Franklin County

Group wants judge to rule on Bluegrass Pipeline's eminent domain claims

A citizens group wants a Franklin Circuit Court judge to determine whether Bluegrass Pipeline Co. has the right to invoke eminent domain to condemn properties for construction of a natural gas liquids pipeline through Kentucky.

The nonprofit group called Kentuckians United to Restrain Eminent Domain Inc., or KURE, which incorporated in November, filed the "petition for a declaration of rights" Thursday in Franklin Circuit Court.

The group's purpose is to "protect Kentuckians from the threat of and attempts to exercise eminent domain by entities not in public service to Kentuckians."

Bluegrass Pipeline has said that it has the right to condemn property under the state's laws of eminent domain. KURE disputes that claim.

Pipeline spokesman Tom Droege wrote via email Friday that "our policy is not to comment on litigation."

Droege also said: "Our primary focus today remains on working with landowners to establish mutually beneficial easement agreements. So far, in a short period of time, we have purchased easements for more than 50 percent of the proposed pipeline route in Kentucky. We estimate our easement payments to landowners will reach $50 million."

Among the KURE members who would be affected by the proposed pipeline is Penny Greathouse, who owns property in Franklin County. The complaint says she has been approached several times by agents seeking to acquire easements across her property for the pipeline.

Franklin is one of the 13 Kentucky counties that the underground pipeline would cross. It would carry natural gas liquids from Pennsylvania, West Virginia and Ohio to an existing connection in Kentucky that runs to the Gulf of Mexico.

The liquids are byproducts of the natural gas refining process and are used to make consumer products including water bottles, plastics and carpet.

Pipeline developers have not yet tried to condemn any property, but landowners say that the company's claim that it has such power under Kentucky law puts unwarranted pressure on landowners to sell easements.

An answer from a circuit judge will end "the uncertainty and controversy that exists in this situation," the group said.

Greathouse, a board member of KURE, said in an affidavit that she and her husband granted written permission to allow a representative of Bluegrass Pipeline to survey their land "because they had said they were a natural gas pipeline. When we found out differently, we rescinded our permission for the survey."

Greathouse said the pipeline representative she spoke with most is Rich Ellis, who told her that Bluegrass Pipeline has "the right to eminent domain" but did not like to use it.

State law allows condemnation for "pipelines for transporting or delivering oil or gas, including oil or gas products, in public service."

But KURE asserts 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 asserts that interstate transportation of natural gas liquids by pipeline through the commonwealth is not transportation of oil or gas products "in public service," as that term is used in the law.

The complaint says Bluegrass Pipeline is not a public utility regulated by the Kentucky Public Service Commission, so it is not "in public service" as that term is used in the law.

The complaint also states that Bluegrass Pipeline "will not be receiving, transporting, or delivering oil or natural gas 'for public consumption' as that term is used in the statute, since the transportation of the natural gas liquids is for a limited customer base to which the natural gas liquids will be delivered or sold after being processed ... in Louisiana, and because the unfractionated natural gas liquids would be transported through the commonwealth and are not intended to serve or be used by Kentucky consumers."

Bluegrass Pipeline maintains that it can invoke eminent domain power and meets the criteria of being a common carrier "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."

"Even so," the Bluegrass Pipeline said, "our hope is that Bluegrass Pipeline will acquire land rights by reaching agreements with landowners rather than using eminent domain to let a court determine the fair market value of a landowner's property."

KURE is asking that a judge declare that Bluegrass Pipeline does not possess any power or authority to use eminent domain.

In the meantime, legislation pre-filed for the 2014 General Assembly seeks to clarify the state's eminent domain laws so projects such as the Bluegrass Pipeline would not have eminent domain power.

Related stories from Lexington Herald Leader