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Kinder Morgan appeals state denial of Palmetto Pipeline
Pipeline hearing
Allen Fore, the vice president of public affairs for Kinder Morgan, the company behind the proposed Palmetto Pipeline, speaks about the project at an April 21 public hearing at the Richmond Hill City Center. An estimated 500 people attended the hearing, and most were opposed to the project.

Kinder Morgan has appealed the Georgia Department of Transportation’s denial of a certificate of public convenience and necessity for the proposed Palmetto Pipeline, which would go through coastal Georgia.

The Texas-based energy company filed the appeal Wednesday in Fulton County Superior Court. The 58-page document says GDOT’s decision infringed on Kinder Morgan’s rights by violating state law, that GDOT exceeded its statutory authority, that the decision was “clearly erroneous” based on “substantial evidence on the whole record,” that it was “arbitrary or capricious” and that GDOT “unreasonably withheld” the certificate of need.

If ultimately approved, the 360-mile pipeline from Belton, South Carolina, to Jacksonville, Florida, which includes 210 miles through Georgia, would have 7 miles in Bryan County. South Bryan also would house a terminal with six to eight tanks, some of which could as much as 100,000 barrels of oil and that would move up to 25,000 barrels of fuel products per day.

Allen Fore, Kinder Morgan’s vice president for public affairs, told the Development Authority of Bryan County in April that the project, if approved, would be part of a $60 million to $70 million investment in the county.

The certificate of public convenience and necessity is needed to allow Kinder Morgan to have the power to invoke eminent domain to pass the pipeline through property whose owners do not want to negotiate, or do not accept a negotiated offer, for compensation in exchange for the right of way to extend the petroleum pipeline.

For his part, GDOT Commissioner Russell McMurry wrote a letter to Kinder Morgan announcing his decision that economic data from the U.S. Energy Information Administration forecast that by 2020, Georgia’s fuel consumption would be 9 percent lower than in 2006 because of fuel-efficient cars.

McMurry also questioned Kinder Morgan’s assertion that the pipeline would increase competition for petroleum fuel — thereby lowering prices — in the Augusta, Savannah and Jacksonville markets.

In its appeal, Kinder Morgan subsidiary Palmetto Pipeline fought back on both of those claims, saying that McMurry did not follow the state statute that defines the certificate of public convenience and necessity. Kinder Morgan noted that the statute “does not empower (the commissioner) … to consider any other factor not listed in the statute,” a fact that McMurry himself acknowledged in his letter announcing the decision.

Yet, Kinder Morgan asserts in its appeal, GDOT relied on a different statute — one that governs intrastate natural-gas pipelines rather than petroleum-product pipelines — which is against the law in question.

The company also cited a certificate GDOT granted Colonial Pipe Line Co. in 2007. Colonial justified its need for the certificate of need by saying in part, “Colonial’s mainline pipeline capacity has become constrained in recent years” and “constraints on Colonial’s system are projected to worsen in the coming years.”

Despite its similar name, Colonial Pipe Line, is different from Colonial Oil Industries, an opponent of the Palmetto Pipeline, which distributes petroleum products in this area.

Kinder Morgan, on the other hand, cited several factors, most notably an expected increase in demand based on increasing population in the Augusta, Savannah and Jacksonville markets, and the fact that Savannah is not currently served by a pipeline.

The company’s appeal also rejects GDOT’s question as to whether the Palmetto Pipeline would ultimately constrict competition and drive up prices. McMurry said in his decision letter that Kinder Morgan had not said how many committed shippers would make up 90 percent of the volume of petroleum to be shipped along the pipeline, estimated to be as much as 167,000 barrels per day. McMurry contemplated that “one or two committed shippers could essentially control the supply to the entire area.”

Kinder Morgan’s response in the appeal noted that the Federal Energy Regulatory Commission “conclusively establishes the fairness of the proposed rates and terms and conditions of service to which the committed shippers will be subject.” The company added that Palmetto Pipeline’s pricing structure and the impact of the pipeline on competition “are within the exclusive jurisdiction of the Federal Energy Regulatory Commission.”

Kinder Morgan acknowledged the enormous public opposition to its proposal. Two public hearings hosted by GDOT in April and May drew no speakers supporting the pipeline other than company officials.

Palmetto Pipeline requested those comments under Georgia’s Open Records Act, which requires a response within three business days, on April 23. But, the company said, it did not receive the response until May 11, or 12 business days later, and only four days before the deadline for written public comments to be received.

Palmetto submitted a response to those negative comments on May 15, the company’s appeal says, but GDOT did not provide Palmetto with additional negative comments and other materials McMurry considered in denying the certificate — including the Energy Information Administration economic forecasts, which Palmetto asserted are not allowed under state law to be used in considering whether to grant the certificate of need for a petroleum pipeline.

The company requested that GDOT’s denial of the certificate be reversed as well as for Fulton County Superior Court to schedule a hearing resolving Palmetto’s petition for the certificate.

2015 06 17 - Petition for Review - with exhibits
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