Lawsuits challenge railroad's authority to OK oil pipeline

Here is an interesting article from AP business writer, Josh Funk, about growing conflicts between railways and neighbouring landowners in the US over pipelines and pipelines royalties: Click here to read the article at PennEnergy.com.  Not all railways hold full ownership over the land beneath their tracks; so who has the authority to grant permission for a pipeline, and to whom is compensation payable?

Former Pipeline Inspector attacks TransCanada construction practices

Mike Klink, formerly a pipeline inspector for Bechtel, recently wrote an editorial piece expressing concern over the workmanship he witnessed during the construction of TransCanada's Keystone Pipeline and the risk that it will be repeated in the construction of the Keystone XL pipeline.  Bechtel was an inspection company working on behalf of TransCanada.  Klink says that he witnessed the use of substandard steel that cracked during welding, faulty safety tests and the installation of insufficient foundations.  He warns, "If it were a car, the first Keystone would be a lemon.  And it would be far worse to double down on a proven loser with Keystone XL."  Klink points to fourteen spills as having already occurred on the relatively new Keystone pipeline.

Read the opinion piece at: journalstar.com

Keystone pipeline decision shelved until 2013

The US State Department has ordered an environmental assessment of the proposed Keystone XL pipeline in the US, meaning that the project is shelved until after the 2012 Presidential Election.  Read CBC.ca's story at: Keystone XL delayed.

U.S. DOT releases report on risk-based land use planning around pipelines - future restrictions are coming

Partnering to Further Enhance Pipeline Safety In Communities Through Risk-Informed Land Use Planning

Final Report of Recommended Practices

November 2010

The U.S. Department of Transportation has released a report prepared by the Pipelines and Informed Planning Alliance (PIPA) on the subject of "risk-informed" land use planning around pipelines.  The Report notes that fixed setback requirements from pipeline easements may not be appropriate in all cases.  However, it is accepted that pipelines may pose risks that impact people and property beyond the edge of the pipeline easement or right-of-way:

Transmission pipeline failures present risks that may impact people and property beyond the edge of pipeline rights-of-way (ROW). To address these risks, some communities have imposed zoning restrictions, including fixed-distance building setbacks for development along transmission pipeline ROW. Building setbacks are typically used by local governments to provide separation between the community and potential risks, in this case pipelines. However, fixed-distance setbacks commonly don’t consider the risks involved with a specific pipeline and the physical environment in which the pipeline operates. Individual transmission pipelines differ in character – some are large-diameter, high-pressure, cross-country pipelines traversing mostly rural areas, while others are located in urban areas and densely-populated urban centers. Transmission pipelines operated within urban areas may be located underneath public streets and roadways in areas that are already well-developed. Federal regulations attempt to mitigate the risk of transmission pipelines located in more densely-populated areas by imposing more stringent requirements. For example, gas transmission pipelines located in heavily populated urban areas are generally required to adhere to additional design, operation, and maintenance requirements. However, each situation is unique relative to the pipeline characteristics and the areas surrounding the pipeline ROW. Thus, PIPA recommends that implementing a risk-informed approach to land use planning and development and establishing good communication with the transmission pipeline operator is more appropriate than establishing a fixed-distance setback to be applied in all situations.

One thing seems clear from the report - risks posed by pipelines are of growing concern to governments in the United States.  The manner in which the risks are addressed and managed will have an effect on landowners and land values.  Where measures are imposed to ensure the safety of aging and deteriorating pipelines, the effect is likely to be a restriction of the uses that can be made of a property and a subsequent loss in property value.  Can landowners be compensated for this loss of property value that would not likely have been considered in setting compensation at the time a pipeline company acquired its land rights?  Apart from mentioning that a pipeline company may wish to obtain additional rights from a landowner in exchange for additional compensation, the Report does not address the issue of compensation for risk management-associated land use and development restrictions.

Read the full report at: PIPA-Report-Final-20101117.