In Re: Condemnation by Sunoco Pipeline, L.P. of Permanent and Temporary Rights of Way for the Transportation of Ethane, Propane, Liquid Petroleum Gas, and other Petroleum Products in the Twp. of North Middleton, Cumberland County, PA ~ Appeal of: R.S. Martin , 143 A.3d 1000 ( 2016 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Condemnation By Sunoco :
Pipeline, L.P. of Permanent and :
Temporary Rights of Way for the :
Transportation of Ethane, Propane, :
Liquid Petroleum Gas, and other :
Petroleum Products in the Township :
of North Middleton, Cumberland :
County, Pennsylvania, over the :
Lands of R. Scott Martin and :
Pamela S. Martin : No. 1979 C.D. 2015
:
Appeal of: R. Scott Martin and :
Pamela S. Martin :
:
In Re: Condemnation By Sunoco :
Pipeline, L.P. of Permanent and :
Temporary Rights of Way for the :
Transportation of Ethane, Propane, :
Liquid Petroleum Gas, and other :
Petroleum Products in the Township :
of North Middleton, Cumberland :
County, Pennsylvania, over the :
Lands of Douglas M. Fitzgerald and :
Lyndsey M. Fitzgerald : No. 1980 C.D. 2015
:
Appeal of: Douglas M. Fitzgerald :
and Lyndsey M. Fitzgerald :
:
In Re: Condemnation by Sunoco :
Pipeline, L.P. of Permanent and :
Temporary Rights of Way for the :
Transportation of Ethane, Propane, :
Liquid Petroleum Gas, and other :
Petroleum Products in the Township :
of North Middleton, Cumberland :
County, Pennsylvania, over the :
Lands of Harvey A. Nickey and :
Anna M. Nickey : No. 1981 C.D. 2015
: Argued: March 9, 2016
Appeal of: Harvey A. Nickey and :
Anna M. Nickey :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE ROBERT SIMPSON, Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
OPINION
BY JUDGE COHN JUBELIRER FILED: July 14, 2016
R. Scott Martin and Pamela S. Martin, Douglas M. Fitzgerald and Lyndsey
M. Fitzgerald, and Harvey A. Nickey and Anna M. Nickey (Condemnees) appeal
from the September 29, 2015 Order of the Court of Common Pleas of Cumberland
County (common pleas) that overruled Condemnees’ Preliminary Objections to
Declarations of Taking (Declarations) filed by Condemnor Sunoco Pipeline, L.P.
(Sunoco) to facilitate construction of the phase of its Mariner East Project known
as the Mariner East 2 pipeline. Condemnees assert that common pleas erred when
it overruled their Preliminary Objections because: Sunoco’s Declarations are
barred under the doctrine of collateral estoppel by an earlier York County decision;
the Mariner East 2 pipeline is not an intrastate pipeline subject to Pennsylvania
Public Utility Commission (PUC) regulation; the Mariner East 2 pipeline does not
provide PUC regulated service; and, no public need exists for the Mariner East 2
pipeline. After careful review of the record, we find no error and therefore affirm.
I. PUC and FERC Jurisdiction, Sunoco and the Mariner East Project
Before we address the specific facts of these appeals and their merits, it will
be helpful to provide some general background information on the nature of the
interrelationships between Sunoco, PUC and Federal Energy Regulatory
Commission (FERC), as well as the nature and history of the Mariner East Project.
A. Regulation of Public Utilities by PUC and by FERC
Section 1511(a)(2) of the Business Corporation Law of 19881 (BCL), 15 Pa.
C.S. § 1511(a)(2),2 provides that “public utility corporations” may exercise the
power of eminent domain to condemn property for the transportation of, inter alia,
natural gas and petroleum products. Section 1103 of the BCL, 15 Pa. C.S. § 1103,
defines public utility corporation as “[a]ny domestic or foreign corporation for
profit that . . . is subject to regulation as a public utility by the [PUC] or an officer
or agency of the United States . . . .” FERC is an agency of the United States that
may regulate an entity as a public utility under this section.
Jurisdiction over the certification and regulation of public utilities in the
Commonwealth is vested in PUC through the Public Utility Code (Code).3
However, simply being subject to PUC regulation is insufficient for an entity to
have the power of eminent domain. Section 1104 of the Code, 66 Pa. C.S. § 1104,
requires that a public utility must possess a certificate of public convenience (CPC)
1
15 Pa. C.S. §§ 1101-9507.
2
Section 1511(a)(2) of the BCL provides:
§ 1511. Additional powers of certain public utility corporations.
(a) General rule.--
A public utility corporation shall, in addition to any other power of eminent
domain conferred by any other statute, have the right to take, occupy and
condemn property for one or more of the following principal purposes and
ancillary purposes reasonably necessary or appropriate for the accomplishment of
the principal purposes:
***
(2) The transportation of artificial or natural gas, electricity, petroleum or
petroleum products or water or any combination of such substances for the public.
15 Pa. C.S. § 1511(a)(2).
3
66 Pa. C.S. §§ 101-3316.
2
issued by PUC pursuant to Section 1101 of the Code, 66 Pa. C.S. § 1101, before
exercising the power of eminent domain.4
Both FERC and PUC regulate the shipments of natural gas and petroleum
products or service through those pipelines, and not the actual physical pipelines
4
Section 1101 of the Code (related to the organization of public utilities and the
beginning of service) provides:
Upon the application of any proposed public utility and the approval of such
application by the commission evidenced by its certificate of public convenience
first had and obtained, it shall be lawful for any such proposed public utility to
begin to offer, render, furnish, or supply service within this Commonwealth. The
commission’s certificate of public convenience granted under the authority of this
section shall include a description of the nature of the service and of the territory
in which it may be offered, rendered, furnished or supplied.
66 Pa. C.S. § 1101. Similarly, Section 1102 of the Code (related to the enumeration of the acts
requiring a certificate of public convenience), provides, in part, as follows:
(a) General rule.--Upon the application of any public utility and the approval
of such application by the commission, evidenced by its certificate of public
convenience first had and obtained, and upon compliance with existing laws, it
shall be lawful:
(1) For any public utility to begin to offer, render, furnish or supply within this
Commonwealth service of a different nature or to a different territory . . . .
66 Pa. C.S. § 1102. Section 1104 of the Code states:
§ 1104. Certain appropriations by right of eminent domain prohibited.
Unless its power of eminent domain existed under prior law, no domestic public
utility or foreign public utility authorized to do business in this Commonwealth
shall exercise any power of eminent domain within this Commonwealth until it
shall have received the certificate of public convenience required by section 1101
(relating to organization of public utilities and beginning of service).
66 Pa. C.S. § 1104.
3
conveying those liquids. (R.R. at 1344a.) FERC’s jurisdiction is derived from the
Interstate Commerce Act (ICA) and applies to interstate movements,5 while the
Code and PUC’s jurisdiction apply to intrastate movements.6 This jurisdiction is
not mutually exclusive. See, e.g., Amoco Pipeline, Co., 62 F.E.R.C. ¶ 61119, at
61803-61804, 1993 WL 25751, at *4 (Feb. 8, 1993) (finding that “the
commingling of oil streams is not a factor in fixing jurisdiction under the ICA”);
(R.R. at 687a, 693a, 1379a-80a.) In Amoco, FERC held as follows:
Amoco argues that the commingling of the crude oil from Wyoming
and other states makes all of the commingled crude oil subject to the
interstate rate. This argument has no merit. As the cases demonstrate,
the commingling of oil streams is not a factor in fixing jurisdiction
5
See, e.g., 42 U.S.C. § 7155; 42 U.S.C. § 7172(b) (transferring authority conferred by
ICA upon the Interstate Commerce Commission (ICC) to regulate pipeline transportation of oil
to FERC); 49 U.S.C. § 60502 (regarding FERC jurisdiction over rates for the transportation of
oil by pipeline formerly vested in the ICC). According to its website, FERC is an independent
agency that among other duties regulates the interstate transmission of electricity, natural gas and
oil. The website further notes that many areas beyond FERC’s jurisdiction are within the
province of state public utility commissions. Federal Energy Regulatory Commission, What
FERC Does, available at http://ferc.gov/about/ferc-does.asp (last visited May 20, 2016).
6
Pipeline transportation services are defined as public utility services under Section 102
of the Code, 66 Pa. C.S. § 102, which provides as follows:
§ 102. Definitions.
***
Public utility.
(1) Any person or corporations now or hereafter owning or operating in this
Commonwealth equipment or facilities for:
***
(v) Transporting or conveying natural or artificial gas, crude oil, gasoline, or
petroleum products, materials for refrigeration, or oxygen or nitrogen, or other
fluid substance, by pipeline or conduit, for the public for compensation.
Id.
4
under the ICA. Rather, we look to the “fixed and persistent intent of
the shipper,” and to such factors as whether storage or processing
interrupt the continuity of the transportation.
It is not disputed that both interstate and intrastate transportation occur
over the pipeline segments in question, nor is there any dispute that
crude oil shipped by Sinclair over these segments, no matter where
produced, is destined for Sinclair’s Wyoming refineries. Therefore,
the crude oil produced outside of Wyoming and transported over
Amoco’s Wyoming facilities to Sinclair’s refineries in that state is
moving in interstate commerce and is covered by the tariffs filed by
Amoco with this Commission. Transportation over Amoco’s facilities
of that portion of the crude oil that is both produced and refined in
Wyoming is subject to the regulation of the Wyoming [Public Service
Commission]. Commingling does not alter the jurisdictional nature of
the shipments, and as Sinclair has stated, the question of jurisdiction
arises only in the context of the facts relevant to individual shipments.
Amoco argues that later decisions have effectively overruled this
precedent. However, the cases cited by Amoco relate to the
transportation of natural gas, which is governed by the Natural Gas
Act (NGA), and which do not control our determination of the effect
of commingling crude oil from various sources.
62 F.E.R.C. at ¶¶ 61803-61804, 1993 WL 25751 at *4. See also National Steel
Corp. v. Long, 718 F. Supp. 622, 625 (W.D. Mich. 1989) (holding in a prospective
challenge to the exercise of regulatory jurisdiction by the Michigan Public Service
Commission that the federal scheme under the ICA “is not so comprehensive as to
address the local interests which are the focus of state regulation.”); Humble Oil &
Refining Co. v. Tex. & Pac. Ry. Co., 289 S.W.2d 547 (Tex. 1955) (where shipper
produced oil in New Mexico and Texas and delivered it by pipeline to Texas tank
farm where it was commingled and shipped by rail to various destinations, the
shipper accepting at destination the equivalent of oil delivered to farm, that portion
of oil shipped which was equivalent in volume to that produced in New Mexico
was subject to interstate rate, while that portion equivalent in volume to that
5
produced in Texas was subject to intrastate rate.); Removing Obstacles to
Increased Elec. Generation & Natural Gas Supply in the W. United States, 94
F.E.R.C. ¶¶ 61272, 61977 (Mar. 14, 2001) (FERC authority limited to regulating
terms and rates of interstate shipments on a proposed line). Thus, it is apparent
from these authorities that it is PUC, and not FERC, that has authority to regulate
intrastate shipments. Similarly, the record shows that pipeline service operators in
Pennsylvania, such as Sunoco, can be, and frequently are, simultaneously regulated
by both FERC and PUC through a regulatory rubric where FERC jurisdiction is
limited only to interstate shipments, and PUC’s jurisdiction extends only to
intrastate shipments. (R.R. at 1379a-80a.)
B. Regulation of Sunoco as a Public Utility
As to Sunoco generally, the record shows that it has been operating as a
public utility corporation7 in Pennsylvania since 2002, at which time Sunoco
7
Sunoco points out that the term “public utility corporation” is not limited to
corporations, but also includes partnerships and limited liability companies, citing Section
8102(a)(2) of the BCL, 15 Pa. C.S. § 8102(a)(2), which provides that:
§ 8102. Interchangeability of partnership, limited liability company and
corporate forms of organization.
