Proposed natural gas pipelines are fueling a bitter
debate over the proper balance between the "public good"
and "property rights." The dispute pits landowners against
pipeline companies as it relates to the laws that permit
the confiscation of land for the purposes of building what
is believed to be vital infrastructure.
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Ken Silverstein
EnergyBiz Insider
Editor-in-Chief |
The feud has spilled over into several communities
around the United States. The issue is now on the agenda
in both the courts and state legislatures. In all cases,
the common solution is for the two sides to work out an
amicable agreement -- one that will require companies to
use circuitous routes that deviate from the original
plans.
Without the ability to exercise their right of "eminent
domain," developers say they won't do business in a
jurisdiction and the people will therefore suffer.
Property owners counter that many of the projects are
unnecessarily intrusive and that the laws don't give
pipeline companies the right to profit at their expense --
a proposition that oftentimes gives them inadequate
compensation for their troubles.
"Eminent domain exists because services such as
electricity, natural gas, sewer and water are considered
necessities," says Mike Enoch, general manager of the
Chester County Natural Gas Authority in South Carolina.
"They are essential services upon which lives and
livelihoods depend. The purpose of eminent domain is to
prevent any property owner ... from denying an entire
community adequate service."
The battle in South Carolina is over a 42-mile
pipeline. The pipeline's owner says that the deal would
save gas authorities $60 million over 30 years and ensure
that adequate capacity exists down the road. Many
residents who live along the proposed route are taking the
developer, Patriots Energy Group, to court. They argue
that not only is the demand for their land invasive but
that it is also excessive and that current providers can
meet the projected demand for power.
In that state, the law forbids government from allowing
private entities to exercise their rights under eminent
domain laws unless it would eliminate eyesores or accrue
to the benefit of entire communities. It comes atop a 2005
U.S. Supreme Court ruling involving a Connecticut case
called Kelo versus City of New London in which the high
court decided that government could condemn private
property for the public good and even if it involved
private development such as hotels and shopping centers.
That diverged from previous interpretations of the law,
which said that eminent domain rights could be exercised
if such things as roads, schools and hospitals were built.
In response to that 2005 Supreme Court 5-4 decision, 34
states have passed laws to try and limit those rights. In
Wyoming, for example, citizens have filed a ballot
initiative that would protect their private property
rights when it involves oil and gas development.
"If our federal constitutional right to property is not
going to be protected by the Supreme Court, then we need
to ensure that every state has solid state constitutional
rights that ensure people's right to property," says
Jenifer Zeigler, a legislative affairs attorney for a
Washington, D.C.-based property rights group called
Institute for Justice.
People Power
Beyond the ballot initiative, Wyoming is considering
bills that some lawmakers say will level the playing field
between developers and landowners. The measure would
ensure that property owners receive better compensation as
well as get more money in the event that pipeline
development would force them to relocate.
Other bills would go further and prohibit the
condemnation of private property unless a project would be
used for a public purpose. The transference of private
property to other private interest would be forbidden. All
proposals, meanwhile, want the disparate sides to
negotiate so as to ensure the public would benefit without
trampling over landowners.
A recent poll taken in Wyoming says that 77 percent of
registered voters there believe that private developers
have the upper hand when it comes to negotiating deals
with property owners. Pipeline owners say that they favor
good faith talks but add that unless they are able to
build infrastructure at reasonable costs, they would
simply not build.
According to the Interstate Natural Gas Association of
America, the country needs to invest $61 billion in its
natural gas pipeline infrastructure. It also says that the
industry must build 45,000 miles of pipeline in North
America and particularly in California and the Northeast.
Further delays, it says, will only serve to drive up gas
rates.
The permitting process has always been an onerous
undertaking. Potential routes are chosen based on
construction costs -- determined in part by terrain,
environmental factors and projected population growth.
Safety has also become paramount, particularly since the
events of 9/11. Toward that end, developers must
demonstrate that they will work with communities and add
technology to bolster security -- things that don't
necessarily generate a return on investment.
After environmental impact reviews are undertaken, all
landowners along the proposed route must be notified. If
they don't give their consent, then state regulators do
have the right to grant eminent domain to the energy
companies. The Federal Energy Regulatory Commission,
meanwhile, has the authority to step in and break ties if
it considers projects vital to the public concern.
However, about 90 percent of all cases do not require that
kind of federal involvement and are negotiated
successfully.
While the degree of permissiveness varies, overall
there must not be any significant effect on either the
natural habitat or the landowners who lease their
rights-of-way. Typically after months of infighting, the
common solution is to re-route the pipeline to accommodate
all concerns.
"Rarely is it smooth sailing," says Greg Lamberson,
manager of International Construction Consulting, based in
Tulsa.
Developing pipelines is about building coalitions. The
twin goals are to meet the expected future demand for
energy without running roughshod over property owners.
Policymakers around the country are trying to determine
the proper balance -- decisions that will assuredly place
personal freedom and energy resilience at odds with one
another.
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