GREASING OIL’S PATH
As environmental concerns halted pipelines elsewhere, Wisconsin government leaders quietly made it easier to condemn private property for a potential Canadian oil line expansion
SUPERIOR – Jeremy Engelking was on his way back from a deer hunt in 2009 when he tried to stop a construction crew from completing a 1,000-mile oil pipeline running from western Canada to an oil distribution center in his hometown on the shore of Lake Superior.
Wearing a blaze orange parka on that blustery December morning, the 27-year-old pulled his green Honda ATV in front of the workers’ heavy equipment and told them to stop.
Cellphones were drawn, 911 was called and a sheriff ’s deputy arrived within minutes to quash the one-man protest of a pipe being laid by Canadian pipeline giant Enbridge, Inc.
“I pulled out my taser and ordered Engelking to turn around away from me and go down on his knees,” a Douglas County Sheriff ’s law enforcement officer identified only as Sgt. Smith wrote in his official report. “Engelking complied at which point he was placed in handcuffs and escorted off the work sight (sic) back to my squad. Engelking was informed he was under arrest.”
Engelking’s hunting rifle, which remained in its case during the incident, was confiscated, as was his ATV. Engelking was hauled off to jail on charges of trespassing. On his own property.
It took more than five years for the courts to sort it all out, but it turned out that the law enforcement officers got everything backward that morning.
It turned out that Engelking, whom a pipeline construction worker acknowledged was “polite and calm” during the entire incident, was not the one trespassing.
The pipeline was.
That pipeline is one of six that now cross the Engelking property. Collectively, they can carry more than 2.5 million barrels of crude oil per day, an around-the clock flow fast enough to fill an Olympic-sized pool every 10 minutes.
The Engelking family — Jeremy and his parents — were awarded $150,000 in 2014 for what the court determined was Enbridge’s unlawful construction of the pipe across the family land.
The court found that Enbridge made a mistake in interpreting the rights to lay pipe across the land — rights its predecessor had purchased for $60 under a 1949 easement agreement with a previous property owner. Even so, the court allowed the new pipe to remain on the Engelking property and the oil to keep flowing.
Much of the Enbridge oil flowing into Superior comes from the tar sands deposits of western Canada. This “unconventional” oil is reviled by environmentalists because of the energy it takes to tap the tar-like substance, push it through pipes to refineries and then convert it to gasoline.
Shutting the oil flow to refineries was not the Engelkings’ reason for objecting to the new pipeline. Their problem was they feared the wording in a new easement agreement Enbridge wanted them to sign would let the company claim even more use of their land in coming years.
When the family did not sign off on the new easement, Enbridge laid the pipe anyway, later arguing in court — unsuccessfully — that the language in the 1949 easement gave it authority to do so.
“It’s not that we’re against the pipelines,” Jeremy Engelking said. “We just didn’t want to agree to give Enbridge additional rights to our land.”
But Enbridge doesn’t necessarily need a property owner’s permission to legally claim use of his or her land. The company has a history in Wisconsin of rolling over reluctant landowners’ wishes by turning to the government to allow it to claim private land through eminent domain, one of the most awesome powers government wields.
Eminent domain allows the government to compel an individual to sell his or her private property, or the use of it, for a project that the government deems a public need, such as highways and power lines.
Of course, people need oil as much as they need roads or schools or electricity. But just how much oil do we need?
The final destination of all the oil flowing across the Engelking property is hard to peg. Most of it flows down an existing pipeline corridor that runs the length of Wisconsin, from Superior to the Illinois border.
From there much of it flows to refineries in the central U.S. and Canada — and beyond. Most of the oil is refined in the U.S., but that doesn’t mean it necessarily stays and is burned in U.S. autos.
U.S. gasoline exports to rival economies — including China, India, Singapore and Brazil — have increased nearly five-fold in the past decade and now hover around 5 million barrels per day.
Crude oil exports from the U.S., which had been largely prohibited for decades after the energy crisis of the early 1970s, have soared since that ban was lifted in late 2015 to about 1 million barrels per day.
