Project Report:
Defending against eminent domain abuse by fossil fuel industries
Purpose
- Investigates the causes of economic imbalances.
- Investigates causes tending to destroy or impair the free-market system.

Summary

Pipeline companies are taking property from landowners by using eminent domain authority. Our goal is to litigate cases where favorable decisions could then be used as the basis of challenging pipelines across the country, including cases to establish that pipelines supplying LNG export facilities do not have eminent domain authority; challenging FERC’s practice of delegating its constitutional and statutory obligations to provide notice to landowners that a pipeline wants to take their property; challenging FERC’s authority to approve a pipeline before the pipeline has obtained other required federal approvals; challenging the industry practice of dubbing pipelines "intrastate" in order to avoid the more rigorous NGA review and permitting scheme; requiring pipelines that abandon a project to return land taken to property owners or at least restore it to its pre-construction state; and challenging the ability of pipelines to take possession of property before they pay for it.

Description

Pipelines supplying LNG terminals: On behalf of Oregon landowners, we challenged the Federal Energy Regulatory Commission’s approval of the Pacific Connector Pipeline (supplying the proposed Jordan Cove liquefied natural gas export terminal), arguing that pipelines supplying LNG export terminals do not provide a “public benefit” under the Natural Gas Act or the Takings Clause and so their operators may not use eminent domain.

Fortunately for our clients, but unfortunately for our larger goals, after a four-hour D.C. Circuit argument on October 28, 2021, Jordan Cove canceled the project. Although this issue is also presented in another D.C. Circuit case (City of Oberlin v. FERC, where we submitted an amicus brief in support of the landowners), unfortunately Oberlin has far less favorable facts than Jordan Cove, and the Court could decide Oberlin without reaching this issue. As a result, we are looking for a new test case.

Curtailing the “intrastate” pipeline subterfuge: Representing Texas landowners, we sued the Permian Highway Pipeline in federal district court in Texas, claiming that contrary to the developer’s claims that it was an “intrastate” project, this was an interstate pipeline subject to FERC’s exclusive jurisdiction. We lost in 2021, with the judge deciding that only FERC, and not the federal courts, had authority to make this determination. Since the Fifth Circuit would have been very unlikely to reverse, we chose not to appeal.

We are looking for a new case in a more favorable Circuit. In addition, with the swearing-in of Willie Phillips, FERC now has a 3-2 Democratic majority, and we may bring an intrastate pipeline case (probably on a pipeline supplying an LNG terminal) to FERC, so it (or the D.C. Circuit) can finally clarify the difference between “intrastate” and “interstate” pipelines.

Limiting eminent domain authority under “temporary” certificates: The Spire Pipeline in Illinois and Missouri has been operating since 2018, but in June 2021, the D.C. Circuit vacated FERC’s authorization, and we now represent landowners fighting Spire’s attempts to remain in service. Currently Spire is operating under an emergency Temporary Certificate while FERC decides what to do next. Because there is an active condemnation case against one of our clients, we asked FERC to clarify that such temporary authorization does not grant eminent domain authority, which would have led to this attempted taking being dismissed. FERC refused, repeating that it has no authority over how pipelines use eminent domain and strongly hinting that we should take this to the D.C. Circuit, which we did. FERC is now trying to get the case put on hold; we await a decision whether the case will proceed or get shelved until FERC decides Spire’s fate and litigation over that decision is concluded.

FERC calculating restoration costs: In addition to unjustly taking property, pipelines also frequently cause damage to adjacent property they do not condemn, and FERC fails to enforce the conditions and practices it mandates for the pipelines to prevent such damage. FERC has finally done something about this in connection with the notorious behavior of the Midship pipeline in Oklahoma. FERC is not only assessing administrative penalties against Midship, but has ordered a full evidentiary trial on the costs of restoring one of the properties that Midship well and truly trashed. Midship’s developers conceded that FERC has the authority to order them to restore the property, but deny the agency’s authority to determine how much that will cost, and have challenged FERC’s order in the Fifth Circuit. We are considering whether to represent the affected property owners by intervening as a party on FERC’s side.

