LAPORTE, Pa. When federal regulators approved a 39-mile natural-gas pipeline through northern Pennsylvanias pristine Endless Mountains, they cited the operators assurances that it would make sparing use of eminent domain as it negotiated with more than 150 property owners along the pipelines route.
Yet a few days after winning approval for its $250 million MARC 1 pipeline in the heart of the giant Marcellus Shale gas field, the company began condemnation proceedings against nearly half of the landowners undercutting part of the Federal Energy Regulatory Commissions approval rationale and angering landowners.
Some of the landowners are now fighting the company in court, complaining that Central New York Oil and Gas Company LLC steamrolled them by refusing to negotiate in good faith on monetary compensation and the pipelines location. Their attorneys say CNYOG has skirted Pennsylvanias eminent-domain rules.
The company, a subsidiary of Inergy LP of Kansas City, Mo., insists its trying to reach a fair settlement with all property owners and wants to be a good neighbor.
The dispute could foreshadow eminent-domain battles to come as more pipelines are approved and built to carry shale gas to market in states like Pennsylvania, New York and Ohio.
The company promotes the MARC 1 pipeline as key infrastructure in developing the Marcellus Shale, a rock formation underneath Pennsylvania and surrounding states that experts believe holds the nations largest reservoir of gas. The MARC 1, a high-pressure steel pipeline 30 inches in diameter, will connect to major interstate pipelines and the companys own natural-gas storage facility in southern New York state.
CNYOG hopes to start construction soon and finish by July, but it awaits permits from Pennsylvania environmental regulators and the U.S. Army Corps of Engineers.
It also needs to answer the legal challenge from residents.
Many of the complaining landowners say they favor natural-gas drilling and some have leased land to gas drillers. What rankles them is that FERC has invested CNYOG with the power of eminent domain, taking away their bargaining power.
Once the government becomes involved, this is what happens. Because you lose that leverage, said Amy Gardner, who, with her husband, faces condemnation of part of their 175-acre parcel in Sullivan County.
The Gardners say CNYOG offered less than a third of the amount that another pipeline company had previously paid them to install a gathering line on their land. The difference? Gathering lines smaller pipelines that take gas from the wellhead to a transmission line or processing facility are not regulated by the federal government and companies that operate them dont have condemnation power.
Amy Gardner said a company representative who made them the lowball offer told them to take it or leave it.
Theres no negotiating with this company. They come and they tell you what theyre going to do. Theyre telling you what theyre going to pay. And theyre counting on the government to enforce it, Gardner said in a recent interview at the Sullivan County Courthouse, where a judge has scheduled a mid-February hearing on the landowners concerns.
Amounts offered by CNYOG range from a few hundred dollars to tens of thousands of dollars, depending on the amount of property taken. Court papers filed by CNYOG in late December say it valued damages at 37 condemned properties in Sullivan County at $310,900.
The company insists it has met its obligation to negotiate. Its attorney, Michael Wright, said there were several meet-in-the-middle cases involving compromise.
Its not like we were sitting silently until the FERC order and rushed to the courthouse, said Wright, who is based in Vestal, N.Y. To say we did not attempt to negotiate in good faith is incorrect.
Wright acknowledged, however, that CNYOG told landowners that if they challenged the company in court, forcing it to incur legal expenses, then any deal on the table would be withdrawn.