by James Bruggers, @jbruggers –
The Kentucky Supreme Court decided not to take up the matter after Bluegrass appealed a lower court ruling.
The Kentucky Supreme Court has let an appeals court decision stand that only regulated utilities can use the power of eminent domain to get land for pipelines.
That decision deals a blow to companies looking to lay new pipeline to carry natural gas liquids from through Kentucky from oil and gas fields in Ohio and western Pennsylvania to the refineries and ports along the Gulf Coast because it will make it more difficult and expensive to get the land they need. That became an issue amid a boom brought on by new drilling methods using hydrologic fracturing, or fracking.
“Today is a good day for Kentucky landowners and for freedom,” Louisville attorney Tom FitzGerald posted on his Facebook page.
Univesity of Louisville law professor Tony Arnold, a land-use and environmental law expert, said the decision was “significant for both for opponents of the Bluegrass Pipeline and for all Kentucky residents who want to ensure that the exercise of eminent domain for energy development and transmission is held accountable to the public interest.”
However, he said the ruling has its limits.
“National companies seeking to move oil or gas through Kentucky and to use eminent domain to acquire easements for their preferred routes may try to get around (this) limited ruling by partnering with public utilities that are regulated by the Public Service Commission or with state agencies,” Arnold said. “They would have to provide some sort of benefit or service to Kentucky residents, such as providing some of the oil and gas to Kentuckians.
“Don’t underestimate the tenacity of energy companies to find a way to get what they want.”
The case involved the Bluegrass Pipeline, which was to be developed by the Williams company. That pipeline would have snaked across nearly 200 miles of Kentucky, but the company put it on indefinite hold in April 2014, saying that it did not have enough customers for the liquids it sought to move.
A legal battle continued, however, in the case of Kentuckians United To Restrain Eminent Domain v. Bluegrass Pipeline.
“Our legal team is looking into this,” Williams spokesman Tom Droege said.
“I couldn’t have had better clients,” said FitzGerald, director of the Kentucky Resources Council.
In an interview, FitzGerald said he learned of the state’s high court’s Wednesday on Thursday morning.
The Court of Appeals ruling last May was by a unanimous three-judge panel of James H. Lambert, Janet L. Stumbo and Jeff S. Taylor. They agreed with Franklin Circuit Judge Phillip Shepherd that only pipeline companies that are or will be regulated by the state’s Public Service Commission can use the courts to force a purchase of property or easements.
“In addition, the (natural gas liquids) in Bluegrass’s pipeline (would) be transported to a facility in the Gulf of Mexico,” the judges wrote. “If these NGLs are not reaching Kentucky consumers, then Bluegrass and its pipeline cannot be said to be in the public service of Kentucky.”
The Supreme Court decided not to take up the matter after Bluegrass appealed.
A Kinder Morgan plan would reverse the flow of an existing natural gas pipeline. More than 250 miles of that pipeline crosses Kentucky, but company officials have said they may need to acquire workspace or other easements for the transition.
This story will be updated.
