Lawmaker pre-files bill to clarify use of eminent domain; others express concerns

A Western Kentucky lawmaker pre-filed a bill Monday to clarify the use of eminent domain in cases such as the Bluegrass Pipeline, but an environmental lawyer expressed reservations about the proposed legislation in a letter to its sponsor.

The Bluegrass Pipeline would ship natural gas liquids from Ohio, Pennsylvania and West Virginia to Texas and Louisiana. The planned route in Kentucky includes 13 counties, from Bracken in the northeast to an existing connection in Breckinridge.

Affected landowners have wondered whether eminent domain, the power to take private property for a public use, applies. This month, State Energy and Environment Cabinet Secretary Len Peters told an interim legislative committee that his staff attorneys think the companies proposing to build the Bluegrass Pipeline cannot invoke eminent domain to gain easements.

State Rep. John Tilley, D-Hopkinsville, said in a statement his bill specifies that any proposed oil and gas pipelines are available for "public use as a common carrier" for similar products, which is a more stringent guideline when compared to the current law, which requires these pipelines only be of a "public service" when it comes to eminent domain.

Under Tilley's bill, the Kentucky Public Service Commission would play a "gatekeeper" role if those building pipelines cannot reach agreement with private landowners.

"I think the PSC is the natural administrative body to handle these types of questions, given its work in regulating other utilities," Tilley said. "This would enable the state to put this bill in place almost immediately."

If it becomes law, the PSC could grant eminent domain only after it made the request public and open to input, Tilley said. In addition, the PSC would have to determine that the condemnation was in the public interest; that the project met all safety, construction and operation protocols; and that the environment, including groundwater, was protected.

"My legislation will make sure that everyone involved has a chance to make their concerns known and that the work will be done to proper standards without hindering efforts to make our country more energy independent," Tilley said. "I think it strikes a fair balance."

Tilley chairs the House Judiciary Committee. His bill is to be considered during the 2014 regular session of the Kentucky General Assembly, which begins in January.

In a letter to Tilley posted Monday on the website of the Kentucky Resources Council, environmental lawyer Tom FitzGerald cited three problems with the bill as proposed.

First, FitzGerald wrote: "The Public Service Commission jurisdiction extends to regulated public utilities, and these interstate pipelines are not regulated utilities. The commission is being asked to grant or withhold the power of condemnation, which is a legislative and constitutional function and should not be delegated to the executive branch."

Second, he wrote: "The criteria and process for PSC review are much less robust than would be accorded to a natural gas pipeline by the Federal Energy Regulatory Commission, and do not appear to require a full quasi-adjudicative hearing as would be provided in a Certificate of Need and Public Convenience case, including the right of formal intervention, cross-examination of witnesses, and discovery."

Third, "the review criteria are unrelated to the decision to allow or disallow condemnation powers," FitzGerald wrote.

The PSC "is being tasked with balancing the promotion of infrastructure against public safety and environmental protection in deciding not whether to allow the project (as would be the case in a siting board or Certificate of Need process), but whether to grant the power of condemnation to a private, non-utility for a pipeline project.

"The bill in effect 'trades' some level of review (but no authority to prevent the project even if it isn't found to be in the public interest) for a broad grant of condemnation powers to interstate pipelines carrying natural gas liquids, that they currently do not have under state law." FitzGerald wrote. "I don't believe that the extension of condemnation powers to non-utility, private companies, whether they are common carriers or not, is in the best interests of Kentucky landowners.

FitzGerald encouraged Tilley to "decouple these issues" so "the question of whether to expand the power of condemnation to these non-utility parties can be debated on its merits. Nothing in current law prevents the construction of such a pipeline on a willing seller basis. Landowners should not have to trade the right to say 'no' for a modicum of oversight of pipeline routing."

Tilley said in his statement, "I want to make certain that the inherent rights of Kentuckians are secure and free from the unregulated use of eminent domain. ...We should strive to maintain the proper balance between those rights and economic development when it comes to safely transporting fossil fuels. I believe the state needs to paint a brighter line on how pipelines like this are built and where they can be located."

Tom Droege, a spokesman for Williams Co. of Tulsa, Okla., said in a statement Monday that "Bluegrass Pipeline is about economic opportunity for Kentucky and America; it's not about eminent domain. We are currently focused on working with individual landowners along the pipeline route as we begin the process for purchasing easements.

"An easement is a narrow strip of land (50-feet wide) where we would bury the pipeline. Landowners will continue to own the land and can use the easement much as before — to grow crops, raise Thoroughbreds and enjoy their land much as they wish."

The other company hoping to build the pipeline is Boardwalk Pipeline Partners of Houston.

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