By Dustin Hurst | Watchdog.org
IDAHO FALLS, Idaho – Bob Allpress, a farmer from the tiny Nebraska border town of Naper, isn’t dead set against the Keystone XL Pipeline, though he wishes the company behind the project, TransCanada, would take it someplace else.
“We’re not 100 percent against the pipeline,” Allpress said. “If only it were sensibly located.”
Allpress is just one property owner affected by the pipeline, a 36-inch oil conduit slated to run from eastern Alberta, Canada, to southern Texas oil refineries. He lives on more than 900 acres, ground he splits between crops – usually corn – and cows.
The pipeline, as it snakes through the ground, will also come within about 150 yards of his home. It will also come too close, he says, to a well that provides drinking water for his family and a few neighbors.
TransCanada wants to stick the pipeline right down the middle of his land, cutting the cropland and the pasture in half. The company, if it ever wins federal approval for the project, will take forever a 50-feet wide swath of land from Allpress, and an additional 60 feet span during construction to accommodate cranes, truck and digging equipment.
Once the company finishes pipeline construction, Allpress will be able to use the land again, but TransCanada reserves the right to access the pipeline in emergency circumstances.
For the inconvenience, TransCanada will pay Allpress, like others along the path, a set amount for the temporary and permanent easements, plus another sum for crop losses. The company has also offered to rent pasture land on behalf of ranchers with displaced livestock.
As the Keystone debate, more than four years old, chugs along, the nation fixates on a classic battle of Washington, D.C., powers: Republicans vs. Democrats and environmentalists vs. business.
Yet, in the Cornhusker state, the controversial project divides even deeper, splitting many residents and interested parties who would self-identify as Republicans or conservative. Many of these farmers, typically supportive of a pro-business growth agenda, seem to have one message for TransCanada: not in my backyard – or my farm, either.
“It’s the location,” Allpress says of reason for opposition to the project. He would eagerly back the project if it were routed differently – a further distance from his home and water source.
The division comes because of Nebraska Code 57-1101, the section of state law that gives TransCanada a huge stick to use during its negotiations with property owners: Eminent domain authority.
“They have eminent domain hanging over our heads,” Allpress muttered. “They’ll get us one way or the other.”
The company isn’t afraid to flash the authority, as it revealed in a July 2012 letter to a Central City, Neb., landowner.
“While we hope to acquire this property through negotiation, if we are unable to do so, we will be forced to invoke the power of eminent domain and will initiate condemnation proceedings against this property promptly after the expiration of this one month period,” a TransCanada senior land coordinator wrote.
TransCanada did not return an email request for comment on the story.
The situation has many affected Cornhuskers wondering: Why does a private company have state-granted power to take my land?
The answer: pufferbellies.
Christopher Burch, a constitutional lawyer for the 1851 Center for Constitutional Law in Ohio, says a natural evolution occurred in the last century that allow for pipeline companies to use eminent domain. “It’s all derived from railroads,” he explained.
Here’s Burch’s explanation of the progression: In the early 1900s, railroads, holders – and often abusers – of eminent domain authority, hauled oil across the countryside. Businesses, seeing pipelines as a safer and ultimately cheaper alternative, lobbied governments to extend the same privileges to pipelines.
Intelligent minds disagree about the rightfulness of delegating that power to pipeline companies, though.
Maurice Thompson, a constitutional lawyer and executive director for 1851, believes the pipeline companies shouldn’t have power to condemn land for their own use. The reason? The public doesn’t use the pipeline, a classical argument of eminent domain.
“The use of property has to be by the government,” he explained. “The Constitution requires public use, not public benefit.
Scholars on the subject generally agree that justification for eminent domain use has broadened widely in the past century, sliding from public use to public purpose to public benefit. Public use, for example, means taking land for roads and bridges. Public benefit, in the vastly expanded understanding, might mean condemning a less valuable property in favor a development that will create jobs or greater tax revenue.
Thompson wonders if the Keystone, which makes no stops in the Nebraska, even directly benefits the state under the widened scope of eminent domain powers. “Does it service anybody in the state, much less everybody?” Thompson asked.
Bill Blake, an attorney with Baylor Evnen Law Firm in Lincoln, Neb., says because the line transports oil, a product always in demand, it clears the public-benefit threshold. He also notes that Keystone will generate millions in new revenue for local taxing entities, including school districts who, he says, are “thrilled to receive it.”
Nebraska itself has taken a stand on taking land for economic development purposes. In 2005, the U.S. Supreme Court ruled in the Kelo vs. New London case that taking land from one party to give it to another group promising greater economic benefits from the land served as a legitimate and legal function of eminent domain.
