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Keystone XL: Risky Business?

As much as we pipeline opponents have been accused of being “too emotional” by TransCanada, by their pet supporters at AFP and Nebraskans for Jobs and Energy Independence, and by TransCanada-sponsored politicians and contrary to Nebraska State Sen. Christensen’s arm-waving assertion that we simply don’t understand basic economics, some things have come to light that even fuzzy-headed environmentalists can recognize as risky business.

No, we’re not talking about TransCanada CEO Russ Girling sliding stocking-footed across a wooden floor, dancing in briefs and a pink oxford while blaring Bob Seger’s “Old Time Rock N’ Roll,” although that might be a more effective marketing strategy than their regurgitative efforts at convincing Nebraskans that “the aquifer will be safe” in the event of a spill on the Keystone XL. We mean business–dollars and cents. In the case of TransCanada’s Keystone XL pipeline, not only is it environmentally hazardous, but it might also be a bad bet for Nebraska and other states along the pipeline route.

Just this week, Oil Change International released a new report entitled “Getting to Market: Emerging Investor Risks in the Tar Sands,” outlining the financial uncertainties of tar sands developments in Canada and the U.S. To summarize, the report describes difficulties in the approval of the Keystone XL, including mention of the two-week sit-in at the White House in August, the over-10,000-person protest on November 6th (both of which were well-attended by awesome Nebraska activists), and the buzz-saw that was Nebraska citizens protecting their land and water.

Those difficulties, and the ensuing delay called for by the State Department and supported by President Obama, could lead to cancelled contracts due to sunset clauses and expired shipping commitments. Coupled with competing pipelines such as Enbridge’s Wrangler and Conoco-Phillips’ Seaway, the future of the KXL’s viability in a results-driven marketplace is uncertain at the very least.

Moving beyond uncertainty into TransCanada’s known track record, we can see that there are some very disturbing patterns in TransCanada’s business practices. While landowners in Nebraska can attest to TransCanada’s bad-actor status when it comes to obtaining easements and threatening eminent domain condemnation, taxpayers in other states are hopping mad about getting shafted after the construction of TransCanada’s first pipeline, Keystone 1.

For example, there are six counties in Kansas that will receive no property taxes on the Keystone 1. Indeed, due to an act of the Kansas state legislature, TransCanada is exempt from paying taxes on the project for its first 10 years of operation. As if that weren’t enough, TransCanada has applied for similar tax waivers in other states that the proposed Keystone XL would cross  (just like they applied for safety waivers to allow them to use thinner pipe and pump at higher pressure).

The question on the minds of many Cornhuskers is: do they plan to do the same in Nebraska? Given the shocking number of our state senators (including a majority of those on the Natural Resources Committee) that seem to hold TransCanada’s interests above those of Nebraskans, we should all be at least a little bit worried.

So what about Nebraska taxes? We already have the Keystone 1 in our state, and it’s already been in operation for a year and a half. What has been the impact of TransCanada’s dirty oil money in our state so far? Well, in true TransCanada form, the big talk isn’t backed by similar-sized results. Like TransCanada’s outlandish job creation claims, their property tax boastings have been more hot air than cold, hard cash.

When TransCanada told Nebraskans back in 2007 that the Keystone 1 would generate more than $5 million in property tax revenues for the state, many county board members drooled in typical “business-friendly” fashion. Well, truth be told, now that 2011 is coming to a close and the numbers are in, guess what? You got it–the actual dollar amount TransCanada has been billed by Nebraska counties is significantly less:

County

Taxes Due 2011

Cedar

 $334,266.08

Wayne

 $175,712.62

Stanton

 $343,257.18

Colfax

 $217,505.78

Butler

 $317,254.62

Seward

 $255,894.30

Saline

 $278,940.88

Jefferson

 $288,371.58

Total:

 $2,211,203.04

It must be noted here that these numbers are taxes billed, not paid–It remains to be seen if TransCanada will actually pay these amounts, or if there are some yet-unforeseen loopholes they may be able to use to avoid responsibility, much as they do in their easement contracts with Nebraska landowners.

In any case, landowners, taxpayers, and citizens in Nebraska should be very wary of the perceived financial benefits–especially if those benefits are being advertised by TransCanada. Their past performance has been less-than-promised, when you take the old records off the shelf.

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