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House panel pounds Cheniere, FERC on delay restoring farmland after pipe construction

Highlights

Subcommittee to consider bipartisan steps to 'balance' system

Cheniere says on track to meet FERC deadline

Cheniere Energy's treatment of landowners and delays restoring properties affected by Midship Pipeline construction faced intense scrutiny May 5 from US House members, with lawmakers on both sides of the aisle agreeing to work to "balance" the current federal legal regime.

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At a hearing by the House Oversight and Reform Committee's panel on civil rights and civil liberties, some lawmakers also lashed out at the approach taken by the Federal Energy Regulatory Commission in overseeing construction and ensuring landowner interests were protected.

Representative Jamie Raskin, Democrat-Maryland, who chairs the subcommittee, faulted FERC for requiring only that companies show they have made substantial progress on restoration before entering service, without better specifying what that means.

"In practice, as the Midship Pipeline illustrates, FERC's standard is totally slippery and woefully insufficient," Raskin said. "More than a year after Cheniere turned on the Midship Pipeline, Oklahoma farmers are still dealing with leftover construction debris, erosion, flooding, and missing topsoil, among other damage."

Some lawmakers including Raskin questioned the fairness of a system that allows compensation for landowners to be delayed until well after property is accessed for construction.

The 199.7-mile, 1.4 Bc/d Midship project, designed to move gas to the US Gulf Coast and Southeast markets from Oklahoma's Anadarko Basin, gained permission to enter service in April 2020, over landowner objections, with FERC staff citing progress on stabilization and the company's commitments on restoration.

Following outcry from some landowners and their representatives, FERC on March 18 ordered Midship to remedy outstanding restoration issues and encouraged use of dispute resolution.

Cheniere updates progress

During the hearing, Christopher Smith, Cheniere senior vice president for policy, government and public affairs, updated the committee on the status of that work.

As of May 5, Smith said 75% of the 56 identified tracts in the FERC order either have been completed or are awaiting inspection results, or else have reached agreements for alternate arrangements.

"We currently anticipate meeting all of our restoration obligations under the order by the May 17 deadline, with the important caveat that alternate arrangements were being pursued in some of those cases," Smith said. Cheniere has entered alternative dispute resolution with many additional landowners with whom direct discussions had stalled, he added.

Subcommittee Ranking Member Pete Sessions, Republican-Texas, spoke about how the American economy is built around effective use of pipelines to safely ensure the transfer of energy, but he also mentioned a need for a "better way to look at pipelines and oversight."

Under questioning from Sessions, Smith said that "there are some things that we will have to do differently" to ensure Cheniere handles well the multi-year engagement with landowners affected by Midship.

"It is certainly in our best interest to do this well, and I can say as I compare other endeavors that our company has had and the types of relationships we've created with what I'm hearing..., that's not consistent with the standard that we need to reach to make sure that we're operating properly."

Highlighting landowner woes

The hearing, alongside a video released by Raskin, featured testimony from several farmers complaining of unaddressed damage and an intimidating legal process.

"These people absolutely knew they were going to get eminent domain," said Terry Lubar, an Oklahoma farmer. "They use the fear factor like a sword,"

Lubar described damage to terraces and a waterway that helped drain his property. "Basically it's unfathomable how much it's going to cost to fix that," he said.

In the video the subcommittee circulated, Raskin said since last year, his office has been inundated with stories that make clear the committee has "only scratched the surface of FERC's lopsided approach.

"FERC needs "sweeping fundamental reform," he said, adding he was "committed to making that happen."

Sessions called the hearing well-intended and said he "would like to spend time to balance this out." He suggested the panel look further into the role played by the courts, as well.

Raskin, for his part, pledged to work with every member of the committee to come up with bipartisan legislation "that will guarantee this won't happen again."

Samuel Gedge, an attorney with property rights advocacy group Institute for Justice, suggested some areas for possible legislative action. He said there was insufficient notice to landowners that ultimately will be on the receiving end of a condemnation action. He also suggested aligning the payment time period with possession of property, and floated the idea of creating a trespass cause of action when a company exceeds the scope of an easement and fails to restore property consistent with its obligations.

Of note, despite his attack on FERC's track record, Raskin welcomed some recent steps, such as the commission's order May 4 stating it would generally stay its certificate authorizations while landowner rehearing is pending.