PIPELINE OBSERVER SPRING 2017

PIPELINE

SPRING 2017

CANADIAN ASSOCIATION OF ENERGY AND PIPELINE LANDOWNER ASSOCIATIONS

OBSERVER

PIPELINES TO PRODUCTIVITY

The power of private investment to stimulate the economy SAFETY SABOTAGE

Protesters undermine their own message

LAND GRAB

Dismantling the myth of fair market value

SAME OLD NEB

National Energy Board’s ‘absurd’ survey CAEPL A .ORG

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Flying solo. We didn’t study for the test. Or spend Saturday practicing three-point turns at the mall. But we did fuel the car for this newfound freedom. When the energy you invest in life meets the energy we fuel it with, independence happens.

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CONTENTS

SPRING 2017

CANADIAN ASSOCIATION OF ENERGY AND PIPELINE LANDOWNER ASSOCIATIONS

04 A Life-Changing Relationship 07 There’s an App For That 09 Stimulating the Economy 14 Horizontal Directional Drilling 16 A Different Kind of Green 18 Security Against Sabotage 20 Pipeline Protest

CAEPLA links landowners and companies Technology can help control land access Pipelines are more effective than public spending What landowners need to know

Restoring private land pays dividends The laws are adequate, but must be enforced

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Tamperers pose a serious safety threat

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Private investment is clearly preferable to public spending, even on infrastructure, in terms of stimulating the economy.

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21 22 24 26 28 32

Expropriation: A Price on Your Property

34 37 41

Don’t ‘Modernize’ the NEB

Six articles that put ‘fair market value’ on trial

Fair Market Value: The Myth

Is theft okay if the perpetrator promises to pay?

Fair Market Value: The Illusion

A willing seller is a necessary part of a fair deal

Fair Market Value: The Problem

Sometimes it’s literally an offer you can’t refuse

Eminent Domain Land Grab

It’s the real reason to oppose Dakota Access

Landowners Left in the Cold Again

Eminent domain casts shadow on Virginia project

Get government out of land acquisition instead

‘Priceless’ Resource

Arizona water program pays farmers to conserve

Caught in the Crossfire

Landowners between pipelines and activists

Cover photo: CAEPLA

Pipeline Observer is a publication of the Canadian Association of Energy and Pipeline Landowner Associations (CAEPLA), 257, 918 Albert St., Regina, SK S4R 2P7; 306-522-5000.

All contents copyright ©2017 CAEPLA. Advertising information: advertising@caepla.org | Editorial: editor@caepla.org Administration: admin@caepla.org | caepla.org | Twitter: @CAEPLA

Media & Marketing Solutions

Published by RedPoint Media Group Inc., 100-1900 St. S.E., Calgary, AB T2G 3G2, 403-240-9055, redpointmedia.ca Pete Graves, President & CEO | Sandra Jenks, Client Relations Manager | Miles Durrie, Managing Editor David Willicome, Art Director | Mike Matovich, Production Manager | Rob Kelly, Audience Development & Reader Services Manager Printed in Canada by Transcontinental LGM | Statements and viewpoints expressed herein do not necessarily represent the views of the publisher.

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BY ANNETTE SCHINBORN

Partnership With an Energy Transport Company: A Life-Changing Relationship Let CAEPLA help get your ‘marriage’ off to a good start

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“Only cooperation with your neighbours and a voluntary, free-market approach founded on property rights can protect your farm, family and prosperity.”

iStockphoto.com

F

rom the moment you find out you are in the path of a proposed energy transport project, your life changes.

You can receive notice through the mail with an invitation to an information meeting, or you might hear about it when a smooth-talkin’, good-lookin’ land agent knocks on your door with a sales pitch you can’t refuse.

Suddenly there is a lot of anxiety — and understandably so.

Many landowners who already have pipelines on their property understand how they can interfere with their farm production.

Some remember the times they have felt disrespected because of the threat of expropriation when presented with papers to sign. Landowners who have never had a pipeline and don’t know what’s involved feel the stress of navigating an unfamiliar process.

So where do you turn for help?

After all, the land agent works for the company, not for you.

When landowners need advice about their taxes or other bookkeeping matters they talk to an accountant. If they need advice on soil fertility, they see an agrologist. If they have questions about chemicals for their crops they see a specialist at their ag chemical dealer.

But where can landowners go for

proven expertise and assistance when they find themselves in the path of a pipe or power line?

Who can help you, the landowner, navigate the maze of regulations, cooperate with your neighbours, shed light on the situation, provide specialized legal services and negotiating expertise?

The Canadian Association of Energy and Pipeline Landowner Associations (CAEPLA) can.

CAEPLA is the only national grassroots property rights organization that works with all landowners, from farmers and ranchers to woodlot and acreage owners.

We even provide advice to the growing number of urban residents concerned with pipeline safety.

CAEPLA is not only an advocate for your rights, but a negotiator of “win-win” business agreements on linear projects.

CAEPLA is pro-energy and pro-energy transport. We understand how essential abundant cheap energy is to the ag sector and urban residents alike.

Ultimately, we are all pipeline landowners, whether we run a family farm business or rely on natural gas for our homes.

Energy is essential for farmers and ranchers to provide our society with food security.

The team members at CAEPLA come from farm backgrounds and the organization grew out of the pipeline landowners movement of the post-war era.

From long experience, our landowners have learned that government and regulations cannot be relied upon to protect our rights. Agencies like the National Energy Board (NEB) are not there for you — heck, they aren’t even any good for industry.

CAEPLA came to be out of the realization that only cooperation with your neighbours and a voluntary, free-market approach founded on property rights can protect your farm, family and prosperity.

Expropriation by definition is a violation of your property rights and a threat to your prosperity.

Yes, some landowners who are new to this think that negotiating an easement agreement with a pipeline or power-line company is virtually the same as negotiating for a combine or other piece of farm equipment, buying a piece of property or most other business transactions they conduct.

What they soon come to realize is that they are not negotiating on a level playing field. The pipeline company can always ask the regulator to expropriate your property for its project if you don’t agree to the terms it puts in front of you.

It becomes a “take it or leave it” proposition.

But getting a pipeline or power line doesn’t have to be an all-or-nothing scenario for you.

Quite the opposite: by coming together with your neighbours and consulting CAEPLA, we can quickly broker winning

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agreements that work for the landowner and the company.

We’ve been doing it for decades now.

Construction methods, liability issues, bio-security protocols, ingress/ egress rights, landowner construction monitors, soil mitigation procedures and proper compensation are just some of the things that belong in a good business agreement.

In fact, CAEPLA negotiated a settlement for directly affected landowners on the then-proposed Keystone XL pipeline back in 2008. That agreement with its precedent-setting safety, environmental and stewardship standards convinced the NEB to approve the project in Canada.

Landowners in Saskatchewan and Alberta came together with CAEPLA to negotiate and work with TransCanada to set the bar higher than the NEB could even dream of — the same as we had done a year earlier with Enbridge on the Alberta Clipper and the Southern Lights projects.

With U.S. President Donald Trump recently giving the thumbs-up to Keystone XL south of the border, CAEPLA hopes to help broker the same win-win relationships in the U.S. as we have done in Canada.

A partnership is the best way for the relationship between a landowner and energy transport company to begin, because it’s a relationship that can last for generations.

As one pipeline CEO puts it, the relationship is a lot like a marriage.  Annette Schinborn is COO and Director of Landowner Relations at CAEPLA. Before joining the team at CAEPLA, Annette worked with grassroots nonprofits including the Canadian Taxpayers Federation, the Prairie Centre and the Western Canadian Wheat Growers Association.

She has worked closely with farmers, ranchers and other landowners on issues such as tax and agricultural policy and now energy transport and property rights.

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Case Study: A win-win agreement ‘Working with CAEPLA removed the stress’

The following testimony is from Doug, a landowner living alongside a pipeline project. I recently asked Doug to share his experience:

My

grandparents owned the land when the first pipeline came through. The land was sold to my aunt and uncle, and later, my parents and I purchased it.

We didn’t have any trouble with the pipe.

It was out of sight, out of mind. It wasn’t until a couple years ago that we had the first maintenance dig. The land agents told us what needed to be done and what they could pay us. We didn’t have any experience with this so we accepted what they told us.

They did a nice job, I can’t complain, but I really should have been asking more questions. There were issues, like tree removal, that should have been addressed as well as the costs of rehabilitating the soil.

But I wasn’t knowledgeable about any of this.

When I found out we were getting another pipeline, I signed to allow access for archaeological surveys. They offered me money to allow them access to my land and I didn’t understand what they were going to do or how it might affect my property. I didn’t think it was a big deal.

I have learned since that we should have a Settlement Agreement with terms of what they are going to do on our land before we agree to let them on.

When I first heard of a group of landowners working together, I didn’t think anything could be done as I had already signed the Access Agreement for surveying

and was aware that the company could expropriate.

I did go to an information meeting and was overwhelmed by what I learned. I realized how little I knew about what should go into an agreement on a pipeline project.

I’m a pro-gas person like my neighbours, and I learned what could be accomplished by working with your neighbours and CAEPLA to negotiate an agreement that will protect my property. As it became clear to me, I told them they could count me in 110 per cent.

And I would sign up again on the spot.

