CAEPLA BLOG

Power Lines, Pipelines, and the Limits of Eminent Domain

Posted on June 02, 2020

 

Greens, in their efforts to stop pipelines and promote power lines, are hoping to make expropriation look better and work better, for them.

But landowners need to be wary of their schemes.

Power line proponents will talk a good game, but as CAEPLA landowners learned the hard way with Manitoba Hydro, green energy proponents, especially in government, are more ruthless expropriators than any we have encountered in the pipeline industry.

Palo Alto online

Do you notice that you are seeing more protests against oil and gas pipelines in recent years? That’s because pipeline construction is booming. When fracking took off more than a decade ago, oil and gas production ramped up in areas without adequate infrastructure, like North Dakota and eastern Pennsylvania. The industry has also gotten more aggressive extracting oil from challenging sources like Alberta’s tar sands. The expansion is leading oil and gas companies to build more pipelines to move their products to urban areas and/or export terminals. To aid in that effort, federal and state grants of “eminent domain” allow them to seize property along their planned pipeline routes.

As you can imagine, that is not always popular. Although eminent domain requires that a project be for “public use” and that “just compensation” is offered, the reality is not always acceptable. The “public use” requirement was interpreted pretty broadly until about fifteen years ago, when a woman’s house was threatened to make room for a waterfront renewal project in New London, Connecticut. Her complaint reached the Supreme Court. (1) The “public use” the Court endorsed were the jobs and tax revenue that would result from revitalization of the area. Americans were upset with this generous application of eminent domain, and in the two years following most states restricted what qualified as a “public use”, precluding economic development. But pipelines and power lines continued to be considered core use cases for eminent domain.


Fast forward fifteen years. Oil and gas companies are pushing to build pipelines across the US to support their new supply. Utilities and transmission companies at the same time are pushing to build power lines across the US to connect new renewable resources with demand. Landowners, property rights advocates, and (sometimes) environmentalists are joining together to push back on these projects, often targeting the use of eminent domain. As one Iowa landowner in the way of a pipeline lamented, “We are devastated. How can a Texas company be allowed to seize my family farmland for their profit?"

The question I want to ask here is, how do we push back on pipelines without limiting power line expansion? The arguments can look pretty similar. One opponent of a planned power line from Canada to Massachusetts complained that it would “turn New Hampshire into a giant extension cord to Southern New England.” Is the groundswell of opposition to pipelines going to hurt the effort to clean up our electricity?

The Pipeline Fight


Inside Climate News has a good review of some of the recent pipeline fights. Gas pipelines are approved at the federal level, by the Federal Energy Regulatory Commission (FERC), so many of the fights happen there. (2) In practice, FERC has been a rubber stamp for pipeline requests. A recent House investigation found that virtually all requests are granted and almost all appeals are denied. The Hill summarizes the finding: “The committee found that in more than 99 percent of cases over the past 20 years, FERC has decided to give natural gas pipeline companies eminent domain; the move was approved 1,021 times and only rejected six times…. Over the past 12 years, when landowners have sought to appeal FERC’s decision to give companies eminent domain over their property, in every case the commission has issued an order extending its time frame to respond. The appeals were ultimately denied every time.”

The recent approval of the Jordan Cove pipeline to the Oregon coast is a sorry example of this. The state of Oregon has denied it multiple permits because of threats to waterways and coastal areas. And just four years ago FERC also denied approval, in part due to lack of contracts from buyers. But in March FERC approved the pipeline, granting eminent domain, having been shown a purchase contract, albeit one from a corporate affiliate of the pipeline company. Their mutual parent, Pembina, is a Canadian company that plans to ship Canadian gas through Oregon for export. FERC commissioner Richard Glick strongly disagreed with the approval. He is concerned that the contract from a friendly party doesn’t establish a clear need for the gas. And he adds that the numerous outstanding issues and delays make it “unconscionable for this Commission to permit a developer to seize private land for a project that has little chance of ever being completed.” An environmental group filed suit just a few days ago against FERC.

Intense opposition to pipelines from states, environmentalists, landowners, and others has raised questions about FERC’s fossil-friendly practices, and at least one of the commissioners agrees that change is needed. The sole Democrat on the commission, Glick, has penned a lengthy document explaining how FERC might fairly account for climate change within their existing authority, for example by considering climate impact when evaluating the public benefit of a project. FERC is taking some steps, but is unlikely to consider climate impact under the current administration.

We Need More Power Lines

With all this going on in the gas industry, the renewable sector is simultaneously looking to build long-distance transmission lines to better connect renewable supply with demand. Just as fracking in new areas led to the need for more pipelines, wind and solar in new areas are creating the need for more transmission. Wind power in the Great Plains needs to go east, while wind in the Intermountain West needs to go west. Solar in the southwest and hydropower in Canada need to reach demand-heavy areas. (3)


The United States’ electric grid lacks capacity in the right places, and has inadequate connectivity. Even the well-connected regions often lack a single coordinated market, instead hosting multiple independent operators. (4) A more robust grid would allow us to make better use of renewables, since solar and wind are available only in certain places at certain times. California, for example, has inadequate nighttime wind to match our daytime solar. Until we can build out offshore wind, we need to import it from other places. (5)

But It’s Not Easy to Build Them


Power lines are not much more popular than pipelines. They can be more visible and take up more surface space. And while Congress has greased the skids for interstate pipelines by allowing for federal grants of eminent domain, power line approvals need to be done on a state-by-state basis. (6) Any one state that objects can block construction. If you are a state in the middle of a long transmission line, getting neither the jobs at the generators nor the power at the receiving end, you might well question what is in this for you and push back on that “public use” requirement. Moreover, environmentalists are not always in favor of power line construction, with some echoing concerns made about pipelines. As a result, many attempts to build power lines are failing, and that is hurting our ability to use our full capacity of renewable energy.

