Bluegrass pipeline bill stirs property rights, energy industry c - WDRB 41 Louisville News

SUNDAY EDITION | Bluegrass Pipeline bill stirs property rights, energy industry concerns

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FRANKFORT, Ky. (WDRB) – The hearing was more than an hour old when the four men approached the table and sat down, ready to voice their opposition to a bill that would keep the Bluegrass Pipeline from condemning land in Kentucky.

The room in the Capitol Annex was so crowded that the House Judiciary Committee's chairman had already apologized for not having more space. The list of speakers spilled onto two pages. Some people stood. Others sat on the floor.

The Bluegrass Pipeline, which would carry natural gas liquids through Kentucky, has been a lightning rod for property rights and environmental concerns since it was proposed nearly a year ago. But a lingering question that the General Assembly took up last Wednesday is whether the pipeline's developers can use eminent domain if negotiations with landowners fall short – and some property owners insist they won't grant easements at any cost.

The men at the table weren't Bluegrass Pipeline officials. They represented oil and gas companies, manufacturers and the state's largest business association, and they repeated a common concern: House Bill 31 could have "unintended consequences" for Kentucky business. They urged the courts -- not the legislature -- to decide whether condemnation is legal.

Then Rep. Johnny Bell spoke. From his elevated vantage point, Bell could see the roaming lobbyists and landowners in the pipeline's path, including the Nelson County farmer who sat in the front row. The farmer, Joe Boone, had testified about a pipeline agent who made a veiled threat of eminent domain last year.

"When I look around back through this crowd, I see everyday citizens of the Commonwealth of Kentucky trying to protect what I feel is an inalienable right,  a right given by a power higher than men – and that is the right to enjoy and use their property as they see fit," said Bell, a Glasgow Democrat.

Bell acknowledged the concerns raised by the industry representatives.

"How do we balance that in a fair and equitable way to protect the people that are sitting here that have an inalienable right, a constitutional right, to the use and enjoyment of their property when they're fighting against something that I would feel would be much more powerful than they are, or that I would be if I was in the same situation?"

The room broke out in applause.

Rep. John Tilley, the committee chairman and a co-sponsor of House Bill 31, said he wasn't trying to thwart the pipeline. A committee substitute to the bill would prohibit the state's eminent domain laws from being used for projects carrying natural gas liquids.

"We're just trying to clarify the existing law," said Tilley, a Hopkinsville Democrat, "I think a law that everybody says at best is murky -- but at worse leaves a hole to be filled."

Condemnation is allowed under Kentucky law when land is taken for a public use, such as a highway project or a gas line operated by a public utility. But whether it applies to the Bluegrass Pipeline, a joint venture of two private companies, is a more complicated matter.

Pipeline officials have argued that they do have power of eminent domain under Kentucky law, but the state Energy and Environment Cabinet disagrees. 

With uncertainty over whether a pipeline transporting natural gas liquids would operate in "public service," Cabinet Secretary Len Peters told the Judiciary Committee that his agency supports the General Assembly clarifying the law.

"Where does that line cross from white to black, or are we going to simply leave the gray area very, very broad?" Peters said.

The committee ultimately chose to delay a vote on the measure, but on the same day Gov. Steve Beshear gave his backing to legislation clarifying the law, and the project announced it will now be mid-to-late 2016 to complete the pipeline -- a year later than previously thought.

The Bluegrass Pipeline would transport natural gas liquids -- naturally occurring substances found in natural gas – for use in plastics, automotive fuels and other products. They are classified as hazardous materials under federal rules.

Kentucky, where plans call for roughly 275 miles of new or repurposed line, would be the midpoint of a route stretching from natural gas fields in the northeast to the Gulf Coast.

Houston-based Boardwalk Pipeline Partners L.P. and the Williams Cos. of Tulsa, Okla., argue that the pipeline will create temporary construction and permanent monitoring jobs in Kentucky, help the United States become more energy independent and allow access to local businesses that use natural gas liquids.

Pipeline officials did not speak at Wednesday's committee hearing, but their Louisville public relations firm issued a "myths vs. facts" paper following the meeting. In it, the companies said:

  • "The Bluegrass Pipeline does not wish or intend to use eminent domain to obtain easements from landowners. It is our goal to negotiate a deal with 100% of landowners. Eminent domain is only an option as a last resort and used in rare and unique cases. The companies involved in building the Bluegrass Pipeline have used eminent domain in less than 1% of cases in the pipelines they have built across the United States."
  • "In the rare case that Bluegrass Pipeline would need to use eminent domain, they will still honor negotiations with landowners and offer fair prices for any land obtained via this method. To date, Bluegrass Pipeline has paid $27 million dollars, and 66 % of the easements needed have been obtained through fair negotiations."
  • "Obtaining an easement through eminent domain does not ‘take land away.' It allows the pipeline to be constructed and maintained while the landowner retains all other uses of the property except building on top of the easement area."

In an email, Williams spokesman Tom Droege said the pipeline developers believe "current federal and state laws are more than adequate in terms of oversight and regulation of both the construction and operation of the Bluegrass Pipeline and that no new legislation is needed." He declined to say what effect the passage of House Bill 31 would have on the project.

Still, pipeline opponents worry about the developers' safety record and the possible environmental consequences of natural gas liquids leeching into soil and groundwater in the event of a spill. And Republican and Democratic lawmakers are concerned about the specter of eminent domain.

Rep. David Floyd, a Bardstown Republican and a bill co-sponsor, told the Judiciary Committee that condemnation is the "threat in the background" during discussions between landowners and pipeline agents.

Floyd said he has advised his constituents that he doesn't believe the project can use eminent domain, but "I couldn't guarantee that some attorneys, arguing in front of a judge in a courtroom far away from where they live, might determine otherwise."

But Greg Higdon, president of the Kentucky Association of Manufacturers and a former state Senator, argued against the revised bill, saying of the law: "If it ain't broke, don't fix it."

"We believe that the courts should be the ultimate decider, based upon the way business and other entities, both public and private, have had to operate in the past in the Commonwealth," he said.

Higdon, along with representatives of the Kentucky Oil & Gas Association, the Kentucky Chamber of Commerce and the American Petroleum Institute, opposed the measure and warned repeatedly that the legislation could have "unintended consequences."

"While we greatly respect private property rights and concerns, we believe that House Bill 31 could – could – make it too costly and time-consuming for companies to consider building a new pipeline in Kentucky," said Rusty Cress, speaking for the American Petroleum Institute.

The proposed legislation is "unnecessary and unprecedented regulation" for natural gas gathering lines that are likely to carry natural gas liquids, or NGLs, in the future, said Andrew McNeill, executive director of the Kentucky Oil & Gas Association.

But Tilley argued that existing pipelines wouldn't be affected by the House proposal.

"Whether they carry NGLs or not, but certainly if they carry NGLs, they're unaffected," Tilley said. "Eminent domain (or) whatever power was used to get those properties has already been put in place."

Tilley also took issue with the industry representatives' multiple warnings.

"This overly used phrase of ‘unintended consequences.' Anytime you want to kill a bill, what do you say?" he asked, before answering his own question. "Unintended consequences."

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