Pipelines and Eminent Domain: Legal and Legislative Update

Daniel T. McKillop, Esq.Beattie Padovano, LLC

50 Chestnut Ridge RoadMontvale, New Jersey 07645

U.S. “Hazardous Liquid” Lines and Gas Transmission Lines

Pipeline and Hazardous Materials Safety Administration (http://www.phmsa.dot.gov/)

Natural Gas Pipelines – PennEast Pipeline

To carry gas from Marcellus Shale “fracking” region of PA across Delaware River, through Hunterdon and Mercer

Natural Gas Pipelines – Eminent Domain

• Subject to FERC per the Natural Gas Act

• FERC certificate conveys eminent domain authority upon the developer per 15 USC §717f(h)

• However, CWA gives states some oversight:– Allows states to deny certification of project that “may discharge into

navigable waters” (CWA §401)– Grants states authority to regulate impact of project on wetlands (CWA

§404)» incorporated into NJ FWPA at NJSA 13:9B-5(a)

Oil Pipelines – Pilgrim Pipeline

• Two lines between Albany and Linden

• 200K GPD of Bakken shale oil to Bayway Refinery

• 200K GPD refined product to Albany

• No FERC pre-emption

• Subject to full environmental review by NJDEP as a “linear development”

Pipeline Failures• Since 2010: 3,300+ crude oil and liquefied natural gas leaks or ruptures

• 80 fatalities; 389 injuries; $2.8 billion in damages; environmental impacts

• Over 1,000 of these incidents occurred on pipelines carrying crude oil:

The Center for Effective Government (http://www.foreffectivegov.org/blog/map-displays-five-years-oil-pipeline-spills)

Santa Barbara Oil Pipeline Spill• May 19, 2015 onshore pipeline failure • 101,000 gallons of crude oil spilled• 21,000 gallons into Pacific via storm drain• Costs to date: $65 million+

“Workers clean oil spill on California beaches by hand” (Alicia Chang/AP), 6/20/15 (http://bayareane.ws/1IanUA1)

NJ Ordinances/Resolutions Opposing Pilgrim Pipeline

• Berkeley Heights• Bloomingdale• Caldwell • Chatham Borough• Chatham Township• Clark• Cranford• East Hanover• Fanwood• Florham Park • Kinnelon• Linden• Livingston• Madison• Mahwah• Millburn • Montville• New Providence• Oakland• Parsippany• Pequannock• Pompton Lakes• Rahway

• Ringwood• Riverdale• Roseland• Roselle• Scotch Plains• South Orange• Wanaque• Watchung• West Milford• West Orange • Westfield• Woodbridge

• New Jersey Assembly• Chatham, NJ Board of Education• Essex County, NJ Freeholder Board• Montville, NJ Board of Education• Morris County, NJ Freeholder Board• Passaic County, NJ Freeholder Board• Roselle, NJ Board of Education• Union County, NJ Freeholder Board• Watchung, NJ Board of Education

COALITION TO STOP PILGRIM PIPELINE, 6/22/15 (http://stoppilgrimpipeline.com/)

Pilgrim Pipeline – Eminent Domain

• Late 2014 – letters sent to private property owners who had previously refused access for surveying requesting reconsideration

• Pilgrim: power to condemn private property

• Clarification: route largely along existing ROWs; 50’-300’ centerline surveys not indicative of siting (actual footprint only 5.5’)

• Sierra Club: Pilgrim is not a “public utility” and has not shown that properties at issue are necessary for a “public use”

‘

Title 48 – Public Utilities

NJSA 48:10-1: Power to condemn; water policy commission unaffected. Pipe line companies, associations and corporations may acquire by condemnation land and other property necessary for public use for right of way in the manner prescribed by [NJSA Title 20][.]

NJSA 48:10-1.1: Power to condemn; department of conservation and economic development unaffected. Pipe line utilities may exercise the power of eminent domain as provided in [NJSA 48:3-17.6, 17.7] in taking land and other property necessary for public use for right-of-way.