My experience with working with CAEPLA has been priceless. I have gone from zero to 100 in what I have learned about what should be in an agreement with a pipeline company.

You know, finding out you’re getting a pipeline can be stressful. Working with CAEPLA removed the stress. It was the best investment I could have made. I would recommend CAEPLA to anyone. Actually, I told many of my neighbours about CAEPLA and they joined as well and I have received many thanks for calling them to invite them to join the group.

It was reassuring knowing that CAEPLA was taking care of the negotiation details, and it has removed the anxiety knowing that the business agreement CAEPLA helped us negotiate protects my property.

Do you have a story about your experiences with CAEPLA or energy transport companies you would like to share? We’d love to hear from you. Contact us at admin@ caepla.org or by calling 306-522-5000.

BY SHAWN REGAN

Want public access to private land? There’s an app for that

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iStockphoto.com

Technology offers effective solutions for landowners and users ot a day goes by without someone bemoaning the lack of public access to private lands in the West. Gone are the good old days, many say, when landowners welcomed visitors.

Today, it seems like there are “no trespassing” signs across every gate, and orange paint on every fencepost,

blocking access to fishing, hunting and other recreation opportunities on private lands.

Why are landowners so reluctant to provide public access? The problem might be that we just haven’t figured out a simple and effective way to contract with them.

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That might be changing. Consider the sharing economy, which is revolutionizing the way we tackle similar problems elsewhere. From Airbnb and Uber to countless startups in between, entrepreneurs are finding new ways to “rent” underused assets such as vehicles and spare bedrooms. Technology reduces the transaction costs between suppliers and demanders, making sharing easier and cheaper than ever before.

The challenge is to build a platform that creates trust between users. On Airbnb, homeowners invite complete strangers into their homes. On Uber, drivers shuttle around people they don’t even know. Online reviews, ratings systems, and background checks provide assurances for both sides, fostering trust among suppliers and demanders.

The same is possible with public access in the West. Imagine if, with a few taps on your smartphone, you could rent

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access to a local property, book a fishing pass to a neighbour’s spring creek or lease short-term hunting access on a nearby ranch.

Landowners could enroll, define certain conditions and limits, and gain assurances that their property would be respected. In the process, they could diversify their incomes and have greater incentives to conserve their land.

To some extent, this is already happening. Hipcamp, a venture capital-funded startup, is providing camping opportunities on private lands.

The company has about 60 landowners enrolled, with prices ranging from $30 to $300 per night.

Likewise, a college student in Michigan is creating a land-sharing app, called Rod, Gun and Bow, that would allow hunters and anglers to lease private land on a short-term basis.

All across the West there are po-

Shawn Regan is a research fellow and the director of publications at PERC. He holds a M.S. in Applied Economics from Montana State University and degrees in economics and environmental science from Berry College. His work has appeared in the Wall Street Journal, Quartz, High Country News, Reason, Regulation, Grist and Distinctly Montana. Shawn is also a former backcountry ranger for the National Park Service.

— Reprinted with permission of the author. Original posting at perc.org/ articles/bringing-sharing-economy-private-land

This page: iStockphoto.com; facing page; photo CAEPLA

‘Imagine if, with a few taps on your smartphone, you could rent access to a local property, book a fishing pass to a neighbour’s spring creek or lease short-term hunting access on a nearby ranch.’

tential suppliers of outdoor recreation opportunities. Most are not opposed to public access. They simply don’t want their private land open to everyone, just like homeowners on Airbnb don’t want just anyone sleeping in their spare bedroom.

Landowners, like all property owners, need to have some control and protection against damages. The sharing economy can provide that.

Thought of in this way, the public access issue is not about greedy landowners locking up the West. It’s about finding the right ways to contract with landowners to reduce the risks of allowing access.

This is a radical departure from the ways we typically approach public access issues. Here in Montana, we pass laws that mandate stream access on private lands and often penalize landowners who don’t allow public hunting. But these approaches can backfire, straining relationships with landowners and making them even more reluctant to allow access.

So, instead, what if we took an Uber approach to public access? What if we stopped complaining about the good old days and started trying to solve the problem? The West, and the people who share it, would be better off for it. 

BY YOURI CHASSIN

Stimulating the Canadian Economy with Pipeline Projects

Private investment trumps public infrastructure spending

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t seems the Canadian economy will soon be getting a shot in the arm thanks to U.S. President Donald Trump’s approval of the Keystone XL pipeline project, subject to a renegotiation of terms.

This follows the Canadian government’s announcement last November that it was giving a green light to

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The important point when comparing public to private investment projects is not the amounts in play, it’s their economic impact.

The Main Pipeline Projects Energy East (TransCanada) The Energy East project involves the conversion of a 3,000-km gas pipeline connecting Alberta and Ontario, and the

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construction of a new 1,500-km structure to Saint John, N.B. The approximately 4,500-km structure will transport 1.1 million barrels a day between Hardisty, Alta., and Saint John, and will require an estimated investment of $19.3 billion.

The NEB announced in early January 2017 the assignment of a three-member Hearing Panel to undertake the review of this project after the previous panel stepped down over potential conflict of interest in 2016.

Northern Gateway (Enbridge) Enbridge’s Northern Gateway project involves two pipelines that would connect Bruderheim, Alta., with Kitimat, B.C. In total, the project would allow for the transport of 718,000 barrels a day over a route of a little under 1,200 km. The construction of these pipelines would necessitate an investment of $7.9 billion.

The federal government approved the project in 2014, imposing 209 conditions, including particular attention to the concerns of Aboriginal communities. The current government, however, is now asking the NEB to reject the project on the grounds that Great Bear Rainforest is not a suitable place for a pipeline.

Trans Mountain (Kinder Morgan) The Trans Mountain project involves doubling a network that has existed since 1953 including 1,150 km of

Brent Beach / Alamy Stock Photo

the expansion of Kinder Morgan’s Trans Mountain pipeline and to the project to replace Enbridge’s Line 3, while simultaneously asking the National Energy Board to reject the Northern Gateway pipeline project.

These and other pipeline projects for transporting Alberta oil represent considerable private investment, with positive impacts for Canada as a whole at a time when the federal government is running large annual deficits in the hope of stimulating the economy through infrastructure spending.

The NEB already regulates 73,000 km of oil and gas pipelines that crisscross the country, from Vancouver to the Atlantic Provinces. This network has been in development since 1853, when the first gas pipeline transported natural gas to Trois-Rivières to light the streets.

The four main projects that have been in the news offer outlets for oil produced in Alberta by connecting the province to ports on the east and west coasts, or in the case of the Keystone XL project, to the American market.

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Features of the main pipeline projects ENERGY EAST

NORTHERN GATEWAY

TRANS MOUNTAIN

KEYSTONE XL

Value of project

$19.3B

$7.9B

$6.8B

$8B

Job creation during construction

9,246

2,0003,000

1,500

13,000

direct jobs

direct jobs

jobs

direct, indirect, and induced jobs

(full-time equivalent, per year)

Length

4,500 km

1,200 km

1,150 km

1,897 km

Capacity

1.1 million

718,000

590,000

830,000

Total investments of $34 billion and creation of at least 12,700 jobs for the projects in Canada as a whole pipeline connecting Edmonton with various terminals in British Columbia and Washington State. The addition of around 980 km of pipeline and the return to service of 193 km of existing pipeline would bring the transport capacity of Trans Mountain from 300,000 barrels per day to 890,000.

This infrastructure requires an estimated investment of $6.8 billion. The NEB recommended that the project be

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approved, with 157 conditions, and the government gave it the green light in November 2016.

Keystone XL (TransCanada) The 1,897-km pipeline connecting Hardisty to Steele City, Neb., could transport up to 830,000 barrels of oil a day. In Canada, 529 km of pipeline would be built.

The Keystone project includes several phases that already exist, the first of

which began operating in June 2010 following a different route. The capacity of the preceding phases is limited to 591,000 barrels of oil per day.

The project was evaluated at $8 billion, an amount that would be spent mainly in the United States. After being rejected by then-President Barack Obama in November 2015, it has now been approved by President Trump, subject to a renegotiation of terms.

Montreal Economic Institute

additional capacity

(barrels per day)

Major Economic Impact In all, these projects represent substantial investments — a total of $34 billion, excluding the Keystone XL project located largely in the United States.

During construction of the pipelines in Canada, various estimates find that between 12,700 and 21,500 jobs will be created across nearly every Canadian province, from B.C. to New Brunswick (see chart). These jobs would be especially welcome given that some 40,000 have been lost in the energy sector in Alberta with the fall in oil prices.

In the case of eastern Canadian refineries located in Montreal, Lévis and Saint John, the ability to supply themselves with oil within the Canadian market improves their long-term prospects.

Beyond refineries, the petrochemical industry (the polyester production chain in Montreal’s east end, for instance) also depends on competitively priced supplies. These industries and the jobs connected to them would be more secure.

But the main benefit of pipelines is the opening up of access to the global market for oil from the Prairies, allowing producers to obtain a higher price than they currently do. As long as the United States is the only export market for Canadian oil, this sector is dependent on a market which is itself producing more and more oil.

The price differential for a barrel of oil on the internal American market versus the world market implies a loss of revenue for governments, as well as a loss for the Canadian economy that can be estimated at $13.5 billion.

