cite as 38 energy & min. l. inst. 2 (2017) chapter 2 …...cite as 38 energy & min. l. inst....

CITE AS 38 Energy & Min. L. Inst. 2 (2017)

Chapter 2

Recent Developments in the Law and Regulation of Oil and Gas Pipeline Infrastructure

Ramonda C. LyonsJoseph L. JenkinsAngela Ramsey

Lewis, Glasser, Casey & Rollins, PLLCCharleston, West Virginia

Synopsis§ 2.01. Introduction and Organization of the Chapter ........................ 27§ 2.02. The Need for Additional Gas and Oil Pipeline Infrastructure Within the United States ................................... 27§ 2.03. Overview of Federal Energy Regulatory Commission Approved Infrastructure Construction Projects Within the Continental United States .......................................28

[1] — Northern Lights 2017 Expansion (Docket No. CP16-472-000)............................................... 28[2] — Transco to Charleston Project (Docket No. CP16-98-000)................................................. 29[3] — Rayne and Leach Xpress (docket Nos. CP15-514-000 and CP15-539-000) ............................................................. 29[4] — Orion Project (Docket No. CP16-4-000) ............................ 30[5] — Rover Pipeline Project (Docket Nos. CP15-93-000, CP15-93-0001, CP15-94-0000, CP15-96-000) ................. 30[6] — Atlantic Sunrise Pipeline Project (Docket No. CP-138-000) ................................................................. 31[7] — Northern Access (Docket No. CP15-115-001) ................... 31

§ 2.04. President Trump’s Treatment of Issues Impacting Oil and Natural Gas Pipelines ................................. 32

[1] — Campaign upon America First Energy Plan ....................... 32[2] — January 20, 2017 Regulatory Freeze Memorandum ...................................................................... 33[3] — Executive Orders ................................................................. 33

[a] — Presidential Executive Order on Reducing Regulation and Controlling Regulatory Costs ........................................................................ 33[b] — Presidential Executive Order on Enforcing the Regulatory Reform Agenda .............................. 34

ENERGY & MINERAL LAW INSTITUTE

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SYNOPSIS

[c] — Presidential Executive Order on Promoting Energy Independence and Economic Growth ..................................................................... 34

[4] — Withdrawal from Paris Climate Agreement ....................... 35§ 2.05. Regulation of Pipeline Safety ......................................................36

[1] — Pipeline and Hazardous Material Safety Administration (PHMSA) Background ............................. 36[2] — Significant Recently Implemented Rules and Regulations ........................................................ 37

[a] — Docket No. 2011-0009 — Phase: Final Rule and Correction, Section 192 ........................... 37[b] — Docket No. 2016-0010 — Phase: Interim Final Rule, Section 190 .............................. 38[c] — Docket No. 2010-0026 — Phase: Final Rule, Section 192 ........................................... 38[d] — Docket No. 2009-0192 — Phase: Final Rule, Sections 196 and 198 ............................ 38

[3] — Pending Rules Presented by PHMSA ................................. 39[a] — PHMSA- 2011-0023 ................................................. 39[b] — PHMSA- 2010-0229 ................................................ 42[c] — PHMSA- 2011-0163.................................................. 43[d] — PHMSA- 2014-0098 ................................................ 43[e] — PHMSA- 2013-0255 .................................................44[f] — PHMSA- 2013-0163 .................................................44

§ 2.06. Eminent Domain ..........................................................................44[1] — Negotiation of Pipeline Right-of-Way Agreement with the Property Owner .................................................... 45[2] — Summary of Recent Condemnation Legislation or Court Rulings Involving and Impacting Oil and Natural Gas Infrastructure .......................................... 47

[a] — Georgia ..................................................................... 47[b] — Kentucky .................................................................. 47[c] — Ohio .......................................................................... 48[d] — Pennsylvania............................................................. 51[e] — South Carolina .......................................................... 54[f] — Virginia ..................................................................... 54[g] — West Virginia ........................................................... 55

§ 2.07. Conclusion ..................................................................................... 57

Oil and Gas PiPeline infrastructure

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§ 2.01

§ 2.01. Introduction and Organization of the Chapter.Section 2 of this chapter will discuss the urgent need for additional

gas and oil pipeline infrastructure within the continental United States. Section 3 of this chapter will briefly touch on some large-scale gas pipeline infrastructure development that is currently underway in the Marcellus and Utica shale plays. Section 4 will discuss some early policy moves made by the Trump administration that will likely have an effect on the oil and natural gas pipeline development. Section 5 will discuss recent developments in the regulation of oil and natural gas pipeline infrastructure. Finally, Section 6 will discuss recent legal developments concerning eminent domain for oil or gas pipeline infrastructure.

§ 2.02. The Need for Additional Gas and Oil Pipeline Infrastructure Within the Continental United States.

The recent shale boom, particularly in the Appalachia area,1 has necessitated not only the expansion of pipeline infrastructure, but also the updates to and reconfiguration of existing pipeline infrastructure.2 The increased production of natural gas, natural gas liquids and oil has exceeded the capacity of the existing infrastructure to accept the resources and deliver them to market for further processing and sale.3 The insufficient oil and gas pipeline infrastructure throughout the Northeast is costing both developers and residential and commercial consumers billions each year.4

1 Jude Clemente, “More Northeast Natural Gas Pipeline Capacity Brings Questions,” Forbes (Oct. 23, 2016), https://www.forbes.com/sites/judeclemente/2016/10/23/more-northeast-natural-gas-pipeline-capacity-brings-questions/#4aeb1f11c940 (“Led by the surge in Appalachia’s Marcellus and Utica plays, U.S. natural gas production has increased over 50% since 2005 . . . .”). 2 Id. (stating that gas pipeline infrastructure is lagging behind the rise in gas production). 3 See id.4 See Mark Green, “Infrastructure and Harnessing U.S. Shale Energy,” Energy Tomorrow (Jan. 28, 2016), http://www.energytomorrow.org/blog/2016/01/28/infrastructure-and-harnessing-us-shale-e (“EIA estimates that Northeast residents paid up to 68 percent more for electricity than the national average in the winter of 2014, while industrial users paid up to 105 percent more for electricity than the national average.”).


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It is true that significant investments are being made in the construction of new pipelines and to extend or upgrade current pipelines,5 but further investments are needed throughout the Appalachian region in order to expand production of shale gas.6

§ 2.03. Overview of Federal Energy Regulatory Commission Approved Infrastructure Construction Projects Within the Continental United States.

