ICC approves oil pipeline, not eminent domain
By Jeffrey Tomich
ST. LOUIS POST-DISPATCH
07/09/2009
The Illinois Commerce Commission will allow the construction of a 170-mile oil pipeline that will deliver crude from Canada's oil sands to a storage hub about an hour east of St. Louis.
But regulators said it was premature to give the Calgary-based developer, Enbridge Inc., authority to use eminent domain to acquire an easement for the project if it cannot negotiate an agreement with landowners.
Wednesday's 4-0 ruling probably means the continuation of a two year-long battle between Enbridge and hundreds of farmers and other rural landowners, because the ICC didn't prohibit the company from reapplying for eminent domain authority.
Thomas Pliura, an attorney from LeRoy, Ill., who represents about 250 of the landowners, said he was satisfied with the decision regarding eminent domain. "But we're somewhat disappointed that they left the door open for Enbridge."
Denise Hamsher, an Enbridge spokeswoman, said the company hadn't been made aware of the ICC decision and couldn't immediately comment.
The $500 million pipeline would complete Enbridge's Southern Access pipeline system stretching from Superior, Wis., to Patoka, Ill., and would allow the company to transport 400,000 barrels of Canadian oil a day to U.S. refiners.
Enbridge has said it needs a 60-foot right of way and a similar construction easement through parts of eight Illinois counties.
In its decision Wednesday, the ICC said Enbridge had demonstrated a public need for the project but hadn't shown that it needed eminent domain authority.
Enbridge says it studied 28 potential routes for the pipeline and chose the one that would have the least impact on the environment and landowners. The company said it was offering compensation for easement rights as well as payments for any crop losses or construction damage.
The company has previously said it rarely needs to use eminent domain, but wants the option to go to court and condemn land as a last resort to make sure a few "holdout" landowners can't stop the project or significantly drive up costs by requiring the company to reroute the pipeline.
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The Enbridge project is part of a large build-out of new pipelines to supply U.S. refiners with oil from Alberta's oil sands. They include TransCanada Inc.'s Keystone Pipeline that will stretch from Hardisty, Alberta, to the Wood River refinery in Roxana, Ill., and the 13 million-barrel oil storage hub in Patoka.
Jim Prescott, a spokesman for the Keystone project, said the construction in eastern Missouri and Southern Illinois should be complete by the end of the year.
Canada is already the largest foreign supplier of oil to the United States, and volumes are expected to increase. Enbridge says its Southern Access project will benefit Illinois consumers by providing a more stable, secure source of oil for Midwest refiners.
Opponents disagree, and say the pipeline is a piece of a broader strategy to move more Canadian oil to the Gulf Coast, the nation's refining center.
Pliura said most of the landowners challenging Enbridge weren't trying to stop the project; they're trying to prevent the company from obtaining the right to take their land via eminent domain.
"This is a private project backed by big oil companies to increase the price of heavy oil in Canada," Pliura said.
"They shouldn't benefit at the sacrifice of property owners who own land in the path of the route they want to pursue."
This isn't the first time Enbridge has tangled with landowners over eminent domain and a pipeline route.
In 1997, the ICC turned down a request by the company's predecessor that sought eminent domain authority for its Lakehead pipeline. The company built the pipeline anyway, zig-zagging where necessary so it could acquire an easement.
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