The Man vs. the Pipeline

A dark side of the fracking boom: more eminent domain

Olichel/Pixabay

If you're a fan of the Ornery Holdout Battling Eminent Domain genre of newspaper writing, you should read Anya Litvak's profile of David Rheinlander in the Pittsburgh Post-Gazette. Here's the lede:

If David Rheinlander believes that his 5.5 acres, which include woods and a modular home, are worth $10 million, then who exactly is the Rover Pipeline or the federal government, for that matter, to say otherwise?

"If they don't like it, go around me," Mr. Rheinlander said less than a week after Energy Transfer Partners, the Texas-based firm developing a massive natural gas pipeline, asked a federal court to condemn a 150-foot-wide line across his Washington County [Pennsylvania] land so it can cut down his trees as soon as possible.

Litvak goes on to describe Rheinlander's early encounters with the company's land agents ("Even during those amicable conversations, the phrase eminent domain was a frequent garnish, he recalled") and the ensuing arguments over safety, property rights, and where the best route for the pipeline would be. My knee-jerk sympathies, as always, are with the holdout. The company claims that it faces "billions of dollars of lost revenue" without the property, which to me suggests they should pay Rheinlander more than the $3,500 they're offering, but I guess they think they've found a legal workaround.

The story also gives us a glimpse of a bigger issue, a dark side of the fracking boom:

The number of eminent domain pipeline cases has risen in proportion to the pace at which pipelines are being built to accommodate the shale gas boom—which is to say, it has ballooned…

Read the whole thing here.

Comments

[Not a True MJG]

"That ain't life-changing money," he said. "And this is gonna change my life."

What he's looking for is something that's enough to pay off his mortgage. As he sees it, once the pipeline goes in, his land will be worthless.

He doesn't sound ornery at all.

Thanks for sharing, JWalker.

[albo]

He already has a gas line under him, like many of us do.

"I wouldn't even mind the line if they put it where I want them to put it," he said

Yeah. I don't think this is an eminent domain hill you'd want to die on. He's goofy.

[Agammamon]

$3,500 - which I'm assuming is supposed to be for a 150 ft long (but how wide) 'easement' (even though this sort of thing effectively takes that part of the property away from the use of the landowner - though I bet he'll still be assesed taxes on it)?

I would think that the purchase cost of the underlying land is more than $1.16 per square foot. A $3,500 *per year* lease payment sounds a lot more equitable.

[The Last American Hero]

I'm not sure I understand the problem. If he's getting low-balled, isn't that what the courts are for? It would seem that if there is a problem, it wouldn't necessarily be with eminent domain, but with courts being too deferential to the government in cases where the government assessments are low balling the property value. The energy company making a shitty offer doesn't seem like much of a story.

[Pompey:? Class Mothersmucker]

The says 150ft wide (but how long). Either way, my rage level has increased.

[albo]

I get nothing per year for the power company's telephone pole I have to mow around.

[pan fried wylie]

Reduced solar input on the north side of the pole means you have to mow that spot like 1/64th less, and you don't even have to mow the spot the pole occupies. Nothing pleases You People.

[Zeb]

Presumably you didn't own the property when that right of way was established.

[Fatty Bolger]

I'm trying reaaaallllll hard to get revved up over this, but I just can't. This is the kind of thing eminent domain is actually supposed to be used for.

[kbolino]

There are really 3 categories of intellectually consistent views of eminent domain.

1. There should be no such thing.

2. It should be used only for things which have direct benefit to the public at large.

3. There should be few if any restraints on its use.

The anarchist (and maybe minarchist) position falls into 1. Most people probably have views which fall into category 2. Few people who aren't communists or government lackeys hold views that fall into 3.

The problem is that, generally speaking, there is no meaningful difference between a road or a power line and a pipeline. It is not eminent domain "abuse", if you think eminent domain should be used for public benefit, to use it for a pipeline. Finding somebody honest enough to admit this, even when they don't like what the pipeline is carrying, is difficult.

[Stormy Dragon]

there is no meaningful difference between a road or a power line and a pipeline

Anyone who wants to use a road can do so. I can't distribute my natural gas through Energy Transfer Partner's pipeline, only they can.

[Fatty Bolger]

Not true. Any producer can ship natural gas through the pipeline.