(a) General rule. --
Subject to any restrictions on a specific line of business made applicable by
section 103 (relating to subordination of title to regulatory laws):
***
(2) A domestic or foreign partnership or limited liability company may
exercise any right, power, franchise or privilege that a domestic or foreign
corporation engaged in the same line of business might exercise under the laws of
this Commonwealth, including powers conferred by section 1511 (relating to
additional powers of certain public utility corporations) or other provisions of law
(Continued…)
6
received PUC approval for the transfer, merger, possession, and use of all assets of
the Sun Pipe Line Company (“Sun”) and of the Atlantic Pipeline Corporation
(“Atlantic”), both of which were subject to PUC jurisdiction. (R.R. at 28a-33a,
670a.) As such, Sunoco came into possession of a pipeline system operated
previously by Sun and its predecessors and Atlantic and its predecessors. This
“legacy” pipeline system operated under CPCs issued in 1930 and 1931 by PUC’s
statutory predecessor, the Pennsylvania Public Service Commission. (R.R. at 89a-
90a.) The record substantiates that the pipeline system previously provided and
currently provides interstate and intrastate service on the same pipelines. (R.R. at
90a-93a, 657a, 672a, 687a, 821a-22a, 1383a-87a.) PUC has regulated Sunoco’s
intrastate pipeline transportation of petroleum products and refined petroleum
products since 2002, and FERC has regulated Sunoco’s interstate service of the
same products on the same pipelines. (R.R. at 90a-93a, 1383a-87a.)
As to regulation by PUC, that agency in an Order entered on October 29,
2014 concluded that: “Sunoco has been certificated as a public utility in
Pennsylvania for many years, and [that] the existence of Commission Orders
granting the [CPCs] to Sunoco is prima facie evidence . . . that Sunoco is a public
utility under the Code.” (R.R. at 116a.) PUC further explained that Sunoco’s
existing authority under its prior CPCs gave it the right to reverse the flow within
the existing pipeline and to add new pipelines if Sunoco concluded it was
necessary to expand the previously certificated service, stating:
granting the right to a duly authorized corporation to take or occupy property and
make compensation therefor.
Id.
7
Thus, Sunoco has the authority to provide intrastate petroleum and
refined petroleum products bi-directionally through pipeline
service to the public between the Ohio and New York borders and
Marcus Hook, Delaware County through generally identified points.
This authority is not contingent upon a specific directional flow or a
specific route within the certificated territory. Additionally, this
authority is not limited to a specific pipe or set of pipes, but rather,
includes both the upgrading of current facilities and the
expansion of existing capacity as needed for the provision of the
authorized service within the certificated territory.
(R.R. at 122a (emphasis added).)
Additionally, by Order dated July 24, 2014, PUC clarified Sunoco’s
authority under its existing CPCs to transport petroleum products and refined
petroleum products, including propane,8 between Delmont, Westmoreland County
8
PUC has interpreted the definition of “petroleum products” broadly to encompass what
would otherwise be an exhaustive list of products. This list includes propane. See Petition of
Sunoco Pipeline, L.P. for Amendment of the Order Entered on August 29, 2013, Entered July 24,
2014, Docket No. P-2014-2422583, at 9 n.5, (R.R. at 41a-51a); and Petition of Granger Energy
of Honey Brook LLC, Docket No. P-00032043, at 14 (Order entered August 19, 2004). In these
Orders, PUC held that this interpretation is consistent with the definition of “petroleum gas” in
the federal gas pipeline transportation safety regulations at 49 C.F.R. Part 192. Part 192 has been
adopted by PUC and defines “petroleum gas” to include propane. 49 C.F.R. § 192.3. PUC
posits that its interpretation also is consistent with the definition of “petroleum” in the federal
hazardous liquids pipeline safety regulations at 49 C.F.R. Part 195. Part 195 also has been
adopted by PUC (52 Pa. Code § 59.33(b)) and defines “petroleum” to include natural gas liquids
and liquefied petroleum gas, which can include propane. 49 C.F.R. § 195.2. The following
definitions can be found in the Parts 192 and 195 of the CFR:
§ 192.3 Definitions.
As used in this part:
***
Petroleum gas means propane, propylene, butane, (normal butane or isobutanes),
and butylene (including isomers), or mixtures composed predominantly of these
gases, having a vapor pressure not exceeding 208 psi (1434 kPa) gage at 100° F
(38° C).
(Continued…)
8
and Twin Oaks, Delaware County. (R.R. at 41a-51a.) Therein, PUC stated that
Sunoco retained that authority under its 2002 CPCs, its prior suspension and
abandonment of gasoline and distillate service notwithstanding. (R.R. at 49a.)
PUC further found that Sunoco’s proposed intrastate propane service would result
in “numerous potential public benefits” by allowing Sunoco “to immediately
address the need for uninterrupted deliveries of propane in Pennsylvania and to
ensure that there is adequate pipeline capacity to meet peak demand for propane
during the winter heating season.” (R.R. at 49a-50a.)
Further, by Order dated August 21, 2014, PUC granted Sunoco’s
Application for a CPC to expand its service territory into Washington County.
(R.R. at 60a-64a.) In that Application, Sunoco stated that it intended to expand the
capacity of the Mariner East Project by implementing the Mariner East 2 pipeline,
which would increase the take-away capacity of natural gas liquids (NGLs)9 from
49 C.F.R. § 192.3
§ 195.2 Definitions
As used in this part—
***
Petroleum means crude oil, condensate, natural gasoline, natural gas liquids, and
liquefied petroleum gas.
Petroleum product means flammable, toxic, or corrosive products obtained from
distilling and processing of crude oil, unfinished oils, natural gas liquids, blend
stocks and other miscellaneous hydrocarbon compounds.
49 C.F.R. § 195.2
9
According to the United States Energy Information Administration:
Natural gas liquids (NGLs) are hydrocarbons—in the same family of molecules as
natural gas and crude oil, composed exclusively of carbon and hydrogen. Ethane,
propane, butane, isobutane, and pentane are all NGLs . . . NGLs are used as inputs
(Continued…)
9
the Marcellus Shale and allow Sunoco to provide additional on-loading and off-
loading points within Pennsylvania for interstate and intrastate propane shipments.
(R.R. at 61a-62a.) PUC, by authorizing the provision of intrastate petroleum and
refined petroleum products pipeline transportation service in Washington County
in the August 21, 2014 Order expanded the service territory in which Sunoco is
authorized to provide Mariner East service. (R.R. at 60a-64a.) PUC found that the
expansion was in the public interest, stating:
Upon full consideration of all matters of record, we believe that
approval of this Application is necessary and proper for the service,
accommodation, and convenience of the public. We believe
granting Sunoco authority to commence intrastate transportation of
propane in Washington County will enhance delivery options for the
transport of natural gas and natural gas liquids in Pennsylvania. In the
wake of the propane shortage experienced in 2014, Sunoco’s proposed
service will increase the supply of propane in markets with a
demand for these resources, including in Pennsylvania, ensuring
that Pennsylvania’s citizens enjoy access to propane heating fuel.
Additionally, the proposed service will offer a safer and more
economic transportation alternative for shippers to existing rail and
trucking services . . . .
for petrochemical plants, burned for space heat and cooking, and blended into
vehicle fuel . . . .
The chemical composition of these hydrocarbons is similar, yet their applications
vary widely. Ethane occupies the largest share of NGL field production. It is used
almost exclusively to produce ethylene, which is then turned into plastics. Much
of the propane, by contrast, is burned for heating, although a substantial amount is
used as petrochemical feedstock . . . .
United States Energy Information Administration, Today in Energy, April 20, 2012,
available at http://www.eia.gov/todayinenergy/detail.cfm?id=5930&src=email (last
visited May 20, 2016).
10
(R.R. at 63a (emphasis added).)10
Therefore, pursuant to PUC’s Orders, Sunoco has CPCs that authorize it to
transport, via its pipeline system, petroleum and refined petroleum products,
including propane, from and to points within Pennsylvania. This authority was
expanded to include Washington County in recognition of the public need and the
importance of increasing the supply of propane to the citizens of Pennsylvania.
C. The Mariner East Project
In 2012, Sunoco announced its intent to develop an integrated pipeline
system for transporting petroleum products and NGLs such as propane, ethane, and
butane from the Marcellus and Utica Shales in Pennsylvania, West Virginia and
Ohio to the Marcus Hook Industrial Complex (“MHIC”) and points in between.
(R.R. at 9a, 46a, 1377a.) Sunoco’s various filings describe the overall goal of the
Mariner East Project as an integrated pipeline system to move NGLs from the
Marcellus and Utica Shales through and within the Commonwealth; and to provide
10
Sunoco also points out that it has filed all necessary tariffs required to implement the
intrastate service proposed by the Mariner East Project. The authority to file a tariff is limited to
a public utility regulated by PUC. Section 1302 of the Code states that “every public utility shall
file with the [C]ommission . . . tariffs showing all rates established by it and collected or
enforced, or to be collected or enforced, within the jurisdiction of the [C]ommission.” 66 Pa.
C.S. § 1302. The record contains the following with regard to Sunoco’s tariffs:
Sunoco filed Tariff Pipeline – Pa. P.U.C. No. 16 on June 12, 2014. By final Order dated
August 21, 2014, in Docket No. R-2014-2426158 PUC permitted the tariff to become effective
on October 1, 2014. (R.R. at 53a-56a.) On November 6, 2014, Sunoco filed Supplement No. 2
Tariff Pipeline-Pa P.U.C. No. 16 (Supplement No. 2) to become effective January 5, 2015. (R.R.
at 66a.) Supplement No. 2 proposed to add the new origin point of Houston, Washington County
for west-to-east intrastate movements of propane, based on the CPCs issued. (Id.) On December
18, 2014, Sunoco filed Supplement No. 4 voluntarily postponing the effective date to January 16,
2015. PUC allowed Tariff Pipeline-Pa. P.U.C. No. 16 and Supplement No. 2 to become
effective. (R.R. at 53a-57a, 66a-69a.)
11
take away capacity for the Marcellus and Utica Shale plays and the flexibility to
reach various commercial markets, using pipeline and terminal infrastructure
within the Commonwealth. (R.R. at 61a, 91a, 93a-94a, 656a, 662a.)
1. Mariner East 1
The Mariner East Project has two phases. The first, referred to as Mariner
East 1, has been completed and utilized Sunoco’s existing pipeline infrastructure,
bolstered by a 51-mile extension from Houston, in Washington County, to
Delmont, in Westmoreland County, to ship 70,000 barrels per day of NGLs from
the Marcellus Shale basin to the MHIC. (R.R. at 46a, 93a, 498a, 1377a.)
2. Mariner East 2
Sunoco has begun work on the second phase of the Mariner East Project,
known as Mariner East 2. (R.R. at 16a.) Unlike Mariner East 1, which used both
existing and new pipelines, Mariner East 2 requires construction of a new 351-
mile pipeline largely tracing the Mariner East 1 pipeline route, with origin
points in West Virginia, Ohio, and Pennsylvania. (R.R. at 658a, 1377a-78a.)
Sunoco’s plans for the Mariner East 2 phase include constructing two adjacent
pipelines separated by approximately five feet over the portion of the Mariner East
line which runs from Delmont, Pennsylvania to the MHIC, and a single line over
the portion of the Mariner East line which runs between Delmont and the West
Virginia border. (R.R. at 17a.) With the exception of some valves, Mariner East
2 will be below ground level, with most of it paralleling and within the existing
right of way of the Mariner East 1 pipeline. Part of Mariner East 2 will be
12
located in Cumberland County which is within the geographic scope of the
CPC issued to Sunoco by the PUC. (R.R. at 12a, 18a.)
