A recent Commonwealth Court decision reaffirmed the opportunity for a property valuation witness to rely upon hearsay evidence in forming an opinion of property value. In re Condemnation by Turnpike Commission, No. 1131 C.D. 2017 (April 10,2018) a property owner appraiser relied upon an affidavit of a neighbor about the property owners ability to obtain a driveway easement. The affadavit was relied upon in support of a highest or best use for hotel development. The decision cited 26 Pa. C.S.A 703 and the Eminent Domain Code provision which allows an expert to rely on “facts or data” which the expert did not personally observe. Use of this particular rule for eminent domain evidence can be very beneficial in production of evidence of full just compensation.
The Penn East pipeline across northern Pennsylvania and northern New Jersey continues with FERC approval and multiple eminent domain challenges. Recently another challenge was added via a New Jersey request that FERC reconsider the pipeline impact. Although unlikely, the effort could derail the pipeline in both states.
New Jersey asks appeals court to review FERC’s approval of PennEast pipeline
FERC erred in awarding Public Convenience and Necessity certificate, AG says
One of the first acts of Gurbir Grewal when he became New Jersey’s attorney general was to ask the Federal Energy Regulatory Commission to rehear its decision to certify a crucial aspect of the controversial PennEast pipeline; the proposed pipeline would carry natural gas from Pennsylvania to Mercer County. Monday, Grewal filed a petition with a federal appeals court that challenges FERC on that certification.
Grewal filed a petition yesterday with the District of Columbia Circuit Court, asking it to hear the state’s arguments that the Federal Energy Regulatory Commission (FERC) erred when it issued a Certificate of Public Convenience and Necessity to the pipeline project in January.
In February, Grewal asked FERC to stay the certificate and rehear the case, in a motion that was seen as a precursor to the legal challenge that it has now made.
FERC responded to the rehearing request with a “tolling order,” a mechanism that in theory gives it more time to consider the request but which in practice means that the agency takes no action for about six months and then summarily dismisses the request, critics say.
Other groups seeking a rehearing include three New Jersey municipalities, three New Jersey state lawmakers, a Pennsylvania township, and activist groups in both states. If constructed, the $1 billion pipeline would carry natural gas about 120 miles from Luzerne County, Pa. to Mercer County, NJ.
NJ says FERC doesn’t have authority
In the latest motion, New Jersey argued that FERC does not have the authority to issue a tolling order when a rehearing request is combined with any other request such as a stay.
The state argues that FERC was wrong to give PennEast the certificate that has allowed it to file eminent domain suits against some 150 New Jersey landowners who have refused its offers of compensation for building the pipeline on their land.
The state has also declined the company’s offers of compensation for easements on several parcels of state-protected land in Hunterdon County, totaling about 1,300 acres.
Since many landowners have denied the company access to their land to survey for the pipeline, the company lacks knowledge about environmental impacts on about two-thirds of the route, the state said in its motion to FERC in February. Even so, FERC’s certificate allows condemnation — the process by which land is taken via eminent domain — for all the route, the motion said.
“Enabling PennEast to condemn perpetual easements before knowing whether the route must be shifted to avoid environmental impacts undoes the preserved nature of the land even if the pipeline will ultimately never cross that land due to route changes,” the state said in February.
‘Arbitrary and capricious’
In the new petition, the state calls FERC’s certificate “arbitrary and capricious” because it lacked environmental information, improperly relied on PennEast’s contracts with its affiliates to demonstrate public need for the line and tried to minimize or avoid environmental impacts rather than mitigating them, as required under federal law.
The motion is a rare or perhaps unprecedented example of a state challenging FERC on its certificate of approval in a pipeline case, said Jennifer Danis, an attorney who represents the New Jersey Conservation Foundation, a leading opponent of the pipeline. “I don’t know of another state that has taken a broad legal challenge at a FERC certificate in a pipeline case,” Danis said.
FERC is likely to respond by asking the court to dismiss the petition, and the real question is whether the court agrees to hear the case on the merits, Danis said.
Tom Gilbert, campaign director for the NJCF, said the motion challenges FERC’s “flawed” process and its findings. “PennEast never should have been approved in the first place,” he said in a statement.
