Energy giant Kinder Morgan posted second-quarter profits earlier this year that surpassed the operating budget of the city of Kyle over the course of the past decade.
That’s the backdrop against which the city fought the Permian Highway Pipeline (PHP), a 42-inch, 430-mile natural gas pipeline routed across the Edwards Aquifer and through the Kyle.
After a rare Friday night meeting last week, the Kyle City Council and Kinder Morgan came to an agreement to settle the city’s lawsuit. Terms of the agreement basically allow the company to do as it proposed. However, language specific to the agreement prevents the pipeline’s future conversion to crude oil.
Under the agreement, the city agrees to “release, acquit and forever discharge” the company and its partners and agents from past, present or future claims in return for $2.7 million, which will be paid in two installments. The first will be paid within 30 days after the completion of the pipeline within the city limits and the second approximately one year later.
Nothing in the settlement alters the PHP’s proposed route, which was the basis of opposition from not only Kyle but other cities along the way, as well as counties, school districts and water conservation districts. As routed, the pipeline would twice cross the Blanco River and would come within a mile of the pristine Jacob’s Well.
“In a perfect world, this pipeline would have been routed through unincorporated areas of Texas – preferably those areas already established with oil infrastructure – minimizing the effect on landowners, local governments and our environment,” Kyle Mayor Travis Mitchell said. “Unfortunately, we don’t live in a perfect world.”
Mitchell said the council and city staff worked “diligently” with Kinder Morgan to develop the framework of the agreement he said “will provide protections to the city that otherwise are not granted through current state and federal regulations,” one of which being forbidding any potential switch to a cruel oil carrier.
Kinder Morgan also agreed to participate in resolution of conflicts between the pipeline and any future infrastructure projects within the city.
Mitchel said the crux of the fight has been “how to leverage our limited city resources to carry this fight against an opponent with virtually unlimited resources.”
“We believe that this settlement agreement represents a better outcome than what we could have expected in a long and drawn out and expensive legal battle,” he said.
One of the concerns about the pipeline and its routing has been that, because it is an infrastructure project, the only entity that had to give its approval was the Texas Railroad Commission (RRC), meaning the pipeline, which in addition to the fragile Edwards Aquifer crosses the habitat of federally-endangered species, required no formal environmental assessment or potential economic harm. Moreover, the RRC was not required to give any consideration to issues other than safety.
In April, Kyle joined Hays County and other stakeholders in a lawsuit – Sansom et al v. Texas Railroad Commission – that challenged the constitutionality of such limited governmental oversight. It was the first such legal challenge to the RRC, and it was struck down by a district judge. The case is presently on appeal, and the settlement agreement specifically states that the city of Kyle retains its right to participate, as well as the right to participate in “any claims that it may have arising under the Endangered Species Act, the Clean Water Act, the Safe Drinking Water Act, the National Environmental Policy Act and the regulations promulgated under any such Act.”
The city council on July 2 approved an ordinance that would have put stricter controls on the pipeline’s construction within the city limits but Kinder Morgan countersued, arguing that state and federal law prohibits cities from regulating pipeline. Council amended the ordinance Sept. 11 to bring the ordinance in line with state and federal law.
“While we’re satisfied to have this particular legal proceeding behind us, we remain committed to advocate for Kinder Morgan to build in the most responsible manner possible,” Mitchell said. “This is a step in the right direction, but it is also not the end of the fight.”
Mitchell encouraged “any and all residents of Texas to engage our state legislature and encourage them to give communities a better say in the pipeline routing process, better protection of landowner property rights, publicly and independently produced environmental impact studies, and the preservation of local jurisdictions’ ability to regulate those projects within their incorporated boundaries.”