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Property rights tensions stir debate amid continued gas pipeline buildout

http://www.chemnet.com   Oct 10,2019 S&P Global Platts
Pipeline and property rights advocates offered competing visions Wednesday of changes needed to ease tensions over landowner interests, as a major US natural gas pipeline buildout continues linking production to domestic and international demand.

During a forum on pipelines and property rights held by the R Street Institute in Washington, there was agreement that more can be done to inform landowners of their rights. That notion drew support from Don Santa, president of the Interstate Natural Gas Association of America, and Megan Gibson, who litigates on behalf of property owners for the Niskanen Center, a Washington-based think tank.
Gibson said there is often "conflicting and very confusing" information sent to landowners, even perplexing well-educated professionals, about the need to intervene in pipeline proceedings at the Federal Energy Regulatory Commission to preserve a right to judicial review. A simple instruction from FERC on how companies communicate with landowners could go a long way, she said.

Santa agreed that there is "room for improvement to make sure that folks are informed as possible." INGAA has suggested that FERC improve its own explanations of landowner rights in materials it shares with landowners, and should stress the importance of landowners granting survey access to complete environmental reviews, he said.

Santa sought to inject a historical perspective about the motivation behind the 1947 amendment to the Natural Gas Act that allowed use of federal eminent domain for pipeline companies that have a FERC certificate. Gas shortages during the winter of 1946 and 1947 resulted from pipelines being blocked by opponents such as competing fuels and their champions, state governments and landowners, he said. "A lot of it is still relevant today," he added.

But Gibson said more needs to be done now to prevent the "nightmare scenario" in which a pipeline company gains access to property to cut trees and "destroys the land" after receiving a certificate FERC issued, but then problems with an outstanding permit derail the pipeline project while the landowner is left uncompensated.

'SIMPLE SOLUTION'
If a permit is vacated or suspended, a simple solution in her view would be for pipelines to notify FERC within five to 10 days, and for the commission to suspend its certificate, preventing construction and condemnation proceedings while the other permit issues are sorted out.

On that permitting tension, Santa by contrast highlighted the Trump administration's efforts to improve permitting efficiency and rein in what he saw as "troublesome" state actions to "effectively veto" projects using Section 401 of the Clean Water Act.

The conversation comes as some states, such as Maryland and New Jersey, have recently opposed eminent domain actions by interstate gas pipelines, in litigation that is adding to hurdles for projects.

'HIGHER PREMIUM'
William Murray, energy manager at R Street Institute, said there may be a need for pipelines to pay a higher premium for access, for instance when environmental externalities are taken into account.

"What we're seeing is that the cost of environmental consciousness in the last half century suggests that there's probably a higher premium for access than is currently appreciated." He gave the example of a project needing to cross under the Potomac River that needed access to about 0.1 acre and offered $5,000 to the state of Maryland, which decided to fight in court.

"I'm not sure that $5,000 is a proper offer for a permanent access and easement for 30 to 40 years and hundreds of millions of dollars over time of natural gas," Murray said.

Asked about the idea of premiums, Santa noted that eminent domain is valued according to the law of the state in question. He emphasized that pipelines generally only fully litigate the exercise of eminent domain only as a last resort because it is expensive to do so, and because it can pit the pipeline company against the landowners with whom it will be dealing for years.

"There are a lot of instances where a pipeline company will agree to pay in excess of what it calculated it would get" if eminent domain were fully litigated, he said.
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