FERC’s unconstitutional practices under the Natural Gas Act: As we’ve noted previously, there are a surprising number of these, and we keep finding new ones:

Allowing pipelines to take and destroy property before securing other required permits. FERC issues “conditioned” pipeline certificates, i.e., approval to take land and do most construction, with final construction and operation “conditioned” on obtaining all other required federal permits (under the Clean Water Act, Clean Air Act, etc.). Pipelines then take property, cut trees, dig the trench, etc., even though they lack those other permits; because those may be denied, property is taken and destroyed for projects that are never built, as has recently happened with the Atlantic Coast and Constitution pipelines.
We won a significant victory on this issue back in 2020 – responding to our arguments, FERC’s authorization for the Pacific Connector said that not only “construction,” but “any tree-felling or ground-disturbing activities” anywhere along the route were barred until the pipeline obtained all those other permits; no other FERC certificate had ever imposed that restriction.

However, even if FERC makes this a standard part of all pipeline certificates, conditioned certificates still allow pipelines to condemn property (even if they can’t start construction) before having all the required permits. FERC’s position is that while it can “stay” a certificate in its entirety, it cannot stay only its eminent domain authority. We will be litigating the scope of FERC’s authority to stay a certificate’s eminent domain authority in the challenge to FERC’s decisions on the abandonment of the Atlantic Coast Pipeline.

Requiring pipelines that are canceled to return property to landowners. If a pipeline project is canceled, there is no legal obligation to return property taken by eminent domain (or “voluntarily” conveyed under threat of eminent domain) or restore it to its pre-construction condition. On behalf of Atlantic Coast Pipeline landowners, we’ve submitted four sets of comments to FERC, asking it (among other things) to require ACP to (1) restore the property to its pre-construction state; (2) relinquish all temporary easements not needed for restoration purposes; and (3) at a minimum, release landowners from all restrictions on their use of the easement areas. FERC refused, and in late May we will be going to the D.C. Circuit to get it to opine on the scope of FERC’s authority.

Authorizing pipelines to increase profits without a demonstration of public benefit or need. FERC rubber-stamps any pipeline application if it shows shippers committed to buying capacity on it (including their own affiliates). Unfortunately, companies frequently build new pipelines not because there is inadequate capacity (and thus public need), but because FERC guarantees them a 14 percent return on equity. If a company operates a pipeline built in 1980 with only a 6 percent return, it is a no-brainer to build a new pipeline, abandon the old one (long since fully depreciated), and more than double their profits. Buyers do not object to the increased cost because, as regulated utilities, they pass those costs on to captive consumers. In any event, those buyers are usually affiliates of the pipeline company, making this even easier to pull off. We are looking for the right case to litigate this issue.

Taking property before paying for it. Federal courts allow pipeline companies to take property years before they pay for it. In 2019 the Supreme Court issued a major Takings Clause decision in Knick v. Scott Township that may change this. The lawyer who lost Knick contacted us and explained why he thought his loss was our gain, and that Knick might be used to stop this practice. Pipelines have not tried to do this yet in any of our cases, but if they do, we will litigate this issue.

Allowing pipelines to take property before landowners can seek judicial review of FERC’s decision. This issue has a long history, but in 2020 the full D.C. Circuit rejected FERC’s practice of indefinitely extending its time to complete its administrative process, which must be done before landowners can go to court to challenge FERC’s decision. (We submitted an amicus brief in that case on behalf of landowners on the ACP, Constitution, Mountain Valley, Nexus, Pacific Connector, and PennEast pipelines.) Extensively citing Niskanen’s comments, in May 2021 FERC then issued Order 871-B. The order provides that if landowners object to a pipeline certificate, FERC will presumptively stay the entire certificate until FERC has completed its administrative appeal process so that pipelines cannot condemn property until landowners can get into court.

Failure to provide constitutionally adequate notice to landowners. The Fifth Amendment and the Natural Gas Act require FERC to notify landowners when someone asks the agency for authority to take their property. FERC’s notice procedure has two major problems. First, the notice is so ambiguous and contradictory that landowners don’t understand that they must formally intervene in FERC’s administrative process to preserve their ability to challenge FERC’s decision in court or how long they have to do so (FERC gives landowners as little as eight days - in the context of a multiyear project - to file a motion to intervene).

We represented two landowners in a D.C. Circuit challenge to the Atlantic Coast Pipeline claiming that the information they received did not give them adequate notice of what they needed to do to intervene. ACP’s cancellation mooted these claims; we are looking for a new case on this issue. We also have been urging FERC to revise its notice process through its new Office of Public Participation and believe that the OPP will take some positive steps.
The second problem is that notice may never actually be sent to landowners. Bizarrely, FERC delegates its notice responsibility to the pipeline companies, requiring only that the company gives FERC the names and addresses of landowners to whom it sent notice. After FERC admitted it does not check whether the lists are accurate or that notices were ever actually sent, we litigated two FOIA cases to get examples of these landowner lists.

