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Commissioners pipeline meeting: Eminent domain and big companies' need for flexibility

Thanks to rjs for the help in researching this post.

Last week I linked to this article detailing how the relative lack of pipelines in Ohio is preventing fracking from taking off as the extraction industry would like. This means pipelines have moved front and center in some communities. Since the fastest way to assemble the land for one is to pressure citizens to sell under threat of seizure via eminent domain (ED), ED law is starting to get a much closer look.

The short version is that ED can be used for oil but not liquefied natural gas, meaning yes for traditional drilling but no for fracking. Companies have taken note of the distinction:

the eminent domain statute says only companies that ship “natural or artificial gas, petroleum, coal or its derivatives, water, or electricity” through pipelines have a right force Ohioans to sell easements on their land. The eminent domain law doesn’t mention natural gas liquids.

To get around that, the company uses a different definition for the ATEX in court cases where it is citing eminent domain power, calling it a “petroleum product derived from natural gas extraction process.”

So here’s the conundrum for the fracking companies: they want to use the threat of ED to pressure homeowners into giving up their land, but they can’t invoke ED for the purpose the pipelines are being constructed for (until they can once again fix the law to their liking, that is).

The workaround appears to be this: Build the pipeline ostensibly for oil but leave wiggle room to change that later. Of course, an oil pipeline is troubling enough. Sunoco has demonstrated over and over and over again that its Ohio pipelines are leaky. Looking strictly at their track record around here, there is little reason for Portage County residents to feel confident in the soundness of this new pipeline.

As problematic as an oil-only pipeline would be (why here and now, incidentally? Have vast new petroleum reserves been discovered in eastern Ohio?), it appears Sunoco is at least leaving the door open for alternate uses:

property owners have raised questions about the all-inclusive language of the easements proferred by Sunoco. In one easement for a Randolph property, Sunoco says the pipeline is “for the purpose of transporting oil, oil products, crude petroleum, natural gas, gas liquids, liquefied minerals, mineral solutions or any other liquids, gases or substances, including water.”

The article also notes Sunoco sent out letters that resemble the notice of intent to acquire by ED required by the Ohio Revised Code, but that when pressed on it the company said they weren’t notice of intent. So they want to build an oil pipeline for land seizure purposes, but maybe use it for something else later. They appear to want to give homeowners the impression that their land is about to be seized via ED, but don’t send an actual notice of intent to seize. It’s all very murky.

These are just some of the questions that prompted the Portage County Commissioners to invite company representatives to a meeting on the pipeline. Video of this portion of the meeting is available here starting around the 0:55 mark, and it lasts a little more than an hour and a half. If you have the time to watch please try to. It isn’t exactly sexy and compelling television, but as an example of a meeting between oil and gas industry representatives and the public it’s very instructive.

Company representatives kick it off by discussing the various regulatory requirements for pipelines and a general discussion of company practices/engineering. It struck me as unhelpful boilerplate, because I would rather hear the company discuss spills that had already occurred in its Ohio pipelines, lessons learned, new practices that will prevent a recurrence, and so on. I’m not especially interested in the theoretically wonderful things that should make us feel good about the new one, though maybe some residents found it worthwhile.

Citizen statements are next, starting around 1:21:44, and because of the large number of people giving statements each was limited to one minute. Note the tone of the commissioners, also. Two of them were supportive of the meeting and were very welcoming. The third one - that would be the one timing citizens’ statements on a stopwatch and cutting them off after exactly one minute - was clearly not supportive.

Several statements are worth noting. The one beginning at 1:23:10 covers how a resident was verbally told an easement would be for petroleum but that the easement presented for signature was of the open ended “any other liquids” variety. At 1:39:25 a citizen of Stark County (about a 45 minute drive) says she showed up because it was the first time she knew of that company representatives were answering questions at a public meeting. That is a very common impression around here: residents have lots of questions and it has been very difficult to get answers.

