Kinder Morgan wins Texas court challenge, removing obstacle to $2 billion gas pipeline

DENVER/HOUSTON (Reuters) - Kinder Morgan Inc can begin work on a $2 billion natural gas pipeline without having the Texas energy regulator approve its proposed route, a state judge ruled on Tuesday.

FILE PHOTO: Helmets line a shelf in a control room at Kinder Morgan's Westridge Terminal on Burrard Inlet in Burnaby, British Columbia, Canada November 17, 2017. Picture taken November 17, 2017. REUTERS/Chris Helgren

The decision removes a challenge to the state’s licensing process that lets gas pipeline companies determine their own route and acquire land without a landowner’s consent. Texas is in the midst of a pipeline-construction boom with multibillion-dollar projects under way to bring shale oil and gas to market.

A Travis County District court ruled the Texas Railroad Commission, the state’s oil and gas regulator, is not required to set standards for routing the pipelines or private land-takings, Judge Lora Livingston wrote on Tuesday. The state allows gas pipeline operators that qualify as utilities to use eminent domain to take land for the public good.

“The court finds no authority for the proposition that the legislature has granted authority to the Commission to oversee the rights granted,” she wrote. She also granted Kinder Morgan’s request to dismiss it from the lawsuit.

A group of Texas landowners and officials had sued to block construction, arguing the oil and gas regulator failed to seek public input or properly supervise the routing of Kinder Morgan’s Permian Highway Pipeline, which will carry 2 billion cubic feet per day of natural gas roughly 400 miles (645 km) from West Texas to the U.S. Gulf Coast.

Kinder Morgan had asked the court to throw out the landowners’ lawsuit, arguing it was up to the state legislature, not the court, to change the pipeline permitting process.

“The court’s finding validates the process established in Texas for the development of natural gas utility projects,” Tom Martin, a Kinder Morgan executive, said on Tuesday.

U.S. shale gas production in July is projected to hit a record 81.4 billion cubic feet per day, which would be an 18th consecutive monthly increase. Shale oil could hit 8.52 million barrels per day that same month, according to the U.S. Energy Information Administration.

Landowners argued that the pipeline will cross “sensitive environmental features,” such as endangered species habitats, sites of historical significance and residential subdivisions, according to a filing.

The Texas Real Estate Advocacy and Defense Coalition, which advocates for Texas landowner rights, said it was weighing an appeal and additional legal actions in other venues.

The ruling “is unfortunate but not unexpected,” said Travis Mitchell, mayor of Kyle, Texas, a co-plaintiff. “We will be working to determine the best path forward. We’re certainly not giving up.”

A spokeswoman for the Railroad Commission of Texas declined to comment.

Reporting by Liz Hampton; writing by Gary McWilliams; editing by G Crosse and Lisa Shumaker