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Blurring the Lines of Public Use: Pipeline Takings

By Ashley Wofford

In my blog posts “How to Reform Eminent Domain Law” and “Fair Market Value Compensation: is this the right standard” I began to look at the issues Ilya Somin addresses in his new ACRE policy brief “Ripe for Reform: Eminent Domain Law in Arkansas.” In this post, I will look into a second area with potential for abuse: pipeline takings.

Pipeline companies are given the power to condemn in the state through Arkansas Code §23-15-101, being classified as a “common carrier” that is “required by law to carry for all alike.” Somin points out that pipeline corporations are seeking to overcome the “holdout problem” when using their eminent domain power. Often, a project can be delayed if one landowner refuses to sell portions of their property during negotiations. However, pipelines are, just like all other condemning authorities, only supposed to use the eminent domain power for public use. As discussed in my previous posts, however, the case law surrounding eminent domain has blurred the lines between public use and public benefit.

The debate hinges on who is serviced through the line. For example, a public utility is obligated to service the entire public, but a private pipeline company could be building a line that will only be used to transport  a resource to another private corporation. This was the situation in Linder v Midstream Gas Services (2010) that was decided by the Arkansas Supreme Court. Midstream Gas Services Corp. petitioned to use the eminent domain power across Perry and Kathy Linder’s property in Cleburne County to build a pipeline that would deliver natural gas to Chesapeake Operating Inc.

The Linders challenged the constitutionality of the action, arguing that §23-15-101 was in violation of Article 2 section 22 of the Arkansas Constitution, which clearly specifies the public use mandate, but the Linders failed to convince the court. The Arkansas Supreme Court has addressed this issue dating back to railroads in 1893 and has remained flexible on what public use means for “common carriers”. The Court summarized its ruling in this way: “The character of a road, whether public or private is not determined by its length or the places to which it leads, nor by the number of persons using it. If it is free and common to all citizens, it is a public road though but few people travel upon it.” As long as the pipeline is not closed off to others who wish to use it, it is considered public use.

Somin argues that “Arkansas legislators should pass laws making clear that eminent domain may only be used for pipelines that are genuine common carriers.” Arkansas almost accomplished this in 2017. HB 2086 would have put more restrictions on pipeline companies by requiring the Arkansas Public Service Commission to verify common carrier status, but the bill died in the House Committee on Insurance and Commerce. Arkansas should consider the impact of eminent domain by pipelines to ensure property rights are not losing out to influential business interests.