INTRODUCTION

This appeal will determine whether the Franklin Circuit Court erred in issuing a
declaration of rights regarding a right of eminent domain that has never been exercised
nor threatened, sought by a plaintiff relying on associational standing, whose
representative "member" may not be a member at all and has no property that would be
taken even if the defendant has the right of eminent domain.
Assuming the Court were to conclude that there was a ripe, justiciable
controversy brought by a plaintiff properly relying on associational standing. this appeal
will address whether statutory language conferring the right of eminent domain to
companies developing pipelines to transport "oil, gas, or oil and gas products ... in public
service" applies to a common carrier transporting natural gas liquids, which are oil and
gas products, in a pipeline open to the public.
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ST A TEMENT CONCERNING ORAL ARGUMENT
Appellant believes that oral argument may be helpful to the Court in deciding the
issues presented. The issues regarding standing, ripeness, and justiciable controversy rest
on well-established legal principles, but, if the Court were to reach the merits of the
eminent domain question, oral argument may assist the Court in evaluating less-settled
issues such as the interplay between the "public service" requirement of KRS 278.502
and the "public use" requirement of KRS 416.675.
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STATEMENT OF POINTS AND AUTHORITIES
INTRODUCTION .............................................................................................................. i
STATEMENT CONCERNING ORAL ARGUMENT ................................................. ii
KRS 278.502 ........................................................................................................... ii
KRS 416.675 ........................................................................................................... ii
STATEMENT OF POINTS AND AUTHORITIES ..................................................... iii
STATEMENT OF THE CASE. ....................................................................................... 1
ARGUMENT ..................................................................................................................... 4
Blankenship v. Collier, 302 S.W.3d 665 (Ky. 2010) .............................................. 4
Veith v. Louisville, 355 S.W.2d 295 (Ky. 1962) ..................................................... 4
KRS 278.502 ........................................................................................................... 5
I. THE CIRCUIT COURT SHOULD HAVE REFUSED TO ISSUE A
DECLARATORY JUDGMENT BECAUSE THERE IS NO RIPE,
JUSTICIABLE CONTROVERSY. ..................................................................... 5
Kentucky Const. § 112(5) ........................................................................................ 5
KRS 418.040 ........................................................................................................... 5
Appalachian Racing, LLC v. Family Trust Foundation o.lKy., Inc., 423 S.W.3d
726 (Ky. 1014) ........................................................................................ 5,6
Com. v. Ky. Retirement Sys., 396 S.W.3d 833,839 (Ky. 2013) ......................... 5, 6
Veith v. Louisville, 355 S.W.2d at 297 (Ky. 1962) ................................................. 6
Texas Municipal Power Agency v. Johnston, 405 S.W.3d 776 (Tex. App. 1st
2013) ........................................................................................................... 7
Wilson & Wilson v. City Council of Redwood City, 191 Cal. App. 4th 1559 (Cal.
Ct. App. 2011 ) ............................................................................................. 7
Dravo v. Liberty National Bank and Trust, 267 S.W.2d 95 (Ky. 1954) ................. 7
KRS 416.61 O( 4) ...................................................................................................... 8
Ratliflv. Fiscal Court of Caldwell County, Ky., 617 S.W. 2d 36 (Ky. 1981) ........ 8
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KRS 418.065 ........................................................................................................... 8
Black v. Utter, 190 S. W. 2d 541 (Ky. 1945) ........................................................... 8
II. THE CIRCUIT COURT INCORRECTLY PERMITTED KURED TO
INVOKE ASSOCIATIONAL STANDING ........................................................ 8
Harrison v. Leach, 323 S.W.3d 702 (Ky. 2010) ..................................................... 9
Assoc. Indus. 0/ Ky. v. Com., 912 S.W. 2d 947 (Ky. 1995) .................................... 9
Interactive Gaming Council v. Com. ex ret. Bro'wn, 425 S.W.3d 107 (Ky. App.
2014) ........................................................................................................... 9
Bailey v. Preserve Rural Roads of Madison COZinty. Inc., 394 S.W.3d 350 (Ky.
2011) ........................................................................................................... 9
Com. v. Hughes. 873 S.W. 2d 828 (Ky. 1994) ..................................................... 10
Veith v. Louisville, 335 S. W.2d 297 (Ky. 1962) ................................................... 10
Health Am. Corp. a/Ky. v. Humana Health Plan, Inc., 697 S.W, 2d 946 (Ky.
1985) ......................................................................................................... 10
Rusman v. Luckett, 391 S.W. 2d 694 (Ky. 1965) .................................................. 11
Rose v. Counselfor Better Education, Inc., 797 S. W. 2d 186 (Ky. 1989) ........... 11
Hunt v. Wash. State Apple Advertising Comm 'n., 432 U.S. 333 (1977) ............... 12
KRS 273.161(7) .................................................................................................... 12
KRS 273.187(1) .................................................................................................... 12
KRS 273.257(1) .................................................................................................... 12
KRS 273.207 ......................................................................................................... 12
KRS 273.161(8) .................................................................................................... 12
KRS 273.211 ......................................................................................................... 12
Sierra Club v. IV/orton.405 U.S. 727 (1972) ................................................... 12, 13
Valley Forge Christian College v. Americans United/or Separation o.lChurch
and State, Inc .. 454 U.S. 464 (1982) ......................................................... 13
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III. BLUEGRASS PIPELINE HAS THE POWER OF EMINENT DOMAIN
UNDER KRS 278.502, BECAUSE IT IS A COMMON CARRIER OF
NATURAL GAS LIQUIDS, WHICH, AT A MINIMUM, ARE OIL AND
GAS PRODUCTS . ............................................................................................... 13
KRS 278.502 .................................................................................................... 13, 14
KRS 416.675 ......................................................................................................... 13
A. KRS 278.502 is Not Limited To Public Utilities Regulated by the PSc.
................................................................................................................... 14
KRS 278.502 ................................................................................. 14
KRS 278.485 ................................................................................. 14
KRS 446.140 ................................................................................. 14
Stephenson v. Woochvard, 182 S.W.3d 162, 169-70 (Ky. 2005) .. 15
B. Bluegrass Pipeline, As a Common Carrier, is Providing a Public·
Service, and the Pipeline is a Public Use ............................................... 15
KRS 278.502 ................................................................................. 15
KRS 416.67S ................................................................................. 16
1. The "Public Service" and "Public Use" Questions Turn On the
Same Analysis . .............................................................................. 16
KRS 278.502 ......................................................................................................... 16
KRS 416.675 ......................................................................................................... 16
KRS 416.67S(2)(d) ............................................................................................... 16
KRS 416.67S(2)(e) ................................................................................................ 16
2.
Public Service, and the Pipeline 'would be For a Public   ~ e . ...... 16
49 U.S.c. § 1(1) (1988) ........................................................................................ 17
49 U.S.c. § 1(3) (1988) ........................................................................................ 17
49 If.S.C. § 60S02 ................................................................................................. 17
ICA, FERC.GOV, http://www.ferc.gov/legallmaj-ord-reg/ica.pdf (last accessed
July 23, 2014) ............................................................................................ 17
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49 U.S.c. § 1(4) (1988) ........................................................................................ 17
49 U.S.c. § 6(1) (1988) ........................................................................................ 17
18 C.F.R. 342.1 ..................................................................................................... 17
18 C.F.R. 341.2 ..................................................................................................... 17
49 U.S.C. § 1(5)(1988) ......................................................................................... 17
18 C.F.R. 341.11 ................................................................................................... 17
49 U.S.C.   3(1) (1988) ....................... ,",.',.,.,""", .............. , ..... , ........ , ................. 17
NICHOLS ON EMINENT DOMAIN Ch. 7 § 7.05 (Matthew Bender, 3d ed.) ........ 17, 18
Chesapeake Stone Co. v. Moreland, 126 Ky. 656 (Ky. 1907) .............................. 18
EQT Gathering, LLC v. Tract oj Prop. Situated in Knott County, 970 F. Supp. 655
(E.D, Ky. 2013) ............................................................................................... 18, 19
KRS 278.502 ............................................................................................. 19,20,21
KRS 416.675 ................................................................................................... 20,21
"Milam v. Viking Energy Holdings, 370 S.W.3d 530 (2012) ................................. 20
In re Langford, 32 B.R. 746 (Bankr. W.O. Ky. 1982) .................................... 20,21
KRS 278.470 ................................................... , .......................................... , ... , 20, 21
C. NGLs are oil, gas, or oil and gas products under KRS 278.502 . ........ 22
KRS 278.502 .............. , ...... , ............... , .......................................... , 22, 24, 25
Edward S. Gilson, Jr., Oil and Gas Production, 1 KENTUCKY
MINERAL LAW 4 (Short and Thomas eds, 1986),."",.,."", ... 22
What are natural gas liquids and hOvlI are they used?, U,S. ENERGY
INFORMATION ADMINISTRATION (ApriI20, 2012),
http://www,eia.gov/todayinenergy/detai1.cfm?id=5930 ,.,.".,""'" 22
40 C.F.R. § 60,631 .................................................................................... 22
10 C,F,R, § 500.2 ............ , ......................................................................... 22
40 CFR 60.631(3) , ................ , ................................... " .... , ..................... , ... 23
BLACK'S LA W DICTIONARY 1328 (9th ed, 2009) ................................... , .. 23
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KRS 353.51 0 ............................................................................................. 23
49 U.S.C. § 601O! et. seq ................................................... ....................... 23
49 C.F.R. § 195.2 ...................................................................................... 23
KRS 143A.OIO(2) ..................................................................................... 24
http://dictionary.reference.comlbrowse/rock?s=t ..................................... 24
http://dictionary.reference.comlbrowse/stone?s=t .................................... 24
Afid-American Pipe Line Co. v. lvfissouri P. R. Co., 298 F. Supp. 1112 (D.
Kan. 1969) ..................................................................................... 24
AIilam v. Viking Energy Holdings, 370 S.W. 3d 530 (2012) .................... 25
CONCLUSION ............................................................................................................... 25
APPENDIX .................................................................................................................... A-I
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STATEMENT OF THE CASE
Appellant/Defendant Bluegrass Pipeline, LLC ("Bluegrass Pipeline") plans to
construct an underground pipeline that will transport natural gas liquids ("NGLs") in
interstate commerce (the "Pipeline"). I NGLs are hydrocarbons such as ethane, propane,
butane, and pentane. some of which (e.g., butane) can be burned for fuel, but which
generally are more valuable as raw materials to produce a range of products such as
plastics and fertilizers.
