Nebraska lawmakers debate pipeline eminent domain rules

A group of demonstrators rally against the controversial Keystone XL oil pipeline outside President Barack Obama's fundraiser at the W Hotel in San Francisco, California October 25, 2011.

LINCOLN, Neb (Reuters) - Nebraska lawmakers debated on Tuesday tightening eminent domain rules for procuring land during the second day of a special session to discuss bills related to the proposed $7 billion Keystone XL oil pipeline.

The pipeline's planned route from Canada to Texas takes it across Nebraska, a move opposed by environmental groups and some property owners who will be affected by the construction.

Nebraska lawmakers are considering five bills to regulate the pipeline and possibly force TransCanada Corp to move its route away from the state's ecologically sensitive Sand Hills region and Ogallala aquifer, a major source of drinking and irrigation water for several states.

State Senator Bill Avery, speaking at the statehouse on Tuesday, said his bill on eminent domain rules would require a pipeline company to have a state or federal permit before contacting landowners and giving notice that property could be taken via eminent domain rules.

"This bill is to protect Nebraska landowners from the unfair taking of property," Avery said in morning hearings.

Avery produced a letter he said a landowner received from TransCanada. The letter contained an offer to buy property and a 30-day time limit for the landowner to make a decision. Avery said the letter said that if a decision wasn't made within 30 days, the corporation could invoke eminent domain.

"That is offensive," Avery said. "They don't have a (federal or state) permit, and they didn't have one then."

He said that under his bill, all companies "would have to have a permit before starting land discussion," and that the permit would carry the right of eminent domain.

State Senator Steve Lathrop countered that current eminent domain authority was not dependent on permit approval, and the TransCanada letters were not out of line.

"The letter as written is not misrepresentation. There's nothing wrong with the letter under the law that exists currently," he said.

State Senator Brenda Council also questioned the bill, noting that any change in eminent domain rules for pipelines could force the legislature to investigate eminent domain as a whole in Nebraska.

MOST AFFECTED LANDOWNERS ALREADY IN DEALS

Robert Jones, a TransCanada vice president who would be in charge of constructing the pipeline, defended his company's procedure for procuring land, saying 91 percent of affected Nebraska landowners had already signed agreements with the corporation.

"There's this belief that TransCanada treats eminent domain as a tool," Jones told Reuters. "That's not true. We wait until the last moment."

"We empathize with those who are frustrated. TransCanada does not treat eminent domain frivolously. It is absolutely the last choice we take," he added.

In the Natural Resources Committee, lawmakers were considering a bill that would give the governor authority to decide the route of any pipeline that crosses the state.

Senator Chris Langemeier outlined his plan to create a committee to advise the governor, but the governor would have the final say.

"The governor gets the power to approve or deny," Langemeier said. "And you have a committee of extremely knowledgeable individuals to help weigh in on this."

The committee would include the lieutenant governor, members of the Department of Environmental Quality, the Department of Natural Resources, the Department of Game and Parks, the Public Service Commission and county board members.

It would also include an independent landowner "to give us a personal feel of what it takes to reclaim the land after construction," Langemeier said.

Hearings will continue on Wednesday on two other bills related to the pipeline, and votes to send the bills to the full body of the legislature could come as early as Thursday, although several lawmakers were leaning toward next week.

Meanwhile, new pamphlets arrived in Nebraskans' mailboxes touting the positives of the proposed transcontinental pipeline.

A group called Nebraskans for Jobs and Energy Independence sent out a flyer saying "the crude oil Keystone XL will transport will not be shipped to China; it will be refined in the U.S. refineries on the Gulf Coast to meet American demand for petroleum products and decrease gasoline prices."

(Editing by Cynthia Johnston)