Author: Brian Brock

In the last few months, everything has changed – but in reality, nothing has changed.

What has changed?

The Tennessee Gas Pipeline Company seems to have dropped its Northeast Extension Project, after the partnership of Williams and Cabot announced their Constitution Pipeline.

Instead of moving the gas from the Tennessee #300 pipeline, the gas will come from the Williams Transco Pipeline further to the south.

The Northeast Extension would have been a 36” pipeline, whereas Constitution will be 30” – one third smaller. To move the same amount of gas through a smaller pipe, the pressure will be higher: 1480 psi.

What has not changed?

A major pipeline will still run through Franklin (see map at right). The gas will still come from the Marcellus gas fields of Pennsylvania. This gas will be delivered to the intersection of the Tennessee #200 and the Iroquois pipelines in the Town of Wright, Schoharie County, and from there moved on to New England or the New York Metro area. Construction is still scheduled to begin in the spring of 2014 and finish in less than a year (see Timeline: Constitution Pipeline).

How did this happen?

It seems that Williams and Cabot have managed to hijack the pipeline route from Tennessee Gas Pipeline Company. Williams says: “The two projects are competing proposals. No one bought anyone out.” El Paso Corp (parent of Tennessee Gas Pipeline Company) would only say: “We are continuing to assess the needs for the project with potential customers.”

No other details were provided by Richard Wheatly, Manager of Media Relations. All this is despite El Paso having presented the Northeast Extension at least since September 2009, whereas Williams first presented the Constitution in February 2012.

A primer for getting the most you can from eminent domain

The Constitution Pipeline repeats the Marcy South power line experience in that hundreds of land owners in Delaware County will lose control of parts of their property for inadequate compensation — even though the project is of little benefit to residents. Unwilling owners will be compelled through eminent domain.

The pipeline would be almost 121 miles long, with the right-of-way cutting through an estimated 1,400 properties. Of those, 1,100 are in New York State, 500 of which are in Delaware County, and 120 are in the Town of Franklin.

The Cornell Cooperative Extension of Delaware County hosted two meetings on the pipelines on the17th of May. At the meeting in the Franklin Central School, representatives from Williams did not answer why the Constitution Pipeline could not be routed along the I-88 right of way (ROW) for over half its length, thereby sparing hundreds of local landowners.

A few days afterward, Williams responded to our e-mail from a week before the meeting with three reasons: to avoid developed areas, to avoid wet lands, and the lack of flat land between river and hills

In April, Williams began sending letters to landowners along their preliminary route, requesting permission to trespass for survey work. Separately or together, land, engineering, environmental, and possibly cultural surveys will take a day or two each and leave stakes and a cleared line-of-sight along the route. If this permission is not granted, then Williams could obtain a court order to force the issue. However, the permission granted by the landowner need not follow the Williams document exactly. Other such documents give more protection to the landowner and fewer rights to Williams.

By fall, Williams will have firmed-up the route of the pipeline, and then it will be seeking easement agreements from landowners. Owners should be compensated for: permanent loss of the use of the ROW, inconvenience during construction, complications from dividing a property in two, loss of the value of the whole property, rental of the land to ship gas, and future rights to the easement. Other costs should be assumed by Williams in the easement agreement, such as contingent liability and the cost of removing the abandoned pipeline.

Along pipeline routes in northern PA and the Millennium in NY, the landowners have been paid $5 to $25 a running foot. Use of the surface ROW alone is valued at a fraction of the fee simple (purchase price) of vacant land. In Franklin, for a corridor 50 feet wide, that works out to about $1 per running foot of easement. Although a corridor up to 125 feet wide will be cleared, Williams’ control of the wider strip ends with the completion.
In addition, landowners should be paid for “damages” such as structures knocked down, timber cut, and crops that could not be grown during construction.

In the ROW, no permanent structures can ever be built: no house, garage, deck, patio, or septic system. Nor can the landowner plant trees or even tall shrubs. Nothing can be built that interferes with Williams’ ability to monitor the pipeline and dig-up the pipe if necessary. However, the owner must still pay taxes on the acreage in the corridor.

Other than walking, mowing, and watering, anything that you want to do on Williams’ easement requires their written permission. The landowner must submit plans to their engineering department. After a few weeks a letter will be sent prescribing what Williams will allow. You may only begin work once this letter has been signed and returned.

The boiler plate contract from most companies would allow more than just the pipe under their easement. While the pipeline is mostly buried, there are small surface facilities such as valves, metering and regulating stations, and equipment launch and retrieval ports. These fit entirely within their easement and are surrounded by a chain link fence.

A pipeline ROW also enters the land owner in the lottery to have a compressor station for a neighbor. The plan that Williams has submitted includes only one compressor station at the northeast end. However, even at 32,000 hp, this is not enough to move gas through the pipeline at full capacity. Additional compressor stations can (and likely will) be built along the line.

In recent years, pipeline companies have left these booster stations out of the pipeline project, possibly to reduce local opposition. For example, the Millennium Pipeline is only a few years old, but already a compressor station is being separately certified for town of Minisink, Orange County, and the company has selected the site for a second in town of Hancock, Delaware County — only 60 miles away. Williams will not deny that compressor stations may be built but only repeats that none are in their current plans and additional FERC permission will be required.

In the boiler plate agreement, there is no clause for rental payment. The Constitution Pipeline is designed to carry 630,000,000 cubic feet each day beneath your feet. Williams will charge companies of Cabot Oil & Gas and Southwest Energy a fee for every cubic foot, but the land owner receives nothing.

Again, the land owner has no choice but to reach some sort of agreement with Williams. Once FERC awards a Certificate of Public Convenience and Necessity (targeted for November 2013), Williams gains the power of eminent domain to seize any easement.

However, the agreement does not have to be the boiler plate version that the landman will first offer. These versions give every advantage to the company. For example, they typically give a company all rights to future use of the easement for additional utilities such as communications, power, and even additional pipelines – all without additional payment to the landowner.

The landowner comes to the negotiating table with a weak hand. The owner is a novice while the pipeline company has been doing this for decades. Most likely, this will be the first time an owner has seen an easement agreement for a pipeline, whereas the company knows not only what every word means but understands how the court would interpret anything not specified.

On top of this, the company will have the power of eminent domain and can ask a court to impose terms on anyone who will not agree to their offer. According to Amendment V of the U.S. Constitution, no citizen shall be “deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use without just compensation.” Unfortunately, over time, the courts have broadened the meaning of “public use” and narrowed the meaning of “just compensation.”

Utility projects are inherently unfair in compensating a landowner, but they can be made less unfair. By banding together to form a coalition, landowners can pool information and resources, and negotiate the best possible deal for themselves.

The proposed Constitution Pipeline would carry gas from the Marcellus gas fields of Pennsylvania to the intersection of the Tennessee #200 and the Iroquois pipelines in the Town of Wright, Schoharie County, NY.

For more information in this issue of The New Franklin Register, see:

Constitutional Confiscation?

Déjà Vu All Over Again