Export pipelines new front line
Eminent domain authority remains under legal debate
WASHINGTON — With growing volumes of natural gas from Texas and the rest of the United States sold abroad, developers are rushing to build new pipelines connecting oil and gas fields with border crossings and shipping ports.
But a growing number of landowners and environmentalists are fighting those projects at the Federal Energy Regulatory Commission and in federal courts, challenging the notiont pipeline projects carrying gas destined for export are entitled to the same privileges granted infrastructure projects serving American customers.
Under federal law, pipeline developers can seize land for construction as long as the project is
deemed in “the public interest.” In the D.C. Circuit Court of Appeals, the city of Oberlin, Ohio, is challenging FERC’s 2017 approval of a 275-mile pipeline moving Appalachian natural gas to Michigan through their city, arguing in part FERC erred because a substantial portion of the gas will be exported to Canada.
“Taking gas and using it for export doesn’t benefit American consumers in any way,” said David Bookbinder, an attorney with the Niskanen Center, a libertarian think tank in Washington, who is following the case. “The only benefit is to the private corporations profiting from this. Any of the LNG projects being built in Texas and anywhere else where a pipeline is being built, this (issue) is going to be raised.”
Legal definition sought
The Nexus pipeline, a joint venture between the Canadian pipeline company Enbridge and Detroit-based DTE Energy, has been built and is operational. But were the court to find in Oberlin’s favor, FERC could be forced to define when a pipeline carrying gas for export is and is not in the public interest. With tens of thousands of miles of pipelines in development around North America, such an outcome has implications for billions of dollars of investment.
“It’s significant, given the fact, the exports are a big driver for demand for gas,” said Don Santa, president of the Interstate Natural
Gas Association of America.
The question of whether export pipelines are entitled to eminent domain authority remains under debate in legal circles, with some conservative legal scholars making the case the public good defined under federal law is not limited to the American public.
James Coleman, a law professor at Southern Methodist University in Dallas, likened landowners and environmentalists’ objections to pipelines carrying gas for export to those of states such as Missouri fighting off high-voltage power line projects carrying electricity from wind farms in Texas and Oklahoma to the eastern United States.
“There’s dozens of cases like this in the state courts,” he said. “The law doesn’t make any distinction between the local public and the foreign public. The idea we give zero weight to consumers abroad or the next state would be a bad thing for energy markets.”
FERC has granted eminent domain authority to pipelines carrying gas for export. But attorneys for Nexus are not taking any chances and have tried to make the case their pipeline should not be considered an export project because it also serves U.S. customers.
To make this point, a spokesman for Enbridge noted the company and its partner had recently bought a 23-mile pipeline in Toledo, to deliver gas from Nexus to power plants and industrial facilities in Ohio.
Nexus, which has a capacity of 1.5 billion cubic feet per day, has managed to book delivery on 885
million cubic feet per day. Of that 460 million is destined for export to Canada, said Carolyn Elefant, the Washington attorney representing Oberlin in the case.
“If only 1 or 2 million [cubic feet] of that gas wasn’t staying in the country, we wouldn’t have a case,” she said. “We’re arguing if 59 percent is acceptable, you need to look at what proportion would not be acceptable.”
Mad as heck
A decision on the Nexus case is not expected for months. But in the meantime a similar legal strategy is developing around a proposed 230-mile pipeline running through woodlands in Oregon to the site of another LNG export project, Jordan Cove, along the coast.
FERC halted the project in 2016, saying the market benefits did not outweigh the damage to landowners’ property were eminent domain granted.
But in hopes of getting a better outcome from FERC commissioners selected by President Donald Trump, Canadian firm Pembina Pipeline Corporation has submitted another application for the project and is expecting a decision next year.
With the activist group Sierra Club and local landowners in opposition, a legal challenge would be likely were FERC to approve Jordan Cove , Bookbinder said.
“They’re building pipelines in places where people are getting angrier and angrier,” he said.