As these exports increase, the federal Energy Information Administration predicts U.S. gasoline consumption will drop by about 1 million barrels in the next decade as sales of fuel efficient and electric vehicles continue to rise, accounting for more than 25% of the market by 2027.
Meanwhile, increasing volumes of tar sands oil keep coming out of the ground in western Canada, and Enbridge is now constructing a new pipe from Alberta to Superior to replace a deteriorating line that is nearly 50 years old.
If Enbridge succeeds in getting permits for the $7 billion project from the state of Minnesota, it is likely going to need to construct another pipeline flowing out of Superior to the Illinois border.
At the same time, political pressure is growing to close two 64-year-old pipelines in Michigan that lie at the bottom of the Straits of Mackinac. A study financed by Enbridge hints a likely alternative path for that oil to get to market would be the Wisconsin pipeline system that crosses more than 1,000 parcels of private land. Many of those properties are owned by individuals who, like the Engelkings, have no interest in allowing another pipeline across their property.
And, like the Engelkings, their resistance might not make a difference.
In 2015, Enbridge persuaded Wisconsin Republicans, who have long expressed vigorous support for private property rights, to change the state’s eminent domain law. The change makes it easier for the company to turn to the government to force property owners to allow construction crews to bury new pipes across their land.
The move stunned many citizens in the path of the potential pipeline, but it came as no surprise to those who have resisted the company’s expansion efforts in recent years.
“Enbridge seems to have this kind of entitlement mentality that we are a big corporation and we have a right to do this, and you can’t stop us,” said the Engelkings’ attorney, Kevin Sandstrom.
And, so far, nobody in Wisconsin has.
‘Good news’ goes bad
The caller who interrupted James Botsford’s dinner in early spring 2013 told the Wausau resident he had just hit the jackpot.
“We have good news,” said an Enbridge representative. “Your land has been selected as a possible location along a proposed corridor for a new pipeline.”
The land Enbridge was eyeing is a 160-acre patch of eastern North Dakota farmland that has been in the Botsford family for decades. The parcel is just down the road from Botsford’s grandfather’s old farm, where the young Botsford spent summers helping him raise wheat, oats, sunflowers and soybeans.
The Enbridge representative explained that the company’s proposed “Sandpiper Pipeline,” designed to carry North Dakota shale oil to the Enbridge terminal in Superior, would likely be crossing the Botsford family property and that he would have a check coming as compensation.
Botsford told him not to waste the paper.
The retired attorney, who moved to Wisconsin in 1991, maintains he is no environmental warrior, but said he and his wife have zero interest in helping Enbridge get North Dakota’s shale oil to market.
The couple views shale oil as a particularly troublesome fuel due to environmental damage caused by hydraulic fracturing, or fracking, that is required to bring it to the surface.
“We drive cars and tractors and lawnmowers,” Botsford said, acknowledging his own oil dependence.
“But when ‘Big Oil’ knocks on your door and dangles a bag of silver and says, we’d like you to materially participate in putting a lot more carbon into the atmosphere, especially from this extra carbon-laden oil that we can only get out by fracking, which brings an additional layer of toxins … those things combined made me tell them: No. I don’t want to participate.”
Botsford eventually found himself as the lone holdout of all the property owners along the North Dakota portion of the 616-mile route.
He said pressure to cede a 50-foot swath across a half mile of his land came from friendly Enbridge representatives — at first. The initial offer, he said, was for about $12,000, and when he declined the company doubled it. Then the offers kept climbing, to $35,000, to $38,000 and then to $51,000.
Each offer came with a follow-up call from Enbridge asking if Botsford and his wife were going to sign the agreement.
“I kept saying: ‘It’s a matter of principle. My wife and I don’t want your money, and we’re not going to participate.’”
Botsford said he finally got a call from “a corporate muckety-muck.” He doesn’t recall his name, but Botsford remembers what he told him: “You know we are never going to say, ‘Yes.’ So why don’t you go around us?” Botsford recalled. “He said: ‘Mr. Botsford, you don’t understand — We are Enbridge. We don’t go around anything. We go through it.’”
