Bluegrass Pipeline Co. cannot use eminent domain to take private property for construction of a natural gas liquids pipeline through Kentucky, a Franklin Circuit judge ruled Tuesday.
Judge Phillip Shepherd held that the power of eminent domain is "an essential attribute of a sovereign government" that cannot be delegated to a private company such as Bluegrass Pipeline "without a clear legislative mandate that such a delegation is in the public interest."
"There has been no such clear and explicit delegation of this power to Bluegrass for its proposed ... pipeline," Shepherd wrote.
The ruling was a victory for Kentuckians United to Restrain Eminent Domain, or KURE, a citizens group that asked the court last year to clarify whether Bluegrass Pipeline had the power to use eminent domain.
Bluegrass Pipeline developers want to build a line to carry natural gas liquids across 13 Kentucky counties, but many citizens have opposed the project, saying it poses environmental and safety concerns. The flammable liquids are byproducts from natural gas refining processes that are used to make consumer products such as plastics and carpet.
Tom Droege, spokesman for the Bluegrass Pipeline project, said in a statement Tuesday afternoon that pipeline developers "disagree" with Shepherd's opinion and will "immediately appeal the decision."
The company has not attempted to use eminent domain to condemn property for the pipeline but has argued that it has the right to do so under Kentucky law.
Shepherd, however, rejected that claim.
"Bluegrass remains free to build its pipeline by acquiring easements from willing property owners," he wrote. "However, Bluegrass cannot invoke the sovereign power of eminent domain to threaten or intimidate, or even suggest to landowners who have no desire to sell, that Bluegrass has the right to take their property without their consent."
Shepherd added that "landowners who do not wish to sell, but who may be unable to finance a legal challenge, are entitled to know that the law does not support Bluegrass's assertion of the power of eminent domain."
Droege said in Tuesday's statement that pipeline developers are making progress in securing the easements needed, acquiring "nearly 70 percent of the route needed in Kentucky."
State law allows the use of condemnation to acquire land for "pipelines for transporting or delivering oil or gas, including oil or gas products, in public service."
The KURE petition asserted that natural gas liquids are not "oil or gas," nor are they "oil or gas products" as those terms are defined in the law.
KURE also asserted that interstate transportation of natural gas liquids by pipeline through the state is not transportation of oil or gas products "in public service," as that term is used in the law. Bluegrass Pipeline, the group argued, is not a public utility regulated by the Kentucky Public Service Commission, so it is not "in public service."
Bluegrass Pipeline argued that it has the right to invoke eminent domain "because it will provide open access to any potential Kentucky customer that is willing to meet the Bluegrass Pipeline's tariff conditions and pay the tariff rate."
Shepherd sided with KURE, ruling that Bluegrass Pipeline is a private, for-profit company that "is not acting in public service."
"The proposed pipeline transports natural gas liquids through Kentucky, but does not have any impact on the energy needs of Kentucky," the judge concluded.
The pipeline would carry natural gas liquids from Pennsylvania, West Virginia and Ohio through Kentucky to an existing connection in the state that runs to the Gulf of Mexico.
Last month, the head of Tulsa-based Williams Co., one of the pipeline project's developers, said the target date for having the pipeline in service now stands at late 2016.
While pipeline backers have insisted that pipelines like the one proposed are safe, recent events such as the explosion of an underground natural gas pipeline in Adair County and a sinkhole that opened up under the National Corvette Museum in Bowling Green last month have raised concerns.
Responding to critics of the project, the state House approved a bill last week that would block Bluegrass Pipeline from using eminent domain. House Bill 31 has since moved to the Senate, where it awaits action.
Jim Warren: (859) 231-3255.