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LINCOLN — The company behind the Keystone XL pipeline recently took a gamble that has already produced a payoff for public schools in Nebraska.

TransCanada Corp. has paid close to $640,000 to secure four miles of right-of-way on publicly owned land in three northern Nebraska counties. Given the uncertainty surrounding federal approval of the project, the company could end up walking away from that investment.

Securing as much right of way as possible now will help speed construction of the $5.4 billion pipeline, assuming that President Barack Obama eventually green-lights the project, a TransCanada spokesman said. But a pipeline opponent argued that it was inappropriate for the state to accept the payments, considering that a judge has struck down the Nebraska law used to route the pipeline.

The Nebraska Supreme Court will hear oral arguments today in the state’s appeal of that decision. The Obama administration has said it will await the court’s opinion before deciding whether it’s in the national interest to allow the pipeline to be built.

The proposed pipeline would transport 830,000 barrels a day of mostly heavy Canadian crude to refineries on the Texas Gulf Coast. The company first applied for a federal pipeline permit nearly six years ago.

After a lower court struck down the routing law in February, the company said it intended to keep negotiating for easements along the pipeline’s proposed 275-mile path in Nebraska. As of Thursday, TransCanada had reached voluntary agreements with 84 percent of the roughly 500 landowners on the Nebraska route, company spokesman Shawn Howard said.

The temporary and permanent easement agreements that TransCanada reached July 7 are different. They involve just under 54 acres of what’s called “school land” in Keya Paha, Holt and Antelope Counties, part of the roughly 1.28 million acres managed in trust by the Nebraska Board of Educational Lands and Funds.

The board was created by the State Constitution to generate income from the land for the benefit of public schools. It does so through land sales, grazing and crop leases, and oil, natural gas and wind energy leases.

More than half the $474,000 that TransCanada paid to obtain the easements will add to the estimated $38 million the board will generate for school funding this year, said Richard Endacott, the board’s executive secretary and CEO. The balance will go to the Nebraska Investment Council, which plans to use it to produce ongoing interest income for the schools.

Nearly $177,000 of the money paid to the state was considered an accelerated signing bonus, similar to bonuses that TransCanada has offered to private landowners in order to secure agreements.

And that’s not all. The company paid an additional $164,000 to seven farmers who lease school lands as compensation for any crop losses that occur during construction. And finally, the company committed to pay the farmers $459,000 more if, during construction, they can’t irrigate some crops.

All payments but the irrigation compensation carry a risk. If the pipeline is rejected by the president or if an adverse Nebraska Supreme Court ruling eventually requires the company to adjust the route, the board and the farmers aren’t required to refund the payments.

When the company altered portions of the pipeline route last year to avoid the environmentally sensitive Sand Hills, it released its easements and didn’t ask for the money back. Now the company sounds confident that everything will work out in the end. “While we cannot guarantee the outcome of every event, we do know that this project remains in America’s national interest, that it has passed all of the tests that it has been put through,” Howard said Thursday.

Jane Kleeb, director of pipeline opposition group Bold Nebraska, disputed the company’s estimate of the number of private property easements, saying she is aware of at least 100 landowners who have not signed deals.

She said there was no reason for the school land board to rush to do business with 
TransCanada.

“We have land that is supposed to be in trust for the public good, and we are selling it to a foreign tar-sands pipeline company that doesn’t even have a permit to build,” she said. “That’s wrong.”

She also questioned whether the public was given proper notice of the easement deal.

In response to the criticism, Endacott said TransCanada complied with state laws that allow entities to apply for such easements on school lands.

Although the Board of Educational Lands and Funds is made up of five members appointed by the governor, the easement proposal was decided by a separate, three-member appraisers board. Members of the appraisers board also are appointed by the governor.

The appraisers board met July 7 in Lincoln, a meeting that was attended by TransCanada representatives.

Public notice of the meeting was published in the Lincoln newspaper, which is not required by law, Endacott said. The law does require the board to notify the attorney general and the governor, which it did.

There are oil and gas leases on other school lands, particularly in western Nebraska. And there also are other pipeline easements, Endacott said.

Approving such easements fits the mission of the board, which is to raise money for schools, Endacott said. And he emphasized that the amount the company offered was well above the appraised value of the land, which helped make the decision relatively easy.

“If the pipeline is never approved, we would have been walking away from $474,000,” he said. “We have the sole obligation to our beneficiaries, which are the public school kids of Nebraska.”

Contact the writer: 402-473-9587, joe.duggan@owh.com

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