While Mariner East 1 was underway, Marcellus and Utica Shale producers
and shippers advised Sunoco that there was a need for additional capacity to
transport more than the 70,000 barrels of NGLs per day being transported by
Mariner East 1. (R.R. at 694a-95a, 1339a, 1378a.) Sunoco thus undertook to
expand Mariner East Project capacity and developed the Mariner East 2 pipeline.
(R.R. at 1339a-40a, 1384a.)
This expansion of the Mariner East 1 service will enlarge capacity to allow
movement of an additional 275,000 barrels per day of NGLs, (R.R. at 498a),
thereby allowing shippers from the Marcellus and Utica Shales to transport more
barrels of NGLs through the Commonwealth to destinations within the
Commonwealth, as well as to the MHIC for storage, processing, and distribution to
local, domestic, and international markets. (R.R. at 604a, 1251a.) It is intended to
increase the take-away capacity of NGLs from the Marcellus and Utica Shales and
enable Sunoco to provide additional on-loading and off-loading points within
Pennsylvania for both interstate and intrastate propane shipments and increase the
amount of propane that would be available for delivery or use in Pennsylvania.
(R.R. at 661a-64a, 1377a-78a.)
PUC recognized this second phase of the Mariner East Project in its August
21, 2014 Order granting Sunoco’s CPC application for Washington County,
stating:
Subject to continued shipper interest, Sunoco intends to
undertake a second phase of the Mariner East project, which will
expand the capacity of the project by constructing: (1) a 16 inch or
larger pipeline, paralleling its existing pipeline from Houston, PA to
13
the Marcus Hook Industrial Complex and along much of the same
route, and (2) a new 15 miles of pipeline from Houston, PA to a point
near the Pennsylvania-Ohio boundary line. This second phase,
sometimes referred to as “Mariner East 2”, will increase the take-
away capacity of natural gas liquids from the Marcellus Shale and
will enable Sunoco to provide additional on-loading and off-
loading points within Pennsylvania for both intrastate and
interstate propane shipments.
(R.R. at 61a-62a (emphasis added).)
Sunoco does not contest that the Mariner East Project initially was
prioritized for interstate service.11 However, before PUC and common pleas,
Sunoco explained that during and after winter 2013-2014, as a result of the “polar
vortex,” it had a significant increase in shipper demand for intrastate shipments of
propane due to an increase in consumer demand within Pennsylvania as a result of
shortages due to harsh winter conditions and insufficient pipeline infrastructure.
(R.R. at 694a-95a, 1378a.) These changes in market conditions led Sunoco to
accelerate its provision of intrastate service on the Mariner East Project. Sunoco
thus sought and obtained PUC approval to provide intrastate service on the
Mariner East 1 and 2 pipelines as described above. As described in more detail
below, PUC issued three final Orders in 2014 and two final Orders in 2015
confirming that Sunoco is a public utility corporation subject to PUC regulation as
a public utility. PUC also recognized that the service provided by both phases of
the Mariner East Project is a public utility service.
11
The York County decision upon which Condemnees rely for their collateral estoppel
argument and which we address infra was issued during this timeframe and prior to Sunoco’s
decision to expand service on the Mariner East Project to include intrastate service.
14
3. PUC Orders and Tariffs
Sunoco on May 21, 2014 filed an application pursuant to Section 703(g) of
the Code, 66 Pa. C.S. § 703(g),12 to clarify an August 29, 2013 PUC Order granting
Sunoco authority to suspend and abandon its provision of east-to-west gasoline and
distillate service (and the corresponding tariffs) in certain territories along its
pipeline in order to facilitate the west-to-east Mariner East service of NGLs in
those territories. (R.R. at 10a.) PUC on July 24, 2014, issued an Opinion and
Order granting Sunoco’s Application and reaffirmed Sunoco’s authority under its
existing CPCs to transport petroleum products and refined petroleum products,
including propane, between Delmont, Westmoreland County, and Twin Oaks,
Delaware County. (Id.) This approved route includes Cumberland County. (R.R.
at 12a, 18a.)
PUC in its July 24, 2014 Order recognized that: circumstances changed
regarding the Mariner East Project since August 2013 and that in response, Sunoco
intended to provide intrastate transportation service of propane to respond to
changing market conditions and increased shipper interest in additional intrastate
12
Section 703(g) of the Code provides:
§ 703. Fixing of hearings.
***
(g) Rescission and amendment of orders.--
The commission may, at any time, after notice and after opportunity to be heard
as provided in this chapter, rescind or amend any order made by it. Any order
rescinding or amending a prior order shall, when served upon the person,
corporation, or municipal corporation affected, and after notice thereof is given to
the other parties to the proceedings, have the same effect as is herein provided for
original orders.
66 Pa. C.S. § 703(g).
15
pipeline service facilities; the definition of “petroleum products” is interpreted
broadly to encompass propane; and Sunoco’s proposed intrastate propane service
will result in numerous public benefits by allowing it “to immediately address the
need for uninterrupted deliveries of propane in Pennsylvania and to ensure that
there is adequate pipeline capacity to meet peak demand for propane during the
winter heating season.” (R.R. at 48a-50a.)
In addition to the May 21, 2014 application, Sunoco on June 12, 2014 filed
Tariff Pipeline Pa. P.U.C. No. 16, with a proposed effective date of October 1,
2014. This tariff reflected PUC-regulated pipeline transportation rate for the west-
to-east intrastate movement of propane from Mechanicsburg (Cumberland County)
to Twin Oaks. (R.R. at 53a-54a.) PUC by final Order dated August 21, 2014,
permitted the tariff to become effective on October 1, 2014. (R.R. at 53a-57a.)
PUC, by these actions and through Sunoco’s previously obtained CPCs,
authorized Sunoco as a public utility to transport, as a public utility service,
petroleum and refined petroleum products both east to west and west to east in the
following Pennsylvania counties through which the Mariner East Project is
located: Allegheny, Westmoreland, Indiana, Cambria, Blair, Huntingdon, Juniata,
Perry, Cumberland, York, Dauphin, Lebanon, Lancaster, Berks, Chester, and
Delaware. (R.R. at 10a-12a, 48a-49a, 60a-64a.)
Sunoco’s service territory originally did not include Washington County
because Sunoco did not maintain facilities there and had not applied to PUC for a
CPC for that county. However because the planned Mariner East service would
originate in Washington County, Sunoco on June 6, 2014 applied to PUC to
expand its service territory into that county. (R.R. at 12a-13a.) PUC by Order
dated August 21, 2014 granted Sunoco’s application and authorized the provision
16
of intrastate petroleum and refined petroleum products pipeline transportation
service in Washington County, thus expanding Sunoco’s service territory for its
intrastate Mariner East service. (R.R. at 60a-64a.)
II. Background of the Instant Appeals
The genesis of this matter was the filing by Sunoco on July 21, 2015 of the
three Declarations in common pleas. As to Condemnees R. Scott Martin and
Pamela S. Martin, Sunoco sought to condemn a permanent non-exclusive easement
of 1.5 acres, a temporary workspace easement of 0.72 acres, and an additional
workspace easement of 0.12 acres on the Martins’ property on Longs Gap Road,
North Middleton Township, Cumberland County. (R.R. at 7a-156a.) As to
Condemnees Douglas M. Fitzgerald and Lyndsey M. Fitzgerald, Sunoco sought to
condemn a permanent non-exclusive easement of 0.14 acres and a temporary
workspace easement of 0.07 acres on the Fitzgeralds’ property at 281 Pine Creek
Drive, Carlisle, Cumberland County. (R.R. at 307a-454a.) As to Condemnees
Harvey A. Nickey and Anna M. Nickey, Sunoco sought to condemn a permanent
non-exclusive easement of 0.7 acres, and a temporary workspace easement of 0.31
acres on the Nickeys’ property at 125 Blain McCrea Road, Lower Mifflin
Township, Cumberland County. (R.R. at 157a-306a.) Condemnees filed
Preliminary Objections to the Declarations for their respective properties. (R.R. at
455a-507a, 561a-613a, 508a-560a.)
Condemnees are here, and were before common pleas, represented by the
same counsel. Hence all three sets of Preliminary Objections raised the same
objections to the Declarations subject to variances for the individual properties.
All Condemnees objected: that Sunoco lacked the power or the right to condemn
17
their land as Sunoco was not a public utility regulated by PUC for the Mariner East
2 pipeline; that Sunoco’s corporate resolution authorized takings only for an
interstate pipeline and not an intrastate pipeline; that the declarations were barred
by collateral estoppel on the basis of the York County decision; that the Mariner
East 2 pipeline was an interstate pipeline and not an intrastate pipeline; that the
Declarations sought to condemn their properties for two pipelines while the agency
Condemnees assert has sole jurisdiction, FERC, approved only one pipeline; that
Sunoco lacked the FERC Certificate of Public Convenience and Necessity
(Certificate) necessary to exercise eminent domain power for the pipeline; and that
Sunoco’s proposed bond amounts were insufficient. (Id.)
Sunoco filed responses to Condemnees’ Preliminary Objections that were,
like the objections, essentially uniform. With regard to the corresponding
objections referenced in the preceding paragraph, Sunoco asserted: that PUC
recognizes that, the fact that Sunoco has FERC authorization to make interstate
movements on Mariner East notwithstanding, Sunoco also has authority under state
law to provide intrastate service as a public utility regulated by PUC; that the
corporate resolution attached to the Declarations is not defective in any way; that
the identical issue of whether Sunoco has the power of eminent domain to
condemn for the Mariner East 2 pipeline was not decided previously in the York
County decision; that the Mariner East 2 pipeline is regulated by both PUC and by
FERC; that FERC’s regulation of interstate shipments on Mariner East 2 pipeline
is inapplicable to a determination of Sunoco’s eminent domain authority as a
Pennsylvania-regulated public utility; that a FERC Certificate is not the only
method by which a public utility can obtain eminent domain power in
Pennsylvania where state law provides eminent domain authority both to utilities
18
regulated by PUC and to utilities regulated by an officer or agency of the United
States, such as FERC; and that the bonds posted by Sunoco were adequate. (R.R.
at 621a-33a, 951a-63a, 786a-98a.)
III. Common Pleas Decision
Common pleas consolidated the three Declarations and Preliminary
Objections for hearing as they essentially were identical,13 and scheduled a hearing
on the Preliminary Objections for September 22, 2015. Both Condemnees and
Sunoco offered testimony and entered exhibits into the record. (R.R. at 1328a-
1998a.) Common pleas on September 29, 2015, entered its Order overruling
Condemnees’ Preliminary Objections.14 Condemnees appealed to this Court and
13
(December 22, 2015 Op. at 2 n.1.)
14
Common pleas added the following footnote to its September 29, 2015 Order:
We feel that a brief explanation of our decision is appropriate in regards to [sic]
Preliminary Objections 1, 3 and 7. As to the first Preliminary Objection, the
Mariner East 2 (ME2) pipeline at issue will provide both loading and offloading
of ethane, propane, liquid petroleum gas and other petroleum products within the
Commonwealth. As such, ME2 provides intrastate service, regulated by the
Pennsylvania Public Utility Commission (PUC). [Sunoco] is a “[p]ublic utility
corporation” as defined at 15 Pa. C.S.[] § 1103. Pennsylvania public utility
corporations possess the power of eminent domain. 15 Pa. C.S.[] § 1511. Since
ME2 may be regulated by both the Federal Energy Regulatory Commission
(FERC) and the PUC, federal preemption is not at issue.
