Attorneys for Plains Southcap won a partial court victory Nov. 19 when Circuit Court Judge Robert Smith asked them to draw up an order recognizing the company’s conversion from a LLC to a Corporation and acknowledging its ability to condemn property in the state of Alabama. The order reverses a previous ruling by Mobile County Probate Court Judge Don Davis and puts the company one step closer to acquiring land owned by the Mobile Area Water and Sewer System and completing a 45-mile pipeline between a tank storage facility and Chevron’s Pascagoula refinery.
But Smith was more hesitant about ruling on a second question before the court, whether or not MAWSS legally asserted a claim the pipeline would adversely affect the drinking water supply. That question, Plains’ attorneys argued, was not under the jurisdiction of any state agency but rather under the realm of federal pipeline safety acts.
The court will consider the preemption argument after hearing evidence and testimony at a trial expected to begin Dec. 16. If Plains prevails, it will have to get a second judgment of condemnation and a determination of land valuation from a jury before it can complete its pipeline.
“[MAWSS] claimed Plains lacked authority based upon its entity form and [Smith] said both as a LLC or as corporation, they in fact did have that authority,” said Plains’ attorney Jarrod White. “Today he determined there are condemnation statutes determining that for the purposes of constructing interstate pipeline, Plains Southcap can condemn property. So as long as Plains has complied with all the other requirements, which it has, it will get a judgment of condemnation.”
Preemption is determined if there is a rule of law enacted by Congress that prevails over state law. White said MAWSS’ concern about pollution falls within that standard.
“They believe there will be an adverse affect to the drinking water quality and we believe that is a faulty concern,” he said. “We say they are preemptive and we expect the judge to prevent them from asserting those positions at the hearing Dec. 16.”
MAWSS attorney Don Beebe said the utility plans to bring forth evidence that doesn’t question the federal standards of pipeline safety, but argues for a “higher public use” of the property than that proposed by the pipeline company.
“We’ve never objected to the pipeline,” he said. “Our argument is it’s too much of a threat to our public use. The code section they cited to the judge on the preemption argument talks about what you do when there is a spill. So Congress is not denying that oil pipelines leak or spill, it addresses what you do when they do. Our position is when it does leak, it’s too late to do anything.”
The only witness in today’s hearing was James Bryce, the Joseph D. Peeler Professor of Law at the University of Alabama. Testifying on behalf of Plains Southcap, Bryce said he wrote portions of the state law bestowing eminent domain power to pipeline companies. In response to the probate court’s initial ruling, Bryce defended the code, saying it didn’t mention LLCs specifically to “eliminate needless distinctions between different forms of entities.”
Bryce testified that he has been tasked by state legislators to revamp the code for 2014.
In losing the argument against the company’s corporate conversion, MAWSS cannot force Plains to repeat the steps it took earlier in the condemnation process, such as issuing new letters of notification or performing new surveys. The question of whether the pipeline can be rerouted will likely not be allowed in the preemption trial.
Beebe did not say whether MAWSS would appeal today’s decision or disclose further plans about its strategy going forward.