FERC spokewoman Tamara Young-Allen said the agency can’t comment on matters that are subject to a final commission order.
PennEast spokeswoman Pat Kornick said FERC’s approval of the project is consistent with the agency’s longstanding policies and that the company is confident that the courts will uphold the review process. The company says it expects to begin construction this year and for the pipeline to start operating in 2019.
In a separate case, a federal judge in Trenton is expected to rule shortly on whether PennEast can use eminent domain to take land from about 130 landowners along the New Jersey portion of the pipeline route.
FERC’s approval of PennEast was a blow to opponents but the project still needs permits from a number of agencies including the New Jersey Department of Environmental Protection and the Delaware River Basin Commission.
Written by: John Hurdle | StateImpact Pennsylvania
Photo caption: Part of the proposed PennEast pipeline could run through this stretch of land in Bucks County, Pa. New Jersey has taken a stronger position toward the pipeline. The Attorney General’s office has filed a federal appeals case to try to halt construction while Pennsylvania has approved water crossing permits.
An April 30, 2018 decision of the Pennsylvania Commonwealth Court rejected six of seven claims against Sunoco re environmental harms and eminent domain overreach. One claim, based on the Environmental Rights Amendment, was directed to further consideration by the Commonwealth Court.
Read the Pennsylvania Commonwealth Court decision here.
Mike Faherty was provided the “Ideal Scout” award by the Lancaster Council of Boy Scouts. Mike an Eagle Scout and former Boy Scout employee, provided pro bono services to the Scouts when a scout camp was threatened by eminent domain. Mike was able to decrease the land acquired and increase compensation.
The Pennsylvania Turnpike Commission condemned 70.9 acres through a 240 acre sportsman’s club. The Turnpike paid $1,750,000 for property damages and no funds for relocation damages. Faherty Law Firm provided representation and obtained a settelement for an additional $5,000,000 in total damages.
Turnpike buys gun club land near near McDonald for $5 million
The Pennsylvania Turnpike Commission has acquired a key piece of property to allow the construction of an interchange on the Southern Beltway — and protect the safety of motorists.
But it came at a hefty price: $5 million.
That’s the amount the commission agreed to pay last week to buy 70.9 acres of land from the McDonald Sportsmen’s Association, leaving the association 168.4 acres of property off of Cooks Road between McDonald and Midway, Washington County.
The commission needs the land to build interchange 11 on the $800 million, 13-mile toll road that will link Route 22 to Interstate 79 on the Allegheny-Washington County border. That interchange will be on the northeast corner of land formerly owned by the association and will include construction of access roads from Route 980 to the north and Noblestown Road to the south.
Jeanmarie McLaughlin, the commission’s assistant counsel, said the property was among the last and most expensive pieces of land the commission has had to acquire for the project. Several factors besides the amount of property were at play in the cost, she said, among them activities the association conducts on that part of the property and the need to protect motorists who will use the new highway from activities on the shooting ranges at the association.
“The settlement amount includes more than the price of the land,” Ms. McLaughlin said. “In order for us to get them back to whole, we needed to pay for the activities they lost as a result of taking the land.”
Ms. McLaughlin said it was “a challenge” to reach an agreement that provided the land the turnpike needed, allowed the association to continue its programs and protect motorists.
“We’re not taking any of their buildings, but we are impacting their ranges,” she said. “They were very involved from the beginning to make sure they could continue their activities. That was especially important that them continuing their activities would continue to be safe for everybody.”
The association offers a variety of shooting ranges and training programs, including nighttime skeet shooting, but it isn’t clear which activities occur on the land acquired by the turnpike commission. Association President Bernie Dhans referred questions about the sale and changes the club will have to make to Harrisburg attorney Mike Faherty, who declined comment.
With this purchase, the commission has purchased just over 300 properties for the Southern Beltway at a cost of about $68 million.
Parts of the highway are under construction but none of it will open until all of it is complete in early 2021.