[1] — Northern Lights 2017 Expansion (Docket No. CP16-472-000).The Federal Energy Regulatory Commission (FERC)7 approved the

Northern Lights expansion on January 30, 2017. This is an expansion project for Northern Natural Gas Company’s customers through 2026.8 The expansion, to commence on or after November 1, 2017, will include constructing approximately 4.8 miles of 8 and 12 inch-diameter “branch line loop extensions in Sherburne and Isanti counties, Minnesota.”9 This will allow transportation of approximately 76,000 decatherms per day (Dth/day)

5 ICF International, North American Midstream Infrastructure Through 2035: Leaning into the Headwinds, INGAA (April 12, 2016), http://www.ingaa.org/File.aspx?id=27961&v=db4fb0ca (stating that the United States has invested $40 to $50 billion each year between the years 2010-2015 on gas pipeline infrastructure). 6 See generally Michael Wise, Is the US Blowing the Shale Revolution?, McDonald Hopkins (Jun. 17, 2014), https://mcdonaldhopkins.com/Insights/Blog/Energy-Insights/2014/06/17/is-the-us-blowing-the-shale-revolution (stating that reports show “that it will take over $20 billion of investment to reverse pipelines and build new pipelines from Appalachia to support substantial changes in gas flows to meet demand.”). 7 Natural Gas Act of 1938 (NGA) empowers the Federal Energy Regulatory Commission (FERC) to conduct the review of a proposed interstate natural gas pipeline, coordinate environmental and land user permitting with other federal and state agencies, and determine whether a proposed pipeline meets the “public convenience and necessity.” Natural Gas Act of 1938, 75 P.L. 688, 52 Stat. 821, 75 Cong. Ch. 556. As part of approving a pipeline application, FERC can specify the conditions under which the pipeline can be constructed, including the route used. Id.8 Project Overview, Northern Natural Gas, http://www.northernnaturalgas.com/expansionprojects/Pages/NorthernLights2017.aspx (last visited Jun. 15, 2017).9 Id.


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through the addition of the pipeline and compression facilities on Northern’s existing system.10

[2] — Transco to Charleston Project (Docket No. CP16-98-000). Dominion Carolina Gas Transmission’s (DGC) project involves plans

to place facilities including “55 miles of 12-inch diameter pipeline in Spartanburg, Laurens, Newberry and Greenwood counties and five miles of 4-inch diameter pipeline in Dillon County,” South Carolina.11 DGC has plans to be in service by November 2017.12

[3] — Rayne and Leach Xpress (Docket Nos. CP15-514-000 and CP15-539-000).TransCanada will be undertaking two Columbia Pipeline Group projects

that were “designed to transport natural gas from the Marcellus and Utica production areas to Midwest and Gulf Coast markets.”13 The approximately $1.4 billion investment in Leach XPress will transport approximately 1.5 billion cubic feet per day (Bcf/d) of natural gas from the Marcellus and Utica plays.14 The 160-mile project crosses the northern panhandle of West Virginia and ends in southeastern Ohio.15 Rayne XPress involves the construction of two new compressor stations along the already existing Columbia Gulf system.16 Overall, the two pipeline projects represent a $1.8

10 Id.11 David Bradley, “FERC Approves Dominion Carolina’s Transco to Charleston Project,” Natural Gas Intel (Feb. 3, 2017), http://www.naturalgasintel.com/articles/109293-ferc-approves-dominion-carolinas-transco-to-charleston-project. 12 Id.13 “Moving Gas: FERC Approves Construction of TransCanada’s Leach Xpress and Rayne Xpress Pipelines,” Oil & Gas 360 (Jan. 29, 2017), https://www.oilandgas360.com/moving-gas-ferc-approves-construction-of-transcanadas-leach-xpress-and-rayne-xpress-pipelines/. 14 Id.15 Id.16 Id.


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billion investment. Developers broke ground on these projects in February 2017 and intend on having the two pipelines “in service” by November 2017.17

[4] — Orion Project (Docket No. CP16-4-000).Tennessee Gas Pipeline Company’s (TGP) has broken ground on $143

million project that is approximately 13 miles of pipeline running adjacent to existing pipelines in Pike and Wayne counties, Pennsylvania.18 In addition, the Orion Project will transport “up to 135,000 dekatherms per day of additional firm natural gas capacity on its pipeline system.”19 The Orion Project is scheduled to be completed by June 2018.20

[5] — Rover Pipeline Project (Docket Nos. CP15-93-000, CP15-93-0001, CP15-94-0000, CP15-96-000).

Rover Pipeline LLC is an interstate natural gas pipeline “designed to transport 3.25 billion cubic feet per day (Bcf/day) of natural gas to markets in the Midwest, Northeast, East Coast, Gulf Coast and Canada with 710 miles of pipeline.”21 Rover will deliver directly to “Ohio, West Virginia, Michigan, and into Ontario, Canada,” providing a broader distribution network in the United States and Canadian markets.22 The $4.2 billion project will gather gas from processing plants in West Virginia, Eastern Ohio and Western Pennsylvania to be delivered to markets in Michigan.23 This project is expected to be complete in November 2017.24

17 Id.18 Orion Project, Kinder Morgan, https://www.kindermorgan.com/pages/business/gas_pipelines/east/orion/ (last visited June 15, 2017). 19 Id.20 Id.21 Rover Pipeline Project, Energy Transfer, http://www.energytransfer.com/ops_etrover.aspx (last visited June 15, 2017).22 Rover Pipeline Route, Energy Transfer, http://www.roverpipelinefacts.com/ (last visited June 15, 2017).23 Id.24 Id.


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[6] — Atlantic Sunrise Pipeline Project (Docket No. CP15-138-000).The Williams Atlantic Sunrise project is a “proposed expansion of the

existing Transco natural gas pipeline.”25 The Transco natural gas pipeline as it currently exists transports nearly “10% of the nation’s natural gas.” 26 The expansion project would add approximately 200 miles of new pipeline.27 The project will expand the Transco pipeline to northeastern Pennsylvania and will transport enough natural gas per day to service nearly seven million homes.28 This project is scheduled to be completed in mid-2018.

[7] — Northern Access (Docket No. CP15-115-001).Beginning in April 2017, the Northern Access Project entails National

Fuel Gas Supply Corporation and Empire Pipeline, Inc. constructing of 96.9 miles of 24-inch diameter pipeline.29 The Northern Access Project will start in Pennsylvania and will transport gas to the Northeast United States and Canada.30 Additionally, the project will include an interconnection with the Tennessee Gas Pipeline in Erie County, New York. The project is expected be completed by spring of 2018.31

25 Chris Stockton and Ann Simonelli, “Williams and the Conservation Fund Announce Recipients of Stewardship Program in Pennsylvania,” The Conservation Fund (June 29, 2015), http://www.conservationfund.org/news/press-releases/1050-williams-and-the-conservation-fund-announce-recipients-of-stewardship-program-in-pennsylvania. 26 Id.27 Id.28 Id.29 Northern Access Project Update, National Fuel (Jan. 2017), http://www.natfuel.com/supply/NorthernAccess2016/docs/NA%20Project%20Update%20January%202017.pdf. 30 Id. 31 Northern Access Project Timeline, National Fuel, http://www.natfuel.com/supply/NorthernAccess2016/timeline.aspx (last visited June 15, 2017).


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§ 2.04. President Trump’s Treatment of Issues Impacting Oil and Natural Gas Pipelines.

