Tuesday’s denial of Kinder Morgan’s request for a Certificate of Public Convenience and Necessity does not mean the Palmetto Pipeline is dead.

Rather, it is an obstacle that the Texas-based oil company still can overcome with some work. Its next step to keep the process going, according to Georgia law, is to file an appeal in a county superior court within 30 days.

“We very likely will appeal, and that will put it in the judicial system,” Allen Fore, Kinder Morgan’s vice president of public affairs, said in a phone interview Wednesday. “We knew this was going to be a long process.”

Georgia Department of Transportation Commissioner Russell McMurry denied the request for the certificate, which is needed for Kinder Morgan to have the power to invoke eminent domain to pass the proposed 360-mile Palmetto Pipeline through property whose owners do not want to negotiate, or do not accept a negotiated offer, for compensation in exchange for the right-of-way to extend the petroleum pipeline.

However, Fore contends the matter belongs in court rather than being decided by the DOT. He questioned the Georgia statute McMurry applied in making his decision.

“It’s about this narrowly applied statute which, frankly, has been applied only once before,” Fore said. “The applicability of this statute to eminent domain is open to debate.”

Eminent domain has been a particular sore spot with a number of property owners who have voiced their objections to the pipeline in two official DOT public hearings and several open houses held by Kinder Morgan.

The pipeline is proposed to include 210 miles in Georgia, including 7 miles in Bryan County, according to McMurry’s letter. But in a presentation to the Development Authority of Bryan County last month, Kinder Morgan officials said the proposed route has been changed to require 11 miles in the county.

“After careful consideration of information in the application submitted by Kinder Morgan on behalf of Palmetto Pipe Line LLC, which is owned by Kinder Morgan; numerous public comments submitted at seven public meetings held by Palmetto; two public hearings hosted by the Georgia DOT; and approximately 3,000 public comments submitted online and by mail to myself and the Utilities staff, the department has determined that it will not issue a Certificate of Public Convenience and Necessity,” McMurry said in a statement issued Tuesday morning. “The basis for the decision is outlined in our correspondence to Palmetto Products Pipe Line LLC.”

In that letter, McMurry largely cited a forecast lack of demand, in contrast to claims by Kinder Morgan that studies indicate demand for gas will increase in Georgia in coming years.

Kinder Morgan cited data from a December 2010 report by the University of Georgia’s Carl Vinson Institute of Government. The company used that report to tie increases in fuel consumption to projected population increases, McMurry noted.

However, he said, several sources contradict Kinder Morgan’s assertion. The U.S. Energy Information Administration forecasts that nationwide, petroleum-fuel consumption “across all sectors in 2040 is unchanged from 2013 levels” because of increasingly fuel-efficient vehicles being driven. Also, fuel consumption in Georgia peaked in 2006 at 6.5 million gallons, according to state Department of Revenue data, and an analysis of the data projects that by 2020, Georgia’s fuel consumption will be 9 percent lower than in 2006, despite population growth — again, largely because of fuel-efficient cars, McMurry wrote.

“We don’t enter into a project without confidence it will be used significantly,” Fore responded. “We’re building this project based on customers, and those customers deliver gas to gas stations in Georgia. It’s as simple as that. They’re not going to be storing gas in tanks for 20 years.”

McMurry also cited price. Despite Kinder Morgan’s assertion that its pipeline would increase competition for petroleum fuel in the Augusta, Savannah and Jacksonville, Florida, markets, the company itself noted that it has no control over the prices petroleum suppliers set.
Further, McMurry added, Kinder Morgan did not provide enough information to determine whether its pipeline would result in an increase in the number of petroleum suppliers to eastern Georgia, meaning McMurry “cannot reasonably conclude that the project will provide any benefit to the region in terms of fuel prices.”

Kinder Morgan Products Pipelines issued a response Tuesday from its president, Ron McClain, indicating in part that the company is “disappointed” with the DOT’s decision.

“We believe that we have more than adequately demonstrated that this project is in the best interests of Georgia’s consumers, as it will result in lower costs and provide safer transportation of refined petroleum products to many areas in the Southeast, including specifically many communities in Georgia,” McClain said. “The fact the proposed pipeline is fully supported by long-term commitments from multiple customers seeking safer and more-efficient supply options, and that it was so vehemently opposed by certain existing refined-petroleum suppliers with vested economic interests in maintaining the status quo of artificially higher prices, is itself compelling evidence that the pipeline will serve needs that are not being met by current supply options. We continue to believe in the viability of the project and its economic benefits to the Southeast region and Georgia in particular, and we plan to pursue all available options to move forward with the project.”

Regarding eminent domain, McClain added that “over 80 percent of the landowners potentially impacted by the Palmetto Pipeline have already agreed to have their property surveyed.”

As for environmental concerns, McClain said, several agencies, including the U.S. Army Corps of Engineers and Georgia Department of Natural Resources, will be involved “to ensure protection of the environment.”

Riverkeepers said they were pleased with the DOT’s decision, but that the process isn’t over yet.

“Commissioner McMurry is to be commended for his refusal to let Kinder Morgan annihilate some of our state’s most beautiful, prized natural resources,” Ogeechee Riverkeeper Emily Markesteyn said. “In addition to unfairly ousting many Georgians from their land, the Palmetto Pipeline would have endangered the coast by risking the safety of residents and wildlife, as well as the health of the ecosystem. Had the pipeline been put in place, a leak would have been environmentally catastrophic to the Peach State’s coastal region. We applaud the DOT for doing the right thing.”