A fateful 2014 decision confounds foes of Sunoco's Mariner East pipeline

The first time Charles S. Katz Jr. heard of the Mariner East 2 project was in 2015, when a representative of Sunoco Pipeline LP arrived at his house in Glen Mills and said the company was going to bury a pipeline across his backyard, whether he liked it or not.

“I never received any information about this until a representative of Sunoco walked on my property and said, `Here, sign this easement,’ ” said Katz, 72. He and his wife, Karen, were told Sunoco could take the easement using eminent domain, the right of government or its agent to expropriate private property for public use.

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The ME2 Pipeline route

Katz, a lawyer who practices workers’ compensation law, sued to block Sunoco’s authority, which had been granted by the Pennsylvania Public Utility Commission in 2014. “I would have liked to have had an opportunity to question the status of Sunoco as a public utility, and I would have liked to have had a chance to challenge the siting of the pipeline,” he said.

The Delaware County couple lost in lower court, and on July 3, Commonwealth Court rejected their appeal, the latest of six Mariner East cases in which the court has affirmed Sunoco’s eminent-domain authority.

The Katzes are the latest casualties of decisions made by the PUC in 2014 affirming Sunoco Pipeline and its Mariner East project as a public utility. The commission determined that the project, which carries gas liquids such as propane from the Marcellus Shale region to a Sunoco terminal in Marcus Hook, provides “significant public benefits.”

The PUC ruling was not uncontested. The commission rejected a recommendation by two hearing examiners that Sunoco is not a public utility because its pipeline service is private, available to only a select few shippers. Three Commonwealth Court judges, in various dissenting opinions, also have questioned whether Sunoco has the legal authority to condemn private property for its project.

But Sunoco has prevailed. With construction of the $2.5 billion project already underway, the chances of blocking it now seem increasingly remote.

Camera icon Clem Murray
An ethane storage tank under construction at the Marcus Hook Industrial Complex, the destination for Sunoco’s Mariner East project.

The most serious remaining legal challenge is being heard in Common Pleas Court in Philadelphia, where the Clean Air Council is suing Sunoco on the grounds that Mariner East violates the federal and state constitutions, including Pennsylvania’s Environmental Rights Amendment. Judge Linda Carpenter said the constitutional claims before her have not yet been addressed in other litigation.

The case is expected to go to trial at the end of the year, when Sunoco hopes the Mariner East 2 pipeline will be completed. Alex Bomstein, a Clean Air Council attorney, said the courts could order Sunoco to abandon its project.

“We’re not seeking damages, but if there’s a declaration that Sunoco doesn’t have the right to take land, there’s a question retroactively about the validity of the takings that have happened,” Bomstein said.

Sunoco’s opponents say that the propane, ethane, and butane carried in the pipeline are primarily used as raw materials in the commercial production of plastic, and that most of the gas liquids are under contract to be shipped to petrochemical plants in Scotland and Norway. They question the pipeline’s public benefit.

The disputed purpose of the Sunoco project has been much litigated since the company announced plans in 2010 to reverse the flow of the 80-year-old pipeline that carried refined products such as gasoline from Philadelphia refineries to Western Pennsylvania. The new plan involved allowing shale producers to send liquids from west to east, where the materials would be shipped out by sea. Hence the name: Mariner.

As Sunoco’s plans evolved, it made a pivotal strategic change in 2014 that has proved to be decisive as it navigated a regulatory netherworld between federal and state jurisdictions.

That year, Sunoco was acquiring easements to accommodate an expansion of the project by constructing two additional pipelines, largely tracing the route of the original Mariner East 1 pipeline. The company argued that the project had inherited the public-utility status under which its east-to-west pipeline operated for decades, and that it had the authority to take the easements.

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A protest sign marks the property line of Ellen and Stephen Gerhart in Huntingdon County, Pa. Tree-sitting activists are protesting the pipeline on the Gerharts’ land.

But environmental groups and some landowners argued that Mariner East, unlike its predecessor, was an interstate pipeline that fell strictly under federal jurisdiction  — the pipe crosses the state line at its terminus in Claymont, Del. They argued that Sunoco needed certification not from the PUC but from the Federal Energy Regulatory Commission, without which it would be unable to exercise eminent domain to assemble the necessary easements.

Facing mounting legal challenges, Sunoco made a crucial move in 2014: It announced plans to build “off-ramps” in Pennsylvania to allow propane distributors to withdraw fuel for local sale. Now, it argued, Mariner was both a multistate pipeline and an intrastate project, and qualified as a state public utility to transport “petroleum products,” a category that includes gas liquids.

“This sudden change in tactics is a transparent attempt to avoid the fact that the proposed Mariner East project simply is not the type of project for which public utility status should or was meant to apply,” the Clean Air Council said in objections filed in 2014 with the PUC.

The commission sided with Sunoco, saying the proposed service would ensure “that Pennsylvania’s citizens enjoy access to propane heating fuel.” Sunoco has declined to disclose how much propane it has distributed to local markets since Mariner East 1 went into service more than two years ago.

In a separate 2014 proceeding dismissing legal challenges of Sunoco’s plans to build pump and valve stations on the pipeline route, the PUC also addressed what it called “serious misconceptions” about Sunoco’s public-utility status. It affirmed Sunoco as a public utility, and emphasized that a “public utility” is not required to have a retail component to its business.

Sunoco has cited the PUC’s decisions in fending off legal challenges from property owners about its eminent-domain authority. In a precedent-setting 5-2 decision last year, Commonwealth Court upheld Sunoco’s power to seize property.

Judge Patricia A. McCullough, one of the dissenters, was troubled by Sunoco’s “dizzying array of procedural moves and reversal of course as to its business plans.” She maintained that the company should get a certification specifically for the Mariner East 2 project, rather than relying upon authorizations cobbled together from the pipeline’s previous lives.

McCullough was also on the three-judge panel that heard the appeal this year of Sunoco’s plan to put the pipe across the back of the Katz property on Heather Hills Lane in Glen Mills, Edgmont Township. (The existing Mariner East 1 easement is across a neighbor’s yard, so Mariner East 2 would be the first time the project directly touched the Katzes’ property.)

The judge said she concurred in the ruling against the Katzes only because she was bound by the court’s previous Mariner decision. But she adhered to her objections. “It is my renewed belief that Sunoco continues to take private property without lawful authority,” McCullough wrote in the July 3 decision.

Katz said he will appeal the Commonwealth Court decision to the state Supreme Court, but it’s a long shot. The state’s highest court has tersely declined to hear all other appeals from aggrieved Mariner landowners.