As to the third Preliminary Objection, the Honorable Judge Linebaugh’s decision
in Sunoco Pipeline, L.P. v. Loper, 2013-SU-4518-05 (C.P. York, February 24,
2014) (reaffirmed March 25, 2014) is inapposite to the case at bar. Loper was
decided when Condemnor’s plans for ME2 consisted of the installation of a
purely interstate pipeline, crossing Pennsylvania state lines but containing no
stations for the off-loading of transported materials. In Loper, Condemnor had
argued that FERC provided that with the power of eminent domain for a purely
interstate pipeline. Since that decision Condemnor has reconfigured ME2 to be
(Continued…)
19
common pleas directed the filing of a Concise Statement of Errors Complained of
on Appeal (Statement) pursuant to Rule 1925(b) of the Pennsylvania Rules of
Appellate Procedure, Pa.R.A.P. 1925(b).15 Following receipt of Condemnees’
Statements, common pleas on December 22, 2015 issued its Opinion in support of
its September 29, 2015 Order. Common pleas first addressed Condemnees’
contention that FERC possesses sole jurisdiction over the Mariner East 2 pipeline.
After repeating the text of the first paragraph of the footnote from the September
29, 2015 Order, common pleas noted that “the Natural Gas Act (NGA)[] 15 U.S.C.
§ 717(a)(5)[] . . . grants ‘FERC exclusive jurisdiction over the transportation and
sale of natural gas in interstate commerce for resale,’” but observed further that
“[h]owever, [Mariner East 2 pipeline] will transport natural gas liquids (NGLs),
and thus, the physical pipeline is not regulated under the ambit of FERC through
both an interstate pipeline as well as an intrastate pipeline subject to PUC
regulation.
While we had questions as to the adequacy of the bond, the Condemnees failed to
present any evidence as to the effect of the taking upon the value of their property.
Therefore we have no alternative but to overrule their seventh Preliminary
Objection.
(September 29, 2015 Order at 2 (emphasis in original).)
15
Pa. R.A.P. 1925(b) provides as follows:
Rule 1925. Opinion in Support of Order
***
(b) Direction to file statement of errors complained of on appeal;
instructions to the appellant and the trial court.--If the judge entering the order
giving rise to the notice of appeal (“judge”) desires clarification of the errors
complained of on appeal, the judge may enter an order directing the appellant to
file of record in the trial court and serve on the judge a concise statement of the
errors complained of on appeal (“Statement”).
Id.
20
the NGA[].” (December 22, 2015 Op. at 3 (footnote omitted) (citation omitted).)
Common pleas stated further that:
Condemnees[] also argue that because [Sunoco] did not receive
a Certificate . . . . from FERC for ME2, they do not possess the power
of eminent domain under federal law. Again, Condemnees are
operating under the mistaken belief that FERC regulates the siting of
NGL pipelines.[] FERC, pursuant to the NGA, regulates the siting of
pipelines that carry interstate shipments of natural gas, doing so
through the issuance of a CPC.[] Because FERC does not possess
authority to regulate the siting of NGL pipelines, the responsibility
falls to state agencies regardless of the physical jurisdiction of the
NGL pipeline.[]
We were satisfied that the PUC regulates intrastate shipments
of NGL. Therefore, [Sunoco] is considered a “public utility
corporation” under Pennsylvania’s Business Corporation Laws
(BCL).[] Pursuant to 15 Pa.C.S.[] § 1511(a)(2), public utility
corporations “have the right to take, occupy and condemn property for
[the] principal purpose[] and ancillary purposes reasonably necessary
or appropriate for the accomplishment of . . . [t]he transportation of . .
. petroleum or petroleum products . . . for the public.” As a result,
[Sunoco] has the power of eminent domain to condemn property for
the construction of [Mariner East 2 pipeline].
(December 22, 2015 Op. at 3-4 (footnotes omitted).)
Common pleas next addressed Condemnees’ collateral estoppel argument
and relied on the text of the second paragraph of the footnote from the September
29, 2015 Order quoted above in holding that the reasoning in the York County
decision relied upon by Condemnees, Sunoco Pipeline, L.P. v. Loper, 2013-SU-
4518-05 (C.P. York, February 24, 2014) (reaffirmed March 25, 2014), did not
apply in this instance because Sunoco reconfigured the Mariner East 2 pipeline “to
be both an interstate pipeline as well as an intrastate pipeline subject to PUC
regulation.” (December 22, 2015 Op. at 4-5.) With regard to Condemnees’
argument that Sunoco, to obtain the power of eminent domain under the BCL,
21
must be granted a FERC Certificate as set forth in Nat’l Fuel Gas Supply Corp. v.
Kovalchick Corp., 74 Pa. D. & C. 4th 22 (2005), common pleas concluded that
Kovalchick also was inapposite to the facts of this case. Common pleas noted that
the condemnor in Kovalchick was granted eminent domain power because it was
subject to FERC regulation under the NGA. However, as common pleas earlier
concluded that the Mariner East 2 pipeline was not regulated by FERC under the
NGA because it does not transport natural gas; common pleas held that Sunoco did
not need a FERC Certificate to obtain the eminent domain power under the BCL.
(December 22, 2015 Op. at 5-6.) Common pleas also rejected Condemnees’
argument that PUC’s orders issued to Sunoco regarding the Mariner East project
did not include a reference to the Mariner East 2 pipeline, noting that PUC Order
attached to each Declaration as Exhibit D provides:
Subject to continued shipper Interest, Sunoco intends to undertake a
second phase of the Mariner East project . . . This second phase,
sometimes referred to as ‘Mariner East 2’, [sic] will increase the take-
away capacity of natural gas from the Marcellus Shale and will enable
Sunoco to provide additional on-loading and offloading points within
Pennsylvania for both intrastate and interstate propane shipments.
(December 22, 2015 Op. at 6.)16
16
Common pleas also rejected Condemnees’ arguments that Sunoco’s corporate
resolutions authorized takings for interstate pipelines only. (December 22, 2015 Op. at 5-6.)
Condemnees do not pursue that argument here.
22
IV. Issues Before This Court
A. Collateral Estoppel
Condemnees appealed to this Court.17 Condemnees first argue that common
pleas erred when it declined to find that Sunoco’s Petitions were barred by the
doctrine of collateral estoppel based on Loper. As described above, common pleas
concluded that Loper is inapposite to this matter because it was decided when
Sunoco’s plans for the Mariner East 2 pipeline featured a purely interstate
pipeline, crossing Pennsylvania state lines but containing no stations for the off-
loading of transported materials in Pennsylvania. Common pleas pointed out here
that in Loper, Sunoco argued that FERC provided it with the power of eminent
domain for a purely interstate pipeline, and that subsequently Sunoco repurposed
Mariner East 2 to be both an interstate pipeline as well as an intrastate pipeline
subject to PUC regulation.
Condemnees argue here that common pleas erred and that Mariner East 2 is
in interstate service only. On that basis, PUC lacks jurisdiction and Sunoco thus
is not a public utility corporation under the BCL. Moreover, Condemnees assert
that Sunoco is regulated by FERC as a common carrier and not as a public utility
with the power of eminent domain. Condemnees state that in Loper, Sunoco
contended that it is a public utility under the BCL and therefore clothed with the
eminent domain power and that Sunoco makes the same argument in this matter.
For these reasons, Condemnees argue that the issue presented before common
17
In an eminent domain case disposed of on preliminary objections this Court is limited
to determining if common pleas’ necessary findings of fact are supported by competent evidence
and if an error of law or an abuse of discretion was committed. Stark v. Equitable Gas Co., LLC,
116 A.3d 760, 765 n.8 (Pa. Cmwlth. 2015).
23
pleas is identical to that presented in Loper and that collateral estoppel applies to
bar Sunoco’s Declarations as to Condemnees.
Collateral estoppel bars any subsequent action where the sole issue requiring
judgment was litigated previously. Thompson v. Karastan Rug Mills, 323 A.2d
341, 343 (Pa. Super. 1974). For collateral estoppel to apply, the following
conditions must be met: (1) the issue or issue of fact previously determined in a
prior action are the same (no requirement that the cause of action be the same); (2)
the previous judgment is final on the merits; (3) the party against whom the
doctrine is invoked is identical to the party in the prior action; and (4) the party
against whom estoppel is invoked had full and fair opportunity to litigate the issue
in the prior action. Dep’t of Transp. v. Martinelli, 563 A.2d 973, 976 (Pa. Cmwlth.
1989).
Based on the record in this case, common pleas did not err in finding that
collateral estoppel does not bar this action. The issue decided in Loper is not the
same issue raised in this case, and so it does not meet the first condition. At issue
in Loper was whether Sunoco satisfied the definition of public utility corporation
as a result of the regulation of its interstate service by FERC and not as a result of
PUC’s regulation of its intrastate service. At the time Loper was decided, Sunoco
had not yet sought or obtained PUC approval to provide intrastate service. (R.R. at
107a, 1378a.) The Loper court addressed only whether Sunoco was a public utility
corporation because it was subject to regulation as a public utility by an officer or
agency of the United States, i.e., FERC, and did not decide whether Sunoco was a
public utility corporation because it was subject to regulation as a public utility by
PUC, the issue raised here. Although Condemnees disagree that Sunoco can
prevail on this issue that is a separate inquiry from whether the issue was
24
previously decided. For these reasons, we agree that collateral estoppel is not a bar
to this case.
B. Whether Mariner East is both an Interstate and Intrastate
Pipeline
Condemnees next argue that common pleas erred when it concluded that the
Mariner East 2 pipeline was both an interstate and an intrastate pipeline subject
to PUC jurisdiction. This argument is grounded in the fact that Sunoco is a
common carrier under the ICA and that it obtained FERC approval to transport
NGLs from Ohio and West Virginia to the MHIC and beyond via the Mariner East
2 pipeline. Put another way, Condemnees assert that PUC has jurisdiction only
over pipelines beginning and ending entirely in Pennsylvania, and that the
Mariner East 2 pipeline is solely in interstate commerce because it crosses state
lines. Condemnees maintain that Sunoco thus lacks eminent domain power
because the Mariner East 2 pipeline can never be regulated by PUC as the Code
prohibits PUC from regulating interstate commerce. Condemnees argue that
common pleas used an incorrect conception of interstate commerce and cite
numerous decisions for the proposition that a pipeline that crosses a state line is in
interstate commerce and that products in that pipeline remain in interstate
commerce during their entire journey. Condemnees thus disagree with common
pleas’ conclusion that, because the Mariner East 2 pipeline “will provide both
loading and offloading of ethane, propane, liquid petroleum gas and other
petroleum products within the Commonwealth . . . [it] provides intrastate service,
regulated by the [PUC].” (September 29, 2015 Order at 2 n.1.)
Based on our review, we conclude that the record establishes that the
expanded service to be provided by the Mariner East 2 pipeline will involve both
25
interstate service (subject to FERC regulation) and intrastate service (subject to
PUC regulation) and that common pleas did not err when it overruled
Condemnees’ Preliminary Objection. FERC’s decision in Amoco and the other
authority previously discussed support this conclusion. Condemnees apparently do
not accept that the service at issue can be both interstate and intrastate, and the
cases they cite are not on point as they address general principles of interstate
commerce and/or transport of natural gas.18 Moreover, PUC Orders related to the
Mariner East Project and the testimony before common pleas establishes that the
Mariner East 2 pipeline will provide both interstate and intrastate service. (R.R.
at 49a, 53a-54a, 61a-62a, 66a, 68a, 72a-73a, 118a-19a, 657a, 659a, 1336a, 1339a,
1344a, 1378a.)
The record establishes that the Mariner East 2 pipeline will consist of a
physical structure with access points in Ohio, West Virginia, and Pennsylvania.
Product will be placed into the pipeline and removed at multiple points within
Pennsylvania.19 (R.R. at 945a.) In addition, Sunoco has filed, and received PUC
approval, of multiple tariffs applicable to Sunoco’s provision of intrastate service
through the Mariner East Project, including the use of Mariner East 2. (See supra
18
See, e.g., Maryland v. Louisiana, 451 U.S. 725 (1981) (for purposes of evaluating
effect under the Commerce Clause of state tax, natural gas flowing from Gulf of Mexico in
pipelines through Louisiana to up to 30 other states does not lose interstate character even if
processing to remove NGLs takes place in Louisiana); California v. Lo-Vaca Gathering Co., 379
U.S. 366 (1965) (sale of gas which crosses a state line at any stage of its movement from
wellhead to ultimate consumption is in interstate commerce within the meaning of the Natural
Gas Act).
