Nebraska Supreme Court Affirms Exemption from the Nebraska Municipal Gas System Condemnation Act
The Nebraska Supreme Court affirmed a district court’s decision to allow a municipality to use general condemnation procedures to acquire gas facilities in an area that the municipality annexed. See SourceGas Distribution LLC v. City of Hastings, 287 Neb. 595 (2014). The Supreme Court’s decision affirmed a powerful exemption from the Nebraska Municipal Gas System Condemnation Act.
On March 14, 2011, the City of Hastings (the “City”) annexed an area located east of the City consisting primarily of the Central Community College campus. Following the annexation, the City attempted to negotiate with SourceGas Distribution LLC (“SourceGas”) to acquire the gas facilities that SourceGas owned and located within the annexed area. Negotiations failed. On January 13, 2013, the City filed a petition in the County Court for Adams County to condemn the gas facilities. The City brought its action under the general condemnation procedures, Nebraska Revised Statutes sections 76-701 through 726 (“Chapter 76”).
SourceGas challenged the action by filing a complaint in the District Court for Adams County for temporary and permanent injunctive relief. SourceGas claimed the City must utilize the Nebraska Municipal Gas System Condemnation Act (the “Act”) to condemn its gas facilities, rather than Chapter 76. The District Court rejected SourceGas’s argument.
The District Court held that Nebraska Revised Statutes section 19-4626(2) exempted the City from proceeding under the Act because the City owned and operated its own gas system, and the gas facilities were within the City’s corporate boundaries. As such, the City could proceed under Chapter 76. SourceGas appealed.
The Nebraska Supreme Court affirmed, holding that the general condemnation proceedings applied to the City’s condemnation of the gas facilities. The court explained that section 19-4626(2) provides an exemption when a city owns and operates its own gas system and the condemned property is within the corporate boundaries of the city by annexation.
The Supreme Court’s decision affirms a significant power of municipalities to use eminent domain powers to take gas facilities in annexed areas.
A full copy of the Supreme Court’s opinion is available here.