City near Austin tries to block pipeline from Permian Basin to Southeast Texas

Fuel Fix:
Houston pipeline operator Kinder Morgan has sued an Austin suburb over the passage of an ordinance that the company alleges aims to keep a proposed natural gas pipeline out of town, disrupting the route approved by state regulators.

In a 22-page lawsuit filed on Monday in U.S. District Court in Austin, Kinder Morgan alleges that the City of Kyle overstepped state and federal law when city council members passed a July 2 ordinance regulating the construction of natural gas pipelines within city limits.

Kinder Morgan is seeking to build the $2 billion Permian Highway Pipeline to connect the prolific Permian Basin of West Texas to the Katy natural gas hub near Houston. Spanning 430 miles, the 42-inch diameter pipeline is designed move 2 billion cubic feet of natural gas per day but the proposed route faces stiff opposition in the Texas Hill Country, Hays County and the City of Kyle.

Opponents unsuccessfully tried to stop the project by suing Kinder Morgan in a state district court in Austin. A judge tossed out the lawsuit in a June 25 decision. Days later, the Kyle City Council passed an ordinance stating that all natural gas pipelines with a diameter of 30 inches or more would require a city permit.

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Under the ordinance, pipelines must be buried at least 13 feet below the surface and be located at least 200 feet away from schools, day cares, hospitals, retirement homes and other sensitive facilities. The ordinance also imposes several fees, including a $2,500 permit application fee and a fee per linear foot for city right-of-way used. By comparison, the Railroad Commission, the state agency that regulates pipelines and the oil and gas industry, charges a per mile fee for pipeline projects and a $500 permit application fee.

Kinder Morgan is asking Judge Pitman to issue an injunction suspending the ordinance until the case is settled.

“While municipalities have the authority to impose certain fees in discrete circumstances under Texas law, those fees must be both reasonably calculated and tied to the actual costs incurred by the city administering valid municipal regulations,” Kinder Morgan said in a statement. “The fees the City of Kyle is attempting to collect are neither.”
The ordinance raises questions about the good faith of the city in dealing with a regulatory issue which already appears to be settled.


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