Landowners’ Options for Challenging Pipeline Limited
Published: September 29, 2007
http://www.argusleader.com/apps/pbcs.dll/article?AID=/20070929/NEWS/709290315/1001
South Dakota law appears to give TransCanada the right to exercise eminent domain in building the Keystone crude oil pipeline from its proposed entrance in the state at the North Dakota border to where it would exit across the Missouri River near Yankton.
If TransCanada is indeed free to compel easements from landowners, the only way it might be prevented from using them for a pipeline is if the federal government or the state Public Utilities Commission refuses to issue permits for Keystone. The South Dakota statute on energy transmission facilities requires “that a facility may not be constructed or operated in this state without first obtaining a permit from the commission.”
The PUC is holding public hearings on the pipeline in December, and the U.S. State Department also expects to decide late this year whether to issue a permit to allow Keystone to cross the U.S. border.
TransCanada officials say they hope to begin construction in South Dakota next year.
The proposed pipeline has become a contentious project for several reasons. Among them: Environmental concerns are associated with building it across wetlands, and it proposes to carry as many as 590,000 barrels of crude oil per day beneath the state to oil refineries in Illinois and Oklahoma.
Also, TransCanada’s plan to use eminent domain has infuriated some landowners and others who question whether a Canadian company should be able to condemn land in the U.S. TransCanada already has filed a condemnation notice on land on which the BDM Rural Water System has its own easement and on land owned by Lillian and Raymond Anderson near the North Dakota border at Langford.
Options are limited
Lillian Anderson, an outspoken Keystone foe, says “you think you have some rights. You hope you have some rights.”
But South Dakota statutes specifically provide “a common carrier may exercise the right of eminent domain in acquiring right of way,” and TransCanada appears to clear the state’s threshold for being a common carrier.
“All pipelines holding themselves out to the general public as engaged in the business of transporting commodities for hire by pipeline are common carriers,” reads the statute governing utility rights of way.
TransCanada operates 36,000 miles of pipelines, including the Northern Border natural gas pipeline in South Dakota, according to Keystone project representative Jeff Rauh. This month, the Canadian National Energy Board gave TransCanada permission to convert 537 miles of a natural gas line across the Prairie Provinces to carry crude oil and to build an additional 232 miles of pipeline and terminals. This covers the portion of Keystone from Hardisty, Alberta, to the U.S. border.
“We have reviewed all the applicable statutes and are very confident we’ve got the right to proceed with eminent domain,” Rauh says. “Our preference remains to continue to negotiate easements,” he adds, “… even with those who received indication we are moving into legal channels.”
Sioux Falls lawyer Todd Epp says “I have talked to landowners in the Howard area, and I have had e-mail communication with others. They are pretty unhappy about all this.”
He says he would tell such landowners their best bet is to try to stop the project at the PUC level and to persuade state legislators next year to tighten the common carrier rules. But Epp says of Keystone’s ability to use eminent domain now, “The bottom line, if it holds itself out to be a pipeline … I don’t know of anything anybody can do about it.”
Little concern elsewhere
Keystone would serve refineries in Wood River and Patoka, Ill., and in Cushing, Okla. In those states, the project doesn’t appear to be the lightning rod it is in South Dakota.
“There doesn’t seem to be much animosity or concern about this in Illinois,” Bond County board member Jill Franks says.
Jeff Leidel, editor of the Greenville Advocate, who joined Franks in attending a five-county area informational meeting Wednesday about Keystone, said: “All the economic-development type people and representatives of the county boards are gung-ho just because of the jobs that would be involved with putting it in. It’s something happening in their area. They didn’t voice any opposition.”
Dee Shieber, a commissioner in Oklahoma’s Kay County, says Keystone would run the full length of the county, and while TransCanada has not yet begun to seek right-of-way there, “I don’t anticipate any trouble. It will be going through mostly farmland. We need all the help we can get right now.” In a county given over mainly to growing wheat, “90 percent of our wheat has been left standing” this year because of dismal yields from drought, Shieber says.
TransCanada’s defense
Rauh notes TransCanada is seeking right-of-way for Keystone, not title to property. He also says as the company tries to acquire that right-of-way, “the statutory construction and even the regulatory review varies greatly from state to state.
“Clearly, if the project is not approved, we cannot build the project.” But Rauh insists TransCanada is not shouldering undue risk by securing easements in advance of regulatory approval.
He also dismisses speculation TransCanada’s pedal-to-the-metal approach to Keystone in South Dakota and elsewhere is so it can remain ahead of a potential competitor for Alberta’s crude oil. Enbridge wants to build a pipeline from Alberta to Wisconsin.
“No, it is not,” Rauh says. “It’s reflective of our desire to meet the needs of our customers for crude oil, starting in the fourth quarter of 2009.”
Reach reporter Peter Harriman at 575-3615.