Fracking = Pipelines = Eminent Domain

Time to think about all the things that occur when fracking begins. Fracking doesn’t just mean pulling gas from the ground, bringing radioactive materials to the surface, increasing the number and severity of earthquakes a relatively short distance from a nuclear power plant, overuse and pollution of scarce water resources, a 24×7 heavy industrial environment, road damage, health problems for residents, and increased emission of greenhouse gases like CO2 and methane during all fracking lifecycle stages. No, not just that. It also means pipelines and the use of eminent domain to take residents’ property.

Here are some pipeline facts:

  • Pipelines are built to transport gas from its source to its destination, whether that be export terminals or end users.
  • The Transco Pipeline runs from Texas to New Jersey, through Virginia, and is the main highway for gas across the East Coast.
  • The proposed Atlantic Coast (2) Pipeline runs from WV, through VA, to NC, while the Mountain Valley (8) pipeline goes from WV into VA.
  • The Federal Energy Regulatory Commission (FERC) has jurisdiction over pipelines that run from state-to-state (interstate), while the Virginia State Corporation Commission (VA-SCC) has jurisdiction over pipelines that are entirely within the state (intrastate).
  • Natural gas is transported almost exclusively via pipelines, unless it is liquefied; if the latter, the product is usually shipped overseas from one of a handful of export terminals via tanker ships. The closest one is not yet operational. Dominion Cove Point LNG Terminal is an offshore liquid natural gas shipping terminal located near Lusby, Maryland, on the western shore of the Chesapeake Bay
  • Additional types of pipelines may be used to funnel fracking waste to a temporary storage site or to treatment stations.

Eminent Domain

The end destination for Taylorsville Basin fracked gas determines which Agency (FERC or VA-SCC) has jurisdiction over any proposed pipelines. FERC’s record regarding pipeline approval seems to be “We never met a pipeline we didn’t like”, as only 2 pipeline applications have been rejected since the 1980’s. There appears to be little-to-no regulation of gathering pipelines in Virginia, and no experience as to VA-SCC’s rulings since the 2012 Eminent Domain referendum was passed. That referendum limited eminent domain but allowed an exception for public utilities. A recent West Virginia Supreme Court case rejected a pipeline application primarily because they determined that pipelines are private enterprises and not for the good of the public. Unfortunately, the WV case isn’t determinative for Virginia.

If a company wants to build a pipeline to collect the gas from the Taylorsville Basin, based on history and statements from the Trump administration, they would want the pipeline to come under FERC’s jurisdiction. The distinction between those pipelines would be non-jurisdictional gathering lines (SCC control) and jurisdictional lateral lines (FERC control), a somewhat subjective distinction. Usually, pipelines operated by gas drillers are intended to gather “raw gas” from different wells and transport it to gas processing plants. But, if the gas is clean enough to go directly into interstate pipelines (TBD for the Taylorsville Basin), the company may be able to elect to build a line directly or indirectly connected to an interstate pipeline and call it an interstate pipeline lateral, which would come with FERC eminent domain powers. Even if processing is needed, pipelines can sometimes take the gas into an interstate system and run it to processing facilities (so called straddle plants) to remove valuable liquids and impurities before the gas is delivered to the market.

A pipeline doesn’t have to cross a state line to be deemed jurisdictional (interstate) under the Natural Gas Act.  It only needs to transport gas as part of the flow of interstate commerce (i.e., to begin or be in the middle of the flow of gas that crosses a state line), and not be called a gathering line. If the Atlantic Coast Pipeline is built, Dominion could build laterals over to the producing areas in the Taylorsville Basin under its blanket certificate, as could Transco. A pipeline could be built under FERC’s blanket certificate rules without a full hearing and possibly without any prior public notice if it is not a main line; if it was a main line, there would be a prior public notice and a dollar limit on the project.

So, approving fracking means you are approving pipelines, and that means eminent domain.

 

 

 

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