Sunoco Pipeline, A Common Carrier, is Facing Varied Opposition to its Efforts to Avoid Zoning Laws

An Elaborate Plan by Sunoco Logistics Partners L.P. to Transport Marcellus Shale Natural Gas Liquids by Pipeline Across Pennsylvania to Marcus Hook is Running into Resistance.

Published in the Philadelphia Inquirer
Written by: Andrew Maykuth, Inquirer Staff Writer

sunocoAn elaborate plan by Sunoco Logistics Partners L.P. to transport Marcellus Shale natural gas liquids by pipeline across Pennsylvania to Marcus Hook is running intoresistance. The company’s subsidiary, Sunoco Pipeline L.P., last month filed an application with the Pennsylvania Public Utility Commission to sidestep local zoning restrictions to build pump and valve control stations in 31 municipalities crossed by the pipeline.

Sunoco Pipeline argues that it is a “public utility corporation,” and that the PUC can exempt the construction of the above-ground structure from local zoning if it determines the buildings are “reasonably necessary for the convenience or welfare of the public.” A pumping station slated to be built on a two-acre site at the corner of Boot Road and Route 202 in West Goshen Township has triggered alarm. Two suburban Philadelphia state senators on Wednesday wrote to the PUC, contending that the exemptions would conflict with the Pennsylvania Supreme Court’s decision in December upholding local zoning rights over oil and gas activity. “At the very least, we urge you to hold a public hearing in Chester County before any decision is made,” argued Sen. Andy Dinniman (D., Chester) and John Rafferty Jr. (R., Montgomery).

Sunoco Pipeline, which is based in Philadelphia, says it needs to build 18 pumping stations along the pipeline to push propane and ethane extracted from Marcellus Shale natural gas in Western Pennsylvania to Marcus Hook, where the company has an export facility. The proposed West Goshen pumping station, housed in a 24-foot-high building, would include a 34-foot-high “flaring” stack to burn off fuel during maintenance procedures. Sunoco also wants to build 17 valve control stations along the pipeline to allow the operators to control pressure remotely.

The PUC action would relieve Sunoco of the need to get separate zoning approval in 31 towns. “We believe that our above-ground facilities are part of the state’s critical energy infrastructure, as with public utilities, and should be treated as such,” said Jeffrey Shields, a Sunoco spokesman. Sunoco has asked the PUC for an expedited decision. Formal protests and petitions to intervene are due by April 21.

The pipeline project, called Mariner East, was announced in 2010 as a means of transporting propane and ethane from the Marcellus Shale region in Western Pennsylvania to the Delaware River, where the materials can be exported. Local officials also hope the pipeline can fuel industrial development. The Mariner project involves converting an existing eight-inch pipeline that carried fuel from Philadelphia refineries to Western Pennsylvania. The project requires about 45 miles of new pipeline in Western Pennsylvania. Sunoco’s efforts to acquire rights of way by eminent domain have run into resistance.

Sunoco last year announced plans to build a second Marcellus liquids pipeline to Marcus Hook that it initially called Mariner East 2 but has since been renamed the Pennsylvania Pipeline. Unlike the Mariner East project, the new pipeline will need new rights of way.

Harrisburg lawyer Michael Faherty, who has fought Sunoco’s efforts to survey the new route, argues that the company is not a “public utility corporation” under the law.

A Proposed Natural Gas Pipeline Raising Issues for Nine Columbia County Townships

columbia_pipeline

By: Michael Lester
Publishedn in Press Enterprise
 

Land surveyors plan to visit about 300 properties in nine Columbia County townships in the coming months as an energy company maps a route for a proposed natural gas pipeline. Maps of the proposed line show that it would bisect the county along a north-south route, from Sugarloaf Township north of Benton to Cleveland Township south of Catawissa. Williams Partners, a Tulsa, Okla., energy firm, also plans to build a 25,000-horsepower compressor station somewhere in Columbia County. Preliminary maps indicate it will be located near the county’s northern line.If Williams gets Federal Energy Regulatory Commission approval for the 176-mile line through six Pennsylvania counties, it will begin negotiations to buy roughly 55-foot-wide land easements from property owners along its preferred path. If property owners object, Williams will seek the easements through eminent domain in the courts.

