DT Midstream wins appeal against Energy Transfer

Louisiana’s Second Circuit Court of Appeals has overturned a ruling preventing DT Midstream Inc. from building a natural gas pipeline crossing under Energy Transfer LP’s ETC Tiger pipeline system.

Other companies have also complained that Energy Transfer is preventing them from building pipelines which would transit beneath its pipelines. Both Momentum Midstream LLC and Williams Cos. filed amicus briefs on DT Midstream’s behalf in its legal battle with Energy Transfer, with Energy Transfer last year filing suits similar to its DT Midstream litigation against affiliates of each.

When Energy Transfer purchased the rights to the Tiger pipeline in 2010 the contract granted it "exclusive servitude," which the company asserted meant its permission was required to build other pipelines crossing its rights-of-way. DT Midstream argued that exclusive servitude meant no other pipeline could share Energy Transfer’s right-of-way on a parallel basis. 

The Second Circuit disagreed with Energy Transfer, stating that "we do not find that one-time use of the word 'exclusive' means that [Energy Transfer's] servitude includes all depths and can subjectively be used to block the crossing of another pipeline." It continued by saying "to assert the grantee was somehow granted exclusive authority outside the area necessary for the operation and maintenance of [its] pipeline produces an absurd result."

The court concluded by affirming the language of servitude in this context as granting the right "to prevent damage or interference with the efficient maintenance, operation, and patrol of the pipeline…and nothing more."

Louisiana's state house of representatives last month unanimously passed legislation designed to clarify pipeline servitude rights and expedite the resolution of future crossing disputes. The state's senate has yet to vote on the matter.