ONEOK granted eminent domain

By Sarah Pridgeon

ONEOK Partners have been granted immediate possession of the final rights of way and easements needed to complete construction of the Bakken Pipeline across Crook County. After reviewing written closing statements in the case against Bush Ranches and Watson Land LLC, Judge John R. Perry ruled in favor of ONEOK’s right of eminent domain.

Construction of the Bakken Pipeline had been authorized on all but the properties in question, which consist of 4.95 acres belonging to Bush Ranches and 25.2 acres owned by Watson Land LLC. The defendants’ case was concerned largely with the potential dangers of building across territory riddled with gypsum karst and the lack of direct benefit associated with the pipeline for the citizens of Crook County.

“Our goal was to get the pipeline moved around the Spearfish Formation, not stopped entirely,” explains Judith Bush, defendant.

Wyoming’s Eminent Domain Act required ONEOK to prove three elements before it could be granted possession: that public interest and necessity require the project, that it is planned or located in the manner most compatible with the greatest public good and that the property in question is necessary to the project. The act also required ONEOK to demonstrate it had made reasonable and diligent efforts to acquire the property through good faith negotiation.

The court ruled that the first requirement was demonstrated during the case. “ONEOK is not required to establish an absolute public necessity, only a reasonable necessity is required, which has been defined as ‘reasonably convenient or useful to the public’,” said Judge Perry in his ruling.

“It is not essential that the entire community, or even a considerable portion thereof, directly enjoy or participate in the project for the use to be considered a public use, as long as there is ‘some benefit’ to the public for the taking,” he continued, pointing out that other courts have recognized that not only the present demands of the public, but those that may be fairly anticipated in the future, may be considered.

“Wyoming has specifically acknowledged that condemnation in aid of mineral development is in the public interest,” he concluded, pointing to public benefits including meeting the growing demand, both in Wyoming and nationally, for natural gas liquids in various industries and for refining and home heating.

“ONEOK also demonstrated a direct benefit to the citizens of Wyoming and Crook County as a result of this project,” Judge Perry’s ruling continued. “As a result of this project, ONEOK will pay an estimated $2.2 million in property taxes every year to Wyoming. ONEOK also established that the project will provide use taxes to Wyoming, with Crook County entitled to approximately $300,000 and…will create jobs in Wyoming.”

Judge Perry also ruled that ONEOK proved the project has the potential to provide further benefits in the future because the pipeline will be open to Wyoming producers of NGLs that meet the pipeline quality standards, thus transporting Wyoming NGLs to market.

Regarding the location of the pipeline, Judge Perry noted that courts are reluctant to overturn site determinations unless the evidence clearly establishes an unreasonable disregard of individual or public interests. He concluded that ONEOK met its burden of showing it considered the requisite factors in selecting the location of the pipeline.

“The route of the ONEOK pipeline is the result of extensive planning and consultation over several years,” said Perry. “ONEOK considered alternate routes, and selected the current route through consultation with agreeable private landowners as well as federal and state agencies.”

“Through both fact and expert testimony, ONEOK established that it complied with all regulations and generally accepted industry standards in the planning and siting process.”

Perry noted that the route of the entire pipeline has been adjusted “hundreds of times” to accommodate landowner concerns, potential environmental impacts and safety issues, including in the specific cases of the defendants’ land.

“The undisputed testimony established that Defendant Watson asked to move the pipeline alignment further to the west. ONEOK followed its procedures and, despite determining that its original route was preferred for certain reasons, it would move the alignment in order to accommodate the landowner,” said Perry in his verdict.

“Likewise, the pipeline was moved onto an adjacent landowner’s property, thus minimizing the alleged impacts to Bush Ranches.”

Discussing the defendants’ argument that a mudslide or sinkhole might cause a rupture to the pipeline, Perry concluded that “the greater weight of the evidence” is based on a series of events that would not cause the alleged injury in isolation or incomplete combination.

“Moreover,” said Perry, “Defendants’ own expert witness acknowledged that there are pipelines located across the country that have been constructed and continue to be operated in areas of geologic instability.”

The third element in question, that the land in question be necessary to the project, was also judged to have been proven.

“ONEOK is not seeking a fee interest in the property, but rather is seeking to condemn only a permanent easement necessary for the pipeline location, only that temporary workspace necessary for pipeline construction, and a right of way to and from the pipeline,” stated Perry, concluding that these requests are reasonable and necessary.

“At this point, the pipeline route is defined and almost entirely acquired for 500-plus miles,” he added. “Without easements across the Bush Property and the Watson Property, there will be a gap in the pipeline route. As ONEOK has settled with more and more landowners, it became difficult to route around the defendants’ properties.”

Regarding the final element, Judge Perry ruled that ONEOK has shown it attempted to negotiate a settlement in order to avoid the condemnation process and offered a premium rate to acquire the necessary easements.

“Defendants did not present any evidence that refutes ONEOK’s evidence that it complied with the obligation to conduct negotiations in good faith. Defendants have thus conceded that ONEOK met its burden,” he concluded.

“The decision basically said that ONEOK had met its burden of proof regarding the siting of the pipeline,” says Bush, speaking after judgment was announced. “I do not know how he could have said that when not one witness spoke about siting.”

“He also said that more than one thing would have to go wrong to rupture the line – well, yes, that’s obvious. But it doesn’t really make an argument not to site the pipeline on stable ground [in the first place],” she continues. “Our expert witness said the siting was reckless, which was strong language for him. Two geologists testified for us and only the danger from mudslides was mentioned, not the landslides and sinkholes.”

The defendants are currently deciding whether they wish to continue pursuing the matter through appeals.

“We think it’s challengeable, but it’s a question of what the outcome would be,” explains Bush. “It’s been difficult, we’ve had no meaningful response from any level of government [during this process. However,] it was ONEOK’s burden of proof to meet, and I don’t believe they did.”

ONEOK, meanwhile, is poised to complete construction of the Bakken Pipeline and remains on schedule to do so by the end of the year, with the pipeline becoming operational at the beginning of 2013.

“We’ll begin construction immediately, we’ve been standing by awaiting the decision,” comments Brad Borror, Supervisor of External Communications for ONEOK. “There are still compensation hearings to go through with the judge, but we look forward to a final resolution.”

“Construction has gone relatively well, we’re pleased with our progress,” he concludes. “The final reclamation will continue into next year and beyond as we work to seed the land and put it back to the state it was in before, or as the landowners request. We’re happy to continue now that the process has moved along.”