In a rush to fight back, Nebraska lawmakers passed in 2006 LB924, which essentially banned eminent domain takings for economic development purposes. Lawmakers conveniently carved an exemption for oil and gas pipelines.
The economic benefits argument serves as a powerful persuader in the divisive Keystone rumble. That line of thinking attracted a powerful ally from a somewhat unlikely source: a free market think tank that also professes to treasure property rights.
The clash between the property rights and economic development is readily apparent at the Platte Institute, an Omaha-based free market think tank. Throughout the battle over the pipeline, Platte’s stood as an ardent backer. The institute even published in September 2011 a comprehensive report to drum up support for the project.
Yet, less than a year later, Platte released another post extolling economic freedom and “the fundamental right of every human to control his or her own labor and property.”
What gives? Jim Vokal, the institute’s executive director, told Watchdog.org that, in this case, the project’s economic benefits trump property rights. “We support it because it brings significant economic benefit to the state,” he explained. According to Platte’s own numbers, Keystone will bring 7,500 jobs and millions in new tax revenue.
“The economic advantages outweigh any concerns Platte has over eminent domain,” he continued, adding that state law gives homeowners a fair process for garnering just compensation from the takers.
Thompson ardently disagrees, arguing that giving a private company eminent domain authority leaves landowners at a distinct disadvantage and harms their economic interests.
“It’s the ultimate in corporate welfare,” argues Thompson, who’s well-versed in pipelines and eminent domain. He successfully fought back against Enterprise Liquid Pipeline, a Texas-venture, when it wanted to use eminent domain authority to push a pipeline through the Buckeye State.
Thompson strongly believes that pipelines shouldn’t have eminent domain authority because it hurts landowners in negotiations, thereby helping corporate bottom lines. “The threat of eminent domain … gives corporations tremendous leverage to lower the amount they pay,” he said.
His evidence? Thompson said that once Enterprise realized it couldn’t simply take land, it increased the easement payment offer to one of his clients by nearly $100,000.
To borrow and tweak slightly a Notorious B.I.G lyric, “Mo’ money, mo’ pipeline.”
“Everybody has a price and if they don’t, you go around them,” he said. If landowners and pipeline companies can’t amicably agree on a price, he said, the route should move elsewhere.
“If you pay enough money, you’ll always find someone willing to let you cross their field,” Thompson said.
Lawyers involved directly in Keystone talks agree the process needs some reform, though they can’t agree on what route to take.
Brian Jorde of Domina Law in Omaha has been actively involved in easement negotiations with TransCanada. He boisterously supports eminent domain reform for the state because he, like Thompson, says landowners received the short end of the stick.
“TransCanada gets a forever easement for a one-time payment,” he complained, though he didn’t say whether lawmakers should eye stealing eminent domain authority away from pipelines. Instead, he said, easement terms should come on a temporary basis, forcing TransCanada to pay landowners in regular intervals.
Blake scoffs at the idea that money alone could buy a pipeline’s successful passage.
“What are you going to do if you have one holdout?” he queries. “What if that holdout asks for $100 million?”
Blake, who represents a number of property owners negotiating with TransCanada, holds his own reform ideas, but nothing to restrict condemnation use by private pipeline firms. Instead, he wants more disclosure by companies during negotiations and a regulation preventing businesses from beginning condemnation proceedings until after obtaining all required permits.
Still, he admits that eminent domain prevents Nebraska landowners from cashing in on Keystone. When asked if TransCanada hears proposals about regular easement payments, “it goes nowhere,” he responds, blaming eminent domain for keeping that compensation plan out of discussions.
The Lincoln lawyer also points out that if the project’s cost balloons, so will the price of oil running through the line. That, he says, is tantamount to a tax. “We all pay for it somewhere else,” Blake notes.
Thompson is more of a purist on that issue. He doesn’t care if oil companies have to move oil through a more expensive alternative, usually rail service. “It’s more economically efficient to ship it through a pipeline,” he offers. “Is that a public use, to improve profit?”
Allpress confirms Thompson’s line of thinking, with one caveat.
“That’d be fair to us,” Allpress said of regular payments from TransCanada to property owners. “They’re making billions of dollars off this and they’re paying us a pittance.”
Combine a re-routed line steering clear of his home and well and regular payments from TransCanada, and Allpress says the energy giant wouldn’t see any objections from him.
“Something like that would be fair.”
Contact: Dustin@Watchdog.org or @DustinHurst via Twitter.