Public vs Private Spending In the hope of stimulating the economy, the federal government announced in its 2016 budget a total of $120 billion devoted to infrastructure over the next

Pipeline projects represent substantial economic benefits when considered from a Canadian perspective.

10 years. (The 2017 budget is expected in late March.)

But the real funding devoted to infrastructure under the 2016 budget to date represents just $3.97 billion, or 13.5 per cent of the projected $29.4 billion.

Similarly, the proportion of the $120 billion that will actually be devoted to investments in economic infrastructure remains uncertain.

The important point when comparing public to private investment projects, however, is not the amounts in play. It’s their economic impact, which differs markedly for four main reasons.

First, the creation of value is the entire purpose of private investment.

Public investment is mostly aimed at fulfilling promises of job creation, and its purpose is first and foremost political.

Second, public infrastructure investment projects regularly run into difficulties, like cost overruns and delays.

This kind of risk is implicitly guaranteed by taxpayers.

Third, public infrastructure is funded either by raising Canadians’ tax burden or by growing the public debt that is ultimately supported by taxpayers. In contrast, private investment does not require tax money since private companies run the projects with their own funds.

The economic activity generated by this private investment will even contribute to governments’ tax revenue.

Fourth, empirical results from the U.S. show that after 10 years, economic stimulus has no permanent effect on productivity. In contrast, when the government competes less with the private sector in the recruitment of workers and

the use of capital, private investment takes over.

Indeed, economic research shows that public spending cuts have positive effects on economic growth, as shown in a study of Canada in the 1990s by renowned Harvard economist Alberto Alesina and two of his colleagues.

Private investment is clearly preferable to public spending, even on infrastructure, in terms of stimulating the economy. Pipeline projects in particular represent substantial economic benefits when considered from a Canadian perspective, and not solely in terms of local spinoffs.

Prime Minister Justin Trudeau has pointed out that pipelines represent the safest way of transporting oil, and that ensuring market access for Canadian resources is one of the most important duties of a prime minister. Intelligent regulation with predictable delays and clear definitions of federal, provincial and municipal jurisdiction would go a long way toward removing uncertainty from beneficial private investments like pipeline projects. 

Youri Chassin is an economist and Research Director at the Montreal Economic Institute (MEI). This is an adapted and updated version of “The Most Efficient Way to Stimulate the Economy: Private Pipelines or Public Infrastructure?” released by the MEI in June 2016 and signed by Joe Oliver and Youri Chassin. For more information, visit iedm.org.

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BY SEAN CORBETT

Horizontal Directional Drilling: What You Need To Know HDD is often the best method for sensitive river crossings

H

orizontal Directional Drilling (HDD) is a construction technique in which a tunnel is drilled under a waterway or other area and a pipeline is pulled through it.

The tunnel follows an arc from the entry point, down under the crossing area, and then comes up on the other

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side. A drill head guides the drilling pipe electronically. This ensures that the angle, depth, and exit point are precise.

During drilling, the tunnel is lubricated with a natural, non-toxic substance that’s roughly 95 per cent water and five per cent bentonite clay.

This drilling mud coats the walls of the tunnel and removes drill cuttings.

Once the tunnel is 30 cm (12 inches) wider than the diameter of the pipe, the pipeline segment can be pulled through.

These segments are made of thick steel. They have a first layer of coating to prevent corrosion, and a second scrape-resistant layer to protect the pipe during the pull. The two ends of the segment will then be welded together with the rest of the pipeline system.

Typical Horizontal Directional Drilling Method This is an example of one of a number of watercourse crossing methods.

RIVER PRE-ASSEMBLED PIPE SECTION PULLED THROUGH

HORIZONTAL DRILLING DIRECTION OF PULLBACK

An Ideal Method To Reduce Impact Long-distance underground pipelines are built across open areas, like rural farmland. Construction crews clear a route, dig a trench and lower in the welded sections of pipeline. After completion, they replace the soil as a restoration process.

This is all done in a way that minimizes environmental and stakeholder impact.

For large rivers or sensitive crossings, directional drilling is often the ideal method. It reduces impact on the area above the drill. And any land around the drill entry and exit will be restored to its pre-drill state.

Photo: CAEPLA

How Will Directional Drilling Affect You? Drilling equipment creates noise.

Whenever possible, companies such as Enbridge will restrict activity to daylight hours if the equipment is close to occupied buildings. Construction crews reduce noise by using structures that

are designed to cut down sound levels.

The drilling time depends on the distance, geology and pipeline diameter.

Sometimes, drilling is completed in just a few weeks. Other times it may take months.

There is an estimated completion time for any specific drill site. Timetables can, of course, be affected by surprise conditions.

Pipeline design and construction are regulated by the National Energy Board. Depending on the location, local, provincial or federal permits may be needed.

Enbridge plans and performs HDD crossings to exacting standards, and meets or exceeds NEB demands.

But What About The Environment?

HDD is used to reduce or avoid environmental impact. Like anything, HDD is not 100 per cent risk-free.

Normally, the drilling mud stays in the tunnel, and around entry and exit points. The mud can sometimes surface elsewhere through natural cracks. This

unplanned release is called “inadvertent return.”

Highly trained technicians use advanced monitoring equipment to watch for potential problems. Often, the drilling mud will itself seal a hole, preventing and minimizing seepage.

If a certain amount of mud surfaces outside the drilling area, Enbridge will suspend work and perform full cleanup and containment. If the mud enters a waterway, it is usually diluted by the river (being only five per cent bentonite) so that no active cleanup is necessary.

Still, Enbridge works directly with the proper environmental agencies throughout the drilling operation.

In rare situations, directional drilling attempts may not be successful. Enbridge will then propose and seek permits for alternative ways to cross the area. No matter the method, the company observes environmental protection measures and consults the appropriate agencies.  Sean Corbett is a Calgary-based writer and filmmaker. He runs the marketing agency Repria Multimedia Corp.

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BY DREW JOHNSON

A different Kind of Green

Restoring private land is big business—and the benefits flow well beyond property boundaries.

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lodding through kneehigh grass and high-stepping electric fences, Scott Gillilan makes his way to a crisp, clear creek dotted with spawning areas for fish. An occasional trout swims past as Gillilan

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weaves his way through a thicket of cattails to proudly survey his work from the water’s edge. Rey Creek, nestled in a valley west of Bozeman, Mont., looks every bit as old as the picturesque mountains that serve as its backdrop.

Just two years ago, however, this creek was nothing more than a muddy

ditch, with pockets of stagnant water that hid discarded tractor tires and faded beer cans. “Before the restoration work there probably weren’t more than a few trout per mile because the habitat was so degraded,” Gillilan says. “But now, this is a ‘blue ribbon’ fishery.”

Over the years, this now-sparkling

Photo: CAEPLA

“Before the restoration work there probably weren’t more than a few trout per mile because the habitat was so degraded,” Gillilan says. “But now, this is a ‘blue ribbon’ fishery.”

creek was diverted for irrigation, had its banks crushed by grazing cattle and, eventually, once it became filled with silt and the water ran too shallow for fish, it became a trash dump for local ranchers.

Any Sierra Club devotee or environmental regulator would be heartened to see the makeover that restored the land much as it was before the first settlers set foot in this rugged region.

But it wasn’t government orders that restored the creek bed, or environmental activists who hauled debris from the stream’s bank.

Instead, it was the prospect of a different kind of green, the almighty dollar, which triggered the impressive restoration of this creek. Land developers bought the dirty, polluted creek and a couple hundred neighbouring acres in hopes of selling plots of land to people seeking a break from city life — a place where they could build their dream lodge at the base of the Montana mountains.

And, of course, no Montana dream lodge would be complete without easy access to a fly-fishing stream.

That’s where Gillilan, a hydrologist and aquatic and land restoration expert, and his team came in. By restoring the long-neglected creek and turning it into a fishing paradise, the property’s owner transformed a plot worth “maybe a few thousand dollars an acre,” Gillilan estimated, into land that sold for more than $16,000 an acre, according to property records.

There are no losers when acts of private environmental preservation and

restoration, like painstakingly re-establishing a lost creek, occur. Property owners, the environment, and the general public all benefit. The restored creek provides enhanced water quality, increased fish populations and wildlife habitat, which flow well beyond the property’s boundaries.

For environmentalists, restoration projects such as this one ensure that many more people will have the opportunity to enjoy unspoiled land that might have otherwise been used for cattle or large-scale farming, or may have simply been disregarded and unappreciated.

Restored areas also offer species the possibility to thrive once again in their native habitat. Private stream restoration projects in the cold waters of Montana’s higher elevations have even given hope to the Arctic grayling, a native fish once threatened with extinction.

While government efforts to save the fish have done little to help, the beautiful sail-finned trout has found miles of new habitat and hundreds of additional spawning areas as private preservation and restoration projects continue to spread across Montana and beyond.

And when landowners or investors restore their properties, not only are jobs created for people like Scott Gillilan who perform the restoration, but the land itself often becomes more valuable. The

value of surrounding properties increases as well, and additional property tax revenues find their way into government coffers.

Finally, private efforts that reclaim and restore previously undesirable land literally create more land for Americans hoping for the chance to enjoy pristine space for vacation properties, retirement homes, or simply to create a better quality of life for their families.

In recent years, doing right by the environment has become big business.