2
The safe and efficient transport ofNGLs by pipeline is an
essential component of the nation's industrial strategy.3 The Pipeline will be used for
safer transport ofNGLs (currently being transpOlied primarily by road, rail, and barge)
between producers of the NGLs and the petrochemical processing industry, including
producers and manufacturers in Kentucky.4 Contrary to the Circuit COUli's conclusion
that Bluegrass Pipeline is a private actor serving purely private interests, as will be
discussed below, Bluegrass Pipeline is a common carrier that will furnish transpOliation
services to the public on non-discriminatory terms at federally-approved rates.
In developing the Pipeline route, Bluegrass Pipeline has approached landowners
to discuss voluntary agreements to purchase right-of-way easements for the construction
of the Pipeline.
s
When property owners have declined to grant easements, Bluegrass
Pipeline has revised the proposed Pipeline route to avoid their property.6 This is
precisely what occurred with Franklin County landowner, Peru1Y Greathouse, on whom
I R.176 2. References to the appellate record are designated by "R" and page number.
2 R.n3 3.
1 R.I78-79, 225-26.
4 R.176 P 2. The primary transport, at least initially, would be between producers extracting NGLs from
the   and Utica shale formations in Pennsylvania, West Virginia, and Ohio and processors located
on the Gulf Coast. Id. However, others will be able to connect to the Pipeline along its path, as recognized
by at least one substantial Kentucky processor-Westlake Chemical Corporation-which has recognized
that it will be "able to interconnect with the Pipeline." R.I78.
5 R.176-77 3.
6 Id.
1
Appellee/Plaintiff Kentuckians United To Restrain Eminent Domain, Inc. ("KURED")
exclusively relied to establish associational standing in this lawsuit.
7
Bluegrass Pipeline
met with Mrs. Greathouse and her husband in October 2013 to discuss the Pipeline and to
express interest in purchasing right-of-way easements from them.
s
In November 2013,
the Greathouses declined to grant an easement to Bluegrass Pipeline.
9
In response,
Bluegrass Pipeline revised its map to reroute the Pipeline, which eliminated the need to
cross the property owned the Greathouses.
IO
Therefore, Bluegrass Pipeline is not seeking
to acquire an easement from Penny Greathouse and made that decision not to seek an
easement from her prior to the filing of this action. I I
Even though Bluegrass Pipeline stopped seeking an easement from Mrs.
Greathouse and despite the fact that Bluegrass Pipeline had not initiated or threatened
eminent domain proceedings against her or any other Kentucky landowner, KURED fiied
this lawsuit on December 5, 2013 seeking a declaration that Bluegrass Pipeline does not
have the power of eminent domain. 12 KURED owns no property and has no individual
stake in what happens with the Pipeline. Instead, KURED relied on the doctrine of
associationaI standing to enable it to act as a plaintiff. 13 To attempt to establish
associational standing and the existence of a justiciable controversy, KURED relied on an
affidavit from Mrs. Greathouse stating that she is a member of KURED and that she is
7 R.lS0-S2.
8 R.lS0 ~ 2.
9 R.lSl ~ 4.
10 [do
II [do See also R.lS2 ~ S.
12 R.l.
1 3 R   2 ~ 3  
2
uncertain as to whether or not Bluegrass Pipeline has the right of eminent domain,
affecting her willingness to negotiate an easement with Bluegrass Pipeline. 14
              to explore   basis for KURED-; s assertion
". '!"-
of associational standing and the existence of a justiciable controversy through discovery.
Bluegrass Pipeline served discovery requests designed to obtain information regarding
KURED's members (if any), including whether they owned any real estate on the
proposed pipeline route, and whether there was any controversy between Bluegrass
Pipeline and anyone associated with KURED (or anyone else).15 KURED's objections
and responses disavowed reliance on any "member" other than Mrs. Greathouse and
raised questions as to whether KURED had any members based on the lack of reference
to any members in KURED's governing documents and whether KURED was formed for
anything other than the filing of this lawsuit against this defendant 16
Bluegrass Pipeline promptly requested depositions of Mrs. Greathouse and of
Lisa Aug, KURED's chairman of the board who verified KURED's written interrogatory
responses. KURED refused to provide depositions and moved for summary judgment--
not even three months after the complaint was tiled.
17
Bluegrass Pipeline moved the
Circuit Court to continue the hearing and to compel discovery regarding those threshold
jurisdictional issues.
18
The Circuit Court denied Bluegrass Pipeline's motion to compel
14 R.ll.
15 R.28-47.
16 R.1341nt. No 2; R.139 Req. No.2; R.143-48; R.1351nt. No.6.
17 RA8.
18 R.112.
19 RJ 52 .. _"., .... _ ' ..
3
On March 25, 2014, following briefing by the parties and a hearing on March 10,
2014, the Circuit Court entered an opinion and order granting summary judgment and
ruling that Bluegrass Pipeline does not have the right to invoke eminent domain.
2o
ARGUMENT
This is an appeal from a summary judgment entered by the Franklin Circuit Court.
This Court reviews the summary judgment de novo to determine w h   t h   ~ the Circuit
Court properly concluded that there were no genuine issues of material fact and that
KURED was entitled to judgment as a matter of law. Blankenship v. Collier, 302 S. W.3d
665,668 (Ky. 2010). The Court "must also consider whether the Circuit Court gave
[Bluegrass Pipeline] an ample opportunity to respond and complete discovery before the
court entered its ruling." Jd. Here, the Circuit Court expressly refused to allow Bluegrass
Pipeline to complete discovery, or even take just two depositions to address critical
jurisdictional questions of standing and justiciability.
Beyond the Circuit Court's decision to deprive Bluegrass Pipeline of relevant
discovery, summary judgment was improper here for three basic reasons. First, KURED
failed to present a ripe, j Llsticiable controversy. Bluegrass Pipeline has not commenced
or threatened eminent domain proceedings against anyone, and the speculative possibility
that it might consider doing so in the future provides no "grist for the judicial mill."
Veith v. Louisville, 355 S.W.2d 295,299 (Ky. 1962). Second, KURED failed to establish
associational standing because the sole "member" on whom KURED relied to establish
associational standing has no standing in her own right, and because the doctrine of
associational standing does not exist to allow a corporation to be formed solely to pursue
a lawsuit. Third, even if these jurisdictional deficiencies did not exist, the Circuit Court
20 Opinion and Order R.259 (attached in Appendix at Tab I).
4
erred in concluding that Bluegrass Pipeline lacks the power of eminent domain because
Bluegrass Pipeline-a federal common carrier providing services to the public-falls
squarely within the grant of eminent domain conferred on operators of pipelines carrying
oil, gas, or oii and gas products in public service by KRS 278.502.
I. THE CIRCUIT COURT SHOULD HAVE REFUSED To ISSUE A DECLARATORY
JUDGMENT BECAUSE THERE IS No RIPE, JUSTICIABLE CONTROVERSy.
21
This lawsuit lacks the most fundamental prerequisite for a declaratory judgment
action, or any action in Circuit Court, which is the existence of a present and actual
controversy. Circuit Courts in Kentucky have original jurisdiction over "justiciable
causes" and are empowered to issue a declaratory judgment only when the case involves
"an actual controversy." Kentucky Const. § 112(5); KRS 418.040. "For a cause to
justiciable, there must be a present and actual controversy presented in good faith by
parties with adverse interests in the subject to be adjudicated." Appalachian Racing. LLC
v. Family Trust Foundation a/Ky .. Inc., 423 S.W.3d 726, 735 (Ky. 2014).
The Circuit Court concluded that this case presents ajusticiable controversy. To
do so, the Circuit COllli misinterpreted the Appalachian Racing opinion. Referring to
that decision, the court stated that "the touchstone of justiciability is the presence of an
actual controversy, vigorously contested by the parties." (Op., at 11.) The Circuit Court
focused primarily on its conclusion that the parties are "truly adversarial," (id.), but that
alone does not establish justiciability. If the existence of adverse parties were the sole
requirement, then every situation in which two parties disagree would justiciable. For a
cause to be justiciable, one party must occupy a position that would "impair, thwaIi,
obstruct, or defeat the plaintiff in his rights." Com. v. Ky. Retirement Sys., 396 S.W.3d
21 Appellant raised this argument below at R. 160-164 and V.R. 3-10-14,
5
833, 839 (Ky. 2013) (quotation omitted). There must be an "existing state of facts upon
which [the parties'] rights may be fixed." Veith, 355 S.W.2d at 297. Ajusticiable
controversy cannot rest on disagreements over hypothetical possibilities. See id.
The Appalachian Racing case, for example, involved a challenge to regulations
adopted by the Kentucky Racing Commission and the Kentucky Revenue Cabinet. See
423 S. W.3d at 730-31. The Family Trust Foundation challenged those regulations and
asked the court to declare them invalid. Id. at 731. The case presented a justiciable
controversy because it \vas a dispute between the litigants over the present validity of
regulations that had actually been adopted. not over some future. speculative action by
state government. c";ee id. at 732-35. Cumpare .vith Veith. 355 S. W.2d at 297-99
(holding that no justiciable controversy existed when there was merely a possibility that
various public entities might take certain actions in the future).
The present and actual nature of the dispute in Appalachian Racing distinguishes
that case from this one. Here, KURED sought and obtained a declaratory judgment that
Bluegrass Pipeline does not have the right to use eminent domain to acquire easements
for the construction of the Pipeline. Unlike the patiies in Appalachian Racing who had
actually adopted regulations, Bluegrass Pipeline has not taken a single step to initiate
eminent domain proceedings against anyone in Kentucky, nor has it threatened such
action. The Circuit Court referenced comments by Bluegrass Pipeline representati-ves
that the company believes that it has eminent domain power, but does not like to use it.
(Op., at 9.) Expressing an opinion as to the ability to invoke eminent domain is not a
present action to assert that right by actually filing a condemnation action.
6
Although no Kentucky appellate decision has addressed this precise situation,
courts from other jurisdictions have held that the issue ofa condemnor's right to exercise
eminent domain is not ripe for judicial review until the filing of a condemnation action.
In Texas Municipal Pm-ver Agency v. Johns/on, 405 S.W.3d 776, 783-85 (Tex. App. 1st
2013), the court held that there was no ripe, justiciable controversy because the municipal
power agency had merely negotiated with the landowner and expressed a desire to use
eminent domain at some point. Another court reached a similar conclusion in Wilson &
'Wilson v. City Council ot'RedH'ood City, 191 Cal. App. 4th 1559.1581-85 (Cal. Ct. App.
2011), rejecti'ng as unripe and non-justiciable the pb.intiff's claim for declaratory relief to
address the ~ i t y   s possible future use of eminent domain.
In the absence of actual, present condemnation activity by Bluegrass Pipeline, the
Circuit Court erroneously speculated as to what Bluegrass Pipeline might do in the future.
(E.g., Op., at 8 (noting that Bluegrass Pipeline "could change its mind at any time").)
