Kentucky Judge: Private Pipeline Lacks Eminent Domain Power - Not "In Public Service" Because It Is Transporting Through Kentucky, Not To Kentucky
For the second day running, we're posting a trial court ruling. This time, it's from a Kentucky state circuit court, and although it does not have precedential value, we're guessing it will go further up the food chain to an appellate court, so it's worth paying attention to the issue now.
In Kentuckians United to Restrain Eminent Domain, Inc., v. Bluegrass Pipeline Co., LLC, No. 13-CI-1402 (Mar. 25, 2014), the court granted summary judgment to a group of Kentucky residents who oppose the Bluegrass Pipeline, a 1,100+ mile private pipeline that would deliver natural gas from the Marcellus and Utica shale formations to the Gulf Coast. The pipeline is planned to run through 13 Kentucky counties.
Kentucky's eminent domain statutes allow certain private entities to exercise the power of eminent domain:
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...
Ky. Rev. Stat. § 278.502. The court concluded that this means that a private entity like Bluegrass must be regulated by the PUC and "in public service." Slip op. at 12. Even though the plain text of the statute does not limit it to PUC-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." Id. at 13.
Nor is the Bluegrass pipeline "in public service," held the court, because there are no "offramps" in Kentucky:
The proposed pipeline transports NGL's through Kentucky, but does not have any impact on the energy needs of Kentuckians. Bluegrass argues that the pipeline will be available for Kentucky manufacturers and producers. However, the only stated purpose of the pipeline is to transport NGL's to the Gulf Coast to be processed and sold in Louisiana; not to provide natural gas to Kentuckians, but to have NGL's, a mixture of highly dangerous chemicals, running through Kentucky farmland and forests, and near rural communities.
Slip op. at 14 (emphasis original).
But wait a minute, argued Bluegrass, we're a federal common carrier, and anyone can transport gas through our pipeline. Therefore we're "public," and this is a "public use" under the Takings Clause. The court rejected the argument, concluding that the "in public service" requirement is "a more restrictive stricter standard" than public use under the Fifth Amendment and Kelo. Id. at 15.
More on the decision here from the Louisville NPR affiliate.
The court certified the case for appeal, so we would not be surprised if there were more action in this case. In other words, stay tuned.
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