NJSA 48:3-17.6. Authority to take property. Any of the following types of public utilities now or hereafter organized and existing under and by virtue of any law of this State: electric light, heat and power; canal; gas; pipeline... may, subject to the restrictions as provided hereinafter, take or acquire under the provisions of [NJSA Title 20], such property or other interest therein which may be reasonably necessary for the purposes enumerated for each such utility in the succeeding sections hereto[.]

NJSA 48:3-17.7. Necessity; application; notice and hearing; rules and regulations. The power of condemnation shall not be used or enforced by any such public utility unless the necessary land or other property or any interest therein as stated in this chapter, cannot be acquired from the owner... for any [ ] reason. Except where a governmental agency having jurisdiction has granted the utility the permission to take or acquire property... the power of condemnation shall not be used or enforced by any public utility until and unless such utility shall have applied to the Board of Public Utility Commissioners... and the board, after due notice [to all interested parties], and public hearing, shall have found that the land or other property or interest therein desired is reasonably necessary for the service, accommodation, convenience or safety of the public, and that the taking of such land or other property or interest therein is not incompatible with the public interest and would not unduly injure the owners of private property[.]

NJSA 48:10-1

• Enacted in 1918

• A “Public Utilities” statute, but at least one NJ court has ruled that a pipeline company need not be a “public utility” to invoke it– Faubel v. Buckeye Pipeline Co., 20 N.J. Super. 116, 119 (Law Div. 1952) (“The qualification that

only pipe line companies that are public utilities have the power to condemn is not in the statute and may not be read into it by implication.”)

• No App. Div. or NJ Supreme Court review to date – Application of Buckeye Pipeline Co., 13 NJ 385 (1953)

• Supreme Court decision against landowner solely on procedural grounds

• One New Jersey case upholding statute’s constitutionality– Texas Pipe Line Co. v. Snelbaker, 30 NJ Super. 171 (Law Div. 1954)

• NJSA 48:10-1.1, NJSA 48:3-17.6, and NJSA 48:3-17.7 enacted later (1962)

Legislative Efforts – S2748 / A4178Restricts availability of eminent domain to “public interest private pipeline” companies, which must:

1) agree to oversight by BPU pursuant to NJSA 48:3-17.6-17.8; and

2) demonstrate to BPU that the pipeline is in the “public interest”

S2748 / A4178: Eminent Domain Power Of

Public Interest Private Pipeline Companies

“R.S. 48:10-1 is amended to read as follows:

48:10-1. [Pipe line] Pipeline companies, associations and corporations that are regulated by the New Jersey Board of Public Utilities as public interest private pipelines may acquire by condemnation land and other property necessary for public use for right of way in the manner prescribed by chapter 1 of the title Eminent Domain (s. 20:1-1 et seq.).”

“R.S. 48:2-13 is amended to read as follows...

The term ‘public interest private pipeline’ shall mean every private pipeline company, association, and corporation that both demonstrates to the [BPU] that its proposed pipeline is in the public interest and agrees to be subject to the eminent domain provisions of sections 48, 49, and 63 of P.L. 1962, c. 198 (C. 48:3-17.6 through 29 48:3-17.8)...”

S2748 / A4178:“Public Interest”

“R.S. 48:2-13 is amended to read as follows...

In determining that a proposed pipeline is in the public interest, the [BPU], at a minimum, shall consider the following factors:

1) the enhancement of competitive transportation alternatives;

2) the possibility of overbuilding;

3) the avoidance of unnecessary disruptions to the environment; and

4) the avoidance of the unnecessary exercise of eminent domain.”

S2748 / A4178 – Status• S2748

2/9/2015: Introduced in the Senate, Referred to Senate Economic Growth Committee

5/18/2015: Transferred to Senate Environment and Energy Committee

• A4178

2/12/2015: Introduced, Referred to Assembly Telecommunications and Utilities Committee

Tom Gilbert – NJ Conservation Foundation

• 6/15/15 – Tom Gilbert joined NJ Conservation Foundation in new position of Campaign Director, Climate, Energy and Natural Resources

• Formerly:

– Senior conservation finance director for the Trust for Public Land

– Executive Director, Highlands Coalition– Founding board member of the New Jersey

League of Conservation Voters– Wilderness Society, Appalachian Mountain

Club and Vermont Natural Resources Council

Thank you

dmckillop@beattielaw.com / 201-799-2125