Kinder Morgan’s plan to construct a new ethane pipeline throughout Ohio and into Michigan encountered an unanticipated obstacle last week when Wood County Common Pleas Judge Robert Pollex ruled that the company does not have eminent domain rights. In April, Kinder Morgan filed eminent domain lawsuits against several dozen Wood County landowners who refused to give Kinder Morgan easements on their property in the pipeline’s path. Accordingly, Kinder Morgan petitioned the court in an attempt to have an easement price set by the court.
Last Wednesday, Judge Pollex ruled that Kinder Morgan’s “proposed use and purpose of the pipeline in this case is not to the benefit of the public and clearly is not necessary.” Kinder Morgan argued that the pipeline would provide more than $230 million in economic benefits to Ohio by aiding in the development of Ohio’s energy infrastructure and creating hundreds of temporary union jobs and several permanent positions. Kinder Morgan admitted, however, that the project did not involve energy distribution, and the court hearing established that only one committed shipper and the user, a Canadian company, planned to utilize the pipeline. Kinder Morgan argued that the pipeline would be available to “walk-up shippers” in the future, but because it could not identify such users at the time of the hearing, the court concluded that the “walk-up shippers” would be “a limited number of commercial enterprises engaged only for the economic benefit and use of those manufacturers.” Based on those facts, the court determined that the pipeline would not benefit the public in any way.
Judge Pollex also rejected the notion that Kinder Morgan was acting as a common carrier for the purpose of R.C. 1723.08, despite recognizing that the statute “specifically states that a company organized to transport petroleum through pipelines is a common carrier[.]” Judge Pollex reasoned that Kinder Morgan was not acting as a common carrier “in any sense of the word” because “[it] is not offering its services to the public or even to an unlimited number of commercial enterprises” and “[i]ts sole purpose is to convey a petroleum derivative to a company in Canada who is willing to pay the costs.” Judge Pollex concluded that “[t]o the extent that the Ohio statutes authorize a common carrier of Kinder Morgan’s type, that legislation is an unconstitutional infringement upon the property rights of the [landowners].”
There are a number of pending eminent domain cases involving Kinder Morgan’s pipeline project, making Judge Pollex’s decision all the more significant. Kinder Morgan has already filed its notice of appeal of the decision, and its chances on appeal are promising. Ohio’s Fifth Appellate District has already held that Kinder Morgan is a common carrier with respect to the pipeline project, and Ohio’s Seventh Appellate District recently found that a pipeline transporting pure propane and pure butane from Harrison County, Ohio to Marcus Hook, Pennsylvania met the public use requirement. The court recognized that the pipeline did not have any “off ramps” in Ohio, and it could only speculate where the product would go after it reached Pennsylvania. It concluded, however, that the Utica and Marcellus shale development within the district and the certainty that “some products containing Ohio propane and butane will return to Ohio” was evidence of public use. Time will tell if the departing Judge’s decision stands or if the Sixth Appellate District adopts the reasoning of its sister appellate courts in favor of Kinder Morgan.