Request By:
Mr. Ron Johnson
Executive Director
Economic Development Commission
Capital Plaza Tower
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
Maysville and Mason County have created the Maysville-Mason County Port Authority, pursuant to KRS 65.520, to be located some four miles from Maysville, on the Ohio River. It is anticipated that the Port Authority will issue its revenue bonds, pursuant to KRS 65.600, for the purpose of acquiring "riverport facilities", including land, wharves, equipment, etc., sufficient to provide a riverport operation. KRS 65.510(2).
THE RIVERPORT'S LESSEE
The Port Authority is planning to acquire such facilities and then subsequently lease a substantial portion of its facilities to a private Kentucky corporation, whose principal purposes are to engage in the erection and operation of coal transloading facilities and to carry on the business of providing facilities for the unloading of coal from railroad hopper cars, trucks and other vehicles or carriers for the reloading of coal into barges for further transportation.
Thus this private corporation, as the Port's lessee, plans to transload in the port area great quantities (millions of tons) of Eastern Kentucky Coal onto barges in the Port River area for shipment to utility purchasers in the midwest and west. This kind of lease arrangement is permitted by KRS 65.530(4). A companion corporation plans to acquire a short rail line owned by L & N, running from Paris, Kentucky, to Maysville, but whose tracks do not cross over the Chessie track system. Coal will be loaded onto the hoppers in Paris and shipped by rail on this short line to the Port area, just short of the intervening Chessie tracks.
NECESSITY FOR AIRSPACE OVER CHESSIE TRACKS
There is one major problem. The Chessie Railroad System owns a double track right of way which runs somewhat parallel to and near the Ohio River and across the general area of land to be acquired by the Port Authority. In order for the private corporation to be able to transload coal from rail cars or trucks and finally onto barges, it will be necessary that sufficient air space rights over the Chessie track system be obtained. Air space rights would accommodate a conveyor belt system which could take the coal unloaded from rail hoppers or trucks and carry it over to the Port's river area for loading onto barges. Amtrak and five to seven freight trains, containing, perhaps, 50 to 70 rail cars each, go over these Chessie tracks daily.
THE LEGAL ISSUE
Your specific question is whether or not the Port Authority has the authority to condemn the necessary air space over the Chessie right of way. 1
AIR SPACE IS CRITICAL TO PORT OPERATION.
It is our understanding that presently the Eastern Kentucky Power Company has an agreement with Chessie relating to a conveyor belt system over a portion of the Chessie right of way. The conveyor is some 80 to 100 feet over the right of way. It is further our understanding that this air space right is necessary if the whole Port project is to come into existence. However, the air space right must be continuous or perpetual if the venture is to jell.
PUBLIC PURPOSES OF PORT AUTHORITY
A port authority is not a child of the local governmental units creating it. It is a public or governmental agency with clearly defined public purposes, which include the establishing, maintaining and operating proper riverport and river navigation facilities, and the acquiring and developing of property, or rights therein within the economic environs of the riverport or proposed riverport to attract directly or indirectly river-oriented industry. It has the duty and necessary powers to promote and develop navigation, river transportation, riverports, and riverport facilities, and to attract industrial or commercial operations to the property held as industrial parks. KRS 65.530(1). Subsection (4) permits the Authority, inter alia, to lease, sell, convey or assign its interest in land owned, optioned, or otherwise held by it to any person for the purpose of constructing and/or operating any industrial or commercial facility or for the purpose of acting as the authority's agent or licensee in effectively carrying out any of its powers and duties.
PORT'S AUTHORITY TO CONDEMN
KRS 65.530(4) and (5) authorize the port authority to condemn in its own name [when the property cannot be acquired by purchase or agreement], with the consent of the legislative body of the governmental unit in which the property to be condemned is located [here, the fiscal court], "any real, or personal property, or rights therein, necessary for the establishing and operating of a riverport. (Emphasis added). Procedure of the Eminent Domain Act of Kentucky must be used.
CONDEMNATION OF AIR SPACE FOR A PUBLIC USE
It is clear that the foregoing enumerated powers of a port authority are to be exercised for a public purpose and necessity, as so declared by the legislature in KRS 65.630. The specific question is whether, under the assumed facts, the condemnation of the air space over Chessie tracks would constitute a public use.
CITY OF OWENSBORO CASE
In the City of Owensboro v. McCormick, Ky., 581 S.W.2d 3 (1979), the Supreme Court of Kentucky struck down as unconstitutional those provisions of the Local Industrial Authority Act granting a city the unconditional right to condemn private property, which is to be conveyed by the local industrial development authority to some private person or corporation for private development or for industrial or commercial purposes.
The court noted that §§ 13 and 242 of the Kentucky Constitution prohibit the taking of private property for "public use" without compensation. The court emphasized the words "public use" appearing in those sections.
The court's rationale was given at pages 5-6:
"Naked and unconditional governmental power to compel a citizen to surrender his productive and attractive property to another citizen who will use it predominantly for his own private profit just because such alternative private use is thought to be preferable in the subjective notion of governmental authorities is repugnant to our constitutional protections whether they be cast in the fundamental fairness component of due process or in the prohibition against the exercise of arbitrary power. Ky. Const. Sec. 2."
Although in one part of the opinion the court seems to suggest that "public purpose" can never be equated with "public use" , for purposes of condemnation, other parts indicate that this synonymity can exist where the clear public purpose, such as the blight area, or widespread unemployment, or the public welfare is evident and outweighs substantially the consideration that a mere choice of entrepreneurs operating on the condemned property is made.
