July 20, 2016

Eminent Domain in Pipeline Development

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Public utility corporations are given the right of eminent domain by the Pennsylvania Public Utility Commission (PUC) so long as the public utility holds a certificate of public convenience, which is a regulatory compliance certification granted to private companies that provide services to the public when the PUC assesses that there is a public need.

In the case of pipeline development, once a natural gas company receives a certificate of public convenience from the PUC, it now has the power to use eminent domain to acquire land in order to build infrastructure that transports natural gas.

These principles are established by recent litigation within Pennsylvania. Sunoco Pipeline LP condemned and acquired nearly four acres of land for the purpose of developing the Mariner East 2 Pipeline from landowners in North Middleton Township, Cumberland County, Pennsylvania. These landowners appealed this condemnation and taking to the Common Pleas Court of Cumberland County, where the court ruled in favor of Sunoco Pipeline LP, and then to the Commonwealth Court of Pennsylvania.

Legal council for the landowners argued that Sunoco LP does not have the power to exercise eminent domain. Their argument was, in part, based on the nature of the proposed pipeline (i.e. if it was being built for the public good or if was being built for company profits) and where the natural gas transported through would ultimately end up (i.e. if the pipelines purpose is for intrastate transportation only for use in Pennsylvania or interstate transportation for use in other states or countries). The landowners argued that the purpose of the project was to increase company revenues and increase interstate transportation of natural gas, making it exempt from the PUC’s authority to utilize eminent domain.

On July 14, 2016, the Commonwealth Court ruled in favor of Sunoco LP in a 5:2 vote, stating that the purpose of the pipeline is for both interstate and intrastate transportation and that the court does not need to review the PUC’s decision that the Mariner East 2 project meets a public need.

For more information concerning eminent domain in pipeline development, visit the Commonwealth Court’s Ruling here.

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