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Thoughts on Keystone XL

One thing lost in the entire Keystone XL debate is that we’re really not talking about an entirely new project. The “XL” portion is the proposed expansion of the original Keystone pipeline that is, much to the amazement of some I would gather, currently operating safely while transporting oil from Canada to the United States.

But safety is only one issue brought up by the Left, the other being the argument over how many jobs the XL portion of the pipeline will create. TransCanada, the owner of the pipeline, is promising 20,000 jobs while a so-called independent study by the Cornell Global Labor Institute states the pipeline will actually destroy more jobs than it creates.

So, we have two estimates. One, from the people trying to get the project built and one from an institution dedicated:

“. . .to help forge international social solidarity based on workers’ rights, environmental protection, needs-based sustainable development, and the extension of economic democracy and popular participation in shaping communities and societies.”

Who is correct? To be honest, I have no idea.

But since Keystone XL is not a new project, we can get an idea for how many jobs it will create by looking at how many jobs were created by the original project. For example, a filing with the South Dakota’s public utility commission said 2,580 jobs were created in South Dakota, with 282 of the jobs as permanent jobs. As for the Left’s focus on most of the jobs being “temporary,” a construction job, by definition, is a temporary job. See page 45 of this PDF file for a detailed breakdown, including a chart that shows Keystone’s original estimates of jobs needed for the project were actually lower than the number of people they did employ.

And in a quote in the Canadian Press, the CEO of TransCanada declared that some 9,000 people worked on original, smaller Keystone project.

Rather than look at either study mentioned above, I think it’s fair to say that, yes, building a pipeline does create jobs, and this doesn’t even include the magical multiplier effect that Team Obama touted for its taxpayer funded infrastructure programs. If Keystone doesn’t create jobs, than President Obama mustn’t have — right?

Keystone is being built without taxpayer money, making the hypocrisy of Team Obama and the Left’s new concern for exact job-growth estimates even more galling.

But jobs really aren’t the important issue. There’s an issue brewing that could derail the pipeline, and it’s an issue conservatives really should be taking a hard look at: eminent domain.

From the New York Times in October:

Randy Thompson, a cattle buyer in Nebraska, was informed that if he did not grant pipeline access to 80 of the 400 acres left to him by his mother along the Platte River, “Keystone will use eminent domain to acquire the easement.” Sue Kelso and her large extended family in Oklahoma were sued in the local district court by TransCanada, the pipeline company, after she and her siblings refused to allow the pipeline to cross their pasture.

“Their land agent told us the very first day she met with us, you either take the money or they’re going to condemn the land,” Mrs. Kelso said. By its own count, the company currently has 34 eminent domain actions against landowners in Texas and an additional 22 in South Dakota.

In addition to enraging those along the proposed pipeline’s 1,700-mile path, the tactics have many people questioning whether a foreign company can pressure landowners without a permit from the State Department — the agency charged with determining whether the project is in the “national interest.” A decision is expected by year’s end on the pipeline, which would carry crude oil from Alberta to American refineries.

A government official with knowledge of the permitting process who would address the issue only on condition of anonymity said, “It is presumptuous for the company to take on eminent domain cases before there is any decision made.”

Landowners have begun joining forces and challenging the company’s assumption that it can legally seize land.

And from Canada’s National Post in November:

But there’s more to the anti-Keystone movement than greens, something that may be more difficult to fight. These are the property-rights defenders who are unhappy with TransCanada’s use of expropriation – under U.S. laws of eminent domain – to take over land to make way for the pipeline.

In Nebraska and South Dakota, where TransCanada is laying new routes for the XL, local landowners are marshalling opposition to eminent domain practices. Eminent domain allows corporations, with state help, to force local landowners to give up control over land. Compensation is paid, but the exercise of eminent domain is a court-challenge process. In recent years, eminent domain trends appear to be moving against allowing corporations the rights they once had.

Eminent domain is also seen – often rightly – as a subsidy to corporations. Such subsidies can be worth millions. The eminent U.S. leftist Alexander Cockburn (no friend of global warming greens) wrote that the Keystone XL “will require one of the largest and most aggressive eminent domains actions since the construction of the Interstate highways.”