19
Testimony shows that on-loading in Pennsylvania will occur in Independence
Township (Washington County), Houston (Washington County), Delmont (Westmoreland
County), and Mechanicsburg (Cumberland County). (R.R. at 1340a.) Off-loading points in
Pennsylvania are in Mechanicsburg, Schaefferstown (Lebanon County), Montello (Berks
County), and Twin Oaks (Delaware County). (R.R. at 1341a.)
26
note 10.) As we noted, under Section 1302 of the Code, authority to file a tariff is
limited to a public utility regulated by PUC. We thus conclude that Sunoco is a
public utility corporation empowered to exercise eminent domain under Section
1511 of the BCL, and that common pleas did not err when it overruled
Condemnees’ Preliminary Objection that the Mariner East 2 pipeline was an
interstate pipeline and not an intrastate pipeline.
C. PUC Regulation of Mariner East 2 Service
Condemnees next argue that common pleas erred when it concluded that the
Mariner East 2 pipeline provides service regulated by PUC. There are two related
prongs to Condemnees’ argument: that PUC Orders do not cover service on the
Mariner East 2 pipeline; and, that PUC did not issue a CPC for Mariner East 2
because it provides interstate commerce. Common pleas found both of these
arguments unpersuasive.
The record reflects that Sunoco, on June 9, 2014, applied to PUC to expand
its service territory for the Mariner East Project, including Mariner East 2, into
Washington County, the only service territory not previously certificated for
Mariner East service by prior CPCs. (R.R. at 60a.) By Order dated August 21,
2014, PUC granted the application authorizing Sunoco’s provision of intrastate
petroleum and refined petroleum products pipeline transportation service in
Washington County thus expanding Sunoco’s service territory for its Mariner East
service. (R.R. at 59a-64a.) PUC’s Order accompanying the CPC described the
authorized service, and specifically described Mariner East 2 service as an
expansion of existing Mariner East 1 service. (R.R. at 61a.) The result of this
Order is that PUC authorized Mariner East 1 and Mariner East 2 intrastate
27
service in 17 counties, from Washington County in western Pennsylvania, through
15 other counties, including Cumberland County, to Delaware County in eastern
Pennsylvania. (R.R. at 1637a.)
Subsequently, in its October 29, 2014 Order, PUC stated that:
[T]his authority [under existing CPCs] is not limited to a specific
pipe or set of pipes, but rather, includes both the upgrading of
current facilities and the expansion of existing capacity as needed
for the provision of the authorized service within a certificated
territory.
(R.R. at 122a (emphasis added).) From these PUC Orders we conclude that
Sunoco’s CPCs apply to both Mariner East 1 service and to Mariner East 2
service, as it is an authorized expansion of the same service. (R.R. at 657a-59a,
1344a, 1377a.) In addition, Sunoco’s approved tariffs proposed to add the new
origin point of Houston, Washington County for west-to-east intrastate movements
of propane, based on the CPCs issued. (R.R. at 66a.) On these bases, we hold that
common pleas did not err when it concluded that “PUC regulates intrastate
shipments of NGL[s,]” including service provided by Mariner East 2, and that
“[a]s a result, [Sunoco] has the power of eminent domain to condemn property for
the construction of [Mariner East 2].” (December 22, 2015 Op. at 4.)
D. Demonstration of Public Need
Condemnees’ final argument is that common pleas erred when it overruled
the Preliminary Objections and approved a pipeline where no public need was
demonstrated. According to Condemnees, PUC approval of a service is only a
preliminary step, and it was common pleas’ responsibility to review the public
28
need and to make a determination of the scope and validity of the condemnation
for the Mariner East 2 pipeline.
PUC filed an amicus brief solely addressing this issue.20 PUC expresses
concern that Condemnees’ argument, if credited, would permit eminent domain
litigants to challenge the validity of PUC-issued CPCs before courts of common
pleas, which would constitute impermissible collateral attacks on otherwise valid
PUC orders and raises serious jurisdictional concerns. PUC argues, as does
Sunoco, that the CPCs Sunoco obtained through its acquisition of Sun and Atlantic
were for an integrated pipeline system and not a single pipeline, and that PUC’s
October 29, 2014 Order confirms that Sunoco’s intrastate transportation of propane
and other petroleum hydrocarbons is within its existing certificated authority for
petroleum and petroleum products. PUC cites the same history we detailed above
to establish that it, on numerous occasions, has asserted its regulatory authority
over Sunoco and its public utility service on the Mariner East system.
1. PUC has statewide jurisdiction over public utilities
Initially, we observe that the Code charges PUC with responsibility to
determine which entities are public utilities and to regulate how public utilities
provide public utility service. This has long been the statutory mandate. See, e.g.,
Pottsville Union Traction Co. v. Pennsylvania Public Service Comm’n, 67 Pa.
Super. 301 (1917). It is beyond purview that the General Assembly intended PUC
to have statewide jurisdiction over public utilities and to foreclose local public
20
PUC takes no position regarding the affirmance or reversal of common pleas’ decision
or whether Sunoco appropriately exercised eminent domain authority against Condemnees’ real
property interests.
29
utility regulation. Duquesne Light Co. v. Monroeville Borough, 298 A.2d 252 (Pa.
1972).
As previously described, in the public utility context, an entity must meet
separate but related requirements set forth in both the BCL and the Code to be a
public utility corporation clothed with the power of eminent domain. Section
1511(a)(2) of the BCL provides that “public utility corporations” may exercise the
power of eminent domain to condemn property for the transportation of, inter alia,
natural gas and petroleum products. Section 1103 of the BCL defines public utility
corporation as “[a]ny domestic or foreign corporation for profit that . . . is subject
to regulation as a public utility by the [PUC] . . . .” 15 Pa. C.S. § 1103. Section
1104 of the Code requires that a public utility must possess a CPC issued by PUC
pursuant to Section 1101 of the Code before exercising eminent domain. While
courts of common pleas have jurisdiction to review whether an entity attempting to
exercise eminent domain power meets the BCL criteria, that jurisdiction does not
include the authority to revisit PUC adjudications. A CPC issued by PUC is prima
facie evidence that PUC has determined that there is a public need for the proposed
service and that the holder is clothed with the eminent domain power. This Court
has stated “[t]he administrative system of this Commonwealth would be thrown
into chaos if we were to hold that agency decisions, reviewable by law by the
Commonwealth Court, are also susceptible to collateral attack in equity in the
numerous common pleas courts.” Aitkenhead v. Borough of West View, 442 A.2d
364, 367 n.5 (Pa. Cmwlth. 1982).
30
2. The Eminent Domain Code governs the scope and validity of a
taking, and not public need
The Eminent Domain Code21 governs process and procedure in
condemnation proceedings. Section 306 of the Eminent Domain Code provides in
pertinent part that:
§ 306. Preliminary objections.
(a) Filing and exclusive method of challenging certain matters.--
(1) Within 30 days after being served with notice of
condemnation, the condemnee may file preliminary objections to the
declaration of taking.
(2) The court upon cause shown may extend the time for
filing preliminary objections.
(3) Preliminary objections shall be limited to and shall be the
exclusive method of challenging:
(i) The power or right of the condemnor to
appropriate the condemned property unless it has been
previously adjudicated.
(ii) The sufficiency of the security.
(iii) The declaration of taking.
(iv) Any other procedure followed by the condemnor.
26 Pa. C.S. § 306(a).
The Eminent Domain Code does not permit common pleas to review the
public need for a proposed service by a public utility that has been authorized by
PUC through the issuance of a CPC. In Fairview Water Co. v. Public Utility
Comm’n, 502 A.2d 162 (Pa. 1985), our Supreme Court discussed the proper forum
for a condemnee’s challenge to the legality of a taking when a public utility
attempts to condemn an easement and PUC has determined that condemnee’s
21
26 Pa. C.S. §§ 101-1106.
31
property is necessary for the utility service. The case stemmed from a dispute
between Fairview and a power company over the power company’s continuing use
of an easement previously agreed to by the parties. Id. at 163. The power
company filed an application with PUC requesting a finding and determination that
its transmission line was necessary and proper for the service, accommodation,
convenience, or safety of the public. A PUC Administrative Law Judge
determined that the service was necessary and proper and also determined the
scope and validity of the easement. This court affirmed. On appeal, Fairview
argued that PUC lacked jurisdiction to determine the scope and validity of the
easement. Id. at 163-64. The Supreme Court agreed and stated: “[o]nce there has
been a determination by the PUC that the proposed service is necessary and proper,
the issues of scope and validity and damages must be determined by a Court of
Common Pleas exercising equity jurisdiction.” Id. at 167. As Sunoco here holds
CPCs issued by PUC and PUC in its Orders issuing the CPCs found the authorized
service to be necessary and proper, it is left to common pleas to evaluate scope and
validity of the easement, but not the public need.
As illustrated by Fairview, determinations of public need for a proposed
utility service are made by PUC, not the courts. Section 1103 of the Code requires
an applicant for a CPC to establish that the proposed service is “necessary or
proper for the service, accommodation, convenience, or safety of the public.” 66
Pa. C.S. § 1103(a). Under this section, the applicant must “demonstrate a public
need or demand for the proposed service . . . .” Chester Water Auth. v. Public
Utility Comm’n, 868 A.2d 384, 386 (Pa. 2005) (emphasis added).22
22
Condemnees cite several decisions for the proposition that “[t]he Court must … review
whether Mariner East 2 pipeline satisfies the public purpose test.” (Condemnees’ Br. at 26-27.)
(Continued…)
32
In this case, PUC in its July 24, 2014 Order held that Sunoco’s proposed
intrastate propane service would result in “numerous potential public benefits” by
allowing Sunoco “to immediately address the need for uninterrupted deliveries of
propane in Pennsylvania and to ensure that there is adequate pipeline capacity to
meet peak demand for propane during the winter heating season.” (R.R. at 49a-
50a.) Further, in granting Sunoco’s CPC application to extend its service territory
into Washington County, PUC stated:
[W]e believe that approval of this Application is necessary and
proper for the service, accommodation, and convenience of the
public. We believe granting Sunoco authority to commence
intrastate transportation of propane in Washington County will
enhance delivery options for the transport of natural gas and natural
gas liquids in Pennsylvania. In the wake of the propane shortage
experienced in 2014, Sunoco’s proposed service will increase the
supply of propane in markets with a demand for these resources,
including in Pennsylvania, ensuring that Pennsylvania’s citizens
enjoy access to propane heating fuel. Additionally, the proposed
service will offer a safer and more economic transportation alternative
for shippers to existing rail and trucking services.
(R.R. at 63a (emphasis added).)
Here, both PUC and common pleas followed their statutory mandates and
evaluated the issues within their respective purviews. There is no basis for a
common pleas court to review a PUC determination of public need. In fact, to
allow such review would permit collateral attacks on PUC decisions and be
However, none of the cases cited support the proposition that common pleas may review a public
utility’s CPC in an eminent domain context because those cases involve appellate review of PUC
decisions related to public need for a particular service, not court decisions involving eminent
domain.
33
contrary to Section 763 of the Judicial Code, 42 Pa. C.S. § 763, which places
review of PUC decisions within the jurisdiction of this Court.
