Pipeline: House feels the need for speed

Although the Natural Gas Act preempts state laws about natural gas pipelines, it preserves the role state agencies play in issuing permits under federal environmental laws. This proviso appears in section 717b(d) of the statute. For example, because pipeline construction involves the discharge of water, the Clean Water Act requires the pipeline company to obtain a water quality certificate (in addition to a certificate of public convenience and necessity from the Federal Energy Regulatory Commission (FERC)). reduced speed

Not being immune to public pressure, state agencies have allegedly dragged their feet on occasion (e.g. failing to promptly process water-quality applications) a problem Congress sought to address in 2005 via the Energy Policy Act. Congress intended to accelerate the permitting process through expedited judicial review, which allows a pipeline company to petition the U.S. Court of Appeals for the D.C. Circuit if the agencies fail to meet FERC’s deadlines.

But according this report from the Interstate Natural Gas Association of America, since the act took effect the speed of permitting has gone down rather than up. In 2012 President Obama issued Executive Order 13604 directing federal agencies to “adhere to guidelines and schedules”  and, to that end, establishing a Steering Committee on Federal Infrastructure Permitting and Review Process Improvement. But the new committee does not seem to have injected or diffused sufficient alacrity into the executive branch.

So to solve the problem (again) Congress is considering another bill, the Natural Gas Pipeline Permitting Reform Act. This post on PipelineLaw.com provides some helpful background. At present, if an agency lets FERC’s deadlines slide the onus is on the pipeline company (not FERC) to go to court for an order telling the agency to comply with the timetable. Under the proposed bill if an agency fails to approve or deny a permit by FERC’s deadline, the permit will issue anyway. After passing the House (252:165) the bill is now before the Senate. With no action likely this side of the November elections, the bill will probably not have any effect on the Northeast Expansion that Tennessee Gas Pipeline Company proposes to build across northern Massachusetts.

Featured

Pipeline Answers: What Counts Toward Just Compensation? Stigma and Hassle

What rights do landowners have when a pipeline company takes part of their property by eminent domain? As I mentioned on Monte Belmonte‘s show on The River, although federal law governs the taking itself, state law determines the meaning of “just compensation.” What, then, is “just compensation” for an easement over part of your land?

Here in Massachusetts the courts start their analysis with the applicable statute, M.G.L.c.79, s.12, which provides that in the case of a partial taking the assessment shall include “damages to the part not taken.” So the landowner needs to show the diminution in the fair market value of the whole parcel (both the taken part and the remaining part). In other words, what would a hypothetical willing buyer pay for the property as a whole after it had been on the market for a reasonable length of time. At this point readers may wonder how a judge would arrive at that hypothetical buyer’s price. The following case provides some guidance.

When the United States District Court for the District of Massachusetts considered this issue, it decided to take into account several factors, including (1) “stigma,” i.e public fear of potential hazards (even exaggerated fears based on misinformation) and (2) the possible additional construction expenses and the “administrative hassle” of having to abide by the company’s rules. The figure the judge ordered was far in excess of what the company deemed reasonable, so the company appealed. But the Court of Appeals for the First Circuit affirmed the judge’s decision. Portland Natural Gas Transmission Sys. v. 19.2 Acres of Land in Haverhill, 195 F.Supp.2d 314 (D.Mass. 2002) aff’d 318 F.3d 279 (1st Cir. 2003).

What does this mean for landowners in Berkshire and Franklin Counties whose properties the underground pipeline might cross? When preparing for the eminent domain case, they should make sure their attorneys have garnered abundant evidence of how the taking will diminish the fair market value of their property, including photographs and testimony from expert and lay witnesses alike. In putting their evidence together they should bear in mind that the court should take into account the “stigma” and “hassle” factors.

If you have questions about what might constitute “stigma” and “hassle,” please feel free to post a comment/call/email.