From the Argus: South Dakota PUC approves oil pipeline

Technorati Tags: TransCanada, environment, crude oil, Keystone Pipeline

This just in from KELOLAND News:

ConocoPhillips Takes Half Ownership In Pipeline 
Oil company ConocoPhillips has taken a 50-percent ownership stake in a proposed oil pipeline that would deliver Canadian crude to U.S. refineries.  FULL STORY

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A story on the TransCanada Pipeline may be in the works at a major US magazine.

I received a query today from a contributing editor of one of the nation’s more prestigious monthlies about TransCanada and our situation here in South Dakota.

Whether they’ll actually do a story and whether they’ll focus on the South Dakota aspect of the line is TBA.   

Regardless, I would expect that the TransCanada Pipeline controversy is soon to be more than a local and regional story.

I’ll keep you posted. 

Here’s my latest entry on KELOLAND.com—Explaining TransCanada’s Use of Eminent Domain

An excerpt:

Why can TransCanada Pipeline use eminent domain when the project hasn’t received South Dakota PUC approval?

Because there’s nothing in South Dakota law that says TransCanada has to get such approval before implementing eminent domain proceedings.

If they are a common carrier pipeline—which means they charge people to carry stuff—then there is a provision of our laws that lets them use eminent domain.

It would seem more logical to require a common carrier to have their project approved by the PUC prior to putting people through the pain and considerable legal expense of eminent domain.  But that’s not what the law says… .

I was quoted in the Argus Leader this morining about TransCanada’s use of South Dakota’s eminent domain statutes regarding their crude oil pipeline.

• Read: Landowners’ options for challenging pipeline limited

There are a couple of additional points I’d like to make. 

• First, I think there is a possible attack on TransCanada’s use of eminent domain, but I’m keeping that under my hat in case someone engages me to fight this.

• Second, like our state’s problems with open meetings and open records access, the problem here is with the laws.  In the comments of the previous post, PUC Commissioner Dusty Johnson, or someone who says they are Dusty, notes that the PUC’s hands are tied.  TransCanada doesn’t have to get approval before using eminent domain under the common carrier provisions.

I’m going to write a complete post on the issue later this weekend. 

Scott Ehrisman whipped this up this morning in light of the TransCanada condemnations and no PUC approval.  

Good work, Scott! 

You read it here first but today’s Argus Leader confirms and provides many more details about TransCanada’s condemnations in northeast South Dakota.

Read: Pipeline may sue for land  

Excerpts:

PIERRE - The company proposing to pipe crude oil across eastern South Dakota from Canada to Illinois is beginning condemnation proceedings on some property, a rural water system official says.

TransCanada, the company proposing the Keystone Pipeline from Hardisty, Alberta, to Wood River and Patoka, Ill., filed a notice of condemnation on property on which BDM Rural Water System has its own easement, BDM Manager David Wade of Britton said Thursday… .

“It’s a surprise. I didn’t know we (rural water) could get a condemnation against us,” Wade said. He said the rural water system received “a sort of complementary filing,” because it held an easement on property the oil pipeline wants to cross… .

I have a major problem from a legal standpoint that TransCanada can put landowners through condemnation without the project being approved by the SD PUC.  While it is unlikely the PUC won’t approve the project, it is sort of like the people who have merely looked at your house in a real estate deal deciding to move in before they signed the papers to buy it.

If TransCanada was looking to win friends in South Dakota with this and their “thinner is better” pipe idea, then they have an odd idea of good public relations. 

(Hat tip to Madville Times.)

I have received confirmation from one condemnee that they have been served condemnation papers from TransCanada for the oil pipeline.  I am keeping their name anonymous:

We are one of the farmers that have been served papers by TransCanada.  There were 9 landowners listed on those papers that received summons at that time.  I understand that they have sent out more of the leading letters to other landowners. They are given from Sept 24th through the 30th to sign.  Otherwise, condemnation will be started on them also. That is the way ours started only last month. 

We have until next week to answer their summons. They say they have negotiated with us.  They came to our farm and told us to take what they offered or get nothing. Anyone has tried to work with the easement has been told that they can do nothing to change it.  We only get what they have offered and nothing else.

