Property Rights

Ranchers Tell Keystone: Not Under My Backyard


John Harter's spread in Winner, S.D., won't be fit for grazing for years if the pipeline goes in, he says

Photograph by Hunter Murphy for Bloomberg Businessweek

John Harter's spread in Winner, S.D., won't be fit for grazing for years if the pipeline goes in, he says

Oil has put bread on Eleanor Fairchild’s table in Wood County, Tex., for more than 50 years. Her late husband was a geologist who worked on exploration for different energy companies, and was part of a team that discovered oil in Yemen in the 1980s. That doesn’t mean she welcomed a TransCanada (TRP) worker who appeared on her doorstep in March 2009. The company wanted to run nearly a mile of its 1,700-mile Keystone XL pipeline across Fairchild’s 350-acre farm 90 miles east of Dallas, the representative explained, and was willing to pay her $43,000 for an easement on five acres. Fairchild pondered the offer for several weeks. She says the company upped it to $60,000, but “they were really pushy, and that doesn’t go over well with me,” Fairchild says. “It’s my land.”

TransCanada announced it will soon reapply for the federal permit it needs to build a northern portion of Keystone, from Hardisty, Alberta, to Steele City, Neb.; the Obama administration denied its first application in January. The southern leg running from Cushing, Okla., to the Texas coast doesn’t require Washington to sign off because it doesn’t cross an international border; the company plans to start work on that leg in June. Another force delaying TransCanada from breaking ground: The company needs rights of way on about 2,150 properties in five states.

Along the route a handful of landowners refuse to grant those easements. They’re fighting the company’s efforts to seize land using state eminent-domain laws, which allow a business to seek court approval to take over private property as long as it’s for public use and the owner is compensated. “Most of the landowners already have pipelines on their land, so they aren’t against pipelines,” says Roberta Colkin, a city council member in Gallatin, Tex., who’s organized a group that’s fighting the project. “But they’re upset about being bullied by TransCanada.”

Terry Cunha, a spokesman for the company, says: “We’re listening to the needs of the landowners, trying to find out what we can achieve together, and also providing them with the full market value of their property in obtaining the easements.” He points out that TransCanada has successfully negotiated all but 19 of the 1,200 easements it sought in Oklahoma and Texas.

'I've never considered myself a bunny hugger'—John HarterPhotograph by Hunter Murphy for Bloomberg Businessweek'I've never considered myself a bunny hugger'—John Harter

TransCanada staff began visiting landowners four years ago, trying to strike deals and avoid court battles. That didn’t work with John Harter in Winner, S.D. The rancher says TransCanada offered him a one-time payment of $13,300 to snake the line across a half-mile of his 280-acre cattle pasture. Harter demanded an additional $70,000 annually to compensate for the fact that he wouldn’t be able to graze his herd on the land for several years. The company refused his request and instead filed a lawsuit to seize the land through eminent domain, arguing the access to Harter’s land is worth just over $6,000. “They’re doing it with no regard to human life, let alone the earth,” complains Harter, whose case will be heard by a state court in June. “I’ve never considered myself a bunny hugger, but I guess if that’s what I’ve got to be called now, I’m OK with it.” Says Cunha: “Eminent domain is allowing us to obtain the easement and compensate the landowner.”

The Keystone pipeline would be buried three feet underground, and environmental activists worry that leaks would taint water sources along the route. David Daniel, a carpenter who lives near Winnsboro, Tex., wishes he’d asked more questions about that possibility before accepting almost $14,000 from TransCanada in 2010 for an easement across 20 acres of his land. Daniel says he felt pressured into the deal: “TransCanada said this is our final offer; otherwise we’ll take you to court.”

Montana landowners have banded together to try negotiating better terms for the 217 easements TransCanada is seeking. The state, which requires pipeline builders to obtain a permit prior to construction, also has conditions it wants TransCanada to meet. “The idea is that we can allow certain development-type activities but still try to reduce the environmental effects,” says Greg Hallsten, an official at the Montana Department of Environmental Quality. The agency is “getting close” to making a decision on the permit, Hallsten says.

In Texas, Fairchild says her lawyers have advised her to wait for TransCanada to break ground before deciding whether to fight the company if it tries to come onto her land. She knows a resolution “could take years,” she says. “Some of my neighbors who have signed with TransCanada are now against the pipeline too, but some of them work in the oil business, and they can’t fight it like I can.”

The bottom line: TransCanada must still persuade 19 landowners to let it build the southern leg of its Keystone pipeline in Oklahoma and Texas.

Mildenberg is a reporter for Bloomberg News.
Efstathiou is a reporter for Bloomberg News.

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