Dams are being removed, streams are being reclaimed and native plants are being reintroduced, all by people whose motives could be viewed as self-serving.

But unlike the government, which has a spotty history when it comes to protecting or restoring land, private investors who see the value in returning land to a more natural state have a strong incentive to restore the environment from years of damage and abuse. They also have a strong track record of success.

There’s an important lesson in the little stream that Scott Gillilan brought back from the verge of destruction—and in the hundreds of other land and water restoration projects throughout America: Government will never preserve or restore land as well as people who stand to make money off of it. 

Drew Johnson is a senior scholar at the Taxpayers Protection Alliance and a columnist at The Washington Times. This article first appeared in PERC Reports and is reprinted by permission of the Property and Environment Research Center.

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BY AMANDA ACHTMAN

Companies have a responsibility to uphold property rights for the protection of landowners and the public

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f you want to know if I was involved in any of that sabotage, well — if I was, would I be stupid enough to tell you?” This was the answer of the late religious fanatic-turned-eco-terrorist Wiebo Ludwig when he was questioned about pipeline bombings, explosions and vandalism in Alberta and B.C. Ludwig, who died in 2012, committed some of the worst domestic acts of sabotage in recent memory. His illegal acts during the 1990s included: bombing a gas well, encasing a wellhead in

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concrete, counseling a police informant to obtain dynamite during a sting operation and other acts of vandalism and mischief. He continued to threaten acts of sabotage following his early release from prison until his death.

Journalists have merely called this criminal a “controversial” and “polarizing” figure and “an environmental activist.” A Maclean’s article archived in The Canadian Encyclopedia described him as “even a folk hero.” And, somehow, Andrew Nikiforuk’s book, Saboteurs: Wiebo Ludwig’s War Against Big Oil, won the Governor General’s Award for Nonfiction.

But in this country, we have a word for persons who violate the Criminal Code of Canada and it isn’t “activist” or “demonstrator” or even “protester.”

More recently, Vanessa Gray, Sarah Scanlon and Stone Stewart faced charges of “mischief endangering lives” after trespassing and occupying an energy company’s site in 2015. These women chained themselves to pipeline infrastructure and manually tampered with equipment.

Reporters are now noting that the withdrawal of charges signals a “precedent-setting victory.” The three women have a court order to stay away from

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We need only look to Nigeria, where hundreds in recent years and thousands in recent decades have been killed in the process of tampering with pipelines. company property, but what is to stop their friends from imitating them, if not the rule of law generally?

The Canadian public frequently hears that criminal acts committed by trespassers, vandals and saboteurs at pipeline sites have the potential to cause severe harm.

A public awareness document released by Enbridge mentions the “potential for a pipeline failure or release if a manually operated valve is closed without prior notification to our control centre.”

Unfortunately, this means practically nothing to the average citizen. Given the state-of-the-art technologies engineered and utilized every day by the energy industry in Canada, companies usually manage to shut down the lines when saboteurs threaten them. This means, thankfully, that we do not actually get a sense of the real consequences of “life-endangering” tampering.

Yet, we do know that trespassing and then tampering with pipelines puts the community-at-large, landowners, employees, shareholders, our environment and, yes, especially the saboteurs themselves, at great risk. We need only look to Nigeria, where trespassing usually happens in an attempt to scavenge the fuel, rather than squander it. Hundreds in recent years and thousands in recent decades have been killed in the process of tampering with pipelines.

Strangely, so-called environmentalists in Canada who would like to shut down Canada’s energy industry do not realize that their actions will only lead to greater energy dependency on countries like Nigeria, where those caught tampering with pipelines are occasionally punished by being shot dead.

In Canada, almost everyone understands that individuals have rights concerning their private property.

It’s common sense that it is wrong to trespass or steal. However, not everyone understands that companies also have rights concerning property. Part of ensuring the rule of law in Canada involves communicating the law clearly and maintaining sharp distinctions between environmentalists and eco-terrorists.

The Canadian Security Intelligence Service Act clearly considers threats to the security of Canada to include: “espionage or sabotage that is against Canada or is detrimental to the interests of Canada … and activities within or relating to Canada directed toward or in support of the threat or use of acts of serious violence against persons or property for the purpose of achieving a political, religious or ideological objective within Canada or a foreign state.”

When it comes to crimes committed with environmentalism as the ideological motive, we frequently hear the term “mischief,” which sounds innocuous enough. The Criminal Code says, “Every one commits mischief who willfully destroys or damages property; renders property dangerous, useless, inoperative or ineffective; obstructs, interrupts or interferes with the lawful use, enjoyment or operation of property; or, obstructs, interrupts or interferes with any person in the lawful use, enjoyment or operation of property.”

But mischief also has a playful sound to it, does it not? And this is the problem. Time and again, clear violations against private and corporate property are taking place. The rule of law is being substituted for the rule of stunts.

We see that the illegality of trespassing and sabotage is not always a sufficient deterrent to prevent people from committing these acts. Some think that it is a legitimate form of civil disobedience and seek the publicity that results from being prosecuted. Law-abiding citizens, companies and politicians have a responsibility to promote legal and democratic forms of opposition. The laws are adequate but must actually be enforced.

Otherwise, saboteurs will revel in their stunts even as they threaten everything for which they purport to stand.

Companies have a responsibility to uphold property rights for the security of landowners and the public. Farmers and ranchers need their property rights respected to guarantee the safety and security of their families and employees.

Todd Nogier, Enbridge’s manager of enterprise corporate communications, explains that keeping in touch with its neighbours is paramount to Enbridge as a company. “That’s why we contact landowners, business owners, tenants, communities and emergency responders on an ongoing basis,” he says.

“It’s an opportunity to share important information, hear about our neighbours’ experiences, respond to their questions and update them on Enbridge’s safety programs. These are also opportunities for us to communicate about the risks to both people and the environment of tampering or other sabotage.” 

Amanda Achtman is a CAEPLA contributor. She holds a BA in political science and is currently pursuing an MA in philosophy.

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BY SEAN CORBETT

A Reliable and Safe Pipeline System We are connected to the energy we need every day by a complex network of pipelines. Ongoing data and performance checks keep the systems running smoothly.

For example, at Enbridge, safety features include: Constant monitoring for emergency action Remotely controlled valves that can be closed in an emergency Automatic over-pressure protection that safely shuts down the pipeline in case of blockage

Pipeline Protest

Pressure relief systems to maintain proper operation Leak detection equipment that notifies control centres

It’s tamperers, not pipelines, that are unsafe

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riminal acts don’t just impact the delivery of energy we all rely on. Pipeline trespassing and damage affects the nearby community, the environment, the safety of the employees… and even protesters themselves.

Pipeline operation requires highly specialized skills. Valve tampering puts a protester in serious physical

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danger. A pipeline failure or release can happen if a manually operated valve is closed without notice.

So protesters can end up harming themselves and the environment they claim to protect. Of course, protesters will be prosecuted for such sabotage. But that’s cold comfort for the local landowner with destroyed property. Or for you, when you need to turn the heat on.

We Need Discussion, Not Illegal Acts There are many opinions on the transport and use of energy. Most people can express their views without dangerous criminal acts. Protesters who put their fellow citizens and the environment in harm’s way do not advance this discussion.

Enbridge is open about its projects and operations, and it is natural that people would voice their concerns about issues that affect us all.

True progress is made through dialogue, not sabotage. 

This page and facing page: iStockphoto.com

EXPROPRIATION: Putting a Price on Your Property

In a genuinely fair market, a property’s worth can only be decided by the landowner. But expropriation and eminent domain practices put the value decision in the hands of government. The following six articles take a critical look at the concept of ‘fair market value.’

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BY TIM MOEN

Fair Market Value: The Myth

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Is it okay to steal as long as you promise ahead of time to pay damages?

n Canada, the term for the legal theft of private property is “expropriation.” In the U.S. it’s called “eminent domain.”

This legalized plunder is considered acceptable in many jurisdictions — after all, the victims are given compensation in the form of “fair market value.”

Fair market value is defined in these

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jurisdictions as the price it is imagined a willing buyer would pay a willing seller. “Willing” being the operative word, of course.

In a marketplace, a buyer and a seller both gain from a transaction. Sellers want the buyers’ money more than they want their property, and buyers want the sellers’ property more than they want their money. Both have their desires met

in this voluntary transaction. It’s a winwin situation.

There are numerous reasons sellers who have exactly the same item for sale might charge different prices for it.

Sometimes property is valued so much by its owners that they won’t part with it for any price.

As soon as the term “fair market value” is bandied about, you can be sure

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“The only person who can determine the value of property is the owner of that property. There is no such thing as fair market value other than the price that the actual owner is willing to sell to an actual buyer.”

that the marketplace of willing buyers and sellers has nothing to do with it.

What’s the fair market value of a locket you can buy from Walmart for $20? What would the fair market value be if that locket were given to you by your wife on her deathbed? The only person who can determine the value of property is the owner of that property.

There is no such thing as fair market

value other than the price at which the actual owner is willing to sell to an actual buyer.

Pretending that you know what would happen if you had a willing seller of the property in question is completely ignoring the fact you actually have a real-life property owner in front of you who is telling you what the fair market value of his or her property is.

