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Legal Battle Grows Over Pipeline Expansion Project

Shortly after several families in northeastern Pennsylvania sued each other over plans by Chief Oil & Gas LLC to build a natural gas transmission pipeline through their neighborhood, the Dallas-based company has joined the fray with its own lawsuit in federal court.

At the center of the kerfuffle are plans by Chief to construct a 24-inch pipeline through Goodleigh Estates -- a residential subdivision in Luzerne County's Dallas Township -- to connect Marcellus Shale natural gas wells in Susquehanna County with an arm of the Transcontinental Gas Pipe Line (Transco).

Last Wednesday Chief Gathering LLC, a subsidiary of Dallas-based Chief, filed suit in U.S. District Court for the Middle District of Pennsylvania against three families who live in Goodleigh Estates. Chief accused the families -- William and Patricia Watkins, Scott and Kelly Watkins, and Jeffrey and JoAnn Dickson -- of tortious conduct and misconstruing the neighborhood's convenants.

"We felt that it was necessary to protect our interest in our pipeline," Chief spokeswoman Kristi Gittins told NGI's Shale Daily on Friday. The company is seeking punitive damages from the defendants and wants the pipeline project to move forward.

According to court documents, Chief said that for the past 22 months it has been working to secure the necessary rights of way (ROW) and permits for the pipeline, and currently owns ROW under 30 properties in Dallas Township.

The company said it concluded separate ROW agreements with two families who own property in Goodleigh Estates -- Patrick and Patricia Doughtery and Tuula D'Anca -- in September 2010. One year later, Chief received conditional preliminary approval for its application to build the pipeline from the Dallas Township Planning Commission on Sept. 13, and all zoning and associated approvals from the Dallas Township Board of Supervisors on Sept. 14.

"Within the next six to eight weeks, [we] will have all the permits and approvals needed to initiate construction of the entire pipeline project," Chief said in its complaint. "[But if we are] unable to use the original route through Goodleigh Estates, [we] will face a delay of several months as [we] must go through the regulatory process to permit an alternate route."

That could cost the company at least $18 million, the prospect of which Chief said would delight the Watkins and Dickson families, both reportedly members of the Gas Drilling Awareness Coalition (GDAC), a group opposed to shale gas activities.

"[Their] true goal is to stop [us] from installing a pipeline not just in Goodleigh Estates, but in any location in Dallas Township," Chief said of the defendants. "[Their] argument about the supposed violation of restrictive covenants for Goodleigh Estates is simply a ruse to effect [their] overall scheme to thwart [us] from conducting [our] lawful business in Dallas Township."

The company also accused the defendants and their attorney, Robert Schaub, of making statements that injured its reputation in the community.

Chief said it has already spent another $683,000 trying to pursue a possible alternative route for the pipeline. The company said that if the route through Goodleigh Estates were ultimately rejected, it would cost $1.91 million on top of the cost for the original route. Chief added that it was spending between $2.2 million and $3 million every month the project is delayed.

"Even after [we] began contracting for an alternate route that would not go through Goodleigh Estates, [the defendants] conspired to find the location for the alternate route and to block it, even though the alternate route completely bypasses Goodleigh Estates," Chief said.

According to Chief and media reports, Watkins and Dickson filed suit against D'Anca in Luzerne County Court of Common Pleas on Sept. 20, accusing her of violating neighborhood covenants when she signed to the ROW agreement with Chief. The company was not named as a defendant in that case.

GDAC spokeswoman Paula Chaiken declined to comment on the litigation Monday. Schaub could not be reached for comment.

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