Canadian Energy Company Sues Americans for Eminent Domain

The Canadian TransCanada Corp. is presently seeking to construct and begin operation of the Keystone XL pipeline. This 3,000 km long project will bring approximately 700,000 barrels of Alberta tar sands crude oil through the United States to refineries in Texas. The project still needs approval from the US State Department but officials at TransCanada are publicly optimistic. The CEO of TransCanada, Russ Girling, has said that he expects the State Department’s approval by the end of summer 2011.

The Keystone XL pipeline is estimated to be a $7 billion project. According to the company’s release it is expected to create 13,000 high paying construction jobs and provide millions of dollars in tax revenue for local and state governments in the US. Jack Gerard, president of the American Petroleum Institute, has pushed Hillary Clinton and Barack Obama to accept Keystone XL and maintains that the pipeline could create up to 342,000 direct and indirect jobs between 2011 and 2015. According to the Globe and Mail, TransCanada estimates that revenue to Canadian companies would increase as much as $3.9 billion a year as a result of the pipeline’s operation.

Nine members of the Texas House of Representatives have approved Keystone XL along with 30 congressmen from 18 others states. These congressmen are urging Secretary of State Hillary Clinton to approve the pipeline.

Stephen Harper raised the issue of the Keystone XL pipeline when he met with Barack Obama on Friday, February 4th. According to the Vancouver Sun, “Harper made a personal pitch Friday for President Barack Obama to support a controversial $7 billion pipeline that could double the amount of Alberta oilsands crude exported to the United States.”

Harper’s backing is not the only support TransCanada receives from the state. It has also been threatening citizens in several American states with eminent domain and condemnation of their property in an attempt to gain easements to build its pipeline.

Sue Kelso is 69 and has lived her whole life on her farm in Oklahoma near the Texas border. TransCanada offered her compensation for using her land but Kelso refused. The company then filed for eminent domain in an effort to gain access to Kelso’s land. Kelso and her siblings have recently filed a motion in district court to block TransCanada’s claim.

According to the Journal Star, “Already, 12 Oklahoma residents who were sued by TransCanada over access to their property are mounting a legal case to question the public benefit of the pipeline. Nebraskans, some of whom have protested at the state Capitol, have been even more vociferous in opposition.” TransCanada’s approach in dealing with landowners has been described as “heavy handed” and a mix of “dickering and threats of eminent domain.” In Texas, landowners have complained about surveyors and agents from TransCanada showing up unannounced pushing them to sign contracts and land use agreements.

In one case TransCanada’s own workers acted as goons to intimidate land owners. David Daniel, a carpenter in Winnsboro, Texas was forced to sign a contract with TransCanada only after the company threatened to take him to court and company workers showed up at his home asking him why he was “threatening” their jobs. These workers may have in part been convinced by a TransCanada report that suggested the pipeline would create 50,000 “spinoff” jobs.

TransCanada also told Daniel they would need to cut down most of the trees that lie in the wooded valley on his property. When Daniel asked what the odds were of such a thin walled, high pressure pipeline erupting on his property TransCanada replied that there were no such studies available. “So I’m a lab rat on my own property,” Daniel concludes.

One reaction to TransCanada’s activities is that of Barbara Jean Shuttlesworth. “They tell you, you can either take this money we’re offering you, or they’re going to take your land anyway … the way they’re doing this, it really makes you feel helpless. It renders you helpless when they put eminent domain out there.”

In Nebraska, TransCanada representative Jeff Rauh admitted that his company had sent letters to Nebraska residents urging them to sign easements or face land condemnation procedures. In these letters land owners were given 30 days to make up their minds. After that time period TransCanada would begin legal action against them. “It’s important to be able to start to get those land rights, so that we’re able to move forward in a timely manner once project approval is given,” Rauh said. According to Rauh fewer than 50 letters were sent out and only in cases where “the process toward voluntary agreement was no longer progressing.” He also noted that the 50 letters should be contrasted with the 470 land owners along the route.

Energy Pipeline News recently reported that state legislators in Montana agreed to grant TransCanada condmenation powers as long as it agreed to let the government regulate local producers access to the oil line. Montana produces a substantial amount of its own oil but has trouble accessing refineries. The Keystone XL pipeline will solve this problem. TransCanada now has the violence of the state backing it up to further help increase its profits while the state has satisfied its oil producing constituents. The only people who lose are those who have their land transferred to TransCanada and the tax payers who will no doubt pay for the various subsidies that will go to finance the pipeline project.

TransCanada has defended its behaviour. The company’s spokesman, Terry Cunha has said that his company expropriates land for pipeline use only as a “last resort.” According to Cunha the industry resorts to eminent domain in about 10% of all land dispute cases where as TransCanada is doing so in only 2% of cases. The Globe and Mail quotes Cunha as saying “Our commitment is to treat landowners with respect and in good faith, to … work with them and come up with the best possible solution.” He has also said that, “We do everything reasonable to avoid using eminent domain. In acquiring easements from landowners, we offer the full market value of the property, in exchange for which we receive limited rights to construct and operate a pipeline below ground.”

Jeff Rauh told the Journal Star that, “TransCanada’s commitment, number one, is to treat landowners with respect, and, number two, to work with landowners and come to a mutually acceptable agreement on easements whenever we can.”

Yet another TransCanada spokesman, Shawn Howard, said that TransCanada files for eminent domain only as a last resort and “always pays market rate or better and seeks only an easement, not possession of the land.”

Eminent domain is the government using, or threatening to use violence, if one does not surrender his or her land. TransCanada Corp’s ability to sue land owners for eminent domain derives from the state and implicates the company in the state’s violent activity. If TransCanada had to negotiate with every landowner for a fair price for the use of their land (not just offer them mere “compensation” after acquiring easement) it is unclear whether the Keystone XL pipeline would be profitable and undertaken at all. Since the real costs of the pipeline are externalized, in this case through the use of tax payer funded violence against various small land owners, a project that might otherwise be unproductive is being undertaken. In the long run, this impoverishes society and benefits a politically well connected few.

He welcomes all comments, criticisms, and questions.

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