Eminent Domain Poses Latest Obstacle to Pipeline Builders
Even as the standoff continues on the Dakota Access pipeline, there is a new battle simmering over pipelines: the right of eminent domain.
Strong and growing alliances between liberal environmental groups and conservative land-rights organizations are signaling a coming “war” over eminent domain, said Mike McKenna, president of MWR Strategies, and Donald Trump’s pick to lead the transition at the Dept. of Energy.
McKenna spoke at a Louisiana energy conference before the election.
“Eminent domain issues are having a real impact on constructibility of pipelines,” said Deepa Poduval, senior managing director of Black & Veatch’s management consulting business, in an interview. Eminent domain fights mean increased costs and increased time. “In some cases … projects are just getting canceled because the issues can’t be navigated,” Poduval noted.
Also speaking on Oct. 26 at the Louisiana Energy Studies energy summit, Allen Fore, vice president of public affairs for pipeline giant Kinder Morgan, illustrated how eminent domain is having a big impact on pipeline construction.
Earlier this year, after Georgia’s Legislature placed a year-long moratorium on the use of eminent domain for petroleum pipelines, Kinder Morgan canceled the construction of its $1-billion, 360-mile Palmetto Pipeline, which would have carried oil from South Carolina through Georgia to Florida. The South Carolina Legislature also approved a three-year pause in eminent domain for oil pipelines after a number of disputes. The city of Nashville also imposed an eminent domain ordinance, and ballot measures are popping up throughout the U.S., Fore said. “It’s not just the Northeast liberals” opposing pipelines, he added.
With the help of AECOM, Kinder Morgan was “well down the path” toward construction when Georgia stopped the use of eminent domain for such pipelines.
AECOM wouldn’t discuss its involvement but was listed as a Kinder Morgan agent in Corps of Engineer documents.
People are asking what public benefit the for-profit pipelines offer a community or state when all they do is traverse an area, carrying oil or other fuel, said Poduval.
Some of the pushback is coming from environmental groups citing safety issues, such as the Oct. 31 explosion of the Colonial Pipeline in Shelby County, Ala., which killed one and injured five.
“There’s a lot of fear that gets mongered around pipeline explosions and leakages,” Poduval said. “But the facts would support that it has been a relatively safe industry.”
Construction of natural-gas pipelines doesn’t face as many obstacles. The Federal Energy Regulatory Commission is responsible for permitting. Once approval is granted, developers can use a federal right of eminent domain. However, even FERC approval is becoming more lengthy and costly as opposition grows.
Eminent domain for oil and other liquid pipelines generally depends on state, rather than federal, law. In the past, it was a given in oil-patch states. But even Texas faces a growing resistance to the use of eminent domain. There, companies only had to check a box that they were a “common carrier” and were building a pipeline for public use. Now, they must prove it.
Between scrapping the Palmetto line and, in May, canceling its $3-billion, 420-mile Northeast Direct line to carry Marcellus shale oil to New England, Fore said Kinder Morgan has learned that siting a pipeline isn’t just “getting here to there. It’s not just engineering and construction. What are the other political and other social issues that are out there? It’s not just the mechanics of a permit.”
Kinder Morgan is doing more outreach earlier in the process to learn of perceived problems, said Fore. “To dismiss [opposition] as extremism is a disservice,” he said.
Not winning approval to build the lines is not an option. “Our pipes are full,” Fore said. Kinder Morgan alone has $13 billion in backlogged projects, he said.
According to an IHS Markit report for the American Petroleum Institute, there were 9,679 miles of crude-oil pipeline completed in the U.S. in 2014 and an expected 4,175 miles of large projects expected in 2017, including Dakota Access. Developer Energy Transfer early this month said it would complete the job.