The Circuit Court should not have relied upon speculation as the factual basis for a
declaratory judgment. "A declaratory judgment should not, or cannot, be made as to
questions which may never arise or which are merely advisory, or are academic,
hypothetical, incidental, or remote, or which will not be decisive of any present
controversy." Dravo v. Liberty Vational Bank and Trust, 267 S.W.2d 95, 97 (Ky. 1954).
Referring to Bluegrass Pipeline's efforts to acquire easements voluntarily and
rerouting the Pipeline to accommodate those not wishing to sell as a "tactic", the Circuit
Court expressed concern that this "dispute is capable of repetition yet evading review."
(Op., at 10.) That concern is unfounded. If Bluegrass Pipeline ever decides to file
condemnation proceedings instead of rerouting the Pipeline as needed, its authority to
7
invoke eminent domain cannot evade review. A landowner has the right to challenge a
condemnor's power to condemn the property in the answer to the condemnor's petition.
KRS 416.61 O( 4). If a landowner challenges condemnation authority, the cOLlli is required
to decide that issue ;;forth\vith" before condemnation can proceed any further. Id. Either
party may immediately appeal the decision on the petitioner's condemnation authority.
Ratl!flv. Fiscal Court of Caldwell County, Ky., 617 S.W. 2d 36, 38-39 (Ky. 1981).
Since the court is required to decide the petitioner's condemnation authority at the outset
of any condemnation action, the landowner will not incur litigation costs associated with
the vaJuatio'l phase ofthe case unless a court determines the right to condemn.
This efficient statutory procedure provides the landowner with a quick judicial
determination of condemnation authority and eliminates the need for a preemptive attack
on an unexercised power. "The Court may refuse to exercise the power to declare
rights ... if the declaration or construction is not necessary or proper at the time under all
the circumstances." KRS 418.065. And, a court may not exercise jurisdiction under the
Declaratory Judgment Act when "another statutory remedy has been especially provided
for the character ofthe case presented." Black v. Utter. 190 S. W.2d 541, 542 (Ky. 1945).
Such a remedy exists under the eminent domain statutes that allow the landowner to
immediately challenge the petitioner's condemnation authority. There. the evaluation of
eminent domain 'vvhen the right is actually invoked does not require a court to improperly
issue an advisory opinion on a hypothetical condemnation that may never be filed.
II. THE CIRCUIT COURT INCORRECTLY PERMITTED KURED To INVOKE
ASSOCIATIONAL ST ANDING. 22
A plaintiff cannet invoke the jurisdiction of the courts without establishing
22 Appellant raised this argument below at R. 157-160 and V.R. 3-10-14.
8
  ajudieially recogni zable interest in the subject matter of the case.
Harrison v. Leach, 323 S.W. 3d 702, 705 (Ky. 2010). A plaintiffmust establish a
"personal stake" in the litigation and cannot rel y on the rights of OThers to establish
standing. See Assoc. Indus. olKy )'. Com, 912 S.W. 2d 947, 951 (Ky. 1995) . The
standing requirement ensures that a party with an actual stake in the outcome of the case
litigates vigorousl y and effectively to adjudicate that personal interest. Interactive
Gaming Council v. Com. ex rei. Brown, 425 S.W.3d 107, 112 (Ky. App. 20 14). The
requirement of standing is rooted in Kentucky's constitutional requirement that courts
may only decide cases or controversies. See id at lIS.
KURED is not a landowner, and it therefore has no personal stake in determining
whet her Bluegras'; Pipeline has the right to use eminent domain to condemn land in
Kentucky. Thus, KURED relies on associati onal standing as an exception to the personal
stake requirement. To establi sh associational standing, KURED must prove that "( I) its
members otherwise woul d have standing to sue in their own right; (2) the interests it
seeks to protect are germane to its purpose; and (3) neither the claim asserted nor the
relief requested requires the pal1icipation of the individual members." Bailey v. Preserve
Rural Roads olMadison County, Inc, 394 S.W.3d 350, 356 (Ky. 20 11 ). Kentucky now
fol lows the federal law elements cited in Bailey. Interactive Gaming. supra at lIS. The
Circuit Ceurt enoneously concluded that "KURED has associational standing through its
member, Penny Greathouse, who has indi vidual standing as a landowner." (Op., at 5.)
Since KURED relies solely on Mrs. Greathouse to establish its associational
standing, it must demonstrate that she would have standing to sue in her own right. Sh,o
would not have standi ng. Bluegrass Pipeline approached Mrs. Greathouse to discuss
9
acquiring an easement for the Pipeline
23
Bluegrass Pipeline never raised the topic of
eminent domain, but reluctantly responded to her repeated inquiries about that subject
2 4
When she declined to sell an easement, Bluegrass Pipeline rerouted the Pipeline to avoid
her property25 Bluegrass Pipeline reiterated during the summary judgment hearing that it
will not seek to obtain an easement from Mrs. Greathouse. These undisputed facts
establish that Mrs. Greathouse has no present personal stake in the Circuit Court's
adjudication as to whether or not Bluegrass Pipeline has the right to invoke eminent
domain in Kentucky Th us. KURED has no standing either.
Hoping to manufacture an actual or present controversy, KURED relied on Mr8.
Greathouse's alleged uncertainty as to whether Bluegrass Pipel ine has the right of
eminent domain and its effect on her negotiations regarding a potential, voluntary sale of
an easement to Bluegrass Pipeline
26
Even if such uncertainty once could have
established justiciable controversy, that uncertainty was moot when Bluegrass Pipeline
decided not to pursue an easement from her. See Com. v. Hughes , 873 S. W. 2d 828, 829-
30 (Ky. 1994). The Circuit Court found that Mrs. Greathouse had standing based upon
the possibility that Bluegrass could reroute the Pipeline and reassert its right to condemn
her property. (Op., at 7.) The mere possibilitv that Bluegrass Pipeline might seek to
acquire an easement from Mrs. Greathouse either through negotiations or condemnation
does not establish ajusticiable controversy. Veith, 335 S.W.2d at 297. See also Health
Am. Corp. ojKy. v. Humana Health Plan, [nc., 697 S.W. 2d 946, 947-48 (Ky. 1985)
(holding that fears or expectancies of potential harm do not create standing).
23 R.ISO l' 2
24 R. ISO- SI ~ ~ 2-3 .
25 R.IS2 11 8
2 6 R   I I ~ 5  
10
The Circuit Court also stated, sua sponte. that the location of a pipeline "carrying
highly dangerous and toxic chemicals on the adjoining property gives Mrs. Greathouse a
continuing and real substantial interest in adjudicating Bluegrass' legal right to utilize
eminent domain to obtain an easement from her neighbors." (Op., at 7.) First, there is
no evidence or assertion in the record regarding any threat to land related to a highly-
regulated pipeline or that NGLs are "highly dangerous and toxic." Second, Mrs.
Greathouse did not express any concern about the substances that would be shipped
through the Pipeline or its possible location on adjacent property. The sole concern that
Mrs. Greathouse expressed in her affidavit was the effect that her alleged uncertainty
about eminent domain might have on her negotiations with Bluegrass Pipeline.:!7 Since
there is no       that Mrs. Greathouse will be engaged in negotiations with
Bluegrass Pipeline regarding an easement, she does not have a stake in the outcome of
this litigation. Therefore, the Circuit Court should have rejected KURED's claim of
associational standing based on Mrs. Greathouse.
Although KURED claims associational standing solely through Penny
Greathouse, the Circuit Court also gratuitously concluded that all members of KURED
have standing as citizens and taxpayers. (Op., at 8.) The cases cited by the Circuit Court
involve citizen and taxpayer challenges to actions taken by the government that regulate
the public at large. See Rusman v. Luckett, 391 S.W. 2d 694 (Ky. 1965); Rose v. Counsel
for Better Education. Inc., 797 S.\\!. 2d 186 (Ky. 1989). The Circuit Court's reliance on
those cases was inappropriate because Bluegrass Pipeline is not a governmental entity,
and, moreover, it has not attempted or threatened to use the power of eminent domain.
27 R.Il.
11
Finally. KURED does not satisfy the legal requirements to qualify for the naITOW
docTrine of associational standing. Associational standing was created for membership
associations (e.g., trade associations, labor unions, or bar associations). See Hunt v.
Wash. State Apple Advertising Comm 'n., 432 U.S. 333, 345 (1977). KURED is a
corporation formed for the sole purpose of filing this lawsuit that has done nothing other
than filing this action.
28
While certain corporations can invoke associational standing to
represent their members, KURED has faiied to demonstrate that it has any members to
represent. A member of a non-profii corporation is "one having membership rights in a
corporation in accordance with the provisions of its articles of incorporation or bylaws."
KRS 273.161(7). A non-profit corporation is required to designate all classes of
members, or state that the corporation has no members, in its articles of incorporation or
its bylaws. KRS 273.187( 1). KURED has no bylaws, and its articles of incorporation do
not describe any classes of members, nor do they state that there are no members.
29
The
failure to establish bylaws at the organizational meeting of KURED's board of directors,
see KRS 273.257(1), and the failure to include statutorily-required inforrnation regarding
whether KURED has actual members, see KRS 273.187( 1), call the legitimacy of
KURED as an entity into question. Regardless, KURED has no members with an injury
in fact on whom to base associational standing.
30
Unless an organization truly represents an injured party, it is not meaningfully
different from the organization in Sierra Club v. Morton, which sought standing as a
28 See R.135 lnt. No.6.
29 R.139 Req. No.2; R 143--48.
}O KURED does have dIrectors, but a director ofa non-profit corporation does not need to be a member of
the corporation. KRS 273.207. A director ofa non-profit corporation is simply responsible for overseeing
the ::tffairs of the corporation and can be virtually anyone. See KRS 273.161 (8). 273.207, 273.211.
KURED presented no facts to show that its directors or anyone else have any "indicia of membership in an
organization." Compare with Hunt, 432 U.S. at 344--45 (listing fact that only constituents of agency could
be elected to leadership as factor supporting "indicia of membership in an organization").
12
"representative of the public"-an assertion that the U.S. Supreme Court rejected,
holding "that a mere interest in a problem ... is not sufficient by itself to confer
standing." 405 U.S. 727, 736-39 (1972). The judicial process should not be converted
"into no more than a vehicle for the vindication of the value interest of concerned
bystanders." Valley Forge Christian College v. Americans Unitedfor Separation of
Church and State, Inc:, 454 U.S. 464, 473 (1982). The mere fact that KURED was
organized to challenge Bluegrass Pipeline's ability to exercise eminent domain fails to
create jurisdiction without a member of KURED who has standing in her own right.
