In a case we've been following, the Kentucky Court of Appeals has affirmed a trial court ruling which held that a pipeline company could not exercise the power of eminent domain.
The Bluegrass Pipeline is a 1,100+ mile private pipeline that would deliver natural gas from the Marcellus and Utica shale formations to the Gulf Coast. It is planned to run through 13 Kentucky counties, although there are no "offramps" for the natural gas actually in Kentucky.
In Bluegrass Pipeline Co., LLC v. Kentuckians United to Restrain Eminent Domain, No. 2014-CA-000517 (May 22, 2015), the Court of Appeals concluded that the pipeline company did not have eminent domain power because it was not regulated by the Public Service Commission, and therefore was not "in public service" as required by Kentucky eminent domain statutes. See Ky. Rev. Stat. § 278.502 ("Any corporation or partnership organized for the purpose of ... operating oil or gas wells or pipeline for transporting or delivering oil or gas, including oil or gas products, in public service, may ... condemn the land and material or the use and occupation of the lands...").
The trial court concluded that this means that a private entity like Bluegrass must be regulated by the PSC and "in public service." Slip op. at 12. Even though the plain text of the statute does not limit it to PSC-regulated entities, the court concluded that the legislative history made it clear the legislature intended it to be so, and that Bluegrass cannot "circumvent the statutory protections for landowners to take advantage of the right of eminent domain." The Court of Appeals agreed, holding:
the legislature only intended to delegate the state’s power of eminent domain to those pipeline companies that are, or will be, regulated by the PSC. In addition, the NGLs in Bluegrass’s pipeline are being transported to a facility in the Gulf of Mexico. If these NGLs are not reaching Kentucky consumers, then Bluegrass and its pipeline cannot be said to be in the public service of Kentucky.
Slip op. at 9.
More on the decision from Central Kentucky News: "Kentucky Court of Appeals upholds eminent domain decision on pipeline."
A big win for those who oppose these pipelines. Will other jurisdictions follow suit? Stay tuned.