“That was it for me,” Botsford said, “and I responded — and this is verbatim — ‘Well, in that case: (Expletive) you.’”
The company’s hard line, Botsford said, elevated his principled stand against the pipeline. Suddenly it wasn’t just about trying to block the flow of unconventional oil.
“This was a foreign corporation, a Canadian-based corporation, wanting to condemn our land and their whole purpose of this pipeline was to get this oil to the Great Lakes to sell it on the world market,” he said. “How could this be justified as a public use for a North Dakota land owner?”
Enbridge sued Botsford, and eventually won the right to claim the use of the Botsfords’ property through eminent domain.
The Botsfords didn’t give up. They pressed their case to the North Dakota Supreme Court, and that is where Enbridge backed down.
One likely reason is that in fall 2016 Enbridge announced it was pulling back on its plans for the Sandpiper line and instead investing in the Dakota Access Pipeline, which runs from North Dakota to Illinois.
To settle with Botsford, Enbridge returned to him the easement granting the company the right to bury the pipeline on his property, and the company made a written promise in court to never again seek his property for a pipeline route. It also paid his attorneys fees.
Botsford’s home near Wausau is not along Enbridge’s Wisconsin pipeline route, but he is closely following the controversy over the potential for a new pipeline running out of Superior because it would likely require easement acquisitions along the entire route which could lead to fights similar to the one he fought in North Dakota.
He said if the company does push ahead with a statewide easement expansion, he expects a much more ferocious fight from Wisconsin landowners than what took place in North Dakota.
“Wisconsin is more worldly, more analytical. More critical,” he said. “I don’t think Enbridge will be able to steamroll over the people of Wisconsin to the degree they did in North Dakota.”
‘This is about property rights’
Most of the Canadian oil coursing out of the city of Superior — roughly 20% of the nation’s imports — flows through an underground cluster of pipes along an 80-foot wide swath of mostly private land stretching the length of Wisconsin.
Enbridge’s predecessor acquired the right to use most all the Wisconsin properties by negotiating deals with individual owners a half century ago. Enbridge’s fight with the Engelking family notwithstanding, the company maintains its relationship with those property owners over the years has been based on “trust and ethical dealings,” and indeed there are many landowners across the state who have no problem with Enbridge’s pipes running under their properties.
Yet the company in recent months has come under blistering criticism from a growing number of landowners who are accusing Enbridge of brutish tactics when it comes to pumping everincreasing volumes of oil across their property.
The newest Enbridge pipe in Wisconsin opened in 2009, but the company has since added pumps to bump up pressure that allows its capacity to double from an initial 400,000 barrels per day to 900,000 barrels per day. It could soon be carrying 1.2 million barrels per day.
Retired physician Paul Harkins was among more than 50 property owners who drove to Madison in May to tell lawmakers about their sour dealings with Enbridge. He was still stinging from trouble he had with the company during construction of the 2009 pipeline.
In addition to Enbridge’s 80-footwide easement, the company commonly also has the right to temporarily use additional land beyond the easement borders for maintenance and construction projects related to the pipes.
In Harkins’ case, he said Enbridge wanted to cut a swath of trees almost right up to his house to make it easier for construction crews to squeeze the new pipe into the 80-foot easement.
Harkins ended up in court and prevailed in stopping the company from cutting down the trees and endangering his septic system by rolling heavy equipment over it. The pipeline was built anyway and the battle cost him thousands of dollars in legal fees, but he nevertheless claimed victory because he stopped Enbridge from ravaging his
property outside Marshfield.
The victory came with a lot of stress — he said he was essentially threatened with financial ruin for trying to stop the crews from leveling his trees.
“It’s very intimidating to have a $35 billion company in your face saying they are going to sue you with the full force of the company,” Harkins said.
His victory was short-lived; crews returned to his property a few years ago to conduct a new survey.
The company says it may some day need to expand its easements on private properties across Wisconsin to build a new pipeline because, according to Enbridge engineers, the company’s existing easement can hold no more pipes.