At 1:42:00 a labor representative notes the company has brought in contractors instead of employing Ohioans. In fact, the jobs illusion is one of the most persistent myths about this new era of resource extraction. Temporary contractors, often from out of state, help build the infrastructure, and once that’s done even those jobs go away. The oil and gas industry would like the public to believe that there is some kind of dramatic, community-anchoring quality to all of this - like a steel mill that employs hundreds of locals at good paying jobs for decades and supports lots of related employment to boot - but the reality is far different.

The speaker immediately after mentions the amount of money he has received from the existing Sunoco pipeline - an average of $7.50 per year (he also discusses the unscrupulous behavior of land men). The citizen at 1:54:45 describes how Sunoco claims a 50 foot right of way but refuses to show documentation to that effect despite repeated requests.

Around 2:06:07 a company representative mentions the need for “flexibility in an easement to move, generally, multiple different types of petroleum products.” This circles right back to the beginning: is the company going to argue that new materials fall under the definition of petroleum products in order to allow ED claims? And what happens if the company, in the name of flexibility, switches to carrying non-petroleum products once the pipeline is built? Does it forfeit any ED claim at that point? Will it need to re-negotiate easements under the new legal environment? None of this is clear.

If you are only able to watch a few minutes, I’d recommend roughly 2:21:12 to 2:28:20. This is where company representatives answer questions about the open ended nature of the easements. One representative even includes ethane in a list of petroleum products - which, again, for ED purposes, it is not. Clearly the company would like petroleum to be defined as broadly as possible.

The commissioners ask some pointed questions along these lines, the representative talks again about flexibility in an asset (to its credit, I suppose, the company never denied that it might pull the old switcheroo down the line), and at 2:25:50 a citizen reads directly from an easement document that includes the incredibly vague “any other liquids, gases or substances” verbiage.

The concern is that Sunoco is saying petroleum now in order to invoke ED but will have the (ahem) flexibility to make it to God knows what once the legal hurdles are cleared. For as helpful as the meeting was, we know no more about that now than we did before. That doesn’t mean the meeting wasn’t worthwhile though, and I’ll address that next week.

Commissioners' meeting background: Pipelines, fracking and peering underneath the rock

Last week I posted a statement prepared for our county commissioners regarding a pipeline under construction in Portage County. As I began outlining a report on the meeting I realized a good deal of context was needed for those not in the thick of it. Here is a bit of background.

Pipelines have traditionally been understood as carrying oil, but that has begun to change with fracking. Companies now want to use them to transport various fluids associated with that process, and in places that do not already have lots of pipelines there is a new push to construct them. As the Columbus Dispatch reported last May:

Officials of the oil and gas industry said the pipelines and the plant are safe and vital to their plans to develop Ohio’s Utica shale.

A lack of natural-gas processing, industry officials say, keeps shale wells from delivering to buyers and has slowed the pace of drilling and fracking.

So places that have been targeted for fracking are seeing a new interest in pipelines. The first step in this process is securing the land along the route, and this is also perhaps the shadiest part of the process. Pipeline companies subcontract out through what are called land men. These individuals go door to door attempting to negotiate the necessary legal agreement - and that is an exceedingly diplomatic, anodyne and generous way to describe how it sometimes works.

Land men are not governed by anything other than their scruples. Theoretically the companies paying them have requirements for conduct, but the arrangement more often seems designed for plausible deniability: Ask a pipeline company about allegations of unethical behavior and they will insist in the strongest terms that their contractors must adhere to the highest ethical standards - and usually that they’ve rarely or never had complaints about their land men.

Which is at least slightly disingenuous. After all, who can say what was discussed on someone’s doorstep? Some residents have reported being delivered contracts that were far different than the ones promised; others that they were told eminent domain (ED) was a foregone conclusion and signing the contract a mere formality. Good luck proving it, though. Unless the homeowner had the presence (and ability) to record the conversation, it would end up as he said/she said in a courtroom.

The land men basically pick off the low hanging fruit. Those reluctant to sign require a little stronger persuasion. In Portage County that has meant the pipeline company making what it has determined is a fair offer to buy the property, backed up by the threat of seizure via ED. These letters have a veneer of legal nicety, but an unmistakable subtext of menace and intimidation lurks behind them as well.