[1] — Campaign upon America First Energy Plan. Candidate Donald J. Trump made America’s energy independence an

integral part of his campaign’s platform.32 In fact, candidate Trump often promised to remove obstacles slowing down oil and gas development, especially in the Utica and Marcellus plays.33 As a part of his “America First” agenda, he promised to eliminate “a slew of environmental regulations” in order to expand and develop America’s fossil fuel resources.34 To further his “America First” agenda, candidate Trump promised to overturn President Obama’s decision to enter the Paris Climate Accord and to revive the halted construction of the Keystone XL pipeline.35 Candidate Trump’s “America First” Energy Plan was a large reason why Trump would go on to win the United States presidency. President Trump began taking actions to further his “America First” agenda immediately upon taking office. The White House hosted an “Energy Week” in June of 2017 in order to “promote the president’s energy policies.”36 During this week, President Trump and his administration pushed the administration’s agenda for America’s “energy dominance” and independence.37 Throughout “Energy Week” the Trump administration bolstered its message that it intended to utilize the United States’ abundant domestic resources to both create jobs domestically and to “strengthen America’s global influence and leadership abroad.”38 As a

32 Andrew Restuccia, Trump Calls for ‘Complete American Energy Independence,’ Politico (May 25, 2017), http://www.politico.com/story/2016/05/donald-trump-energy-drilling-fossil-fuels-223628. 33 Id. 34 Id. 35 Ashley Parker & Coral Davenport, Donald Trump’s Energy Plan: More Fossil Fuels and Fewer Rules (May 26, 2016), https://www.nytimes.com/2016/05/27/us/politics/donald-trump-global-warming-energy-policy.html?_r=0. 36 Timothy Cama and Devin Henry, Overnight Energy: The White House Kicks off ‘Energy Week,’ The Hill (June 26, 2017), http://thehill.com/policy/energy-environment/overnights/339559-overnight-energy-its-energy-week-in-the-trump. 37 Id. 38 Id.


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part of strengthening America’s global influence, President Trump detailed efforts during “Energy Week” to enact policies allowing America to export liquefied natural gas to markets in Eastern Europe and Asia.39 President Trump’s enacted policies affecting the oil and natural gas pipeline industries will be described in greater detail below.

[2] — January 20, 2017 Regulatory Freeze Memorandum. On January 20, 2017, the same exact day that President Trump was

inaugurated, the president issued a Memorandum for the Heads and Acting Heads of Executive Departments and Agencies that required that all agencies to enact immediate temporary freezes on all pending regulations that had not yet taken effect.40 The intent of the regulatory freeze was clear — it was intended to “halt[] any lingering policies from the Obama administration before they [could] be finalized.”41 For purposes of this chapter, this allowed Trump to put his administration into place before any of former President Obama’s pending regulations on oil and natural gas could become effective.

[3] — Executive Orders.[a] — Presidential Executive Order on Reducing Regulation and Controlling Regulatory Costs.

On January 30, 2017, President Trump signed Executive Order 13,771 entitled Reducing Regulation and Controlling Regulatory Costs. Trump on the campaign trail often proposed that as president he would mandate that two regulations be repealed for every new regulation promulgated. Executive Order 13,771 includes language requiring that each time an agency “publicly proposes for notice and comment or otherwise promulgates a new regulation, it shall identify at least two existing regulations to be repealed.”42 Further,

39 Tom DiChristopher, Trump Wants America to be ‘Energy Dominant.’ Here’s What That Means, CNBC (Jul. 1, 2017), http://www.cnbc.com/2017/06/28/trump-america-energy-dominant-policy.html. 40 https://www.whitehouse.gov/the-press-office/2017/01/24/implementation-regulatory-freeze 41 Id. 42 Exec. Order No. 13771, 82 C.F.R. 9339 (Jan. 30, 2017).


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Trump’s Executive Order 13,771 requires that for the fiscal year 2017 “the total incremental costs of all new regulations, including repealed regulations . . . shall be no greater than zero.”43 No doubt, President Trump issued Executive Order 13,771 in large part because he believes excessive regulations are unduly burdening American businesses, especially in the fossil fuel industries.

[b] — Presidential Executive Order on Enforcing the Regulatory Reform Agenda.

On February 24, 2017, President Obama issued Executive Order 13777 entitled Enforcing the Regulatory Agenda.44 Executive Order 13777 mandates that regulatory agencies establish and designate a “Regulatory Reform Officer” that will head a “Regulatory Reform Task Force.”45 The Regulatory Reform Task Force is tasked with fulfilling the President’s regulatory reform agenda set forth in Executive Order 13771. At a minimum, the Regulatory Reform Task Force within each executive agency will be required to “identify regulations that . . . eliminate jobs, or inhibit job creation; are outdated, unnecessary, or ineffective; impose costs that exceed benefits; create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies . . . .”46

[c] — Presidential Executive Order on Promoting Energy Independence and Economic Growth.

On March 28, 2017, President Trump issued an Executive Order 13783 entitled Promoting Energy Independence and Economic Growth that will likely substantially change the regulatory regimes surrounding natural gas and oil development.47 The goal of Executive Order 13783 is to “develop[]” America’s “vast energy resources, while at the same time avoiding regulatory burdens that unnecessarily encumber energy production . . . .”48 Also, the

43 Id. 44 Exec. Order No. 13777, 82 C.F.R. 12285 (Feb. 24, 2017).45 Id. 46 Id. 47 Exec. Order No. 13783, 82 C.F.R. 16093 (Mar. 28, 2017).48 Id.


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Executive Order states that it is in the national interest that electricity be produced from, inter alia, domestic natural gas. The Executive Order orders agencies to avoid regulatory burden that unnecessarily inhibit development of domestic energy resources.49 Further, it asks agencies to adopt a policy of not promulgating environmental regulations when the costs of the regulation outweigh the benefits of adopting said regulation.50 While Executive Order 13783 did not repeal the Clean Power Plan, it does severely cripple it by rescinding Obama-era executive orders pertaining to agency’s considerations in making climate change legislation.51

[4] — Withdrawal from Paris Climate Agreement.On June 1, 2017, President Trump withdrew from the Paris Climate

Accord — fulfilling a promise he had often made on the campaign trail.52 While largely nonbinding, the Paris Climate Accord sought to reduce the United States’ greenhouse gas emissions by 26-28 percent below 2005 levels by the year 2025.53 Further, under the Accord, the United States had vowed to commit up to $3 billion to poorer countries by the year 2020.54 President Trump has stated that withdrawing from the Paris Climate Accord would bring energy jobs back to America and would prevent a redistribution of American wealth to develop energy infrastructure abroad.55

49 Id. 50 Id.51 Charles T. Wehland, Alina Fortson, and Jennifer M. Hayes, FAQS Regarding President Trump’s Energy Executive Order, Mondaq (May 18, 2017), http://www.mondaq.com/unitedstates/x/594944/Renewables/FAQs+Regarding+President+Trumps+Energy+Executive+Order. 52 Michael D. Shear, “Trump Will Withdraw U.S. From Paris Climate Agreement,” The New York Times (June 1, 2017), https://www.nytimes.com/2017/06/01/climate/trump-paris-climate-agreement.html. 53 Id. 54 Id. 55 Id.


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§ 2.05. Regulation of Pipeline Safety.[1] — Pipeline and Hazardous Material Safety

Administration (PHMSA) Background.The Pipeline and Hazardous Materials Safety Administration

(PHMSA), an agency within the Department of Transportation, is responsible for developing and enforcing “regulations for the safe, reliable, and environmentally sound operation” of United States pipelines.56 The PHMSA was created in 200457 with the principal mission of “protect[ing] people and the environment from the risks inherent in the transportation of hazardous materials.”58 The PHMSA promulgates regulations to protect the environment, to ensure pipeline reliability, to harmonize pipeline requirements, and to prepare and respond to pipeline failures.59 These PHMSA regulations are set forth in Title 49 of the Federal Register.

