Kinder Morgan Sues Austin Suburb over Pipeline Ordinance

HOUSTON (P&GJ) — Kinder Morgan has filed a lawsuit in federal court challenging an Austin suburb's "most recent attempt to hinder construction and impermissibly interfere" with its Permian Highway Pipeline (PHP) project.

The lawsuit filed Monday in U.S. District Court in Austin argues that the City of Kyle exceeded its authority by enacting the restrictive ordinance on July 2 – exactly a week after a lawsuit challenging PHP was dismissed by a Travis County District Court judge.

The ordinance requires a city permit for any natural gas pipeline with a diameter of 30 inches or more and imposes siting restrictions and a permit application fee that is five times higher than required for a Texas Railroad Commission application.

"Not only is it unconstitutional, but it is also preempted by existing federal and Texas laws and regulations that have effectively governed pipeline projects, like PHP, for decades," Kinder Morgan said in a media statement. "Pipelines are already heavily regulated by both state and federal agencies that are dedicated to ensuring the safety of people, wildlife, property and the environment."

The ordinance requires that all pipelines must be buried at least 13 feet deep and be located at least 200 feet from schools, hospitals and other facilities.  It also imposes a $2,500 application fee and charges a fee per linear foot for city right-of-way. The Railroad Commission, in contrast, requires a $500 application fee and charges a per-mile fee.

Contacted by P&GJ for comment, City of Kyle spokesperson Kim Hilsenbeck provided a statement which read, “Kinder Morgan’s lawsuit is not unexpected. We will confer with our legal team in the coming days and decide the best course of action.”

In addition to its lawsuit, Kinder Morgan said it has filed a complaint with the Railroad Commission, which regulates Texas oil and gas activity, to appeal the "unsupported and excessive fees" required under Kyle's ordinance.

"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. The fees the City of Kyle is attempting to collect are neither," Kinder Morgan said. 

PHP, one of two 2 Bcfd natural gas pipelines Kinder Morgan is now building from the Permian Basin to the Texas Gulf Coast, is scheduled to come online in 2020.  The Gulf Coast Express (GCX) project is expected to begin service in late September this year.

Additionally, Kinder Morgan reaffirmed last week that it is planning for a potential third Permian-to-Gulf Coast natural gas pipeline that would probably start up in 2022.

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