“Generally, once the FERC issues a certificate of public convenience and necessity for a project, the company may, by virtue of the authority granted in the U.S. Natural Gas Act, seek authority from the court to obtain the limited rights necessary to construct, operate and maintain a pipeline,” Williams says in its website primer on pipeline construction. Williams hopes to have the $2 billion line flowing with gas by the second half of 2017. It plans to host about a dozen public meetings in May or June in the five counties through which the line would pass.’Be wary’ Columbia County commissioners “would suggest anybody who (gets a letter from Williams requesting a land survey) to certainly get some legal counsel,” said Commissioner Chris Young. Young said if his property was targeted for the line, he would insist Williams pay for any legal bills he might incur for advice. Under Pennsylvania law, landowners can recoup up to $4,000 for legal and engineering fees from a pipeline builder

“But that’s only if a property owner chooses to fight a pipeline, and the pipeline builder goes to court claiming the power of eminent domain”, said lawyer Michael Faherty, who has represented landowners in hundreds of such cases. Faherty, of Lavery Faherty Patterson in Harrisburg, recommends hiring a lawyer to anyone whose property is being eyed by a pipeline firm. “Landowners need to be wary about these companies that come looking to acquire land, they don’t have an obligation to be telling the truth,” Faherty said. “They need to be wary of land agents.”‘Risk of explosion’ Faherty said the price landowners may fetch for an easement is based on the amount of property sought as well as the value of a property before and after a line is built.

With before- and after-pipeline appraisals, landowners can negotiate to recoup a loss in property value due to the line, Faherty said. “Some properties can be harmed by visual impact, harm of access and risk of explosion.” Faherty recommends against immediately getting an appraisal, suggesting a landowner first try to negotiate easements with the help of a lawyer. Just last week, Faherty settled an eminent domain case for a pipeline in the Reading area for $50,000. The company originally wanted to pay $3,000 to use a stretch of a business’ property, Faherty said. He said that easements under commercial properties typically fetch more than residential sites.

Expanding the pipeline as proposed now, the “Atlantic Sunrise” pipeline would cut through Columbia, Northumberland, Schuylkill, Lebanon and Lancaster counties, connecting branches of Williams’ Transco pipeline to the north and south. The project is fueled by the reserves of natural gas in the Marcellus Shale of northeast Pennsylvania that can be routed through the line to customers in Atlantic seaboard states, according to Williams.Williams spokesman Chris Stockton stressed that the company’s plans are preliminary. This means exact locations have not been determined for both the compressor station, a building of electric motors that pushes gas through the line, and the route of the 42-inch line itself.

The number of properties through which the pipeline will pass in Columbia County will “significantly decline” once the route is finalized, Stockton added. Stockton said half the route for a recent Williams project in Susquehanna County and New York was altered after public meetings, at which the firm heard concerns from landowners. Transco is the largest-volume natural gas pipeline system in the U.S., delivering natural gas through a 10,200-mile network.

Funding Increase for PennDot Projects

Recent funding legislation will significantly increase PennDOT projects in the Allentown area as discussed below, and statewide.

Funding puts PennDOT projects back in gear

mc-route-22-widening-eps-20140224

By Dan Hartzell, Of The Morning Call

Plans for widening Route 22 through the heart of the Lehigh Valley and other long-term transportation projects are back in gear, regional planners said Monday, thanks to last year’s passage of a funding bill in Harrisburg. Widening 22 between 15th Street and Airport Road has been an on-again, off-again proposition for years, but the anticipated $2.3 billion in new annual state road funding by 2017 gives the project and smaller ones across the Valley renewed impetus. The latest Route 22 estimate puts its widening cost at $183 million.

New items on a local to-do list include resurfacing Route 33 between Interstate 78 and Wind Gap for $85 million; reconstructing the Route 309/Tilghman Street intersection for $48.5 million; rehabbing Bethlehem’s Hill-to-Hill Bridge for $38 million; and resurfacing Route 22 from 15th Street west to I-78, and from Route 191 east to the Easton area 25th Street exit. No start date has been established for any of the projects, which are expected to unfold over a 12-year period from 2015 to 2026.

“We’ll start to lay out the phasing of projects” in the months and years ahead, depending on the availability of funding, said Mike Rebert, district executive for PennDOT’s Allentown-based District 5. Projects selected for a 12-year plan are moved to four-year Transportation Improvement Programs, putting them closer to a start date. The TIPs are adjusted every other year as new information becomes available. More projects could be added to the hopper. A shortage of state money had put many programs on hold. No longer.