The lawyer in me wonders how TransCanada can utilize the state’s condemnation statute for common carriers without the pipeline project being approved first by the SD PUC.  Seems like putting the refined product before the oil well to me.

If anyone has the answer to that one, let me know.

And my thanks to the correspondent who emailed me with the update.
 

I have heard from a source of mine that would likely be in the path of the proposed TransCanada (Keystone) Pipeline that farmers in Marshall and Day counties have received condemnation notices from the pipeline for the largescale crude line.

I have not been able to independently verify this.

Recent news stories suggest the threat of condemnation from TransCanada.  Also, KELOLAND reported yesterday that the SD PUC has not approved the project, so condemnation may be premature.  KELOLAND has also reported that the Canadian government has approved the project.

Anyway, if you’ve received a condemnation notice, know someone who has, or are with TransCanada or some other company or agency and know the rumor to be false, let me know. 

As I’ve noted here before, my father Rodney spent over 40 years in the petroleum pipeline business, working his way up from a terminal operate to electrician to middle management in the head office.

So, as both a pipeliner and a former South Dakotan, he’s been following the TransCanada project with some interest.  As recently reported—read the Yankton P & D’s TransCanada Pipeline: Waiver Granted For Proposed Oil Pipeline  —TransCanada has made the decision to use thinner pipe in rural areas—like South Dakota.  And apparently the regulator are ok with that.

I asked my dad if it was that big of a deal.  His answer?

“They’ll save a lot, I mean a lot of money on pipe.  Pipe is sold by the ton.”

Apparently to TransCanada, the bad press and bad taste that their decision leaves in peoples’ mouths—read SD Moderate’s Oh This Is A Good Idea—is worth it in terms of cost savings.  

I don’t know, I think I would have stuck with the thicker pipe and the better public relations that brings.  

At the invitation of some landowners in Miner County, I spent a chunk of Saturday on a four-wheeler looking over some wonderful farmland and around the den table looking at TransCanada’s standard easement agreement and listening to some articulate and concerned farmers.  (For now, as they may be potential clients, they have asked me not to give out their names.)

Coming from a pipeline family, I’m somewhat familiar with the business.  I even spent summers working for a pipeline during college.  So, the mere fact that someone wants to put a pipeline in doesn’t make the hair on the back of my neck bristle.

But as a lawyer, I’ve drafted and reviewed scads of agreements and a few easements.  The Miner County landowners I visited with Saturday gave me a copy of the standard easement that prospective easement givers are being asked to sign.  Click here to see a PDF copy.

In my opinion, there are major problems with the proposed easements.  Not to get too legalese, these concerns are:

• The amount of payment for the easement—$10.  $10?  Yes.  Ten dollars.
  
•  That the landowners would not be able to sue for any future issues.  This is very unusual in my experience.
• Joint indemnifications.  While not strange on its face, why would a multi billion, multi-national corporation need a South Dakota farmer to indemnify them?
• Concerns over what is “negligence”?  Is it negligence if a farmer drives his or her heavy combine over the line and the line breaks?  I don’t know the answer.
• Only the landowner signs the easement, not the pipeline.  Does that make the agreement enforceable against only the farmer?  i don’t know the answer to that either.

And there are more issues.

The landowners I talked to love their land.  They don’t farm it fence row to fence row.  The have protected the many wetlands on their properties.  They have over one hundred acres of never broken virgin prairie.  They are excellent stewards of the land—and excellent operators.

They can’t understand why Governor Rounds would let a company come in and try to convince people to sign a one sided agreement; actually, not just one sided, but confiscatory.  They feel betrayed by their state and their government.

They also don’t understand why the pipeline would want to cross their land, which is full of wetlands and native prairie.  

The folks I talked to aren’t radicals.  They are just the kind of people you’d want on the land, not only helping to feed the rest of us, but doing it in a way that treats the land well too.  They understand that sometimes modern industrial life will intrude.  They are even willing to do their part.  

All they want is to be treated fairly.

If the TransCanada easement document is what they think is “fair,” TransCanada and the Governor’s Office may be in for a surprise.   

Above: A shot of the native grasses that thrive near a wetland on farm land in the path of the proposed TransCanada pipeline in Miner County, South Dakota.