When an oil pipeline now poised to cut through four Midwestern states was first proposed in 2014, the project quickly got pushback from environmentalists and some landowners on the pipeline’s route.
For one group, this piece of fossil fuel infrastructure was a poor investment in a time of human-caused climate change and increasing pollution. For the other, it was a threat to their land and their property rights. Residents thought it was clear from the beginning that Dakota Access, the developer, intended to claim land by condemning it via eminent domain if allowed to, and build a line to transport oil from North Dakota’s Bakken Formation to a market hub near Patoka, Illinois.
The project, known as the Bakken pipeline, is one of many fossil fuel lines across the nation that traditionally raise concerns about their environmental and safety risks. That’s because oil transportation largely relies on trains and pipelines and out of those two, pipelines spill more often than trains.
Yet since the Bakken pipeline mostly avoids wildlife, it has become an example of how for-profit developers in need of private property ignite disputes when awarded the controversial use of eminent domain. Eminent domain is the governmental power to take private property for public use in return for fair-market compensation. The government usually uses eminent domain to build bridges or freeways, though oil and gas companies have often benefited from this power in the past, particularly during the first pipeline development surge of the 1950s.
No governmental agency gathers data on eminent domain permits given to corporations, but experts said a new wave of pipeline investment is pitting landowners against corporations and regulators in growing numbers, and the trend will likely continue. “The conventional wisdom is that we are having more [eminent domain controversies] in recent years because of the oil and natural gas boom,” Ilya Somin, professor at the George Mason University School of Law, told ThinkProgress. With that growing tension in hand, regulators, lawmakers, and courts in various states are being pushed to probe eminent domain requests for pipeline build out like never before; in some cases, like in South Carolina, bans are being approved.
In Iowa, however, there is no indications oil pipelines are falling out of favor with the government. Republican Governor Terry Branstad has long said he supports the use of eminent domain in some circumstances for pipeline projects. And on Monday, the Iowa Utilities Board (IUB) — the last state agency to rule on the matter — gave Dakota Access a green light to begin construction where it has the necessary permits, although the developer is still waiting for a U.S. Army Corps of Engineers permit that’s been delayed over the project’s potential impact on a Sioux site in northwest Iowa. Meanwhile, construction of the 1,168-mile-long Bakken pipeline — a line comparable in length to the Keystone XL — has begun in North Dakota, South Dakota, and Illinois.
“We currently have 96 percent of the pipeline route across the four states secured with easements,” said Vicky Granado, spokeswoman for Dakota Access, in an email to ThinkProgress. Construction is expected to be completed later this year. “Our schedule has not changed,” she said.
The IUB decision comes three months after it approved the Bakken pipeline, granting the developer eminent domain powers. However, the Bakken pipeline still faces lawsuits from landowners owners who object to the use of eminent domain to secure easements on their farmland.
“I’ve been paying on this land for 35 to 40 years … and within four or five years since paying for it, somebody is trying to take it away to put a pipeline across it,” said William Smith, an Iowa farmer who refuses to lease away 200 acres of the land he uses to grow corn and soy. “It just doesn’t sit very well with me,” he told ThinkProgress.
Smith, 66, is part of small group of Iowa landowners who are challenging Dakota Access’ eminent domain power in court. “We are still not giving into the company,” he said. At issue is whether the pipeline company deserves eminent domain powers given that it’s not a public utility. In addition, plaintiffs claim giving eminent domain powers for the Bakken pipeline is not a public improvement or serves any public use, according to court documentation obtained by ThinkProgress.
Dakota Access, a subsidiary of Dallas-based Energy Transfer Partners, disagrees in part because it says it will provide economic benefits to the public, the states, and the region. The company says it will create nearly 12,000 jobs — some 4,000 of them in Iowa — $1 billion in materials, millions in taxes, and $195 million in easement payments to landowners. All these benefits have been praised by some officials, and many union and business leaders.
It’s unclear how long the issue could take to resolve, but plaintiffs reached for this story and published reports say the court battle could be lengthy and reach the Iowa Supreme Court. And yet for the time being Dakota Access has power to condemn land and the go-ahead to build, making court-embattled landowners weary about the future of their land.
“It is very discouraging, and I’m not sure what would happen if it got to the point where they have condemned the land, and taken it, and then the court says they shouldn’t have done it,” said Richard Lamb, who recently turned down an offering of $300,000 for the land he leases to a farming family.
But what’s happening in Iowa is not an isolated case. The United States has the largest network of energy pipelines in the world, with more than 2.5 million miles of pipes. Investment in U.S. oil and gas infrastructure has in addition increased since 2010 by some 60 percent, according to an American Petroleum Institute study. Investment climbed from $56.3 billion in 2010 to $89.6 billion in 2013, and, according to the study, will remain on average greater than $80 billion until after 2020, before it decreases to $60 billion by 2025.
Experts reached said the fracking boom that opened new oil and gas reservoirs for exploration in the mid-2000s caused this investment growth as it prompted companies in need of land to apply for eminent domain powers. “We have a lot of [pipeline] building going on, and at least with regards to oil pipelines, a lot of states in the process of reviewing those pipelines,” said Alexandra Klass, a Distinguished McKnight University Professor at the University of Minnesota.
Indeed, while the Midwest has the Bakken pipeline, eastern states like the Virginias have the Atlantic Coast Pipeline, itself one of four other similar projects proposed in the region by different companies. South Carolina, too, was recently dealing with a Kinder Morgan-owned oil pipeline that would have run all the way to Florida. And that’s not counting the countless pipelines inside Pennsylvania, North Dakota, or Texas, which are, with low oil and gas prices, enjoying a production glut.
Klass noted, however, that the pipeline development surge has also brought increased scrutiny as opposition from environmentalists and landowners grew in proportion, particularly after Keystone XL came under the spotlight. Another factor is the Kelo v. New London case that made it all the way to the U.S. Supreme Court in 2005. Then the court held that “the government’s pursuit of a public purpose will often benefit individual private parties.”
After Kelo v. New London, “over half of the states revised their eminent domain laws,” said Klass, “but almost no state did anything to disturb the eminent domain authority for oil and gas companies or for electric utilities.”
However, some states have in recent months looked into revising eminent domain laws in relation to oil pipelines — which are regulated differently than gas pipelines — and do fall under state jurisdiction. Last week, South Carolina lawmakers approved a bill that bans private, for-profit oil pipeline companies to condemn land during the next three years. Over that time, lawmakers will study the issue and decide whether to continue the ban though the governor is yet to approve the law, the Myrtle Beach Online reported. That ban comes in response to the Kinder Morgan pipeline that the South Carolina Supreme Court said wasn’t entitled to receive eminent domain powers. Yet other states have decided against these types of laws, as they can mean the loss of revenue and jobs. For instance, New Hampshire’s House and Senate dismissed a bill last week that would give eminent domain protections to landowners facing energy projects, the Concord Monitor reported.
Somin, the George Mason University professor, believes that creating strong property rights may be overdue for energy pipelines since abuse does happen, he said. Moreover, “lots of research in development economic shows that strong and secure property rights are very important for [economic] growth,” said Somin who went on to add “there may be some cases where [eminent domain] is an unavoidable aspect of some project that creates great public benefit, but we should have much tighter scrutiny to ensure that is the case.”
Meanwhile, some industry leaders say that scrutiny is already the norm and affecting development. “Project applicants today have got to revise their expectations in terms of [when their pipelines will be operational] to anticipate the need to deal with more opposition,” Donald Santa, chief executive officer of the Interstate Natural Gas Association of America, told Environment & Energy Publishing last week.