Recently, we posted an article about a lawsuit which was filed against FERC by the Delaware Riverkeeper and the Delaware Riverkeeper Network which alleged, among other things, that FERC has not rejected any pipeline plans submitted to it for review. However, more recently, on March 11, 2016, FERC issued an Order denying the application for a Certificate in connection with the Jordan Cove Energy Project in Coos County, Oregon. The project had proposed to site, construct and operate a Liquefied Natural Gas (LNG) export terminal and associated facilities. In the decision letter, FERC indicated that the project developer had failed to demonstrate a need for the pipeline as the developers had not signed any formal contracts to sell the gas it intended to move to the Asian markets. Further, the developers had failed to negotiate easements with 95% of the property owners along the 232 mile pipeline.
Sunoco Logistic Partners has announced that the Mariner East I Pipeline is now carrying both ethane and propane from the Washington County shale fields to the Marcus Hook Industrial Complex in Delaware County. Sunoco also announced that the first tanker carrying ethane to Europe departed from Marcus Hook on March 9, 2016.
We recently received information that a law suit has been filed against the Federal Energy Regulatory Commission (FERC) by the Delaware Riverkeeper Network and the Delaware Riverkeeper in the United States District Court for the District of Columbia challenging FERC's relationship with the pipeline industry. Based upon information set forth within the Complaint, it is alleged that FERC receives funding from the industry which it regulates thereby creating a bias. The Plaintiffs also allege that FERC has a 100% approval rate on pipelines. Through this suit, the Plaintiffs are seeking to have FERC's reimbursement mechanism in the Omnibus Reconciliation Act of 1986 declared unconstitutional and/or a declaration that FERC's power to grant pipeline projects the power of eminent domain is unconstitutional and that the ability of FERC to pre-empt local and state laws is unconstitutional. Additionally, the suit also seeks a declaration that the procedure utilized by FERC to issue Certificates of Convenience and Necessity relative to the PennEast Pipeline and the other projects within the Delaware River Basin deprives the Plaintiffs of due process.
The Pipeline Task Force held its final meeting last week. With that completed, it is now anticipated that the Task Force's report will be delivered to Governor Wolf soon. That report is expected to consist of over 180 recommendations regarding how to prepare for and manage the impact of pipelines within Pennsylvania. It is believed that some of the Task Force's recommendations will include, among other things, increased training for state regulators and emergency responders, creating state level coordination and infrastructure systems and suggestions on how to minimize environmental impacts. Other areas likely to be addressed by the report include agriculture, conservation and natural resources, historical and cultural resources, public participation, and economic development.
As new and additional pipeline projects are undertaken in Pennsylvania, many property owners are being confronted with a situation with which they have little to no prior experience. This often takes the form of a pipeline company representative approaching the property owner seeking to purchase an easement across the property owner's land. During this process, the land agents will often claim that the pipeline will have no or only a minimal impact on the property and its value. We caution property owners to be wary of these statements and representations. Experience has reflected that pipelines can impact property values in a number of ways. One possible way is that a pipeline can lower the fair market value of a property. In some cases, the pipeline can have a significant impact on the property's value. Second, the pipeline can limit the property owner in utilizing the property in the future. By way of example, if the easement were to cut through the center of a vacant lot, it may render the lot no longer usable for development. In addition, if a pipeline runs through the center of a back yard, it may prevent the property owner from adding an addition to an existing residence and/or installing a pool. Third, pipelines can potentially limit the number of individuals who may be willing to purchase the property in the future. On this basis, we suggest that property owners carefully consider any offer which is made to them by a pipeline company before accepting the offer.
Based upon information recently issued by PennEast Pipeline Company, LLC, it appears that the project is moving forward and that PennEast has or may soon start approaching property owners in an effort to secure the necessary easements for the project. The PennEast pipeline is reported to be slightly over 100 miles of 36 inch diameter pipe which will run from Luzerne County, Pennsylvania to Mercer County, New Jersey carrying natural gas. PennEast has indicated that pipeline construction would likely begin as soon as all required permits and approvals are secured from FERC with a targeted completion date in late 2017. In light of this information, we expect that property owners in the impacted areas will likely soon start to receive communications from PennEast representatives, if they have not already. These initial contacts are usually either in the form of a home visit or a telephone call and are generally for the purpose of either securing an easement or taking the preliminary steps towards filing a condemnation proceeding.
A new lawsuit was filed last week in the Philadelphia County Court of Common Pleas by the Clean Air Council and a number of residents of Delaware County claiming that Sunoco is not a public utility as it pertains to the Mariner East II pipeline and does not have the power of eminent domain. As of the date of this entry, Sunoco has not filed a formal response to the lawsuit. We will post further updates as additional information becomes known by our office.
By definition, a pipeline right-of-way is a strip of land over and around a natural gas pipeline where some of the rights relative to the land have been granted to a pipeline operator. This is generally documented in a right-of-way agreement (also known as an easement) between the pipeline company and the property owner. The easement is usually filed in the County Registrar and Recorder's office along with the deed to the property. The easement gives the pipeline company an interest in the property although, depending on the type of easement, it may be permanent or temporary.