HI. BLUEGRASS PIPELINE HAS THE POWER OF EMINENT DOMAIN UNDER KRS
278.502, BECAUSE IT IS A COMMON CARRIER OF NATtJRAL GAS LIQUIDS,
WHICH, AT A MINIM liM, ARE OIL AND GAS PRODlICTS.
3
\
Assuming the Court were to conclude that the Circuit Court properly determined
that there was a ripe, justiciable controversy brought by a plaintiff with proper standing,
the Court still should reverse the Circuit Court's summary judgment because it
erroneously holds that Bluegrass Pipeline lacks the power to exercise eminent domain.
The source of Bluegrass Pipeline's ability to exercise eminent domain is KRS
278.502. This statute confers the right of eminent domain upon "[a]ny corporation or
partnership organized for the purpose of ... constructing, maintaining, or operating oil or
gas wells or pipelines for transporting or delivering oil or gas, including oil and gas
products, in public service."" KP,-S 278.502. In addition to the statute creating the
substantive right of eminent domain, KRS 416.675 also requires that any exercise of
eminent domain be for a "public use."
The Circuit Court rejected Bluegrass Pipeline's ability to exercise eminent
domain on two basic grounds. First, the court concluded that KRS 278.502 is limited to
31 Appellant raised this issue below at R. 164-174 and V.R. 3- 10-14.
13
utilities regulated by the Public Service Commission ("PSC"). (Op .. at 11-15.) Largely
because of its conclusion that Bluegrass Pipeline is not a utility regulated by the PSC, the
Circuit Court concluded that Bluegrass Pipeline would not be acting in "public service"
or providing a "public use." (Jd. at 14-16.) The Circuit Court erred by grafting a public
utility requirement onto KRS 278.502 that is contrary to the plain language of the statute.
The Circuit Court also erred in concluding that Bluegrass Pipeline, a federally-regulated
common carrier required to make its pipeline available to the public, will not be acting in
public service or providing a public use.
A. KRS 278.502 is Not Limited To Public Utilities Regulated by the PSc.
The first issue to address is the Circuit Court's erroneous conclusion that KRS
278.502 applies only to public utilities regulated by the PSc. While acknowledging that
nothing in KRS 278.502 actually refers to the PSC or utilities in any way, the Circuit
Court relied on the fact that KRS Chapter 278 is titled "Public Service Commission" and
concluded that the chapter "is dedicated to 'Public Utilities.'" (Op., at 11-12.) The court
stated that the PSC protects consumers and regulates public utilities and cited a 1992
amendment to KRS 278.485 (concerning PSC approval of rates to furnish gas to
landowners) as somehow reflecting legislative intent to limit KRS 278.502 to PSC-
regulated utilities. (hi. at 12-13./ The court also concluded that the reference to "public
service" in   ~ R ~ S 278.502 "strongly supports a finding that the power of eminent domain
in KRS 278.502 is limited to companies regulated by the PSc." (ld. at 14.)
The Circuit Court's conclusions contradict basic canons of statutory construction.
"Title heads. chapter heads, section and subsection heads or titles, and explanatory notes
and cross references, in the Kentucky Revised Statutes, do not constitute any part of the
law .... " KRS 446.140. Accordingly, the Circuit Court's reliance on the title of Chapter
14
278 directly contradicts Kentucky law. Instead, as the Kentucky Supreme Court has held
time and again, "The most logical and effective manner by which to determine the intent
of the legislature is simply to analyze the plain meaning of the statutory language: 'resort
must be had first to the words, which are decisive if they are clear. '" Stephenson v.
Woodward, 182 S.W.3d 162, 169-70 (Ky. 2005) (quotation omitted). The plain language
of KRS 278.502 makes no reference to public utilities or regulation by the PSC, but
refers unambiguously to "any" corporation or partnership that constructs, maintains, or
operates a pipeline to transpOli oil or gas, including oil and gas products, in public
service. If Bluegrass Pipeline fits within the scope of the statutory language, it is
immaterial whether it is a public utility regulated by the PSC.
Had the General Assembly intended to limit KRS 278.502 to Kentucky
jurisdictional utilities, it would have done so in the statute. Indeed, when it amended the
current version of KRS 278.502 in 1992, the General Assembly declined to pass a
proposal that would have limited the statute to utilities and required purposes approved
by the PSc.
32
The Circuit Court erred in imposing a public utility requirement onto KRS
278.502 that does not appear in the statute itself
B. Bluegrass Pipeline, As a Common Carrier, is Providing a Public
Service, and the Pipeline is a Public Use.
Because there is no extra-statutory requirement in KRS 278.502 that Bluegrass
Pipeline be a public utility regulated by the PSC, detelmining whether Bluegrass Pipeline
32 See R.227-28. Of course, the failure to adopt an amendment could occur for various reasons. The
uncertainty of resorting to legislative history is why the fundamental axiom in statutory construction is to
apply the statute as written, which is all that Biuegrass Pipeline asks here. Nevertheiess, the Circuit Court
relied on the fact that the General Assembly amended an entirely different statute in 1992 as somehow
evincing legislative intent to impose regulatory oversight on entities given a right of eminent domain by
KRS 278.502. It would be quite puzzling of the General Assembly to express intent to impose a public
utility requirement on KRS 278.502 by amending a different statute and declining to amend KRS 278.502
itself to express that intent.
15
has the right of eminent domain rests on the language of KRS 278.502 itself and the
"public use" requirement imposed by KRS 416.675 on all exercises of eminent domain.
Thus, it is necessary to determine whether Bluegrass Pipeline will be operating a pipeline
to transport oil, gas, or oil and gas products in public service and the related concept of
whether the exercise of eminent domain would be for a public use. In essence, the
Circuit Court held that Bluegrass Pipeline would not be transporting oil, gas, or oil and
gas products in public service or taking property for a public use because Bluegrass
Pipeline is a private company that would not be providing service tl) "consumers" in
Kentucky. (See Op., at 14-16.) This analysis is contrary to law.
/. The "Public Service" and "Public Use" Questions Turn On the
Same Analysis.
As a threshold matter, the questions of public service (the term used in KRS
278.502) and public use (the term used in KRS 416.675) rest on the same analysis. KRS
278.502, which refers to public service, creates the substantive right of eminent domain.
KRS 416.675 merely ensures that any exercise of eminent domain, whether through KRS
278.502 or any other statute, be for a public use, rather than a private one. KRS 416.675
detines public use to include use of the property for operation of a common carrier. KRS
416.675(2)(d). KRS 416.675 also defines public use to include any use expressly
authorized by statute. KRS 416.67S(2)(e). As discussed below, Bluegrass Pipeline is a
common carrier, which is a public use under KRS 416.675(2)(d). Because KRS 278.502
expressly creates a right of eminent domain for operating pipelines transporting oil, gas,
or oil and gas products, that statutory authorization also is a public use, as defined by
KRS 416.675(2)(e) (i.e., a use expressly authorized by statute).
2. As a Common Carrier, Bluegrass Pipeline would be Providing a
Public Service, and the Pipeline would be For a Public Use.
16
Because it will transport NGLs in interstate commerce, Bluegrass Pipeline is a
common carrier under the Interstate Commerce Act ("ICA") and is subject to regulation
by the Federal Energy Regulatory Commission ("FERC"). See 49 U .S.c. § 1 (1) (1988);
49 U.S.c. § 1(3) (1988).33 As a common carrier, Bluegrass Pipeline is required by
federal law to "to provide and furnish transportation upon reasonable request therefore:"
See 49 U.S.C. § 1(4) (1988). Bluegrass Pipeline is required to establish initial rates for
the transportation ofNGLs and to keep those rates on file with FERC. See 49 U.S.c. §
6(1) (1988); 49 U.S.c. § 60502; 18 C.F.R. 342.1; 18 C.F.R. 34l.2. If the public rates
established by Bluegrass Pipeline for its transportation services are not 'just and
reasonable," then FERC can reject them. See 49 U.S.c. § 1(5)(1988); 18 C.F.R. 341.11.
AdditionalIy, Bluegrass Pipeline cannot "make, give, or cause any undue or unreasonable
preference or advantage to any particular person, company, firm, corporation,
association, locality, port, [or etc.] .... " 49 U.S.C. § 3(1) (1988).
The regulatory scheme to which Bluegrass Pipeline is subject and its status as a
common carrier mean that Bluegrass Pipeline will provide service to the public--
including the public in Kentucky. The Circuit Court took issue with the fact that
Bluegrass Pipeline is a private company, (Op. at 14), but this is immateria1.
34
"[T]o be'
considered a public service, the crucial fact is not that the taking is made by either a
public or Ci private corporcltion, nor is it crt-Ictal that the serv'ice prov'ided is for free or for
a fee." NICHOLS ON EMINENT DOMAIN Ch. 7 § 7.05 (Matthew Bender. 3d ed.) (emphasis
J3 FERC has all of the duties and powers related to the establishment ofa rate or charge for the
transportation ofoiliNGLs by pipeline that were vested on October I, 1977 in the Interstate Commerce
Commission. See 49 U.s.c. § 60502. FERC regulates interstate oil and NGL pipelines based on the ICA
as it existed on October I, 1977. A copy of the 1977 version of the ICA is available on FERC's website as
an appendix to the 1988 edition of the U.S. Code. See ICA, FERC.OOV, http://www.ferc.gov/legallmaj-oi"d-
reg/ica.pdf(last accessed July 23,2014).
34 The court also characterized that Bluegrass Pipeline as being "unregulated," but this has no support in the
record or the law. As set forth above, FERC regulates NGL pipelines.
17
added). Instead, "to be a public service, the public must have a right to make use of the
service offered at reasonable rates and without discrimination. Serving the public cannot
be the arbitrary choice or whim of the condemning party." NICHOLS § 7.05. That
describes the essential character of a common carrier like Bluegrass Pipeline.
The leading treatise on eminent domain cited above echoes the analysis of
Kentucky's highest court in Chesapeake Stone Co. v. Moreland, 126 Ky. 656 (Ky. 1907).
In defining what makes a "public use," the court recognized that it was likely that there
would be relatively few users of the tramway at issue. Id. at 665. The court held.
however: "It is not the number of people who use the property taken under the law of
eminent domain that constitutes the use of it a public one; nor does the fact that the
benefits will be in a large measure local enter into the question." Jd. Rejecting notions
that these sorts of questions determine whether there is a public use, the court distilled a
simple test: "The controlling and decisive question is: Have the public the right to its use
upon the same terms as the person at whose instance the way was established? If they
have, it is a public use; if they have not, it is a private one." Id. Here, it is undisputed
that Bluegrass Pipeline will be available to the public on terms pre-approved by FERC.
It also is immaterial that, literally speaking, every member of the public would not
have a need for Bluegrass Pipeline's services. In EQT Gathering, LLC v. Tract afProp.
