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Special Status May Make Keystone Pipeline Impervious to Lawsuits

TransCanada has qualified as a 'common carrier' in the states along Keystone XL, a designation that has stumped some attorneys, advocates and observers

Mar 2, 2011
Welcome to South Dakota highway sign

Editor's Note: In this three-part series, SolveClimate News examines how landowners along the six-state route for TransCanada's controversial Keystone XL pipeline are dealing with potential property condemnation. Part III: Why Is TransCanada a 'Common Carrier?'

WASHINGTON—Though eminent domain statutes vary in each state, TransCanada seems to have made itself legally impenetrable in the half dozen states along the Keystone XL pipeline route by claiming "common carrier" status.

In a nutshell, that designation means the provider is under the obligation to treat each customer account equally. But parsing out how the Canadian company qualified as a common carrier has stumped some attorneys, advocates and observers.  

They find it odd that South Dakota's three-member Public Utilities Commission granted TransCanada's Keystone XL common carrier status when the state has no oil to ship onto the pipeline. If that's the case, they ask then how can the characterization be tested?

"In South Dakota, if you can prove that TransCanada is not a common carrier, then you would have a case," Stephanie Trask, an organizer with South Dakota-based Dakota Rural Action, explained in an interview with SolveClimate News.

Otherwise, she said, that status gives TransCanada the authority to condemn property, and the courts would likely determine the value of the land.

Oil interests in Montana and Oklahoma have played the common carrier card to their advantage by forcing TransCanada to add on-ramps in those states so domestically harvested oil can be shipped along the Keystone XL.

Harlan Hentges, the attorney representing two generations of an Oklahoma family in a condemnation legal challenge an Oklahoma, is positive that pipeline connections in two out of six states do not transform TransCanada into a common carrier.

"A common carrier hauls anybody anywhere for a flat rate and is built to serve the public of the United States," he emphasized. "And that public use is defined by the state and U.S. constitutions.

"I don't think there's any question that the purpose of this pipeline is to carry Canadian bitumen to the Gulf Coast," Hentges continued. "That is not a common carrier. Keystone XL is like a private car going from Canada to the Gulf Coast, not a bus that goes from Wichita to Dallas."

Messing with Texas

In Texas, it was the state's Railroad Commission that granted TransCanada common carrier status. Most landowners along the route in eastern Texas, assuming Keystone XL would be hauling conventional oil, were content to take the buyout offer.

But that was before one curious property owner David Daniel did a bit of research about oil sands mines in Alberta. The carpenter-cum-activist planted protest signs in his yard, plus one in his truck that included his cell phone number.

His efforts gave birth to a website and galvanized efforts between landowner holdouts and local advocacy groups. That solidarity has generated a protest song about stopping tar sands from being shipped into this country and a letter to President Obama and Secretary of State Hillary Clinton urging them to inform property owners about the potential health, environmental and safety risks of Keystone XL.

TransCanada spokesman Terry Cunha said his company has challenged many of the allegations Daniel and other members of the advocacy group Stop Tarsands Oil Pipelines have made about the safety of the actual Keystone XL steel pipeline, the type of oil it will be pumping and how TransCanada is handling the easement process. 

"We are simply seeking an easement for a critical American oil pipeline to meet American energy needs," Cunha said. "To date, we have been pleased to enter into agreements with approximately 80 percent of Texas landowners along our proposed pipeline route."

TransCanada expects to complete negotiations with the remaining Texas landowners in the coming weeks and months, he said.

"If we cannot reach an agreement, then the state of Texas has established an independent hearing process to determine fair compensation," Cunha said, "and we support this approach."

Though Republican Gov. Rick Perry is evidently fast-tracking a bill that on its surface appears to bump up protections for landowners, Ryan Rittenhouse, an organizer with Public Citizen Texas, said that isn’t the case.

Instead of offering protection from the threat of eminent domain, he said, the legislation — known as HB 279 in the House and SB 18 in the Senate — offers an olive branch of sorts to landowners already in condemnation court. Most landowners can't afford to even fight the threat of condemnation in court, he added.

"The laws don't have teeth," Rittenhouse said. "Even if a non-profit attorney was willing to help, these condemnation cases are too expensive to fight in court. Sadly, what we're seeing is that these landowners are on their own."

To give anti-pipeline Texans a more united front, advocates are looking to create what state law refers to as "391 commissions" along the Keystone XL corridor. It allows communities within the same planning regions to band together and gain the legal status to oppose proposed development on a number of fronts.