The company insists that no decision has been made on whether to pursue a new line crossing the state, let alone a new round of easement acquisitions on private properties along the corridor.
Even so, the company this summer began construction of the 14 mile-long Wisconsin portion of a new $7 billion line that runs from Alberta to the Enbridge’s terminal at Superior.
A pitched battle is under way over the Minnesota pipeline permit to complete the line, and if Enbridge prevails, company critics say that almost surely will necessitate a new pipeline running out of Superior — you can’t add to the flow into Superior without expanding the flow out of Superior.
Enbridge, in fact, has previously told its investors it is considering a twin to the Superior-to-Illinois line that opened in 2009 and will soon be capable of carrying 1.2 million barrels per day.
Furthermore, in 2014 crews surveyed lands straddling the existing Wisconsin easement. That included taking an inventory of houses, barns, sheds and other structures and natural features up to 300 feet beyond the current easement border. Company officials say they are not eyeing an easement expansion that wide. If they do eventually move ahead with an expansion, they have said they are considering adding something closer to 50 feet.
Harkins isn’t waiting for Enbridge to make up its mind on whether or how to proceed. He’s already saying no — and not because he’s worried about how a new pipeline could add to the Earth’s rising temperatures.
“I’m not an environmental extremist,” said the Rhinelander native with undergraduate and medical degrees from the University of Wisconsin. “This is about property rights. This is about safety. And it’s about property values.”
It may be an uphill fight. While Enbridge says talk of an expansion is premature, it recently became easier for the company to claim use of private properties along the existing pipeline corridor.
The company has the Wisconsin Legislature to thank for that.
Republicans make exception for Enbridge
Just hours before the Fourth of July holiday weekend started in 2015, the Legislature slipped into the state budget bill a 24-page wish list of last-minute measures — most of which had nothing to do with the state budget.
One of those — a move to gut the state open records law and make it easier for politicians to cut secret deals — was revealed and reversed after public outcry from citizens across the state.
Compared to the other 65 items on the list, number 51 stands out for the profound impact it could have on landowners across the state. It is called “PSC Condemnation Authority for Oil Pipeline Companies.”
The PSC is the state Public Service Commission, a three-person board that regulates utilities and many liquids delivered by pipeline, including oil.
The PSC has the authority to condemn private property, a maneuver that has commonly and historically been used to acquire property for government projects that serve all citizens, things like construction of roads, schools and landfills.
But the ability of private companies to gain government support in seizing private lands for profit grew substantially in 2005, when the U.S. Supreme Court ruled that governments can force transfer of private land from one owner to another in the name of economic development.
In their landmark decision — Kelo vs. New London, Conn. — the justices ruled that a group of property owners had to sell their homes so they could be replaced with office buildings, condominiums and retail development that would generate more property tax revenue for the city.
The 5-4 decision by the court’s liberal justices, joined by swing vote Anthony Kennedy, drew a stinging rebuke from their conservative colleagues as an outrageous case of government overreach.
“Something has gone seriously awry with this Country’s interpretation of the Constitution,” Justice Clarence Thomas wrote in his dissenting opinion. “Though citizens are safe from the government in their homes, the homes themselves are not.”
The Connecticut residents lost their properties, but the hoped-for development was never built.
Even so, many conservatives contend the damage done by the ruling extends far beyond the borders of those vacant New London lots.
Some states responded by reining in the authority of governments to claim private lands, specifically for pipelines.
Wisconsin’s Republican leadership took a different tack.
The one-paragraph addition in the 2015 state budget bill appeared innocuous enough: “Delete the reference to ‘corporation’ and substitute ‘business entity’ in the current law provision which conveys the authority to condemn real estate and personal property to corporations that transmit oil or related products in pipelines in Wisconsin and that maintain a terminal or product delivery facilities in Wisconsin…”
Records show the tweak in wording was inserted after lobbying on behalf of a U.S. Enbridge subsidiary — Enbridge Energy, Limited Partnership.
Limited liability partnerships are formed for a variety of reasons, including lowering business taxes and limiting a company’s exposure to lawsuits involving bankruptcies, or accidents.
