MINGO — Bill Gannon's 900-acre row crop operation near Mingo has been in his family for generations. He was recently contacted by Texas-based Energy Transfer Company, which earlier this year proposed a 1,134-mile, 30-inch diameter oil pipeline connecting the North Dakota Bakken and Three Forks oil fields with Patoka, Ill.
A former Iowa House representative and house minority leader, Gannon is no stranger to negotiating. During an interview at his Mingo home Nov. 20, when asked if he would voluntarily allow the pipeline to run under his property, the Jasper County farmer said "I'll be a 'no' to the end."
Kathy Holdefer owns approximately one-acre with husband Tom surrounded by Gannon's property. She said they are still educating themselves on their rights during the eminent domain decision. But for the Holdefers, the discussion is "holistic" and a matter of environmental consciousness.
“I’m a citizen of this community, and I respect the concept of eminent domain. But I don’t want something pushed on to people before everybody knows the total impact,” Kathy Holdefer said. “I feel like I don’t know what I need to know. My gut says I don’t like the idea of fracked oil coming through my land. I don’t like how it originates. I feel like we’re backtracking in Iowa. We’ve got bragging rights for all the wind energy we produce. I think we should keep rolling with that.”
The final approval will be decided by the Iowa Utilities Board — a three member panel appointed by the governor. If the board feels the pipeline is in the public interest, eminent domain laws could require property owners to cooperate with ET’s construction plan. The board is classified nonpartisan, and the three current members have been appointed by Gov. Terry Branstad within the last three years and confirmed by the Democrat-controlled Iowa Senate.
If the board approves the line, ET spokesperson Vicki Granado said the company hopes to acquire a permit in early 2015, with construction beginning in the fourth quarter. Depending on construction delays, ET plans to begin pumping crude in the fourth quarter of 2016.
Before the IUB decides to approve or reject the Dakota Access Pipeline construction, ET is required to hold informational meetings in each county impacted. The meeting for Jasper County residents is scheduled for 9 a.m. Dec. 4 at the DMACC Newton Conference Center at 600 N. Second Ave. W. Many affected area land owners plan to attend the meeting, some — like Gannon — with legal representation.
DAPL is not allowed to offer construction compensation, easement and damages to Iowa landowners — which the company estimates will be approximately $60 million — until the completion of the statewide meetings or prior to the IUB approval. But surveyors are out asking Iowa and Jasper County landowners for access to their properties to plot initial pipeline paths. Gannon claims he found DAPL surveyors on his farmland after telling the crew they could not have access.
Granado said she could not speak for the specific case, but indicated the company would look into the incident. The spokesperson agreed a landowner has the right to deny surveyors access to their land.
“What we expect out of anybody on our process team is to obey the laws, rules and regulations of that state,” she said “I can’t speak for Iowa, but there are very specific rules and guideline of how our surveyors are expected to operate.”
Pollution and price:
Gannon had another encounter with eminent domain laws years ago when Mid-American Energy — then Iowa Power and Light Company — ran a high voltage power line through his farmland. But he’s afraid whether he leaves the land to family or sells it on the open market, a pipeline running underneath the ground could not only affect the value but the viability of his land.
ET’s pipelines are buried 38 inches below the surface, and Granado said the company leaves up to 12 inches of top soil in tact following the construction. Like natural gas lines, farmers will be able to plant and harvest corps above the buried pipeline, but not erect structures. DAPL officials said the only vegetation not allowed following the reclamation process are trees.
Activists are already concerned about the environmental impact of the proposed pipeline. Nathan Malachowski is a community organizer with Iowa Citizens for Community Improvement, a Des Moines-based nonprofit leading the campaign against Bakken crude’s transfer through the state. CCI is hosting a Bakken pipeline resistance meeting Dec. 6 in the Ames City Hall council chambers.