For instance, letters sent to residents say that the state of Ohio allows the company to seize the property via eminent domain - this will be a crucial topic in next week’s post - but that they would rather negotiate something agreeable to both. In other words, we can take it if we want; now let’s negotiate! (Imagine how successful those negotiations will be for the homeowner.) The good cop/bad cop routine continues as the company says it is

of the opinion that this offer is in excess of the fair market value…[W]e make this final and best offer in the hopes that the parties may be able to reach an amicable agreement and avoid unnecessary and costly litigation expenses. Please understand, however, that if you force us to commence eminent domain proceedings to acquire the easements, this offer is withdrawn.1

Basically, play ball with us or you’ll lose your land.

It should be clear just how much gumption it takes to fight a company on something like this. Most folks will be blindsided by it: There they were living their lives, not knowing they were in the way of pipeline company profits, and one day land men show up. They will generally not be knowledgeable about the laws in question nor will they have access highly specialized legal counsel. Most will be sufficiently risk averse (and sensible) to not want to risk what is likely their biggest single investment on an all-or-nothing showdown with the oil and gas industry. So they sign and get something instead of risking getting nothing.

That’s how these pipelines get created. But even though the playing field is so decidedly tilted in favor of big business, it still hasn’t been entirely cleared. More on that, and how it came up in the commissioners’ meeting, next week.


NOTES

1. I believe this short excerpt to be covered by the fair use provision of copyright law:

the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.

(Back)

Commissioners' meeting background: Pipelines, fracking and peering underneath the rock

Last week I posted a statement prepared for our county commissioners regarding a pipeline under construction in Portage County. As I began outlining a report on the meeting I realized a good deal of context was needed for those not in the thick of it. Here is a bit of background.

Pipelines have traditionally been understood as carrying oil, but that has begun to change with fracking. Companies now want to use them to transport various fluids associated with that process, and in places that do not already have lots of pipelines there is a new push to construct them. As the Columbus Dispatch reported last May:

Officials of the oil and gas industry said the pipelines and the plant are safe and vital to their plans to develop Ohio’s Utica shale.

A lack of natural-gas processing, industry officials say, keeps shale wells from delivering to buyers and has slowed the pace of drilling and fracking.

So places that have been targeted for fracking are seeing a new interest in pipelines. The first step in this process is securing the land along the route, and this is also perhaps the shadiest part of the process. Pipeline companies subcontract out through what are called land men. These individuals go door to door attempting to negotiate the necessary legal agreement - and at times that is an exceedingly diplomatic, anodyne and generous way to put it.

Land men are not governed by anything other than their scruples. Theoretically the companies paying them have requirements for conduct, but the arrangement more often seems designed for plausible deniability: Ask a pipeline company about allegations of unethical behavior and they will insist in the strongest terms that their contractors must adhere to the highest ethical standards - and usually that they’ve rarely or never had complaints about their land men.

Which is at least slightly disingenuous. After all, who can say what was discussed on someone’s doorstep? Some residents have reported being delivered contracts that were far different than the ones promised; others that they were told eminent domain (ED) was a foregone conclusion and signing the contract a mere formality. Good luck proving it, though. Unless the homeowner had the presence (and ability) to record the conversation, it would end up as he said/she said in a courtroom.

The land men basically pick off the low hanging fruit. Those reluctant to sign require a little stronger persuasion. In Portage County that has meant the pipeline company making what it has determined is a fair offer to buy the property, backed up by the threat of seizure via ED. These letters have a veneer of legal nicety, but an unmistakable subtext of menace and intimidation lurks behind them as well.

For instance, letters sent to residents say “Ohio law expressly provides us with the right to acquire the necessary easements by eminent domain” (this will be a crucial topic in next week’s post) but that the company “would prefer to obtain them voluntarily and on terms mutually agreeable to all concerned.” The good cop/bad cop routine continues as the company says it

in a good faith effort to reach an agreement, is making its final and best offer to you…as full monetary compensation for the necessary easements…[We are] of the opinion that this offer is in excess of the fair market value for the easements as determined by Ohio law. In order to maintain good relations with landowners, we make this final and best offer in the hopes that the parties may be able to reach an amicable agreement and avoid unnecessary and costly litigation expenses. Please understand, however, that if you force us to commence eminent domain proceedings to acquire the easements, this offer is withdrawn.