The problem for Enbridge was that a limited partnership entity wasn’t specifically mentioned in Wisconsin law as an eligible enterprise to acquire property through condemnation.
Enbridge learned this in 2008 when it requested permission from the Public Service Commission to use condemnation to claim additional private properties while constructing its latest pipeline.
Most property owners affected by the expansion negotiated agreements with the company to allow increased rights to use of their land. But in some places along the line the company needed some government muscle to acquire additional rights from the unwilling.
The Public Service Commission gave Enbridge the go-ahead to claim the properties. But in a statement accompanying the approval, one commission member noted that the wording in state law made it ambiguous as to whether Enbridge’s limited partnership status made it eligible to acquire private property through condemnation, which she called “one of the state’s most dramatic powers” and one that “must be applied solemnly.”
Seven years later, Enbridge lobbyists went to work on Republican legislative staff to ensure the company would not be denied future condemnation authority based on its limited liability partnership status.
Email exchanges in the summer of 2015, initially obtained by Wisconsin Public Radio, show an Enbridge lobbyist pressed state legislation drafters to get a change in the description of a business eligible to condemn property from a “corporation” to any “business entity.”
When one legislative drafter noted that the change may not be needed because Enbridge had been granted the right to condemn property for the pipeline project in 2008, Enbridge pressed harder.
“The change needs to be made,” an Enbridge attorney explained in an email to an Enbridge lobbyist at the time. “The PSC is not like a court. A finding in one contested case has no binding precedential value for another contested case.”
Less than two weeks later, with no public notice or hearing, the company got from the legislature the change it sought.
This is not a blank check for Enbridge to condemn any property it desires. The company would still need approval from the Public Service Commission, which would have to find the project is in the “public interest.” But it does remove an obstacle for the commissioners to give Enbridge the ability to condemn private lands. All of the commissioners have been appointed by business-friendly Gov. Scott Walker, who signed the budget changing the law.
Neither the offices of Assembly Speaker Robin Vos nor Senate Majority Leader Scott Fitzgerald responded to repeated requests to answer questions about the law change.
Walker’s staff also did not respond to emails inquiring about the change in the law.
Brian Jorde, an attorney who has been consulting Wisconsin property owners along the existing Enbridge pipeline route, said it is impossible to reconcile principles of conservatism with condemning private lands in order to build pipelines to benefit a for-profit company that serves refineries outside the region.
“It’s the reality, I think, of economics and dollars superseding values. Because if your value system, as a conservative, is individual rights, individual freedom, defending the constitution, then you could no way ever, morally or ethically, fundamentally support a foreign for-profit company that is going to take those very rights from your neighbors or yourself,” he said. “It absolutely cannot be squared.”
That argument held sway with central Wisconsin’s Wood County Commission late this summer. In a 10-8 vote, the board approved a non-binding resolution asking the state legislature and Walker to change the state condemnation law to prohibit the taking of private land by for-profit oil pipeline companies.
A similar resolution passed Oct. 10 in Walworth County and another one is in the works in Jefferson County. All of the counties are along the Enbridge route.
A public necessity?
Paul Wehking, who describes himself as conservative, is nervous about the future of his home, in which he and his wife have raised two teenage boys and near which the Enbridge pipelines run.
Wehking is not asking for anyone’s sympathy for having to live with the lines already crossing his property; he knew there was a pipeline easement on the land when he bought his Dane County house 17 years ago.
He didn’t protest when a new line was added in 2002, nor when two more lines were added in 2009, including a smaller one that carries a highly volatile “diluent.” That is a chemical concoction pumped from the Chicago area to western Canada that liquefies the clay-like tar sands oil so it can be piped south.
Wehking said this diluent line came with a safety packet for the family that included a glow stick, a whistle and a list of Do’s and Don’ts should a leak occur. The “don’t” list included turning on lights (hence the glow stick), starting a car, or using a cellphone, all of which could spark an explosion.
He said the to-do list was simple. “They basically tell you to run,” he said. “Upwind.”
