Pipeline may sue for land: Sioux Falls SD Argus Leader, 9/28/07

Condemnation proceedings surprise owners

By Terry Woster and Melanie Brandert

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.

If negotiations with landowners fail to get an easement, right of eminent domain gives TransCanada the ability to take landowners to court. In court, a fair price would be set for the easement or to take the property.

"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.

Wade said the legal action means his organization must work with a lawyer to respond to the petition for condemnation filed in Marshall County Circuit Court. He said other landowners have received condemnation notices recently, even though TransCanada hasn't received a permit from the South Dakota Public Utilities Commission for the proposed route through the state.

"It's a foreign company trying to condemn" property, Wade said.

The petition gives BDM 30 days to respond or the pipeline company will "apply to the court for an order to empanel a jury and ascertain the just compensation for the property proposed to be taken or damaged," the summons says.

TransCanada is scheduled to make its case before the PUC beginning Dec. 3. That's when evidentiary hearings are scheduled on its request for a permit. It isn't clear whether the state commission has any authority to question condemnation actions in the matter, even though the PUC is charged with deciding whether to issue a permit.

Lillian Anderson and her husband, Raymond, who live five miles west of Langford, also received a condemnation notice in early September. She said she thought TransCanada was jumping the gun with the notice because it doesn't have a permit yet from the PUC.

"You don't know what to think," she said about the notice. "You think you have some rights. You hope you have some rights."

Anderson said she and her husband weren't sure how to handle the notice yet. She didn't want to discuss whether they would consult a lawyer like the rural water system has.

Earlier this month, PUC Chairman Dusty Johnson said statutes related to the PUC process don't mention eminent domain or condemnation.

Johnson referred the question to John Smith, the PUC's general counsel. He responded with a list of several state laws dealing with eminent domain and pipelines, then added, "As of this time, no one involved in the proceeding has pointed to any statute that gives the PUC authority to determine the right to take under the South Dakota condemnation statute."

One section of state law, Smith said, "Seems to state that the 'right to take' decision is made by the court."

Whether or not the pipeline company has authority to condemn property for its project, it should try harder to negotiate agreements without legal action, says Curt Hohn, WEB Water Systems general manager and a vocal critic of TransCanada's plan for a South Dakota route.

"It can take a long, long time to negotiate a pipeline route, but if you take the time, you don't leave a sour taste in people's mouths when you're finished," Hohn said in a recent interview. "It isn't easy or quick that way, but you don't make as many enemies."

Keystone intends to be moving crude oil in 2009, said Jeff Rauh, pipeline project spokesman. That means construction must start next year.

"We continue to try to work with landowners to try to negotiate easements," he said. "In cases where negotiations are not processing, we still have a need to meet commitments to deliver oil to refineries in the Midwest."

Rauh called the filings of petitions for condemnation a legal step that's necessary if negotiations aren't successful.

Rauh also noted that the condemnation being contemplated in the Keystone project affects land in a different way than does condemnation for highways or reservoirs. In those instances, the land is forever taken from the landowner, he said. The easements the pipeline company wants in South Dakota generally will mean temporary loss of a portion of property while construction is under way. In most cases, because the pipe is to be buried 4 feet under the surface, the land may be used again, Rauh said.

A witness for Keystone filed written testimony with the PUC earlier this week that touched on eminent domain.

Michael Koski, vice president of energy services for TROW Engineering Consultants of Tallahassee, Fla., prepared the testimony as project director of the technical team for the Keystone Pipeline.

His testimony suggested it would be nearly impossible to complete the pipeline route without some condemnations.

Koski was asked: "Can you tell us to what extent the reliance on eminent domain power could be reduced by use of an alternative site?"

"Yes, I can," he said. "All practical route alternatives for the Keystone project involve crossing privately owned lands. Accordingly, there is no known viable alternative route which would reduce the possibility for reliance on eminent domain powers. As a 220-mile linear facility, Keystone requires easements from a large group of landowners. Keystone is endeavoring to negotiate easements with all landowners on a voluntary basis. It is not possible, however, to site the project on a route where the project will impact only landowners who are willing to grant easements on a voluntary basis."

Sioux Falls SD Argus Leader: http://www.argusleader.com