Eminent domain, the government’s power to take private property for public use, is rooted in the Fifth Amendment, which mandates that the government pay just compensation in exchange for the land. Typically, municipalities have invoked that power for public projects like schools and roads.
In 2005, the Supreme Court ruled 5-4 that governments could also take property and transfer it to private developers, arguing that a community’s economic growth was a justified “public use” under the Fifth Amendment. That case, Kelo vs. City of New London, alarmed many state governments — including Pennsylvania’s — which subsequently changed their eminent domain laws to mostly forbid such a practice.
In Pennsylvania, eminent domain is generally limited to the state and municipal governments, but it can also be exercised by entities known as “public utilities,” a broad category that includes railroads and bus companies; water, oil, gasoline and natural gas suppliers; and sewage collectors, among others. Such public utilities generally only meet the definition if they supply their services directly to the public, which has emerged as a key point of dispute in the Sunoco controversy.
Sunoco Logistics Partners operates federally regulated “common carrier” pipelines — meaning its rates are controlled and it must almost always offer its services to anyone who pays — and it has argued that such a status also makes it a public utility in Pennsylvania. But opponents have pointed out that common carriers are only regulated to provide their services to other businesses, not consumers. (Sunoco, for example, sometimes ships oil and refined products such as gasoline and natural gas liquids to petrochemical manufacturers, but not to consumers’ homes.)
In Texas, which has allowed extensive oil and gas development for far longer than Pennsylvania, the state government has afforded common carriers the power of eminent domain, though the state Supreme Court has begun to roll back that power in recent years. Whether Pennsylvania will do the same could depend, in part, on the outcome of the Sunoco case.