[Gadfly]

You are correct. The power of eminent domain for pipelines is only granted for pipes that are "common carriers", those that allow anyone to ship gas through their lines. Proprietary lines are not granted the power of eminent domain.

[Sevo]

True, but they are still 'toll-ways' for the transport of a particular good and for the profit of the owner.
Still seeing a wide differentiation to 'roadz'.

[Fatty Bolger]

Yes, they have to pay for the transport. The same way road users pay to use the roads via fuel and other transportation taxes. The difference is a matter of accounting, not principle.

[SomeGuy]

roads aren't privately owned/profit based. I would have an issue with a road if it was private vs public and it used eminent domain.

[SomeGuy]

err. I have equal issue with roads and pipes when privately owned and they made a profit off it.

Those should not have access to eminent domain. Period.

[kbolino]

Anyone who wants to use a road can do so.

As any number of people on any given immigration thread will point out, no, they can't. Less facetiously, you have to have a license and a registered vehicle to drive on a "public" road legally.

The public benefit of the pipeline, like the public benefit of power/telephone/cable/etc. lines, is the good or service delivered over it. A nat-gas pipeline gives you better access to nat-gas.

[Sevo]

"Less facetiously, you have to have a license and a registered vehicle to drive on a "public" road legally."

Even without driving, I can walk on it, I can ride with a wide variety of licensed operators; I, as an individual can use the "thoroughfare" in many ways. Further, in the case of most gov't 'roadz', there is no profit-making entity benefiting from them ("them" specifically; not gonna play games here).
Further, in any conflict between coercion and trade, I will personally land on the side of trade every time absent strong showing for coercion.
I see none here; the pipeline owner can negotiate a price and build it into the fees to move nat gas. Yes, we 'all' pay a bit more, but tough beans. Nowhere is it written that I deserve cheaper nat gas which means Max's property is taken.

[SomeGuy]

This is the issue at hand. If they dont want to pay they can do something else.

Nothing i hate more than property owners getting jewed.

[Zeb]

There are other uses of roads besides driving a motor vehicle.

And the roads are already there. If they were building the interstate system now, I'd have some questions about the use of eminent domain there as well.

[Karen24]

Back in the 90's I did legal work related to pipeline safety cases. The justification for allowing pipelines to use eminent domain was that they got to use the state's resources to force landowners to sell and in turn the state got to cap the prices they charged for transporting fuel and also require the pipeline to install taps and gates for producers and agricultural users. . It was part of a (only somwhat even when it worked, and it rarely ever worked) consistent system of regulation. Since that time the state and Feds have almost completely deregulated prices and access, yet the eminient domain laws remain in effect.

[Gadfly]

The justification for allowing pipelines to use eminent domain is that they are public utilities. Pipelines that are classified as private utilities are generally not granted this privilege. A public utility is required by law to make their facilities available, at fair rates, to any other public utility company that wishes to use them. The company that is building this line will most likely have to make it available for use by their competitors as a trade-off for being granted the use of eminent domain.

[CPRM]

I think you got too big of a gap between 1 and 2 there kb. For me the actual minarchist position would be a case like a guy owns a beach, war is imminent and his beach is a weak spot where invasion is likely. An actual need for that specific piece of land, not some wishy-washy public benefit.

[kbolino]

Fair enough, but that would also be a temporary taking. Eminent domain is permanent.

[CPRM]

That specific case is most likely temporary, but other like cases need not be. The important thing is there is an actual need that that land, and only that specific land, can fill. (ie property on a border or such may be needed to be taken permanently to fulfill certain duties chartered to the government)

[ant1sthenes]

If he actually values his land at $10 million dollars, shouldn't his property taxes reflect that?

[ace_m82]

I believe the State taxes under the theory of Eminent Domain as well - in that they own your property and you're just renting it from them.

It sets aside all logic and Lockean property rights aside, but that's how they think because it's "necessary".

[Gadfly]

Correct. The US (and most other nations) operate under the principle that all private citizens may only own property in fee and that all allodial titles are held only by the state. Interestingly, in the English tradition from which the US inherited much of its foundational legal theories, many private individuals in ancient times held allodial titles, but these were eventually confiscated by the king since a king may not tax or in any other way impinge upon an allodial title, which they of course found very inconvenient.

[Austrian Anarchy]

Sounds like a case for a new constitutional amendment to get rid of that royalty shit they forgot to get rid of right after the revolution.

[SomeGuy]

agreed.

