William Petroski

bpetrosk@dmreg.com

Thousands of construction workers could start work this spring on the Bakken oil pipeline through Iowa, but a statewide coalition of environmentalists, community activists and property owners is vowing to do everything possible to stop the project.

The Iowa Utilities Board voted 3-0 on Thursday to approve a state permit for the underground pipeline, which will run diagonally for 346 miles across 18 Iowa counties. The project is proposed by Dakota Access LLC., a unit of Dallas-based Energy Transfer Partners.

The massive pipeline project has deeply divided Iowans from many walks of life, from those who welcome it as a potential economic benefit to those who deride it as an environmental threat and a violation of private property rights.

The board took about seven minutes to issue its decision. It came after 18 public informational meetings, 12 days of public hearings, and weeks of deliberations over the past year and a half. In the process, the board received more than 8,000 public comments and compiled more than 3,500 pages of transcripts.

The regulators ultimately concluded that issues of safety, economic benefits, environmental factors and landowners’ rights merited the most significant weight in reaching their decision, board member Libby Jacobs said. She was joined by board member Nick Wagner, who remarked, "We find that subject to terms and conditions that are set forth in the order, that the proposed pipeline will promote the public convenience and necessity, pursuant to Iowa Code."

Chairwoman Geri Huser cast the third yes vote.

The board said in a statement that it applied a "statutory balancing test" that concluded that the public benefits of the project outweighed other factors. The public benefits included significant safety advantages of transporting oil by pipeline compared with alternatives, plus the creation of jobs and other economic benefits, projected to be at least $787 million during the construction period.

The decision came on a voice vote in a meeting room filled with about 60 supporters and opponents of the pipeline. Some opponents stood one by one after the decision was announced and loudly proclaimed, "I'm an Iowan and I vote no." Opponents also rallied outside the IUB's offices afterward, chanting, "No oil in our soil!"

Chad Carter, vice president and business agent of the International Union of Operating Engineers Local 234 in Des Moines, said he was elated by the board's decision, because it will result in good-paying construction jobs for 300 to 400 of his union's members in Iowa. He also said it will improve Iowa's energy security.

"All farmers in Iowa need diesel fuel, and everything we do in our society requires some type of fossil fuel," Carter said.

But Pam Alexander of Ottumwa, a pipeline opponent whose family owns two farms in Mahaska County, said she was disappointed. "I feel like landowners were given the shaft. No one stood up for landowners," she said.

A written-order — it is about an inch thick — issued by the board spells out the reasons behind the decision, and the terms and conditions of the state permit. The board's decision includes the company's right to use eminent domain for the pipeline on private-owned land where it has been unable to negotiate voluntary easements.

The board’s decision culminates a process that began in June 2014, when plans were announced for a 1,168-mile pipeline extending from North Dakota’s Bakken oil patch through South Dakota and Iowa to a distribution hub at Patoka, Ill. Dakota Access has said it plans to proceed with the project despite a plunge in global oil prices.

Construction is scheduled to begin this spring, with completion late this year. An army of 2,000 to 4,000 construction workers is expected to be employed on the project in Iowa alone.

The pipeline has an estimated total cost of $3.78 billion in four states. Once completed, the pipeline typically will transport about 450,000 barrels of crude oil daily and will have the capacity to transport up to 570,000 barrels of oil per day.

Regulators in three other states have approved the pipeline, although state and federal permits must still be granted. Chuck Gipp, director of the Iowa Department of Natural Resources, said Thursday his agency has approved a permit for the pipeline to cross publicly owned land in Iowa, but it is conditional on authorization from the U.S. Fish and Wildlife Service.

Lawsuits are expected from farmers opposed to the pipeline who fear damage to tile drainage lines and reduced crop yields or who simply don’t like the idea of a pipeline running through land that has often been owned by Iowa families for generations. A Cherokee County District Court judge used a technicality in October to dismiss a lawsuit challenging the Iowa Utilities Board’s authority to grant eminent domain for the pipeline, citing a failure to exhaust all administrative remedies.

But the judge did not rule whether the pipeline company, which is not a public utility, is eligible to use eminent domain.

Eminent domain is the right of a government to seize private property for public use, in exchange for payment of fair market value. Iowa and other states, responding to concerns about protecting property rights, have moved in recent years to limit use of eminent domain.

Attorney Bill Hanigan of the Davis Brown law firm in Des Moines said Thursday that he and landowners he represents believe that assurances from state regulators of no negative impacts from the pipeline did not go far enough.

"We are disappointed with the decision and the idea that an out-of-state company can take private property for industrial development in the name of the state," Hanigan said. "We believe the board has misinterpreted Iowa law, particularly the 2006 law specifically designed to protect Iowa farmland."

A Des Moines Register/Mediacom Iowa Poll conducted in late February showed that a plurality of 47 percent of adult Iowans supported construction of the pipeline, while 40 percent were against it and 14 percent were not sure. But public support for the pipeline had decreased by 10 percentage points since February 2015. The poll surveyed 804 Iowa adults.

