The question of eminent domain took center stage at a legislative hearing Thursday, when State Energy and Environment Cabinet Secretary Len Peters said the companies proposing to bring a natural gas liquids pipeline through Kentucky do not have such power.
Peters said the cabinet’s legal counsel has determined Bluegrass Pipeline does not have the right of eminent domain, the process whereby private property may be condemned for public use.
Michael Haines, legal counsel for the department, said natural gas liquids pipelines are not considered “public utilities.”
“Based on this research relative to federal law and statutes relative to how natural gas liquids pipelines are regulated, they (legal counsel) do not see how eminent domain can be invoked,” Peters said.
But Michael McMahon, chief general counsel for Boardwalk Pipeline Partners, one of the companies seeking to develop the pipeline, said it is a “public service.”
The meeting of the Interim Joint Committee on Natural Resources and Environment drew about 250 people Thursday for a discussion on the proposed Bluegrass Pipeline.
Williams and Boardwalk Pipeline Partners seek to establish a roughly 1,100-mile pipeline from natural gas mining regions northeast of Kentucky to plants on the Gulf Coast.
Sen. Robin L. Webb, D-Grayson, brought up alleged instances in which land
surveyors for the companies have surveyed properties without owners’ permission — including the Kentucky State University Research and Demonstration Farm.
Despite requests from The State Journal, Williams has still not provided the name of the KSU official who a representative has said granted survey permission.
“There have been instances where we have had missteps,” Jim Scheel, senior vice president of corporate strategic development at Williams, told members of the Interim Joint Committee on Natural Resources and Environment.
Scheel said it’s the company’s policy to ask permission and that it would continue, “to do everything in our power to make sure we have great relationships going forward” and quickly address any issues.
The representatives of the natural gas liquids pipeline argued the project would economically benefit Kentucky and the nation as a whole, adding jobs and contributing to lower energy costs.
About 500 miles of the pipeline passing south through Ohio and Kentucky would be new construction. That section would connect to 600 miles of existing pipeline that begins in Breckinridge County and goes south to Louisiana.
The pipeline would transport up to 400,000 barrels, or 16.8 million gallons, of natural gas liquids each day. Natural gas liquids, including hydrocarbons such as ethane and propane, are the byproducts of the mining process and would primarily be used to create plastics.
Scheel also said the project would mean $30 to $50 million would be paid out to landowners to secure easements. A representative of Williams previously stated that easement acquisition would begin in August.
Tom FitzGerald, an environmental lawyer who directs the Kentucky Resources Council, said the Energy and Environment Cabinet has had regulation power for a decade due to a prior Legislative decision, and said it’s time for the cabinet to act.
He also called upon the governor to call a special session to deal the issue or, at the very least, take it up at the beginning of the next session in January.
Gov. Steve Beshear recently declined to take up the issue when the General Assembly met in August for a special session called to settle redistricting.
FitzGerald said after the meeting that it’s nice that he and the cabinet and several county attorneys agree the companies don’t have the power of eminent domain.
“But that doesn’t protect the landowners who are out there when a company comes to them and says, ‘Oh, I’d like to voluntarily acquire an easement from you, but I have the power of eminent domain, but I really don’t want to do that to you,’” FitzGerald said.
“That’s not a negotiation at arm’s length,” he added. “That’s an inherently unfair situation.”
He said he’s confident the Legislature would act to clearly restrict the power of eminent domain to regulated utilities so landowners would know for sure.