The PHMSA is funded by “user fees” that are statutorily imposed on pipeline operators on a per mile basis.60 PHMSA must “rely heavily” on state partnerships for “inspection and enforcement” of its regulations.61 As such, there is inconsistency among states when it comes to safety inspection and reports have indicated the PHMSA’s oversight of the state pipeline safety programs is not sufficient to ensure states comply with program evaluation requirements.62 Additionally, there is potential to create a “funding gap” for the states to provide the necessary oversight since proposed regulatory obligations will increase greatly while funding remains the same. Perhaps most importantly, federal agencies “will no longer consider the . . . ‘social

56 About PHMSA, PHMSA, https://www.phmsa.dot.gov/about-phmsa/phmsas-mission (last visited June 15, 2017).57 Norman Y. Mineta Research and Special Programs Improvement Act, 108 Pub. L. No. 426, 118 Stat. 2423 (2004).58 See supra note 49. 59 Id. 60 Paul W. Parfomak, DOT’s Federal Pipeline Safety Program: Background and Key Issues for Congress, Congressional Research Service (May 20, 2016), https://fas.org/sgp/crs/misc/R44201.pdf. 61 Id. 62 Id.


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cost of carbon’ when promulgating climate change regulations.”63 Trump’s mandate requires agencies to identify agency actions that utilized Obama-era climate change data and suspend, withdraw, or rescind such actions “as soon as practicable.”64

[2] — Significant Recently Implemented Rules and Regulations.

[a] — Docket No. 2011-0009 — Phase: Final Rule and Correction, Section 192.

This final rule was promulgated to “reduce the risk of explosions in natural gas distribution pipelines” by requiring excess flow valves (EFVs) to be installed on service lines single-family and multifamily residences as well as small commercial entities consuming less than 1,000 Standard Cubic Feet per Hour (SCFH).65 This rule expanded the definition of what gas service lines require EFVs under Section 192.66 An EFV is a “safety device installed inside a natural gas distribution service line” that will close the flow of gas that escapes into the atmosphere when a gas line becomes damaged.67 The rule also requires gas line operators to notify customers of their right to request EFV installation on service lines that are not “newly installed or replaced.”68 This final rule is expected to immensely enhance “safety benefits in the form of reduced fatalities, injuries, lost product, and other property damage.”69 However, the added safety benefits do not come without additional costs. The installation of additional EFVs required by this final rule will cost gas distribution operators approximately $10.6 million in compliance costs each year.70

63 See supra note 48.64 Exec. Order No. 13783, 82 C.F.R. 16093 (Mar. 28, 2017).65 49 C.F.R. 192 (2015).66 Id.67 Id.68 Id.69 Id.70 Id.


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[b] — Docket No. 2016-0010 — Phase: Interim Final Rule, Section 190.

In this Interim Final Rule, PHMSA revised references in its existing regulations to increase the maximum civil penalties for violating the Federal Pipeline Safety Laws, or any PHMSA regulation or order issued, pursuant thereto.71 Under the “Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015,” (FCPLAA) which further amended the “Federal Civil Penalties Inflation Adjustment Act of 1990,” federal agencies are required to adjust regulatory civil monetary penalties starting August 1, 2016, and then annually, in order to account for rate of inflation.72 Pursuant to the FCPLAA, the maximum penalty for PHMSA violations is now $209,002.00 per day the violation continues up to a maximum of $2.09 million for a series of related violations.73

[c] — Docket No. 2010-0026 — Phase: Final Rule, Section 192.

On March 11, 2015, PHMSA published a final rule that amended regulations pertaining to and clarifying miscellaneous pipeline safety requirements.74 The final rule addressed several subject matter areas “including the performance of post-construction inspections, Type B onshore gas gathering line leak surveys, qualifying plastic pipe joiners, ethanol regulation, pipe transportation, offshore pipeline condition report filing, pressure reduction calculations for hazardous liquid pipeline anomalies, and components fabricated by welding.”75

[d] — Docket No. 2009-0192 — Phase: Final Rule, Sections 196 and 198.

This final rule establishes criteria for state excavation damage prevention law enforcement programs as a prerequisite for PHMSA to conduct an enforcement proceeding against an excavator in the absence of an adequate

71 49 C.F.R 190 (2017)72 Id.73 Id. 74 49 C.F.R 191, 92, 95 (2015).75 Id.


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enforcement program in the state where a pipeline damage prevention violation occurs.76 This final rule amends existing regulations to establish the following:

Criteria and procedures for determining the adequacy of State pipeline excavation damage prevention law enforcement programs; an administrative process for making State adequacy determinations; the federal requirements PHMSA will enforce in States with inadequate excavation damage prevention law enforcement programs; and the adjudication process for administrative enforcement proceedings against excavators where federal authority is exercised. The development of the review criteria and the subsequent determination of the adequacy of State excavation damage prevention law enforcement programs is intended to encourage States to develop effective excavation damage prevention law enforcement programs to protect the public from the risk of pipeline ruptures caused by excavation damage and allow for federal administrative enforcement action in States with inadequate enforcement programs.77

[3] — Pending Rules Presented by PHMSA.[a] — PHMSA- 2011-0023.

PHMSA-2011-0023, entitled “Pipeline Safety: Safety of Gas Transmission Pipelines,” was published for comment on April 8, 2016, and the comment period will end on July 7, 2016.78 This proposed rulemaking could significantly change the regulatory landscape surrounding oil and gas pipeline industry. Among other things, this proposed rulemaking proposes the following oil and gas pipeline regulatory amendments to 49 C.F.R. 191 and 192:

§ 191.1. Scope — The proposed change will require operators of onshore gas lines to submit incidents, safety related conditions and annual summary data reports and eliminates the exemptions under which gathering lines currently operate.

76 49 C.F.R. 196, 98 (2015). 77 Id. 78 PHMSA-2011-0023, 81 Fed. Reg. 29830 (May 13, 2016).


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§ 191.23. Reporting Safety Related conditions — requires operators to report when they exceed their maximum allowable operating pressure (MAOP).

§ 191.25. Filing safety related condition reports — imposes a reporting requirement for MAOP exceedances and particular procedures to report.

§ 192.3. Definitions [changed] — gathering line and the inclusion of a definition for a “moderate consequence area.”

§ 192.5. Class locations — requires operators to make and retain for the life of the pipeline documentation of how class location is determined.

§ 192.9. Distinctions and requirements on gathering lines.

§ 192.13. Creates record creation and retention requirements for all operators to evaluate and mitigate risks to the public and the environment as a part of the construction, operation, maintenance and management of a line. It also defines the obligations of the operator transporting natural gas in neighborhoods, cities and environmentally sensitive areas.

§ 192.67. Requires new rules to validate records used to establish MAOP. Requires operators to make and retain for the life of the pipeline all records documenting tests, inspections and manufacturing specifications.

§ 192.127. Requires operators to create and retain records relating to pipeline design and determination of design pressure to comply with MAOP.

§ 192.227. Requires operators to keep records relating to welder qualifications and retain them for the life of the pipeline.

§ 192.319. Requires an indirect assessment of the coating of a pipeline immediately following installation to make sure that there has been no mechanical damage to the coating during construction and the records maintained for the life of the pipeline.


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§ 192.461, .465 and .473. Reducing damages to a pipeline due to external corrosion by clarifying and reporting coatings, requiring remediation of any damage to the coating and monitoring any damage to the coating or external corrosion and requiring surveys to determine if coating might by affected by interference currents.

§ 192.478. Requires operators to monitor deleterious gas stream constituents and review corrosion mitigation and monitoring.

