Sunoco wins round one of pipeline court battle

Sunoco wins round one of pipeline court battle

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A Pennsylvania Commonwealth Court has upheld Sunoco Logistics Partners’ power to take private property for its Mariner East Pipeline, adding momentum to Sunoco’s plan to deliver more energy from the Marcellus Shale region to Marcus Hook.

The court, in a 5-2 ruling, affirmed a Cumberland County judge’s decision last year that Sunoco’s pipeline subsidiary is a public utility as determined by the Pennsylvania Public Utility Commission, which Sunoco says gives it the authority to take rights of way from property owners who decline to negotiate agreements along the pipeline’s 351-mile route.

The majority opinion, written by Judge Renée Cohn Jubelirer, concluded that “Sunoco is regulated as a public utility by PUC and is a public utility corporation, and Mariner East intrastate service is a public utility service.”

Sunoco Logistics called the ruling decisive. “Although this case confirmed Sunoco Pipeline’s public utility status, we have always worked with landowners to reach mutually acceptable agreements, and pursued legal proceedings only in those instances where an agreement could not be reached.”

The Mariner East project, which would deliver natural gas liquids like propane, butane and ethane to Delaware County, still faces obstacles that were unresolved by the July 14 ruling.

A separate suit, filed last year in Philadelphia by the Clean Air Council, also argues that Sunoco has no legal right to use eminent domain to build its pipelines, which it argues would not serve a public need.

“This is not the end of the story,” said Alex Bomstein, a Clean Air Council attorney. He said the ruling on Thursday was “quite narrow” and did not address the constitutional challenges raised by the Philadelphia suit, including arguments that the pipeline violates the state’s Environmental Rights Amendment.

Bomstein said the issues will ultimately be decided by the state Supreme Court.

The state environmental protection agency has set five public hearings next month on Mariner East, including one on Aug. 10 at West Chester University.

The Mariner East project links shale-gas producers in western Pennsylvania, West Virginia and Ohio to a Sunoco’s Marcus Hook Industrial Complex, a former refinery site on the Delaware River. The $2.5 billion project was backed by the Corbett and Wolf administrations, along with labor and business interests. But it has aroused opposition from adjacent landowners and environmental groups.

The project’s first phase, using an existing underground pipeline repurposed to deliver up to 70,000 barrels of natural gas liquids a day, is already operating.

Sunoco wants to build one or two new adjacent pipelines as part of the Mariner East II project. Altogether, the pipelines could carry up to 675,000 barrels a day.

The legal arguments about the Mariner East project revolve around whether it is an interstate pipeline, governed by federal regulations, or an intrastate pipeline, regulated by the PUC. The Commonwealth Court ruled that it is both, and that it falls under PUC’s jurisdiction.

Three Cumberland County landowners had argued that the Mariner East pipeline was an interstate project, and that Sunoco lacked certification from the Federal Energy Regulatory Commission.

The pipeline was initially framed as an interstate project primarily to carry natural gas liquids to the Marcus Hook terminal for export on ships to Europe. But in 2014, Sunoco added terminals in Pennsylvania to deliver propane to local markets.

The landowners argued that Sunoco contrived to convert the project into an intrastate pipeline only after a York County judge had agreed with landowners who said it needed a federal certificate.

In a separate dissents, Judge P. Kevin Brobson and Judge Patricia A. McCullough questioned whether Sunoco’s “true purpose” in taking property was to provide public utility service to Pennsylvanians.

“Private ownership of property is a fundamental right under the U.S. Constitution, and as noted by my colleague, Judge Brobson, in his dissent, a right that is zealously protected under the Pennsylvania Constitution as well,” McCullough wrote. “The majority’s decision, I fear, will gravely undermine that right.”