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Tensions still plague gas pipeline industry even with favorable court outcome

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Tensions still plague gas pipeline industry even with favorable court outcome

Tensions with the public continue to plague the gas transmission pipeline sector, even as the U.S. Supreme Court declined to weigh in on eminent domain issues.

The U.S. Supreme Court recently denied an attempt by landowners to fight a lower court ruling that allowed the EQM Midstream Partners LP-led Mountain Valley Pipeline LLC to quickly exercise the eminent domain authority of a Natural Gas Act certificate to take land for its 2-Bcf/d natural gas pipeline project, which runs from West Virginia to southern Virginia.

The case could have altered the pipeline industry's use of the legal power had it gone forward. Consulting firm ClearView Energy Partners LLC said the case differed from other cases involving eminent domain because it challenged the timing of when a pipeline developer uses the authority to acquire land, rather than whether the developer has the authority under the Natural Gas Act in the first place.

ClearView had observed that the case did not pose much risk to the Mountain Valley project because the pipeline had already gained access to the land it needed, but it could have posed problems for future pipeline projects.

This is not the first time the high court blocked an attempt to challenge a pipeline project this year. In January, the court decided not to hear a landowner challenge to eminent domain authority granted by the Federal Energy Regulatory Commission to the Mountain Valley project as part of a Natural Gas Act certificate. The following month, the court declined to hear a case brought by a group of Roman Catholic nuns over land condemned to allow for the construction of the Williams Cos. Inc.-led 1.7-Bcf/d Atlantic Sunrise gas pipeline project.

While the latest court order is a welcome development for pipeline project developers, tensions over landowner interests have not abated, stirring debate among pipeline and property rights advocates over how the issues should be addressed.

At a forum on pipelines and property rights held by the R Street Institute in Washington, Megan Gibson, who litigates on behalf of property owners for Washington-based think tank Niskanen Center, emphasized the need for better communication with landowners affected by pipeline proposals.

Gibson said there is often "conflicting and very confusing" information sent to landowners about the need to intervene in pipeline proceedings at FERC to preserve a right to judicial review, adding that a simple instruction from FERC on how companies communicate with landowners could go a long way. More needs to be done, she said, to prevent the "nightmare scenario," in which a pipeline company gains access to the 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.

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. "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.

Landowners and environmental groups often point to safety concerns when objecting to pipeline projects. Gas line explosions can have devastating effects, as evidenced by a deadly gas pipeline blast in August along the Texas Eastern Transmission LP system that rocked Lincoln County, Ky. The incident killed 1 person, hospitalized six others and forced the evacuation of 75 people, prompting a lengthy probe into the incident by the National Transportation Safety Board.

The board on Oct. 8 issued its first preliminary report on the blast. It said the ongoing investigation will focus on system operator Enbridge Inc.'s past inspections and maintenance on the line as well as the company's emergency isolation measures and how it classified the area where the accident occurred. The agency is also conducting metallurgical assessments on samples of the pipe and will investigate a 2003 rupture and other incidents and "inspection anomalies" on the line.