§ 192.485. Requires operators pipe and material properties used for strength calculations.

§ 192.506. Spike hydrostatic pressure testing required .

§ 192.605. Procedural manual required for all operators and must include means to prevent exceeding MAOP.

§ 192.607. Requires operators to verify pipeline material and describe the physical and operational characteristics of the pipelines.

§ 192.613. Requires operators to inspect pipes within 72 hours of a natural disaster.

§ 192.619. Requires manufacturing effects can only be considered stable in situations where they have been subject to a hydrostatic test for which the operator has and maintains traceable, verifiable records, of 1.25 times the MAOP.

§ 192.624. Establishing a required hydrotest for a section of “grandfathered pipes” which are prior to 1970 for a MAOP of at least 1.25 times the segments MAOP.

§ 192.710. Requiring periodic integrity assessments of areas in moderate consequence areas, allowing 15 years for the initial assessments to be completed and a “pig and dig” every 20 years.

§ 192.917. Clarifies what information must be contained in a risk assessment including pipeline attributes, interactive threats, information, records and data analysis to now be incorporated in risk assessment reports.


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§ 192.921. Adjusts the accepted and preferred methods of assessing pipelines under the integrity management rules and expressly limits the use of direct assessments to segments that are not piggable.

§ 192.927 and .929. Adjusts the rules for direct assessments.

§ 192.933. Adjusts repair criteria and timeframes for repairs to be made.

§ 192.935. Provides a list of prescribed preventative and mitigative measures that operators must consider in a risk assessment.

[b] — PHMSA-2010-0229.In recent years, there have been significant hazardous liquid pipeline

accidents, most notably the 2010 crude oil spill near Marshall, Michigan, during which almost one million gallons of crude oil were spilled into the Kalamazoo River.79 In response to accident investigation findings, PHMSA published an Advance Notice of Proposed Rulemaking (ANPRM) on October 18, 2010.80 The ANPRM solicited stakeholder and public input and comments on several aspects of hazardous liquid pipeline regulations being considered for revision or updating in order to address the lessons learned from the Marshall, Michigan accident and other pipeline safety issues.81

Subsequent to these incidents, Congress enacted the Pipeline Safety, Regulatory Certainty, and Job Creation Act that included several provisions that are relevant to the regulation of hazardous liquid pipelines.82 Shortly after the Pipeline Safety, Regulatory Certainty, and Job Creation Act was passed, the National Transportation Safety Board (NTSB) issued its accident investigation report on the Marshall, Michigan accident.83 In it, NTSB

79 PHMSA-2011-0229, 80 Fed. Reg. 61610 (Oct. 13, 2015). 80 Id. 81 Id. 82 Id. 83 Id.


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made additional recommendations regarding the need to revise and update hazardous liquid pipeline regulations.84

[c] — PHMSA-2011-0163.PHMSA, through this proposed rulemaking, seeks to amend safety

regulations in order to address new requirements of the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 (“2011 Act”) and to clarify existing regulations.85 Among other proposed amends, PHMSA seeks to add a clear time frame for notifications of accidents and incidents.86 Further, PHMSA intends to add provisions that will allow developers to recover costs for having design reviews of certain new projects.87 This proposed rulemaking also intends to incorporate an option for confidentiality for developers who submit required statutorily or regulatory information to PHMSA.88

[d] — PHMSA-2014-0098.PHMSA, through this proposed rulemaking, seeks to amend the gas

pipeline safety regulations to “address regulatory requirements involving plastic piping systems used in gas services.”89 These proposed amendments are intended to correct errors, address existing inconsistencies, and to respond to a multitude of petitions for rulemaking on the subject matter.90 The following requirements will be addressed, amended, and/or modified:

(1) design factors for polyethylene (PE) pipe; (2) mechanical pipe fitting requirements; (3) updated and additional regulations for risers; (4) expanded use of Polyamide-11 (PA-11) thermoplastic pipe; (5) incorporation of newer Polyamide-12 (PA-12) thermoplastic

84 Id. 85 PHMSA-2011-0163, 80 Fed. Reg. 39915 (July 10, 2015). 86 Id. 87 Id. 88 Id.89 PHMSA-2014-0098, 80 Fed. Reg. 29263 (May 21, 2015). 90 Id.


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pipe; (6) and incorporation of updated and additional standards for fittings.91

[e] — PHMSA-2013-0255.This proposed rule would require mandatory installation of automatic

shutoff valves, remote controlled valves, or equivalent technology and establish performance based meaningful metrics for rupture detection for gas and liquid transmission pipelines.92 The overall intent is that rupture detection metrics will be integrated with ASV and RCV placement with the objective of improving overall incident response.93 These response metrics would focus on mitigating large, unsafe, uncontrolled release events that have a greater potential consequence for destruction of property or risk of human life.94 The areas proposed to be covered include High Consequence Areas (HCA) for hazardous liquids and Class 3 and 4 for natural gas.95

[f] —PHMSA-2013-0163.This rulemaking would address miscellaneous issues that have been

raised because of the reauthorization of the pipeline safety program in 2012 and petitions for rulemaking from many affected stakeholders.96 Some of the issues that this rulemaking would address include: (1) renewal process for special permits, (2) cost recovery for design reviews, and (3) incident reporting.97

§ 2.06. Eminent Domain. With the advent of the shale revolution across the United States,98 and

in particular Appalachia, the increased production of natural gas, natural gas

91 Id. 92 PHMSA-2013-2055, 90 Fed. Reg. 3787 (Jan., 23, 2015). 93 Id. 94 Id. 95 Id. 96 PHMSA-2013-0163, 82 Fed. Reg. 7972 (Jan. 23, 2015). 97 Id. 98 The U.S. Shale Revolution, Strauss Center, https://www.strausscenter.org/energy-and-security/the-u-s-shale-revolution.html (“The ‘Shale Revolution’ refers to the combination of


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liquids, and oil has exceeded the capacity of the existing infrastructure to accept the resources and deliver them to market for further processing and sale.99 The result is a recent, and likely continuing, investment of billions of dollars per year in the construction of new pipelines and to extend or upgrade current pipelines.100 As part of these significant projects, miles of right-of-ways need to be obtained for the pipelines and other associated gas transportation facilities.

[1] — Negotiation of Pipeline Right-of-Way Agreement with the Property Owner.

Oftentimes, the necessary property rights are obtained by the pipeline operators by negotiating directly with the property owner.101 However, if an agreement cannot be reached, usually because of a dispute over the purchase price, environmental protection concerns, or simply ideological opposition to fossil fuels, the pipeline operators have the option to condemn the property.102 The power of eminent domain is inherent in the sovereign,

hydraulic fracturing and horizontal drilling that enabled the United States to significantly increase its production of oil and natural case, particularly from tight oil formations, which now account for 36% of total U.S. crude oil production.”) (last visited July 3, 2017). 99 See generally Is the US Blowing the Shale Revolution, McDonald Hopkins (Jun. 17, 2014), https://mcdonaldhopkins.com/Insights/Blog/Energy-Insights/2014/06/17/is-the-us-blowing-the-shale-revolution (stating that gas pipeline infrastructure in the Marcellus need to focus on developing infrastructure). 100 See Morgan Brennan, A nat gas investing idea that most people are missing, CNBC (July 23, 2015), http://www.cnbc.com/2015/07/23/a-natgas-investing-idea-that-most-people-are-missing.html (stating that “roughly $54 billion has been invested in new natural gas pipeline capacity in the United States since 2009 .Nearly double that – another $104 billion – is planned between 2016 and 2018.”). 101 See generally Understanding Eminent Domain, Fleeson Gooing (Feb. 6, 2013), http://www.fleeson.com/news/fleeson-publications/understanding-eminent-domain (“Condemning authorities generally begin by negotiation with the landowner. The authority makes a money offer to the landowner. The landowner can review the proposed taking and the compensation offered and can settle with the authority . . . . Many cases are concluded in this manner.”). 102 See Chris Baronzzi, “Oil and Gas Pipeline Companies Can Condemn Private Property in Ohio,” Oil & Gas Law Report (Oct. 19, 2012), http://www.oilandgaslawreport.com/2012/10/19/oil-and-gas-pipeline-companies-can-condemn-private-property-in-ohio/ (stating that the Natural Gas Act and state legislation allows natural gas companies to condemn private property for “public use”).

