Keystone pipeline fails common-carrier test, court is told

Work Continues

A trial court ruled that TransCanada could start installing the pipeline while Holland appealed. Landowners, some of whom also claim the pipeline doesn’t qualify as a common carrier under state law, so far have failed to stop construction of the 485-mile southern leg.

“What’s at stake here is whether the state should allow a public agency to allow condemnation for private gain,” Tom Smith of Public Citizen, a consumers’ rights advocacy group, said in an e-mail. “TransCanada has yet to prove to the court that they are transporting the product for the public good or for the public for hire as required by law.”

Pipeline companies have been accustomed to “checking the box” on a state regulatory form to claim common-carrier status without having to prove it, said Edward Vassallo Jr., a Dallas property-rights attorney.

“Over time, many courts made it the rule, rather than the exception” by granting eminent-domain power to any pipeline, utility or school that requested it, Vassallo said. “We may start to see the pendulum swinging back.”

Requirements ‘Met’

David Dodson, a TransCanada spokesman, said before today’s hearing that the company has met all legal requirements to prove Keystone is a common carrier. The company has “all the necessary permits and legal authority” to finish constructing its line and is confident it will prevail in court, he said in an e-mail.

“One can only speculate as to the consequences if existing interstate pipelines bringing crude oil from outside of Texas to the refineries on the Gulf Coast suddenly lost their common-carrier status,” Dodson said. “This is a much larger issue than a single pipeline or a single project.”

The Texas Supreme Court dealt the pipeline industry its first major eminent domain setback last year.

In the so-called Denbury case, the court denied condemnation rights to a firm that built a carbon-dioxide pipeline for its own use.

TransCanada has argued in court filings that the relatively narrow ruling doesn’t apply to Keystone. Opponents of the pipeline are trying to use it against TransCanada in the current round of court challenges.

Rejected Offer

Before they wound up in a state court last year, Holland rejected TransCanada’s offer of $446,864 for an easement across his farm, according to court papers.

He said he has since granted similar easements to other pipelines for slightly higher prices that included better environmental protections for his land.

“TransCanada isn’t willing to pay fair market value, and they are not willing to provide landowners protection against an obviously dangerous pipeline,” Holland said.

Holland claims Keystone improperly used common-carrier power of eminent domain to take his property after a condemnation proceeding valued an easement at just $20,808.

He wants the court to force Keystone to prove its common-carrier status so it can’t take his land “without paying anything for years,” he said.

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