Environment
3:50 pm
Tue March 25, 2014

Judge Rules Bluegrass Pipeline Companies Don't Have Power of Eminent Domain

A Franklin County judge has ruled in favor of Kentucky residents who challenged whether companies have the power to invoke eminent domain to build a controversial natural gas liquids pipeline across the state.

Judge Phillip Shepherd found that Kentucky law doesn't allow the developers of the Bluegrass Pipeline to use eminent domain to force unwilling landowners to hand over portions of their property for the pipeline. The Bluegrass Pipeline would carry natural gas liquids--like butane, propane and ethane--across Kentucky to the Gulf of Mexico. The NGLs are used in manufacturing processes, but the project has been controversial because of worries about the project's environmental impact and safety concerns.

In his opinion, Shepherd wrote that the Bluegrass Pipeline doesn't fall under the definition of "public service" stated in the law, and also doesn't count as a common carrier. From the opinion:

"Bluegrass is a private, for-profit unregulated entity engaging in the interstate transportation of NGLs. It is not acting 'in public service,' and therefore it falls outside the scope of KRS Chapter 278. The proposed pipeline transports NGLS 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 NGLs to the Gulf Coast to be processed and sold in Louisiana; not to provide natural gas to Kentuckians, but to have NGLs, a mixture of highly dangerous chemicals, running through Kentucky farmland and forests, and near rural communities."

The issue of eminent domain has been a murky one, ever since the Bluegrass Pipeline was proposed. Representatives of Williams and Boardwalk Pipeline Partners--the two companies building the pipeline--said they were confident they had the power under Kentucky law, even though they didn't intend to use it unless necessary. But Kentucky attorneys, including Attorney General Jack Conway and the legal counsel for the state Energy and Environment Cabinet, disagreed.

This lawsuit for summary judgment was filed in December, arguing that because local residents weren't sure whether their land could be legally seized, it put them at a disadvantage when they were approached by the company and many felt pressure to settle. Here's what I wrote about the lawsuit at the time:

According to state law, parties can file for declaratory judgment to seek clarification of their rights under state law. The act’s “purpose is to make the courts more serviceable to the people by way of settling controversies and affording relief from uncertainty and insecurity with respect to rights duties and relations.”

So, by filing today’s lawsuit, the pipeline’s opponents are hoping to find out the court’s interpretation of the law before a landowner ends up in court over the matter. Whatever decision the court makes will likely be appealed, but the final ruling will have statewide impact.

A bill explicitly stating that natural gas liquids pipelines don't have the power of eminent domain under Kentucky law has been working its way through the General Assembly; it passed the House last week and is currently in a Senate committee.

In a statement, Williams spokesman Tom Droege said the company will appeal the decision.

"While we disagree with today’s ruling by the Franklin Circuit Court and plan to immediately appeal the decision, we continue to purchase easements through face-to-face negotiations with individual landowners, a successful process whereby we’ve acquired nearly 70 percent of the route needed in Kentucky," he wrote.

 

Read Judge Shepherd's order: