Court of Appeals: pipeline comp no power of eminent domain in KY |Blueprint f/ landowners

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Court of Appeals rules pipeline company does not have power of eminent domain in Kentucky

In a 3-0 decision, the Kentucky Court of Appeals said Friday that Bluegrass Pipeline LLC did not have the power of eminent domain because it was not a utility regulated by the Public Service Commission.

Because the natural gas liquids are not directly reaching Kentucky consumers, "the pipeline cannot said to be in the public service of Kentucky," the court said.

The decision is a victory for landowners who had opposed efforts to put a natural gas liquids pipeline across 13 Kentucky counties, said Tom FitzGerald, the attorney who represented a group called Kentuckians United to Restrain Eminent Domain, or KURED.

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Friday's decision means only regulated natural gas utilities, such as Atmos, LG&E and Columbia Gas and others regulated by the PSC, can invoke eminent domain, FitzGerald said.

The Court of Appeals decision also affects Kinder Morgan's plan to convert or "repurpose" its Tennessee Gas Pipeline, which transports natural gas, into a conveyance for natural gas liquids. That existing line crosses 18 Kentucky counties, from Greenup County in the north to Simpson County on the Tennessee line.

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http://www.kentucky.com/2015/05/22/3865010/court-of-appeals-rules-pipeline.html


A Possible Blueprint for Landowners Challenging Pipeline Companies
The Legal Intelligencer

Landowners in Kentucky may be emboldened by a recent decision by the Kentucky Court of Appeals that rejected an attempt by Bluegrass Pipeline Co. to obtain public utility status that would allow it to acquire easements pursuant to eminent domain. While this decision largely echoes that of the York County Court of Common Pleas rendered in February 2014 in Sunoco Pipeline LP v. Loper, (C.P. York Feb 24, 2014), Pennsylvania law continues to be somewhat unsettled on the subject.

The classification of pipeline operators in this context is of great significance, as it directly impacts their ability to potentially avoid negotiating pipeline rights of way with individual landowners and instead, essentially, take the property through eminent domain. Furthermore, public utility status may also allow the operator to seek exemptions from local zoning ordinances. Operator status is a growing issue in Pennsylvania, where it is expected that as many as 25,000 miles of gathering lines and another 4,000 to 5,000 miles of midstream and transmission lines will be built over the next decade.

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Although not controlling in Pennsylvania, the logic set forth in the opinion is potentially persuasive and certainly provides additional support for the Loper decision referenced above. There are, however, factual and legal differences in the two opinions. Significant to the court's decision in Bluegrass was the fact that the corporation was not regulated by the PSC pursuant to Chapter 278. On the contrary, in Pennsylvania, Section 1103 of the Pennsylvania Business Corporation Law, or BCL, defines a "public utility corporation" as any domestic or foreign corporation for profit that is "subject to regulation as a public utility by the Pennsylvania Public Utility Commission or ... agency of the United States."

Therefore, while Kentucky appears to limit the potential classification of a corporation as "in public service" to only those that are regulated under Chapter 278, Pennsylvania permits a classification by a federal agency as a public utility to allow a corporation to qualify as a public utility corporation, as defined by Section 1103. The key to the Loper decision was that the federal agency that regulated Sunoco, the Federal Energy Regulatory Commission, or FERC, classified it as a "common carrier," and not a "public utility," and regulated it under the Interstate Commerce Act as opposed to the Natural Gas Act. As such, it did not fall within the definition of a public utility corporation under Section 1103 of the BCL and therefore could not condemn property under Section 1511(a) of the BCL, which provides eminent domain powers for public utility corporations. Notably, the Loper case was not appealed by Sunoco.

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http://www.thelegalintelligencer.com/home/id=1202729163749?kw=A%20Possible%20Blueprint%20for%20Landowners%20Challenging%20Pipeline%20Companies&et=editorial&bu=The%20Legal%20Intelligencer&cn=20150615&src=EMC-Email&pt=PA%20Law%20Weekly&slreturn=20150516131906



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