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SD landowners support Keystone pipeline or are resigned to it

A map shows the portion of the proposed pipeline route that would go through South Dakota. (Laris Karklis/The Washington Post)1 / 2
At left, Brad Bolton owns a ranch south of Dallas that would be crossed by the proposed Keystone XL crude oil pipeline. He was angered at past treatment he received from pipeline company TransCanada and has been annoyed at the company's propensity for flying over with helicopters and scaring his cattle, but he thinks he received fair compensation for an easement through his property. Gerry Leber, top right, and Lee Weidner, bottom right, both of rural Colome, own land on the proposed Keystone XL pipe...2 / 2

WINNER -- In the 1950s, electric and natural gas companies constructed transmission lines and pipelines across the South Dakota prairie.

"We cross them every day and we don't even think about them," said Lee Weidner, a landowner in Tripp County.

Landowners back then raised some of the same concerns they're raising now about the Keystone XL crude oil pipeline, which could soon cross western South Dakota from north to south. Some are satisfied with the plan and how the pipeline company, TransCanada, has been treating the land and its owners. Others are not, but South Dakotans seem to have accepted the pipeline more readily than their Nebraska neighbors.

TransCanada already has built an oil pipeline, known simply as Keystone, through the eastern half of South Dakota. That project was constructed in 2009.

The existing Keystone pipeline starts in Hardisty, Alberta, and carries tar sands crude oil through North Dakota, South Dakota and Nebraska. Branches from Steele City, Neb., go to refineries in Patoka, Ill., and Cushing, Okla.

The Keystone XL pipeline would also start in Hardisty, Alberta, cross the northeast corner of Montana, and pass through South Dakota and Nebraska, finally reaching Steele City. An extension of Keystone XL continues south from the existing Keystone line at Cushing to refineries in Port Arthur, Texas, and Houston. That segment is considered a standalone effort known as the Gulf Coast Project. It was approved last year, and construction began in August.

The Keystone XL project has been in limbo while TransCanada reroutes the line around the environmentally sensitive Sandhills of Nebraska and awaits approval from President Barack Obama. The president rejected plans for the pipeline in January 2012. On Jan. 4 of this year, Nebraska Gov. Dave Heineman received a state evaluation of the proposed reroute of Keystone XL and was given 30 days to review it. He will then share his decision with the U.S. State Department. The State Department will make its recommendation to Obama, who has the final say.

Dealing with TransCanada

Weidner said he has had a good experience with TransCanada. He owns land south of Colome, and the pipeline would cross about a half-mile of his pasture and crop land in sparsely populated south-central South Dakota.

"I was particularly impressed with the original exploration. They didn't take vehicles or four-wheelers on the land," he said. "They walked the land, probably at least three times, and every time they called and told me they were coming through."

He said TransCanada has been doing this for about two years, occasionally flying the proposed line route with a helicopter.

Weidner said one small corner of his pasture land will be affected by the pipeline, and he will likely fence off that area during construction.

The pipeline will cross another area of Weidner's land, which will interfere with planting crops for his cattle feedlot operation. But he said the amount TransCanada offered him for that easement was fair.

Easements filed in Lyman, Jones and Tripp counties for TransCanada's use of land for the pipeline and examined by The Daily Republic do not list amounts paid to landowners. Landowners interviewed for this story declined to divulge the amounts of payments they received.

Not everyone thought the initial easement payments offered were fair, so negotiations ensued.

"I was concerned about the financial offer originally," said Brad Bolton, a rancher and farmer in Tripp County. Now that he and representatives from TransCanada have worked together amicably, he feels he received fair compensation.

The pipeline is proposed to run through one mile of Bolton's land, and TransCanada originally wanted a pump station just to the south of his home.

"To start with, they were very short and rude with us," he said. "It was like, 'You're going to do this. We don't care what you think.' "

That first experience was about two years ago. He said representatives from the company became more willing to work with him.

"I'm not as discouraged now," he said.

Bolton is worried, though, about construction interfering with calving season. Much of the pipeline on his land will run through calving pastures.

"I want to make sure the time of year doesn't mess with that and disrupt calving and moving of cattle. They have said they will try to work around that," Bolton said.

While Bolton is not worried about spills when the line is completed, he is annoyed at TransCanada's apparent lack of regard for his cattle.

"They have been flying helicopters over pastures with no regard for what they're doing when they're doing it," he said. "If the cattle are spooked, they don't care."

Bolton is worried about his cattle escaping the pasture and possibly getting injured.

He said TransCanada contacted him prior to flying a helicopter over his land last year but has not contacted him since.

"They fly low and don't care where they go," he said. "And they don't stay on the pipeline route."

