(Fuse)

Sunoco Pipeline will be allowed to use eminent domain to take property in Cumberland County for its Mariner East 2 pipeline project, a state court has ruled.

Cumberland County Court of Common Pleas Judge Edward Guido ruled late last month that the pipeline company will be able to condemn a permanent easement on 1.5 acres of land and temporary easements on 0.84 acres of property owned by R. Scott and Pamela S. Martin in North Middleton Township.

The decision in In re Condemnation by Sunoco Pipeline LP overruled preliminary objections from the Martins.

In a footnote in Guido’s two-page order, the judge said the pipeline will provide both loading and off-loading of ethane, propane, liquid petroleum gas and other petroleum products. The footnote also clarified several disputes between the parties, primarily noting the Mariner East 2 project provides intrastate service, and Sunoco is subject to Pennsylvania Public Utility Commission regulations.

“Sunoco Pipeline LP is a ‘public utility corporation’ as defined at 15 Pa. CSA Section 1103,” Guido said. “Pennsylvania public utility corporations possess the power of eminent domain.”

Jeff Shields, a spokesman for Sunoco, said that, although the decision was consistent with case law, the company did not view the need to resort to eminent domain as a positive.

“We are confident that our negotiations with landowners will continue to produce agreements that are acceptable to all parties and avoid the condemnation process whenever possible,” Shields said in an emailed statement. “Sunoco Pipeline regards eminent domain as a last resort, for use cautiously only when negotiations with a landowner fail and can impede the successful completion of the project.”

Along with disputing whether the project should be considered interstate or intrastate, and therefore primarily regulated by either the PUC or the Federal Energy Regulatory Commission, the parties also disputed several recent cases involving condemnation for pipelines, and the adequacy of the $12,000 bond Sunoco put up for the property.

According to the declaration of taking filed in July, Sunoco contended it operated a public utility that provides and transports petroleum products. The company argued it had been regulated since 2002 by the PUC.

In 2012, Sunoco announced the Mariner East project, which is aimed at relieving the “oversupply of natural gas liquids in the Marcellus and Utica shale basins and to alleviate supply-side shortages of propane in Pennsylvania and the northeastern United States,” said the declaration of taking, filed by Dana W. Chilson of McNees Wallace & Nurick.

Although the first phase of the project initially prioritized interstate pipeline transportation, Sunoco’s business plan for the Mariner East project as a whole focused on intrastate transportation of propane for delivery to customers in Pennsylvania, the declaration said. The declaration also noted the increased shipping demands for propane during the 2013-14 winter, and the resultant price spikes.

“In reaction to the unfolding market conditions and shipper interest, Sunoco Pipeline accelerated its business plans to provide intrastate shipments of propane within the commonwealth, in addition to interstate shipments of propane and ethane,” the declaration said.

In their preliminary objections, the Martins contended Sunoco does not have the power or the right to take the land. The filing argued the legislature chose not to provide eminent domain power for natural gas liquids, and said courts have repeatedly rejected Sunoco’s attempts to exercise eminent domain powers.

“The assertion of state eminent domain power is entirely inapplicable to this interstate pipeline,” said the preliminary objections, filed by Hershey attorney Michael F. Faherty. “Sunoco has repeatedly tried and failed to obtain the requested eminent domain power.”

The Martins cited the 2014 decision in Loper v. Sunoco, and said York County Court of Common Pleas President Judge Stephen P. Linebaugh “flatly and forcefully rejected this exact attempt.” The Martins also said Washington County Court of Common Pleas Judge Katherine B. Emery “scoffed at the ploy” in the consolidated cases in Cox v. Sunoco.

“Sunoco has now sunken to the effort of false representation of mischaracterizing Mariner East 2 from an interstate to an intrastate pipeline. Sunoco seeks eminent domain power to defeat constitutional law and simply reduce property costs. This honorable court should not be fooled,” the filing said.

The preliminary objections also contended the Mariner East 2 project crosses state lines, and is only regulated by FERC.

In its response filed in September by Kandice Kerwin Hull, also of McNees Wallace, Sunoco contended the Martins mischaracterized the arguments and the case.

The project, Sunoco argued, is not an interstate project and it is not regulated by FERC. Sunoco further contended the pipeline will transport products that are substantially different from natural gas.

Sunoco additionally argued it has never been denied eminent domain authority, and the references to the Loper case were misleading, as the case dealt with interstate shipments.

Emery also never rendered a decision in the Cox cases, Sunoco argued, because the parties negotiated an agreement of easement.

“To include these cases among the alleged ‘repeated failures’ of Sunoco Pipeline to obtain eminent domain power when no decision was even rendered by the court stretches the limits of zealous advocacy and comes perilously close to outright misrepresentation,” the filing said.

Faherty did not return a call for comment.

Max Mitchell can be contacted at 215-557-2354 or mmitchell@alm.com. Follow him on Twitter @MMitchellTLI.