That may be going too far. But the practice of eminent domain is under attack across the United States. Alexandra Klass, of the University of Minnesota Law School, writes that recent cases suggest the power to use the law to take over property is under constant reform, especially as it relates to natural resource developments.

A review of eminent domain and property rights reform in the Interior West reveals that while there has not been a frontal attack on natural resource development takings, subtle reforms have taken place. both as a result … of changing economic and social forces in the region. Those reforms can be seen as part of a broader reconsideration of the role of natural resource development in the Interior West, as those states attempt to balance economic development, urban expansion, traditional natural resource development, and preservation of the environment. In adopting recent reforms, state legislatures and courts are readjusting the allocation of property rights in favour of individual property owners to address the present-day needs of their states, just as they adjusted them in favour of natural resource extraction companies to promote that industry over 100 years ago.

Roughly, that means the ability of natural resource enterprises and pipeline firms such as TransCanada to use eminent domain and expropriation is diminishing rapidly. It will not disappear completely. Eminent domain is still a standing part of the U.S. legal system and part of its political culture. But it is going to be more and more difficult. The Keystone XL experience in key states shows that the system is being challenged on a monthly basis. With the delay in approval, the risks mount that TransCanada’s access to eminent domain will have diminished by the time the next review comes up.

The aforementioned New York Times article does say that TransCanada has agreements with some 90 percent of the landholders along the route in Nebraska and TransCanada states in this .pdf fact-sheet:

. . . Keystone XL extends TransCanada’s commitment to treatlandowners with respect and work with them in good faith. That commitment is reflected in the fact thatwe have successfully reached easement agreements with more than 80% of landowners on the route in Texas (as ofFebruary 2011). In addition, we have currently negotiated agreements with almost 93% of landowners who own/control almost 90% of the tracts of land along the entire pipeline route.During our 60-year history of safely meeting American’s energy needs, we have developed positive relationships with morethan 40,000 landowners in North America. We meet face-to-face with landowners to understand their specific needs and addresstheir concerns. We work hard to be a good neighbor.

That’s all well and good, but as we saw with the conservative outrage over the Kelo case, there’s a question whether the government should use its power of eminent domain for a private enterprise. What makes Keystone XL different than Kelo are the national-security concerns which are not only voiced from by the Right. Former NSA adviser Jim Jones and current Democratic governor of Montana Brian Schweitzer have both cited the need for energy resources from an ally as a reason to approve the pipeline.

I’m a supporter of the Keystone extension, I think it will bring jobs to America, but I’m still squishy on the national-security argument that would allow TransCanada to use eminent domain to take land for the route. If TransCanada wants to build the pipeline, they need to do it without eminent domain, at least in my opinion.

And one last important fact to point out to our friends on the Left, Keystone XL is no different than the Alberta Clipper Canada-to-America pipeline approved by President Obama in 2009:

By Executive Order, the State Department has been delegated authority from the president to receive applications for the construction, connection, operation and maintenance of facilities at the borders of the United States, including petroleum pipelines, and to issue or deny Presidential Permits for such facilities upon a National Interest Determination. A Presidential Permit application triggers an environmental review of the proposed project, under applicable environmental laws and regulations.

After considerable review and evaluation, on August 20, 2009, the Department issued a Presidential Permit to Enbridge Energy, Limited Partnership for the Alberta Clipper pipeline. In evaluating the Enbridge application, the Department worked in consultation with all relevant agencies and parties and with extensive public and stakeholder participation and outreach.

The Department found that the addition of crude oil pipeline capacity between Canada and the United States will advance a number of strategic interests of the United States. These included increasing the diversity of available supplies among the United States’ worldwide crude oil sources in a time of considerable political tension in other major oil producing countries and regions; shortening the transportation pathway for crude oil supplies; and increasing crude oil supplies from a major non-Organization of Petroleum Exporting Countries producer. Canada is a stable and reliable ally and trading partner of the United States, with which we have free trade agreements which augment the security of this energy supply.

