TransCanada revises strategy for Keystone XL Nebraska route

ANDREW HARRIS and REBECCA PENTY

WASHINGTON (Bloomberg) -- TransCanada Corp. said it wants to end its fight with Nebraska land owners over the legality of its Keystone XL pipeline path through the state, opting instead to seek approval from the state’s Public Service Commission as its opponents wanted all along.

The Calgary-based pipeline company made public its strategy shift Tuesday in a statement and in interviews. TransCanada faces a trial next month in a second round of cases brought by property owners challenging the legality of the pipeline path.

Mark Cooper, a TransCanada spokesman, said the company is choosing to seek commission approval after “careful consideration” of the company’s circumstances. Cooper said that despite having won approval for the route from now-former Governor Dave Heineman, “there has been uncertainty in the courts” about the legality of that process.

TransCanada putting an end to court battles with landowners over eminent domain may be the path of least resistance to gain public acceptance for Keystone XL, said Kevin Book, Washington-based managing director at Clearview Energy Partners LLC, an energy policy company.

“TransCanada tried to go through the front door and they got blocked in Nebraska, and they tried to change their path, and they got blocked again,” Book said. “Eminent domain is a tough way to pursue a controversial project.”

TransCanada has waited seven years for U.S. permission to build the line, which would carry crude from Alberta’s oil fields to refineries on the U.S. Gulf Coast. Producers are turning to costlier trains and expansions of existing systems to transport their oil amid the delays and have watched the cost of Keystone XL soar to $8 billion.

TransCanada won an earlier lawsuit filed by landowners challenging legislation that allowed Heineman to approve the pipeline’s path across the state. That victory was based on a legal technicality as four of the state’s seven Supreme Court judges in January agreed with the challengers that the law underlying the approval process violated Nebraska’s constitution. Three other judges said the property owners hadn’t established that they had suffered an injury, a step needed to maintain their lawsuit. The suing property owners needed at least five high court votes to have the law struck down.

Once TransCanada began its eminent domain process, property owners filed new lawsuits in York and O’Neill, Nebraska. The latter case is still set for trial on Oct. 19, landowner attorney David Domina said Tuesday.

“The company realized it could not win a Nebraska legal challenge and faced additional delay if it continued along those lines,” Domina said. He said he didn’t know whether the company’s decision to abandon related property condemnation lawsuits and apply for commission approval necessarily rendered the legal challenge moot. The underlying approval law is still in place, he said.

“We’ll probably have a conference call with the court tomorrow,” he said.

TransCanada’s intended route through Nebraska remains unchanged, Cooper said. The pipeline company has already acquired 91% of the parcels it needs for construction, he said.

The PSC approval process can last from seven months to a year, Cooper said. The company may submit its application by Friday, he said.