                                                         NOT PRECEDENTIAL

                    UNITED STATES COURT OF APPEALS
                         FOR THE THIRD CIRCUIT
                             _______________

                                  No. 19-1613
                                _______________

                            ROVER PIPELINE LLC,
                                          Appellant

                                       v.

     ROVER TRACT NO. PA WA HL-004.500T, COMPRISED OF PERMANENT
   EASEMENT(S) TOTALING 0.9 ACRES, MORE OR LESS, AND TEMPORARY
 EASEMENT(S) TOTALING 1.33 ACRES, MORE OR LESS, OVER A PARCEL OF
 LAND IN HANOVER TOWNSHIP, WASHINGTON COUNTY, PENNSYLVANIA,
  TOTALING 49.571 ACRES, MORE OR LESS; JUSTIN D. SMITH and WENDY J.
   SMITH; RANGE RESOURCES APPALACHIA LLC; WEST PENN POWER CO,
 doing business as Allegheny Power; VERIZON PENNSYLVANIA LLC; COLUMBIA
  GAS TRANSMISSION LLC, c/o Corporation Service Company; HARMON CREEK
 COAL CO; MULLETT COAL CO INC; BARBARA MINGES SHEPERD; EMERY J.
 MINGES; PATRICIA R. SHOOP MINGES; DOUGLAS EMERGY MINGES; TALIS-
 MAN ENERGY USA INC; MURDOCKSVILLE INDEPENDENT TELEPHONE CO;
    JAMES M. BUCHANAN AND DIANE ZACK BUCHANAN FARM #4 LP and
 ROVER TRACT NO. PA WA HL-008.000T, COMPRISED OF PERMANENT EASE-
  MENT(S) TOTALING 1.23 ACRES, MORE OR LESS, AND TEMPORARY EASE-
 MENT(S) TOTALING 1.97 ACRES, MORE OR LESS, OVER A PARCEL OF LAND
IN HANOVER TOWNSHIP, WASHINGTON COUNTY, PENNSYLVANIA TOTAL-
 ING 73.874 ACRES, MORE OR LESS; DAVID J. RHEINLANDER and GRETCHEN
   RHEINLANDER, husband and wife; PNC MORTGAGE, a division of PNC Bank,
  Nation Association; OLD WILSON FARM LAND TRUST, Lawrence E. Bolind, Jr.,
Trustee; CAPITAL C ENERGY OPERATIONS LP; LUCILLE D. FROATS; FIRSTEN-
  ERGY CORP; LAVERNE D. MEDINA; MCDONALD ROD & GUN CLUB, a Non-
Profit Pennsylvania corporation; ROCCO ZAGARI, JR. and JILL ZAGARI, as tenants in
  common; VALVOLINE OIL CO; PEOPLES NATURAL GAS COMPANY LLC, c/o
    Corporation Service Company; WCM PROPERTIES LLC; LAREINA ORISON
   GEORGE; ELYSIA ORISON SMITH; FRED C. STROUD; PEOPLES NATURAL
                                 GAS COMPANY LLC
                                   _______________

                     On Appeal from the United States District Court
                        for the Western District of Pennsylvania
                                (D.C. No. 2:17-cv-00170)
                      District Judge: Honorable Arthur J. Schwab
                                   _______________

                                Argued: February 6, 2020

            Before: CHAGARES, RESTREPO, and BIBAS, Circuit Judges

                                  (Filed: May 7, 2020)
                                   _______________

Thomas A. Zabel               [ARGUED]
Nancy H. Elliot
Vadim O. Bourenin
Zabel Freeman
1135 Heights Blvd.
Houston, TX 77008

Brian J. Pulito
Jon C. Beckman
Steptoe & Johnson
201 Chestnut St., Suite 200
Meadville, PA 16335

   Counsel for Appellant Rover Pipeline LLC

Harry F. Kunselman         [ARGUED]
Amanda M. Cook
Strassburger McKenna Gutnick & Gefsky
444 Liberty Ave., Suite 2200
Pittsburgh, PA 15222

   Counsel for Appellees Rover Tract No. PA WA HL-004.500T, Rover Tract No. PA WA
   HL-008.000T, and James M. Buchanan and Diane Zack Buchanan Farm #4 LP




                                           2
                                    _______________

                                       OPINION *
                                    _______________

BIBAS, Circuit Judge.

    Sometimes, a court-appointed commission strays too far, exceeding even its broad fact-

finding powers. Rover Pipeline LLC used eminent domain to take several easements for

the natural-gas pipeline that it plans to bury across the middle of James and Diane Bu-

chanan’s farm. As neither side could agree on a fair price for the needed easements, the

District Court appointed a Commission to settle the score. The Commission calculated just

compensation as the difference between the farm’s pre- and post-taking fair market values.

