Opening Statements in Gas Pipeline Easement Trial

Posted by msch on Jan 6, 2011 10:46:00 AM

Daniel Bishop and Michael MarcilFlorida Gas v. Florida DOT opening statements were heard today in Fort Lauderdale, Florida.

Representing Gas Transmission Company of Florida, attorney Daniel W. Bishop, II, of Bishop London & Dodds, told the jury that the dispute between Florida Gas and the Department of Transportation involved rights going back more than 50 years.

"In a nutshell," said Mr. Bishop, "The turnpike built a toll road in the 50's and 60's, and during that same period of time Florida Gas bought the rights to exist along side it. And over the years the turnpike has moved closer and closer to the pipelines as it was widened and expanded..." In the 2002-2003 timeframe the road was widened again, which required Florida Gas to move the pipelines, which cost millions of dollars, and DOT refused to pay for it.

Mr. Bishop recounted for the jury the 1958 easement agreement that allowed the a predecessor to Florida Gas to locate an 18" pipeline alongside the Sunshine State Parkway -- SR 91 -- in southeast Florida. 

1967, another easement was purchased for $700K to add a 24" pipeline alongside the 18" pipeline.  

A 1992 turnpike expansion resulted in two more agreements, one of which allegedly provided for reimbursement in the case of some utility relocations.  

Mr. Bishop said that a subsequent 2002 expansion would have required that the Florida Gas pipeline be paved over for 11 miles, which the utility did not want. "We literally can prove almost our entire case through their documents," said Mr. Bishop.

According to Mr. Bishop, the DOT forced Florida Gas to relocate, thereby causing Florida Gas to incur significant costs in abandoning the two older old pipes and relocating a new 36" pipeline.

Mr. Bishop concluded that the DOT should have replaced the easement, reimbursed for the moving expenses, and provided adequate space for future maintenance and operations. Florida Gas sought damages in excess of $127M.

For the Florida DOT, Gunster's Michael Marcil challenged the plaintiff's version of the facts and told a very different story.  According to Mr. Marcil tthe Turnpike was there before the pipeline, and the pipeline could have been sited in many locations. Florida Gas chose the right of way because it was easy and cheap, but there was plenty of other land available.

Florida Gas allegedly accepted three additional obligations in the 1967 agreement: that Florida Gas would use the highest grade of pipeline, that Florida Gas would avoid interfering with the turnpike to the extent possible, and that Florida Gas would relocate the pipeline at their own expense.

Mr. Marcil showed that guardrails, signposts, and pavement, had repeatedly been placed adjacent or over the pipeline, with no complaint.  If anything, said Mr. Marcil, Florida Gas wanted to stay under pavement. 

Moreover, explained Mr. Marcil, a pipeline inspection by "smart pig" had revealed significant metal loss -- up to 60-69% wall-loss -- due to 50-year old welding techniques and obsolete coatings.

According to Mr. Marcil, Florida Gas knew they had to repair or replace the pipeline at a cost of $41.7M to $51.6M, but then decided to both upgrade to a state-of-the-art 36" pipe and relocate. The plan to relocate the pipeline and blame it on the DOT, said Mr. Marcil, emerged as a "legal strategy" in response to the prospect of major repair costs. The DOT issued no order for Florida Gas to relocate, but only offered Florida Gas an opportunity to relocate before the next phase of construction began.

Florida Gas' independent obligation to upgrade its pipe was confirmed, said Mr. Marcil, by a major 2009 pipeline explosion that showed that Florida Gas was not in compliance with the requirement that it use the highest quality pipe.

Because the DOT did not require Florida Gas to relocate its pipeline, and because Florida Gas decided on its own to upgrade and relocate, Mr. Marcil concluded, the DOT had no obligation to Florida Gas.

Watch CVN's live webcast of Gas Transmission v. Florida DOT.

Topics: Florida Gas v. Florida DOT, Energy Law, Commercial Law