Eminent domain plays a key role in U.S. pipeline projects

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The pipelines are coming, and with them, the potential for eminent domain lawsuits that leave property owners over a barrel.

This month Columbia Gas Transmission filed two federal eminent domain lawsuits, demanding access to land in Allegheny, Indiana, Washington and Westmoreland counties for pipeline reconstruction or other infrastructure work.

Uncommon until recently, such complaints could be a sign of things to come as gas companies upgrade and expand pipelines statewide. Texas Eastern Transmission, for instance, is seeking approval for $520 million in pipeline expansions and improvements to carry gas from Pennsylvania's Marcellus to New York, New Jersey, Ohio, Mississippi and Louisiana.

"I imagine that there are going to be increased [eminent domain lawsuits], at the very least," said Gerald R. O'Brien, an Irwin-based attorney who represents a defendant sued by Columbia.

When pipeline companies invoke eminent domain, there isn't much the targeted landowner can do to prevent or even slow the construction.

"Once they file their papers, they generally have to put up some sort of bonding amount. And with that bonding amount, they have the right to go into the property and do whatever they need to do," said Greensburg-based attorney George Kotjarapoglus, who represents another defendant. "You can't stop it."

PG graphic: Pipelines in Western Pa.
(Click image for larger version)

Columbia declined comment through a spokeswoman.

Earlier this month, Columbia sued five landowners with whom, it claimed, it could not reach agreement on terms for the replacement of pipeline segments in Allegheny, Westmoreland and Indiana counties. The lawsuit said that to do the work, the company needed temporary access -- beyond the 50-foot-wide easements it already has -- to the properties, which total 392 acres. The complaint said that the company needs to start reconstruction of the line by May 30.

The company's attorneys wrote in the lawsuit that parts of a pipeline known as Line 1711 have to be replaced, and all of the affected landowners except the defendants had agreed to allow the needed access. The company wants U.S. Magistrate Judge Robert C. Mitchell to issue an order of taking under its eminent domain rights and determine the compensation due to the landowners.

The defendants include an 87-year-old man and his 75-year-old wife in Delmont; homeowners in Elizabeth Township and Salem; Cherryhill farmers; and a company that is developing housing in North Huntingdon. All declined to talk about their cases.

Mr. Kotjarapoglus, who represents the Delmont couple, said they were puzzled when the gas company offered them a modest payment in return for their signatures on papers they didn't fully understand.

"My clients are elderly. They don't need a lot of anxiety about this kind of lawsuit," said Mr. Kotjarapoglus. But they also have questions about whether the replacement project will impede access to their property, whether the pipe will be enlarged and what it will carry.

Another defendant, North Huntingdon developers Cole Land Partners, has been involved in litigation with Columbia since January. That's when Columbia sued Cole, saying the developer inappropriately put a sewer drain box and electric boxes within the gas line right-of-way, which hinder Columbia's efforts inspect and upgrade Line 1711.

Mr. O'Brien, who represents Cole, wrote in his answer that the gas company in 2006 granted verbal approval for the encroachments on its right-of-way. It said that only in August 2012 did Columbia tell the developers that the pipeline suffered "corrosion and/or other problems." Mr. O'Brien wrote that removing the sewer drain now would require the redesign of a road and render two home sites undevelopable.

Mr. O'Brien said that once the Federal Energy Regulatory Commission, or FERC, approves a pipeline plan, "there's not a ton you can do" except haggle.

What if a company wants to build a new pipeline across your land? As a defense attorney, he'd "certainly take a look at every aspect of the property -- what they've used it for, how long they've had it, whether it's the least intrusive means" of advancing the pipeline, he said.

"What's currently on it?" he asked. "What's it being used for? What's it currently zoned?" If the property owner can show that he is taking steps to develop it, the court might factor that into its calculation of the value, he said.

Also this month, Columbia sued two Claysville residents who own 90 acres in Donegal. The eminent domain lawsuit in U.S. District Court said that the company owns the mineral rights under the property pursuant to a 1967 lease, which the landowners, Duane Douglas Wolfe and Bridget A. Wolfe, contend is invalid.

That lawsuit added a federal component to a legal fight that started in state court. There the Wolfes have asked a judge to confirm that they, and not Columbia, own the oil and gas rights for their 90-acre parcel.

Columbia's federal lawsuit said that the company stores gas underground, above a layer of sandstone. It said the Wolfes are allowed to continue to use the property "in any manner that will not interfere with Columbia's use and enjoyment of its rights," but the company wants to "re-secure" its rights in preparation for "constructing, maintaining, operating, altering, testing, replacing and repairing" its storage system there.

The Wolfes could not be reached, and their attorney declined comment.

The classic use of eminent domain is to take property needed by government to build a road or other public piece of infrastructure, said Amanda Olejarski, an assistant professor for public administration at Shippensburg University of Pennsylvania. She wrote the book "Administrative Discretion in Action: A Narrative of Eminent Domain," published in March.

Governmental eminent domain powers have been growing for more than 115 years, she said, to the point where courts have upheld the taking of property from one private owner for the purpose of transferring it to another, as long as it benefits the public.

Though a gas pipeline certainly benefits the gas company, federal policy makers also have decided that it benefits the public, Ms. Olejarski said. The Natural Gas Act delegates eminent domain powers to the pipeline companies, subject to court approval. As a result, she said, "there's no mechanism in place to dispute the taking."

That gives pipeline companies great leverage in negotiations with the property owners along their desired route, she said.

"Holding out can be very dangerous to property owners," she said. "You're rolling the dice," she said, because the court is going to assess the property based on market prices, not owner sentiment.

The next big new pipeline construction slated for Western Pennsylvania, according to FERC filings, is Texas Eastern Transmission's TEAM 2014 project. The project will include work in Fayette, Indiana, Westmoreland and five other counties.

"We're in the very early stages of this project," said Marylee Hanley, director of stakeholder outreach for Spectra Energy, which owns Texas Eastern Transmission.

"Our goal is to work cooperatively with the landowners to acquire either permanent or temporary work space for our construction project," she said, declining further comment on whether eminent domain might be used.

Last year Texas Eastern Transmission sued a married couple over access to two tracts of land in German Township, Fayette County, which it needed to cross with a 36-inch pipeline. The company withdrew the case less than three weeks after it was filed with no explanation.

Also in 2010, Texas Eastern Transmission LP sued Jefferson Township, Greene County, landowners because they wouldn't agree to add to an existing pipeline easement to accommodate the construction of an additional line. One of the exhibits in the case was the agreement allowing the original pipeline, for which the prior owners of the property were paid $195 in 1951.

The case was settled in early 2011, according to docket notes.

In 2010, Columbia sued a man over access to his 250-acre property in Richhill, Greene County. The company claimed that it needed to modify the pipeline because of production in the Marcellus Shale area and offered the landowner $39,706.

Columbia later withdrew the lawsuit, but only after Mr. Lucey's attorney made it clear that his reticence wasn't driven by opposition to gas production. "The location of the pipeline as established," the attorney wrote, "will interfere with the location of a Marcellus Gas Well drilling pad" on Mr. Lucey's property.

region - businessnews - marcellusshale

Rich Lord: rlord@post-gazette.com, 412-263-1542 or Twitter @richelord.


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