Private land, private profit

Nebraska law leaves open door for oil companies

The letters started coming in July. Canadian oil company TransCanada offered Nebraska landowners along the route of its proposed 1,073 mile Keystone XL Pipeline a “premium price” for easements on their property. The alternative? They’d take the land anyway, through eminent domain. The pipeline would carry 500,000 barrels of tar sands oil each day from Alberta through six states to the Gulf of Mexico. The oil would cross through the Nebraska Sandhills and over the Ogallala Aquifer, the state’s largest source of drinking and irrigation water, according to the U.S. Geological Survey. The concerns stretch beyond simple water contamination in case of a spill. The Nebraska Wildlife Federation has asked the U.S. State Department to consider the pipeline's potential to increase soil temperature, greenhouse gas emissions and soil erosion before ruling on whether the project can proceed. That decision, only necessary because the pipeline crosses an international border, is expected early next year. But the lack of federal approval didn’t stop TransCanada Senior Land Coordinator Tim Irons from telling landowners this summer that the clock was ticking. “This letter is Keystone’s final offer and it will remain open for one month after the date of this letter or until you reject it,” Irons wrote in a July 21 letter to a Central City, Neb. landowner that was posted online by Mother Jones. “Keystone’s offer is high because the company prefers to acquire this property through negotiation and to avoid litigation and its associated delays and risks.” Randy Thompson — a landowner in Merrick County, northeast of Grand Island — received a similar letter in August, giving him until Sept. 1 to negotiate an easement or face condemnation. He told the company he wouldn’t negotiate until it had a federal permit to build. Sen. Mike Johanns backed the landowners that month in a letter to TransCanada president and CEO Russell Girling, asking the company to remove its deadlines. TransCanada complied, and spokesperson Jeff Rauh says the company has yet to exercise eminent domain in Nebraska. But they can. If a company wants to use eminent domain to build an oil well in Nebraska, it needs approval from the state's Oil and Gas Conservation Commission. But eminent domain rights already exist for companies that want to pump oil through the state All 50 states allow eminent domain for public-use projects. But Nebraska is the only state among the six in the pipeline's path with a specific statute allowing companies to use eminent domain for the transport of crude oil, petroleum or natural gasses. Creighton University law professor Eric Pearson says the key question for judges is whether a private company operating for profit — but promising jobs and economic development — serves a greater public good. He says a 2005 U.S. Supreme Court decision made things easier on private companies. The Court ruled 5-4 in Kelo v. City of New London that private gain for a company seeking the power of eminent domain doesn't necessarily preclude public benefit. On a case-by-case basis, almost any project that offered jobs, redevelopment or tax revenue now could potentially qualify for the right to condemn. Four international unions — consisting of the plumbers, pipefitters and engineers who likely would be hired to build the pipeline — say in a joint study that the project could bring more than $90 million in state and local taxes. “Economic redevelopment is not really a public use so much as an alternative private use,” Pearson says. “It’s not like a public highway or a post office. But the majority on the court said that was fine, in effect stretching the public-use clause.” University of Nebraska-Lincoln property law professor Anthony Shutz says the law is designed to protect both private and public interests. “Eminent domain exists first to protect landowners, but you also can’t allow one landowner to hold up an entire project,” he says. “Any property is sort of subject to some sort of public interest, because your ability to own private property depends on some recognition from the state.” Thompson knows the State Department's decision will decide the fate of his land. “My feeling is that if they do indeed get the permit, then we’re probably out of luck,” he says. “We will probably have to sit down and negotiate with them.” That’s unlikely to change, according to Nebraska State Sen. Ken Haar. “We’re not going to take eminent domain away from oil companies, but there might be some refinement as to where it could be used,” he says. Haar hopes to work with other state senators whose districts would be affected by the pipeline to examine the law and investigate potential changes. He isn’t sure what form those changes could take. But he knows he didn't like TransCanada’s ultimatum to landowners. “At the very least, they shouldn’t be sending threatening letters,” Haar says. “I’m sure we can do something in that area. We have control over that.”

posted at 09:34 pm
on Tuesday, December 07th, 2010

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