Basically, play ball with us or you’ll lose your home.

It should be clear just how much gumption it takes to fight a company on something like this. Most folks will be blindsided by it: There they were living their lives, not knowing they were in the way of pipeline company profits, and one day land men show up. They will generally not be knowledgeable about the laws in question nor will they have access highly specialized legal counsel. Most will be sufficiently risk averse (and sensible) to not want to risk what is likely their biggest single investment on an all-or-nothing showdown with the oil and gas industry. So they sign and get something instead of risking getting nothing.

That’s how these pipelines get created. But even though the playing field is so decidedly tilted in favor of big business, it still hasn’t been entirely cleared. More on that, and how it came up in the commissioners’ meeting, next week.

Commissioners' meeting background: Pipelines, fracking and peering underneath the rock

Last week I posted a statement prepared for our county commissioners regarding a pipeline under construction in Portage County. As I began outlining a report on the meeting I realized a good deal of context was needed for those not in the thick of it. Here is a bit of background.

Pipelines have traditionally been understood as carrying oil, but that has begun to change with fracking. Companies now want to use them to transport various fluids associated with that process, and in places that do not already have lots of pipelines there is a new push to construct them. As the Columbus Dispatch reported last May:

Officials of the oil and gas industry said the pipelines and the plant are safe and vital to their plans to develop Ohio’s Utica shale.

A lack of natural-gas processing, industry officials say, keeps shale wells from delivering to buyers and has slowed the pace of drilling and fracking.

So places that have been targeted for fracking are seeing a new interest in pipelines. The first step in this process is securing the land along the route, and this is also perhaps the shadiest part of the process. Pipeline companies subcontract out through what are called land men. These individuals go door to door attempting to negotiate the necessary legal agreement - and at times that is an exceedingly diplomatic, anodyne and generous way to put it.

Land men are not governed by anything other than their scruples. Theoretically the companies paying them have requirements for conduct, but the arrangement more often seems designed for plausible deniability: Ask a pipeline company about allegations of unethical behavior and they will insist in the strongest terms that their contractors must adhere to the highest ethical standards - and usually that they’ve rarely or never had complaints about their land men.

Which is at least slightly disingenuous. After all, who can say what was discussed on someone’s doorstep? Some residents have reported being delivered contracts that were far different than the ones promised; others that they were told eminent domain (ED) was a foregone conclusion and signing the contract a mere formality. Good luck proving it, though. Unless the homeowner had the presence (and ability) to record the conversation, it would end up as he said/she said in a courtroom.

The land men basically pick off the low hanging fruit. Those reluctant to sign require a little stronger persuasion. In Portage County that has meant the pipeline company making what it has determined is a fair offer to buy the property, backed up by the threat of seizure via ED. These letters have a veneer of legal nicety, but an unmistakable subtext of menace and intimidation lurks behind them as well.

For instance, letters sent to residents say “Ohio law expressly provides us with the right to acquire the necessary easements by eminent domain” (this will be a crucial topic in next week’s post) but that the company “would prefer to obtain them voluntarily and on terms mutually agreeable to all concerned.” The good cop/bad cop routine continues as the company says it

in a good faith effort to reach an agreement, is making its final and best offer to you…as full monetary compensation for the necessary easements…[We are] of the opinion that this offer is in excess of the fair market value for the easements as determined by Ohio law. In order to maintain good relations with landowners, we make this final and best offer in the hopes that the parties may be able to reach an amicable agreement and avoid unnecessary and costly litigation expenses. Please understand, however, that if you force us to commence eminent domain proceedings to acquire the easements, this offer is withdrawn.

Basically, play ball with us or you’ll lose your home.