Situated in Knott County, 970 F. Supp. 665, 663 (E.D. Ky. 2013), the court held that
"[h]ighly regulated pipelines that carry highly t1ammable materials need not be fully open
to the public to be a public use." Jd. at 19-20. Rather, it is sufficient that the pipeline be
"available for use" by the relevant portion of the public, i. e., natural gas transportation
18
companies. Id. at 20. As in EQT Gathering, the relevant portion of the public will be
able to use the Pipeline.
The Circuit Court also decried a perceived lack of Kentucky users of the Pipeline.
(Op., at 14.) The test is not whether a common carrier can present a list of individuals
and entities that will use its services. What matters is whether the public has the right to
use the facilities, as discussed above. KRS 278.502 does not speak to providing service
to Kentucky users at all, but the record makes clear that the Pipeline will be available to
Kemuckyusers. For example, Westlake Chemical Corporation, which has operated
facilities in Calvert City, Kentucky for over two decades, voiced its support for the
Bluegrass Pipeline in a letter to the Kentucky Energy & Environment Cabinet.
35
In
describing a $250 to $290 million expansion of its Kentucky facilities, Westlake noted
the abundant domestic supply of cost-competitive natural gas and NGLs and the need for
infrastructure investments to enable these raw materials to be brought to market in a cost-
etTective, efficient manner.
36
Westlake recognized that the Pipeline was a key example
of such investment that would make further investment by Westlake (and other similar
manufactures) in Kentucky viable.
37
Westlake offered its support for the Bluegrass
Pipeline, which Westlake recognizes to be a common catTier, because it can provide a
source of feedstock for Westlake's Kentucky plant and for others in its industry.38
Billegrass Pipeline confirmed that V'iestlake \vil1 be able interconnect \vith the Pipeline.
39
As a common carrier, Bluegrass Pipeline necessarily would do the same for other
Kentucky end users or producers ofNGLs.
35 R.178-79.
36
R
.
178
.
37
/
d.
38 Id.
39 Id.
19
Finally, contrary to the Circuit Court's conclusion, there is no need for Bluegrass
Pipeline to provide services to Kentucky "consumers" for the Pipeline to be in public
service or a public use. Nothing in KRS 278.502 or KRS 416.675 limits the right of
eminent domain to an entity providing services to "consumers." The Circuit Court
essentially rested its "Kentucky consumer" requirement on its erroneous conclusion that
KRS 278.502 is limited to public utilities regulated by the PSc. As discussed above,
there is no basis for that conclusion.
KURED argued below that Milam v. Viking Energy Holdings, 370 S.W.3d 530
(2012), somehow shows that KRS 278.502 is limited to companies providing services to
Kentucky consumers. In Milam, the court rejected the argument that a pipeline company
lacked the power of eminent domain because it was transporting natural gas from one
private company to another rather than directly to the public. See id. at 534-36. Nothing
in the case indicates an understanding that the statute applies to consumers, nor is there
any indication that the statute is limited to intrastate pipelines, as KURED has implied.
And, even if Amam could be read to indicate that an entity availing itself of KRS 278.502
must provide services in Kentucky, Bluegrass PIpeline will be available to manufacturers
and producers in Kentucky.
KURED also relied on In re Langford, 32 B.R. 746 (Bankr. W.D. Ky. 1982), for
the proposition that a pipeline must transport oil or gas for ultimate consumption by
Kentucky consumers in order to be considered a common carrier pursuant to KRS
278.470.
40
Bluegrass Pipeline does not need to be a common carrier under KRS 278.470
40 "Every company receiving, transporting or delivering a supply of oil or natural gas for public
consumption is declared to be a common carrier, and the receipt, transportation and delivery of natural gas
into, through and from a pIpeline operated by any such company is declared to be a public use." KRS
278.470.
20
to avail itself of KRS 278.502 or to satisfy KRS 416.675. If anything, however, Langford
actually illustrates why Bluegrass Pipeline is in public service. The defendant in that
case refused to provide the plaintiff service because it was federally licensed only to
produce and transport its own natural gas. ld. at 748. The bankruptcy court concluded
that the defendant was not a common carrier under KRS 278.470 because, in its view, the
"public consumption" portion ofKRS 278.470 required ultimate use of the defendant's
gas by Kentucky consumers. See id. at 748-50. The court further explained that, even if
state law did afford a basis for the plaintiff to insist that the defendant transport the
plaintiff's gas, it would have been preempted because the defendant's federal license did
not authorize it to do this. ld. at 750. In contrast, Bluegrass Pipeline is federally
regulated as a common carrier and will provide transportation services to the public.
Indeed, the bulk of the capacity for the Pipeline will be contracted for by third parties,
and it will not be a "private" pipeline for the members of Bluegrass Pipeline as asselied
by KURED, unlike the private pipeline in Langford.
Bluegrass Pipeline is acting "in public service," and the Pipeline is a "public us'e"
because Bluegrass Pipeline is a federal common carrier that will furnish transportation'
services to the public upon reasonable request, in a nondiscriminatory manner, at a
reasonable and published rate. While KRS 278.502 does not require it there are end
users ofNGLs in Kentucky vvho can and will avail themselves of a completed Pipeline.
The availahiLiTY of the Bluegrass Pipeline for use by end users and producers ofNGLs is
what matters, not the number of users or the frequency of their use. Bluegrass Pipeline
will function much like an interstate highway for the transportation ofNGLs. Like an
interstate highway, the Pipeline may be used to a greater or lesser extent depending on a
21
variety of factors, and some segments of the public may have more cause to use it than
others. However. Bluegrass Pipeline is acting "in public service," and the Pipeline is a
"public use" regardless because the public has the right to use it.
C. NGLs are oil, gas, or oil and gas products under KRS 278.502.
The final component of KRS 278.502 to consider is whether Bluegrass Pipeline
will be transporting oil, gas, or oil and gas products. Although the Circuit Comi did not
address whether NGLs are oiL gas, or oil and gas products, KURED argued below that
they are not. Accordingly, it is necessary to address the nature ofNGLs to ensure that
KURED cannot claim that this Court could affirm the summary judgment on grounds
presented below that were not actually determined. The chemical makeup of NGLs, how
they are produced and transported, and the state and federal regulatory framework that
governs their production and transportation confirm that NGLs fall squarely within the
scope of oiL gas, or oil and gas products.
OiL gas, and their components, including NGLs, are hydrocarbons.
41
When
"natural gas" and "oil" are produced (extracted) from wells, they often contain a mixture
of naturally-occurring hydrocarbons, including the single-carbon molecule methane (the
"natural gas" most often used for home heating) and multi-carbon molecules (such as
47 .
ethane, propane, butane, and pentane). - The multI-carbon, hydrocarbon molecules are
NGLs.43 Thus, prior to being extracted and separated, NGLs are part of the same
~   R.223 ~ 3. See also, Edward S. Gilson, Jr., Oil and Gas Production, I KENTUCKY MINERAL LAW 4
(Short and Thomas eds. 1986) and What are natural gas liquids and how are they lIsed?, U.S. ENERGY
INFORMATION ADMINISTRATION (April 20,2012), http://www.eia.gov/todavinenergyidetail.ctin?id=5930;
40 C.F.R. § 60.631 (defining NGLs as "hydrocarbons" extracted from field gas); 10 C.F.R. § 500.2
(defining "natural gas" to include "any fuel consisting in whole or in part of natural gas, including
components of natural gas such as methane and ethane").
42 R.223 ~ 3.
43 [d.
22
hydrocarbon pools of "oil" or "gas" located underground.
44
Based on their chemical and physical origins and manner of production, NGLs are
properly considered oil or gas. Even if they were not, they are "oil and gas products."
NGLs are constituents in raw natural gas that may be separated from methane during the
processing and fractionation processes. See e.g. 40 CFR 60.631 (3) ("natural gas
processing means the separation of natural gas liquids (NGLs) or other non-methane
gases trom produced natural gas, or the separation ofNGLs into one or more component
mixtures. ,,).45 Only by depriving the word "product"" of all meaning could one reach the
conclusion that NGLs are not at least an "oil and gas product." See BLACK'S LAW
DICTIONARY 1328 (9th ed. 2009) (defining "product"" to include "the result of fabrication
or processing") (emphasis added).
Statutory and regulatory treatment ofNGLs also confirms that they are oil, gas,
or oil and gas products. KRS Chapter 353, which concerns oil and gas conservation,
broadly defines "oil" as crude oil, petroleum, and other hydrocarbons produced in a
certain way and "gas," in part, to include any hydrocarbons not defined as oil. KRS
353.510. NGLs are hydrocarbons. Similarly, federal law regulates NGL pipelines in the
same way that it regulates other petroleum-related products. See 49 U.S.C. § 60101 et.
seq.46 Under both Kentucky and federal law, NGLs are treated in essentially the same
way as oil and gas. KURED argued below that NGLs are different from oil and gas
because other statutes defining other terms (in contrast to KRS 353.510, which defines
44 See id.
45 See also R.225 (explaining that NGLs are a "natural component of the natural gas (methane) stream
[which are] not separated until they reach a downstream separator or fractionator'·).
46 Federal law regulates certain liquids considered to be hazardous liquids, as defined by statute. Hazardous
liquid is defined as "petroleum, petroleum products, or anhydrous ammonia," and "petroleum" expressly
includes "crude oil, condensate, natural gasoline, natural gas liquids, and liquefied petroleum gas." 49
U.S.c. § 60101 and 49 C.F.R. § 195.2 (emphasis added).
23
"oil" and "gas") mention natural gas and NGLs separately. It is an unscientific and
artificial distinction. In detining terms in these other statutes, the General Assembly
ensured that the defined terms were interpreted broadly to accomplish the overall purpose
of the statutory schemes at issue by enumerating a comprehensive list of examples,
including items that essentially describe the same thing.
47
Including terms with similar,
or even identical, meanings in a list of terms for purposes of ensuring that a defined term
is given the broadest possible meaning does not somehow redefine the terms used in the
list to make them exclusive of each other.
Case law further shows the need to interpret terms such as "gas" broadly. In Mid-
American Pipe Line Co. v. lvlissouri P. R. Co, 298 F. Supp. 1112, 1120 (D. Kan. 1969), a
case involving eminent domain concerning a gas pipeline, the court rejected the argument
that the anhydrous ammonia to be transported in the pipeline was not "gas" under the
statute. Testimony showed that anhydrous ammonia was produced by combining the
m e t h   n ~ of natural gas with nitrogen from the air to produce a valuable fertilizer product.
