Vera Neinast Talks Eminent Domain and Energy Infrastructure with SNL Financial

SNL Financial interviewed Akin Gump energy regulation, markets and enforcement senior counsel Vera Neinast for its article “Right of Way: Pipelines wield eminent domain as they forge costly new paths” on the use of eminent domain at a time of expansion for the U.S. energy infrastructure.

The article notes landowners’ role in increased development costs, with Neinast saying, “The cost of laying a pipeline has increased over the last five years or so because landowners are asking for more money and getting more money.” She added, “As more pipeline is being laid, more rights of way have to be acquired. When you are laying a pipeline in an area where there hasn't been pipeline activity before, you can't necessarily lay your pipeline in an existing utility right of way. If you have to acquire new rights of way, that definitely will add to the cost and the number of negotiations with landowners that a pipeline would have to have.”

Neinast outlined the ways in which the Natural Gas Act (NGA) grants interstate gas pipelines the power of eminent domain, specifically the fact that if the Federal Energy Regulatory Commission decides a pipeline is in the public interest per the NGA, it will grant a certificate to the developer conveying the power of eminent domain. She did note, however, that oil pipelines encounter more difficulties with eminent domain than gas pipelines due to “common carrier” issues.

She said that it can be difficult for courts to determine fair market value for property, particularly in rural areas. However, she also noted, pipeline developers prefer to negotiate rights of way and easements than engage in costly eminent domain litigation to attempt to achieve the same end, adding that negotiation with landowners can yield better terms for developers than litigation.