“This is the first time in I don’t know how many years that we’re able to talk about new projects” after a chronic shortage of new transportation revenue, said Larry Shifflet, of PennDOT’s central office in Harrisburg. “It allows us to advance things we’ve been planning for years,” Lehigh Valley Planning Commission Executive Director Becky Bradley said after Monday’s regional meeting.

After years of debate, a transportation funding bill passed the state House on Nov. 21. Rep. Mike Schlossberg, D-Lehigh, was the only Lehigh Valley region House member to vote for it. Voting no were Democrats Daniel McNeill, Steve Samuelson and Robert Freeman, and Republicans Justin Simmons, Ryan Mackenzie, Julie Harhart, Gary Day, Marcia M. Hahn and Joe Emrick. The measure had passed the Senate the previous day, with Sens. Pat Browne, R-Lehigh, and Bob Mensch, R-Berks, voting in favor, and Lisa Boscola, D-Northampton, voting no. Gov. Tom Corbett signed it into law, providing billions in extra transportation spending through an increase in a per-gallon gasoline tax and other fee increases. Experts say pump prices could climb 28 cents by 2018 under the law. Foes expressed concern about that and about effects on consumers and the economy.

Some members of the Lehigh Valley Transportation Study — primarily municipal officials who advise PennDOT on roadwork needs within their municipalities to help the state prioritize the work — initially were reluctant to vote to approve the preliminary 12-year list out of concern their projects might be passed over. Rebert assured them PennDOT officials in Harrisburg hope to secure general approvals of “the direction we’re going” at the regional level to keep plans advancing. Though details may change as the years progress, state officials are confident that projects on the TIPs list will go forward.

Judge Rules that Sunoco Pipeline Does Not Have Eminent Domain Power

deniedOn February 24, 2014 President Judge Stephen P. Linebaugh of York County, Pennsylvania, denied the Sunoco Pipeline Motion of for Survey Rights for the Mariner East 2 Pipeline.  The Judge adopted the argument of Lavery Faherty Patterson and ruled:

Defendant argues that Plaintiff is not in fact a “public utility corporation” under the Business Corporation Law. Defendant first argues that Plaintiff is not a public utility regulated by FERC
and is therefore not a public utility corporation under the Pennsylvania Business Corporation Law.  The Court agrees.  As Plaintiff repeatedly argues, it is regulated by FERC pursuant to
the Interstate Commerce Act, and not the Natural Gas Act, as a common carrier, and not as a public utility.  It therefore does not fall within the definition of a public utility corporation entitled to condemn property.

The ruling represents a significant victory for the protection of the property rights of those threatened by the Mariner East or the Mariner East II project.

Sunoco Pipeline – Survey Rights

survey_rightsMike Faherty appeared in the York County Court of Common Pleas on February 6, 2014, to oppose a Sunoco pipeline (Mariner East) request for an immediate right to survey a Mechanicsburg property.  Mike argued that the request should be denied because federal jurisdiction preempted the state jurisdiction or because Sunoco failed to correctly start litigation per Pennsylvania Rules of Civil Procedure. In the alternative, Mike argued for denial of the request because:  (1) Sunoco is not a Condemnor, (2) Pennsylvania Business Corporation Law does not allow eminent domain for propane or ethane transportation, (3) Federal law requires a Certificate of Public Convenience and Necessity, and (4) State law requires a Certificate of Public Convenience and Necessity. The judge approved Mike’s suggestion that the judge accept written argument over the following two weeks.

Property Owners take Sunoco’s Mariner East Pipeline to Court in Washington, PA

Mike Faherty represented multiple property owners vs. Sunoco Pipeline on January 21 before Judge Emery in Washington, Pa.  Mike pointed out that the Sunoco legal authority to date has yet to identify any specific law giving eminent domain power for the Mariner East Pipeline.  Mike also elicited evidence that the appraisal approach was wrong per the Eminent Domain Code and the bond security was inadequate.  Judge Emery may decide the initial four cases within a month.

Pa. Eminent Domain Pipeline Fight Headed to Court

NBC 10 Philadelphia | Sunday, Jan 19, 2014

Ron and Sallie Cox’s house in North Strabane Township is nestled behind a lush forest they are fighting to protect from a new natural gas pipeline inching toward their property.

The couple are so adamant about preserving their land that they have found themselves among more than two dozen property owners in Washington County involved in a complicated legal battle challenging Sunoco Pipeline’s right to cross their land. “It’s a disaster,” Sallie Cox said last week as her attorney prepared their case against the Philadelphia-based company’s claims it’s a public utility and has a right to impose eminent domain powers to enter private property for the 50-foot-wide project.