The idea behind fair market valuation is rooted in the Common Law concept that victims of crimes ought to be restored to wholeness by the perpetrator. This most often takes the form of some form of economic compensation to help the victim overcome the damages caused by the crime and return to a fully restored state.

On its face, fair market value seems just. Why shouldn’t criminals compensate victims? However, it only takes a minute to notice there is a real problem with fair market value.

We don’t say its okay to rob another person provided you promise ahead of time to pay damages. We would still consider it a criminal act, and we deal

with the perpetrators of crimes by locking them up or sanctioning them somehow. We certainly don’t institutionalize these crimes and make them a government program.

Consent is the missing ingredient when we bring up the term “fair market value.” Consent is the difference between a boxing match and an assault, between a legitimate transaction and theft. No amount of money makes it okay to violate another person.

We have to decide whether we take property rights seriously or not. It was property rights, the idea that the individual ought to be protected from the mob, that led to the flourishing of western civilization. We undermine property rights at our own peril. 

Tim Moen grew up on a farm in Northern Alberta. Leader of the Libertarian Party of Canada, Tim is also a public speaker, filmmaker, businessman and firefighter/ paramedic.

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BY DANNY LEROY AND ZACH GORHAM

Fair Market Value: The Illusion

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A willing seller is a necessary part of a fair deal

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dvocates of eminent domain — known more accurately as expropriation in Canada — justify its use with the claim that when property is taken from private individuals for public use, they are compensated with the fair market value of what had been their property. While at first this may seem reasonable, further consideration reveals that it is not.

According to the Canada Revenue Agency, fair market value is “the highest price … obtainable in an open and unrestricted market between knowledgeable, informed and prudent parties acting at

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arm’s length, neither party being under any compulsion to transact.”

What this unobserved highest price is can only be a guess. And your guess is as valid as mine or anyone else’s. A definitive amount beyond dispute is also out of reach. No matter how well-educated or well-intentioned, arbitrating a “fair market price” is not a substitute for actual market processes.

Consider the case of an expropriated parcel of land. With fair market valuation, the previous use of the property is taken into consideration and the

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“Markets cannot ascribe a value to something — only individuals can.”

owner is also compensated for the loss of the productivity of the land. If the land had an agricultural use, for instance, the owner would receive some compensation for the crops he would not be able to grow in the future.

But several problems immediately arise.

First, we do not and cannot know how much the land would actually sell for on the open market. A potential buyer’s willingness to pay is personal, specific to time, place and circumstances. There may be several potential buyers willing to pay different prices for the same property, but who these people are and what they are willing to pay is not knowable.

Second, transactions on the open market always involve willing buyers and sellers mutually agreeing on price. If the seller values his property more than the money the buyer is willing to give up for it, no transaction occurs.

Think about that in a real context.

If you are not willing to take anything less than $10,000 for your used car and a potential buyer is only willing to offer $8,000 for it, will the deal be done? The answer is no. Both buyer and seller must agree on a price for there to be a transaction.

In the case of expropriation, the monetary value to the seller of the property is not taken into consideration. It is only the monetary value of the property to potential buyers that is taken into account.

How can this be considered fair?

Would it be a fair transaction if the guy that came to look at your car got to buy it for the $8,000 he wants to pay for it, without consideration of what you wanted to sell it for?

A related issue is that in any exchange, value never equals price. Think

of it in terms of another real-life example.

If a real estate tycoon wants to build a hotel on top of Grandpa’s old farm, is the value of the farm only the value of the land? What if you grew up on that farm and had wonderful memories of Grandma and Grandpa there and wanted to keep the land in the family for generations to come?

There is more value to that land to you than any price it could fetch. How does the concept of “fair market value” as defined by the proponents of eminent domain/expropriation account for this kind of valuation? How do you tangibly quantify emotional attachment?

The takeaway point is perhaps the subtlest aspect of economic theory: the relation between value — which is subjective, non-quantifiable and specific to time, place and circumstance — and price, which is objective and measurable.

The difference between prices and expressions of subjective valuation is most clearly seen through interpersonal exchange. Every time we decide to buy something, we give up something we value less (a specific amount of money) in exchange for something we value more (a specific quantity of a specific good or service). The same is true for the counterparty to the transaction, the seller, who gives up something he

or she values less (a specific quantity of a specific good or service) in exchange for something he or she values more (a specific amount of money).

The resulting price may be public knowledge, but the value to the individuals is known, and can be known, only by them.

Also important to note is that markets are processes, not sentient beings.

Markets cannot ascribe a value to something — only individuals can. Moreover, processes have no sense of justice; rather, it is the actions of individuals that can be ethical or not. The concept of fair market value, as something objective, quantifiable and calculable, is an illusion.

More importantly, in the absence of market processes, it’s impossible to arrive at a price.

Governments may have the legal ability to apply the dubious concept of “fair market value” to establish an exchange ratio for a good or service. But this ratio is not a price, properly understood. A taking via expropriation, in lieu of a property sale, is not a market-based transaction, since one of the parties, in this case the seller, is coerced.

Compensation for legalized takings is not comparable to prices discovered through the free interplay of buyers and sellers in the unhampered market. 

Danny LeRoy, PhD., is an economics professor at the University of Lethbridge where he is also coordinator of the Agricultural Studies program. Areas of research include commodity production, marketing and trade, government interventionism and Austrian Economics. He occasionally blogs at Mises.ca.

Zach Gorham was born and raised in Southern Alberta. He is currently studying Agricultural Biotechnology at the University of Lethbridge and has a keen interest in Austrian Economics.

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BY C. KENNETH REEDER

Fair Market Value: The Problem

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Sometimes it’s literally an offer you can’t refuse

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ou’ve likely dealt with the idea of fair market value before. Maybe it was regarding an appraisal for a house, a piece of equipment or livestock inventory.

What about when a pipeline company approaches a landowner to negotiate

an easement? A lot of discussion about compensation will revolve around the fair market value of the property.

If a pipeline company and a landowner cannot come to an agreement regarding compensation, the National

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What makes something actually fair?

As with many things, it depends whom you ask.

Energy Board will arbitrate the conflict.

The end result is inevitably the expropriation of the land, with the owner required to accept compensation based on “fair market value.”

Section 97 (1a) of the National Energy Board Act says if a matter goes to arbitration, the NEB’s arbitration committee will determine the level of compensation based on “the market value of lands taken by the company.”

Section 97 (2a) defines “market value” as “the amount that would have been paid for the lands if, at the time of their taking, they had been sold in the market by a willing seller to a willing buyer.”

There are two main problems with this system: First, the negotiation dynamic is clearly different when a federal regulator casts its shadow over the process. Pipeline companies know that if negotiations break down, then the NEB’s arbitration will generally produce their desired result anyway.

This would tend to encourage landowners to grant the easement to avoid an arbitration process with a foregone conclusion.

The second issue is at a more fundamental level. “Market value” is not an appropriate tool when determining compensation for the expropriation of someone’s land.

Referring to some idea of market value is fine if it lines up with a price a landowner is happy to accept. If not, then it’s nothing more than a stick to beat the landowner with.

Here is the critical point: “fair market value” is based on an assessment value.

This is determined by looking at comparable transactions.

But since an actual sale has not taken place for the property in question, the assessment is ultimately arbitrary and subject to favouritism and collusion.

Just because some similar properties in your area sold for a million dollars doesn’t mean it’s fair for you to accept the same for yours. After all, what if

How can you settle that? You can only look at outcomes. If the buyer and the seller make a deal and complete an exchange, they must have thought it was fair. If no exchange happens and they walk away, obviously they couldn’t agree about what was fair.

We can joke about how “a good

Section 97

(1a) of the National Energy Board Act says if a matter goes to arbitration, the NEB’s arbitration committee will determine the level of compensation based on “the market value of lands taken by the company.”

(2a) defines “market value” as “the amount that would have been paid for the lands if, at the time of their taking, they had been sold in the market by a willing seller to a willing buyer.”

you’d rather have the land as it is instead of that million?

Obviously in the case of arbitration, there hasn’t been both a willing buyer and seller. There has been no exchange that gives us a price paid as a historical fact.

What makes something actually fair?

As with many things, it depends whom you ask.

But think about buyers and sellers.

If I say, “This is a fair price,” you might disagree. Maybe you’re the buyer and you think the price is too high. Or maybe you’re the seller and you think the price is too low.

compromise makes everyone mad,” but really, nothing is fairer than a voluntary exchange (an insight given by some of the earliest economists over 500 years ago).

Compare this with the situation where a company wants to do federally regulated pipeline work on your property and talk compensation. Unfortunately, even when rooted in some notion of fair market value, that isn’t always a fair process.

Sometimes it’s an offer you can’t refuse.

Literally. 

C. Kenneth Reeder is a Calgary financial analyst providing mergers and acquisitions advisory services for mid-sized, privately held companies in Western Canada. He works with many clients in the oilfield services sector. He is also the editor of CanadianMarketReview.com.

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B Y R YA N M C M A K E N

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The Real Reason to Oppose the Dakota Access Pipeline Farmers protest the use of eminent domain to take their land

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he ongoing protest over the Dakota Access Pipeline near Standing Rock Indian Reservation in North Dakota makes for some good theatre, but the protesters have as yet been unable to demonstrate that the pipeline actually trespasses on Indian lands, or that it will likely lead to groundwater pollution.