The strictness of this view, however, can only be understood within the narrow frame of the Industrial Development Authority legislation, which gave rise to that decision. As the court said, the act places few limitations upon the exercise of the power of eminent domain. The avowed public purpose of industrial development was viewed by the court as somewhat rhetorical, and not based upon compelling economic reality and economic necessity. The court said at page 6 that "The Kentucky Local Industrial Development Authority Act makes no findings nor does it recite goals nor does it express guidelines."
PUBLIC PURPOSE AS PUBLIC USE
It is our view that City of Owensboro, above, was not designed to foreclose condemnation in every piece of revenue bond legislation, such that "public purpose" could never be synonymous with "public use" , for purposes of condemnation. To the contrary, the opinion suggests that under proper legislation and under a proper application of socioeconomic facts, "public pupose" could be equated with "public use" for purposes of eminent domain. We think that is the case here in connection with a riverport authority's condemning air space for its statutory purposes.
OWENSBORO CASE DISTINGUISHED
To begin, the private operations of the Port's proposed lessee will be integrated with the Port's river loading and unloading area [barge and wharf area]. The Port will also carry on a general public cargo receiving and shipping activity.
This situation is clearly distinguishable from the Owensboro case, since the private entrepreneur, Chessie Railroad, will not, in any way, be restrained or prevented from carrying on its usual rail business. The Port's lessee's coal will go over the Chessie tracks by conveyor belt, and the Chessie trains will go on unobstructed along its tracks. There is no displacement of an existing private business.
THE NATIONAL AND STATE ENERGY CRISIS
In connection with the economic necessity and "public use" aspect of this proposed condemnation, the perpetual national and state energy crisis, and the concomitant and compelling need for the increased production, flow, and distribution of Kentucky coal throughout the nation eloquently attests to its "public use" nature. This, indeed, is not a mere matter of incidental benefit accruing to the public. This subject of energy, with its Kentucky and other state coal implications, reaches the very question of the effective continuation of our free society. We are not dealing with mere idle economic or business speculation. We are talking about survival. But to survive we must have dreams, vision, and then actual programming. While "public use" , in connection with condemnation, is not capable of precise definition, the degree of public benefit is important, but the crucial question is one of necessity for the development of the resources of a state. 26 Am.Jur.2d, Eminent Domain, §§ 27 and 28, p.p. 671-675.
THE USE OF THE AIR SPACE WOULD BE A PUBLIC USE.
The right of eminent domain is an attribute of sovereignty, the right of the sovereignty to use property of its members for the public good or necessity. Foley Construction Company v. Ward, Ky., 375 S.W.2d 392 (1964) 393. But it is a sacred trust, and not to be exercised arbitrarily.
While the question of the necessity for the exercise of eminent domain is one for the legislature, the question of whether a public use is involved is for the courts. Further, Spahn v. Stewart, 268 Ky. 97, 103 S.W.2d 651 (1937) 654, 655, defined "public purpose" as having for its objective the promotion of the public health, safety, morals, general welfare, security, prosperity and contentment of all inhabitants within a given political division; but the court held that to constitute a public purpose or public use for the purposes of condemnation there must be a far reaching and obviously public benefit involved [the elimination of the menace of slums was such a far reaching public purpose and public use] .
The case of Dinwiddie v. Urban Renewal & Community Dev. Ag., Ky., 393 S.W.2d 872 (1965) 875, stands for the proposition that once the question of public purpose has been properly decided, the amount and character of land to be taken for the project and the need for a particular tract to complete the integrated plan rests in the discretion of the legislative branch. See 26 Am.Jur.2d, Eminent Domain, §§ 132 and 133. Here the condemnation of the air space over Chessie tracks is a vital part of the whole proposed port authority operation, and it should be considered as an integral part thereof.
Our Constitution [§§ 13 and 242] does not define what is "public use. " Thus it is for the courts to determine, where there is any doubt, whether the use is of such character as to constitute a public use for purposes of condemnation. Chesapeake Stone Co. v. Moreland, 126 Ky. 656, 104 S.W. 762 (1907) 764. It is our opinion that, under the total facts given as to the proposed application of the statutes, the use of the air space by the private corporation-lessee of the Port Authority would be a public use within the broader intendment of §§ 13 and 242, Constitution.
Since the proposed lessee of the Port Authority would be engaged in a public purpose and public use [in the ultimate sense] of the port owned properties, then it is fundamental that a condemning authority may determine without let or hindrance the amount of land [or related rights] necessary for the public purpose. Kroger Co. v. Louisville & Jefferson County Air Bd., Ky., 308 S.W.2d 435 (1958) 439. Such discretion is not reviewable by the courts unless there has been a gross abuse or manifest fraud.
CONCLUSION
In conclusion, it is our opinion that the Port Authority would have the authority to condemn the stratum of air space over the Chessie tracks and right of way, sufficient to carry out the proposed port operation purposes. Cf. Shipp v. Louisville & Jefferson County Air Board, Ky., 431 S.W.2d 867 (1968). Note that KRS 416.540(5), defines "property" subject to eminent domain as real or personal property, or both, of any nature or kind that is subject to condemnation. Of course the conveyor system must not obstruct in any way the operations of Chessie [see KRS 277.240, providing that no passway over a railroad shall be at a height less than 22 feet].
Footnotes
Footnotes
1 See discussion of airspace rights in Nichols on Eminent Domain (3rd ed.) Vol. 2, § 5.781. Also see Bowling Green-Warren County Airport Bd. v. Long, Ky., 364 S.W.2d 167 (1963) 171.