For these reasons, we conclude that common pleas did not err when it
overruled Condemnees’ Preliminary Objections to Sunoco’s Declarations of
Taking. We further conclude that Sunoco is regulated as a public utility by PUC
and is a public utility corporation, and Mariner East intrastate service is a public
utility service rendered by Sunoco within the meaning of the BCL, 15 Pa. C.S. §§
1103, 1511. The September 29, 2015 Order of the Court of Common Pleas of
Cumberland County is hereby affirmed.
________________________________
RENÉE COHN JUBELIRER, Judge
34
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Condemnation By Sunoco :
Pipeline, L.P. of Permanent and :
Temporary Rights of Way for the :
Transportation of Ethane, Propane, :
Liquid Petroleum Gas, and other :
Petroleum Products in the Township :
of North Middleton, Cumberland :
County, Pennsylvania, over the :
Lands of R. Scott Martin and :
Pamela S. Martin : No. 1979 C.D. 2015
:
Appeal of: R. Scott Martin and :
Pamela S. Martin :
:
In Re: Condemnation By Sunoco :
Pipeline, L.P. of Permanent and :
Temporary Rights of Way for the :
Transportation of Ethane, Propane, :
Liquid Petroleum Gas, and other :
Petroleum Products in the Township :
of North Middleton, Cumberland :
County, Pennsylvania, over the :
Lands of Douglas M. Fitzgerald and :
Lyndsey M. Fitzgerald : No. 1980 C.D. 2015
:
Appeal of: Douglas M. Fitzgerald :
and Lyndsey M. Fitzgerald :
:
In Re: Condemnation by Sunoco :
Pipeline, L.P. of Permanent and :
Temporary Rights of Way for the :
Transportation of Ethane, Propane, :
Liquid Petroleum Gas, and other :
Petroleum Products in the Township :
of North Middleton, Cumberland :
County, Pennsylvania, over the :
Lands of Harvey A. Nickey and :
Anna M. Nickey : No. 1981 C.D. 2015
:
Appeal of: Harvey A. Nickey and :
Anna M. Nickey :
ORDER
NOW, this 14th day of July, 2016, the September 29, 2015 Order of the
Court of Common Pleas of Cumberland County is hereby AFFIRMED.
________________________________
RENÉE COHN JUBELIRER, Judge
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Condemnation By Sunoco :
Pipeline, L.P. of Permanent and :
Temporary Rights of Way for the :
Transportation of Ethane, Propane, :
Liquid Petroleum Gas, and other :
Petroleum Products in the Township of :
North Middleton, Cumberland County, :
Pennsylvania, over the Land of R. Scott :
Martin and Pamela S. Martin : No. 1979 C.D. 2015
:
Appeal of: R. Scott Martin and :
Pamela S. Martin :
:
In Re: Condemnation By Sunoco :
Pipeline, L.P. of Permanent and :
Temporary Rights of Way for the :
Transportation of Ethane, Propane, :
Liquid Petroleum Gas, and other :
Petroleum Products in the Township :
of North Middleton, Cumberland :
County, Pennsylvania, over the :
Lands of Douglas M. Fitzgerald and :
Lyndsey M. Fitzgerald : No. 1980 C.D. 2015
:
Appeal of: Douglas M. Fitzgerald :
and Lyndsey M. Fitzgerald :
:
In Re: Condemnation by Sunoco :
Pipeline, L.P. of Permanent and :
Temporary Rights of Way for the :
Transportation of Ethane, Propane, :
Liquid Petroleum Gas, and other :
Petroleum Products in the Township :
of North Middleton, Cumberland :
County, Pennsylvania, over the :
Lands of Harvey A. Nickey and :
Anna M. Nickey : No. 1981 C.D. 2015
: Argued: March 9, 2016
Appeal of: Harvey A. Nickey and :
Anna M. Nickey :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE ROBERT SIMPSON, Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
DISSENTING OPINION
BY JUDGE BROBSON FILED: July 14, 2016
Government is instituted to protect property of every
sort; as well that which lies in the various rights of
individuals, as that which the term particularly expresses.
This being the end of government, that alone is a just
government, which impartially secures to every man,
whatever is his own.
~ James Madison1
Private property rights have long been afforded especial protection in
this Commonwealth. For that reason, the law of our Commonwealth requires that
courts closely scrutinize the exercise of eminent domain. Eminent domain is a
privilege conferred by the General Assembly, while property ownership is a right
of our citizens protected by the United States Constitution and the Pennsylvania
Constitution. As between the privilege and the right, the right is paramount. I
cannot improve upon the words of our Pennsylvania Supreme Court from 1866:
The right of the Commonwealth to take private
property with out (sic) the owner’s assent on
compensation made, or authorize it to be taken, exists in
her sovereign right of eminent domain, and can never be
lawfully exercised but for a public purpose—supposed
1
James Madison, Property, in The Founders’ Constitution I:598 (Philip Kurland and
Ralph Lerner eds., Chicago: Univ. of Chicago Press 1987) (emphasis in original).
and intended to benefit the public, either mediately or
immediately. The power arises out of that natural
principle which teaches that private convenience must
yield to the public wants. This public interest must lie at
the basis of the exercise, or it would be confiscation and
usurpation to exercise it. This being the reason for the
exercise of such a power, it requires no argument to
prove that after the right has been exercised the use of the
property must be held in accordance with and for the
purposes which justified its taking. Otherwise it would
be a fraud on the owner, and an abuse of power. . . . The
exercise of the right of eminent domain, whether directly
by the state or its authorized grantee, is necessarily in
derogation of private right, and the rule in that case is,
that the authority is to be strictly construed[.] What is
not granted is not to be exercised.
Lance’s Appeal, 55 Pa. 16, 25-26 (1866) (citations omitted) (emphasis added); see
Winger v. Aires, 89 A.2d 521, 523 (Pa. 1952). With respect to the exercise of
eminent domain, this Court’s duty is clear: “[T]he court of original appellate
jurisdiction has the responsibility, in the first instance, to review Appellants’
preserved and colorable arguments, and any decision to affirm the taking of their
property should be closely reasoned.” In re Opening a Private Road (O’Reilly),
5 A.3d 246, 258-59 (Pa. 2010).
At issue in this case is the effort of a publicly-traded company—
Appellee Sunoco Pipeline, L.P. (Sunoco)—to take the private property of citizens
in Cumberland County, Pennsylvania (Property Owners), for the purpose of
constructing a portion of an underground pipeline, which is a component of a
project that Sunoco has dubbed Mariner East 2 (ME2).2 This proposed pipeline
2
Although Sunoco disputes that ME2 is an actual reference to the pipeline in question,
unless the context indicates otherwise, I will use ME2 to refer to the proposed pipeline.
PKB-2
will have the capacity to provide for both the interstate transportation of natural gas
liquids (NGLs) from Ohio and West Virginia to Pennsylvania and the intrastate
transportation of NGLs within Pennsylvania.3 The pipeline will terminate at
Sunoco’s Marcus Hook Industrial Complex, Delaware County, Pennsylvania
(Marcus Hook IC). Although the majority’s decision affirming the taking is
well-reasoned, I believe that Property Owners have raised a substantial and critical
mixed issue of fact and law that must be resolved before any court places its
imprimatur on the proposed takings. I thus respectfully dissent.
Sunoco’s legislative authority to take private property in the
Commonwealth through eminent domain in order to construct an underground
pipeline emanates from the Business Corporation Law of 1988 (BCL), which
provides:
(a) General rule.--A public utility corporation
shall, in addition to any other power of eminent domain
conferred by any other statute, have the right to take,
occupy and condemn property for one or more of the
following principal purposes and ancillary purposes
reasonably necessary or appropriate for the
accomplishment of the principal purposes:
....
(2) The transportation of artificial or natural
gas, electricity, petroleum or petroleum products or
water or any combination of such substances for the
public.
3
NGLs are byproducts of natural gas production compressed into liquid form. They
include pentane, propane, butane, isobutene, and ethane.
PKB-3
15 Pa. C.S. § 1511(a)(2) (emphasis added). When interpreting a statute, this Court
is guided by the Statutory Construction Act of 1972, 1 Pa. C.S. §§ 1501-1991,
which provides that “[t]he object of all interpretation and construction of statutes is
to ascertain and effectuate the intention of the General Assembly.” 1 Pa. C.S.
§ 1921(a). “The clearest indication of legislative intent is generally the plain
language of a statute.” Walker v. Eleby, 842 A.2d 389, 400 (Pa. 2004). “When the
words of a statute are clear and free from all ambiguity, the letter of it is not to be
disregarded under the pretext of pursuing its spirit.” 1 Pa. C.S. § 1921(b). Only
“[w]hen the words of the statute are not explicit” may this Court resort to statutory
construction. 1 Pa. C.S. § 1921(c). “A statute is ambiguous or unclear if its
language is subject to two or more reasonable interpretations.” Bethenergy Mines,
Inc. v. Dep’t of Envtl. Prot., 676 A.2d 711, 715 (Pa. Cmwlth.), appeal denied,
685 A.2d 547 (Pa. 1996). Moreover, “[e]very statute shall be construed, if
possible, to give effect to all its provisions.” 1 Pa. C.S. § 1921(a). It is presumed
“[t]hat the General Assembly intends the entire statute to be effective and certain.”
1 Pa. C.S. § 1922(2). Thus, no provision of a statute shall be “reduced to mere
surplusage.” Walker, 842 A.2d at 400. Finally, it is presumed “[t]hat the General
Assembly does not intend a result that is absurd, impossible of execution or
unreasonable.” 1 Pa. C.S. § 1922(1).
Applying these principles of statutory construction to the eminent
domain provision for public utility corporations in the BCL, the intent of the
General Assembly is clear and unambiguous. A public utility corporation may use
eminent domain to construct a facility, such as a pipeline, so long as the “principal
purpose” of the facility is the transportation of the petroleum product, in this case
NGLs, “for the public.” This “public use” condition in the BCL is coextensive
PKB-4
with property rights conferred and protected by the United States and Pennsylvania
Constitutions. Specifically, the Declaration of Rights in the Pennsylvania
Constitution both authorizes and limits the use of eminent domain: “No person
shall, for the same offense, be twice put in jeopardy of life or limb; nor shall
private property be taken or applied to public use, without authority of law and
without just compensation being first made or secured.” Pa. Const. art. I, § 10
(emphasis added). The proper and lawful exercise of eminent domain under the
Declaration of Rights, then, is evidenced by (1) authority of law (i.e., legislation,
such as the BCL), (2) just compensation, and (3) the taking of property for “public
use.” In addition, Article X, section 4 of the Pennsylvania Constitution addresses
use of eminent domain by municipal and other corporations. Like Section 10 of
the Declaration of Rights, Article X, section 4 recognizes the power of eminent
domain only with respect to the “taking [of] private property for public use.”
Pa. Const. art. X, § 4 (emphasis added).
In the context of eminent domain, courts have used the phrases
“public use” and “public purpose” interchangeably. In Kelo v. City of New
London, 545 U.S. 469 (2005), a sharply-divided United States Supreme Court,
interpreting the Takings Clause of the Fifth Amendment to the United States
Constitution,4 held that the taking of private property in furtherance of a
community economic development plan by a private entity furthered a “public
purpose” and thus was a valid “public use” for eminent domain purposes. Critics
of the Kelo majority have contended that the majority applied an overly-broad
4
The Takings Clause of the Fifth Amendment prohibits that taking of “private property
. . . for public use, without just compensation.” U.S. Const. amend. V (emphasis added).
PKB-5
interpretation of the phrase “public use,” opening the door for eminent domain
takings that serve virtually any “public purpose.”5 This Court need not enter into
this debate, however, because in cases involving the taking of private property by
eminent domain (or like authority), the Pennsylvania Supreme Court has
interpreted both “public use” and “public purpose” narrowly in favor of the private
property interests of the landowner.
In Middletown Township v. Lands of Stone, 939 A.2d 331 (Pa. 2007),
a post-Kelo decision, the Pennsylvania Supreme Court held that Middletown
Township could exercise its eminent domain power under Section 2201 of The
Second Class Township Code6 to take private farm land for recreational purposes.