Gerry and Jeff Leber, father and son, farm two miles from Bolton and have had a good experience with TransCanada. They negotiated with a TransCanada representative themselves for easement compensation.

The pipeline will cross about 1½ miles of the Lebers' land about a halfmile from Jeff Leber's house, but they are not worried about leaks contaminating water or TransCanada personnel disrupting their cattle.

Jeff Leber was specific in his request during negotiations that the company not bother the calving area. So far, the Lebers have not had issues with TransCanada employees bothering their cattle, they said. Employees typically call the Lebers prior to surveying the land.

The father and son are not opposed to running oil from Canada to the Gulf Coast.

"You can't sit on your butt and accomplish anything," Gerry Leber said. "You can't oppose everything."

Originally, the duo was part of a negotiating coalition, but decided to drop from it and negotiate for themselves. Gerry Leber said they got reasonable compensation for an easement on their land.

"You can't get everything. You've got to give a little bit," Jeff Leber said.

Pump stations

Bolton is one of the major landowners in the area. His home is four miles from the Nebraska border and the pump station in that area will be about two miles from the border.

Bolton is worried about the lasting effects of the pump station and the pipeline construction.

"To start with, the station would be very close to my home," Bolton said. "My biggest concern was noise. All the neighbors are very concerned about it. They [TransCanada] really fought to keep it where they wanted it. It took a lot to get it moved farther south."

Despite the pump station being farther from its original proposed position, Bolton said he's still worried the constant hum of the station will be a nuisance.

TransCanada has seven pump stations planned along the line in South Dakota, three of which will be in The Daily Republic's print circulation area -- one in Jones County north of Okaton, and two in Tripp County near Ideal and Wewela.

TransCanada will purchase the property needed for pump stations. A typical station takes up about five to 10 acres, said Grady Semmens, a spokesman for TransCanada.

Semmens said the stations "have a bit of noise in terms of general machinery and maintenance." Otherwise, typical operations include employees coming and going for maintenance and inspections.

"It's a relatively small footprint," he said.

He said each pump station, where the pipeline actually comes out of the ground, is fenced off. The oil from the pipeline is contained onsite, Semmens said.

"It has catch basins and reservoirs to ensure nothing goes off site of the property."

The area includes a small yard area, gravel pad and "a bit of a facility, like a shed, where people work."

Semmens said the pump stations will not create new jobs, because they operate automatically. But TransCanada employees will regulate and maintain the stations on a regular basis.

TransCanada Corp.: The name indicates a foreign entity, but that's not necessarily so, according to the company itself and the South Dakota Public Utilities Commission.

TransCanada is headquartered in Calgary, Alberta, Canada, and has offices in Houston and Omaha.

"We are a North American company in terms of having operations and facilities across North America," Semmens said. "We have over 1,000 employees in the U.S."

The company also has a presence on the Eastern seaboard for hydroelectric power and many natural gas pipelines across the U.S.

Some landowners along the Keystone XL pipeline have been concerned about a foreign company using eminent domain to take land for construction. The term describes the power to take private property for public use, in exchange for just compensation to landowners.

South Dakota law gives pipeline companies that are acting as a "common carrier" the right of eminent domain, and TransCanada's lawyers say the proposed pipeline meets the common carrier definition and the state Public Utilities Commission agrees.

State law considers a common carrier to be a business that presents itself to the general public as transporting commodities for hire, like oil, electricity and rail freight, said Gary Hanson, chairman of the South Dakota Public Utilities Commission.

Keystone XL is proposed to cross the property of 301 landowners in South Dakota. Semmens said the line will cross 641 individual tracts of land.

"We have the vast majority of all those easements in place, done through voluntary negotiations with landowners," Semmens said. "In South Dakota, there's a handful of people who we couldn't reach agreements with."

One of the holdouts was John Harter, in Tripp County. He fought TransCanada for more than a year before finally settling out of court. He lost an eminent domain fight with the company in July when a judge ruled in favor of TransCanada. In November, Harter signed a confidential agreement with the company. The case was scheduled for jury trial in late November. Harter could not be reached for an interview.

Harter's attorney, Matt McGovern, of Sioux Falls, grandson of the late George McGovern, said Harter didn't feel TransCanada had the right to use eminent domain, which is typically reserved for public entities like cities and counties. McGovern would not disclose how much Harter received as compensation for TransCanada to lay pipe across 10 acres.

Semmens said TransCanada figures compensation for the use of land at or above current market value. TransCanada spokesman Shawn Howard said landowners receive one-time payments for easements, and future impacts of the construction are calculated into the one-time amount.

"The only real restriction on the right of way is (landowners) can't build a permanent structure over the pipeline, because if there were an incident, we'd need access to it," Howard said.

The compensation to landowners is based on the amount of land needed for right of way. Howard said TransCanada hired experts to study the market and make assessments of property value on a peracre basis.

