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Unequal Risks and Benefits for Citizens in Six States on Keystone XL Pipeline Route

TransCanada getting 10-year tax holiday in Kansas but could pay $63 million a year into Montana’s coffers.

Jan 5, 2012
(Page 3 of 4 )
A field in Zona Vig's ranch in South Dakota.

Even after the plan is released, it will be difficult for landowners along the route to examine the document, said Carl Weimer, executive director of the Pipeline Safety Trust, a nonprofit that promotes fuel transportation safety. The spill plans are created by pipeline companies and given directly to PHMSA for review, so there's no opportunity for public input. A PHMSA spokesman said the secrecy is necessary because the plans contain potentially sensitive information about public safety and homeland security.

Montana rancher Darrell Garoutte thinks the public has a right to review those documents. "After the BP [Gulf spill] fiasco, I'm concerned that any plan without public scrutiny will be lacking in most areas."

Weimer said that some states, including Washington and Alaska, have taken steps to make emergency response information more transparent. But none of the Keystone XL states are included in that group, he said.

Sandy Barnick, whose farm near Glendive, Montana would be crossed by Keystone XL, said the remoteness of her rural county, which she describes as "in the middle of nowhere," has heightened her fear of pipeline accidents and spills.

TransCanada told InsideClimate News that the company is ready to respond to emergencies. "[We've] procured and stored equipment, hired personnel and contractors along the length of the pipeline specifically to ensure we are capable of responding quickly," said spokesman Shawn Howard.

But Zona Vig worries that the company will have trouble responding to an emergency on her South Dakota family ranch, which is 100 miles from the nearest hospital. The region is criss-crossed by dirt roads that become impassable during rains, Vig said. "What happens if you have a leak? How are you going to get people out here, [especially] in a blizzard when the wind is blowing and the snow's coming down?"

Vig and her neighbors are accustomed to taking care of themselves. Her husband pilots a small plane that's sometimes used for medical emergencies, and her son is part of the county's volunteer fire department. But there are no other oil pipelines in Meade County, and Vig said they're not prepared to deal with a spill.

Barnick, the Montana farmer, says state officials should be doing more to address landowner concerns. She blames their inaction on the fact that most of the pipeline's route runs through counties with small populations and little political clout. "I feel [like] we're dispensable."

Pipeline Tax Revenue Varies By State

Some landowners say the promise of tax revenue has made state and local officials blind to citizen concerns. According to the State Department's Final Environmental Impact Statement, the pipeline would generate property taxes ranging from $14 million per year for Oklahoma to $63 million per year for Montana. But experts say actual tax revenues may vary significantly from those estimates.

The State Department calculations for Montana were done without an accurate understanding of the state's tax laws, said Ed Caplis, director of Tax Policy and Research at the Montana Department of Revenue. While the State Department projects tax revenues of $63 million a year, Caplis' department's assessment, based on data provided by TransCanada, puts the number at $80 million.

South Dakota taxes pipelines based on the income they generate, so "it's rather difficult assessing a future project," said Mike Houdyshell, director of the Property and Special Tax Division at the South Dakota Department of Revenue. Pipelines don't make any income until they're operational, and that income is dependent on market forces during the time of operation.

Houdyshell's department wasn't involved in the State Department property tax estimates. Their only assessment for Keystone XL is an estimate of the property tax for Harding County (one of nine counties in the pipeline's path), which comes out to about one million dollars. That's substantially less than the State Department estimate of $3.3 million dollars for Harding County.

An existing TransCanada pipeline, simply called Keystone, has generated far less in property taxes for South Dakota than TransCanada originally projected.

"We don't know how [TransCanada] arrived at those numbers," Houdyshell said. "Obviously they were overstated to some extent—we don't really know why."

The state of Kansas stands to gain the least financially from the Keystone XL. Its situation is unique because the first Keystone pipeline already runs through Kansas, and part of that pipeline would act as a bridge between two sections of the new pipeline. However, the Keystone XL would increase the amount of dilbit flowing through Kansas, so TransCanada would need to build additional pump stations in the state to handle the new capacity (up to 830,000 barrels of oil per day).

When TransCanada began planning the Keystone pipeline in 2005, Marion County commissioner Dan Holub was one of the few Kansas officials who opposed it. "I'm scared to death of what they're running through there," he said, referring to the unknown dangers of dilbit.

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