Both trespassing and water pollution are serious issues that would rightly open up the owners — in this case, Energy Transfer Partners — to crippling lawsuits.

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Threat of land seizure clouds the easement process

While the pipeline owners have attempted to obtain voluntary easements in most cases, it appears that when negotiations for easements break down the pipeline developers resort to seizing the private property via eminent domain. Moreover, the use of eminent domain calls even the “voluntary” easements into question since it is quite plausible that the pipeline developers “encourage” the granting of the easements by threatening to pursue eminent domain seizures should the landowner refuse the easement.

In North Dakota, however, the pipeline passes through private property and a likelihood of groundwater pollution has not been established.

Defenders of the pipeline like to point all this out. But, those same defenders also conveniently ignore that other parts of the pipeline, including parts that pass through Iowa, rely on eminent domain (known in Canada as expropriation) to secure land rights for the pipeline owners.

The Daily Caller reports:

Eminent domain was used in other portions of the route in Iowa, prompting farmers to sue the Iowa Utilities Board (IUB) in an effort to prevent the company from gaining the right to use the property-seizing tool. A judge eventually allowed the DAPL use of the land.

In May 2016, farmers began suing the pipeline developers in an effort to prevent the use of eminent domain to seize private property for the benefit of the pipeline owners. There are 1,295 properties along the 557-km route through Iowa.

As of November 2016, the owners of 17 parcels had sued over the fact that the State of Iowa handed over 200 pieces of land under eminent domain laws.

While the pipeline owners have attempted to obtain voluntary easements in most cases, it appears that when negotiations for easements break down the pipeline developers resort to seizing the private property via eminent domain.

Moreover, the use of eminent domain calls even the “voluntary” easements into question since it is quite plausible

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that the pipeline developers “encourage” the granting of the easements by threatening to pursue eminent domain seizures should the landowner refuse the easement.

In October, according to farmer Cyndi Coppola, pipeline developers trespassed on her farm in Calhoun County, Iowa, and began digging up the topsoil for pipeline construction. Coppola was arrested on her own property for protesting the dig.

In spite of the blatant violation to private property that eminent domain presents, many conservative politicians — the same ones who claim to support property rights — also support eminent domain. Indeed, during the Republican debates last year, candidates expressed unwavering support for eminent domain when pressed on the topic of oil pipelines.

Republicans have even begun supporting eminent domain for seizure of private lands for private uses. Historically, eminent domain was restricted (at least in theory) to public uses such as highways. The use of eminent domain for private uses, such as a Trump hotel in one case and privately owned shopping centres in others, has long been seen as an abuse.

During the Republican debate, Jeb Bush attempted to differentiate his support for eminent domain from Donald Trump’s support. Bush wrongly claimed that the Keystone Pipeline — which also relies on eminent domain — is for public use, when the pipeline is privately owned and built to profit its owners. Trump exposed Bush’s deception, in the process essentially demonstrating that both candidates favoured

the seizure of private land for someone else’s private use.

The situation is no different with the Dakota Access Pipeline in Iowa. The Iowa government is attempting to seize private land and hand it over to other private owners because to do so is convenient for the pipeline owners and their supporters in government.

Nevertheless, defenders of the pipeline’s trespassing are likely to maintain that violations of property rights such as this are acceptable because the former owners receive “just compensation.”

In cases like this, supporters of eminent domain like to throw around a lot of fancy terms like “highest and best use” in order to obscure the core issues at hand. But these terms do not erase the fact that if the owner were willing to sell for the price offered, then government coercion would not be necessary to seize the land.

Noted libertarian author Anthony Gregory explains in detail:

In the market, any compensation that is voluntarily agreed upon by both parties to a transaction is properly seen as just. If buyer and seller or employer and employee are both willing to make a deal, their freedom to do so, at any mutually agreeable price, is the fulfillment of justice in the world of economic exchange....

The state, unlike market participants, does not make its transactions through voluntary persuasion and bargaining, but through violence and the threat of violence.

Certainly in the case of Eminent Domain — which means “supreme lordship” — we see that the victims of seized assets have never consented, otherwise a pure exchange

Previous page; ZUMA Press, Inc. / Alamy Stock Photo; this page: Newzulu / Alamy Stock Photo

“People who lose their property to eminent domain proceedings are almost never made whole.” could take place that requires no police power. No such coerced transaction can be said to entail “just compensation,” since compensation is only just when the party being compensated agrees to the deal.

Oftentimes, the state claims it is offering a “fair market value” for the property it seeks to seize, but this is a sham. The market price for something is, by definition, the price that both parties consent to. In a fair market exchange, each party gives up something he values less for something he values more, or else he wouldn’t agree to it.

It is only through such a voluntary transaction that we can determine what something’s market value is in the first place. Market value is not universal, but particular to the assets exchanged in a specific transaction. For any given piece of property, there can be no market value without market exchange.

When the state has to rely on the coercive power of Eminent Domain, it is a sure sign that the property owner is not being given something he values more in exchange for something he values less, and it is a perversion of language to describe the compensation, however high, as having anything to do with the market.

But, don’t expect this to stop builders and developers who fancy themselves as paragons of civilization who merely need to sweep aside the hicks and rubes who get in the way of “progress.” President Trump has even gone so far as to claim that owners of seized property “at least get fair market value, and if they’re smart, they’ll get two or three times the value of their property.”

At least one study has shown, however, that this is not true at all, and “people who lose their property to

eminent domain proceedings are almost never made whole.”

If confronted with this, supporters of eminent domain would likely stick to their claim that government seizure of private property — much like taxation — is merely the price we pay for civilization. Trump summed it up when he claimed at the Republican debate: “Eminent domain is an absolute necessity for a country, for our country. Without it, you wouldn’t have roads, you wouldn’t

have hospitals, you wouldn’t have anything. You wouldn’t have schools, you wouldn’t have bridges.”

This is just a long-winded way of saying “without government, who will build the roads?” 

Ryan McMaken is the editor of Mises Wire and The Austrian. He is the author of Commie Cowboys: The Bourgeoisie and the Nation-State in the Western Genre.

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BY SEAN CORBETT

Dominion appears to be listening. It has moved its route eastward to collocate with an existing power line.

Landowners Left in the Cold Again?

The tension between Virginia landowners and Dominion Resources

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The pressing issue is Dominion’s plan to go through federal rather than state law. Under Virginia law, landowners enjoy greater property protection.

But Averitt, who is executive director of Americans for Personal Property, Energy, and Landowners (APPEAL), sees a more ethical path:

“There is, in fact, a way to build the pipeline and protect the rights of landowners through a combination of collocation with existing easements and free-market negotiations with willing landowners. Dominion could route a majority of the pipeline through pre-existing rights-of-way and easements to minimize the project’s impact on farmers and other landowners.”

Coming into 2017, Dominion appears to be listening. It has moved its route eastward to collocate with an existing power line.

Virginia residents still remain vigilant. They are urging Governor Terry McAuliffe to require the project to use Virginia courts for any eminent domain proceedings.

The Atlantic Coast Pipeline would surely create some local jobs in the state. And it remains the most efficient means of delivering reliable energy.

Let’s hope it can move forward without pilfering local landowners.  Alamy Stock Photo

E

minent domain, known as expropriation in Canada, threatens to overshadow a U.S. pipeline project.

The Atlantic Coast Pipeline has been proposed by Virginia-based Dominion Resources. While protesters and pundits debate environmental impact, Virginians have more immediate concerns.

In a May 2016 article for CFACT (the Committee For A Constructive Tomorrow), Richard Averitt wrote: “What deeply troubles many landowners in the pipeline’s path is Dominion’s threat to ram the project down their throats using the power of eminent domain.”

CAEPLA WORKSHOP SERIES

A day of essential information for landowners on topics that matter.

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2.

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B Y D AV E C O R E

Don’t ‘Modernize’ the National Energy Board If you want to get pipelines built, get bureaucrats out of the land acquisition business

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What “modernize” means to the Trudeau government is hard to say. Our suspicion is it will mean whatever they want it to mean, but we’re not sure even they know what that is yet. But if it means “change for the better,” they are not off to a very good start.

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ate last year, the federal government told National Resources Canada to “modernize” the National Energy Board.

What “modernize” means to the Trudeau government is hard to say.

Our suspicion is it will mean whatever they want it to mean, but we’re not sure even they know what that is yet. But if it means “change for the better,” they are not off to a very good start.

There is a cliché about doing the same thing over and over again and expecting a different result. That describes the energy board modernization campaign so far.

Ottawa is circulating a “discussion paper” on the subject seeking feedback from “stakeholders.” But the questions being asked are the same old, same old – they have been asked and answered dozens of times over the decades. Including multiple times in the last couple of years

by CAEPLA. In fact, the series of questions is very much like the “push polls” that have been so discredited in the political arena in recent years – the questions are asked in such as way as to skew the outcome to suit the people doing the asking.

You can take a look at the questions from the “Land Acquisition and Compensation” section at the right on this page.

The heading assumes the National

Discussion Paper 12: Land Acquisition and Compensation This discussion paper talks about land acquisition and related dispute resolution for facilities regulated by the National Energy Board (NEB).

Here are the questions within it: 1. How has having a pipeline or power line on your land affected how you use your land?

