Plains Southcap appeared in Mobile County Probate Court on Sept. 12 to present a motion in front of Judge Don Davis to strike “impertinent and insufficient objections and defenses” asserted by the Mobile Area Water & Sewer System related to a property condemnation. MAWSS is asking the court to dismiss Plain’s condemnation action.
Plains’ action against MAWSS is to obtain approximately 4,402-feet of right-of-way to complete the construction of a 41-mile interstate oil pipeline running from Pascagoula, Miss. to the Ten Mile Terminal in Mobile County, where it connects to other pipelines.
In November 2012, MAWSS and Plains Southcap agreed upon a Letter of Intent (LOI) that stated the pipeline would be constructed across MAWSS property through the Big Creek Lake watershed, Mobile’s primary source of drinking water.
The condemnation action means Plains is arguing that it has eminent domain, the right to expropriate private property for public use with payment as compensation. MAWSS says since Plains is an LLC and not a corporation, they are not entitled to the power of eminent domain.
Plains however, says MAWSS’ agreement to enter into the LOI constitutes its recognition of Plains’ authority to construct a pipeline and its rights to acquire the property through eminent domain if necessary.
MAWSS appeared before Judge Davis first and argued that Alabama statutes and constitutions don’t expressly give LLCs the power of eminent domain, so Plains has no authority to condemn land.
“Eminent domain has to be expressly granted, not implied. You’re taking someone’s land against their will, basically,” said MAWSS attorney Chris Arledge.
He went on to say that a LLC is a partnership, which is a quality that prevents an entity from receiving the power of eminent domain. He added that just because Plains is a foreign entity (formed and registered in another state), doesn’t mean they could have greater rights than one registered in Alabama.
In January 2012 the Alabama Public Service Commission issued Plains a Certificate of Industrial Development. Arledge argued the Public Service Commission’s ruling “doesn’t amount to anything in this case.”
Arledge concluded by saying the court cannot change the law, but has to strictly enforce it and Plains Southcap has not been given the power of eminent domain, therefore they’re asking the court to dismiss Plain’s condemnation action.
Plains attorney Jarrod White tried to bring an expert witness to the stand, however Davis denied the request and said he wouldn’t accept evidence since the hearing was on MAWSS’ motion to dismiss.
White went on to explain the Public Service Commission is relevant to the case because it determines the entity applying for a certificate is a valid entity. White said the Public Service Commission gave Plains the certificate, which proves Plains has the power to condemn.
The plaintiff went on to say they believe eminent domain is a sovereign right, and the Alabama constitution has two restrictions to that right. White said the two limitations to the sovereign right of eminent domain are first, there must be just compensation and second, the land must be for public use, but the property can be taken privately.
White said neither restriction bars them the right of eminent domain.
He also addressed the foreign entity reference by MAWSS, arguing Plains does indeed have the right of eminent domain under the revised Alabama Business Act because as a foreign entity, it extends its lines into the state and connects with other pipelines, giving Plains the same permissions Alabama companies have.
Plains already operates a separate 14-inch oil pipeline within the watershed.
White went on to say that the Alabama Constitution states associations having one of the powers or privileges of a corporation means the association can be considered a corporation. Plains has limited liability and continuity of life which, the plaintiff argued, makes it fall under a corporation.
Arledge followed up by again asserting that there’s “not one case, constitution or statute that gives an LLC the power of eminent domain.”
Arledge said he didn’t understand the plaintiff’s Public Service Commission argument, and the sovereign rights argument doesn’t apply because the “plaintiff is not the state and doesn’t have unlimited rights.”
Arledge also replied to Plain’s constitution reference, saying continuity of life and limited liability are aspects of a corporation, but taxes and such are not. Arledge said the Internal Revenue Service states if you have two or less privileges of a corporation you’re treated as a partnership, but with three or more you’re treated as a company.
As the hearing concluded, Judge Davis said new case laws and statutes were presented today that he would review. He will take the matter under advisement and come to a decision as soon as possible.