TransCanada versus the People of Nebraska

TransCanada is actually threatening to sue Nebraska if its elected officials enact a law that stops companies like TransCanada from routing pipelines like Keystone XL through the state’s most important water sources. Never mind the fact that Congress, the State Department and pipeline safety regulators recognize that States have primary jurisdiction over the routing of hazardous liquid pipelines. Montana, for example, already has one such law on the books and has used it to exert control over the route of Keystone XL through its borders. Nebraska, on the other hand, has until recently been ignored by TransCanada and the State Department. TransCanada doesn’t want to reroute its proposed Keystone XL tar sands pipeline because it would cost the company more money to do so. And we’ve seen over and over again that when faced with a choice between safety and saving money, TransCanada tends to pick the latter. In this case, it turns out its less expensive for the company to hire three law firms to try to bully Nebraska’s legislature into inaction than to use a reasonable route for the Keystone XL that avoids the Sandhills.

This blog isn’t the forum to fully analyze the legal failings of TransCanada’s multi-firm legal barrage. But there are a few glaring problems with the company’s arguments that must be pointed out:

  • In the law firm Sidley Austin’s memo, the firm bases a significant part of its legal argument on the false premise that federal pipeline safety law already provides protections for the Ogallala Aquifer as “an unusually sensitive area.” While there is strong case that the Ogallala Aquifer should be considered an unusually sensitive area by safety regulators, it isn’t.  The Ogallala Aquifer is what is called an open-source aquifer, and as such, pipelines going through it receive the lowest level of oversight under federal safety regulations.
  • TransCanada’s legal arguments all make the claim that any move by Nebraska to provide routing restrictions that protect Nebraska’s Sandhills will prove “an impermissible burden on interstate commerce.” This is a hard argument to take seriously, given that while many companies have successfully built pipelines through Nebraska, none of them have needed to build a hazardous liquid pipeline through Sandhills. Nebraska’s Sandhills covers a relatively small area which contains a large portion of the water in the Ogalalla Aquifer and the state of Nebraska. That is why Nebraskans are concerned.
  • TransCanada also claims it is too late for Nebraska to reroute Keystone XL – saying that would be analogous to having a homebuilder get all the necessary permits only to have the inspector change the rules. The obvious problem with this analogy is that TransCanada hasn’t gotten the necessary permits to build Keystone XL. In addition, the company has ignored the repeated calls of Nebraska’s citizens and elected officials to reroute Keystone XL for years.

But the most important question has to be – is TransCanada really serious about litigating this? Litigation takes years, and TransCanada’s big argument against rerouting Keystone XL is that additional delay will cause the project to fall apart. Litigation doesn’t get the company anything the company wants. That is, unless TransCanada wants to cultivate a worse public image in the United States than it already has.

Moreover, will Canada or the tar sands producers sit idly by as TransCanada sues a U.S. State because it won’t let the company build a pipeline through its water supply?  TransCanada’s handling of Keystone XL has already done significant damage to the image of Canada and tar sands producers… a long and public lawsuit in Nebraska would potentially end their social license to do business in the United States.

We can only hope that Nebraska’s public officials know an empty threat when they see it as they consider measures that would protect the welfare of their citizens.