Energy Board (NEB) should even be in the land acquisition business. By “land acquisition,” we mean expropriation.

And by expropriation we mean legal land theft.

Which is what the NEB has always done. Nothing new here.

Nor is it in any way a new approach to ignore feedback from the only real stakeholders (apart from industry and people living near energy corridors) – directly affected farmers, ranchers and woodlot, acreage and other rural landowners.

Let’s take a look at a few of the questions.

“How has having a pipeline or power line on your property affected how you use your land?”

The NEB has literally stacks of testimony from landowners going back decades that answers this question.

The fact Ottawa is using more of your tax dollars to ask this question for the umpteenth time is mind-boggling to say the least.

Question 4 asks “who should make the final decisions for land compensation disputes?”

This is the best example of the pushpoll type question. It’s dishonest.

What they mean by “land compensation dispute” is when a landowner disagrees with the amount offered as compensation after his or her land has been taken or targeted for expropriation by the NEB for a linear project.

2. What are your views with respect to: a) Land acquisition agreements, its required clauses and the NEB oversight? b) Compensation and dispute resolution processes and the private nature of agreements? c) Right of entry process and authority?

3. In your opinion, are the existing processes described in this discussion paper fair and sufficient? If not, what improvements could be made (e.g., additional tools for land acquisition, compensation and dispute resolution)?

4. Who should make the final decisions for land compensation disputes?

5. What are your views regarding the process of determining whether to authorize right of entry?

6. What are your views with respect to the company’s right of entry without the landowner’s consent if a company and a landowner are unable to negotiate an agreement?

7. Should there be a more consistent approach for companies to compensate landowners for access to their land (e.g., defined frequency of payment, opportunities for review)? Would policy or regulatory direction from the Government of Canada be helpful?

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“The bottom line is, you can’t ‘modernize’ a bureaucracy that is itself an anachronism from the last century.”

Out in the real world, where we still have some semblance of a free market, “land compensation disputes” are pretty easy to resolve.

If somebody makes a lowball bid on your car or piece of farm machinery, you counteroffer or say “no thanks.” Problem solved.

If someone offers less than you are

bureaucracy handed use of their property over to a would-be buyer without their consent?

Number 7 has also been asked and answered a hundred times.

The answer could not be more simple: Freely negotiated sales or lease agreements. And thanks, but no thanks – “direction from the Government of

Number 6

Number 6 is just flat out absurd. I have never met a landowner who is anything other than irate about government authorizing Right of Entry without consent in cases where there is no agreement.

asking for your home or farm business, same thing. No third party is required.

And for darn sure no assistance is needed from bureaucrats who at best have no skin in the game and at worst are in a conflict of interest.

Number 6 is just flat out absurd.

I have never met a landowner who is anything other than irate about government authorizing Right of Entry without consent in cases where there is no agreement.

How would they feel if a government

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Canada” would not be helpful.

Expropriation is never OK, or even necessary. As we have written many times in past issues of the Pipeline Observer, there are always alternatives.

Energy transport companies already enjoy well-established energy corridors.

These can be repurposed and expanded.

Today’s pipeline companies also em-

ploy state-of-the-art engineering technology. The ability to go under or bend around the tiny number of holdouts or obstructers is greater than ever.

There are also land assembly strategies – options – that can be used to acquire land in a way that prevents some landowners – again, a small minority – from attempting to hold a project hostage to unreasonable demands.

Abandoning the threat of expropriation also goes a very long way toward pre-empting resistance and establishing good faith.

Other ideas we would like to see adopted include incentives from government.

And we are not advocating subsidies here. What we are suggesting are tax breaks.

Other than the companies themselves, nobody makes more off a pipeline project than governments via taxation. In fact, if energy transport is anything like the gasoline or tobacco industries, we would not be surprised to learn government takes the most.

Whatever the case, governments could incentivize landowners to partner with companies and get projects built fast and affordably by detaxing the property needed.

Property, school, business, and any other taxes attached to required land could be removed by all levels of government profiting from a project.

The bottom line is, you can’t “modernize” a bureaucracy that is itself an anachronism from the last century.

If you want to make change for the better at the NEB, get the bureaucrats out of the land acquisition business.

But you will never arrive at that conclusion by putting out push-poll discussion papers — and ignoring directly affected landowners by holding dogand-pony shows in urban centres. 

Dave Core is founding president and CEO of the Canadian Association of Energy and Pipeline Landowner Associations. Dave has been active in the pipeline landowners movement for nearly three decades.

B Y PA U L S C H W E N N E S E N

A ‘Priceless’ Resource

Facing page; Lebrecht Music and Arts Photo Library / Alamy Stock Photo; this page: iStockphoto.com

Innovative water contract pays farmers to conserve

W

e like to nod sagely at the abstract “value” of water, yet few of us know its actual price.

For reference, in the United States the average cost of the bottled water you toss back at a family barbecue is about a buck-and-half per gallon.

On my 215 arable acres [87 hectares] along the San Pedro River of southeastern Arizona, the price is considerably less. In fact, the only “price” I’ve ever tracked is the electric utility’s rate to operate a commercial irrigation pump — around $120 per month, or 0.003 cents per gallon.

Until recently, I couldn’t have even told you how much water I was using. That is, until my family agreed to an irrigation-reduction contract with the Arizona Land and

Water Trust. This market transaction has spurred us to conserve water, and represents the first instance of water payments in one of the Southwest’s most ecologically significant riparian areas.

It also demonstrates how information can be discovered through the application of site-specific knowledge.

Friedrich Hayek is no doubt nodding in his grave.

Here’s how it happened: My family supplies beef to farmers’ markets and restaurants in Tucson and Phoenix, and we finish our cattle on irrigated land along the San Pedro River. We recently adopted a “no-till” model of pasture management, hoping to establish a base crop of native perennial grasses that would provide year-round forage for our cattle.

We also hoped the change would

reduce our water consumption by increasing the soil’s capacity for retaining our limited rainfall. The experiment has paid off — and in some unforeseen ways.

After spending a couple of seasons fiddling with seed drills and 14-way native seed mixes, we discovered that re-establishing native grasses was actually quite simple. By ending the annual tillage and using regenerative grazing practices, we were able to develop a thick sward of native grass that is both beautiful and productive.

Nevertheless, even though we were interested in conserving water, we still had no absolute sense of our water consumption or any incentive to economize, since the resource went “un-priced” in any meaningful sense.

Then, a few years ago, the Arizona Land and Water Trust

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The deal represents an important lesson in how on-the-ground market transactions can flexibly adjust to site-specific conditions, allowing environmental sanity to prevail.

approached us about its privately funded irrigation-offset program. The Trust heard about our work with native grasses and, knowing that we refuse public subsidies, invited us to apply to its Desert Rivers Initiative, which seeks willing farmers to fallow their fields seasonally so that water can be left instream to improve riparian conditions.

In exchange, the program pays landowners the equivalent commodity value of the crop they would forgo.

We agreed to participate, but with a caveat: Rather than a full fallowing, we proposed an arrangement in which we reduced, rather than ceased, our pumping.

A recent picture in National Geographic, which showed the extent of perennial grass root structure (with root mats 13 feet deep), convinced us of the net positive hydrological gains of well-managed perennial pasture.

We wanted our pastures to remain a “sponge” for the riparian zone, rather than become an un-irrigated hardpan that would simply flush water into the river basin.

After experimenting with fallowing the pastures for a full year — which took quite a toll on the native grass — the Trust agreed to alter the contract

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and extend the payment period over two years of water reduction instead of a full one-year cessation. We now work within a water budget of 135 acre-feet per year, which enables us to use irrigation sparingly to maintain perennial pastures while leaving a significant amount of water in the stream.

This deal represents an important lesson in how on-the-ground market transactions can adjust flexibly to site-specific conditions, allowing environmental sanity to prevail. We now have a deep root base that holds our pastures in a stable matrix, slowly releasing rainfall and irrigation water back into the riparian zone.

And if our experiment in “lightly irrigated” perennial pastures turns out to be wrong, then we have created a

dynamic market relationship that can adjust accordingly.

What is striking about our project is its relative simplicity. Although we are managing unimaginably complex ecological systems, our ranch and the Trust were able to spontaneously create a water market, albeit a small one, that strips away much of the underlying complexity. The prices we’ve created are tentative and subject to change — as all prices are — but they represent one of the first voluntary comparisons of relative water values between agricultural producers and environmentally motivated consumers in our region.

Moreover, we are hoping to demonstrate that well-managed landscapes can be a net positive for ecological stability and the provision of environmental goods. With creativity, land management decisions can generate win-win returns.

Price is a noun, not a verb. The challenge, therefore, is not to simply “price” something but to discover what its price is. Rather than imposing prices based on the ordained judgments of central planners — as is often done with environmental resources — markets provide the rough-and-tumble process of price discovery that helps solve Hayek’s “knowledge problem.”

The free-market contracting that we’re experimenting with in the arid Southwest may prove to be the most efficient and the most just way to save the West’s most “priceless” resource. 

Paul Schwennesen is the owner of Double Check Ranch in Tucson, Ariz.

