LAPORTE, Pa. - A pipeline operator assured federal regulators it would minimize using eminent domain against private landowners if given approval to lay a 39-mile natural gas pipeline in northern Pennsylvania's pristine Endless Mountains.
Yet the company was readying condemnation papers against dozens of landowners even as the Federal Energy Regulatory Commission was considering its application for the $250 million MARC 1 pipeline. Within two days of winning approval, Central New York Oil & Gas Co., LLC went to court to condemn nearly half the properties along the pipeline's route - undercutting part of the regulatory commission's approval rationale and angering landowners who are now fighting the company in court.
Eminent domain would give the company the right to excavate and lay the 30-inch diameter pipeline on private property. Landowners would not lose their properties and would be compensated.
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Lisa Richlin stands along Route 220 at an intersection with Thorndale Road next to her home near Laporte, Pa. Richlin and dozens of others are in court with Central New York Oil and Gas Co. over a gas pipeline project.
The dispute could foreshadow eminent domain battles to come as more pipelines are approved and built to carry shale gas to market in states like Pennsylvania, New York and Ohio.
Some of the complaining landowners say the company steamrolled them by refusing to negotiate in good faith on either monetary compensation or the pipeline's route. Their attorneys say the company has skirted Pennsylvania's eminent domain rules governing compensation.
Residents are fighting the pipeline on two fronts: challenging the eminent domain proceedings in court and appealing the approval by FERC. Because those challenges are pending, commission spokeswoman Tamara Young-Allen declined Tuesday to comment on whether the agency was misled.
The pipeline operator, a subsidiary of Inergy LP of Kansas City, Mo., insists it's trying to reach a "fair settlement" with all residents and wants to be a good neighbor.
The company promotes the MARC 1 pipeline as key infrastructure in developing the Marcellus Shale. The high-pressure steel pipeline will connect to major interstate pipelines and the company's own natural gas storage facility in southern New York state.
Central New York Oil & Gas hopes to start construction soon and finish by July, but awaits permits from Pennsylvania environmental regulators and the Army Corps of Engineers.
It also faces the residents' legal challenge.
Many of them say they favor natural gas drilling and some have leased land to gas drillers. What rankles them is that the federal government has invested the company with the power of eminent domain, taking away their bargaining power.
"Once the government becomes involved, this is what happens. Because you lose that leverage," said Amy Gardner, who, with her husband, faces condemnation of part of their 175-acre parcel in Sullivan County.
The Gardners say the company offered them less than a third of the amount they got from another pipeline company that installed a gathering line on their land. The difference? Gathering lines - smaller pipelines that take gas from the wellhead to a transmission line or processing facility - are not federally regulated and companies that operate them don't have condemnation power.
Amy Gardner said a CNYOG company representative who made them the lowball offer told them to "take it or leave it." She would not disclose what the company had offered.
"There's no negotiating with this company. They come and they tell you what they're going to do. They're telling you what they're going to pay. And they're counting on the government to enforce it," Gardner said.
The company insists it has met its obligation to negotiate and has reached private agreement with more than 80 percent of the landowners. Its attorney, Michael Wright, said there were several "meet-in-the-middle cases" involving compromise.
"It's not like we were sitting silently until the FERC order and rushed to the courthouse," said Wright, who is based in Vestal, N.Y. "To say we did not attempt to negotiate in good faith is incorrect."
Amounts offered by the pipeline company range from a few hundred dollars to tens of thousands of dollars, depending on the amount of property taken. Court papers it filed in late December valued damages at 37 condemned properties in Sullivan County at $310,900 - from a low of $120 to a high of $39,570 for land owned by the Pennsylvania Game Commission.
The regulators were supposed to consider whether there would be an "unneeded exercise" of eminent domain.
The regulators said last year that they relied on the company's assertion it was acquiring land "through negotiated agreements with landowners, thus minimizing the need" to condemn people's land.
In reality, Central New York Oil & Gas had already prepared to take dozens of landowners to court. Within two days of getting the commission's approval on Nov. 14, it began eminent domain proceedings in court against 74 of 152 property owners along the pipeline's route through the mountains of Bradford, Lycoming and Sullivan counties.
The company isn't taking homes or booting people off their land. Rather, it needs easements for the part of each property through which the pipeline will run.