Eminent Domain is Becoming a Crucial, Controversial Part of the Gas Pipeline Boom
If you’ve seen the movie The Graduate, you no doubt remember the classic scene where a businessman friend of Benjamin’s parents—anxious to talk about the kid’s future— approaches Dustin Hoffman’s character with “just one word” of advice.
That one word, of course, was “plastics.”
There was a “bright future” in plastics according to Mr. McGuire. And while The Graduate came out nearly 50 years ago, some parents in Pennsylvania today might also see a future for their kids in plastics.
Thus far, the region’s natural gas deposits have mostly fueled a boom in the drilling industry. But those same resources could also soon be feeding a spinoff industry in chemicals—like the ones used to make plastics—that are made from natural gas. Case in point: The 600 permanent jobs Shell says it will create when it opens its new “ethane cracker” in western Pennsylvania. It will use super-high temperatures to turn ethane—a liquid natural gas product—into the building blocks of plastics. And more of these facilities are in the works for this region.
That’s because ethane and other so-called “natural gas liquids,” like propane and butane, are abundant in the region. And because there’s already a demand for these fuels in places like Canada and Europe, companies are now scrambling to expand the network of pipelines that carry them for export.
Mick Luber has had a front row seat for this most recent phase the industry’s expansion. His small organic farm in the quiet hills of eastern Ohio has recently become a popular spot. The land where he grows things like tomatoes, greens and fava beans now sits next to a new compressor station and multiple well sites. They’re so close, they often wake him up at night.
“For the first year that they were fracking, it was hard for me to go outside,” Luber says. “I felt so bad hearing the roar of all this stuff. It’s nice to have the cicadas that drown them out.”
And Luber expects what he’s seen so far may be just the beginning. Now, pipeline companies, like Kinder Morgan, have come knocking at his door, asking to build a line through the middle of his farm.
“They wanted to come right down through this main field and go up over the top of that hill,” Luber says. “There’s a spring right up there. That’s the most fertile part of this farm.”
Shell is also planning a pipeline in the area, and Marathon is already building one on the farm’s southern border. Along one side of a valley, Marathon’s pipes are lined up, waiting to be connected. All around, the ground has been stripped bare.
“This is what you end up with. This was all woods,” Luber says.
After he saw that, Luber told Kinder Morgan that he didn’t want a pipeline—not even a survey. But Kinder Morgan sued, arguing the pipeline was necessary to serve a public good and therefore had the right to build the pipeline on Luber’s land under eminent domain.
“All of these are operated, not by government entities, but by companies doing public business, in the sense that everybody that’s listening to your radio station uses gas to drive a car [or] heat their homes,” says Allen Fore, a spokesperson for Kinder Morgan. “So there absolutely is a public good for that.”
But Luber argues that’s not the purpose of Kinder Morgan’s pipeline. It won’t be carrying natural gas for home heating; it will be transporting ethane to Canada so that companies there can make plastics.
Still, spokesman Allen Fore argues plastics meet the “public good” threshold.
“You tell me anybody in this country that doesn’t use plastics in some way, and that plastics aren’t critical to their everyday lives—from cups to medical devices to automobiles,” Fore says.
Surprisingly, the federal government doesn’t have much authority when it comes to settling these kinds of disputes between companies and landowners. The Federal Energy Regulatory Commission (FERC) has authority over siting routes for typical natural gas pipelines. But it’s a totally different story for liquids gas products like ethane.
“FERC has no authority to regulate natural gas liquids in the United States,” says Rich Raiders, an attorney representing about a dozen Pennsylvania landowners in an eminent domain case brought by Sunoco Logistics. “FERC’s authority is strictly limited to natural gas.”
Raiders says when FERC has authority—as it does for siting typical natural gas pipelines—landowners are part of the routing discussions.
“That’s an all-public, eyes-open discussion,” Raiders says. “Whereas for a natural gas liquids line, that’s between the individual landowner and the pipeline company, and no government entity is involved at all.”
And that means eminent domain issues are getting sorted out by courts. In Kentucky, the state supreme court recently upheld a lower court ruling, which found a pipeline company is not a public utility and therefore cannot use eminent domain for natural gas liquids pipelines. But in Pennsylvania, pipeline companies that want eminent domain power can get certified as a “public utility” by the state Public Utility Commission. However, to do that, they have to show their project will benefit the people of the Commonwealth.
One of the highest-profile cases where these issues are colliding is Sunoco’s Mariner East project. It includes two pipelines—a new one, and an older one that’s been repurposed. Both will carry natural gas liquids. The new line begins in Ohio, near Mick Luber’s farm in Harrison County, and runs through Pennsylvania to the Marcus Hook Industrial Complex near Philadelphia. From there, Raiders says liquid gas is being shipped to Europe.
Raiders argues the fact that this gas is being produced for export clearly demonstrates that the project is not serving a public need of the Commonwealth—and therefore is not covered under eminent domain laws.
"All of these are operated, not by government entities, but by companies doing public business, in the sense that everybody that's listening to your radio station uses gas to heat their homes. So there absolutely is a public good for that."
Sunoco would not agree to an interview for this story. But in an email, the company says the Mariner East project will also provide propane for heating fuel to markets in Pennsylvania. In addition, Sunoco says the pipeline is already considered a utility under a 1930s certification granted by the Public Utility Commission for its original pipeline. In July, Pennsylvania’s Commonwealth Court agreed with the company’s stance, granting eminent domain power in all 17 counties in the pipeline’s path.
Sunoco says it has come to an agreement with the majority of landowners. But some residents are still bringing eminent domain fights to the courts.
“The bottom line is when they’re approaching landowners in Ohio, they have this big stick called eminent domain,” says Nicholas Anderson, an attorney representing a landowner in Harrison County, Ohio. “And they say look, ‘We’ll give you ‘X’ number of dollars per linear foot. But if you don’t accept that, we’re just going to take your property.’ And that is where we have a problem.”
Anderson’s Ohio clients lost their court case against Sunoco, but they’re appealing. And in the case of the Kinder Morgan ethane pipeline—the one farmer Mick Luber was fighting—Anderson says the company recently filed 130 eminent domain cases in at least eight Ohio counties. Still, Kinder Morgan spokesperson Allen Fore maintains the company only pursues eminent domain action as a last resort.
For Luber, things didn’t get that far. Kinder Morgan recently announced it would reroute the pipeline around Luber’s farm. But the company wants to make it clear that they won’t reroute for every landowner who has a problem.
Even though his farm was spared, Luber doesn’t see it as a victory.
“As long as these guys are still doing this stuff, what is the victory?” he says. “You can’t stop the vigilance. People have to keep standing in their way.”