Officials from Central New York Oil & Gas recently informed landowner Bob Swartz that the company plans to cut “a 50-foot-wide, 400-foot-long gash through an ancient stand of trees” in his front yard to clear the way for a $250 million, 39-mile natural gas pipeline in the mountains of northern Pennsylvania. Not surprisingly, Mr. Swartz balked at the company’s heavy-handed plan, recommending an alternate route for the pipeline out across an open field. Company officials promptly swatted aside Mr. Swartz’s suggestion, and with brazen indifference, offered instead to pay him for the wood from the felled trees.
“That’s not negotiation. It was their way or no way, and ‘we’ll see you in court.’ It’s the little guys against Goliath,” Swartz told the Associated Press. He is challenging the company in court, but faces a steep uphill battle because our federal government permits companies like Central New York Oil & Gas – under the auspices of the Natural Gas Act of 1938 – to assume control of private property for so-called “public benefit.” I’ll try to explain.
Mr. Swartz is one of a growing number of victims falling prey to a new disturbing trend: The fracking industry’s use of “eminent domain” to seize private property as it cuts and slashes its way across the country laying thousands of miles of pipeline and access roads in gas-rich states like New York, Pennsylvania, Ohio, Colorado, Texas and my home state of Louisiana.
For those of you unfamiliar with the term, eminent domain is the legal process by which the government – or an entity like a public utility (or, say, an oil and gas company) – seizes private property for public or civic use, such as a highway or a railroad (or, say, a natural gas pipeline). It is frequently a combative process, as we see in the case of Mr. Swartz, and here’s why: Although landowners are to be paid fair market value for their property, the land can be “acquired” without the owner’s consent.
It was President Harry Truman who granted oil and gas companies this enormous power – traditionally confined to the federal government – to facilitate the construction of our nation’s very first pipelines. In 1947, Truman amended the Natural Gas Act of 1938 to include the exercise of eminent domain. But let’s not place too much blame on Harry, because at that time nobody could have foreseen the mass proliferation of fracking and the soaring number of pipelines necessary to speed product to market. It is much more appropriate to fault modern-day regulators, who are charged with ensuring there is no “unneeded exercise” of eminent domain. Clearly, that has not taken place in the situation now unfolding in northern Pennsylvania.
Put yourself in Mr. Swartz’s shoes for a moment. I know I’d feel completely betrayed by my government if it allowed a company to swoop in with heavy machinery and begin carving up my front yard. And this is only the very beginning of what could become the biggest land grab our nation has ever seen. As the use of fracking continues to spread like wildfire, troubling stories like that of Mr. Swartz are certain to become more and more common. Another term you’ll be hearing is “condemnation,” which is the formal act of exercising the power of eminent domain to transfer title to the property from its owner to the state. Condemnation, indeed.
By design, eminent domain is to be used as sparingly as possible – as a last resort. However, in the case of the proposed MARC 1 pipeline to run atop Pennsylvania’s Marcellus Shale, it’s clear that Central New York Oil & Gas (CNYOG) is pushing the boundaries of eminent domain’s acceptable application.
From a Jan. 31 Associated Press report out of Laporte, Pennsylvania:
A pipeline operator (Central New York Oil & Gas) assured federal regulators it would minimize using eminent domain against private landowners if given approval to lay a 39-mile natural gas pipeline in northern Pennsylvania’s pristine Endless Mountains.
Yet the company was readying condemnation papers against dozens of landowners even as the Federal Energy Regulatory Commission (FERC) was considering its application for the $250 million MARC 1 pipeline. Within two days of winning approval, Central New York Oil & Gas Co., LLC went to court to condemn nearly half the properties along the pipeline’s route – undercutting part of the regulatory commission’s approval rationale and angering landowners who are now fighting the company in court.
The landowners’ legal fight is focused on two parts of the process: (1) the regulatory commission’s approval of the project, which they are appealing; and (2) the pipeline company’s “overly expansive” exercise of eminent domain power as granted by the federal government under the Natural Gas Act. The main problem, as the landowners see it (and I agree wholeheartedly) is that the federal government affords CNYOG, and all other pipeline companies, too much leverage under current eminent domain guidelines. Companies are bullying landowners and relying on the government to back them up.
More from the AP report:
Many of [the landowners] say they favor natural gas drilling and some have leased land to gas drillers. What rankles them is that the federal government has invested the company 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 the company offered them less than a third of the amount they got from another pipeline company that installed 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 federally regulated and companies that operate them don’t have condemnation power.
Amy Gardner said a CNYOG company representative who made them the lowball offer told them to “take it or leave it.” She would not publicly disclose what the company had offered.
“There’s no negotiating with this company. They come and they tell you what they’re going to do. They’re telling you what they’re going to pay. And they’re 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.
Clearly, the time has come to amend the Natural Gas Act to curb the abuse of eminent domain power as the proliferation of pipelines explodes across the country. The situation will only get worse for landowners as fracking spreads to more populated areas.
My guess is Congress will eventually amend the Act, but how many landowners will be stripped of their property – and their trust in our government – before that happens?
Stay tuned, this story is just getting its legs.
Read the full AP report here: http://www.foxnews.com/us/2012/01/31/landowners-fight-eminent-domain-in-pa-gas-field/
Study up on “eminent domain” here: http://en.wikipedia.org/wiki/Eminent_domain
Review the Natural Gas Act of 1938: http://en.wikipedia.org/wiki/Natural_Gas_Act_of_1938
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