Written by: Ed Blazina | Pittsburgh Post-Gazette
DEFERRING TAXES ON §1033 EXCHANGES
Eminent domain lawyers work hard to secure just compensation for property owners. However, in gain situations, the IRS and most states want their share, too. Fortunately, solutions are available that seek to soften or eliminate the tax bite. When property is involuntarily converted, I.R.C. §1033 provides guidelines to defer capital gains and other taxes. Known as a “1033 exchange”, the code allows for non-recognition status if the proceeds are invested in similar property within 2 years after the close of the first taxable year in which any part of the gain is realized. Similar generally means property that is “similar or related in service or use” to the property so converted, terms that the IRS narrowly defines. Note that this period is extended to 3 years for condemnations of investment property, and more liberal “like-kind” rules apply to replacement property. The longer exchange period provides ample opportunity for tax planning. If properly structured, property owners can complete a valid 1033 exchange, yet still “cash out” a significant portion of their award proceeds tax free. Passive, turn-key options may be available to qualified landowners unable to find suitable replacement property. Lastly, taxes that have been already paid can potentially be refunded via an amended tax return. To learn more about these powerful tax codes, see https://www.1031dst.co m/investments/1033-exchanges/ or conference with Catharine Fulmer at (631) 474-1610 Ext. 210. Catharine can also be reached at firstname.lastname@example.org
By Alan N. Lichtenstein
Senior Investment Advisor
Fortitude Investment Group
The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. Consult an advisor as investor situations and objectives vary. This information is not intended to indicate suitability for any particular investor, nor to be interpreted as tax or legal advice.
Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. Insurance products offered through Concorde Insurance Agency, Inc. (CIA). Fortitude Investment Group is independent of CIS, CAM and CIA.
The Pennsylvania Commonwealth Court has ruled for Sunoco Pipeline in the matter of Delaware Riverkeeper Network v. Sunoco Pipeline, No. 952 C.D. 2017 (Feb. 20, 2018). The court reasoned that a township lacks zoning authority to prohibit a pipeline facility regulated by the Pennsylvania PUC.
Pennsylvania law allows public utility corporations to use eminent domain power when the proposed use is “for the public”. If the proposed use is for the corporation and the public, Pennsylvania law looks to who is the primary and paramount beneficiary. If it is the corporation, Pennsylvania law precludes eminent domain power.
Transource sues landowners for access to properties where power lines are proposed
Transource Energy has sued 24 landowners, asking a Franklin County, Pa., judge to allow the public utility’s representatives to access properties to perform studies, tests and surveys as it proceeds with plans for 29 miles of overhead electric-transmission lines.
The company, through a subsidiary, requested in court documents immediate right of entry onto defendants’ properties. It claims landowners are prohibiting access despite “numerous contacts” since October.
“As a Pennsylvania public utility, Transource Pennsylvania has the power of eminent domain pursuant to the Pennsylvania Business Corporation Law of 1988,” lawyers said in filings.
Transource Pennsylvania made its filings a week ago at the Franklin County Court of Common Pleas. As of Tuesday morning, the matter had not been scheduled for a hearing or assigned a judge.
Transource Energy is seeking to spend about $320 million to connect two existing 500-kilovolt transmission lines in Pennsylvania with stations in Maryland, and provide two additional pathways for electricity.
The company’s lawyers said surveying must be done between April 15 and June 15 due to state and federal requirements associated with habitat monitoring for bog turtles. The reptiles are considered federally threatened and are an endangered species in Pennsylvania.
“Without the information from the field surveys, the (transmission-line) project’s design cannot be finalized and the project will be delayed, therefore, the (transmission-line) project requirements will not be met,” Transource lawyers said in court documents.
Written by: Jennifer Fitch | heraldmailmedia.com
The Pennsylvania Public Utility Corporation, Bureau of Investigation and Enforcement, issued a report requesting an emergency order to stop the use of Mariner East 1 for transportation of explosive natural gas ligquids. The well grounded safety concerns compelled the PUC Chairman to stop the transportation of the hazardous liquids. Inspections and monitoring will follow.
PUC shuts down Mariner East 1 pipeline, citing public safety concerns raised by sinkholes
Pennsylvania’s Public Utility Commission on Wednesday ordered a temporary shutdown of the Mariner East 1 natural gas liquids pipeline, saying it could have a “catastrophic” effect on public safety if it leaks.
