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Kinder Morgan appeals Palmetto Pipeline decision
Thu, 06/25/2015 - 9:59am
Pipeline giant Kinder Morgan appealed a Georgia transportation official’s decision that put its proposed billion-dollar Palmetto Pipeline project in limbo last month.
In its 58-page filing last week, Kinder Morgan takes the Department of Transportation to task for what it says are procedural errors, including a slow and incomplete response to its open records request, as well as for what it sees as a faulty decision.
“Palmetto requests that the Final Decision be reversed, as it is in violation of the GDOT’s statutory authority, in excess of the statutory authority of the agency, arbitrary and capricious, an abuse of discretion, clearly erroneous in view of the evidence in record, and the GDOT unreasonably withheld the requested certificate,” attorneys Patricia Barmeyer and Jonathan Chally of Atlanta-based King & Spalding wrote in the petition for review.
GDOT officials declined to comment, saying they had not been officially served.
Steve Caley, an attorney with the nonprofit GreenLaw, which represented environmental groups opposed to the project, said the facts don’t support a need for the pipeline.
“Amazingly, ‘the largest energy infrastructure company in the United States’ — as admitted by Kinder Morgan in its complaint — represented by the largest law firm in the state of Georgia essentially complains that it was not given a fair shot in its application to GDOT despite having more resources than all of the pipeline opponents combined,” he said.
“Where is the shortage of gasoline supplies? There is none. Where are the high prices? There are none. Gasoline consumption has been declining for years and is projected to continue declining for the next several decades. We are confident that the well-reasoned decision of GDOT Commissioner (Russell) McMurry will be upheld by the courts.”
Ogeechee Riverkeeper Emily Markesteyn agreed.
“This is not unexpected as they’ve said all along they would appeal. However, I feel it is unnecessary,” she said. “The DOT Commissioner’s rationale for denying the certificate was sound, based on the lack of public need for Georgia’s citizens, and the court should uphold the state’s decision.”
The eminent domain challenge
The planned Palmetto Pipeline would carry up to 7 million gallons of gasoline, diesel and ethanol a day from Belton, S.C., to Jacksonville. The 210-mile route through Georgia parallels the Savannah River and then turns south, crossing every coastal county and five major rivers.
The company estimates the pipeline would cross the property of almost 400 landowners in Georgia, requiring permanent 50-foot-wide easements that would limit private use. In exchange for the easement, Kinder Morgan offers a one-time negotiated payment. Landowners would continue to pay taxes on the land, which they would technically still own.
To build the pipeline, the company would need to exercise eminent domain wherever its negotiations failed.
And that’s been the challenge for Kinder Morgan.
In Georgia, a law passed in the 1990s requires petroleum pipelines — but not natural gas ones — to get approval from the DOT and the Georgia Environmental Protection Division before the company can condemn property.
Kinder Morgan failed to cross this hurdle when DOT officials, after a public outcry, determined the company had not demonstrated the pipeline met a public need.
The DOT received about 3,000 public comments on the pipeline, most of it opposed.
In Savannah, petroleum marketer Colonial Oil Group vocally opposed the pipeline, chafing at a private company’s threat of eminent domain and saying the tiered bidding on the pipeline capacity could ultimately quash competition in the market.
And Kinder Morgan suffered a public relations setback when a surveyor arrested for alleged trespassing told a Screven County sheriff’s deputy “You can’t stop the pipeline, they have enough money to push the pipeline through the county.”
The surveyors were arrested on the property of William S. “Billy” Morris III, Founder and CEO of Morris Communications, which operates the Augusta Chronicle, the Savannah Morning News and the Jacksonville Times-Union, all along the pipeline route.
Each of pipeline’s six informational meetings and two public hearings was heavily attended. In its petition, Kinder Morgan takes issue with the two public hearings, questioning their need and legitimacy.
“At the urging of opponents of Palmetto Pipeline, the GDOT scheduled two additional meetings, which the GDOT characterized as ‘hearings,’” the attorneys wrote, adding “Palmetto had no opportunity to respond to the comments made at these hearings.”
The company tried to obtain the written public comments through an open records request, but the GDOT was slow and incomplete in responding, giving the company little time to rebut, the attorneys complained. And they’re not so certain GDOT considered the rebuttal they did manage to file on May 15, “just one day before GDOT issued its Final Decision,” they wrote. (McMurry’s decision was actually dated May 18.)
“Given the length of the material Palmetto submitted, including point-by-point refutation of objections asserted by Colonial Oil Group, it is unlikely that the GDOT even considered Palmetto’s responses,” they wrote.
Before GDOT Commissioner Russell McMurry issued his decision Gov. Nathan Deal weighed in, telling an Augusta television station, “We’re going to object from the state level, and I think that process will then go to the courts for a judge to decide.”
About 10 days later, McMurry’s decision did just that, rejecting Kinder Morgan’s claims that the pipeline would meet growing need at lower cost to consumers.
“The evidence suggests an overall downward trend in fuel consumption and the idea that the pipeline is needed to create current and future increased demands is simply not supported,” McMurry wrote in his five-page decision. On the question of cost he pointed out that Kinder Morgan representatives had stated the company couldn’t control prices at the pump.
“There is no reason to believe nor is there any evidence that the presence of a pipeline in the market alone will affect prices in the region,” McMurry wrote in his May 18 decision.
Kinder Morgan had provided the GDOT with a study predicting increased fuel demand that even the study authors at the Carl Vinson Institute subsequently backed away from. Transportation officials instead looked at projections from the U.S. Energy Information Agency.
But Kinder Morgan stands by its experts, even if they don’t stand by their own five-year-old work, some of which has already been demonstrated as inaccurate by actual events.
“The GDOT relied extensively on data from the U.S. Energy Information Agency and ignored evidence from Palmetto regarding existing and projected future fuel growth,” the Kinder Morgan attorneys wrote.
New arguments not allowed
Georgia law requires the superior court review to be determined on the basis of the record already before the commissioner.
“The action of the commissioner shall be affirmed if supported by substantial evidence,” the law reads.
That means Kinder Morgan cannot introduce new arguments to persuade the court there’s a public need for its pipeline.
Apart from the court action, the company has launched a pervasive public relations campaign, advertising in newspapers and on TV and radio. Last week it donated $20,000 to a Savannah anti-litter campaign.
Pipeline critics like KC Allan think they know why.
“The ongoing Kinder Morgan newspaper and TV ads currying popular favor suggest they will take a whole new run at an all new fresh-from-scratch application for yet another Certificate of Convenience and Necessity. Why not? A court appeal does not allow for the introduction of new evidence to bolster KM’s claims. They will lose handily. So why waste advertising dollars trying to budge a Georgia superior court judge? You wouldn’t.”
Allan, a Canadian citizen living in Savannah, said opposition to Kinder Morgan pipelines is growing across the continent, citing protests in Canada and New England.
“And let’s face it, Kinder Morgan failed to prove a need existed three months ago, “ she said. “What could have changed a few weeks later?”
Kinder Morgan did not respond to the question of whether it would submit a new pipeline application. Spokeswoman Melissa Ruiz did provide a written statement on the appeal:
“As we move forward in the process as outlined by the Georgia legislature, we will continue to communicate regularly with stakeholders, including impacted landowners, elected officials and communities, because we believe this project serves the best interests of consumers in the state of Georgia and the Southeast region. We and our shippers remain committed to bringing an alternate source of supply to these markets, and we will continue to make every effort to reach mutually beneficial agreements with stakeholders.”