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THE PETROLEUM PIPELINE STUDY COMMITTEE REPORT Submitted to the South Carolina General Assembly on December 21, 2017 Committee Members: Senator Tom Young, Chairman Senator Brad Hutto Senator Shane Massey Representative Dennis Moss Representative William “Bill” Hixon Representative Russell Ott C. Dukes Scott Michael Traynham W. McLeod Rhodes Donald Gardner Petroleum Pipeline Study Committee Report Submitted on December 21, 2017 Background of the Petroleum Pipeline Study Committee Background On July 1, 2015, South Carolina’s Attorney General issued an opinion holding that current South Carolina law is unclear as to whether South Carolina law allows a petroleum pipeline company to exercise eminent domain authority. The Attorney General recommended that the legislature clarify whether property can be condemned in South Carolina by a petroleum pipeline company. Soon after, the General Assembly enacted Act 205 (2016) which, through a moratorium, prohibited the use of eminent domain by for-profit, pipeline companies that are not defined as a public utility under South Carolina Code of Laws Title 58. That moratorium expires on June 30, 2019. Purpose After the 2015 Attorney General Opinion mentioned above, the General Assembly established the Petroleum Pipeline Study Committee, hereinafter referred to as the “Committee,” by Act 304 in 2016 to study matters related to the presence of petroleum pipelines in South Carolina. Matters to be considered by the Committee were to include, but were not limited to, the following: (1) the various types of petroleum products and by-products that are transported by a pipeline; (2) the federal requirements for petroleum pipeline siting and monitoring; (3) the state’s responsibilities as to the regulation of petroleum pipeline siting and monitoring; (4) the possible environmental implications from a petroleum pipeline; (5) the potential economic development implications for South Carolina resulting from a petroleum pipeline located in this State; (6) whether other states permit petroleum pipeline companies to exercise eminent domain, and if so, under what circumstances; and (7) whether a bonding requirement can and should be imposed as a prerequisite for any private company seeking to install a petroleum pipeline in South Carolina. Membership The Committee’s membership consisted of the following: (1) Representative William “Bill” Hixon, appointed by the Speaker of the House; (2) Representative Dennis Moss, appointed by the Speaker of the House; (3) Representative Russell Ott, appointed by the Speaker of the House; 1 (4) Senator Brad Hutto, appointed by the Senate Judiciary Chairman; (5) Senator Shane Massey, appointed by the Senate Judiciary Chairman; (6) Senator Tom Young, appointed by the Senate Judiciary Chairman, who served as chairman of the study committee; (7) C. Dukes Scott, Executive Director of the Office of Regulatory Staff; (8) Michael Traynham, Chief Counsel, Environmental Quality Control with Department of Health and Environmental Control; (9) W. McLeod Rhodes, representing environmental and conservations organizations; and (10) Donald Gardner, representing the South Carolina Petroleum Council. Summary of Study Committee Meetings The Committee held seven public meetings. The initial meeting was held on September 28, 2016. During that meeting, Committee members raised questions related to petroleum pipelines in South Carolina, as well as the background of events that led to the introduction and passage of the joint resolution that created the Study Committee, including Act 205 (2016) which prohibited the use of eminent domain by for-profit, pipeline companies that are not defined as a public utility under South Carolina Code of Laws Title 58. In addition to the items listed in Act 304 for the Committee to consider, the members also requested information on the following topics: (1) South Carolina’s eminent domain laws; (2) the recent Colonial petroleum pipeline spill in Alabama; (3) the petroleum pipeline spill in Belton, South Carolina; and (4) the history of petroleum pipelines in South Carolina. The second Committee meeting was held on November 30, 2016. This meeting consisted of a day of presentations and public testimony. Presentations were given on the following topics: (1) a general overview of topics regarding petroleum pipelines, such as the types of products transported by pipelines; (2) an overview of the presence of petroleum pipelines in South Carolina; (3) federal laws, regulations and state practices and petroleum company practices regarding petroleum pipeline siting and monitoring, including safety considerations; (4) an overview on the 2016 Alabama petroleum pipeline leak; (5) an overview regarding the history of utilities’ use of eminent domain in South Carolina; (6) potential economic development implications for South Carolina resulting from petroleum pipelines; (7) examples of current bonding requirements for utilities; (8) potential environmental implications from petroleum pipelines; and (9) an update on the petroleum pipeline leak in Belton, SC. The above information was presented in the form of written presentations and oral testimony from a variety of sources, including representatives from the: Office of Regulatory Staff, U.S. Department of Transportation’s Pipeline and Hazardous Material Safety Administration, Public 2 Service Commission, Department of Health and Environmental Control (DHEC), S.C. Commerce Department, and petroleum pipeline industry representatives. Members from the public also provided oral testimony as to their concerns regarding petroleum pipeline siting and safety concerns. Information provided to the Committee in writing was posted on the Committee’s website. At its third meeting on March 9, 2017, the Committee began to discuss policy issues regarding petroleum pipeline companies and eminent domain including whether these companies should be granted the authority of eminent domain, and if so, under what circumstances? Committee members discussed Georgia’s pending legislation that established when petroleum pipeline companies could use eminent domain. DHEC provided information regarding the Belton spill clean-up process and general background information on spills that DHEC is currently monitoring. DHEC currently is overseeing the monitoring of ten petroleum pipeline releases in the state dating back to approximately 1970. The Committee also heard from members of the public. The Committee voted to request an extension on issuing its report to study Georgia’s legislation and to explore any other issues that the Committee may need to consider. A copy of this request for extension is attached as Exhibit 1. The Committee also determined that a list of issues raised during the Committee’s meetings would be placed on the Committee’s website, along with a request for public comment. The list of issues was posted on the Committee’s website, and is included in the attached Exhibit 1, and listed as Exhibit B. During the public comment period, the Committee received comments from the American Petroleum Institute and Colonial Pipeline. These comments were provided to the Committee members and posted on the Committee’s website for public review. No other public comments were received. The Committee met for the fourth time on June 14, 2017. At this meeting, DHEC staff provided information regarding the Belton spill and addressed general questions from Committee members regarding spill clean-up processes. DHEC said that the agency has an emergency response team and private contractor to respond to petroleum pipeline spills. DHEC does intensive long term monitoring of areas where a spill has occurred including monitoring as to potential ground and surface water contamination. Committee members discussed the recently enacted Georgia legislation and whether a similar legislative framework might work in South Carolina. The Committee directed staff to draft language, in the format of draft legislation, to integrate key elements from Georgia’s law into South Carolina’s statutory framework. The Committee held additional meetings on July 31, 2017 and October 3, 2017 to discuss draft language and ideas for legislation. At the July 31, 2017 hearing, the Committee heard public testimony related to environmental concerns and issues related to public notice and opportunity to provide comments in a petroleum pipeline permitting process. At both meetings, Committee members discussed various aspects of potential language for draft legislation including the following: 1. single and/or dual step processes for permitting and eminent domain; 2. an appeals process including the forum and timing of appeals; 3. financial assurances on how a company would pay for a spill including bonding requirements; 3 4. maintenance, extension, and expansion of lines and whether or not permits would be needed under certain scenarios; 5. access to land for surveying; 6. notice to landowners; 7. locations of hearings for interested landowners and the general public to present testimony and/or comments; 8. the maximum width of easements that would be allowed under state law; 9. buy back options for landowners where no activity occurred as to a petroleum pipeline company’s acquired easement within so many years or where the petroleum pipeline company confirms that a project is no longer being considered; 10. abandoned petroleum pipeline issues; 11. what may constitute “public need” and how that may be defined if policymakers chose to define it in statute; and 12. other related issues. The
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