PUC Chairman Gladys Brown approved a request by the commission’s Bureau of Investigation and Enforcement for an emergency order that would halt operation of the line until inspectors are satisfied that it meets safety standards.
The panel, in a petition issued earlier Wednesday, argued that the pipeline had been exposed by the appearance of sinkholes near the construction of two other pipelines – Mariner East 2 and 2X – at several places in Chester County’s West Whiteland Township in recent days.
The panel said that the construction of the two new pipelines and the sinkholes that resulted from drilling for the pipelines – all of it near ME1 – “compromise the safety of the public.”
In a four-page order, Brown agreed with the panel, saying that risks to the public outweigh risks to the shippers of natural gas liquids.
“I agree with BIE that permitting the continued flow of hazardous liquids through the ME1 pipeline without the proper steps to ensure the integrity of the pipeline could have catastrophic results impacting the public,” Brown wrote.
She ordered Sunoco to run an inspection tool through Mariner East 1 for one mile on either side of the location where the sink holes were found, within 24 hours of the order being issued. Within 12 hours of completing the inspection, Sunoco will then shut down the line for an estimated 10-14 days, during which it will study geological conditions and submit its findings for approval by PUC inspectors.
Sunoco will not be allowed to resume operation of the pipeline until it meets all safety requirements set down by PUC inspectors, the order said.
Sunoco spokesman Jeff Shields, in a statement issued late Wednesday, said the company will comply with the PUC’s order over the next 10-14 days but insisted that Mariner East 1 is safe.
“This period should allow us to share what our professional geologist has established to date — that the Mariner East 1 pipeline is stable, is located in suitably safe geology, and will continue to operate safely as it has done for decades. The safe operation of our pipelines is of critical importance to us, and we believe the study period will reaffirm the safety of the pipeline,” he said.
Shields said the order does not affect construction for the Mariner East 2 pipelines, which continues throughout the state.
The order is a victory for anti-pipeline campaigners who have argued that natural gas liquids represent a threat to public safety, especially in densely populated areas like the suburbs of Philadelphia.
Mariner East 1, which was built in the 1930s, has been repurposed to carry ethane, propane and butane from the Marcellus Shale of southwest Pennsylvania to a terminal at Marcus Hook near Philadelphia, where most of it will be exported.
The existing pipeline runs parallel to the two new lines. The first, ME2, is scheduled for completion by the end of the second quarter.
Potential ‘catastrophic’ consequences
In its petition, the panel said it is concerned about how close homes and an Amtrak line are to the existing pipeline, and to the construction of the new lines, after the sinkholes appeared.
In language similar to that frequently used by community groups opposing the Mariner East project, especially in Philadelphia’s western suburbs, the PUC panel said public safety would be “jeopardized” without the proposed review of pipeline integrity.
“The pipeline in question transports hazardous liquids in densely populated areas defined by PHMSA [the federal Pipeline and Hazardous Materials Safety Administration] as High Consequence Areas,” the petition said. “Any compromise or failure of the pipeline would have dire results, and the injuries resulting therefrom would most certainly be irreparable.”
PHMSA spokesman Darius Kirkwood said the agency is investigating the sinkholes and looking into whether Sunoco complied with pipeline construction safety rules.
The first sinkhole, measuring about eight feet wide by three feet deep, was discovered in December last year just south of railroad tracks used by Amtrak, the document said. A second hole, about 15 feet deep, was discovered on March 1 about 300 feet from the rail line, and a third, about 15 feet wide and 20 feet deep, was found on a private property at Lisa Drive in West Whiteland on March 3, the document said.
The third sinkhole was about 10 feet from a foundation wall of a house on that property, and partially exposed the ME1 pipeline, the petition said.
It said that Sunoco did not notify PUC or PHMSA about the sinkholes, and that the company’s own Compliance Group was unaware of the events until March 3.
All three sinkholes were filled with a concrete mix on March 3, and construction stopped when PUC inspectors visited the site on March 5. The inspectors found more sinkholes developing that were in the path of both ME1 and ME2X.
