Berman & Asbel, LLP

Pipeline Overview and Jurisdiction

U.S. natural gas production has increased in recent years, primarily since 2012. According to the U.S. Energy Information Administration, Pennsylvania ranks third in the nation for natural gas production. All that natural gas production means pipelines will need to be constructed to transport the gas to demanding markets.

Twenty interstate natural gas pipeline systems operate in the Northeast region, which consists of Connecticut, Delaware, Massachusetts, Maine, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Virginia, and West Virginia. The Southeast region consists of Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, and Tennessee. The Midwest region is made up of Illinois, Indiana, Michigan, Minnesota, Ohio, and Wisconsin.

The Northeast region's pipelines transport natural gas from Canada and several major domestic natural gas producing areas. Virginia and West Virginia supply natural gas from the Southeast Region; Pennsylvania and West Virginia supply natural gas from the Midwest; and Canadian imports come into the Northeast through Maine, New York, and New Hampshire.

Pipelines can take the form of interstate pipelines, pipelines that cross state boundaries, or intrastate pipelines, pipelines that stay within the boundaries of the Commonwealth. Interstate pipelines are subject to Federal Energy Regulatory Commission (FERC) jurisdiction, whereas intrastate pipelines are not. FERC has jurisdiction over the location, construction, and operation of interstate pipelines. The FERC process requires an environmental assessment, review of route alternatives, and holding public comment hearings with local landowners. Most intrastate pipelines are regulated by the Pennsylvania Public Utility Commission (PUC). The PUC inspects about 46,000 miles of pipelines categorized as public utilities, which means that the pipelines deliver directly to consumers. There are only fourteen PUC inspectors who enforce both state and federal regulations.

Interstate pipelines are regulated by the Department of Transportation and the Department's Pipeline and Hazardous Materials Safety Administration inspects them. The largest pipeline, which runs from the Southwest and ends here in the Northeast region, is the Transcontinental Gas Pipeline Company system ("Transco"). Transco carries 8.5 billion cubic feet of natural gas per day, systemwide.

Pennsylvania does not have a regulatory authority overseeing intrastate gas pipelines. Out of the thirty-one (31) states that produce natural gas, only Alaska and Pennsylvania lack a regulatory authority overseeing intrastate pipelines. In 2011, Governor Corbett signed the Gas and Hazardous Liquids Pipeline Act, which granted the PUC over the Commonwealth's 886 miles of intrastate pipelines, exempting rural, Class 1 pipelines.

Needless to say, all these pipelines are meeting significant opposition from landowners in the pipelines' paths. Many of the landowners and groups opposing the pipelines are urging their municipal governments to pass legislation opposing the pipeline, which would require the pipeline companies to condemn the land through eminent domain, if the pipeline is an interstate transmission line. Individual gathering lines, which are small diameter pipelines (6-20 inches) transporting natural gas from the wellhead to a natural gas processing facility or a larger mainline pipe, are not subject to eminent domain and therefore require the company to negotiate rights of way with individual landowners along the pipeline route.

However, a pipeline company may obtain "public utility" status through PUC and use eminent domain to secure pipeline easements. Pipelines easements secured in this manner, would only require the company to compensate the landowner at "market value" for condemned land.

Negotiating pipeline rights of way is a serious and complicated process that can be made even more difficult by the third party contractors sent out by pipeline companies to initiate negotiations. Often, these contractors are known as "landmen" and do not technically represent the pipeline company itself. The landmen come to a landowner's home with a preprinted agreement that can be the basis for negotiations, or rejected or accepted in whole or in part. It is important to understand the company operations, the requirements for ongoing maintenance and inspection, any limitations of access to the landowner, restoration processes and timelines, and any payments to the landowner for the rights of way.

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