Arguments in the Cox case will be heard Tuesday in Washington County Court, and it’s outcome likely will set the tone for how the others will play out as Sunoco constructs a 50-mile pipeline from Washington County to Delmont in Westmoreland County. Sunoco began filing declarations of taking in Washington County Court last year, lawsuits that sought to condemn property and have the court approve the amount of bonds it needed to post to cover any damages.

President Judge Debbie O’Dell Seneca ruled the cases are too complicated to hear individually and consolidated them Nov. 11. The Coxes then claimed they were being treated unfairly and challenged Sunoco’s public utility status. Eight others involved in the case also countersued.

As a result, Washington County Judge Katherine B. Emery ruled the countersuits need to be settled before the company can proceed with condemnations, and she will proceed first with hearing arguments in the Cox appeal as to whether Sunoco is a public utility.

“The property owners have their full right to use their property as they wish,” said Harrisburg attorney Michael F. Faherty, who represents the Coxes and nine other property owners. Faherty argued in his Wednesday response to the court that Sunoco needs to obtain eminent domain authorization for the pipeline from the Federal Energy Regulatory Commission, claiming the state court has no jurisdiction in the case. He said some of his clients don’t want Sunoco to take their land, while others feel they have not been offered “persuasive enough prices.”

The Coxes are among those who don’t want the pipeline and have complained that they wouldn’t be allowed to plant anything on the right of way and don’t want to deal with the company spraying to maintain a clear path for the pipeline. “I’m one of the people here who has the most to lose,” said the Coxes’ neighbor, Raymond Romanetti, who races horses and has yet to join the lawsuit. “It’s ridiculous that someone has to hire an attorney to protect their property,” Romanetti said.

In Sunoco’s Jan. 10 answer to the court, its attorneys argue it has eminent domain powers under FERC rules, which permit privately held companies to build an interstate pipeline, court records show.

This pipeline, named Mariner East, would connect to MarkWest Energy’s gas-processing plant in Chartiers Township and hook up to an existing, nearly 20-year-old line crossing Pennsylvania into Delaware. Range Resources of Southpointe is a partner and would ship ethane and propane in the pipeline from MarkWest, company spokesman Matt Pitzarella said. “Obviously, it’s an important project to us,” Pitzarella said.

Sunoco states in court records it no longer wishes to voluntarily negotiate purchase prices for the unsettled cases due to the “anticipated delay” of the project. Company spokesman Jeffrey P. Shields said Sunoco doesn’t comment on pending litigation. When the project was announced in March Sunoco expected construction to be underway before the end of last year.

“We are in the process of clearing right of ways and flagging construction areas, and we started directional drills and boring this week,” Shields said. “We expect to begin installing pipe in the next two weeks,” he added.

The Top Ten Reasons Sunoco Pipeline Does Not Have the Power of Eminent Domain

pipeline3Mike Faherty has described the top ten reasons why Sunoco Pipeline does not have the power of eminent domain for the construction of the Mariner East Pipeline.

10. The posted bonds are inadequate.

9. The purported authorization of a sole director is inadequate.

8. Eminent domain for private enterprise is prohibited.

7. Pennsylvania Public Utility law prohibits the use of eminent domain without a Certificate of Public Convenience and Necessity.

6. The Sunoco effort fails under the State Public Utility Regulation.

5. Sunoco admits that it is regulated by FERC.

4. The required public purpose is lacking.

3. The Pennsylvania Business Corporations law does not provide for eminent domain authority for transmission of natural gas byproducts ethane and propane.

2. The Pennsylvania Business Corporations law is preempted by Federal law as applied by FERC.

And the number 1 reason:
Federal law preempts state law and requires a FERC Certificate of Public Convenience and Necessity.

Property owners threatened with the Sunoco pipeline survey or eminent domain effort are encouraged to contact experienced eminent domain counsel.

Sunoco Pipeline Eminent Domain Effort Denied

pipeline2 Sunoco is attempting to acquire property rights to build a 50 mile section of a project called the Mariner East Pipeline. Sunoco petitioned the Washington County Court for approval of the power of Eminent Domain.  I represent the se property owners and  presented multiple defenses via written and oral argument.  Judge Katherine B. Emery denied the Sunoco Petition and scheduled discovery and a hearing on the property owners’ Complaint in Equity. The Orders of the Judge will allow for presentation of evidence in support of multiple defenses to the attempt to use Eminent Domain power.

