Oil (Palmetto) vs. gas (Sabal Trail) pipelines at FERC

FERC’s role for oil pipelines is different than for natural gas pipelines. FERC doesn’t actively promote petroleum products pipelines through federal eminent domain like it does for fracked methane; instead it leaves oil pipeline eminent domain to the states, which for Georgia seems to mostly mean the Georgia Department of Transportation (GDOT).

FERC’s website says about Regulating Oil Pipelines:

The Commission’s responsibilities include:

  • Regulation of rates and practices of oil pipeline companies engaged in interstate transportation;
  • Establishment of equal service conditions to provide shippers with equal access to pipeline transportation; and
  • Establishment of reasonable rates for transporting petroleum and petroleum products by pipeline.

So Kinder Morgan’s Palmetto petroleum products Project does fall under FERC, but not the same way as for Sabal Trail’s fracked methane pipeline.

These FERC oil roles help explain why Palmetto Products Pipe Line LLC’s 23 January 2015 Petition for Declaratory Order of Palmetto Products Pipe Line LLC under OR15-13 has a lot of material about pricing and shipping. According to FERC’s 28 January 2015 Notice of Petition for Declaratory Order re Palmetto Products Pipe Line LLC under OR15-13, it appears that motions to intervene on FERC Docket OR15-13 would still be timely.

Here a couple of industry lawyers consider lack of FERC pre-approval a problem for oil pipelines because their proponents can’t use federal eminent domain. Mark K. Lewis and D. Kirk Morgan II, 1 October 2011, An uneven playing field exists in oil vs gas pipeline development. Which would seem to provide yet more evidence that FERC’s role for natural gas is to promote deployment of pipelines.

However, here’s another writeup that cites a number of cases indicating when federal law might pre-empt state oversight of oil pipelines. Adam Vann, Kristina Alexander, Vanessa K. Burrows, and Kenneth R. Thomas, Congressional Research Service, 20 January 2012, Proposed Keystone XL Pipeline: Legal Issues. The big exception seems to be pipeline safety, which is supposedly under the charge of the Pipeline Hazardous Materials & Safety Administration (PHMSA), not states.

Since counties are creatures of the state, maybe county ordinances could work to determine where an oil pipeline could be routed. Even without specific ordinances, the 2006 Georgia Constitutional amendment about eminent domain might give local elected governments some control over pipeline siting.

Meanwhile, in Georgia, attorneys tell me the state Department of Transportation (GDOT) has to provide a certificate of public convenience and necessity to build an oil pipeline such as the Palmetto Project. Which makes it very interesting that the five March meetings advertised as public hearings involving GDOT with Palmetto Pipe Line LLC may not have been legal hearings.

This is different from what FERC requires for Sabal Trail’s natural gas pipeline, where the list of Agency Permits/Approvals says for GDOT only:

state road, highway, or interstate crossing permits

Both kinds of pipelines still need various other state permits from the Georgia Department of Natural Resources and perhaps other agencies, such as archeological, water withdrawal and discharge, stream buffer variances, and at least in the case of Sabal Trail, an air quality permit for the Albany compressor station.

I am still not an attorney, so if you want authoritative details on such agency responsibilities, please consult an attorney.

Oh, and beware. Just because the Palmetto Pipeline is being proposed for various liquid petroleum products doesn’t mean it will always be that way. The U.S. Energy Information Administration (eia) notes that Options for creating additional pipeline capacity include:

Converting an oil or product pipeline to a natural gas pipeline

Once a pipeline is in the ground, it’s hard to say what it might eventually be used for. Of course, with the price of oil still plummeting and fracking stalling, while the prices of solar panels continuing down doubles solar deployment every couple of years and has already made Georgia the fastest-growing solar market attracting record-setting private investment and creating jobs, any pipelines installed as the carbon bubble pops may end up being used for nothing. So why let them gouge through our fields, farms, and waters for less than nothing in return?

-jsq