Energy development and private property rights sharply clashed Thursday in a hearing before the Senate Energy and Telecommunications Committee over a bill that would allow developers of “merchant” transmission lines to take private land for the public good.
Testimony over House Bill 198, which had its first hearing in the Senate after previously being approved in the House, lasted more than three hours, with dozens of residents and informational witnesses speaking.
If the bill is passed, “a person” issued a certificate under the Major Facilities Citing Act to build transmission lines or other large infrastructure would have the right to initiate condemnation proceedings.
A decision last year by a Glacier County District Court judge who ruled Toronto-based Tonbridge Power Inc. did not have the authority to use eminent domain prompted the legislation. Tonbridge is building the 215-mile Montana Alberta Tie Line merchant transmission line between Great Falls and Lethbridge, and the ruling stalled the project.
With a merchant line, the developer accepts the risk of the project rather than ratepayers of a public utility, such as NorthWestern Energy. Merchant line developers finance construction by selling shipping rights to the line. In Tonbridge’s case, it sold capacity to wind farm developers who want to ship electricity generated in Montana to bigger markets.
Landowners see the bill as a change in state law for a single company, as well as a general expansion of eminent domain powers.
“This is just a sweetheart deal for a Canadian company, and allows them to condemn Montana farmland for their own use – and that’s just absolutely wrong,” said Larry Martin, a farmer from Conrad who owns land in path of MATL.
John Alke, an attorney representing Tonbridge and Montana Dakota Utilities, said the Glacier County judge’s ruling was only the second time a Montana court applied an “entity specific” standard to prevent an out-of-state developer from using eminent domain.
The first time, in 1907, the Legislature quickly passed a law ensuring a company’s eminent domain powers in building Hauser Dam, he said.
What matters in determining whether an entity has eminent domain power, Alke said, is whether the project benefits the public, not the type of entity doing the work.
If HB198 does not pass, “my client, MATL, is in serious trouble,” Alke said.
“It is in the middle of construction,” he said. “It has crews in the field.”
Derek Moretz, with wind farm developer NaturEner, said his company’s proposed $700 million Rim Rock Wind Farm in Glacier and Toole counties will not be built if MATL is not completed. Any holdup in building the line also could delay the wind farm because federal production tax credits are set to expire in 2012, he said.
“Without this eminent domain tool, we’re just not going to be able to develop these linear infrastructure projects,” said Brett Doney, president of Great Falls Development Authority.
Rep. Ken Peterson, R-Billings, the bill’s sponsor, said the bill doesn’t overhaul the current eminent domain law, but rather clarifies who can use it, including NorthWestern Energy.
Opponents of the bill disagreed with Peterson’s characterization, saying the Legislature never previously granted eminent domain power to a merchant line developer.
“This bill has a narrow motivation with broad affects,” said Beth Kaeding of Bozeman, past chair of the Northern Plains Resource Council.
Lyle Quick traveled to the hearing from Circle in Eastern Montana, where the Keystone XL pipeline is proposed, in order to testify. The line, being developed by TransCanada, would ship oil from Canada to the Gulf Coast, and Quick said HB198 could carry ramifications for that project as well.
“They’re cheapskates and a foreign company trying to beat these farmers and ranchers,” said Quick, who said he was representing 10 angry cattle ranchers – eight Republicans and two Democrats – who oppose HB198.
The Republicans are mad because “we are a party of property rights,” he said. The Democrats are mad because Gov. Brian Schweitzer, also a Democrat, supports the pipeline.
Some residents with land along MATL testified Thursday that they have been treated poorly by Tonbridge in negotiations. They urged lawmakers to vote against HB198.
Residents identifying themselves as tea party representatives, noting the state’s strong property rights protections, also spoke against the legislation. Union representatives spoke in favor of HB198, citing the jobs the projects would create.
Sen. Jim Peterson, R-Buffalo, said supporters of both natural resource development and private property rights are “caught in a vice” as a result of the controversy.
Jim Peterson spoke in favor of the bill, saying shipping electricity out of state is in the public interest, and comparing it to farmers exporting wheat.
“It might not be in Montana, but it is public use just like food is public use,” he said.
Katrina Martin, who lives east of Dutton near the MATL line route, took exception to Jim Peterson’s export comparison during her testimony.
“Yes, I export my wheat,” Martin said. “But I do not get to condemn my neighbor’s property to do it.”
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