Its post-taking valuation was proper. But its pre-taking estimate erroneously assumed that

the farm could be developed in ways barred by local zoning rules. The District Court af-

firmed that error. So we will reverse in part and remand for a fresh pre-taking valuation.

                                    I. BACKGROUND

    A. Rover takes a two-acre slice of the Buchanans’ farm

    A few years ago, the Federal Energy Regulatory Commission approved Rover’s plan

to build a natural-gas pipeline across Ohio, Michigan, West Virginia, and Pennsylvania.

To build across private land, Rover would need a lot of easements. Most of them it bought

by negotiating with landowners. But not all landowners would agree. When negotiations




*
  This disposition is not an opinion of the full Court and, under I.O.P. 5.7, is not binding
precedent.

                                             3
failed, Rover had eminent-domain power under the Natural Gas Act to bring condemnation

actions to get the easements. 15 U.S.C. § 717f(h).

   Rover’s negotiations with the Buchanans broke down. The Buchanans own a 123.445-

acre farm in Hanover Township, Pennsylvania. Rover approached them to negotiate a price

for running its pipeline across their farm. But they resisted. So Rover brought this condem-

nation action to secure two things: a permanent easement for the pipeline and temporary

easements for a few construction amenities (a temporary workspace, surface site, road ac-

cess, and other rights of way). The permanent easement would cut a fifty-foot-wide slice

right through the middle of the Buchanans’ farm, covering about two acres of their land.

   Although Rover and the Buchanans were able to agree on a price for Rover’s initial

right of entry, there was still a bone of contention: what price was fair for the permanent

and temporary easements. To end their gridlock, Rover moved to create a court-appointed

commission to decide what compensation was just. See Fed. R. Civ. P. 71.1(a), (h)(2)(A).

The District Court granted the motion and chose the Commission’s three members: two

real-estate lawyers and a former Pennsylvania Court of Common Pleas judge.

   B. The Commission’s valuation

   Private parties, like governments, must pay just compensation for takings under the

Natural Gas Act. Tenn. Gas Pipeline Co., LLC v. Permanent Easement for 7.053 Acres,

931 F.3d 237, 242–43 (3d Cir. 2019). The Commission had to calculate how much Rover

would have to pay the Buchanans for burdening about two acres of their roughly 123-acre

farm. State substantive law (here, Pennsylvania law) governs this calculation. Id. at 255.




                                             4
   In the Keystone State, just compensation for a partial taking equals the difference be-

tween the fair market value of the property right before and after the taking. 26 Pa. Cons.

Stat. § 702(a); see Stoner v. Metro. Edison Co., 266 A.2d 718, 720 (Pa. 1970). Fair market

value is based in part on a property’s “highest and best reasonably available use.” 26 Pa.

Const. Stat. § 703(2); see Stoner, 266 A.2d at 720. So the Commission had to identify the

farm’s highest and best uses both before and after the taking, assign dollar values to each

use, subtract the post-taking value from the pre-taking value, and bill Rover for the differ-

ence.

   1. Pre-taking. To help identify the farm’s pre-taking value, the Commission visited the

Buchanans’ farm and then held an evidentiary hearing. At the hearing, it heard testimony

from Mr. and Mrs. Buchanan and each side’s experts. It also considered expert valuation

reports, maps, and evidence about the surrounding area to assess the potential for future

development. After the hearing, the Commission found that the farm’s best pre-taking use

was “rural recreational and residential uses, which includes . . . multi-family residential and

recreational use.” App. 97 (emphasis added). It unanimously valued that best use at $6,400

per acre, for a total pre-taking value of $790,048.

   2. Post-taking. The Commission next found that the farm’s best post-taking use was

the farm’s “long-standing existing rural recreational and residential uses,” rather than

“multi-family residential” development. App. 97, 100. It based this finding on two facts:

First, Rover could block residential development. The permanent easement would give

Rover sole discretion to grant or deny construction requests, and Rover was unlikely to




                                              5
grant those requests. Second, because Rover’s easements cut the farm right down the mid-

dle, they would substantially impede the Buchanans’ efforts to link utilities from the upper

to the lower part of the farm. So it pegged the farm’s post-taking value at $3,400 per acre,

for a total post-taking value of $419,713.

   3. Just compensation. The Commission took the farm’s pre-taking value ($790,048)

and subtracted its post-taking value ($419,713), for a difference of $370,335. After adding

$4,224 for Rover’s temporary workspace easement and subtracting the $65,628 that Rover

had already paid the Buchanans for its initial right of entry, the Commission set Rover’s

final bill at $308,931.