Malachowski said Iowa has seen roughly 100 pipeline leaks since 2004, most carrying anhydrous ammonia or natural gas. But he cited the 2010 Enbridge Oil Spill near Kalamazoo, Mich., as an example of potential hazards. The spill dumped 843,000 gallons of crude oil into Talmadge Creek, just 35 miles downstream from the Kalamazoo River. As of July 2014, EPA workers have dredged 30 percent of affected Marrow Lake. The DAPL is estimated to pump 450,000 barrels per day.
“This pipeline is going to be underground, so if it starts leaking the only way you’re going to know is if the oil works its way to the surface,” Malachowski said.
DAPL officials are trying to assure Iowans of their safety record. ET operates 71,000 miles of oil and natural gas pipeline in the U.S. Granado said the company will have a pipeline pressure/temperature real-time monitoring system. Iowa law requires the operating company have a first responder within 60 minutes of all areas of the pipeline, however, the spokesperson could not say how many workers would be available during a hypothetical leak incident.
Potential oil leaks aside, Gannon is worried about the effect the pipeline might have on his land value.According to ET, the $1.04 billion Iowa segment of the pipeline will require a 50 feet wide permanent right-of-way on all properties for periodic surface access — 25 feet on either side of the pipeline.
“If everything else is equal, and the price is the same, which would you prefer? The piece of land that has the pipeline under it, or the piece of land that didn’t? Well you’d take the one that didn’t in a heartbeat,” Gannon said.
But Iowa State University associate economic scientist David Swenson said because the reclamation process restores the farmability of the land — including the land directly on top of the line — the pipeline’s effect to land value would be negligible and would not be visible in any property tax assessment.
“I have never heard of anybody making the case that it diminishes the land value over time,” he said. “I don’t buy it.”
Swenson paralleled the line to the influx of natural gas lines run under farmland attached to the growing number of Iowa ethanol plants in the 1990s.
In an independent critique released Nov. 20, Swenson does dispute the economic forecast painted by ET in a survey they commissioned, completed by West Des Moines-based Strategic Economics Group.
The ISU scientist disputes two main factors in the SEG study. Swenson has conducted research on similar pipeline projects in Kansas and was unable to find significant increases in pipe and pump manufacturing in the Midwest region. In fact, Swenson’s findings could not locate any pipeline or pump manufacture within the four states impacted by the construction — North Dakota, South Dakota, Iowa and Illinois — large enough to win a project bid of this scope. He said the closest states with the available industry are Indiana, Ohio and Arkansas. The $3.8 billion of economic impact is assuming the pipeline infrastructure will be manufactured in the construction region, thus, the ISU economist believes the monetary figures in the West Des Moines firm’s contracted study were inflated.
The SEG study also predicts $390 million of 7,623 “job years” in a two-year period produced in construction of the Iowa segment — a total of $1.04 billion of total economic impact. But Swenson said a more accurate study would split those totals in half. The ISU scientist said in an interview Nov. 21, an academic survey of the pipeline’s impact would analyze job years over a one-year period.
The area which Swenson did not dispute was the property tax revenue the project will generate for local and county governments. The pipeline is slated to produce $27.4 million in new property taxes for the impacted Iowa counties. The construction will create an estimated 2,000 to 4,000 temporary jobs in Iowa for the two-year period and 12 to 15 permanent jobs in the state.
But after the wells are spent, the future of the pipeline infrastructure is unclear. Dakota Access has signed 15- and 20-year contracts with North Dakota oil producers, and Granado said the company expects the wells to produce for several decades following the initial usage deals. She said one pipeline/well system the company operates in Texas is estimated to pump for 50 years.
But whether it’s 20 or 50 years, Granado said there is no defined plan for the pipe after Dakota is finished, and it’s “certainly not something that we are planning for.” This makes activists like Malachowski nervous.
“It will become a legacy on landowners,” he said. “Converting pipelines is also dangerous and can increase the amount of leaks and spills that happen. This question goes far beyond the viability of Bakken crude.”