Wehking isn’t demanding the diluent line or any other pipe be moved. He just doesn’t want Enbridge to be allowed to expand the easement further into his yard, and possibly into his living room.
“I don’t think they are evil,” Wehking said of Enbridge. “It’s just that we’d rather not be infringed upon further — or be condemned and have to move out of there.”
Wehking can’t understand how the company could be allowed to claim his land for the benefit of its stockholders. And he doesn’t buy the argument that the line is necessary for the citizens of the state. Beyond a short-term bump in construction jobs, he said he doesn’t see how a new pipeline will significantly boost Wisconsin’s economy.
“I haven’t seen anything that says how Wisconsin benefits having this thing plowing its way through the state, corner to corner,” Wehking said. “If you could see something tangible, in terms of gas prices or jobs here in Wisconsin, that would be one thing.”
The Minnesota Department of Commerce recently reached a similar conclusion. In September, it weighed in against construction of the new Enbridge line running from Alberta across the state and into Superior.
The department commissioned a study from the global energy economics consulting firm, London Economics International, to evaluate the need for a new line that could more than double the current line’s existing flow from 390,000 barrels per day to 844,000 barrels.
The report’s conclusion: Refineries in Minnesota and the Upper Midwest “have been operating at high levels of utilization, which indicates both they are not short of physical supplies of crude oil and have little room to increase total crude runs.”
Minnesota’s commerce department concluded the state would be better off if Enbridge’s existing decrepit line were shut down and the new line not built because the oil is not needed. Enbridge contends the department based its decision on a “flawed analysis” and argues that the oil flowing in the line is indeed a necessity.
Necessity is the operative word for one prominent Wisconsin conservative voice when it comes to eminent domain.
“Eminent domain should only be used for public necessities,” Mark Belling said during his Feb. 16 show on WISN-AM radio. He was talking about a push by the Village of Brown Deer to claim a piece of private property to build a new public works facility, a move Belling did not see as essential.
If that landowner did not want to sell, he said, it is the village’s responsibility to find someone who does. That’s how capitalism works.
“There is a difference between a public necessity and a public improvement or a public good,” said Belling.
When asked by the Journal Sentinel about his opinion regarding the pipeline issue as it relates to his views on eminent domain, Belling declined to comment, saying he was not familiar enough with the details.
During his Feb. 16 show he noted that some conservatives tend to invoke their principles regarding eminent domain on a case-by-case basis.
“Many of the people who are on my side — the conservative side — they change their opinion on this if the project is something that they like.”
Read the series
Previous installments in the Journal Sentinel’s “Oil and Water” series, which examines threats to the Great Lakes and other waterways, as well as photo galleries, videos and related coverage, can be found at jsonline.com/oilandwater.
Construction crews were busy in Wisconsin earlier this fall replacing a portion of Enbridge’s Line 3, which carries Canadian crude from Alberta. The pipeline replacement is well under way in Wisconsin and Canada, though the state of Minnesota has yet to approve the project.
Superior’s Jeremy Engelking is near the spot where he was arrested for trespassing on his own land back in 2009 when he confronted an oil pipeline construction crew working for Enbridge for infringing on his family’s property. Charges were later dropped.
James Botsford speaks to a group of Wisconsin landowners worried that Enbridge is going to expand its pipeline network by acquiring rights to their properties. Botsford recently won his own battle with Enbridge in North Dakota.
Samples of four different types of crude oil transported in Line 61 are shown in August at Enbridge’s Marshfield South Pumping Station about five miles south of Marshfield, Wis. The recently completed station has the capability of increasing the pressure of oil in the pipeline to deliver as much as 1.2 million barrels per day from its current 900,000 barrels per day if market conditions indicate the need.
After a ribbon cutting, local business leaders and officials pose for a photo at Enbridge’s Marshfield South Pumping Station about five miles south of Marshfield, Wis. The station has the capability of increasing the pressure of oil in the pipeline to deliver as much as 1.2 million barrels per day if market conditions dictate the need. It is one of 12 new or modified pumping stations along the 300-mile-long pipeline easement owned by the Canadian firm.