In the case of UGI Sunbury LLC v. A Permanent Easement for 1.7575 Acres, 949 F.3d 825 (3d Cir. 2020), the testimony of a Pipelines Expert Witness played a central role in evaluating claims for damages associated with a natural gas pipeline easement. This case addressed the admissibility and reliability of expert testimony related to property value diminution caused by perceived risks of pipeline proximity—commonly known as “stigma damages.”
Background of the Case
UGI Sunbury LLC, a natural gas company, constructed a 35-mile pipeline in central Pennsylvania. Under the Natural Gas Act, UGI obtained the legal right to take easements by eminent domain across several privately owned parcels of land. The dispute in this case arose from one such property, where the landowners claimed that the presence of the pipeline significantly diminished the value of their land—not due to physical damage, but because of public perception and fear related to the potential danger of a high-pressure natural gas line.
The landowners sought compensation for this alleged “stigma,” arguing that the pipeline would negatively impact the marketability and price of their property.
Role of the Pipelines Expert Witness
The landowners hired an appraiser to serve as a Pipelines Expert Witness to support their claim for stigma damages. This expert testified that the market value of the property had declined because potential buyers would perceive the land as less desirable due to its proximity to a natural gas pipeline.
To support this conclusion, the expert relied on a “damaged goods” theory, which draws from psychological and economic studies about how perceived risks—such as those from environmental hazards—can affect real estate values. He cited unrelated incidents, including the Three Mile Island nuclear disaster and the Exxon Valdez oil spill, to argue that pipelines create similar fears that impact property markets.
The expert did not present empirical sales data showing comparable properties that had declined in value due to nearby pipelines. Nor did he identify a standard methodology, published studies, or peer-reviewed research validating his approach.
Court Proceedings and Findings
The U.S. District Court accepted the expert’s testimony during a bench trial and included stigma damages in the final compensation award to the landowners.
However, UGI appealed, and the U.S. Court of Appeals for the Third Circuit reversed that decision. The appellate court ruled that the expert’s testimony should have been excluded under the Daubert standard, which requires expert opinions to be based on reliable principles and methods.
The Third Circuit emphasized that:
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The expert’s “damaged goods” theory had not been peer-reviewed or generally accepted in the real estate valuation community.
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There was no known error rate or standard protocol for applying the theory.
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The expert’s approach was not tied to objective data—such as comparable property sales or local market trends—and was instead based on subjective belief and speculation.
The court concluded that the testimony lacked sufficient scientific reliability and could not form the basis for awarding stigma damages. As a result, the damages award was vacated, and the case was remanded for further proceedings.
Legal Significance
This decision reinforces the importance of rigorous scrutiny when introducing expert testimony in pipeline litigation and eminent domain proceedings. It establishes that claims for property value diminution must be grounded in verifiable market data and accepted valuation techniques—not generalized theories or anecdotal references to unrelated events.
The ruling also underscores the critical gatekeeping role of courts in ensuring that expert testimony presented at trial meets standards of reliability and relevance.
Conclusion
UGI Sunbury LLC v. A Permanent Easement for 1.7575 Acres highlights how a Pipelines Expert Witness can shape the outcome of a case involving property rights and public infrastructure. It serves as a reminder that courts require expert opinions to be firmly rooted in data and tested methodologies—especially when those opinions significantly impact compensation in condemnation or environmental damage cases.