Get Ready for Keystone Pipeline 2?

The Atlantic Coast Pipeline proposal has the potential to become the Keystone XL of the East.


If you just can't get enough of the debate over the Keystone XL pipeline, take note of the Atlantic Coast Pipeline proposal—which has the potential to become the Keystone of the East.

The $5 billion pipeline is a joint venture by Duke Energy, Dominion, Piedmont Natural Gas and AGL Resources (which owns Virginia Natural Gas). It would run from West Virginia to North Carolina. Unlike Keystone, which would ship oil from the Canadian tar sands, the Atlantic Coast Pipeline would ship natural gas extracted from the Marcellus shale formation.

Virginia Gov. Terry McAuliffe, a Democrat, has enthusiastically endorsed the project. Still, environmentalists and local residents are not pleased. In fact, environmentalists are downright dismayed—even though the power companies plan to do precisely what the Environmental Protection Agency wants them to.

Earlier this month, EPA administrator Gina McCarthy spoke to a group of business interests assembled in New York. She told them the country needs a strategy to "ensure that oil and natural gas will continue to be a big factor in every state … in the most positive way." An EPA summary of her remarks reiterated the need "to build an infrastructure that matches the importance of natural gas to our economy and environment."

The Atlantic Coast Pipeline fits that bill. Nevertheless Glen Besa, who heads the Virginia chapter of the Sierra Club, responded to the pipeline announcement by saying he felt as though he'd been "punched in the gut." Mike Tidwell, director of the Chesapeake Climate Action network, said McAuliffe had made a "huge mistake." The Southern Environmental Law Center said it was "disappointed."

This is jarring—because environmentalists deserve some of the credit (or blame) for the pipeline to begin with. The soaring use of natural gas in recent years is partly owing to the advent of horizontal drilling and hydraulic fracking, and partly owing to the resultant rapid drop in natural gas prices. But it also owes much to tighter environmental regulations that have discouraged coal-fired electricity generation.

In June, the EPA proposed new state-by-state rules for carbon emissions; Virginia's reduction target is just under 38 percent. As The Richmond Times-Dispatch noted then, "Virginia power companies have already begun closing carbon-intensive coal-fired power plants and building generating stations that burn natural gas, which emits about half the carbon that coal does. Dominion Virginia Power has closed, is closing or is converting 12 generating units … and Appalachian Power is closing and converting five in the state." Duke Energy also has been moving away from coal—a process hastened by February's huge coal-ash spill into the Dan River in North Carolina.

At the time, environmental groups around the state gave the EPA's new rules fulsome praise. "Strong action," they said, was "urgently needed" to forestall "the impacts of climate change."

Well. As National Public Radio has reported, "increased use of natural gas to generate power in the U.S. is contributing to a decline in greenhouse gas emissions, according to a new report from the Center for Climate and Energy Solutions" (formerly known as the Pew Center on Global Climate Change). "The report notes," NPR continued, "that the power industry's increased substitution of natural gas for coal is the most notable cause of the nation's reduced CO2 emissions."

So you'd think a natural-gas project would make environmentalists happy. But nope.

Some of those who live near the pipeline's proposed route also object. This is nothing new to Dominion, which confronts opposition all the time. In late August, The Washington Post reported that residents of Haymarket and Gainesville in Northern Virginia are fighting a new power line. In Williamsburg, historic preservationists and others have lined up to oppose a Dominion power line across the James River. Protesters recently marched against a Dominion liquefied natural-gas project in Maryland. And so on.

Nobody who protests power plants and power lines ever volunteers to give up electricity. They just want to get it some other way.

On the other hand, the fact that Dominion always meets opposition does not mean its opponents are always wrong. And one of their biggest concerns also carries a lot of weight: the potential for the company to ride roughshod over small landowners through eminent domain. (This, too, has been a point of contention over Keystone.)

As a regulated utility, Dominion inhabits a weird gray area between private enterprise and public agency. Members of the public don't elect its officers, and its employees are private citizens. Yet thanks to state and federal law, Dominion surveyors can enter private property without permission. What's more, in cases where landowners decline an easement, the company can seize the property it wants. That raises several worries.

Take the right-of-way. Will Dominion use herbicides to keep it clear? If so, that could ruin a farmer's chance of being certified organic. A property owner who wanted to put a driveway across the right-of-way might have to get Dominion's permission—if she can. And if Dominion needed to check the pipeline, its employees could cut across her property, again without her permission.

Unlike, say, the private development that gave rise to the Supreme Court's infamous Kelo decision, a natural-gas pipeline clearly seems to meet the Fifth Amendment's requirement that private property be taken only for a public use. But the Fifth Amendment also requires that the owner receive just compensation. And therein lies another potential minefield.

The utilities want to spend as little as possible. That might lead to cases such as the one a few years ago in Wythe County. Duke Energy offered $60,000 for some property belonging to Harold Hart and Larry Ball. They declined, the case went to court—and the jury said they actually deserved $1.8 million. Sometimes it pays to stand firm.

Then there's the question of "quick take"—a process by which the utility takes immediate possession of the property it wants, and settles up later. This keeps a project from being held up while the courts go through the regular eminent-domain process, which is more time-consuming. But it also puts the landowner at a disadvantage.

Dominion spokesman Jim Norvelle says the company cannot use the quick-take process because the legal authority for condemnation—the federal Natural Gas Act—doesn't allow it. That's true, but incomplete.

In a case several years ago, a federal district judge in Virginia granted East Tennessee Natural Gas quick-take authority anyway. As the Fourth Circuit noted in a subsequent appeal: "The [district] court acknowledged that there is no provision for immediate possession in the NGA. Nevertheless, the court held that it could 'use its equitable powers to grant early possession to ETNG in the form of a preliminary injunction.' " The Fourth Circuit then affirmed the district-court ruling.

In short, if Dominion chose to seek the power of quick take, it could probably get it.

That's not likely to come up for a while, if it ever does. The condemnation power is irrelevant if the pipeline does not get a green light from the Federal Energy Regulatory Commission—and that will take a couple of years. But it never hurts to think about what lies just over the horizon.