He has written and spoken extensively on free market environmentalism and agricultural policy in venues as disparate as Fox News, American Spectator, The Freeman and The Huffington Post. A captain in the United States Air Force Reserve, Mr. Schwennesen served as a Foreign Area Officer, Maintenance Officer and Acquisitions Program Manager on active duty and served a combat-zone deployment to Afghanistan. He holds a Masters of Liberal Arts in Government from Harvard University and a dual B.S. in History and Science (Biology) from the United States Air Force Academy.

This article first appeared in PERC Reports and is reprinted by permission of the Property and Environment Research Center.

B Y PAT R I C K S M Y T H

Safety and security a driving force for collaboration

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Photos: CAEPLA

Working together helps to ensure the highest standards

s new transmission pipeline projects start to move forward, operators are working diligently with stakeholders in Canada and across the border to ensure these pipelines are built with safety and security top-of-mind.

As with any large-scale infrastructure project, there is significant planning before, during and after a pipeline project has been completed. And at

every step, safety is the first priority of the members of the Canadian Energy Pipeline Association (CEPA) who transport 97 per cent of Canada’s daily crude and natural gas to market.

That includes protecting against security issues.

In the last year, there have been a number of pipeline-tampering incidents.

This is extremely dangerous, not only for the individuals conducting the illegal activity, but for the general public and environment. An unauthorized and

unscheduled valve closure could result in unpredicted pressure changes, which can pose serious risks.

Interfering with infrastructure can also have extensive impacts in other areas, such as a prolonged loss of essential services, according to Public Safety Canada.

That’s why our members work together to address security issues.

They tap into many sources, including governments, law enforcement and intelligence agencies to understand

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Interfering with infrastructure can also have extensive impacts in other areas, such as a prolonged loss of essential services.

and prepare for any possible security threats.

We also encourage landowners and the general public to be vigilant and to contact local authorities if they notice suspicious activity around pipeline facilities in their area.

CEPA members respect the rights of Canadians to express individual perspectives about energy development and transportation, but encourage them to do it in a peaceful and respectful way.

How CEPA members work together on safety Beyond ensuring pipelines are secure, CEPA members are also working together to ensure their safety practices and operations reach the highest standards.

Pipelines remain the safest and most efficient way to move the energy Canadians rely on every day. In 2015, our members achieved a 99.999 per cent safety record — a good record indeed, but our goal is to have zero incidents.

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Our pipelines are monitored 24/7 from sophisticated control rooms that can shut down a pipeline immediately, if necessary.

Our members do not compete on safety; they have entered into a Mutual Emergency Assistance Agreement (MEAA) that serves to strengthen emergency response. The agreement formalizes the existing practice of members requesting assistance from each other.

Help may be in the form of personnel, equipment, tools or specialized response advice, depending on the situation.

It’s an arrangement that considerably increases the highly trained and coordinated resources available during an emergency.

In 2017, CEPA members are ensuring the safety of ongoing operations through a number of key initiatives, including:

1. Industry-wide improvement program CEPA Integrity First represents the commitment of our members to collaborate and share best practices in the areas of

safety, environment and socio-economics.

The program strengthens the pipeline industry’s performance in critical areas like control room management, emergency management and pipeline integrity.

Integrity First allows members to constantly self-examine their practices and take a systematic approach to improvement. In 2016, CEPA piloted a third-party verification phase that will help to increase credibility with all stakeholders.

2. Technology and innovation CEPA members are collaborating on a national strategy to develop best-in-class pipeline leak detection technologies. Part of that exercise includes assessing emerging technologies and subsequently implementing the best ones on a national scale.

The strategy is enabling advances in leak detection, from equipment deployed in the field to control rooms where leaks can be pinpointed immediately via remote sensing. Other advancements such as satellite imaging, heat sensing, fibre optics and the use of drones provide enhanced understanding of how facilities are operating at any given point in time.

3. Safety Culture Our members are committed to ensuring that every employee and contractor has safety ingrained into their jobs and their lives, and they feel empowered and are recognized for making safe decisions.

From ensuring employees and contractors are well trained to keeping work sites safe, CEPA members are focused on building a strong industry-wide safety culture. When safety is always top-of-mind, everyone is aware of the known hazards, while remaining vigilant to new emerging hazards. 

Patrick Smyth is Vice-President, Safety & Engineering, with the Canadian Energy Pipeline Association.

B Y D AV E C O R E

Facing page: istockphoto.com; this page; Alamy Stock Photo

Pipeline Landowners Caught in the Crossfire

Anti-pipeline groups who put us all at risk slapped on the wrist

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s I was contemplating my article for this edition of Pipeline Observer, one of our CAEPLA members from Ontario contacted me to let me know that a group of “environmental”

activists, who had shut off a pipeline valve and then chained themselves to it a year ago, left a Sarnia courtroom Jan. 13 without criminal convictions.

The decision was billed as a precedent-setting victory for anti-pipeline

agitators across the country.

After searching the Internet, I came up with two different headlines regarding this court judgment, from two different news services — two views of the same basic story.

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The trespass, occupation and vandalization of private family farms and industrial sites are not acts of protest. They are gross violations of property rights that need to be vigilantly defended against.

The first: COURT: ENBRIDGE ‘DISAPPOINTED’ WITH OUTCOME OF CASE, SAYS COMPANY SPOKESPERSON The second: LINE 9 PROTESTERS BEAT BAD RAP But there’s a third headline that clarifies what is really at stake for landowners and the public. This headline, and the blog that follows, is one we published a year earlier, shortly after the incident occurred. It explains clearly, from a landowner perspective, the dangers of the original action by the activists and the potential risks if these activists are not held accountable.

It also discusses the hypocritical double standard of this judgment (considering the administrative penalties and criminal liabilities for which landowners are responsible under National Energy Board crossing and safety regulations) and provides some possible solutions to reduce risks going forward:

Pipeline Landowners Caught in the Crossfire In the name of the environment, green activists put the lives and livelihood of farm families like yours at risk In the name of pipeline safety and protecting the environment, anti-pipeline environmental activists have...put pipeline safety and the environment at risk.

Three environmental activists invaded an Enbridge valve site on a Sarnia, Ont.,

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area farm this week to shut off the flow of oil through Line 9 and chain themselves to equipment.

Not only did the trespass, occupation and vandalism threaten pipeline safety and create potential for a leak or spill — the very things the activists claim to oppose — the invasion put a farm family at direct risk.

Had something gone terribly wrong during this stunt, the lives and livelihood of the farmers hosting the valve compound would have been affected first and worst.

The fact is farmers, ranchers, and other landowners have increasingly been put in the crossfire by what are arguably acts of “ecoterrorism” by aggressive green activists determined to shut down the oil sands by paralyzing the pipeline industry.

A hazardous new fact of life facing pipeline landowners today The activists — three women in their 20s — claim they “did not give consent” for bitumen to be piped through the area.

Yet it is clearly they who have violated the concept of consent by ignoring the property rights not only of Enbridge, but more importantly of the farmer whose family they put in harm’s way.

Negligent and recklessly dangerous acts targeting oil and gas infrastructure are a hazardous new fact of life facing pipeline landowners today.

The three women were charged with mere “mischief.” But had the same farmer they inflicted themselves on failed to follow federal rules governing the crossing of pipelines on his own property, he might have faced fines in the hundreds of thousands of dollars and potential jail time. (Editor’s note: if you are interested in

learning how to safely “cross the line,” send us a note at info@caepla.org and we’ll tell you how you can download Enbridge’s new pipeline crossing app for your smartphone, tablet, or PC.) Clearly National Energy Board regulations and even the Criminal Code are inadequate tools for preventing political acts that violate property rights and put lives at risk.

Gross violations of property rights It might be time for landowners to take matters into their own hands.

A first step could be hiring security to protect their property from trespassers. The cost could be deducted directly from taxes as a cost of doing business.

Next step ought to be for affected property owners to file civil suits against individual trespassers, occupiers and vandals who so negligently and recklessly endanger farm families and businesses.

Win or lose, bills for legal fees should be forwarded to the governments and regulators who have effectively encouraged these potentially destructive political “protests.”

To protest means to “bear witness,” usually to something we object to.

Protesting is a natural right of Canadians.

But the trespass, occupation and vandalization of private family farms and industrial sites are not acts of protest. They are gross violations of property rights that need to be vigilantly defended against.

This is yet another example of why industry needs to respect the property rights of landowners and embrace us as partners.

If pipeline landowners are to be energy transport’s “first line of defense,” farmers and ranchers need to know that companies — and the general public — have their backs.

While it is important never to exaggerate threats, it would be irresponsible not to acknowledge that the aggressive actions taken by environmental activists near Sarnia this week could easily and suddenly turn tragic. 

WHAT MATTERS TO YOU It takes more than energy to power a community. It takes a connection. A connection we share with more than 95,000 landowners across North America. Because ultimately, we’re working for you – the people who benefit from the energy we safely transport and with whom we work closely across the many diverse communities where we live and operate as your neighbour.

At TransCanada, we are committed to treating landowners with honesty, respect and fairness. We never stop examining our own efforts, setting targets and continually striving for improvement in everything we do.

Because that’s what matters to you.

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Canadians rely on energy every day.

We deliver it with care. Safely. Responsibly.

Canada’s transmission pipeline operators have a duty to protect Canadians and the environment.

That’s why the industry works together to continuously improve pipeline operations.

Find out more at aboutpipelines.com/everyday 44

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