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Attorney general: No eminent domain usage for Kinder Morgan

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By Matthew Clark
mclark@scbiznews.com
Published Aug. 25, 2015

An opinion issued by the office of the S.C. attorney general said petroleum giant Kinder Morgan is not classified as a “pipeline company” and, thus, cannot use the power of eminent domain to obtain property.

The opinion, issued by Solicitor General Robert D. Cook, was presented at the request of the Aiken County legislative delegation of Sens. Tom Young and Shane Massey; and Reps. Bill Clyburn, Bill Hixon and Christopher Corley. The intent was to gain clarification on two state statutes that dictate the power of condemnation.

“Since all doubt must be resolved in favor of the landowner, we are doubtful that such statute conveys the right of condemnation in this instance,” Cook said in his opinion.

Kinder Morgan, based in Houston, is proposing the Palmetto Pipeline, which is part of a larger petroleum transport line that begins in Belton and ends in Jacksonville, Fla. According to Kinder Morgan, the pipeline will carry “refined petroleum products” from Baton Rouge, La., through Mississippi and the southern edge of South Carolina to North Augusta and Savannah in Georgia to end at Jacksonville. The section between Baton Rouge and Belton would be leased from Plantation Pipe Line Co.

“We respectfully disagree with the attorney general’s advisory opinion that a petroleum products pipeline company is not a ‘pipeline company’ under the clear language of the statute in question,” said Melissa Ruiz, manager of Kinder Morgan corporate communications.

The request for the opinion came on the heels of the Aiken County legislative delegation telling the Attorney General’s office that local homeowners along the proposed Palmetto Pipeline suggested Kinder Morgan representatives will “exercise their power of eminent domain and pay money into the court so the judge can determine a just compensation price,” according to a letter sent to the attorney general’s office from the lawmakers.

The statutes in question are S.C. Code Ann. Section 58-7-10 and 58-7-20, which grants the same property condemnation rights given to “telegraph and telephone companies” to companies classified as pipeline companies.

Kinder Morgan had a similar challenge to its status as a “public utility” in 2011 as the Nevada Supreme Court ruled in Kinder Morgan v. city of Reno that the company does not fall under the definition of a public utility even though the company is considered a common carrier.

However, Cook noted in his opinion that it was plausible to support the argument that Kinder Morgan can be considered a pipeline company. But, he said, the decision on characterizing Kinder Morgan as a pipeline company would be solely up to the courts.

Ruiz said the company is continuing to negotiate with property owners along the proposed route “for full fair compensation whenever possible.”

“Kinder Morgan is hopeful that the issue addressed in the Attorney General’s opinion never has to be determined in a court,” Ruiz said.

This latest advisory opinion came just months after the Georgia Department of Transportation denied Kinder Morgan’s application for a certificate of public convenience and necessity, the first step before eminent domain can be exercised by a pipeline company in Georgia. The Federal Energy Regulatory Commission did approve commercial aspects of the project, a crucial first step in getting approval in states affected by the project.

“Kinder Morgan continues to believe that the Palmetto Pipeline project will serve a necessary public purpose that will bring many benefits to South Carolina and its residents in the form of high-paying jobs, increased state and local tax revenues, and safe and efficient transportation of petroleum products,” Ruiz said.

Kinder Morgan and Palmetto Pipe Line Co. are also in the midst of cleaning up remnants of a petroleum spill near Belton. According to the S.C. Department of Health and Environmental Control, more than 44,000 gallons of product and water have been recovered from the spill site. Kinder Morgan said it has spent “nearly $2 million on restoration efforts” in the Belton area and continues to monitor and clean areas affected by the Dec. 8 spill.

In his conclusion, Cook said the statute was not clear and that legislative clarification may be necessary.

Ruiz said the company plans to continue communicating with affected landowners, elected officials and communities as the Palmetto Pipeline project progresses.

“We and our shippers remain committed to bringing an alternative source of supply to these markets and we will continue to make every effort to reach mutually beneficial agreements with stakeholders,” Ruiz said.

Reach Matthew Clark at 864-235-5677, ext. 107

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