   C. The District Court affirms the Commission’s valuation

   Both Rover and the Buchanans objected to the Commission’s findings before the Dis-

trict Court. The District Court reviewed the Commission’s findings de novo and adopted

them in full. App. 35; see Fed. R. Civ. P. 53(f)(3)–(4). Rover now appeals to us, arguing

that the Commission and District Court overestimated the farm’s pre-taking value and un-

derestimated its post-taking value. The District Court had jurisdiction over this condemna-

tion proceeding under 28 U.S.C. § 1331 and 15 U.S.C. § 717f(h). We have jurisdiction un-

der 28 U.S.C. § 1291.

                               II. STANDARD OF REVIEW

   The parties contest the standard of review. If state law governed our standard of review,

that dispute would make sense. The Pennsylvania Supreme Court has not decided whether




                                             6
findings about a property’s highest and best use are pure questions of fact or mixed ques-

tions of law and fact. See In re De Facto Condemnation & Taking of Lands of WBF Assocs.,

L.P. ex rel. Lehigh-Northampton Airport Auth., 903 A.2d 1192, 1210 n.14 (Pa. 2006).

   But this is a federal action in a federal court. So federal procedural law dictates whether

the Commission’s assessment of the farm’s best use is a question of law or fact. See Cooper

Labs., Inc. v. Int’l Surplus Lines Ins. Co., 802 F.2d 667, 671 (3d Cir. 1986); see also Coplay

Cement Co., Inc. v. Willis & Paul Grp., 983 F.2d 1435, 1438 (7th Cir. 1993) (collecting

cases). And under federal law, the assessments a Commission makes in its valuation report

are “findings of fact” subject to review for clear error. United States v. Merz, 376 U.S. 192,

198 (1964). On to the merits.

     III. THE COMMISSION’S PRE-TAKING VALUATION IS CLEARLY ERRONEOUS

   Rover argues that the Commission (and thus the District Court) erred by identifying the

wrong best use, and thus overestimating the farm’s pre-taking value. We agree.

   The Commission found that the farm’s best pre-taking use was “rural recreational and

residential uses, which includes a less dense multi-family residential and recreational use.”

App. 97 (emphasis added). We cannot find any evidence in the record to support a “multi-

family residential” use. By choosing a use that “bears no rational relationship to the sup-

portive evidentiary data,” the Commission clearly erred. VICI Racing, LLC v. T-Mobile

USA, Inc., 763 F.3d 273, 283 (3d Cir. 2014) (quoting Berg Chilling Sys., Inc. v. Hull Corp.,

369 F.3d 745, 754 (3d Cir. 2004)).




                                              7
   The Buchanans’ farm was not zoned for multi-family-residential use. “Multifamily” is

a term of art in the local zoning ordinance. It defines “Multifamily Dwelling” as “[a] resi-

dential building designed exclusively for occupancy by three (3) or more families living

independently of each other and containing three (3) or more dwelling units.” Township of

Hanover, Zoning Ordinance, Ordinance No. 109, as amended by Ordinance No. 122, art.

II, § 201 (2011), https://www.hanovertwp.net/ZONING%20ORD%20.pdf. That would in-

clude structures like apartments, townhouses, and condominiums. But the Buchanans’ farm

is now zoned for rural residential use and was (at the time of the taking) zoned for rural

preservation use, both of which allow only single-family dwellings. Id. art. V,

§ 501(A)(1)(g) (rural residential); id. art. IV, § 401(A)(1)(L) (rural preservation).

   Granted, in Pennsylvania, finders of fact may value a property for a best use that is

barred by current zoning designations. Redevelopment Auth. v. Lieberman, 336 A.2d 249,

255 (Pa. 1975); see also 26 Pa. Const. Stat. § 703 (providing that “[f]air market value”

includes “[t]he highest and best reasonably available use of the property” (emphasis

added)). But to do so, they must identify evidence that those designations are reasonably

likely to change. See Redevelopment Auth., 336 A.2d at 225.

   Here, the Buchanans offered no evidence that Hanover Township would change course.

On the contrary, the Township had previously rejected the Buchanans’ requests for a zon-

ing variance. Neither the Commission nor the District Court considered this problem in

valuing the pre-taking best use.

   Indeed, rather than denying the Commission’s error, the Buchanans urge us—in a foot-

note—to dismiss the error as a harmless “technical misnomer.” Appellees’ Br. 18 n.8. We


                                              8
cannot. The moniker “multi-family” appears alongside two of the Commission’s three ref-

erences to its favored best use. App. 96–97. It then explicitly based its valuation on that

“multi-family residential and recreational use.” App. 97–98.

