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Eminent domain threats persist for pipeline in Ohio

Eminent domain threats persist for pipeline in Ohio
Law change creates land-taking uncertainty for ATEX pipeline

Walking between the skinny maples and oaks on his tree farm, Dave Bonifant emerges from the tree line at the end of his property, which is marked by a sunken wall of rocks he says were moved by the first Americans to farm this land after the Revolutionary War.

On the other side of that wall, it looks as if a contained avalanche has rushed through. The woods have been leveled across a 90-foot-wide strip just past his property line to clear the way for the Appalachia-to-Texas Express, or ATEX, Pipeline.

The ATEX will be buried in the ground in western Pennsylvania and cross 265 miles of Ohio on its way to its destination: ethylene manufacturing plants near Houston. The pipeline will run through 9 miles of northwestern Muskingum County.

Bonifant’s farm in eastern Licking County was part of the original route. The woods in front of his home, where he and his wife walk with their children and young grandchildren, were to be turned horizontal.

“I’m kind of hard-headed though, so I kept saying no,” Bonifant said.

The company, Enterprise Products Partners, attempted to negotiate with Bonifant under the threat of eminent domain, which allows the government — or a qualifying private party — to compel landowners to sell them access to their land for certain projects.

“Nothing made sense,” Bonifant said. “It wasn’t a public utility. It wasn’t anything to do for the public. It was just a product that somebody wanted. I just kept on like, ‘This ain’t right.’ ”

Changes to state law pushed by energy companies, including Enterprise, made the right to use eminent domain for such a pipeline questionable. That hasn’t stopped the company from threatening to take land from residents who are likely unaware of the legal ambiguity.

The company, which didn’t respond directly to CentralOhio.com’s questions, provided a brief statement saying, “Enterprise’s policy is to work diligently and fairly with landowners to reach an equitable agreement for pipeline access whenever possible.”

Senate Bill 315

In March 2012, Enterprise asked for a waiver from the state board that oversees the construction of new “major utility facilities.” The waiver would allow them to begin construction within a year and to forgo preparing plans for a second, alternative route. Two weeks after that waiver request was filed, Senate Bill 315 was introduced.

The law set new rules on horizontal oil and gas wells popping up increasingly in eastern Ohio and the underground injection wells meant to service the growing regional needs for oilfield wastewater disposal. But SB 315 also amended the definition of “major utility facilities” to remove “natural gas liquids finished product pipelines” like the ATEX.

A week after the law became effective in September, Enterprise filed a motion to withdraw it’s case with the state board, contending that SB 315 excluded “natural gas liquids finished product pipelines” like the ATEX. The board, which hadn’t ruled on the waiver request, agreed and the case was dismissed.

At that point, Enterprise was free to build its pipeline on whatever route it chose, provided it adhered to any existing local zoning rules, apprised the Ohio EPA of its contact with waterways, and that it could get agreements with landowners. In April, a long dormant application for another natural gas liquids pipeline was withdrawn using the same rationale.

Eminent Domain

Enterprise, which is doing business in Ohio as Enterprise Liquids Pipeline, went to the trouble of having the ATEX recognized as a transporter of natural gas liquids through SB 315. But the eminent domain statute says only companies that ship “natural or artificial gas, petroleum, coal or its derivatives, water, or electricity” through pipelines have a right force Ohioans to sell easements on their land. The eminent domain law doesn’t mention natural gas liquids.

To get around that, the company uses a different definition for the ATEX in court cases where it is citing eminent domain power, calling it a “petroleum product derived from natural gas extraction process.”

Maurice Thompson, executive director of the libertarian 1851 Center for Constitutional Law in Columbus, communicated with Enterprise pro bono for Bonifant. He said he doesn’t think the eminent domain law applies to the ATEX.

But Matt Warnock, an energy and utilities attorney at the Ohio law practice Bricker and Eckler, said “probably” when asked whether the ATEX would qualify for eminent domain. So did Michael Braunstein, an eminent domain attorney in Columbus who argues on the side of landowners.

“There are some creative arguments against it,” Warnock said, “but I think, at the end of the day, it’s going to be an uphill battle from a landowner standpoint.”

Martin Booher, a partner at law firm BakerHostetler who works on compliance issues for pipeline companies, told an industry audience that the Ohio legislature needs to pass a bill that extends eminent domain to natural gas liquids pipelines.

“If I want to build … a liquids pipeline in the state, I have to go out and congregate right of ways,” he said during his firm’s Utica Shale symposium June 6. “And I don’t have any leverage to say to the owners, ‘Listen, I can always go to the state and try to get eminent domain over your property so can we please resolve this.’ ”

Leverage

But that’s exactly what Enterprise has been doing. The mere mention of eminent domain can be used to strengthen the company’s bargaining position on price or to influence someone who wants nothing to do with the project to reconsider.