Can we Target Pipelines but not Power Lines?

Can we have it both ways? Can we support power line development while continuing to push back on pipelines? A recent development in that vein is promising. It recognizes that some of the worst problems with pipelines do not apply to power lines, which can make it easier to argue that (only) the latter provide a net public benefit. In a decision involving the Keystone XL pipeline, a Montana judge cancelled a nationwide permit for utility construction in US waters because of inadequate attention to endangered species. But he narrowed the ruling to apply only to oil and gas lines. Apparently pipelines leak a lot, and the company building Keystone XL has a history of leaks. This type of ruling maintains the status quo for power lines but makes it harder to get pipeline approval.

Richard Glick, a FERC commissioner, would like FERC to account for climate impacts before granting approval, including upstream (production) and downstream (consumption) emissions. But commissioner Bernard Mcnamee, a Trump appointee with a long history supporting fossil fuels, does not agree with this. With such opposing views on FERC, and a 3-1 Republican majority (7), a federal or even state-level carbon tax is probably needed to make this type of consideration feasible; costs are certainly within FERC’s scope. A new federal administration that is less under the sway of fossil fuel interests would also be a huge help. FERC can in the meantime take smaller steps. Part of FERC’s charter is to create incentives for investing in electricity infrastructure such as transmission lines. FERC is in the process of revising these to be more effective.

James Kolman, a law professor at SMU, and Alexandra Klass, a law professor at University of Minnesota, have suggested a number of ways that states can align their use of eminent domain with their clean energy policies. To begin with, states can define “public use” differently for power lines and fossil pipelines. A few states have already done this (e.g., Georgia and South Carolina when they were fighting the Palmetto oil pipeline). They can also reduce objections to power lines. For example, they can work to improve aesthetics (e.g., encourage burying lines) and compensation for landowners (e.g., have companies pay 150% of fair market value, attorney’s fees, even a stake in revenue). When a state through which the line passes does not see sufficient benefit, they suggest the Constitution’s Commerce Clause may help, since it limits the degree to which states can impede interstate commerce.

Conclusion

When I think about renewable energy, and particularly about reliability and cost, I tend to think about generation. Do we have too much solar, will drought hurt our hydropower, where can we put wind, how much do batteries cost? But many of the concerns about reliability and cost can be addressed with a robust grid. Adequate transmission is a big part of that, but it’s hard to get approvals for long lines. How will states meet their goals for clean power? It will be interesting to see what techniques they try to encourage construction of long-distance transmission lines, to watch how FERC evolves its incentives and approach to climate, and to follow how courts tackle issues with eminent domain and environmental impact.

Greentech Media lists seven transmission projects to watch in 2020. I’ll be keeping an eye on those, on the progress of oil and gas pipelines like Dakota Access and Keystone XL, and on November’s election.

Notes and References
00. Thank you to my daughter Emma for illustrating this blog. She finds the names of these pipelines and power lines pretty funny.


0. A good deal of background and content for this blog post came from an article called Energy and Eminent Domain in the Minnesota Law Review, by law professors James W. Coleman and Alexandra B. Klass. Coleman also wrote an illustrative short op-ed explaining the challenges that Iowa has both fighting its role as middleman for the Dakota Access pipeline while also advocating for transmission lines to distribute its wind power across neighboring states to distant urban areas.

1. I want to give a plug for a terrific class on Constitutional Law that I took through Stanford Continuing Studies a few years ago, where we covered this case (Kelo v. City of new London) among many others. I see it is offered again this summer, so check it out!

2. Curiously, oil pipelines, even when crossing multiple states, are still approved by the individual states. Gas is harder to move than oil, which can be transported more easily in more ways, so the Natural Gas Act of 1935 narrowly called for federal approval and grants of eminent domain specifically for gas, assuming a public need is demonstrated.

3. Greentech Media summarizes some of the current transmission projects.

4. The Western Energy Imbalance Market is pretty widespread across the Western Interconnect, but it only covers short-term power needs, or about 5% of the market. A regional full-purpose operator (like CAISO but across the West) would make the grid much more effective, but California wants to maintain control of its market in order to meet its climate goals.

5. The existing grid can also be made cleaner and more efficient by deploying new technologies, updating contracts to be more flexible (e.g., we should not be running fossil plants when renewables have negative prices), and so on. But at the end of the day, studies show that more power lines will be needed.

6. There is one exception to this. FERC has some ability to site and permit transmission lines in National Interest Electric Transmission Corridors, which span multiple planning regions. See relevant comment below.

7. FERC is meant to be a non-partisan, five-member commission. But with two vacancies open, rather than fill them as a pair (one Democrat, one Republican), Trump has bucked tradition and replaced only the Republican.

Current Climate Data (April 2020)
Global impactsUS impactsCO2 metricClimate dashboard (updated annually)