Though TransCanada has already garnered most of the necessary state permits, Rittenhouse is one of several advocates exploring how 391 commissions might be able to challenge the Texas Railroad Commission, the Texas Council on Environmental Quality and other authorities.  

'Dark Corner' of Eminent Domain

Implemented judiciously on development projects, such as sidewalks, roadways, electricity transmission and distribution lines, water lines — and yes, even oil pipelines — eminent domain can be a tool that contributes to the public good, attorneys and other specialists interviewed for this article agreed.

In the United States, the power of eminent domain lies with the legislative branch. While the U.S. Constitution requires a taking to be for public use, the taker doesn't have to be a public or an American-based entity as long those involved are adequately compensated as required in the Fifth Amendment. 

"Not many people would argue that eminent domain should be scrapped all together, but it has gone too far in a lot of instances," Doug Hayes, a project attorney with the Sierra Club Environmental Law Program in Boulder, Colo., told SolveClimate News in an interview.

"I guess it's really just a question of how broadly you look at this public use requirement," Hayes said. "Landowners opposed to Keystone XL are saying this isn't benefiting us, and a lot of state courts have agreed with that by saying that you can't condemn land that wouldn't be open to the public."

"But it's a tricky subject," he continued. "TransCanada could argue that it will benefit the public good because it's supplying a secure source of fuel that isn't from the Middle East."

For good reason, California attorney Gideon Kanner refers to eminent domain as "the dark corner of the law." He borrowed that definition from lawyer Lewis Orgel, who wrote a book about the topic in the 1950s.

"When it comes to … eminent domain law, judges are all over the freaking lot," said Kanner, a professor emeritus at Loyola Law School with 40-plus years of experience in the subject. "Read enough cases and you'll see that judges can find justification for any ruling. But generalist judges don’t know diddly-squat about eminent domain."

Eminent domain laws are as different as state topographies, he said in an interview, and some are substantive and others aren't.

Generally, pipelines fall into the public use category, Kanner continued, which would cancel out the counter-argument attorneys are planning to use in court to fight Keystone XL. The common carrier question might be a more productive line in court, he added.

"It is entirely possible that some judge somewhere will say a foreign company can't [build] this pipeline," he said. "I don’t know if TransCanada is a common carrier. And God only knows what a judge in one of those particular states might say."

Why Isn't TransCanada Buying Land?

A portion of the Oklahoma Constitution prohibits private land being condemned for private use, Hentges said. And, he added that his state's Supreme Court already laid the groundwork for his TransCanada case involving Doris Lynn and her family by confirming that section of the state document.

TransCanada is conducting its pipeline acquisition as if it were a government entity, he said. As a private company, he added, they should be buying the land for Keystone XL instead of asking homeowners to assume such high risk by granting easements.

"Oklahoma has a long history of the fossil fuel industry taking what they want because that's what this state's economy is built on, oil and agriculture," he continued, referring to the conventional oil pipelines that crisscross the state. "Legislators have made a lot of bad law in favor of fossil fuels. But maybe you can put up with that when you’re seeing the benefits in your own state.

"But Keystone XL is different. With this, TransCanada is making a decision about what's in the public interest. That decision ought to be in the hands of Oklahoma citizens."

Sooners Plan to Persevere

Doris Lynn and two generations of her family are challenging TransCanada in court because they claim the pipeline company acted in bad faith by failing to make a reasonable offer for an easement through their 180-acre homestead in far southeastern Oklahoma's Bryan County.

She's the youngest daughter of the late A.L. and Dollie White — and ancestors on both sides had settled in this territory even before Oklahoma was granted statehood in 1907.

Several years ago, Lynn, 61, returned to the farm where she grew up to care for her ailing mother. She and her husband, Cecil, opted to make the move shortly after she retired in 2004 from her career at Johnson & Johnson in Texas.

They live in a house built in 1978 — not far from where the original family home once stood. One of her sisters, 69-year-old Sue Kelso, also plans to retire and move from Texas with her husband to a separate house on the acreage sometime this spring.    

"It seems like that company wants to build its pipeline and they don't care who they step on to get there," Lynn said.

Most of Lynn's neighbors have already signed on to the easement offer from TransCanada. While it's lonely being the only family in the region to confront the oil pipeline giant with deep pockets, she said, this is a fight about principles.

"People see dollar signs and they take the money," Lynn concluded. "But we don’t want to do that. We're proud of this land."

Part I, Holding Out in Oklahoma

Part II, Defining Good Faith

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