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both state and federal.103 In certain circumstances, this authority has been granted to private entities that seek to condemn property for a public use.104

As oil and gas infrastructure has expanded in recent years, the number of condemnation proceedings has increased.105 This upsurge in condemnation has been followed with an increase in property owners’ challenges and a general outcry from the public regarding the taking of property by private, for-profit companies.106 Property owners have recently challenged whether the takings were for public use, were allowed by statute, or even whether the statute was constitutional. These developments have mostly occurred at the state level because once an interstate pipeline is approved by FERC, and condemnations filed in the U.S. District Courts, there is little a property owner can do to challenge the authority of the condemnor.

What follows below is a summary of recent condemnation developments across the United States that directly involve oil and gas operations or could have an impact on oil and gas operations. It is not intended to be an exhaustive list, but merely a starting point for the condemnation practitioner to begin his or her journey into the age-old realm of eminent domain.

103 Origins of Power, USLegal.com, https://eminentdomain.uslegal.com/origins-of-power/ (“The right [of eminent domain] is an inherent power of the sovereign and exists in a sovereign state [even without] any specific recognition.”) (last visited June 15, 2017).104 See Pipeline Easements, Biersdorf & Associates, http://www.condemnation-law.com/pipeline-easements/ (last visited June 15, 2017) (“Utility companies typically have the power of eminent domain to acquire property for their infrastructure project (pipeline projects, transmission lines) if negotiations with landowners cannot be reach.”). 105 See Condemnation for Energy Corridors: Land Acquisitions for Pipeline, Transmission, Faegre Baker Daniels LLP (Aug. 1, 2009), https://www.faegrebd.com/condemnation-for-energy-corridors-land-acquisitions-for-pipeline-transmission (stating that demand for natural gas pipeline corridors has grown in recent years).106 See generally Sammy Fretwell, Energy Company Trying to Condemn Land from Reticent Property Owners, TheState.com (July 7, 2016), http://www.thestate.com/news/local/article88332132.html (showing common property owner complaints to natural gas pipeline development through eminent domain).


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[2] — Summary of Recent Condemnation Legislation or Court Rulings Involving and Impacting Oil and Natural Gas Infrastructure. [a] — Georgia.

During the 2015- 2016 legislative session, the Georgia legislature passed House Bill 1036,107 which placed a moratorium on petroleum pipeline developers’ use of eminent domain authority, pending further study by a special commission. The moratorium was set to expire on June 30, 2017.108 In the final days of the 2017 legislative session, the Georgia legislature passed a compromise bill that contains several provisions aimed at protecting the environment and property owners.109 The Georgia legislature declined to include a ban on petroleum pipelines in the coastal counties as many had advocated.110

[b] — Kentucky.Bluegrass Pipeline Co., LLC v. Kentuckians United to Restrain Eminent Domain, Inc.

Bluegrass sought to construct a pipeline to carry NGLs “from the Marcellus and Utica shale formations in Ohio, Pennsylvania and West Virginia to the Gulf of Mexico.”111 Landowners sought a declaration that Bluegrass did not have the authority to exercise eminent domain because it was not a public utility and that there was no public service.112 The Kentucky Supreme Court agreed with the landowners.113

107 https://gov.georgia.gov/sites/gov.georgia.gov/files/related_files/document/HB%201036_0.pdf. Last viewed May 21, 2017.108 https://gov.georgia.gov/sites/gov.georgia.gov/files/related_files/document/HB%201036_0.pdf. Last viewed May 21, 2017.109 https://gov.georgia.gov/sites/gov.georgia.gov/files/related_files/document/HB%20413%202017.pdf. Last viewed May 21, 2017.110 Id.111 Bluegrass Pipeline Co., LLC v. Kentuckians United to Restrain Eminent Domain, Inc., 478 S.W.3d 386, 388 (Ky. Ct. App. 2015).112 Id. at 389. 113 Id. at 388.


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The court found that the legislature intended to delegate eminent domain authority only to those entities that are, or will be, regulated by the Public Service Commission to provide public utilities.114 Bluegrass was not a public utility.115 Furthermore, the court held that because the NGLs were only being transported through Kentucky and “not reaching Kentucky consumers, then Bluegrass and its pipeline cannot be said to be in the public service of Kentucky.”116 Accordingly, Bluegrass lacked the ability to condemn property through eminent domain.117

Bluegrass was distinguished in K. Petroleum v. Property Tax Map No. 7 Parcel 12.118 The district court determined that K. Petroleum was regulated by the Public Service Commission. Additionally, and arguably more important regarding the differences between Bluegrass and K. Petroleum, is that K. Petroleum’s pipeline actually served Kentucky customers rather than simply passed through the state.119

[c] — Ohio.Kinder Morgan Utopia, LLC v. PDB Farms of Wood Co., LLC.

Kinder Morgan proposes to construct a pipeline to carry petroleum products from Ohio to a plastics manufacturing facility in Ontario, Canada.120 Landowners along the pipeline’s route objected and the trial court held a necessity hearing to determine whether a public use existed.121 The court held that it did not and rejected Kinder Morgan’s attempt to exercise the power of eminent domain.

114 Id. at 392. 115 Id. 116 Id. 117 Id. 118 K. Petroleum v. Prop. Tax Map No. 7 Parcel 12, 2016 U.S. Dist. LEXIS 30620 (E. D. Ky. Mar. 10, 2016). 119 Id. at *13. 120 Kinder Morgan Utopia, LLC v. PDB Farms of Wood Co., LLC, Wood County, Ohio No. 2016CV0220 (Ct. Com. Pl. Oct. 12, 2016).121 Id at Page 1.


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Referring to the prior Ohio Supreme Court precedent, the trial court recognized that the concept of public use has been expanded but that Norwood drew a line in the sand that found economic development alone is not sufficient to satisfy public use.122 The trial court pointed out that the pipeline would not include energy distribution to meet the needs of the Ohio public, that the petroleum products would be transported to one, private, Canadian manufacturer and that there was only one shipper of petroleum products.123 The trial court put it bluntly:

There is no anticipated circumstance that would show a benefit to the citizens of Ohio or even for that matter, the United States. Thus, it is clear that the Utopia Pipeline does not benefit the public in any way and therefore the property rights of the owners should not be burdened with the encumbrance.124

The trial court also rejected Kinder Morgan’s assertions it was a common carrier, with the attendant eminent domain authority.125 For the same reasons noted above, the proposed pipeline would provide no public benefit and therefore is not a common carrier as a matter of fact.126

Kinder Morgan has appealed to the Ohio 6th District Court of Appeals which has stayed dozens of condemnation matters associated with the pipeline project. In its appeal, Kinder Morgan, asserts that the pipeline qualifies as a public use because it is a statutory common carrier and that the pipeline promotes the development of oil and gas production in Ohio. Although it appears the second argument goes against the line in the sand drawn by Norwood, another appellate court in Ohio has accepted the argument (see Sunoco below).