[albo]

You can't spot reassess in PA. Only when full county reassessment or when a property is sold.

And if he's serious about that value, he's gonna piss off his neighbors.

[SomeGuy]

It is only worth as much as someone wants to pay. If eminent domain didn't exist here it could be worth 10 mil but if company rather go around than it isn't forth 10 mil.

duh...

[$park? don't care bout yo mom]

Is he still paying mortgage? If so then technically the mortgage company owns the land and should be able to make the deal with the oil company then reduce the remaining payments to reflect that. If he's not, then the oil company should be forced to deal with him and his demands.

They honestly should have been trying to work this out before even beginning construction on the line so they could plan its route. If they end up paying more for the line those costs are most likely just going to be put on the ratepayers to cover anyway. Either that or make the guy a reasonable offer.

[Sevo]

"If they end up paying more for the line those costs are most likely just going to be put on the ratepayers to cover anyway."

As *will* the ratepayers when the pipe line runs into the inevitable 'hard-rock' formation to cut through.
Tough. As mentioned above, the ratepayers are not guaranteed the cheapest possible gas. They can use propane of they find nat gas too expensive.

[$park? don't care bout yo mom]

You might find this surprising, but I agree with you. My point is that the ratepayers are covering the cost of the line anyway so the oil company should just stop bitching about it.

[Austrian Anarchy]

Is he still paying mortgage? If so then technically the mortgage company owns the land and should be able to make the deal with the oil company then reduce the remaining payments to reflect that.

That is an interesting one I've never heard put into action before. Are you telling me that if I have a mortgage, my mortgage company can set up any sort of business they want in the yard and I have no say in it, so long as part or all of the proceeds go to reducing my mortgage payments?

Is this disclosed anyplace, or is it just some of that mysterious unwritten contract stuff we are supposed to know as citizens?

[C. S. P. Schofield]

Is the pipeline for unreined product? Does that metter? Might it be worth it to the landowner to say, "Sure, put you're pipeline through, if you give me a free tap. I'm vaguely aware of some similar arrangements for natural gas wells, but I don't know how they work.

[Austrian Anarchy]

If the pipeline company is not budging from $3,500, how likely is it that they would let the guy use their product as payment for the rest of his life? Seems unlikely to me, but it does seem like something he could add to his asking price if these guys keep pestering him.

Sounds more like the statists are going to steal his land and if he resists, they will kill him. The firing squad formed in the comments above yours.

[Austrian Anarchy]

Wow, this is a Bizarro post and comments.

Jesse nails it (unlike many other writers here) with this:

The company claims that it faces "billions of dollars of lost revenue" without the property, which to me suggests they should pay Rheinlander more than the $3,500 they're offering, but I guess they think they've found a legal workaround.

Then the comments are flooded with something worse than statists who agree that whatever the Hell the pipeline company offered is all the poor landowner should get. Take it or else.

What bullshit.

Even one comment saying that his property should be assessed at his asking price for an easement. Presumably, by that math, if he flat refused that makes his property infinitely valuable to him and his taxes should be assessed at infinity.

Just like Jesse said, if the pipeline company is going to lose billions without that easement, then the $10 million asking price should be fine place to begin negotiations. Instead, the pipeline company is going to have an armed State strikeforce steal the man's land and the peanut gallery is fine with that.

Somehow I don't see any of these commenters as the type who would accept that sort of offer for anything else. Maybe I am wrong about that and each one would gladly sell their own house to anybody who knocks on the door with $100. Or anybody who wants to buy their car for $50.

Whoever is making the offer sets the price, no acceptance needed, right boys?

[DRM]

Most of the issues with eminent domain would go away if "reasonable compensation" was replaced with "ten times the assessed value".

While a purist might still object in principle (and I would be sympathetic to such objections), it would certainly do a good job of separating cases where eminent domain is pursued for mere convenience in land acquisition from cases where it reflects a real need for a particular parcel.

[Robert]

This is one of the situations for which I think liberty actually demands, rather than forbids, the use of eminent domain. It was only about 20 yrs. ago that I realized the value of freedom of movement in constraining the right to exclude from land. Easements are pro-liberty. People & things need to cross the property of others, and need to be able to do it for less than property owners might hold them up for. Sometimes a court has to decide how much compensation is appropriate, because if you rely on them to bargain, property owners at certain locations would extract uneconomic rents.