The authorizing statute provides:
The board of supervisors may designate lands or
buildings owned, leased or controlled by the township for
use as parks, playgrounds, playfields, gymnasiums,
swimming pools, indoor recreation centers, public parks
and other recreation areas and facilities and acquire
lands or buildings by lease, gift, devise, purchase or by
the exercise of the right of eminent domain for
recreational purposes and construct and equip facilities
for recreational purposes.
Section 2201 of The Second Class Township Code (emphasis added). The
Supreme Court next considered whether Middletown Township acted within the
5
See, e.g., Ilya Somin, The Grasping Hand: Kelo v. City of New London and the Limits
of Eminent Domain 73 (2015); Brent Nicholson and Sue Ann Mota, From Public Use to Public
Purpose: The Supreme Court Stretches the Takings Clause in Kelo v. City of New London,
41:1 Gonz. L. Rev. 81 (2005).
6
Act of May 1, 1933, P.L. 103, as amended, 53 P.S. § 67201.
PKB-6
scope of this statutory authority when it sought to take by eminent domain a
175-acre farm in Bucks County.
Although Section 2201 of The Second Class Township Code does not
expressly use the phrase “public use,” the Supreme Court opined that in light of the
Takings Clause of the Fifth Amendment to the United States Constitution, “the
only means of validly overcoming the private right of property ownership . . . is to
take for ‘public use.’ In other words, without a public purpose, there is no
authority to take property from private owners.” Lands of Stone, 939 A.2d at 337
(citation omitted) (quoting U.S. Const. amend. V) (emphasis added). As for the
appropriate inquiry, the Supreme Court opined:
According to our Court, “a taking will be seen as
having a public purpose only where the public is to be the
primary and paramount beneficiary of its exercise.” In
considering whether a primary public purpose was
properly invoked, this Court has looked for the “real or
fundamental purpose” behind a taking. Stated otherwise,
the true purpose must primarily benefit the public. . . .
This means that the government is not free to give
mere lip service to its authorized purpose or to act
precipitously and offer retroactive justification. . . .
Clearly, evidence of a well-developed plan of proper
scope is significant proof that an authorized purpose truly
motivates a taking.
....
. . . Because the law requires that the true purpose
of the taking be recreational, it is not sufficient that some
part of the record support that recreational purposes were
put forth. But rather, in order to uphold the invocation of
the power of eminent domain, this Court must find that
the recreational purpose was real and fundamental, not
post-hoc or pre-textual.
PKB-7
Id. at 337-38 (citation omitted) (quoting In re Bruce Ave., 266 A.2d 96 (Pa. 1970),
and Belovsky v. Redevelopment Auth., 54 A.2d 277 (Pa. 1947)) (emphasis in
original).
The Supreme Court then proceeded to examine the common pleas
court’s factual findings to determine whether the “true purpose” of the proposed
taking in Lands of Stone was for the statutorily-authorized purpose—i.e.,
recreational use. The Supreme Court concluded that the common pleas court’s
factual findings did not support the taking. The Supreme Court noted that the plan
on which Middletown Township’s taking was premised did not at all provide for
use of the farm property for recreational purposes. Id. at 339. The Supreme Court
also rejected as insignificant Middletown Township’s consideration of various
recreational options for the property, each of which the Supreme Court found
problematic from a “public use” and necessity perspective. Id. Finally, the
Supreme Court rejected the common pleas court’s finding that Middletown
Township “might” use portions of the property for passive recreation, noting the
absence of any record evidence to support this finding. Id. The Supreme Court
concluded:
It is clear that in order to invoke that power [of
eminent domain], it was incumbent upon the Township to
identify the fact that it could take for a recreational
purpose and to take action to effectuate that purpose.
Further, as stated previously, precedent demonstrates that
condemnations have been consistently upheld when the
taking is orchestrated according to a carefully developed
plan which effectuates the stated purpose. Anything less
would make an empty shell of our public use
requirements. It cannot be sufficient to merely wave the
proper statutory language like a scepter under the nose of
a property owner and demand that he forfeit his land for
the sake of the public. Rather, there must be some
substantial and rational proof by way of an intelligent
PKB-8
plan that demonstrates informed judgment to prove that
an authorized public purpose is the true goal of the
taking.
The record does not support any finding of a
condemnation proceeding informed by intelligent
judgment or a concrete plan to use the Stone farm for the
authorized purpose of recreation . . . .
Id. at 340 (citations omitted). Accordingly, the Supreme Court held that the
common pleas court erred in overruling the preliminary objections to the taking.
Id.
The Pennsylvania Supreme Court revisited the power of eminent
domain a few years later, when it considered a constitutional challenge to the
Private Road Act.7 The Private Road Act allows a landowner to petition the court
of common pleas to appoint a board of viewers to consider the necessity of a
private road to connect landlocked property with the nearest public thoroughfare.
Like eminent domain, the landowner who is successful under the Private Road Act
must compensate the person over whose property the private road is built. In In re
Opening a Private Road (O’Reilly), 5 A.3d 246 (Pa. 2010), the challengers
contended that the Private Road Act authorized the taking of private property for
private purposes in violation of the United States and Pennsylvania Constitutions.
The Supreme Court, agreeing with the challengers, opined that the
Private Road Act provides for a government taking of private property in the
constitutional sense. O’Reilly, 5 A.3d at 257. The Supreme Court held that any
effort by the General Assembly to vest within an individual or nongovernmental
entity the right to take private property for its own use must constitute “a valid
7
Act of June 13, 1836, P.L. 551, as amended, 36 P.S. §§ 2731-2891.
PKB-9
exercise of the power of eminent domain.” Id. In this Court’s majority opinion on
review by the Supreme Court in O’Reilly, we articulated a public benefit behind
the private road in question:
[E]ven if we were to use a traditional takings analysis to
determine the constitutionality of the [Private] Road Act,
a public purpose is served by allowing the laying out of
roads over the land of another. Although the private
property owner who petitioned for the private road
certainly gains from the opening of the road, the public
gains because otherwise inaccessible swaths of land in
Pennsylvania would remain fallow and unproductive,
whether to farm, timber or log for residences, making
that land virtually worthless and not contributing to
commerce or the tax base of this Commonwealth. All of
this, plus the fact that private roads are considered part of
the road system of Pennsylvania, equate with the
conclusion that a public purpose is served by the Private
Road Act provisions that allow for the taking of property
of another for a private road to give access to landlocked
property.
In re Opening a Private Road (O’Reilly), 954 A.2d 57, 72 (Pa. Cmwlth. 2008) (en
banc) (emphasis added), vacated and remanded, 5 A.3d 246 (Pa. 2010). The
Supreme Court, however, found this articulation of a public purpose, or benefit,
inadequate to support a taking. Instead, the test, as articulated in Lands of Stone,
requires that “the public must be the primary and paramount beneficiary of the
taking.” O’Reilly, 5 A.3d at 258 (citing Lands of Stone, 939 A.2d at 337). The
Supreme Court, therefore, vacated this Court’s decision and remanded the case for
further proceedings consistent with its decision—i.e., to apply the proper test.
In their preliminary objections below and on appeal, Property Owners
note that when Sunoco presented this very same pipeline facility—ME2—to the
Court of Common Pleas of York County (York County court), Sunoco maintained
that the sole purpose of the pipeline was for the interstate transportation of all types
PKB-10
of NGLs (ethane, propane, liquid petroleum, gas, and others) for Sunoco’s
customers. In its February 25, 2014 Opinion Denying Motion for Immediate Right
of Entry, the York County court,8 accepting Sunoco’s represented purpose for
constructing the pipeline, held that the facility was not an act in furtherance of
Sunoco’s PUC authority, but, rather, was an act in furtherance of interstate
commerce, regulated by the Federal Energy Regulatory Commission (FERC)
pursuant to the Interstate Commerce Act. (Reproduced Record (R.R.) 484a-89a.)
Under such circumstances, according to the York County court, Sunoco’s power of
eminent domain as a public utility corporation under the BCL was not triggered.
Sunoco, through PUC-issued certificates of public convenience, is
authorized to offer, furnish, or supply intrastate petroleum and refined petroleum
products pipeline service.9 The particular NGL that is the subject of this PUC
authority is propane, which many in the Commonwealth use as fuel for heating.
(R.R. 60a-64a.)10 At the time the York County court issued its decision, however,
Sunoco did not have PUC authority to offer that intrastate public utility service
from Pennsylvanian’s western-most border to Pennsylvania’s eastern-most border.
In western Pennsylvania, that authority stopped at Westmoreland County. In
8
Sunoco Pipeline, L.P. v. Loper (C.P. York, 2013-SU-4518-05, filed February 25, 2014)
(reaffirmed March 25, 2014).
9
The definition of “public utility” in the Public Utility Code includes a person or
corporation that owns or operates facilities in the Commonwealth for: “transporting or conveying
. . . petroleum products . . . for the public for compensation.” 66 Pa. C.S. § 102. Although the
Public Utility Code does not define “petroleum product,” the PUC, in its amicus curiae brief,
notes that PUC considers propane a “petroleum product.” (PUC Br. at 6-7.)
10
In an October 29, 2014 decision, the PUC concluded that Sunoco’s authority also
extended to pipeline service for the intrastate transportation of ethane. (R.R. 120a-22a.)
PKB-11
addition, as revealed below, Sunoco had suspended/abandoned intrastate service in
some parts of the Commonwealth before pursuing the taking in York County.
Following the York County court’s decision, Sunoco filed two
applications with the PUC relating to ME2. The first, filed on May 21, 2014,
sought “clarification” of a prior PUC Order (issued August 29, 2013), which
granted Sunoco the authority to suspend and abandon public utility service in
certain portions of its authorized territory. The PUC granted that application by
order dated July 24, 2014. (R.R. 191a-201a.) In its disposition, the PUC noted a
change of circumstances that prompted its reconsideration of the prior order
authorizing suspension and abandonment of service:
We conclude that Sunoco has identified new
considerations in its Petition, based on its averments that
the circumstances surrounding the Mariner East Pipeline
project have changed since the issuance of the August
2013 Order. When we approved Sunoco’s Abandonment
Application, the Company did not intend to provide
intrastate service within Pennsylvania from the Mariner
East Pipeline and planned to provide only intrastate
transportation of ethane and propane from west-to-east to
the [Marcus Hook IC]. August 2013 Order at 3. The
Company’s plans have since changed due to the
increased demand for intrastate transportation of propane,
and Sunoco now intends to offer intrastate propane
service in response to the increased shipper interest in
securing intrastate pipeline facilities.
(R.R. 198a-99a.) In granting Sunoco’s application for clarification, the PUC
confirmed that Sunoco retained its authority to provide intrastate public utility
service through its certificates of public convenience in the previously abandoned
service areas and clarified the procedures that Sunoco must follow to resume
pipeline transportation services for petroleum products in those areas.
(R.R. 200a-01a.)
PKB-12
On June 9, 2014, Sunoco applied to the PUC for authority to extend
its authorized service to the public in Washington County, Pennsylvania—a border
county with West Virginia. The PUC approved that request in August 2014. (Id.)
With that decision, Sunoco, for the first time, had PUC authority to provide public
utility service in the form of pipeline transportation of petroleum products in
Pennsylvania as far east as Delaware County and as far west as Washington
County.
