Lancaster Farmland Trust v. Hostetter

In 2014, the Steinman Foundation donated a conservation easement on a 138-acre farm to Lancaster Farmland Trust (LFT). The easement clearly prohibited the conveyance of any utility easement or right of way without the consent of LFT. In 2016, the protected property was sold to Robert Hostetter, who promptly executed an option agreement with the Transcontinental Gas Pipeline Company (Transco) to sell a pipeline easement for the Atlantic Sunrise natural gas pipeline. LFT reached out to Transco to void the agreement, but was rebuffed. Before the option was exercised by Transco, LFT filed suit, claiming breach of contract (i.e., that the option for the pipeline violated the conservation easement), declaratory judgment, quiet title, and tortious interference with a contract. Hostetter and Transco filed motions to dismiss. One argument made by Hostetter was that even if the building of a pipeline were prohibited by the easement, the mere granting of an easement for a pipeline, or the option for an easement, was not a violation. In turn, Transco contended that there was no present controversy because it had not yet exercised the option.

Holding: The trial court rejected the motions to dismiss and allowed the case to continue, concluding that LFT's claims were based on the contention that the mere granting of the option violated the conservation easement.

Analysis and Notes: The Atlantic Sunrise pipeline at issue here is a $3 billion, 198-mile project that was approved by the Federal Energy Regulatory Commission in February 2017 after years of review and sustained local opposition. Transco does have eminent domain rights that could trump the conservation easement.