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Pipeline company, environmental group strike unique 'community benefits' agreement

LINCOLN — The developer of a carbon-dioxide pipeline and an environmental group have struck a “one-of-a-kind” agreement to ensure “community benefits” from the pipeline as well as support for the project.

While similar CO2 pipeline projects in Iowa and the Dakotas have spawned protests and harsh opposition, a peace treaty of sorts has been struck for a $1.5 billion pipeline project that crosses Nebraska.

“This agreement is exactly what all communities should have,” said Jane Kleeb, founder of Bold Alliance. “Real money is being left behind in these communities.”

‘Truly remarkable’

“This is truly remarkable,” said Steven Davidson, a spokesman for Tallgrass, who said it’s the first agreement of its kind that he’s aware of involving a pipeline project.

Kansas-based Tallgrass, which is converting a 392-mile-long natural gas pipeline to transport CO2, announced the agreement Tuesday with Bold Alliance, whose subsidiary, Bold Nebraska, was a leading opponent of the Keystone XL crude-oil pipeline.

Tallgrass is converting the former Trailblazer Pipeline — which runs from Beatrice, Nebraska, to eastern Wyoming — to carry carbon dioxide generated by ethanol plants for sequestration deep underground in Wyoming. The goal is to meet the demand for less carbon-intense biofuels in states seeking environmental benefits.

carbon pipelines

 A map of proposed carbon pipelines in the Midwest still includes Tallgrass’ Navigator project, which will convert a former natural gas pipeline to carry CO2 from ethanol plants. (courtesy Iowa Renewable Fuels Association)


Under the “community benefits agreement,” Bold will not oppose the project in exchange for Tallgrass’ commitment to spend $600,000 to train and equip first responders on the pipeline route and to donate $500,000 to nonprofits in the counties on the route.

In addition, landowners will have the option to receive yearly royalty checks, based on the volume of carbon dioxide being shipped, rather than a lump-sum payment for right of way upfront. And they will have the option of having Tallgrass remove the pipe and reclaim the land if the pipeline is later decommissioned.

Kleeb said that Bold, realizing that most of the Tallgrass project was using existing pipeline, focused on getting the best deal for local landowners and communities, and to make sure first responders were prepared in the event of a pipeline leak.

She said Tallgrass is the first pipeline company that has been willing to “engage proactively, acknowledge the need for landowner benefits … and genuinely commit itself to addressing those benefits in a written agreement.”

‘Sets a high bar’

“The question is, what will other pipeline companies now do?” she asked. “This sets a pretty high bar.”

 Jane Kleeb, founder of Bold Nebraska, the leading opponent of the Keystone XL crude oil pipeline. (Ariel Panowicz for Bold Nebraska)


The agreement, Kleeb said, “sets a standard” for future energy infrastructure projects of all kinds, including renewable energy.

Kyle Quackenbush, a segment president with Tallgrass, said the company was willing to seek “common ground,” given the importance of the project to the economy of Nebraska.

“This project is a critical element of Nebraska’s bio-economy — creating new markets and increased value for the biofuels industry, the family farms who supply them and the communities they call home,” he said.

The community benefits agreement, Quackenbush added, “is an excellent avenue for us to demonstrate our committee to safety, landowner rights and accountability.”

The agreement does not impact individual landowners who don’t want to sell right-of-way for the pipeline, the officials said. However, Kleeb said, it outlines “best practices” for negotiating with landowners that Bold had been seeking from state lawmakers.

Lawsuits over eminent domain still possible

Lawsuits over eminent domain could still happen, and Kleeb said the agreement doesn’t change Bold’s opposition to the use of eminent domain for pipelines that blaze new routes.

Quackenbush said that using a court order to obtain land is the company’s “last resort.” Already, he said, Tallgrass has worked “hundreds of reroutes” after finding landowners who didn’t want a pipeline across their land.

Unlike other carbon pipelines being proposed in the Midwest, the Tallgrass/Trailblazer project utilizes an existing pipeline that’s being converted to handle CO2, though some new laterals will be built to ethanol plants.

Officials said the total number of miles of laterals is still undetermined. So far, Tallgrass has announced agreements to serve two Nebraska ethanol plants, one in Columbus and one in Aurora, but more announcements are coming, they said.

Nebraska is second in the nation — behind Iowa — in the production of ethanol, with 24 plants that can produce up to 2.3 billion gallons of the corn-based fuel each year.

About 40% of the corn grown in the state is purchased by ethanol plants, which support 6,000 full-time jobs and contribute $4.5 billion to the state’s GDP each year.

Farmers who live close to an ethanol plant get an estimated 21 cents a bushel more for their corn and the added benefit of waste grains from the plants that are valuable livestock feed.

Ethanol advocates insist that carbon sequestration is a must for the corn-based fuel to fully expand into states that demand greener forms of energy.


Equivalent of 2 million cars

The Tallgrass/Trailblazer project has a capacity of carrying and storing 10 million metric tons of CO2 annually, which the company says is equivalent to eliminating the emissions of 2 million passenger vehicles.

Such community benefit agreements are legally binding. They are most often used to resolve differences between urban developers and local groups and landowners opposed to a project.

Under the contract between Tallgrass and Bold Alliance, non-compliance could result in a lawsuit seeking enforcement of the provisions.

Eleven farm groups also signed the 10-page, 10-year agreement as supporters, including the Nebraska Farm Bureau, the Nebraska Farmers Union and Renewable Fuels Nebraska.

Unlike the States of Iowa and South Dakota, Nebraska has no state statutes concerning the routing of carbon-dioxide pipelines, though some counties have set requirements.

A bill was introduced in the Nebraska Legislature this year but was withdrawn by its sponsor, State Sen. Steve Erdman of Bayard, after he said he learned more about the pipeline projects.

Kleeb said several of the obligations made by Tallgrass were ones Bold had unsuccessfully sought in the Nebraska Legislature.

“Hopefully this will serve as an example for senators,” she said.


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