As noted above, Sunoco relied solely on the interstate component, or
purpose, of ME2 in the York County court proceeding (Loper). On or about
July 21, 2015, Sunoco filed the three Declarations of Taking in the Court of
Common Pleas of Cumberland County, Pennsylvania (trial court), that are at issue
in this appeal. In the Declarations of Taking, in the proceedings below, and in this
appeal, Sunoco emphasizes its PUC authority and the intrastate service that ME2
will provide to those in Pennsylvania who benefit from that regulated service. As
it did in its May 21, 2014 application to the PUC, Sunoco acknowledges in the
Declarations of Taking that the renewed focus on intrastate supply of petroleum
products occurred at or around the time of the York County court’s decision in
Loper:
During and following the 2013-2014 winter
season, Sunoco Pipeline experiences a significant
increase in shipper demand for intrastate shipments of
propane due to an increase in local consumer demand for
propane. These changes in market conditions were due
to propane shortages caused by the harsh winter
conditions and a deficit in pipeline infrastructure. The
resulting price spikes and shortages prompted
unprecedented emergency measures from both the state
and federal governments. In reaction to the unfolding
market conditions and shipper interest, Sunoco Pipeline
accelerated its business plans to provide intrastate
PKB-13
shipments of propane within the Commonwealth, in
addition to interstate shipments of propane and ethane.
(R.R. 159a-60a (emphasis in original).) Absent from the Declarations of Taking,
however, are any allegations that this new emphasis on the intrastate supply of
propane to people within the Commonwealth is, as the Supreme Court phrased in
Lands of Stone, the “true” purpose behind the taking.11
With this background, Property Owners are justifiably skeptical.
At base, Property Owners contend that nothing of material moment has changed in
terms of Sunoco’s purpose for constructing and its intended use of ME2. Counsel
for Property Owners questioned Curtis M. Stambaugh, Esquire, Sunoco’s Assistant
General Counsel, about this issue at the hearing on the preliminary objections
below:
Q. And at that point [in a brief filed by Sunoco
in the York County matter] doesn’t your Sunoco brief
indicate that the Pennsylvania Public Utility Commission
has no jurisdiction to regulate the pipeline because it is
an interstate line not an intrastate line?
A. Yes, sir, I do. As you are aware from the
four hearings we’ve already had where you’ve been
counsel on the opposite side, we have repeatedly testified
that in 2014 the initial plan was for interstate service
only. After the polar vortex that changed to contemplate
both inter and intrastate, that is actually the reason why
we need to go get the Certificate of Public Convenience
to include Washington County from the Public Utility
Commission.
11
Sunoco argues that the ME2 project always contemplated an intrastate component. For
purposes of this dissent, I accept that claim. The question that remains is whether that intrastate
component is the “true” purpose behind the construction of the pipeline.
PKB-14
Q. After the polar vortex and after this [York
County] decision, was Mariner East 2 still an interstate
pipeline?
A. It is both, yes, sir, inter and intrastate.
Q. Continues to cross state lines? Continues to
be a proposal to cross state lines?
A. Yes, sir.
(R.R. 1339a-40a.) According to Property Owners, ME2 is now what it always has
been—a predominantly, if not exclusively, interstate endeavor, intended to benefit
not the Pennsylvanians who require propane to heat their homes, but Sunoco’s
customers, who will use the pipeline to transport NGLs from parts west of
Pennsylvania and within western Pennsylvania to the Marcus Hook IC for eventual
use by concerns outside of Pennsylvania. Accordingly, Property Owners contend
that the result before the trial court on the Declarations of Taking should have
matched the result in York County.
Although the legal issue is not as clearly articulated as I would hope
(or even expect) it to be, the concern of Property Owners is plain. In their
Statement of the Case, Property Owners complain that Sunoco “engaged in an
array of activities attempting to obtain state eminent domain power to reduce the
cost of purchasing property rights,” but that ME2 is still a matter of interstate
commerce. The eminent domain power of the BCL is, therefore, not available,
according to Property Owners. (Appellants’ Br. at 5.) At page 16 of their brief,
Property Owners describe Sunoco’s addition of new on- and off-ramp locations
along ME2 to serve intrastate service as “a faulty ploy to try to obtain eminent
domain power.” (Id. at 16.) Although Property Owners mostly couch their
arguments on appeal in terms of the pipeline being interstate and not intrastate (the
trial court found that it is both), the position that the pipeline is not intrastate
PKB-15
enough to trigger eminent domain authority under the BCL can also be gleaned
from a fair and reasonable reading of the record below and Property Owners’
arguments on appeal.
Upon review of the trial court’s September 29, 2015 Order, overruling
Property Owners’ preliminary objections to the Declarations of Taking, and the
trial court’s subsequent Opinion Pursuant to Pa. R.A.P. 1925, I must conclude that
the trial court’s analysis of the takings at issue in this case and of Property Owners’
contentions is incomplete. The trial court grounded its decision below on its
factual findings that ME2, as reconfigured following the York County matter, will
have the capacity to provide both interstate service regulated by FERC and
intrastate service regulated by the PUC. Those findings alone, however, are
inadequate to address the key legal question of whether Sunoco’s “true purpose”
behind the takings is to provide intrastate public utility service to Pennsylvanians
of the type authorized and in the territories authorized by the PUC. If the courts
are to allow these takings to proceed, it must be so, and not some post-hoc,
retroactive, or pre-textual justification to secure land by eminent domain. Sunoco
must convince the trial court, through “some substantial and rational proof,” that
providing PUC-authorized service “is the true goal” of taking Property Owners’
land. Lands of Stone, 939 A.2d at 337-40. This Court cannot and should not
authorize the taking of private land in this case until the trial court makes such
findings and renders such a legal conclusion. At that point, we can properly
exercise appellate review.
P. KEVIN BROBSON, Judge
PKB-16
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Condemnation By Sunoco :
Pipeline, L.P. of Permanent and :
Temporary Rights of Way for the :
Transportation of Ethane, Propane, :
Liquid Petroleum Gas, and other :
Petroleum Products in the Township :
of North Middleton, Cumberland :
County, Pennsylvania, over the :
Lands of R. Scott Martin and : No. 1979 C.D. 2015
Pamela S. Martin :
:
Appeal of: R. Scott Martin :
and Pamela S. Martin :
:
In Re: Condemnation By Sunoco :
Pipeline, L.P. of Permanent and :
Temporary Rights of Way for the :
Transportation of Ethane, Propane, :
Liquid Petroleum Gas, and other :
Petroleum Products in the Township :
of North Middleton, Cumberland :
County, Pennsylvania, over the :
Lands of Douglas M. Fitzgerald and : No. 1980 C.D. 2015
Lyndsey M. Fitzgerald :
:
Appeal of: Douglas M. Fitzgerald :
and Lyndsey M. Fitzgerald :
:
In Re: Condemnation By Sunoco :
Pipeline, L.P. of Permanent and :
Temporary Rights of Way for the :
Transportation of Ethane, Propane, :
Liquid Petroleum Gas, and other :
Petroleum Products in the Township :
of North Middleton, Cumberland :
County, Pennsylvania, over the :
Lands of Harvey A. Nickey and : No. 1981 C.D. 2015
Anna M. Nickey : Argued: March 9, 2016
:
Appeal of: Harvey A. Nickey and :
Anna M. Nickey :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE ROBERT SIMPSON, Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
DISSENTING OPINION
BY JUDGE McCULLOUGH FILED: July 14, 2016
I must respectfully dissent from the thoughtful Majority decision to
permit Sunoco Pipeline, L.P. (Sunoco), a publicly traded company, to confiscate
the private property of R. Scott Martin and Pamela Martin, Douglas M. Fitzgerald
and Lyndsey M. Fitzgerald, and Harvey A. Nickey and Anna M. Nickey
(Condemnees). After reviewing the procedural history of this matter, I am
concerned that Sunoco is trying to avoid what may be the collateral estoppel effect
of a decision adverse to its interests rendered by the Court of Common Pleas of
York County and to utilize the sovereign power of eminent domain to take
Condemnee’s property for its exclusively private benefit.
Specifically, in recent proceedings before the Court of Common Pleas
of York County, Sunoco represented that the same pipeline facility that is at issue
here, known as the Mariner East 2 pipeline or ME2, was for interstate
transportation of all types of natural gas liquids (NGLs). Based on that
representation, the common pleas court quite properly determined that ME2 was
not in furtherance of Sunoco’s Public Utility Commission (PUC) authority and,
hence, Sunoco could not assert eminent domain powers under the guise of an
intrastate public utility corporation and in accordance with section 1511(a) of the
Business Corporation Law of 1988, 15 Pa.C.S. §1511(a). See Sunoco Pipeline,
L.P. v. Loper (York County C.P., No. 2013-SU-4518-05, filed February 24, 2014)
(reaffirmed March 25, 2014).
Rather than appeal the decision in Loper, Sunoco, in May of 2014,
less than two months after that decision, sought, and subsequently obtained, a
“clarification” from the PUC to re-assert intrastate service after Sunoco had
previously obtained PUC approval to abandon such service less than a year before
as set forth in a PUC Order dated August 29, 2013. Sunoco then followed up its
claimed renewed intention to provide intrastate service within the Commonwealth
from as far east as Delaware County to as far west as Washington County.
In other words, without abandoning its admitted interstate purpose for
ME2, Sunoco has obtained approval for intrastate service for the first time across
the entire breadth of Pennsylvania. Sunoco’s dizzying array of procedural moves
and reversal of course as to its business plans in Pennsylvania in the aftermath of
the Loper decision were followed by the present declarations of taking seeking
extensive portions of Condemnees’ private properties in Cumberland County, not
York County. Despite its prior representation that ME2 was an interstate pipeline,
Sunoco now claims that it has an intrastate component as well, and, upon that basis
alone, has sufficient justification for these takings.
The assertion that ME2 will have several new “on and off” ramp
locations so as to ostensibly provide intrastate service, is, at the preliminary
hearing stage, insufficient to counter the recent representation Sunoco made to the
Court of Common Pleas of York County that ME2 was exclusively interstate. In
order to uphold the invocation of the power of eminent domain, the justification
must be genuine and real, not hypothesized, or invented post hoc in response to
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litigation. See Middletown Township v. Lands of Stone, 939 A.2d 331, 338 (Pa.
2007); see also United States v. Virginia, 518 U.S. 515, 533 (1996).
Additionally, I am troubled by Sunoco’s failure to obtain any PUC
recognition that ME2 is within the ambit of the “intrastate” service it now
professes it plans to provide, as well as its failure to obtain any certificate of public
convenience (CPC) to expressly authorize it to exercise the power of eminent
domain. As can be gleaned from the Majority’s opinion, Sunoco has cobbled
together various CPCs since the 1930’s, but never sought a CPC or any other PUC
approval granting it the ability to exercise eminent domain within the
Commonwealth. Most certainly, Sunoco never sought authority to exercise
eminent domain as to ME2. Rather, Sunoco would have this Court confer such
power upon it on the basis of vague, non-specific language in a PUC Order dated
October 29, 2014, which was entered as part of Sunoco’s post-Loper procedural
posturing. I believe this violates the spirit if not the letter of Section 1104 of the
Public Utility Code, 66 Pa.C.S. §1104.
I would also note that the cases cited by the Majority to analogize this
case to other instances of concurrent interstate and intrastate activity by business
entities are clearly distinguishable in that none of the cases so cited involved the
exercise of eminent domain powers to take private property. Private ownership of
property is a fundamental right under the U.S. Constitution, and as noted by my
colleague, Judge Brobson, in his dissent, a right that is zealously protected under
the Pennsylvania Constitution as well. The Majority’s decision, I fear, will gravely
undermine that right.
Accordingly, I would reverse the trial court’s decision and sustain
Appellee’s preliminary objection that Sunoco is collaterally estopped from re-
litigating the interstate nature of ME2. I would also caution Sunoco not to bypass
PAM - 3
the PUC should it desire to pursue this matter further and obtain, in the first
instance, the proper authority from the PUC to exercise eminent domain powers
with respect to ME2 before it targets private property within the Commonwealth
and seeks to deprive Commonwealth citizens of their fundamental right to own the
same.
________________________________
PATRICIA A. McCULLOUGH, Judge
PAM - 4