It should be clear just how much gumption it takes to fight a company on something like this. Most folks will be blindsided by it: There they were living their lives, not knowing they were in the way of pipeline company profits, and one day land men show up. They will generally not be knowledgeable about the laws in question nor will they have access highly specialized legal counsel. Most will be sufficiently risk averse (and sensible) to not want to risk what is likely their biggest single investment on an all-or-nothing showdown with the oil and gas industry. So they sign and get something instead of risking getting nothing.

That’s how these pipelines get created. But even though the playing field is so decidedly tilted in favor of big business, it still hasn’t been entirely cleared. More on that, and how it came up in the commissioners’ meeting, next week.

Commissioners' meeting background: Pipelines, fracking and peering underneath the rock

Last week I posted a statement prepared for our county commissioners regarding a pipeline under construction in Portage County. As I began outlining a report on the meeting I realized a good deal of context was needed for those not in the thick of it. Here is a bit of background.

Pipelines have traditionally been understood as carrying oil, but that has begun to change with fracking. Companies now want to use them to transport various fluids associated with that process, and in places that do not already have lots of pipelines there is a new push to construct them. As the Columbus Dispatch reported last May:

Officials of the oil and gas industry said the pipelines and the plant are safe and vital to their plans to develop Ohio’s Utica shale.

A lack of natural-gas processing, industry officials say, keeps shale wells from delivering to buyers and has slowed the pace of drilling and fracking.

So places that have been targeted for fracking are seeing a new interest in pipelines. The first step in this process is securing the land along the route, and this is also perhaps the shadiest part of the process. Pipeline companies subcontract out through what are called land men. These individuals go door to door attempting to negotiate the necessary legal agreement - and at times that is an exceedingly diplomatic, anodyne and generous way to put it.

Land men are not governed by anything other than their scruples. Theoretically the companies paying them have requirements for conduct, but the arrangement more often seems designed for plausible deniability: Ask a pipeline company about allegations of unethical behavior and they will insist in the strongest terms that their contractors must adhere to the highest ethical standards - and usually that they’ve rarely or never had complaints about their land men.

Which is at least slightly disingenuous. After all, who can say what was discussed on someone’s doorstep? Some residents have reported being delivered contracts that were far different than the ones promised; others that they were told eminent domain (ED) was a foregone conclusion and signing the contract a mere formality. Good luck proving it, though. Unless the homeowner had the presence (and ability) to record the conversation, it would end up as he said/she said in a courtroom.

The land men basically pick off the low hanging fruit. Those reluctant to sign require a little stronger persuasion. In Portage County that has meant the pipeline company making what it has determined is a fair offer to buy the property, backed up by the threat of seizure via ED. These letters have a veneer of legal nicety, but an unmistakable subtext of menace and intimidation lurks behind them as well.

For instance, letters sent to residents say “Ohio law expressly provides us with the right to acquire the necessary easements by eminent domain” (this will be a crucial topic in next week’s post) but that the company “would prefer to obtain them voluntarily and on terms mutually agreeable to all concerned.” The good cop/bad cop routine continues as the company says it

in a good faith effort to reach an agreement, is making its final and best offer to you…as full monetary compensation for the necessary easements…[We are] of the opinion that this offer is in excess of the fair market value for the easements as determined by Ohio law. In order to maintain good relations with landowners, we make this final and best offer in the hopes that the parties may be able to reach an amicable agreement and avoid unnecessary and costly litigation expenses. Please understand, however, that if you force us to commence eminent domain proceedings to acquire the easements, this offer is withdrawn.

Basically, play ball with us or you’ll lose your home.

It should be clear just how much gumption it takes to fight a company on something like this. Most folks will be blindsided by it: There they were living their lives, not knowing they were in the way of pipeline company profits, and one day land men show up. They will generally not be knowledgeable about the laws in question nor will they have access highly specialized legal counsel. Most will be sufficiently risk averse (and sensible) to not want to risk what is likely their biggest single investment on an all-or-nothing showdown with the oil and gas industry. So they sign and get something instead of risking getting nothing.

That’s how these pipelines get created. But even though the playing field is so decidedly tilted in favor of big business, it still hasn’t been entirely cleared. More on that, and how it came up in the commissioners’ meeting, next week.

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