The court declined to narrowly construe "gas" and held that a company piping anhydrous
ammonia had the power of eminent domain: "We cannot impute to the legislature an
intent to limit the transportation of a commodity by pipeline to certain component parts of
that commodity. This would be like saying a railroad may transport wheat, but not flour,
because it was authorized to haul glain." ld. at 1122.
Mid-American is particularly instructive because this Court has held that the tenns
47 For example, KRS 143A.0 I 0(2) defines "natural resources:' as "all forms of minerals including but not
limited to rock, stone, limestone, shale, gravel, sand, clay, natural gas, and natural gas liquids which are
contained in or on the soils or waters of this state." IfKURED's position were correct, this statute would
mean that "rock" and "stone" are entirely different things. This would be a bizarre result, to say the least.
See http:.i!dictionary.reference.com!browse/rock?s=t (defining "rock," in part, as "a stone of any size") and
http://dictionary.reference.com/browseistone'?s=t(defining''stone,''inpart,as "a small piece of rock").
24
in KRS 278.502 should not be given an overly restrictive meaning. In Milam, supra, the
parties resisting condemnation argued that the power of eminent domain was not
available because the property was to be used for a gathering line, not a transmission line.
Id. at 534. The court acknowledged that administrative regulations differentiated
between these types of lines, but these distinctions could not narrow the general term
"pipeline" that was actually used in the statute. Id. at 535 ("Despite the regulatory
treatment of the different types of pipelines, there is no authority to extend this difference
to KRS 278.502, and we decline the Milam's request that we do so."). So, too, should
the Court decline KURED's request to impose arbitrary limitations on the terms "oil,"
"gas," and "oil and gas products."
The General Assembly granted the right of eminent domain to pipelines
transporting oil, gas, or oil and gas products. NGLs are oil, gas, or, at a minimum, oil
and gas products. The Circuit Court was unable to conclude otherwise, and KURED's
arguments to the contrary do not withstand scrutiny.
CONCLUSION
The Circuit Court elTed in entering summary judgment. The court erred in
concluding that KURED established the existence of a ripe, justiciable controversy to
resolve a right of eminent domain that Bluegrass Pipeline has never attempted nor
tp.reatened to exercise. The court erred in concluding that KURED established
associational standing. The court erred in concluding that Bluegrass Pipeline lacks the
power of eminent domain. For these reasons, this Court should reverse the Circuit
Court's summary judgment and remand this matter for' oceedings.
25
APPENDIX
A-I
INDEX
Opinion and Order of Franklin Circuit Court issued on
March 25, 2014, R. 259 ................................................................................................ Tab 1
520999: 12:LEXINGTON
A-2
COMMONWEALTH OF KENTUCKY
FRANKLIN CIRCUIT COURT
DIVISION I
CIVIL ACTION NO. 13-CI-1402
KENTUCKIANS UNITED TO RESTRAIN
EMINENT DOMAIN, INC.
v. 'OPINION and ORDER
BLUEGRASS PIPELINE COMPANY, LLC.
ENTERED
cJO MAR 2 5 2014
flRANKLIN CIRCUIT COURT
SALLY JUMP, CLERK
PLAINTIFF
DEFENDANT
This matter is before the Court on the Plaintiff's Motion for Summary Judgment. Oral
arguments were held on Monday, March 10, 2014. The parties fully briefed the issues, and the
Court then took the case under submission. After review of the record and the parties' pleadings,
and thus being sufficiently advised, the Court hereby GRANTS Summary Judgment in favor of
the Plaintiff for reasons more fully explained below.
BACKGROUND
Plaintiff, Kentuckians United to Restrain Eminent Domain, Inc. (hereinafter "KURED")
is a non-profit, incorporated under the laws of the Commonwealth of Kentucky, whose purpose
is ''to protect Kentuckians from the threat of and attempts to exercise eminent domain by entities
not in public service to Kentuckians." Plaintiff's Motion/or Summary Judgment, p. 4.
Defendant, Bluegrass Pipeline Company, LLC (hereinafter "Bluegrass"), is a limited liability
company with its principal office in   but with a registered office in Frankfort,
Kentucky. Bluegrass is a joint venture of Williams Company and Boardwalk Pipeline Partners
which proposes a 24-inch pressurized underground pipeline for transporting natural gas liquids
(hereinafter "NGLs") (a mixture of pentane, propane, butane, isobutene, and ethane) from the
Marcellus and Utica shale formations in Pennsylvania, West Virginia, and Ohio, to the Gulf of
Page 1 of18
Mexico. Among KURED's members (and also serving on its Board of Directors) is Penny
Greathouse, a resident of Franklin County whose property is located along the initial path of the
proposed Bluegrass Pipeline. Ms. Greathouse has been approached by representatives of
Bluegrass to survey her property for a potential location of an easement for the pipeline, and has
spoken with Rich Ellis on four different occasions in which Mr. Ellis has said that the company
has the right of eminent domain, but did not like to exercise it. Affidavit of Penny Greathouse.
Plaintiff filed this action in Franklin Circuit Court on December 5, 2013 seeking a
declaration of rights under K.RS 418.040 as to the validity of the claim of Bluegrass that it has
the power of eminent domain under Kentucky law. Plaintiff seeks a ruling adjUdicating the right
of Bluegrass to invoke KRS 278.502, K.RS 416.675, and KRS 278.470 to use eminent domain to
condemn properties to install a natural gas liquids pipeline through Franklin County and other
counties in Kentucky. The Court finds that an actual controversy exists between the parties.
Representatives from Bluegrass have repeatedly affirmed, in both public and private forums, its
right to invoke eminent domain in obtaining easements from landowners on the proposed
pipeline path. The assertion of the right by Bluegrass has a real and immediate bargaining
impact on the landowners from whom easements are sought, because landowners must weigh
into their calculations the vast cost and legal expense of challenging the right to condemn
advanced by Bluegrass. KURED vigorously disputes that claim and has raised a legitimate and
justiciable question as to whether Bluegrass has the right to invoke eminent domain under
Kentucky statutes. This question can only be answered in a court of law.
Plaintiff argues it is entitled to a declaration that Bluegrass does not have the power of
eminent domain under Kentucky law for the proposed Bluegrass NGL Pipeline Project. In
asserting this claim, Plaintiff argues this matter is ripe for review because an actual controversy
Page 2 of18
exists. Bluegrass has represented to Ms. Greathouse and to Franklin County Judge Executive
Ted Collins in a letter from Wendell Hunt, Strategic Outreach Business Partner for the Company
dated August 1,2013, that it has eminent domain power under Kentucky statutes. KURED
argues it has associational or representational standing in this matter to maintain suit because at
least one member of the association has individual standing to sue. On the merits of the case,
Plaintiff argues that the Bluegrass Pipeline is not "in public service" as required by KRS 278.502
because it is transporting NGLs for distribution and export and because it is not regulated by the
Public Service Commission. The requirement that the pipeline be "in public service" is distinct
and in addition to the entity being labeled a common carrier for "public use." Plaintiff argues
that the Bluegrass Pipeline is neither because it is an interstate (as opposed to intrastate) pipeline
not serving Kentucky customers or producers. In addition to the "in public service" requirement,
Plaintiff alleges that the NGLs that will be transported through the pipeline are neither "oil or
gas" nor "oil and gas products" as prescribed by KRS 278.502.
On the other hand, Bluegrass argues that KVRED's claims are premature, legally
deficient, that KURED lacks standing, and that no justiciable controversy exists. It also asserts
there are genuine issues of material fact with respect to the threshold issues, and that summary
judgment should be denied. Procedurally, Bluegrass argues Plaintiff is not the type of
organization capable of asserting associational standing because it's not a membership
association such as a trade association, labor union, or bar association. Bluegrass argues that
KURED was formed for the sole purpose of filing this lawsuit, also alleging that K URED has no
bylaws and has not designated between all classes of members as required by a non-profit. It
also asserts that KURED cannot invoke associational standing based on Ms. Greathouse's
affidavit because Bluegrass is no longer seeking to acquire access to her property and has re-
Page 3 of1S
routed their proposed pipeline around her property before this lawsuit was filed, rendering the
controversy moot. On the merits, Bluegrass asserts that NGLS are "oil, gas, or oil and gas
products" under KRS 278.502 because they have "similar origins and chemical makeup, being
composed primarily of the elements hydrogen and carbon." Memorandum in Opposition to
PlaintiJrs Motion/or Summary Judgment, p. 11. Bluegrass maintains it is acting "in public
service" as a common carrier that will furnish services to the public, potentially including
manufacturers and producers in Kentucky.
Bluegrass has submitted a statement from Westlake Chemical Corporation, a chemical
company that has facilities in Calvert City, Kentucky, alleging that Westlake may possibly, at
some undefined time in the future, seek to interconnect with the pipeline "because it can provide
a source of feedstock for Westlake's Kentucky plant and for others in the industry." Id. at 16.
Bluegrass has not invoked eminent domain proceedings but has asserted its right to do so in
negotiating with approached landowners "voluntary" agreements to right-of-way easements for
the construction of the pipeline in exchange for payments.
STANDARD OF REVIEW
Summary Judgment is appropriate when the court concludes there is no genuine issue of
material fact for which the law provides relief. CR 56.03. Summary judgment should only be
granted when the facts indicate that the nonmoving party cannot produce evidence at trial that
would render a favorable judgment. Steelevest: Inc. v. Scansteel Servo Ctr., Inc., 807 S.W.2d
476,480 (1991). The record must be viewed in light most favorable to the party opposing the
motion for summary judgment and all doubts are to be resolved in that party's favor. Id
"Summary judgment is proper when it is manifest that the party against whom the judgment is
sought cannot strengthen his own case at a trial and the moving party would be entitled
Page 4 of18
ultimately and inevitably to a directed verdict." American Inc., Co. v. Horton, 401 S.W.2d 758,
760-61 (Ky. 1966) (internal citation omitted). In this analysis, '"the focus should be on what is of
recordratherthanwhatmightbepresentedattrial." Welchv. Am. Puhl'gCo. a/Ky., 3 S.W.3d
724, 730 (Ky. 1999).
DISCUSSION
1. Standing
KURED has associational standing through its member, Penny Greathouse, who has
individual standing as a landowner. Ms. Greathouse was approached by agents of Bluegrass to
grant an easement on her property for the construction of the NGL pipeline and thus KURED has
standing to seek a declaration of rights on her behalf as to whether Bluegrass Pipeline Company
has the authority under Kentucky statutes to condemn. There are three requirements for an
association to assert associational standing: n(a) its members would otherwise have standing to
sue in their own right; (b) the interests it seeks to protect are germane to the organization's
purpose; and ( c) neither the claim asserted nor the relief requested requires the participation of
the individual members in the lawsuit." Com ex. reI. Brown v. Interactive Media and
Entertainment and Gaming Ass 'n, Inc., 306 S.W.3d 32,38 (Ky. 2010) (citing Hunt v.
