The Third Circuit recently held that state law is the standard for determining just compensation in Federal eminent domain cases. In Tennessee Gas Pipeline Co. LLC v. Permanent Easement, a pipeline company condemned property pursuant to a federal statute – the Natural Gas Act of 1938 (“NGA”) – and filed the case in federal court. The issue then became whether Pennsylvania eminent domain law governed the issue of the amount of just compensation in that case. PA law could require the pipeline company to pay an additional $1 million.

The district court held that federal law applied. The Third Circuit reversed and held, “we decide to incorporate state substantive law as the federal standard of measuring just compensation in condemnation proceedings by private entities acting under the authority of the NGA.”