Eminent Domain and the International Market: An Examination of Whether Midstream Companies Can Justifiably Show Public Use

Abstract

The energy industry in Pennsylvania has seen rapid expansion over the past several years. Advancements in technology allow natural gas producers to tap previously unreachable shale gas reserves, bringing an unprecedented supply of fossil fuel energy to market. However, this increased supply is bottlenecked by a lack of midstream capacity. Midstream companies, whose business model revolves around the transport of fossil fuels, have launched pipeline projects that will extend across the landscape of Pennsylvania with hopes of alleviating this bottleneck. These projects will transport growing energy resources to a number of destinations. Some of these resources will be destined for regional energy markets, while others will serve as exports to the international market by way of large gas tanker ships.Construction of these pipelines will require midstream companies to obtain hundreds, if not thousands, of rights of way agreements from Pennsylvania landowners. These rights of way will allow for the construction, operation, and maintenance of pipelines across those private properties. However, not all landowners support the expansion and construction of pipelines. Opponents of this new infrastructure will likely refuse to grant midstream companies a right of way across their land. In response, a midstream company may attempt to exercise its power of eminent domain, claiming the right to do so as a utility. The effectiveness of these eminent domain proceedings will likely rest on one question: whether the of eminent domain for the construction of pipelines satisfies the use requirement when the purpose of this pipeline construction is for the transportation of natural gas products to international markets, rather than to the markets within Pennsylvania. More specifically, is public met when natural gas (NG) and natural gas liquids (NGLs) are transported to coastal ports that will serve as export stations?To resolve this question, this paper first examines the expansion of Pennsylvania's energy production and the planned expansion of pipeline infrastructure. Next, it turns to eminent domain. To fully understand the applicability of eminent domain, this paper examines the power held by the party initiating these proceedings and the requirement that a taking by eminent domain confers a public benefit. This paper then examines the issue of whether the construction of a pipeline intended to transport natural gas and natural gas products destined for international markets satisfies the public benefit requirement for eminent domain. Lastly, it concludes whether eminent domain is a valid tool by which to acquire the right to cross private lands with these pipelines.