Washington State Apple Adver. Comm 'n, 432 U.S. 333, 343 (1977), see also Bailey v. Preserve
Rural Roads a/Madison County, Inc., 394 S.W.3d 350, 356-57 (Ky. 2011). "While [Kentucky]
has not held that the precise requirements of federal associational standing apply in Kentucky
Courts, at least the first requirement must apply. An association can have standing only if its
members could have sued in their own right." Id. In City of Ashland v. Ashland FOP. No.3,
888 S.W.2d 667 (Ky. 1994), the Court granted the Fraternal Order of Police standing because
"the nature of police work was such that the lodge members had a real and substantial interest in
Page 5 of IS
who became future employees and in the employee pool from which the city would hire police."
ld. at 668. The Court also conferred standing on the police' association because it represented the
majority of city police. ld.
Defendant argues that KURED is not an organization that can invoke standing because it
does not represent an industry or a group's interest to engage in substantial activities to promote
that industry, and that the non-profit was only created to file this lawsuit. Bluegrass argues that
KURED does not meet certain indicia of a non-profit because it does not distinguish between all
classes of members and because it has no bylaws. The Court does not find Defendant's
argument persuasive. There is nothing in the case law that limits associational standing to
business, labor, or industry trade groups. There is no reason why the concept of associational
standing should not apply to citizens and taxpayers who join together to address common
problems or issues of public concern, so long as the dispute involves a case or controversy that
implicates the substantial rights of the membership.
In its Articles of Incorporation, KURED references its members and names its Board of
Directors, including Ms. Greathouse, and states that its purpose is ''to protect Kentuckians from
the threat of and attempts to exercise eminent domain by entities not in public service to
Kentuckians." After reviewing the discovery documents and affidavits. it is clear that KURED is
a membership organization, Penny Greathouse is a member of KURED, and KURED is
protecting the interests of its members by challenging Bluegrass's assertion that it has the right to
exercise the power of eminent domain.
Thus, KURED has associational standing if at least one member could sue in her own
right and if it demonstrates that its members have a real and substantial interest in the lawsuit.
Penny Greathouse's individual standing is the source from which KURED asserts it derives
Page 6 of18
associational standing. Standing exists where an individual has "a judicially recognizable
interest in the subject matter; interest may not be remote and speculative, but must be present and
substantial." City of Louisville v. Stock Yards Bank & Trust Co., 543 S.W.2d 328, 329 (Ky.
1992). Ms. Greathouse has been approached on four separate occasions by representatives from
Bluegrass attempting to obtain a voluntary easement through her property for the proposed
pipeline. She has also been told by the company that it possess the poyver of eminent domain
under Kentucky law but prefers not to exercise it. As a landowner who owns property in (or
near) the path of the pipeline, Ms. Greathouse has a personal stake in the outcome of the
controversy. She has a present and substantial interest in the outcome of this dispute, and that
interest is not remote or speculative. Bluegrass concedes that it has altered the proposed route of
the pipeline to adjoining property to Ms. Greathouse, but that alteration does not moot the
controversy. Bluegrass could change the route again and reassert its right to condemn Ms.
Greathouse's land. More importantly, the location of a pipeline carrying highly dangerous and
toxic chemicals on the adjoining property gives Ms. Greathouse a continuing real and substantial
interest in adjUdicating Bluegrass' legal right to utilize eminent domain to obtain an easement
from her neighbors. There is no indication in the record that Bluegrass has agreed to indemnify
Ms. Greathouse or other property owners adjacent to the proposed pipeline from any damages
from leaks, explosions, or other discharges ofNGLs that could affect her property.
The outcome of this declaratory action has an immediate effect on bargaining power in
negotiations between Bluegrass and Ms. Greathouse, other members ofKURED, and all
residents within the proposed pipeline path. Bluegrass seeks to obtain voluntary easements, but
invokes the threat of condemnation. This has an inevitable chi11ing effect on landowners who
may question the legal authority of Bluegrass, but who lack the means to engage in protracted
Page 70f18
litigation to resolve the legal dispute. These property owners are more likely to grant voluntary
easements based on Bluegrass' express or implied threat of condemnation. Bluegrass now
claims it is no longer seeking to acquire Ms. Greathouse's property and has re-routed the
proposed pipeline around her property. The company has admitted the pipeline path has been in
a constant state of flux I. Thus, Bluegrass could change its mind at any time and re-route the
pipeline back through her property. Ms. Greathouse, and other similarly situated landowners, are
forced to negotiate with Bluegrass without clear knowledge of whether the assertion of eminent
domain power by Bluegrass is valid. This clear and immediate impact on the bargaining process
by itself demonstrates the existence of a case or controversy that should be addressed through a
declaratory judgment. Thus, KURED has associational standing through its Board member and
member, Penny Greathouse.
Moreover, all members ofKURED have standing as citizens and taxpayers to challenge
the right of a private corporation to act in the name of the government of the people of Kentucky
to take private property for the benefit of purely private economic interests. Kentucky law has
long recognized the right of citizens and taxpayers to bring suits to challenge the wrongful
exercise of government power. See Russman v. Luckett, 391 S.W.2d 694, 696 (Ky. 1965), Rose
v. Councillor Better Education, Inc., 790 S.W.3d 186,201-02 (Ky. 1989) (a "properly formed
non-profit corporation, has the legal authority to sue ... We are cited no authority, and can find
none, that would enable us to pierce the corporate veil and legally cut off the rights of t.1-}e
individual corporate members."). Those cases are no less applicable when a private party acts on
behalf of the government to exercise, or threaten to exercise, the essential government power of
eminent domain.
I At oral argument, counsel for Bluegrass indicated that the route has been changed over 100 times to address the
concerns of landowners, including those who may question the right of eminent domain.
Page 8 oil8
2. Justiciable Controversy
Once standing has been established, we now turn to whether a justiciable controversy
exists and whether this case is ripe for a decision. KRS 418.045 states, "any person ... whose
rights are affected by statute ... or who is concerned with any title to property ... provided always
that an actual controversy exists with respect thereto, may apply for and secure a declaration of
his rights or duties." In deciding ajusticiable controversy, '''The court will not decide
speculative rights or duties which mayor may not arise in the future, but only rights and duties
about which there is a present actual controversy presented by adversary parties, and in which a
binding judgment concluding the controversy can be entered. '" Veith v. City of Louisville, 355
S.W.2d 295,297 (Ky. 1962) quoting Black v. Elkhorn Coal Corporation, 26 S.W.2d 481 (Ky.
1930).
This case meets the requirements for an actual case and controversy. Bluegrass argues
that since it has not yet fIled an action seeking to condemn, that this matter is not ripe and that no
actual controversy exists. However, representatives from Bluegrass have stated numerous times
(to Judge Executive Ted Collins and to Ms. Greathouse) that under Kentucky'S statutes they
have the power to condemn, but that they would prefer to acquire land rights by reaching
voluntary agreements with landowners instead of relying on eminent domain. Bluegrass has
claimed it has no present intent to acquire an easement from Ms. Greathouse, but that does not
protect her in the future if Bluegrass decides to re-route, nor does it dispel a landowner's
justifiable uncertainty regarding the costs of defending a condemnation action. Property owners
and taxpayers in general have a right to determine whether Bluegrass' claim is valid because not
only does it affect their bargaining position, but it affects their legitimate interests and
Page 9 of18
substantive rights as citizens when a private company seeks to exercise the sovereign power of
condemnation.
A declaration of rights is necessary to determine whether Bluegrass has the right to
condemn so that Ms. Greathouse and other landowners, who are within the ever changing present
or future pathway of the proposed pipeline, can make infonned decisions considering all factors
when negotiating and deciding whether to grant an easement to Bluegrass and other private
entities. Moreover, the dispute is capable of repetition, but could still evade judicial review if
Bluegrass continues its policy of asserting the right to condemn, while altering the course of the
pipeline when landowners question its condemnation authority. This admitted tactic of
Bluegrass allows it to vastly increase its bargaining power over landowners without the means to
question or contest the asserted right of condemnation. Accordingly, the controversy is capable
of repetition yet evading review. See Lexington Herald-Leader v. Meigs, 660 S.W.2d 658 (Ky.
1983).
In deciding cases under the Declaratory Judgment Act, the statute itself emphasizes that
its provisions are "remedial; their purpose is to make courts more serviceable to the people by
way of settling controversies, and affording relief from uncertainty, and insecurity with respect
to rights, duties and relations, and are to be liberally interpreted and administered." KRS
418.080. See Hammond v. Smith, 930 S. W.2d 408 (Ky. App. 1996). Kentucky courts have long
held that "there can be a 'justiciable controversy' when an advance determination would
eliminate or minimize the risk of wrong action or mistakes by any of the parties." Combs v.
Matthews, 364 S.W.2d 647 (Ky. 1963). This dispute between these citizens acting through their
non-profit corporation, and Bluegrass, a private for-profit corporation that seeks to negotiate with
landowners from the powerful position of a sovereign authority with the power to condemn
Page 10 of18
property, is exactly the kind of controversy which should be resolved through the rule of law in a
declaratory judgment.
As the Kentucky Supreme Court has recently recognized, the touchstone of justiciability
is the presence of an actual controversy, vigorously contested by the parties. When there is "a
true antagonistic interest" such adversity between the parties results in "eliminating any doubt
about the case's justiciability." Appalachian Racing, LLC v. Family Trust Foundation, _
S.W.3d-, 2014 WL 712662 (Ky. 2014). In this case, there can be no question that the parties
are truly adversarial. As the Kentucky Supreme Court noted, "[t]he adversarial system promotes
sound judicial reasoning by assuring that the courts are fully and fairly informed." The Court
went on to hold that "[f]or a cause to be justiciable, there must be a present and actual
controversy presented in good faith by parties with adverse interests in the subject to be
adjudicated." Id This case fully complies with these rules: the parties have adverse interests
and there is a present and actual controversy presented in good faith. Accordingly, the Plaintiff
has presented ajusticiable controversy.
3. Right to Eminent Domain
Bluegrass lacks the power of eminent domain under KRS 278.502, KRS 416.675 and
KRS 278.470.
a. KRS 278.502
First, Bluegrass argues that entities organized for the purpose of constru.cting,
maintaining, or operating pipelines for transportation or delivery ofNGLs, like theirs, are acting
in public service and have the power to invoke eminent domain to acquire property for the
pipeline under KRS 278.502. Chapter 278 in the Kentucky Revised Statutes is entitled "Public
Service Commission" (hereinafter "PSC") and is dedicated to "Public Utilities." The PSC is a
Page 11 of18
commission dedicated to regulating utilities and ensuring that consumers have access to safe and
reliable services at reasonable rates. Regulated entities that adhere to the requirements of KRS
278.502 are authorized to use eminent domain powers. The statute states in pertinent part, "Any
corporation or partnership organized for the purpose of ... operating oil or gas wells or pipeline
for transporting or delivering oil or gas, including oil and gas products, in public service,
may ... condemn the lands and material or the use and occupation of the lands ... " ld. The parties
disagree as to the definitions of two elements in the statute: oil or gas (including oil and gas
products) and inpublic service.