Business leaders and union construction workers have lined up in support of the project, citing positive economic benefits and a desire for U.S. energy security. Mike Ralston, president of the Iowa Association of Business and Industry, and Bill Gerhard, president of the Iowa State Building & Construction Trades Council, issued statements praising the Iowa Utilities Board's decision.

At the same time, farmers who object to the pipeline have been joined by environmental activists who decry further national reliance on fossil fuels and worry about pipeline leaks. Carolyn Raffensperger of Ames, executive director the Science and Environmental Health Network, said Thursday: "Stay tuned. This story is not over. We do not have a pipeline in the ground yet and we are going to do everything in our power to keep that pipeline from crossing the heartland."

The Iowa chapter of the Sierra Club also pledged to continue opposing the pipeline project.



Supporters and opponents of the pipeline carried out raucous demonstrations at the Boone County Fairgrounds in November before the state board conducted public hearings that drew testimony from more than 200 people for and against the project. Emotions ran high as audience members cheered, whistled, applauded and groaned as speakers made their pleas.

In December, a ruckus developed when pipeline foes angrily accused Iowa Department of Natural Resources officials of trying to prevent them from publicly voicing objections at a meeting attended by about 150 people in Des Moines. DNR officials said they were trying to be fair to all sides and follow Iowa law.

Pipeline issue at a glance

ARGUMENTS FOR

ECONOMIC BENEFITS: The pipeline project will employ an estimated 2,000 to 4,000 construction workers in Iowa and will provide a short-term economic windfall for hotels, restaurants and convenience stores in communities along the route. At least half of the construction workers hired on Iowa's section will come from within the state, Dakota Access LLC says, and it has reached an agreement to hire union workers. Most pipeline jobs will be skilled — welders, mechanics, electricians, pipe fitters and heavy equipment operators. Average annual income for workers will be $57,000. But only about 12 to 15 permanent employees will be needed in Iowa to operate the pipeline once it's finished. Once completed, the Dakota Access will be required to pay local property taxes.

ENERGY SECURITY: Iowa business interests see the pipeline as contributing to the nation’s energy security and a robust state economy. They also say it will free up railroads now used to transport crude oil so they can more expeditiously haul shipments of Midwest grain.

SAFETY: Advocates say it’s safer to transport crude oil via a pipeline compared with railroad tank cars, which have been involved in major accidents involving Bakken oil shipments, causing loss of life and catastrophic property damage.

ARGUMENTS AGAINST

ENVIRONMENTAL DAMAGE: Opponents say it’s inevitable that oil spills will occur, and they say a major spill in Iowa could damage farmland for generations, cause hundreds of millions of dollars of damage and pollute Iowa’s waterways. They also say the pipeline could harm wildlife and sensitive natural areas in its path.

RELIANCE ON FOSSIL FUELS: Critics say the pipeline will continue reliance on fossil fuels, which contribute to climate change. A new pipeline will only delay the nation’s transition to clean and renewable energy and more fuel-efficient vehicles, they say.

PRIVATE PROPERTY RIGHTS: There are 1,295 tracts of land along the Iowa section of the pipeline route, and most property owners have signed voluntary easements in exchange for payments of fair market value. But the owners of nearly 300 parcels have refused to grant easements, which could result in authorization of eminent domain proceedings to take their properties in exchange for payment of fair market value.

About the pipeline

OWNER: Dakota Access LLC, a unit of Energy Transfer Partners of Dallas

CAPACITY: The 30-inch-diameter pipe typically will carry about 450,000 barrels per day, with capacity of up to 570,000 barrels per day.

LENGTH: It will extend 1,168 miles from North Dakota’s Bakken and Three Forks oil-production areas to Patoka, Ill., where it can link to an existing pipeline or railroad connections being developed.

IOWA ROUTE: The pipeline will pass 346 miles from the northwest to the southeast, through 18 Iowa counties: Lyon, Sioux, O'Brien, Cherokee, Buena Vista, Sac, Calhoun, Webster, Boone, Story, Polk, Jasper, Mahaska, Keokuk, Wapello, Jefferson, Van Buren and Lee.

TARGET MARKETS: Dakota Access says shippers will be able to access multiple markets, including Midwest and East Coast markets, as well as the Gulf Coast via the Nederland, Texas, crude oil terminal facility of Sunoco Logistics Partners.

PROJECT COST: $3.78 billion in four states, including Iowa

PIPELINE OPERATOR: Sunoco Logistics

CONSTRUCTION JOBS: The company says 8,000 to 12,000 jobs will be created during construction along the entire route, including 2,000 to 4,000 jobs in Iowa.

CONSTRUCTION TIMELINE: Work is scheduled to start this spring, with the goal of having the pipeline operational in the fourth quarter this year.

PERMANENT JOBS: Once completed, the pipeline would not have any distribution centers in Iowa, and would employ 12 to 15 employees in the state.

TAXES GENERATED: Iowa will receive about $50 million in sales and income taxes during construction, the company says.

ANNUAL IOWA PROPERTY TAXES SECOND YEAR, BEYOND: In 2017, the company says, the pipeline will generate an estimated $24.7 million in local property taxes in Iowa.