Wednesday, September 13, 2017

Shale Law in the Spotlight: Overview of Legal Developments on the Atlantic Sunrise Pipeline Project

Written by Chloe Marie – Research Fellow

The Atlantic Sunrise pipeline is an expansion project to the existing Transco system pipeline, which consists of a 10,200 miles mainline pipeline that transports natural gas from Corpus Christi in southern Texas to New York City. The Atlantic Sunrise project would entail the construction of a new 183 mile pipeline divided in two segments – the Central Penn Line North extending from Susquehanna County and crossing Wyoming and Luzerne Counties to the existing Transco pipeline in Columbia County, and the Central Penn Line South starting from the Transco pipeline in Columbia County and going through Northumberland, Schuylkill and Lebanon Counties to Lancaster County. This project also includes the addition of 12 miles of pipeline looping (Chapman loop, Unity loop), two new compressor facilities and the replacement of existing pipelines in Pennsylvania as well as addition and modification projects to facilities in the states of Maryland, Virginia, North Carolina and South Carolina.

This article will review the timelines of actions taken by FERC and Pennsylvania DEP related to the construction and operation of the Atlantic Sunrise Project. This article also will address the eminent domain issue that has been litigated before the U.S. District Court for the Eastern District of Pennsylvania.
FERC process timeline

Transcontinental Gas Pipeline Company, LLC initiated a pre-filing process with the Federal Energy Regulatory Commission (FERC) for the Atlantic Sunrise project in March 2014 and later filed an application for a Certificate of Public Convenience and Necessity under Section 7(c) of the Natural Gas Act on March 31, 2015. Transco Company stated in its application that the Atlantic Sunrise project would have the capacity to transport approximately 1,700,002 dekatherms per day of natural gas to Southeastern and Eastern U.S. markets and requested approval from FERC by April 29, 2016.

In December 2016, FERC issued a Final Environmental Impact Statement for the project and declared that “environmental impacts would be reduced to ‘less than significant levels’ with the implementation of mitigation measures proposed by the company and FERC.” On February 3, 2017, FERC issued an order granting authorization to construct and operate the Atlantic Sunrise Project in Pennsylvania, Maryland, Virginia, North Carolina, and South Carolina.

Eminent domain process timeline

On February 15, 2017, following the FERC order approving the construction of the pipeline project, Transcontinental Gas Pipeline Company, LLC filed a complaint in condemnation before the U.S. District Court for the Eastern District of Pennsylvania against several landowners residing in Lancaster County, Pennsylvania in order to obtain the necessary rights-of-way to construct and operate the Atlantic Sunrise pipeline project (see docket no. 5:17-cv-00715). The company explained that even though it offered to acquire the rights-of-way at a price “higher than the Appraised value,” landowners refused to enter into an agreement despite the FERC order.

On February 20, 2017, Transco Company filed a Motion for Partial Summary Judgment arguing that it should be granted an order of condemnation because it has the substantive right to condemn under the Natural Gas Act, because it has not been able to acquire the property necessary for the FERC-approved project, and because it offered at least $3,000 for the rights-of-way.

On the same day, Transco also filed an Omnibus Motion for Preliminary Injunction seeking immediate possession of the rights-of-way. Transco Company recalled that the FERC concluded that the project “has been designed to minimize impacts on landowners and the surrounding communities,” and alleged that retention of the necessary rights-of-way would substantially jeopardize the completion of the pipeline project causing irreparable harm to Transco while the landowners’ harm could be compensated with money easily. In addition, Transco Company stated that “granting possession by March 20, 2017 is in public interest, because the Project will provide Transco’s customers and the markets they serve with greatly enhanced access to Marcellus Shale natural gas supplies, support the overall reliability and diversification of energy infrastructure along the Atlantic seaboard and points south, and meet the anticipated increase in market demands for natural gas consumption.”

On April 6, 2017, the U.S. District Court denied Transco’s Omnibus Motion for Preliminary Injunction but provided to the company limited access to the properties in order to complete the needed surveys pursuant to Pa. Cons. Stat § 309. Interestingly, Transco Company filed another Omnibus Motion for Preliminary Injunction on June 28, 2017, to obtain possession of the rights-of-way by August 18, 2017. On August 23, 2017, the U.S. District Court granted Transco Company’s Motion for Partial Summary Judgment as well as its Omnibus Motion for Preliminary Injunction and ordered condemnation of the properties at issue.

DEP process timeline

The Pennsylvania Department of Environmental Protection (PA DEP) issued in April 2016 a Water Quality Certification pursuant to Section 401 of the Clean Water Act for the project as long as Transcontinental Gas Pipeline Company, LLC obtained appropriate environmental permits.

On July 14, 2017, Transco Company submitted a Plan Approval application to DEP for proposed transfer of nitrogen emission reduction credits (ERCs) in order to comply with 25 Pa. Code Chapter 127 and offset emissions from the construction activities of the Atlantic Sunrise Project pipeline.

On August 30, 2017, Transco Company received the Chapter 105, Water Obstruction and Encroachment permits as well as the Chapter 102 Erosion and Sediment Control permit from DEP for the Atlantic Sunrise project. In the Press Release announcing those permit approval, PA DEP stated that “the permits were issued with strict special conditions designed to ensure the strongest possible protections for streams and wetlands, as well as additional stipulations for landowners with private drinking water wells.”

Recently, on September 8, 2017, PA DEP announced that it issued an Air Quality Plan Approval for air emissions related to the construction of the Atlantic Sunrise Pipeline Project. DEP Secretary Patrick McDonnell declared that “DEP thoroughly reviewed the application to ensure that temporary emissions during the construction phase of this project will be minimal and completely offset by reductions elsewhere.” The Air Quality Plan authorizes “the transfer and use of 106 tons of NOx ERCs for offset purposes from the Northeast Maryland Waste Disposal Authority.”

Transco Company proposed an in-service date in mid-2018 and should begin “preliminary construction within a few weeks,” according to the Lancaster Online media report.

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