Shepstone Management Company, Inc.
A completely deceptive and stupid pipeline trick practiced by New Jersey won favor with the 3rd Circuit Court of Appeals is now being advanced by others.
Despite a very well argued appeal to the full Third Circuit Court of Appeals after a throughly bad decision from a three judge panel, the full court refused to take it. This leaves not only PennEast Pipeline, but also every other new pipeline and FERC, in a very bad position where obstructionist states and even individual landowners can sprague pipelines by simply entering into conservation easement agreements. It’s a complete fraud on everyone involved and thoroughly abuses the very concept of a conservation easement. And, fractivists, loving the fraud, are trying to now push this stupid pipeline trick as a template for pipeline opposition.
Readers may recall Jim Willis first identified the problem with the panel decision:
Anti-fossil fuelers will use this new loophole in order to block new pipeline projects. Here’s how it works. A crackpot anti-fossil fueler who doesn’t want a pipeline across his land in Upstate NY calls up Andy Cuomo and says, “Hey Andy, I’ll give you an easement for my property that says my land is only to be used for ‘recreational’ or ‘agricultural’ purposes. The state gets to own the mineral rights under my land, but I’ll own the surface and junk it up any old which way I want to. Deal?” The next day the corrupt Dept. of Environmental Conservation shows up with the appropriate paperwork for the anti landowner to sign. Voila. The state can now block a pipeline from crossing that property. That’s how we see this decision playing out with other pipeline projects.
I pointed out that PennEast had not really addressed this stupid pipeline trick in their legal filings with the Third Circuit’s panel, having instead relied primarily on the provisions of the Natural Gas Act. The subsequent filing of the appeal with the full court was better, I thought, and made much more of the easement aspect, being very compelling overall in demonstrating the panel decision was simply untenable both legally and practically. It still only obliquely dealt with the easement abuse angle, though, and the full court rejected the appeal.
This has predictably led to other fractivists wanting to use the same stupid pipeline trick. Here’s a bit of the news from PipelineLaw.com:
Last week, Annie Kuster (D-NH) along with four other Democratic members of Congress introduced a proposed Natural Gas Act (NGA) amendment aimed at banning the use of eminent domain for construction or expansion of interstate natural gas pipeline infrastructure through lands subject to conservation restrictions in favor of, or owned by, non-profit entities or local governments. The proposed legislation is “The Protecting Our Conserved Lands Act of 2019.”
If enacted, the bill would prohibit NGA condemnation of lands that: (1) are subject to a “conservation easement or other conservation-related restriction” in favor of a 501(c)(3) non-profit entity, or a municipality, county or other division of local government, or (2) that are owned by or deeded to any such non-profit entity or locality “for the purpose of conservation.”
This is the typically crap that comes of New England where they desperately need more gas but don’t want pipelines, apparently hoping the stuff will come in the modified form of pixie dust that magically appears as needed. So, the usual politicos, eager to demagogue, have picked up on New Jersey’s stupid pipeline trick, saying to themselves “now, here’s a way to get some green press by putting this into a piece of legislation that’s going nowhere.” It’s deliberate vague, of course, and is intended to give any landowner the right to stop a pipeline by donating an easement to a state of similar mind. It’s the Jim Willis nightmare in the form of a proposed bill.
The legislation is meaningless as a practical matter unless radical Democrats take over Congress and the Presidency, but, in the meantime, there is the Third Circuit problem. That decision will have to be appealed to the U.S. Supreme Court and if that doesn’t work, a legislative fix will be necessary, if that’s even feasible. It’s a real obstacle and will affect every proposed pipeline in the country if not corrected.
The appeal to the Supremes will clearly have to be even stronger than the one to the full Third Circuit. It would seem, for starters, that it will have to forcefully raise interstate commerce issues, for instance. What right does any state have to create a phony obstacle to delivering gas to another state?
And, the abuse of easement law must get greater attention. These agricultural and conservation easements were never intended to interfere with interstate commerce or with natural gas pipeline infrastructure. The idea a pipeline is incompatible with agriculture is false on its face as a thousand pictures of farmland above pipelines being plowed will demonstrate and every pipeline is a wildlife bonanza for deer, turkeys and the Golden Winged Warbler.
There are three aspects of the easement abuse that must addressed. First, there is the issue Jim raises. How can the donation or sale of an easement to a state by a single landowner possibly be allowed to stand in the way of a pipeline? There are a dozen reasons why this cannot be allowed to stand, beginning with the fact an easement is a negative declaration, not land ownership per se.
Secondly, if the easement was donated, there was undoubtedly Federal tax benefits involved and they were surely of greater value than those from the state. So, why should the state be able to assert their interest in not building a pipeline is greater than the Federal interests in building that same pipeline as expressed in the Natural Gas Act? Moreover, the state program description specifically says “The sale of development rights does not make farmland public property.”
Thirdly, although I seem to be the only one raising this point, but the land condemnation involved in this instance involves real land and not just an easement. If the landowner wants the pipeline, the state does not want it and there is nothing in the easement with respect to pipelines, the latter is effectively condemning additional interests in the property without paying additional compensation for those interests. The landowner would get compensated for any damages to their land, if any, by pipeline construction, but who is compensating that same landowner for the loss of the value of having a pipeline that might pay royalties or serve a business with gas? The state is robbing such a landowner.
Where will this all go? I don’t know but the attempt by this New Hampshire Congresswoman to legislate the New Jersey and Third Circuit decision is the clearest indication of the inherent flaws giving states the right to treat easements as land itself and the chaos that will result if not somehow corrected.
This post appeared first on Natural Gas Now.