FERC fought disclosure in both, claiming that these names and addresses are “confidential information.” In one (for the Pacific Connector lists), the district court ordered full disclosure, which showed that these lists were missing many landowners. In the other (for the ACP lists), the court ordered FERC to give us only some information; we appealed to the D.C. Circuit because, while even this limited information showed that dozens of landowners had no address listed (and so notice could not have been sent to them), the data did not allow us to determine the full degree of FERC’s failure to provide notice. Megan Gibson argued this matter on September 13, 2021, and on December 17 the D.C. Circuit upheld the district court’s decision.

We will now try this again in a different district court.

Illegal surveillance of pipeline opponents. A serious privacy and Fourth Amendment rights issue grew out of the Jordan Cove/Pacific Connector situation — it turns out that Pembina, the Canadian project developer, had been lavishly funding local and federal law enforcement agencies in return for them monitoring groups lawfully opposed to the pipeline (one sheriff’s office had four full-time deputies solely for this purpose). Because these actions potentially violate the Due Process clauses and the Fourth Amendment, we FOIA’d the FBI, DHS, DOJ, Bureau of Land Management, etc. for relevant documents, and after a long administrative process of “we don’t have anything” and “national security” excuses, we are considering filing suit to get those documents.

Fixing FERC

1. FERC’s revisions to its Certificate Policy Statement. In 2018, FERC sought comments on whether and how it should revise its Certificate Policy Statement (CPS), its guidance for determining whether a pipeline serves “the public convenience and necessity,” last revised in 2000. Niskanen and others submitted comments, but FERC took no further steps. However, in February 2021 FERC restarted the process and solicited another round of comments; having learned much about FERC’s pipeline policies in the interim, we submitted far more extensive comments this time, and then additional comments responding to pipeline industry suggestions.

On February 18, 2022, FERC issued its revised Certificate Policy Statement, along with an interim greenhouse gas policy statement. Controversy over the latter led FERC to then redesignate both documents as “draft” proposals and invite comments. We submitted yet more comments on April 25, 2022, and we await FERC’s final decision.

2. FERC’s establishment of an Office of Public Participation. In 1978, Congress told FERC to establish an Office of Public Participation, a command that FERC ignored for 40+ years. But, in December 2020, Congress gave FERC six months to report how it finally intended to get this done. Niskanen submitted extensive comments on how the OPP should be structured and what services it should provide landowners in the pipeline application process and, at FERC’s request, we spoke at a public workshop on the long-delayed office.

On June 24, 2021, FERC issued its report, which said little more than that it was going to establish the OPP, and virtually nothing about what the office would be doing. The one positive hint we could glean from OPP’s proposed structure was that, as we had advocated, the office would be compensating landowners and other intervenors for their attorney and expert fees in certain cases. Since then, a director of OPP and some staff were appointed, and we’ve been working closely with OPP to help define its agenda; for example, on April 26, 2022, we hosted a webinar for landowners with OPP Director Elin Katz.

3. Congress. We have been asked to both draft and comment on various legislative proposals to amend the Natural Gas Act; one of them appears to have legs. There is real bipartisan interest in the ACP abandonment situation, where the developer is hanging on to easements it acquired by eminent domain (or the threat of eminent domain) for a pipeline that will never be built, and we have commented on draft legislation to fix this situation, which may be introduced later this year.

Purpose

Eminent domain is an infringement of private property rights and a subsidy for oil and gas industries; both of these are characteristics that undermine free market principles. It is also an example of the huge disparity in the relative bargaining positions of pipeline companies and landowners. Pipeline companies have vast resources, and build pipelines where the land is cheap, which means where the people are poor, and eminent domain gives the pipelines the virtually unfettered ability to dictate terms to landowners. We are working all three branches of government to address these problems. We are litigating multiple cases to get courts to remedy the problems that are susceptible to judicial resolution. We have drafted amendments to the NGA that would eliminate these problems, and have launched an advocacy campaign to educate Members of Congress regarding the principled issues in play that should compel those that care about property rights to support reforms.

Scope

Geographically, we are litigating cases about pipelines located across the country: Texas, Oregon, Pennsylvania, Virginia, etc. Legally, our scope includes state, federal, and constitutional law, as necessary.