   Even if it had been more subtle, this error would still have tainted the Commission’s

pre-taking valuation and so changed the difference between the farm’s pre- and post-taking

best uses. After all, the Commission’s pre-taking valuation was inflated by the farm’s po-

tential for multi-family development, a use that Rover’s pipeline made less feasible. See

App. 97–100. But that use was barred by Hanover’s zoning designation, which was un-

likely to change. That was clear error. So we will reverse and remand to let the District

Court identify an appropriate pre-taking best use.

  IV. THE COMMISSION DID NOT CLEARLY ERR IN ITS POST-TAKING VALUATION

   Rover objects to the Commission’s post-taking valuation on two grounds. First, it re-

jects the notion that its easements actually burdened the Buchanans’ development pro-

spects. Second, it argues that the Commission let anti-pipeline rhetoric infect its analysis.

Both objections fail. Because the Commission’s post-taking valuation is “plausible in light

of the record,” we will affirm it. Anderson v. City of Bessemer, 470 U.S. 564, 574 (1985).

   A. Rover’s easements burdened the farm’s development potential

   The Commission found that Rover’s easements burdened future development because

Rover could veto future construction requests. That veto, it reasoned, would impair the

property’s value. Rover objects that the easements allow development and that it will likely

grant construction requests, so downgrading the farm’s value was too speculative. Not so.




                                             9
Given Rover’s past conduct and the easements’ long lists of restrictions, the Commission’s

finding was not clearly erroneous.

   1. Rover has the power to veto construction requests. Rover’s permanent easement

barred any use that might “materially interfere” with Rover’s use, unless the Buchanans

got Rover’s “prior written permission.” App. 68–69. That broad restriction gave Rover a

veto over major structural changes, like building roads or buildings or drilling wells. It also

covered cosmetic changes like “remov[ing] soil,” altering a slope’s grade, “impound[ing]

surface water,” or even “plant[ing] trees or landscaping.” Id. at 68–69. If the Buchanans

cannot plant a tree or level a dirt pile without Rover’s permission, then development pro-

spects are less certain than they would be without those restrictions. So the record supports

the Commission’s and the District Court’s findings that Rover’s easement would hamper

development.

   2. Rover’s past conduct shows that it has the will to veto construction requests. At the

valuation hearing, the Buchanans presented evidence that Rover had repeatedly denied

their requests to build a road across the pipeline easement. True, when pressed at the hear-

ing about allowing a road, Rover backpedaled, conceding it could not “unreasonably with-

hold its permission” to build over the easement. App. 726. But the Commission had leeway

to give more weight to Rover’s actions than to its words.

   In sum, the Commission’s post-taking valuation rested not on speculation but on objec-

tive evidence: the terms of Rover’s easements and its past conduct. Plus, the Commission

acknowledged that while the pipeline did not foreclose all future development, it at least




                                              10
made development less certain. Because there was evidentiary support for the post-taking

valuation, we will affirm it.

   B. Neither the Commission nor the District Court tied its post-taking valuation
      to anti-pipeline “stigma” evidence

   During the valuation hearing, the Buchanans’ expert “opined, based on a conversation

with one unidentified developer, . . . [that] the presence of a pipeline” would guarantee that

“no developer would invest in the property.” App. 98. Rover argues that this testimony

reflects a general, irrational fear of pipelines, as it is speculative. Fair enough. But that stray

evidence made no difference. Rover has not shown that this testimony infected either the

Commission’s post-taking valuation or the District Court’s reasoning.

   Rather, the Commission implicitly rejected any testimony stigmatizing pipelines when

it found that the farm, although burdened by limitations, could be developed. The District

Court was even more explicit, “choos[ing] to disregard” the disputed testimony as specu-

lative and unfounded. App. 25. So while the Buchanans’ expert did express an unfounded

fear, we cannot say that those fears infected the analysis of either the Commission or the

District Court.

                                           * * * * *

   The court-appointed Commission based its pre-taking valuation of the Buchanans’ farm

on a use that was barred by local zoning rules and did not explain why those rules would

change. So we will reverse in part and remand for a new pre-taking valuation. But in ob-

jecting to the post-taking valuation, Rover is barking up the wrong tree: both the Commis-

sion and District Court reasonably found that the pipeline would reduce the farm’s value,



                                                11
and neither rested on a fear of pipelines. So we will affirm the Commission’s post-taking

valuation.




                                           12
