Herald-Leader Editorial

Legislature needs pipeline oversight: Do companies have eminent domain?

August 20, 2013 

If you think a pipeline transporting flammable natural gas liquids through Kentucky would be risky, consider a pipeline that's transporting flammable natural gas liquids through Kentucky and is not paying for itself.

Or, worse, two NGL pipelines that aren't paying for themselves.

The urgency of updating state laws to protect Kentucky's interests was underscored by recent news that a second NGL pipeline is being planned through the state to compete with the proposed Bluegrass Pipeline.

Meanwhile, an NGL pipeline that would traverse Indiana, just north of Kentucky, already is under construction.

All three would carry byproducts of natural gas extraction from booming shale gas fields in Ohio and Pennsylvania to chemical plants in Louisiana and Texas.

The most recent Kentucky proposal and the one in Indiana would repurpose existing natural gas pipelines and reverse the flow.

The huge supply of natural gas has driven prices so low that producers are looking for ways to generate more money by selling the byproducts, including propane and ethane, to chemical manufacturers.

But there is only so much demand for these byproducts, which should be raising questions about how many pipelines are needed, where it makes the most sense to locate them and whether the conversion of existing pipelines could leave electrical utilities short of natural gas.

Unfortunately, Kentucky has no legal avenue to take a proactive role in answering these questions.

The Public Service Commission — and by extension the public — would have a big role in decision-making if the pipelines were carrying fuel to heat homes or power electrical utilities.

But because the pipelines would be carrying products for use by private companies, state agencies have only a very limited role in the planning.

It's disappointing that Gov. Steve Beshear did not take advantage of the special session that started Monday to fill this void in state law.

At least five county governing bodies have taken formal stands against the Bluegrass Pipeline as residents raise legitimate alarms about the risks to the environment, public safety and property rights.

The companies behind the Bluegrass Pipeline claim that even though they are not a public utility they have the power of eminent domain to obtain rights-of-way from property owners who refuse to sell.

Only the governor can set the agenda for a special session. In refusing to expand the call, Beshear said the pipeline issues can wait until the regular session in January.

At that time lawmakers should:

■ Require that NGL pipelines seek approval from a siting board created by the legislature in 2002 to review proposals for unregulated power plants and transmission lines.

■ Limit the power of eminent domain to public utilities regulated by the Public Service Commission.

Such legislation could protect Kentucky from being overbuilt with NGL pipelines, making for smarter land use. It also could avoid the risks if demand for pipeline products falls short of expectations.

If that happens, operators might be tempted to cut corners on safety to save money. Or they might repurpose a pipeline to, for example, carry wastewater from natural gas fracking operations through Kentucky.

The legislature should protect Kentuckians from either of those outcomes.


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