UPDATE: Regulatory Status of DTE’s East Petoskey Pipeline Reinforcement Project

DTE has made inconsistent statements about its intentions to obtain regulatory approval.

DTE has referenced its Petoskey pipeline project as part of Michigan Public Service Commission case U-21973. However, this proceeding is a rate case, not a certificate case. That means that DTE has requested the opportunity to raise its electrical rates. As part of that process, DTE has identified budgetary issues, including capital projects that it desires to undertake. DTE’s Petoskey pipeline is one of those projects. Yet, the focus is budgetary and not whether the project is an appropriate reason to use the power of eminent domain.  In those proceedings, it indicated that it is not seeking a certificate. DTE presented the sworn testimony of an employee who testified under oath that the project involved an 8” pipeline.

The employee testified that it would be constructed primarily within existing right of way and that no certificate would be sought.

However, in material presented to the Emmet County Board of Commissioners, DTE’s position changed dramatically. DTE indicated that it was constructing a 10” pipeline requiring private easements for 70% of the route.

DTE also indicated that it would seek a certificate from the MPSC.

However, DTE has not sought a certificate yet and its presentation material identifies an aggressive construction schedule that assumes that a certificate can be obtained within a few months.

The existence or lack of a certificate significantly impacts the extent that a circuit court can review the project.

Michigan eminent domain statutes identify the standards governing circuit review. “[W]ith respect to an acquisition by a private agency, the court at the hearing shall determine the public necessity of the acquisition of the particular parcel. The granting of a…certificate by the public service commission…constitutes a prima facie case that the project in furtherance of which the particular parcel would be acquired is required by the public convenience and necessity.” MCL 213.56(3). As such, acquisition of a certificate from the Michigan Public Service Commission requires deference from the circuit court as to certain issues.

Case 21973 also could provide a road map to oppose the project as a whole and not just seek to limit the property rights sought by DTE either in the MPSC or before the circuit court, depending on whether DTE actually seeks a certificate. The City of Ann Arbor intervened in the project and offered expert testimony from an engineer questioning the need for the project. An independent engineering consultant specializing in gas system design, operation, and analysis testified that the, “expense of the new, redundant East Petoskey Pipeline is not justified by either the remote risk that backup gas will be needed during the ILI on the existing Petoskey Pipeline or as a mitigation strategy for potential future failure of the existing pipeline. As discussed above, other viable, much lower-cost alternatives exist to mitigate the risks raised by the Company. In my experience, these alternatives are regularly used by gas utilities to mitigate the risk of pipeline failure.”

Presumably, MCL 213.56(3) contemplates deference to the MPSC because impacted property owners are entitled to service and the opportunity to oppose either the project or the acquisition of their property at that time. Unlike public agencies like municipalities, counties, and the state, private agencies are driven by their profit motive and not responsible to the state’s voters. If the MPSC does not provide oversight, the circuit court should. 

Condemning agencies are limited to acquiring only those property rights required for the project necessitating the taking. In Troy v Barnard, 183 Mich App 565 (1990), while the City was allowed to acquire property rights to build a sidewalk, its case was dismissed for lack of necessity because it sought excessive rights. “Clearly, neither seventeen feet nor twenty-seven feet are necessary for the construction of a five-foot sidewalk. We believe that the words ‘public necessity’ and ‘necessity’ in the UCPA mean a necessity now existing or which will exist in the near future, not an indefinite, remote or speculative future necessity…Plaintiff's acquisition of excess property, premised on the hope that it might widen Square Lake Road sometime within the next thirty years, does not meet the test of necessity. Further, the fact that plaintiff can utilize this extra land in the meantime for other purposes, such as utility placement and snow storage, does not help to justify the condemnation.”

Based on these prior decisions, DTE should be limited to seeking only those property rights required to construct a single natural gas pipeline of a particular size (either 8 or 10 inches, depending on which of DTE’s inconsistent statements are true).

However, the easements currently sought by DTE could be considered excessive. DTE requests that property owners convey the right to construct unlimited numbers of pipelines of unrestricted size to transport anything capable of moving through a pipe and allows DTE to partially assign its rights to other pipeline companies.

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