The landowners also challenged Kinder Morgan’s proposed pipeline via a § 1983 action filed in the U. S. District Court by arguing that the

122 Kinder Morgan Utopia, LLC v. PDB Farms of Wood Co., LLC, Wood County, Ohio No. 2016CV0220 (Ct. Com. Pl. Oct. 12, 2016).123 Id. at Page 5.124 Id. at Page 5.125 Id. at Page 6.126 Id.


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state delegation of eminent domain authority to Kinder Morgan without oversight from any Ohio governmental or regulatory body violated due process under the Fourteenth Amendment to the U. S. Constitution.127 The district court appeared dubious of the landowners’ claims when it declined to grant landowners’ motion for a temporary restraining order because it believed the landowners lacked both a strong likelihood of prevailing and an irreparable injury.128

Sunoco Pipeline L. P. v. Teter129

Similar to Kinder Morgan, Sunoco sought to construct a pipeline to move pure propane and butane which were extracted from the raw petroleum products obtained from Utica and Marcellus shale deposits in Ohio.130 Landowners first challenged Sunoco’s eminent domain authority by stating propane and butane were not petroleum, which meant Sunoco was not a statutory common carrier.131 The court disagreed and found that pure propane and butane are considered petroleum as evidenced throughout other statutes, the technical and industry definition and historically.132

By statute, a company is a common carrier in Ohio when engaged in the business of transporting petroleum through pipelines for the public.133 Landowners did not dispute that Sunoco was organized to transport petroleum and that Sunoco had offered shipping to the general public during a FERC open season period and that 10 percent of the pipeline’s capacity was still available to the general public.134 Landowners only disputed that petroleum was not being transported because pure propane and butane was not petroleum.135 With the determination that pure propane and butane

127 See Cox v. State, 2016 U.S. Dist. LEXIS 115184 (N. D. Oh., Aug. 29, 2016). 128 Id. at *2.129 Sunoco Pipeline L. P. v. Teter, 63 N.E.3d 160 (Oh. 2016).130 Id. at 162. 131 Id. at 164. 132 Id. at 164-67. 133 Id. at 170-71. 134 Id. at 171.135 Id.


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were petroleum, the court easily dispensed with the first part of landowners’ challenge by finding Sunoco was a statutory common carrier.136

The landowners’ second challenge asserted that the pipeline was not necessary and for a public use. First, the court found that the evidence supported public use.137 The construction of the pipeline would serve to move petroleum products extracted from Ohio to market.138 Without sufficient pipeline infrastructure, production would be stifled, along with drilling and payment of royalties. Additionally, propane and butane are used to heat homes or as additives to gasoline. “Thus, the transportation of propane and butane provides more than economic benefit to Ohio, it provides some necessities of life.”139 It didn’t matter to the court that there were no off-ramps from the pipeline in Ohio:

As with any exploration of oil and gas, there is some speculation. Although there is no off ramp in Ohio’s plan as of now, there may come a time when an off ramp is added because a cracker plant is built in the area. The Ohio Supreme Court in Norwood, indicated the public use test requires flexibility and consideration of diverse local conditions. These are diverse local conditions we must consider.140

With Kinder Morgan and Sunoco, it appears there may soon be some interesting and significant law regarding the use of eminent domain by pipeline companies coming from Ohio.

[d] — Pennsylvania.Robinson Twp. v. Commonwealth141

This is an extensive decision that addresses the ongoing challenges and concerns regarding Act 13, a sweeping law regulating the oil and gas industry,

136 Id.137 Id. at 173. 138 Id. 139 Id. at 174. 140 Id. at 173-74 (internal citations omitted). 141 Robinson Twp. v. Commonwealth of Pa., 147 A.3d 536 (Pa. 2016).


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passed by the Pennsylvania legislature in 2012.142 It is important for purposes of this chapter because a section of the Act that addressed the exercise of eminent domain authority for gas storage by a “corporation empowered to transport, sell or store natural gas or manufactured gas”143 was declared unconstitutional by the Robinson court.144 Specifically, the court held that the provision violated both the U.S. and Pennsylvania constitutions regarding the taking of private property.145

In defense of the provision, the Pennsylvania Attorney General and Pennsylvania Public Utility Commission (PUC) argued that the provision was constitutional because it only authorized public utilities, which have obtained certificates of convenience to condemn property.146 The court explained that the state and federal constitutions limit the exercise of eminent domain in that private property may only be taken to serve a public purpose.147 To satisfy the public purpose requirement, “the public must be the primary and paramount beneficiary of the taking.”148 Furthermore, since condemnation is in “derogation of private property rights,” statutes authorizing its use are “to be strictly construed in favor of landowners.”149 With this legal backdrop, the court rejected the claims of constitutionality.150

The court disagreed that the provision was limited to public utilities.151 The court explained that the language was broad and encompassed entities that were not public utilities and at times were explicitly exempted from PUC regulation.152 The court held that this broad grant of authority would allow takings where the public was not the primary and paramount beneficiary and

142 58 Pa. Cons. Stat. § 3241. 143 Id. 144 Robinson, 147 A.3d 536, 544. 145 d. at 584 n.56 (“Both [federal and state] constitutional provisions prohibit the taking of private property for public use without just compensation.”) (internal quotations omitted). 146 Id. at 585. 147 Id. at 541. 148 Id. at 585.149 Id. at 586. 150 Id. at 587.151 Id. at 588152 Id.


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that the benefit, if any, was speculative and merely incidental.153 As a result, the court determined that the provision was unconstitutional.154

In re Condemnation of Sunoco Pipeline, L.P.155

Across the border in Pennsylvania, Sunoco also ran into opposition to its proposed pipeline from landowners.156 Landowners mounted an unsuccessful challenge Sunoco’s authority to condemn their property for the construction of its pipeline.157 In holding against the landowners, the court confirmed that Sunoco was a public utility regulated by the Pennsylvania Public Utility Commission (PUC) in that the pipeline was both an interstate (FERC regulated) and intrastate (PUC regulated) pipeline.158 It was intrastate because product would be loaded and unloaded at points within Pennsylvania.159 According to the court, because Sunoco was planning on operating an intrastate pipeline that is regulated by the PUC, it is a public utility empowered to exercise eminent domain.160 Sunoco also happened to have the requisite certificates of public convenience from the PUC.161

Landowners also attempted to challenge Sunoco’s eminent domain authority by arguing there was no public need.162 However, because Sunoco possessed certificates of public convenience from the PUC, landowners’ collateral challenge to those orders was precluded.163 The court held that determinations of public need for a proposed utility service were to be made

153 Id.154 Id. at 588-89. 155 In re Condemnation of Sunoco Pipeline, L.P., 143 A.3d 1000 (Pa. 2016).156 Id. at 1011-12. 157 Id. at 1028.158 Id. at 1016.159 Id. at 1007.160 Id. at 1026.161 Id.162 Id. at 1017.163 Id. at 1018.