“(Eminent domain) provides them a lot of leverage,” Braunstein said, “because there are a lot of people who would say we don’t want this pipeline, but if they face the threat of eminent domain, then they might well do it.”

Mike Dorogi has a 47-acre parcel near Black Hand Gorge in Licking County, a few miles south of Bonifant’s farm. Dorogi’s land also was in the path of the ATEX, and he too wasn’t keen on selling an easement to the company.

“Anytime somebody tells me that they want to come on my property, that they’d like to have your permission, but we don’t need it — that was the first inkling that I wasn’t going to like what was coming,” Dorogi said.

Dorogi said he felt like David versus Goliath because lawyers told him it would cost up to $50,000 in legal fees just to get started. Enterprise will spend $4.6 billion on projects this year, according to its latest quarterly report. The 1851 Center also agreed to represent Dorogi.

In court filings, Enterprise noted two 2001 Ohio appellate court cases that present expanded definitions of petroleum. Thompson said those cases “are of limited value considering the ATEX pipeline.”

But then again, Thompson doesn’t think Enterprise wants these questions answered, that they would rather “operate under the specter of eminent domain authority without having to prove that.”

“The only way for the legal issue to be tried in court is for Enterprise to actually follow through on one of these threats,” he said.

Other cases reviewed by CentralOhio.com — one each in Butler and Coshocton counties and two each in Muskingum and Warren counties — were all unopposed by the defendant landowners and dismissed by the company after access to survey the property was granted by a judge.

Enterprise told investors and Wall Street analysts in April that it would be able to begin construction in May with an eye toward opening for service in the first quarter of 2014.

Senior vice president Leonard Mallett said it could take two years to go through the eminent domain process in Ohio, according to a transcript of his remarks on the financial news website SeekingAlpha, not giving the company time to use the process for the pipeline.

Eminent domain and public oversight

Eminent domain is a government power that can be conferred to qualifying private projects, said Matt Festa, a professor at the South Texas College of Law and editor of a blog on land use legal issues.

Those projects that qualify generally provide a “public benefit” or “public use,” he said.

In its statement to CentralOhio.com, Enterprise listed jobs, taxes and support of the burgeoning Utica Shale as benefits that Ohioans would notice.

Certainly, the ability to ship ethane to industrial customers could have a ripple effect through other facets of shale development in Ohio, but that might be the extent of any meaningful, long-term public benefit.

The project is expected to create as many as 1,500 temporary pipeline construction jobs, about half of which would be local workers, according to a regulatory document filed by Enterprise with the Ohio EPA. Enterprise says it will pay $300,000 per year in state taxes to Ohio.

Braunstein worries that cleaving regulations, such as whether a pipeline is needed or where it can be located, from eminent domain eligible projects leave too much power unchecked.

“With the Enterprise situation, you’re dealing with a Texas company that comes here, has no real concern for the people of Ohio and uses Ohio law to simply take property for its profit-making purpose,” he said. “And I think having that with eminent domain power is a potentially dangerous situation.”

razimmer@centralohio.com

June 22, 2013

Link to Advocate article:http://www.newarkadvocate.com/apps/pbcs.dll/article?AID=2013306220036

Additional articles about ATEX: http://search.centralohio.com/sp?aff=1100&skin=&keywords=ATEX

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Pipeline Dispute

Dave Bonifant on the edge of his property where a 90-foot-wide strip of woods have been cleared to make way for the Appalachia-to-Texas (ATEX) Pipeline. The Bonifants were pressured by the pipeline’s owners Enterprise Products Partners to sell an easement. With the help of an attorney, they argued that the company was not entitled to eminent domain under Ohio law. Enterprise backed off and adjusted its route.  /  Sara C. Tobias/CentralOhio.com

One Response to “Eminent domain threats persist for pipeline in Ohio”

  1. Larry A. Powell says:

    This is a perfect example of why I left Ohio after living there for 55 years. When Kashish was elected governor he began his reign of terror on the environment of that great state. He was put into place by big oil who also bought many of the other politicians. The economy was so bad that the voters bought into his plan when he promised jobs and prosperity from the shale boom. They passed laws for their own benefit without much knowledge of the people. What they did not say is that ruining the water and air quality is permanent while the profits to a few will be short lived. Presently they are disposing toxic fracking water from out of state in Ohio. The gas and oil industry spend millions of dollars continuing to brainwash those who do not know any better. When a problem occurs these companies fight the little guy with their big money. Many people are also starting to have health issues now which are related to this. When the environment is ruined, there is NO plan B.

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