"There are cases where the owner hasn't agreed with the compensation we offered and they've gone to hearing," Howard said. "In nearly every case, the panels have awarded the landowner far less than what we offered."

Howard said the one-time compensation is a "standard industry practice" and that TransCanada can't project what may or may not happen in the future. He emphasized the landowner is able to maintain the use of the property, and Semmens agreed.

"The important point is we don't take ownership of the land," Semmens said. "That remains the property of the landowner. They are compensated for market value or better where the pipeline runs under."

He emphasized TransCanada needs a certain amount of right of way to clear the land and does a careful job at reclaiming the land after construction is complete.

Eminent domain is used sparingly, according to Semmens. If a landowner is unwilling to negotiate and the route cannot be moved, "then we have to use appropriate legal channels," he said.

Sometimes, the company is able to bring in a third-party arbitrator to reach amiable compensation, but that is usually at a much lower rate, Semmens said.

Paul Seamans, a rancher and farmer in Jones County near Draper, said TransCanada was rude with landowners and made promises to gain their trust.

"They started promising big property taxes," he said. "When they came to this area, their promise was $18.5 million for South Dakota. By now, they've gone down to $10.3 million."

"They didn't explain it," he added.

According to a study by The Perryman Group in 2010, the Keystone XL pipeline would:

*Lead to $470 million in new spending for the South Dakota economy;

*Increase personal income by $319 million; and

*Increase state and local tax revenues by more than $10 million.

After the pipeline is operational, the study projected the state could see nearly $685 million in property taxes for county and other local governments over the life of the pipeline.

TransCanada pays property taxes directly to the counties affected by the pipeline, said Shawn Howard, a spokesman for the company. TransCanada has paid more than $3.1 million in property taxes already to 10 South Dakota counties. Although 2012's assessments and bills are not finished, the company expects to pay $4.1 million in property taxes for that year, Howard said.

PUC Commission Chairman Gary Hanson said TransCanada will pay property taxes on pump stations, for which the company purchased land. It will also pay property taxes on the pipeline itself and the land it runs under.

Although Seamans is not worried about the pipeline causing problems on his land, he is concerned that the tar sands oil from Canada is more corrosive and noted there have already been leaks along the existing Keystone route that passes through eastern South Dakota.

For example, in May 2011, a bad valve at a pumping station in North Dakota gave way. The leak totaled about 500 barrels, equating to about 21,000 gallons of crude oil that spewed into the air. In June 2011, another leak occurred in Kansas at the Severance pumping station. A half-inch fitting failed and leaked less than 10 barrels of oil, or 420 gallons.

In both situations, TransCanada and local officials said the oil was cleaned up quickly and the pipeline was fixed.

Howard said there were a few small issues at pump stations in South Dakota during the first year of operation in 2010, but there haven't been any leaks on the pipeline.

"The pump stations are where most of the moving parts are and sometimes they wear before they can be switched out," Howard wrote in an email to The Daily Republic. "In 2011, we voluntarily shut down the pipeline to replace fittings, modify some parts, etc., and there have been no issues since. Our pump stations are designed to contain oil that may spill on site."

Another concern of Seamans' is that the pipeline might not benefit consumers in the U.S.

"The oil is not promised for the U.S. or for making us oil independent," Seamans said. "That's kind of a lie. ... I'd rather pay a higher price for gas than help send oil overseas."

According to TransCanada's website, the oil will be refined in the U.S. and used "to meet American demand for petroleum products. This pipeline is not an export pipeline."

The TransCanada site also gives several examples of how Keystone XL will benefit the U.S., including the creation of 20,000 construction and manufacturing jobs, generating more than $585 million in new taxes for states and communities, paying more than $5.2 billion in property taxes and strengthening America's energy security.

Seamans was part of a group of landowners in Jones County that wanted more fair compensation for easements. The group worked with Dakota Rural Action to organize a seven-member board, two of whom negotiated directly with TransCanada. Dakota Rural Action is a grassroots membership organization.

While many others in the area negotiated terms on their own with TransCanada representatives, the group Seamans was in wanted more security against liability issues.

"We made it more to our liking," he said of the agreement. "We were concerned about liability."

For example, after the pipeline is completed, Seamans and other landowners wouldn't be liable for damage to the pipeline, whether it was their fault or not. The agreement is unique to the group, Seamans said. The members all signed the same contracts and a nondisclosure agreement.

It took about one year to come to an agreement, which paid landowners a certain amount per acre, Seamans said.

Despite the exhausting negotiations with TransCanada, Seamans still doesn't feel he was compensated fairly for the use of his land.

"If I had a wind tower on my place, I'd get a payment per year, and these oil companies will not negotiate yearly payments," he said.