 

A Proper Use of Eminent Domain?

The City approval to try to use eminent for this questionable purpose is expected to face strong legal challenges.

California city backs plan to seize negative equity mortgages

By Jim Christie; published in WHTC
Wednesday, September 11, 2013 5:03 a.m. EDT

RICHMOND, Calif (Reuters) – Richmond, California’s leaders approved on Wednesday morning a plan for the city to become the first in the nation to acquire mortgages with negative equity in a bid to keep local residents in their homes. The power of ‘eminent domain’ allows governments to seize private property for a public purpose. Critics say the plan threatens the market for private-label mortgage-backed securities.

Richmond’s city council voted 4 to 3 for Mayor Gayle McLaughlin’s proposal for city staff to work more closely with Mortgage Resolution Partners to put the plan crafted by the investor group for the city to work. Richmond can now invoke eminent domain if trusts for more than 620 delinquent and performing “underwater” mortgages reject offers made by the city to buy the loans at deep discount pegged to their properties’ current appraised prices to refinance them and reduce their principal.

A mortgage is under water when its unpaid balance is greater than its property’s market value. MRP has failed to get similar plans approved by local governments elsewhere – most recently in North Las Vegas, Nevada and earlier this year in San Bernardino County in Southern California – as the mortgage industry and local real estate businesses rallied against them.

But in Richmond, MRP found an ally in a Wall Street-bashing Green Party mayor of one of the San Francisco region’s poorest cities who sees working with the investor group to acquire mortgages as a public purpose if it makes the loans more affordable, averts foreclosures and alleviates blight. Richmond’s residents have been “badly harmed by this housing crisis,” McLaughlin said, defending the plan and partnership with MRP during an often contentious city council meeting that began Tuesday evening and ended early Wednesday morning. “Too many have already lost their homes.”

City council members opposed to the plan countered that using eminent domain would put Richmond at risk of expensive lawsuits that could destroy the city’s finances. “A 1 percent chance of bankruptcy from this program is a deal-breaker for me,” Councilman Jim Rogers told a crowd of about 300 people at the meeting, moved to a city auditorium from the council’s chamber. Other council members warned of a backlash from financial institutions, noting Richmond had no takers last month when the successor to its redevelopment agency put $34 million of bonds up for sale to refinance previous debt. The eminent domain plan had been disclosed to the U.S. municipal bond market.

While housing advocates urged support for the plan, realtor Jeffrey Wright warned that going through with eminent domain could prompt a clampdown in mortgage lending in Richmond or push up mortgage interest rates in the city of about 104,000 residents. Responding to the plan, the Federal Housing Finance Agency recently said it would press Fannie Mae and Freddie Mac to limit or cease its business where such proposals get approved, effectively closing off most mortgage financing there.

Investors holding the mortgages targeted by Richmond dispute altruism motivates the plan and charge the city would lend its eminent domain power to San Francisco-based MRP to split profits from refinancings. The investors have sued through trustees Wells Fargo & Co and Deutsche Bank AG in U.S. District Court to block the plan, which they say relies on them swallowing losses. The two sides square off in court in person for the first time on Thursday. McLaughlin’s proposal directs city staff to work with other local governments interested in the plan, calls for city staff and MRP to resolve its legal issues and confirms the city council would hold votes to seize mortgages by eminent domain if necessary. That would require a supermajority vote of the council.   (Reporting by Jim Christie; Editing by Toby Chopra)

Evidence of Purchase Offers

evidence

The Pennsylvania Supreme Court has decided a case which allowed evidence of purchase offers in addition to the traditional evidence of comparable sales. In Lower Makefield Township v. Lands of Dalgewicz, (No. 33 MAP 2011, Decided 5/29/13) the Supreme Court allowed the property owner to testify to an offer to purchase his property.  An offer letter was admitted into evidence. Both parties stipulated to the authenticity of the offer.  The court reasoned that the owner had provided a sufficient foundation to establish that the offer was made in good faith, by a party acquainted with the value of the property and with sufficient intention and ability to pay.

The case thus blurs the prior bright line distinction that offers were not adequate evidence, while comparable sales were valid evidence. The ruling appears to favor property owners as being the ones to be in receipt of the offers to purchase. Nevertheless, property owners should be mindful that it is possible that a condemnor would uncover evidence of a low offer and attempt to make use of such an offer as evidence. Property owners would be wise to obtain written proof of offers of relatively high purchase offers.