It's important to understand that the U.S. petroleum supply doesn't just travel by the tanker trucks you commonly see out on the roads and highways. Indeed, trains and ships are also vital components of the supply chain, as well as the thousands of miles of pipelines crisscrossing the nation.
Interestingly enough, a proposed pipeline was recently at the center of a fascinating story in Georgia, where officials were tasked with deciding whether to grant a request by a major energy company to use eminent domain to secure private land for their project.
Palmetto Products Pipe Line LLC, a subsidiary of Kinder Morgan, made the request back in February, arguing that it would only deploy eminent domain on a small scale, as the majority of landowners would likely be agreeable to granting a permanent easement in exchange of a fair price. Similarly, it contended that the proposed pipeline would help lower gas prices and meet the rising petroleum demands of the state.
Georgia law dictates that private companies can indeed be authorized to use eminent domain to secure private land provided a "certificate of public convenience and necessity" is issued by the state's Department of Transportation.
In recent developments, however, the state's Transportation Commissioner declined to issue this certificate authorizing Palmetto to use eminent domain, citing multiple factors:
- Potentially affected landowners had expressed concern about losing even a small portion of their property otherwise devoted to crop or timber production.
- Even though the state's population increased, its total petroleum consumption has dropped considerably over the last decade and is projected to continue doing so.
- The current petroleum arrangement encourages competition, but the existence of the pipeline could actually serve to eliminate it altogether, driving prices up.
The decision to reject the construction of the proposed 210-mile pipeline, which would wend its way across Georgia and well into Florida, was lauded by many, including both environmental advocacy groups and the office of Governor Nathan Deal.
While this decision will serve to make things harder for Palmetto and, by extension, Kinder Morgan, it doesn’t spell the end of the proposed pipeline, just the possible use of eminent domain to make it a reality.
Stay tuned for updates …