City of Clarksville, Diamond Pipeline sign $6.6 million pact to build water intake facility

Diamond Pipeline has agreed to deposit $6.6 million in an escrow account to help the Clarksville Light and Water Company improve its water treatment system in Johnson County as part of the Texas group’s plan to build a 900 million, 440-mile crude oil pipeline across Arkansas.

The Clarksville Water & Light (CLW) company held a special meeting Wednesday (Aug. 17) and unanimously approved the Diamond Pipeline pact, which will take effect immediately. According to a copy of the escrow agreement obtained by Talk Business & Politics, Diamond Pipeline will fund construction of a new water intake facility up to $8 million at the existing Spadra Creek treatment system owned by the CLW, a municipally-backed utility owned by the city of Clarksville.

In return, after the initial $6.6 million in escrow funds are wired by Diamond Pipeline to the Johnson County water company, the city of Clarksville will withdraw its petition to intervene in Thursday’s docket at the Arkansas Public Service Commission (PSC) to construct the 20-inch-diameter sweet crude oil pipeline across the watershed at Piney Bay and Spadra Creek.

Diamond Pipeline officials called today’s hearing and agreement in Clarksville an important step in the company’s efforts to build the 440-mile supply pipeline.

“It’s important to us to be a good neighbor, as we intend to responsibly operate and maintain the Diamond Pipeline for years to come,” company spokesman Karen Rugaard said in a statement. “We’re pleased that we reached an agreement with Clarksville Light and Water to fund an escrow account with $6.6 million to cover the construction of enhancements to the Clarksville water system, including relocating the Spadra Creek intake, benefitting the utility’s 28,000 customers.”

BEST DEAL POSSIBLE
Clarksville City Councilor Danna Schneider, a vocal opponent of the Diamond Pipeline who attended the water commission meeting, said CLW commissioners made the best possible decision for the community in light of the fact that the U.S. Corps of Engineers had already conditionally approved the project.

“The commissioners voted unanimously to accept the agreement, and it will allow us to build a new water intake facility to protect our watershed if there is ever an (oil) spill, which addressed our greatest concern,” said Schneider, adding that she and most Clarksville officials will not attend the PSC meeting tomorrow. “Of course, no one wants an (oil) pipeline going through their town, but this is the best result we could have hoped for.”

According to Rugaard, constructing and operating the pipeline will support an estimated 1,500 temporary and 15 permanent jobs as well as approximately $11 million in additional tax revenue to communities along the route. The pact between the city of Clarksville and Diamond Pipeline essentially removes any final protests against the multistate project, which will deliver U.S. benchmark West Texas Intermediate crude from Plain’s facility in Cushing, Okla., across Arkansas to Valero’s 195,000-barrel per day refinery in Memphis.

On Thursday, the Arkansas PSC is scheduled to consider a request by Texas energy giants Plains All American and Valero Corp. – joint venture owners of the pipeline – on how they plan to construct and operate a crude oil pipeline across several major water sources along a snaking route between the Arkansas River Valley and Ozark Mountains.

According to PSC Executive Director John Bethel, the Commission’s authority concerning the project is limited to approval of how Diamond Pipeline will construct and operate “navigable water crossings” over five critical state water sources along the route of the pipeline. In the PSC docket 16-038-U, pipeline owners seek approval to construct the pipeline across the Arkansas River in Franklin County; the Illinois Bayou in Pope County; the White River in Prairie County; the Saint Francis River in Arkansas County; and the Mississippi River in Crittenden County.

“(The PSC) staff’s analysis concludes that the proposed river crossings comply with the statutory requirements for approval,” Bethel said. “Based upon meeting the specific statutory requirements, staff recommends that the Commission conclude that the project complies with the specified requirements and grant the request.”

According to Diamond Pipeline officials, they have obtained all necessary right-of-way approvals across both public and private land to clear the pipeline route. The U.S. Corps of Engineers Office in Little Rock approved a “nationwide permit” for Diamond Pipeline to cross rivers and watersheds in the state earlier this summer.

Once state regulators review the project, Diamond Pipeline officials are expected to begin construction in the latter part of 2016. With protests from Clarksville officials now withdrawn, there is little to no opposition to deny the permit to cross the Johnson County watershed.

PIPELINE OPPOSITION, REBUTTAL
On Aug. 11, Diamond Pipeline submitted rebuttal testimony by company engineer Stephen Lee in response to Arkansas regulators in response to earlier PSC statements on the pipeline crossing in Johnson County by Schneider, Stewart Noland and John Lester, all representing the CLW. Noland, president of Crist Engineers Inc. in Little Rock, has said a future pipeline rupture in Clarksville could be far worse than the Flint, Mich., water crisis, and relocation of the proposed pipeline to a location outside of their water supply watershed is the best scenario for the city.

However, Lee countered in his testimony that the Texas joint venture had planned the current route because the municipal water company had not registered or listed its watershed or intakes in any known private and public databases typically available to pipeline planners.

“As we did with all of the other watersheds, we would have evaluated alternative routes to determine whether the CLW watersheds could be routed around or, as we did in this instance, modified the installation methodology to minimize the risk of impact to CLW and the other external stakeholders,” Lee said in response to query from the Commission.

The Plains engineer further testified that the company’s proposed crossings at Spadra creek, which is where the city and Diamond will build a new water intake system with the escrow fund, would not pose a “public safety threat” or contaminate the water supply if there was an oil spill.

“As noted …, the pipeline will carry West Texas Intermediate (domestic sweet) crude oil, a light crude oil that floats on the surface of water, well away from the CLW intakes,” said the Plains pipeline engineer. “After considering all available data on pipeline releases and their causes, the structure and location of the proposed pipeline, and other relevant factors, (we) concluded that the likelihood of a release was low – no more than once in 4,010 to 6,870 years.”

Schneider said Diamond Pipeline officials could have easily found information about the area’s watershed in the Arkansas Health Department’s database. Although the project will soon begin, she said the fight on the project emboldened local citizens to seek change in Arkansas’ antiquated eminent domain laws that allow private companies to easily take away property from rural landowners without much fight.

“Those are old laws that were written in the 1920s,” said the Clarksville city council member. “This is a new day and we need better laws to deal with what is going on now.”