Approval of the permit sends a positive economic signal, in a difficult economic period, about the future reliability and availability of a portion of United States’ energy imports, and in the immediate term, this shovel-ready project will provide construction jobs for workers in the United States.
The National Interest Determination took many factors into account, including greenhouse gas emissions. The administration believes the reduction of greenhouse gas emissions are best addressed through each country’s robust domestic policies and a strong international agreement.
The United States is taking unprecedented steps at home to transform how we produce and consume energy. The president is committed to reducing overall emissions and leading the global transition to a low-carbon economy.

The rest of the president’s lauding of this “shovel-ready” project here.

 

New on Planet Gore. . .


COMMENTS   18

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   12/19/11 14:01

The problem with estimates is that they're usually wrong. No one has any idea how many jobs will be created due to the Keystone line, but jobs will be created. I am also skeptical of national security arguments (whenever the government wants to expand its power domestically by grabbing land it uses the "national security" argument). For once I'd like people to come out and be honest about their intentions: We should approve the Keystone project because it will make us a lot of money.

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   12/19/11 19:07

One thing I can assert with nearly absolute confidence is that this project will create more jobs than all of the solar jobs created in the US for the past 5 years (that are still here).

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   12/21/11 05:10

That's not really the case for most people in the US with respect to the Keystone pipeline. I seriously doubt that I or anyone I know will gain a single penny from the pipeline. It may help us indirectly by boosting the economy, and it will help the economy of pipeline states directly, but it isn't a windfall for most supporters.

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   12/21/11 09:36

Not true ... more readily available supply means lower energy prices for millions of consumers.

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   12/19/11 14:12

With Iran close to obtaining nuclear weapons and openly training to close the Straits of Hormuz, not to mention Chinese saber ratling, the national security argument for the pipeline gets stronger by the day. I sympathize with the property owners, but this is what eminent domain was meant for -- if it was the U.S. Army building the pipeline there would be no question that the use of eminent domain is legal and proper. And don't forget that these folks won't simply have their land confiscated -- they will receive fair value.

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Nasty, Solitary, Poor, Brutish, and Short
   12/19/11 20:07

Don't get too excited about the eminent domain angle. Utilities have had that power for something like 150 years. The most recently passed anti-Kelo initiative, in Mississippi no less, did not disturb that right. Foreign ownership is not an obstacle.

So Keystone is a different issue entirely, which should not turn on takings. Besides, the taking gets paid at the fair market price, so this isn't a rape-n-run operation.

Think Midkiff v Hawaii from 1984 (wrongly decided IMHO) but this is not a new fight.

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larrytex56
   12/20/11 05:04

In Texas, oil and gas pipelines have had the right for many years now to use eminent domain to obtain right of way for oil and gas pipelines. One of the arguments for the Legislature granting this power is that there are never easy routes for locating a pipeline of this nature. Many landowners would not, if they had their way, ever allow such a pipeline to cross their land. This would have the effect of prohibiting access for the rest of us to the use of oil and gas products from distant fields. These problems are public problems because of the nature of our automobile economy.

I would object to calling this grant of the right a "subsidy," because landowners can easily play the game just as well as the pipeline companies and usually do. A lot of the objections are not principled ones; they are simply a ploy to get more money in compensation. The companies pay, and pay dearly sometimes, for the right-of-way they obtain.

I don't think there is any good answer here. Do we do away with eminent domain for oil and gas pipelines? If we do, expect to see more problems obtaining a cheap supply of oil and gas. The stuff will simply go overseas. The fact is, the oil and gas isn't always close. This is a fact of modern economic life in this country.

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   12/20/11 11:37

This does not look like an expansion of eminent domain. Separately, I wonder how many of the 90% made an agreement only because they believed the first take it or leave it offer. They could probably be pushed into joining the opposition if they end up with the attention of the Occupy Whatever types. Shifting opinon can overcome a lot as it gains momentum. Let's not go squishy.