Information Dissemination

Filings and submissions
January 2021 - December 2021

1/11: DHS fee waiver and FOIA violation submission re: work with anti-immigrant groups
1/22: FBI FOIA administrative appeal I, re: ‘Glomar Response’ to request
1/29: Jordan Cove Opening Brief (D.C. Circuit)
2/16: Opening brief on FERC Order 871 (FERC)
3/3: Reply brief on FERC Order 871 (FERC)
3/10: DHS (ICE) FOIA administrative appeal, re: request
3/11: FBI FOIA administrative appeal II, re: document production
3/25: DHS submission re: FOIA scope of search to request on work with anti-immigrant groups
4/6: Comments for South Carolina Public Service Commission pipeline regulation review
4/8: PennEast LTA amicus brief (Supreme Court)
4/9: Written testimony for FERC Office of Public Participation Workshop
4/16: FERC Atlantic Coast Pipeline (ACP) abandonment plan landowner comments
4/16: Testimony at South Carolina Public Service Commission hearing on pipeline regulation
4/16: Testimony at FERC hearing on pipeline authorization policy
4/23: Comments on FERC’s proposed Office of Public Participation
4/29: ACP FOIA reply brief (D.C. Circuit)
5/3: Opposition to Jordan Cove motion for abeyance (D.C. Circuit)
5/6: ACP FOIA final briefs and Joint Appendix (D.C. Circuit)
5/13: DHS submission re FOIA agreement of terms, and lack of proper agency response
5/26: Comments on FERC’s revisions to its Certificate Policy Statement
5/28: Oberlin v. FERC amicus brief and motion (D.C. Circuit)
6/2: Rule 28j response in ACP FOIA (D.C. Circuit)
6/10: Oberlin v. FERC amicus motion reply (D.C. Circuit)
6/11: Reply comments to South Carolina Public Service Commission pipeline regulation review
6/15: Jordan Cove reply brief (D.C. Circuit)
6/18: Washington Alliance of Technology Workers v. DHS amicus brief and motion (D.C. Circuit)
6/24: Jordan Cove Rule 28j submission re: Environmental Defense Fund v. FERC (D.C. Circuit)
6/29: Jordan Cove deferred appendix (D.C. Circuit)
6/30: Comments on ACP abandonment information response to FERC
7/6: Jordan Cove final briefs (D.C. Circuit)
7/21: Reply to DHS USCIS FOIA response
7/26: Answer to pipelines’ reply to Niskanen comments on FERC Certificate Policy Statement (FERC)
8/10: Comments to House Energy & Commerce Committee hearing on FERC oversight
8/20: Bureau of Land Management FOIA administrative appeal
8/26: DHS FOIA letter memorializing search term agreement
9/7: Spire Pipeline emergency certificate intervention and comments (FERC)
9/9: I-131 humanitarian parole and I-130 visa applications on behalf of SIV’s family in danger in Afghanistan
9/13: ACP FOIA oral argument (D.C. Circuit)
9/13: Comments on ACP Abandonment Supplemental Environmental Impact Statement (FERC)
10/14: Spire Pipeline request for rehearing of temporary certificate (FERC)
10/20: Jordan Cove briefs (D.C. Circuit)
10/21: CBP FOIA administrative appeal (CBP)
10/28: Jordan Cove oral argument (D.C. Circuit)
12/2: CBP letter re: administrative appeal (CBP)
12/17: Spire Pipeline request for rehearing of temporary certificate (FERC)

January 1, 2022 - April 25, 2022

1/2: Spire Pipeline request for rehearing (FERC)
1/14: Spire scoping comments on Supplemental Environmental Impact Statement (FERC)
1/22: Spire petition for review (D.C. Circuit; Denial of Stay)
2/18: Texas Supreme Court amicus brief (not a pipeline case)
2/18: Valancourt amicus (D.C. Circuit) (not a pipeline case)
3/8: Petition for review, Spire Pipeline (D.C. Circuit; temporary certificate)
4/7: Spire challenge - statement of issues and other procedural filings (D.C. Circuit)
4/12: DHS - FOIA administrative appeal on final determination
4/21: Spire opposition to stay motion (D.C. Circuit)
4/22: ACP request for rehearing (FERC)
4/25: Comments on revised FERC Certificate Policy Statement (FERC)

Project Link https://www.niskanencenter.org/policy/legal/

Amount Approved
$30,000.00 on 6/8/2021 (Check sent: 6/11/2021)



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Attachments
Litigation work product and media content (PDF)
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Posted 3/31/2021 2:47 PM
Updated   5/3/2022 1:31 PM

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