KURED persuasively argues that only those utilities regulated by the PSC and those "in
public service" have the power to condemn under Kentucky'S statutes. This Court agrees. In its
Answer, Bluegrass admits that it is not a public utility regulated by the PSC. Answer, p. 6. In
the definitions section of KRS Chapter 278 on Public Utilities, "Utility" means "any
person ... who owns, operate, or manages any facility used or to be used for or in connection
with ... (c) the transporting or conveying of gas, crude oil, or other fluid substance by pipeline to
or for the public, for compensation." KRS 278.01O(3)(c). KRS Chapter 278 was enacted, in
part, to protect consumers against costly and unnecessary capital construction. See KRS 278.020.
By regulating utilities, the PSC ensures reasonable rates and reliable service for the public.
Bluegrass seeks to benefit from the rights conferred on regulated utilities by KRS
Chapter 278 without subjecting itself to the responsibilities, duties, and regulatory oversight
imposed by those statutes. Bluegrass argues that the plain language ofKRS 278.502 does not
indicate that it applies to only PSC regulated utilities. However, when KRS 278.502 was last
amended (in 1992) to include the "oil and gas products" language, KRS 278.485 was also
amended. The 1992 legislation required every gas pipeline company obtaining gas from
Page 12 of 18
producing wells located within the state to actually furnish gas to the landowner at reasonable
rates detennined by the PSC, to service and repair the lines and meters at the company's own
expense, with supervision by the PSC as to safety standards for installation. This amendment
demonstrates it was the legislature's intent in 1992 to impose regulatory oversight for gas
pipeline companies that benefit from that statute's grant of eminent domain power.2
The 1976 Amendment simply brought the procedural requirements for condemnation
proceedings in KRS 278.502 under the provisions of the Eminent Domain Act of Kentucky (set
forth in KRS Chapter 416 - a procedural, not substantive grant of authority), while the 1966
Amendment to KRS 278.502 added other conditions for condemning lands and other necessary
rights to remove underground storage wells. Bluegrass attempts to circumvent the statutory
protections for landowners to take advantage of the right of eminent domain. It is clear from the
language adopted by the legislature, and the context of KRS Chapter 278 as a whole, that the
right of eminent domain under KRS 278.502 is restricted to companies that are regulated by the
PSC.
Bluegrass attempts to cite to the legislative history of the statute and asserts that when it
was amended in 1992, that the legislature actually declined to pass an amendment that would
have limited the statute to PSC regulated utilities. However, as the Kentucky Supreme Court has
explained, "We discern the meaning of the law from the words used by the General Assembly in
the laws it enacted, not from the words of legislation it rejected." Appalachian Racing, LLC v.
Family Trust Foundation 0/ Kentucky, Inc., supra; See also City a/Vanceburg v. Plummer, 122
2 Bluegrass misreads the legislative history when it argues that the rejection of a proposed amendment related to
PSC oversight of gas companies, offered by Rep. Paul Mason, demonstrates the legislature's intent to allow private
companies to exercise condemnation power without regulatory oversight. When the legislation is read as a whole,
it is clear that the purpose of the legislation was to require oil and gas companies to provide services to landowners
whose property was used for pipelines, and that those services be subjected to regulation by the PSC. 1992 Ky.
Acts, ch. 399, Sec. 2.
Page 13 of18
S.W.2d 722,776 (Ky. 1938) (quoting Fox v. Standard Oil Company, 294 U.S. 87 (1934». There
could be a number of reasons for the rejection of a proposed amendment inc1uding that the
legislature found that additional limiting language in the statute was unnecessary because it was
already clear that the condemnation power only applied to regulated utilities. The 1992
amendments clearly spell out the obligation of oil and gas companies to provide services to
landowners whose property is used for pipelines; it also requires that those services be SUbjected
to regulatory oversight by the PSC. See] 992 Ky. Acts, ch. 399, Sec. 2.
The requirement of KRS 278.502 that eminent domain power is limited to pipelines used
"in public service" has been in the law since 1948. See 1948 Ky. Acts ch. 186. The Court
cannot make inferences as to the legislature's intent based on a proposed amendment was not
adopted. The language that was enacted by the legislature strongly supports a finding that the
power of eminent domain in KRS 278.502 is limited to companies regulated by the PSC.
Bluegrass is a private, for-profit, unregulated entity engaging in the interstate
transportation ofNGLs. It is not acting "in public service," and therefore it falls outside the
scope ofKRS Chapter 278. The proposed pipeline transports NGLs through Kentucky, but does
not have any impact on the energy needs of Kentuckians. Bluegrass argues that the pipeline will
be available for Kentucky manufacturers and producers. However, the only stated purpose of the
pipeline is to transport NGLs to the Gulf Coast to be processed and sold in Louisiana; not to
provide natural gas to Kentuckians, but to have NGLs, a mixture ofhighIy dangerous chemicals,
running through Kentucky farmland and forests, and near rural communities. Bluegrass cannot
rely on KRS 278.502 as a basis for its condemnation power because it applies only to utilities
regulated by the PSC. Moreover, Bluegrass does not fall within the scope of the tenn "in pubJic
Page 14 of18
service" because it is transporting NGLs interstate through Kentucky. Bluegrass is not serving
Kentucky's consumers and is not a utility regulated by Kentucky'S PSC.
h. Common Carrier
Even if KRS 278.502 did apply to unregulated utilities, the Bluegrass Pipeline is not "in
public service," and therefore does not have the power to condemn. Bluegrass argues that the
pipeline will be a "public use" under KRS 416.675(2)(d) claiming that it qualifies as a "common
carrier" because it will be transporting NGLs in interstate commerce. As noted above, in 1948,
Kentucky's General Assembly repealed KRS 278.500 and narrowed the scope ofKRS 278.502
by shifting from a broader "public use" standard to a more narrow "in public service" standard.
The "in public service" standard is a more restrictive stricter standard than that which was
addressed in Kelo v. City a/New London, 545 U.S. 469 (2005).
After Kelo, the legislature adopted KRS 416.675(2)(d) which states in pertinent part, "(1)
Every grant of authority contained in the KRS to exercise the power of eminent domain shall be
subject to the condition that the authority be exercised only to effectuate a public use of the
condemned property. (2) 'Public Use' shall mean the following; (d) The use of the property for
the creation or operation ofpubJic utilities or common carriers." Bluegrass argues it is a "federal
common carrier that will furnish transportation services to the public upon reasonable request, in
a nondiscriminatory manner, at a reasonable and published rate." Memorandum in Opposition,
p. 19. Bluegrass argues that it meets the definition of "public use" under KRS 416.675(2)(d).
Likewise, the Court does not find Bluegrass' common carrier argument persuasive. The purpose
of enacting KRS 416.675 was to restrict the grant of authority to exercise eminent domain, not to
supersede KRS 278.502 and its language requiring that a pipeline be "in public service" in order
to give rise to eminent domain power for oil and gas pipelines. KRS 416.675 is not a substantive
Page 15 of18
grant of eminent domain power, but a procedural statute to govern the exercise of that power
when it is granted elsewhere in the statutes.
Bluegrass also cites to KRS 278.470 as being a grant of authority for its alleged power to
condemn because it is a common carrier. KRS 278.470 states, "Every company receiving,
transporting or delivering a supply of oil or natural gas for public consumption is declared to be
a common carrier, and the receipt, transportation and delivery of natural gas into, through and
from a pipeline by any such company is declared to be a public use." Again, the statute is under
the umbrella of Chapter 278 which is dedicated to public utilities regulated by the PSC, so it does
not apply to Bluegrass, a private unregulated company. And even if common carrier status did
apply, Bluegrass is transporting NGLs, not transporting or delivering "oil or natural gas".
Bluegrass admits NGLs are produced from similar compounds, but they are not equivalent.
3
Bluegrass therefore does not fall under KRS 278.470's mandate for transporting "oil or natural
gas."
Finally, even if Bluegrass satisfied the other elements ofKRS 278.470, which it does not,
the statute declares common carriers transporting oil or natural gas a "public use." That
language still does not trump the additional limitations ofKRS 278.502, and the requirement that
the pipeline be "in public service" as noted above. Bluegrass does not meet the required standard
of operating this proposed pipeline "in public service."
CONCLUSION
The Court finds that summary judgment must be granted in favor ofKURED because
Bluegrass does not have the power to condemn under Kentucky'S statutes and no other genuine
issues of material fact remain. As this Court has already noted, the transportation of hazardous
3 NGLs are separated downstream by a separator or fractionators from produced natural gas. See Memorandum in
Opposition, Footnote 31, p. 12.
Page 16 of18
liquids interstate through Kentucky to the Gulf Coast does not justify granting a private company
the right to condemn private property.
The power of eminent domain is an essential attribute of a sovereign government. In a
democracy, that power cannot be delegated to private parties without a clear legislative mandate
that such a delegation is in the public interest. To use the force of law to compel a property
owner to surrender his or her valid property rights for public use, or to surrender those rights to a
private corporation that is discharging a public function, is one of the most expansive powers
entrusted to the government. The Court finds there must be an undeniably clear mandate from
the legislature in delegating one of the state's most fundan:tental powers before a private
corporation can compel any citizen to surrender his or her property rights. There has been no
such clear and explicit delegation of this power to Bluegrass for its proposed NGL pipeline.
Bluegrass remains free to build its pipeline by acquiring easements from willing property
owners. However, 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. Landowners who do not wish to sell, but who
may be unable to finance a legal challenge, are entitled to know that the law does not support
Bluegrass' assertion of the power of eminent domain.
For the reasons state above, the Court hereby GRANTS Plaintiff's Motion for Summary
Judgment. This is a final and appealable judgment and there is no just cause for delay.
So ORDERED this the 25th day of March, 2014.
~ ~ ~
H   P ,JUDGE
Franklin Circuit Court, Division I
Page 17 of18
DISTRIBUTION:
Thomas J. FitzGerald
Kentucky Resources Council, Inc.
P.O. Box 1070
Frankfort, KY 40602
Gregory P. Parsons
Chadwick A. McTighe
STITES & HARBISON PLLC
400 West Market Street, Suite 1800
Louisville, KY 40202
Page 18 of IS

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