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   12/20/11 16:47

In most cases, with the Keystone XL pipeline the landowner in question will get the use of the land back upon completion of the pipeline - it's buried and can be farmed/ranched afterwards. It's not like the land is permanently taken from the owner for construction of a mall or some such. It's still an eminent domain taking, but not of the same permanence as the Kelo taking.

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zack aa
   12/21/11 03:02

Imagine removing the power of eminent domain. The company still has the ability to build the pipeline but only at a price that satisfies the landowner. If that number isn't high enough the builder has to make a decision about paying more per mile for that section, or the extra cost/distance of rerouting to an owner with a lower price point. Everybody has a price. If it makes sense to pipe this stuff 2000 miles down to Texas, a few hundred extra miles here or there along the way won't make a big difference in the long term operating costs. Seems to me this is the conservative way to handle this situation.

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John Cunningham
   12/20/11 23:14

I lived in Alaska for most of my working life, and the Alyeska Pipeline Service Co, which operates the TAPS pipeline, is a major employer. I looked up Alyeska's web site, and found these facts--the pipeline is 768 miles long, from Prudhoe Bay to Valdez. the line is 768 miles along, and Alyeska has 800 permanent employees, plus 1,200 permanent contract employees. in addition, major construction and maintenance projects employ several thousand people yearly.
Besides, the point of capital projects is to create wealth, not jobs directly.

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dr. faust
   12/22/11 19:00

Mr. Cunningham is right. It is silly to buy into this low standard of "jobs created" (and the even lower "standard" of "jobs saved or created".) The question is wealth creation. A super-automated pipeline might create even more wealth with fewer jobs. As if cash-machines caused unemployment.

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pitviper68
   12/21/11 13:55

What if gas prices in the Midwest actually GO UP, as a result of the pipeline? I live in NE, and I'm not worried about the environmentally aspect. Is it true that this pipeline will mainly be for exports?

External Link 

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   12/22/11 14:54

There's a lot of silliness at that link. The bottom line is, one way or another Canada is going to sell its oil and it's better for the US economy if that oil is sold to US refiners than to China.

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ldm
   12/21/11 14:26

Eminent domain is a red herring.

Common carriers (railroads, pipelines, telephone companies etc) have had the right to use eminent domain for well over 100 years to acquire the rights-of-way (servitudes, easements) they need to build their track, pipeline, transmission line etc.

This power has been given to them by both federal and state governments because otherwise they would NEVER be able to complete any project without at a minimum being subject to extortion by one or more landowners, and perhaps being unable to complete construction at all because one landowner in a key location just refused to convey a right-of-way at all.

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Greg in Houston
   12/22/11 15:45

It has been mentioned before that landowners' land will not be confiscated, but how much will they get? In Louisiana, easements often go for $650/rod ($39.39/foot). In rural Midland, it is closer to $10/foot. The more footage a landowner provides, the less per foot he can expect to get. But a rancher with a mile of easement to sell could easily get $20/foot in rural parts of the upper midwest, or over $100,000/mile. Not bad for property that the rancher still gets to use.

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lonie
   12/22/11 22:28

If eminent domain doesn't finish the road block to the pipeline ,then there is surely an unknown Sand Hill Tortoise the Sierra Club will find on their public lands private wildlife reserves . It doesn't even have to be in Sand Hills, just down wind.
Remember the Alaska Pipeline , there are still Bears and Caribou roaming the area .According to environment gurus they should have disappeared by now.

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Old School Conservative
   12/26/11 13:41

Eminent domain for pipelines, roads, railroads, and other infrastructure in the public interest does not even faintly resemble eminent domain as used in the Kelo case, IMHO one of the the five worst SCOTUS decisions ever.

An earlier commenter made the quite valid point that land owners who grant easements for pipelines can still use the land for every purpose except to build over. Most rural county planning commissions (and farmers) today are advocates for farmland preservation. The Keystone project fits quite nicely into that theme.

I believe objections to Keystone are nothing more than smokescreen for the radical enviromental movement, whose water has been so ably carried by the current Administration.

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