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by the PUC, and not the courts.164 Once settled, the public utility had the authority to condemn property in accordance with its certificate.165

[e] — South Carolina.Similar to Georgia, South Carolina passed legislation in June of 2016,

Senate Bill 868, that placed a three-year moratorium on the use of eminent domain by “for-profit pipeline companies, including publicly traded for-profit companies, that are not defined within this title as a public utility.”166 The moratorium ends on June 30, 2019.167

[f] — Virginia.Atl. Coast Pipeline, LLC v. Avery168

Atlantic sought entry to several parcels to conduct surveys and examinations in order the collect information for submission to FERC as part of FERC’s approval process.169 After having been denied access by several landowners, Atlantic sought a declaration from the court granting Atlantic the authority to enter the properties without interference by the landowners pursuant to Virginia statute.170 Landowners responded, raising several challenges to Atlantic’s request to enter their property.171

Among the challenges, landowners, citing Bluegrass, argued that Atlantic was not a public service company under Virginia law and therefore lacked eminent domain authority.172 The court incorrectly believed that Bluegrass solely utilized titles and headings to conclude that eminent domain authority was only granted to public utilities. Citing Virginia law to the contrary, the court poorly distinguished Bluegrass from the matter at hand, even though Bluegrass cited similar Kentucky law regarding the use of titles and headings

164 Id. 165 Id.166 2015-16 SC. Act 205. 167 Id. 168 Atl. Coast Pipeline, LLC v. Avery, 92 Va. Cir. 387 (2016).169 Id. at 388. 170 Id.171 Id.172 Id. at 389.


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in statutory interpretation. The court went on to hold that “based upon the clear unequivocal language of the statute,” an entity does not need to be a public service company to exercise the right of eminent domain under the statute.173

Regardless, the court concluded that Atlantic was a public service company because it would be a natural gas utility which is defined as “an investor-owned public service company engaged in the business of furnishing natural gas service to the public.”174 Furthermore, the public use requirement is met by the Virginia statute Atlantic sought entry pursuant to because “it allows the natural gas companies to gather . . . information required . . . by giving it the ability to enter property and conduct a minimally invasive survey. The statute thus facilitates the ‘transportation and selling’ of natural gas, and thereby serves a public purpose.”175

Landowners also asserted that the temporary entry of Atlantic upon the landowners’ property was a taking. The court disagreed and explained that the right to exclude is not absolute and that numerous exceptions to the right to exclude have been recognized by Virginia and other jurisdictions.

[g] — West Virginia.Mt. Valley Pipeline, LLC v. McCurdy176

Mountain Valley Pipeline, LLC (MVP) plans to construct and operate a nearly 300-mile pipeline through West Virginia and eventually terminating in Virginia.177 Because it is an interstate pipeline, MVP is seeking a certificate of public convenience and necessity from FERC.178 As part of the FERC application, surveys are conducted to determine the final route of the pipeline and to identify and address potential environmental concerns such as wetlands or endangered species.179 Unfortunately, the Natural Gas

173 Id. at 390-91. 174 Id. at 391.175 Id. at 394-95. (Citing Charlottesville Div. v. Dominion Transmission, Inc., 138 F. Supp. 3d 673, 2015 U.S. Dist. LEXIS 132554, *38-39 (W. D. Va. 2015)).176 Mt. Valley Pipeline, LLC v. McCurdy, 793 S.E.2d 850 (W. Va. 2016).177 Id. at 852.178 Id.179 Id. at 853.


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Act and its implementing regulations, which set forth FERC’s certification process for pipelines, does not provide for precondemnation entry. As a result, MVP sought to use W. Va. Code § 54-1-3180 to conduct the required surveys for its FERC application.181

The McCurdys challenged MVP’s right to survey under W. Va. Code § 54-1-3 by arguing the pipeline was not for a public use.182 The W. Va. Supreme Court agreed and held that only those invested with the power of eminent domain could use the precondemnation right of survey found in W. Va. Code § 54-1-3.183 For a private entity like MVP to be invested with the power of eminent domain, “the purpose for which said company desires to appropriate land [must be] for a public use as authorized by W. Va. Code § 54-1-2.”184 MVP met some of the requirements of W. Va. Code § 54-1-2 because it specifically provides for the construction, maintenance and operation of pipelines for transporting natural gas; but only for a public use.185

The supreme court evaluated the evidence presented in the circuit court and determined that MVP was taking private property for a private use because the use of the pipeline to transport gas from unaffiliated, West Virginia producers and the delivery of gas to West Virginia consumers was purely speculative.186 The court elaborated: “MVP has been unable to identify even a single West Virginia consumer, or a West Virginia natural gas producer who is not affiliated with MVP, who will derive a benefit from MVP’s pipeline.”187 Furthermore, the court was not persuaded by the fact that consumers outside West Virginia would benefit.188 The court held that the “State of West Virginia may exercise the right of eminent domain or authorize the exercise of that right only for the use and benefit of West Virginians.”189

180 W. Va. Code § 54-1-3 (2016). 181 Mt. Valley Pipeline, 793 S.E.2d at 854. 182 Id. at 856.183 Id.184 Id. at Syl. Pt. 2. 185 Id. at 858.186 Id. at 860.187 Id.188 Id. at 860-61.189 Id. at 862.


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MVP was now precluded from entering the McCurdy’s and others’ property for a precondemnation right of survey pursuant to W. Va. Code § 54-1-3, unless they secured that right another way such as negotiating a purchase.190 At first blush, some may think this puts a stop to the entire project. It does not. As explained in the concurring opinion in footnote eight: “[T]he pipeline project is not ‘doom[ed]’ by a ruling in the McCurdys’ favor.

There are alternate ways for [MVP] to obtain the relief it seeks and one such way is to obtain a conditional permit from [FERC]. The prospect of a conditional FERC permit . . . is a game changer in that ‘defendant need not employ West Virginia law to conduct the necessary surveys on plaintiffs’ land, but may conduct surveys on those properties to which other landowners [90%] have granted access, receive a conditional FERC Certificate to obtain immediate possession of the land through a preliminary injunction, and then conduct the remaining surveys necessary for an unconditional FERC Certificate.’191

Therefore, if MVP receives a conditional certificate from FERC, it can then file for condemnation in the U.S. District Courts and request a preliminary injunction to enter the land to obtain the necessary surveys. The decision appears to have merely delayed the inevitable, at least with regard to interstate pipelines regulated by FERC.

§ 2.07. Conclusion. As outlined and discussed in full detail above, there is a significant

need for additional gas and oil pipeline infrastructure for the industry to be successful in the future. Also as detailed above, several steps have been taken to improve the same, including the aforementioned FERC approved infrastructure construction projects within the continental United States, President Trump’s recent treatment of issues surrounding Oil and Natural Gas Pipelines, new and updated regulations of pipeline safety, and recent legal developments concerning eminent domain for oil or gas pipeline infrastructure.

190 Id. at 862-63.191 Id. at 864-66. (Citing McCurdy v. Mt. Valley Pipeline, LLC, 2015 U.S. Dist. LEXIS 96062 (granting McCurdys’ motion to remand the matter back to the state circuit court)).

cite as 38 energy & min. l. inst. 2 (2017) chapter 2 …...cite as 38 energy & min. l. inst....

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