Pipeline Update: Decisions in Pennsylvania and the Fourth Circuit Should Pave Way for Pipeline Development

Frank L. Tamulonis III and Margaret A. Hill

Two recent decisions, one from the Fourth Circuit Court of Appeals and one from Pennsylvania’s Commonwealth Court, rejected arguments from pipeline opponents that, if accepted, would have bolstered local efforts to stymie pipeline development. In Orus Ashby Berkley, et al. v. Mountain Valley Pipeline, LLC, landowners challenged Mountain Valley Pipeline, LLC’s (“MVP”) eminent domain authority for the construction of a Federal Energy Regulatory Commission (“FERC”)-regulated pipeline designed to transport natural gas from West Virginia to Virginia. See 2017 U.S. Dist. LEXIS 202907 (W.D. Va. Dec. 11, 2017). Landowners launched a challenge against MVP and FERC, arguing that Congress’s delegation of eminent domain authority to FERC and pipeline developers under the Natural Gas Act (“NGA”) was overly broad and unconstitutional, and that FERC’s standard to determine whether land is being taken for “public use” does not pass muster under the Fifth Amendment. On December 11, 2017, the District Court ruled that the court lacked jurisdiction to consider the constitutional arguments, reasoning that the NGA makes clear that any challenges to FERC orders must be first reheard by FERC, and then can only be challenged in a federal court of appeals. Id. The plaintiff landowners appealed that decision, which is still pending.

Meanwhile, the same judge issued an opinion in a different case affirming MVP’s right to construct the pipeline using eminent domain powers granted to it by FERC-issued certificates. See Mountain Valley Pipeline, LLC v. Easements to Construct, Operate and Maintain a Natural Gas Pipeline, U.S. Dist. LEXIS 15724 (W.D.Va. Jan. 31, 2018). As a result of that decision, Plaintiffs in Berkley filed an Emergency Motion for Order under the All Writs Act seeking to stop MVP from taking any action pursuant to the January 31 decision until the constitutional arguments currently under appeal are decided. The landowner plaintiffs argued that if MVP is permitted to take immediate possession of their property, they will be unable to have their constitutional claims litigated before their properties are irreparably harmed. On February 15, 2018, the Fourth Circuit issued a one-page order denying the landowner’s emergency motion, thus permitting MVP to exercise eminent domain for pipeline construction. See Docket No. 18-1042 (4th Cir., Order Issued Feb. 15, 2018).

In Pennsylvania, the Commonwealth Court recently affirmed a decision by the Chester County trial court dismissing a suit brought by landowners and the Delaware Riverkeeper Network contending that the construction of the Sunoco Pipeline L.P.’s (“Sunoco”) Mariner East 2 pipeline (“ME2”) violates a West Goshen Township zoning ordinance. See Delaware Riverkeeper Network, et al. v. Sunoco Pipeline L.P., 2018 Pa. Commw. LEXIS 74 (Pa. Cmwlth. Ct., Feb. 20, 2018). Mariner East 2 is a 351-mile pipeline designed to bring natural gas liquids (“NGLs”), namely propane, ethane, and butane, from the Marcellus and Utica basins in western Pennsylvania, West Virginia, and Ohio to the Marcus Hook Industrial Complex on the Delaware River. ME2 will be constructed predominately in an existing right-of-way previously secured for the Mariner East 1 pipeline. In 2014, West Goshen Township, located in Chester County, Pennsylvania, enacted a zoning ordinance that restricts gas and liquid pipelines to areas zoned for industrial use, provided a conditional use permit is first obtained. Plaintiffs sought injunctive relief prohibiting ME2 construction, contending that the siting of the pipeline in areas other than those zoned for industrial purposes violates the zoning ordinance. In support, Plaintiffs argued that (1) Sunoco is not a public utility facility regulated by the Public Utility Commission (“PUC”); (2) the ordinance is not preempted by the PUC’s authority; (3) the Environmental Rights Amendment (“ERA”) establishes the Township’s constitutional obligation to regulate matters of health, safety, and welfare, such as the siting of the ME2 pipeline; and (4) Sunoco’s placement of the pipeline violates substantive due process.

In affirming the trial court’s decision, the Commonwealth Court rejected each argument. First, as a threshold matter, the Court cited to its 2016 en banc decision in In Re Sunoco Pipeline, L.P., 143 A.3d 1000 (Pa. Cmwlth. 2016), appeal denied, 164 A.3d 485 (Pa. 2016), which conclusively established that Sunoco is a public utility corporation regulated by the PUC. Second, the Court held that the ordinance, insofar as it applies to public utility pipelines, was preempted by the Public Utility Code. The Court cited to multiple decisions indicating that the General Assembly intended the PUC to occupy the field of public utility regulation. The Court further found that the ordinance is preempted because it conflicts with Public Utility Code, which establishes a policy of statewide regulation of public utility services and facilities. Third, the Court rejected Plaintiffs’ ERA argument, stating that the ERA, established in 1971, was not intended to trump the long-standing, pre-existing policy of statewide jurisdiction of public utility statutes, which were first enacted in 1913. Finally, the Court rejected Plaintiffs’ substantive due process claim, reasoning that such claims are designed to challenge the legitimacy of a legislative enactment, not a private party’s compliance with an ordinance, such as Sunoco’s decision not to comply with the ordinance at issue here. Judge Brobson concurred in the opinion, noting his concern whether Pennsylvanians are the primary and paramount beneficiaries of the ME2 pipeline, but conceding that the issue has been settled in Sunoco’s favor. Judge Brobson, however, departed from the majority’s dismissal of the suit, preferring instead to remand the matter to the trial court so that it could be transferred to the PUC.

By deciding against local interests opposing pipeline development, these two cases should facilitate pipeline development, at least in the Fourth Circuit and in Pennsylvania. That said, opposition to pipeline development remains stiff, and decisions that impact pipeline development are issued on a weekly (if not daily) basis from various state and federal courts, the PUC, the Pennsylvania Environmental Hearing Board, FERC, and state and federal environmental regulatory agencies. To help you keep abreast of these fast-paced developments, this blog will periodically provide additional “Pipeline Updates” that will review and analyze recent decisions impacting pipeline development. Additionally, I invite you to attend Blank Rome’s upcoming webinar on March 13 which will address the ERA, a tool often used to oppose pipeline development. Finally, Blank Rome will host another webinar in late March discussing the Clean Water Act’s Section 401 water quality certifications, which likewise have been used to oppose pipeline projects. You can register for the ERA webinar by clicking here. Registration for the Water Quality Certification webinar will be open soon, and can be accessed on Blank Rome’s events webpage.

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