Judges slow Sunoco’s march to the sea

Judges in Pennsylvania have dealt a setback to a major energy company’s plans to use eminent domain for a natural gas-related pipeline, a novel corporate maneuver that could set a precedent if it were approved.

In a July 23 decision published on Wednesday, two administrative law judges working for the state’s Public Utility Commission (PUC) ruled that a subsidiary of Sunoco Logistics Partners could not sidestep local zoning rules in its drive to build a statewide pipeline that would carry so-called “natural gas liquids” including propane and ethane.

The judges, Elizabeth Barnes and David Salpa, ruled that Sunoco did not meet the definition of a “public utility” in Pennsylvania because its business involves transporting natural gas liquids for other energy companies at premium rates, not supplying natural gas or other essential products directly to the public.

Earlier this month, Al Jazeera reported on how the Sunoco litigation, which has sparked controversy in the gas-rich state, could influence whether other energy companies seek public utility status to gain additional powers.

“This ruling recognizes local control and the important role local zoning plays in protecting the quality of life of our residents, and such recognition is most welcome,” said state Senator Andy Dinniman, a Democrat whose district encompasses a major hub of pipelines in eastern Pennsylvania. "Now it’s our job to continue to stand up for residents’ rights as this initial decision goes through its upcoming reviews.”

Sunoco and the municipalities and advocacy groups that objected to its pipeline have until August 29 to file replies and counter replies to the judges’ decision, after which the five-member Commission – itself the object of some criticism for its close ties to the gas industry – will rule. After that, appeals would go through the state court system.

Sunoco filed 31 petitions before the PUC in March, seeking special exemptions to local zoning rules for pump and valve stations it planned to build along a pipeline that runs from Houston, Pennsylvania, to a refinery on the Delaware River that straddles the state border. In an effort to secure property for additional segments of the pipeline, known as Mariner East, and its soon-to-be-built successor, Mariner East II, Sunoco also told residents that it had the power of eminent domain. Both the petitions and the claim of eminent domain were based on Sunoco’s argument that it was a public utility.

But several towns and interest groups disagreed, arguing that Sunoco intended to ship its products to the refinery and export much of them abroad, and the judges sided with Sunoco’s opponents.

Sunoco has already successfully negotiated buyouts for dozens of property owners along the paths of the two pipelines, but if it were to gain public utility status, it would likely be able to use the threat of eminent domain to obtain property at far lower prices.