Palmetto Pipeline Raises Questions of Eminent Domain in Savannah, GA

March 31, 2015 | Charles Bowen

Question

How would the Palmetto Pipeline affect Georgians?

Answer 

If the Palmetto Pipeline is deemed to have public value, property owners in Savannah, GA and elsewhere may have a tough fight to prevent the pipeline from crossing their property.   Federal precedent in eminent domain suggests that landowners would be offered one-time payments for easements on land that would need to remain permanently fallow despite the fact they would have to continue to pay property taxes on that land.  

 

Eminent Domain Definition and History

The Fifth Amendment states that private property shall not be taken for public use without just compensation. Over the past 225+ years since eminent domain was passed by Congress, there have been many instances of abuse. In just the past ten years, there has been massive reform with 47 states increasing protections for property owners in some way. In 2006, President George W. Bush issued Executive Order 13406 which states: “It is the policy of the United States to protect the rights of Americans to their private property, including by limiting the taking of private property by the Federal Government to situations in which the taking is for public use, with just compensation, and for the purpose of benefiting the general public and not merely for the purpose of advancing the economic interest of private parties to be given ownership or use of the property taken.” While the Palmetto Pipeline is a private project and thus not under the purview of the federal government, the U.S. Supreme Court has consistently deferred to the right of states to make their own determinations of public use.

 

Palmetto Pipeline Overview

Houston, TX-based Kinder Morgan Inc (which describes themselves as the “largest energy infrastructure company in North America”) has proposed a $1 billion pipeline project which will allow the company to offer a new service to move refined petroleum products--including gasoline, ethanol and diesel--FROM: Baton Rouge, LA, Collins and Pascagoula, MS and Belton, SC TO: North Augusta, SC, Savannah, GA and Jacksonville, FL via 16-inch and 20-inch diameter pipelines. The system will have a design capacity of up to 167,000 barrels per day and will consist of a segment of expansion capacity that Palmetto will lease from Plantation Pipe Line Company between Baton Rouge, LA and Belton, SC. A new 360-mile pipeline from Belton, SC to Jacksonville, FL will also be constructed as part of the system as will at least one gas terminal in Richmond Hill, GA and 3.8 million cubic feet of “breakout tankage.”

The pipeline project would cross the Savannah River just downstream from Augusta and pass through the following 12 Georgia counties:
 

  • Richmond, 2 miles

  • Kinder Morgan: proposed Palmetto Pipeline projectBurke, 25 miles
  • Screven, 34 miles

  • Effingham, 39 miles

  • Chatham, 12 miles

  • Bryan, 7 miles

  • Liberty, 18 miles

  • Long, 2 miles

  • McIntosh, 17 miles

  • Glynn 24 miles

  • Camden, 18 miles

  • Charlton, 12 miles

The pipeline would cross into Florida at the U.S. 1 bridge over the St. Marys River. The project is planned to be completed by 2017.

Kinder Morgan currently employs approximately 350 people in Georgia with a payroll of about $26 million, and pays approximately $16 million annually in state and local taxes. The company operates more than 3,000 miles of pipelines and five terminals in Georgia.


Approval Process

Kinder Morgan applied for a certificate of public convenience and necessity--which would authorize it to condemn property--to the Georgia Department of Transportation on February 13, 2015. The law requires the DOT to make its decision on whether the project is in the public interest within 90 days of the filing.

Kinder Morgan conducted five open houses in various counties that the pipeline is set to cross. Company representatives were on hand to answer questions and feedback was funneled through their corporate attorneys. DOT officials were present for observation purposes only. After some public outcry about the process, the DOT plans to conduct its own public hearing though a date and location have yet to be announced.

DOT Deputy Commissioner Todd E. Long recently requested more information about the project’s claims of public benefit.


Palmetto Pipeline Potential Benefits

Economic

  • Additional supply may increase competition and possibly lower prices to end consumers.

  • Estimated 1,200 temporary construction jobs and 28 permanent full-time positions.

  • Projected annual revenue of more than $14 million to state and local taxing bodies.

Logistics

  • Pipelines are generally the least expensive way to move gasoline from refineries to marketplaces.

  • According to Kinder Morgan president Ron McClain, “pipelines are the safest mode of transportation to deliver products such as gasoline, jet fuel and diesel.”

  • Pipelines provide an alternative fuel source when extreme weather, like hurricanes, drive ships from the port.


Palmetto Pipeline Potential Negative Impacts and Criticism

Question of Public BenefitProposed Palmetto Pipeline Route

  • Over 58% of the pipeline (210 of the 360 miles) and environmental exposure would be in Georgia.

  • Coastal Georgia’s daily petroleum demand equates to less than 12% of the planned pipeline capacity.

  • While some jobs may be created, others may be lost, particularly in the regional trucking industry.

Environmental

  • Pipeline construction impact on private and public lands including pine plantations and various waterways.

  • Potential risk to watersheds and wetlands in the case of an accident which could cause irreparable damage.

Property Rights

  • Pipelines require permanent easements of 50-100 feet on property upon which owners could no longer build or plant. Owners would be offered one-time payments and must continue to pay property taxes on the impacted land.

Need


Bottom Line

Pipeline projects are almost always the subject of much debate.  Kinder Morgan and the Southeastern U.S. are familiar with pipeline and eminent domain controversies.  Kinder Morgan is currently facing strong opposition to projects in Canada. The House and Senate recently failed to pass bills which would have used eminent domain to compel operators of a Mississippi pipeline to open the pipeline to third parties. 

If approved and built, the Palmetto Pipeline will provide additional petroleum supply to Savannah and other parts of South Carolina, Georgia and Florida which may lower costs to consumers of those products, create jobs and certainly increase revenue for a handful of suppliers. It is yet to be seen whether those benefits will outweigh the environmental risks and impact on private property owners. 

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Topics: Commercial Law in Georgia