Property rights threatened by new eminent domain bill for private companies

EMINENT DOMAIN FOR PIPELINE COMPANIES?

A recently filed bill (S.1100) would give private petroleum pipeline companies the power to condemn state residents’ property through eminent domain. It would also classify these companies as public utilities and subject the construction and expansion of pipelines to state approval.

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How it would work

Eminent domain is a power held by governments – not private companies – to expropriate private property for public use – yet this legislation (and a similar bill in the House, H.4833) would extend that power to private, non-utility pipeline companies.

Here’s how that process would play out under S.1100.

Before a private pipeline company could construct a new gas pipeline (or expand an existing one) it would need permission from the Public Service Commission (PSC), which would approve the application and direct the Office of Regulatory Staff to grant a permit as the initial step in the condemnation process.

Once the permit is issued, the company would be entitled to “reasonable access” to homeowners’ property to begin surveying the land.

If the landowners refuse to sell their property, the company could then ask the Administrative Law Court for permission to condemn the property through eminent domain. The court could grant eminent domain authority if it believes there is a “public need” based on factors including:

  • Whether existing pipelines are already adequate
  • The demand for petroleum
  • Whether the primary beneficiary is the state or the company
  • Information received at previous public hearings

If approved (and once all subsequent appeals and notice requirements have been satisfied) the pipeline company could legally begin the process of forcing residents from their property.  

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A direct attack on private property rights

The ability to take private property for public use is a government power that can only be exercised for public use – not private benefit.

However, South Carolinians’ property rights are weak under state law. While the state constitution (Article 1, Section 13) states that private property can only be condemned for public use, it does not define “public use” and leaves room for lawmakers to define it themselves with legislative language such as “vital to the welfare of the people of this State” – despite the fact that “public use” certainly does not cover private, for-profit companies’ business interests.

To be clear, petroleum pipeline companies are in fact non-essential private companies, despite the attempt to re-classify them as public utilities under the bill. This was acknowledged by lawmakers in a 2016 law clarifying that pipeline companies do not have the power of eminent domain, stating that they are not defined in state law as public utilities and do not meet the current “public use” requirement (although the clarifying provision expires on November of this year).

Critically, S.1100 could revive efforts to build the “Palmetto pipeline”, which would run along the Georgia/South Carolina border and down to Jacksonville, FL. Considering that petroleum pipelines can consume up to 1/3 mile in width, the potential scale of property condemnation under this bill is alarming.

Once the condemnation has been authorized, a person cannot stop the process and save his/her home. At that point, the only legal avenue open to the property owner is how much he/she must be compensated.

Finally, new pipeline construction would increase the risk of gas spills. In 2014, the Plantation pipeline (which runs through part of the Upstate) spilled an estimated 369,000 gallons of gasoline on a Belton resident’s property, going undetected for an unknown time and threatening the area’s clean water supply. The cleanup effort is still ongoing.

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S.1100 is currently in the Senate Judiciary Committee, and a similar bill, H.4833, is currently in the House Agriculture Committee (to view bill sponsors, see the top of the bill pages: Senate & House). We will be monitoring both bills throughout the legislative session, and provide updates if they move forward or undergo any major amendments.

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