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Pipeline Still Pushing Through, But Without Eminent Domain Power

According to a ruling issued last week by Judge Phillip Shepherd from Franklin Circuit Court, The Bluegrass Pipeline Co. cannot use eminent domain and condemnation to take private property for construction of a natural gas liquid (“NGL”) pipeline through Kentucky. Details about the Bluegrass Pipeline and the company’s efforts to secure easements were shared earlier on this blog.

Kentuckians United to Restrain Eminent Domain, or “KURE”, is a private citizens group that asked the Franklin Circuit court last year to clarify the scope of Bluegrass Pipeline’s power and whether the private company could use the right of eminent domain to take property by condemnation and without a landowner’s consent. KURE’s lawsuit was spurred by Franklin County resident Penny Greathouse after a representative of the Bluegrass Pipeline told her the company had the legal right to exercise eminent domain while attempting to secure an easement for the pipeline through her property.

Many other landowners have reported that the company’s representatives threatened the use of eminent domain during their negotiations for pipeline easements. Judge Shepherd stated in his ruling, "Bluegrass remains free to build its pipeline by acquiring easements from willing property owners . . . [H]owever, 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."

The legal concept of “condemnation” under Kentucky law allows land to be “taken” for public use, such as for utility lines or highways. Judge Shepherd however found that, “Bluegrass is a private, for-profit unregulated entity . . . not acting ‘in public service,’ and therefore, it falls outside the scope of KRS Chapter 278.” He further stated that the proposed pipeline does not have any impact on the energy needs of Kentuckians, but rather results in “NGLs, a mixture of highly dangerous chemicals, running through Kentucky farmland and forests, and near rural communities.”

Judge Shepherd’s order makes it clear that Bluegrass cannot invoke eminent domain to threaten or intimidate landowners, but the company does remain free to build its pipeline by acquiring easements from willing property owners. Tom Droege, a company spokesman, said in a statement following the ruling that the company will immediately appeal the decision and continue to purchase easements through face-to-face negotiations with landowners. Droege said Bluegrass Pipeline already has nearly 70% of the route it needs in Kentucky. Regardless, the Bluegrass Pipeline has been significantly delayed. Industry insiders believe that the pipeline is certain to come through Kentucky; however, it may take up to another year to complete the easement negotiation process before construction.

In his order, Judge Shepherd acknowledged the “immediate effect on bargaining power” that his decision would carry with it. Shepherd's ruling is certainly a win for opponents of the proposed pipeline; however, the conflict is far from over. Landowners must remain vigilant to protect their property rights, carefully weigh their options, and contact an attorney before negotiating a pipeline easement.

The attorneys at McBrayer remain dedicated to ensuring that Kentucky landowners receive just compensation for their land should they choose to allow the pipeline on their property. If you or someone you know is considering allowing the pipeline through their property, contact the attorneys at McBrayer today.

JMorgan

Jason S. Morgan is an Associate of McBrayer, McGinnis, Leslie & Kirkland, PLLC. Mr. Morgan actively represents large, small, established, and new real estate developers and homeowners beginning with the planning phase of a proposed development through zoning changes, development plan approval, financing and the land acquisition processes.  He also has extensive experience with residential and commercial construction and insurance litigation. He is located in the firm’s Lexington office and can be reached at  jmorgan@mmlk.com or at (859) 231-8780.

This article is intended as a summary of  federal and state law and does not constitute legal advice.

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