Beth Toll, a spokeswoman for Amtrak, said inspectors had found no changes to track structures at the West Whiteland location during or since the construction of that part of the pipeline.
‘Can’t afford to wait’
Before PUC’s decision to temporarily shut down Mariner East 1, State Sen. Andy Dinniman, a Chester County Democrat who has argued that the local limestone geology does not support Sunoco’s drilling technique, urged the PUC to issue the emergency order.
“We can’t afford to wait on this,” Dinniman said in a statement. “The number of sinkholes appears to be growing and the heavy snowfall only seems to be exacerbating the problem.”
Clean Air Council, an environmental group that has led legal challenges to the Mariner project, also urged the PUC to shut down ME1 because of its proximity to “this densely-populated neighborhood with busy Amtrak railroad lines and unstable geology,” said executive director Joe Minott, in a statement.
Sunoco restarted construction on the 350-mile cross-state lines in February after a month-long shutdown ordered by the Department of Environmental Protection in response to multiple violations.
This story has been updated with comment from Sunoco.
Written by: Jon Hurdle | StateImpact Pennsylvania
Photo credit: Eric Friedman
Photo caption: | Crews work to stabilize sinkholes in a West Whiteland Township neighborhood on March 3. The sinkholes appeared recently near a construction site for the Mariner East 2 pipeline.
Eminent domain power is available only for a public use with the need for certain property rights. Public use and the need are two issues raised in a county suit to protect property rights.
Northampton County challenging PennEast on eminent domain
Northampton County wants a jury to decide whether publicly protected open space should be disturbed by the proposed PennEast Pipeline.
The county is one of dozens of landowners in Northampton and Upper Bucks counties targeted by the consortium of energy companies for property acquisition through eminent domain.
These properties are part of the proposed route for the 36-inch-diameter natural gas line connecting Pennsylvania’s Marcellus Shale region 120 miles southeast to Mercer County, New Jersey.
PennEast opened eminent domain proceedings, suing property owners in federal court after efforts failed to purchase land for the route.
Federal regulators approved the $1 billion pipeline Jan. 19, conditioned on PennEast securing other necessary approvals.
The county disputes PennEast’s power to condemn publicly preserved open space through eminent domain. The parcels in Lower Nazareth and Williams townships are protected from condemnation, according to the county.
“The county’s position is that PennEast is trying to use eminent domain for a private enterprise, not one that benefits the public,” the county says in a news release. “The county is also disputing that PennEast is offering fair market value for the easements and that attempting to acquire the title to the property rights prior to payment for compensation violates the separation of powers doctrine.”
Michael Corriere, the county’s first assistant solicitor, requested a jury trial, maintaining that taking the conservation easements are not required for the installation, operation or maintenance of the pipeline. The county also requests PennEast’s suit be dismissed and the county be awarded attorney fees and costs.
PennEast declined to comment on the county’s position. But in a statement following the Jan. 19 conditional approval by the Federal Energy Regulatory Commission, PennEast spokeswoman Patricia Kornick said of eminent domain proceedings:
“Through hundreds of meetings and discussions, PennEast has worked collaboratively with landowners, with approximately 75 percent providing survey access
“Unfortunately, organized and unaccountable opposition groups have their own political agenda and use landowners’ withholding survey access to advance that agenda — to the detriment of the landowners. While PennEast views legal proceedings as emotional, burdensome and costly for all involved, it exercised that last-resort option Feb. 6.”
PennEast hopes to begin construction this year on the pipeline, first proposed in August 2014. It is designed to carry up to 1.1 million dekatherms per day of natural gas for domestic energy use, the equivalent of supplying 4.7 million homes. Construction is projected to take about seven months.
Written by: Kurt Bresswein | lehighvalleylive.com
Graphic caption: This PennEast Pipeline Co. LLC shows the route of its proposed 116-mile, 36-inch-diameter natural gas line from Luzerne County, Pennsylvania, to Mercer County, New Jersey, as of September 2016, the most recent map available on the energy company consortium’s website. Visit penneastpipeline.com for a more detailed version. (Courtesy image | For lehighvalleylive.com)