TransCanada Corp. is switching its strategy to get the controversial Keystone XL pipeline built through Nebraska by ending a legal battle with landowners opposed to the project and going instead to the state's Public Service Commission for approval.
The Canadian pipeline company that has been seeking U.S. approvals for the $8-billion pipeline for the past seven years said the new strategy is about avoiding a lengthy legal process in the Midwest state. However, opponents of the project said it was a clear signal the company – now laying off staff – needs to reduce its legal costs and is acting "desperately" as it becomes less likely the pipeline will be approved while Barack Obama remains U.S. President.
"It's a victory for landowners," said Jane Kleeb, director of Bold Nebraska, a landowner group that has fought the project.
The Keystone XL project is planned to carry vast volumes of oil-sands crude from Alberta to the U.S. Gulf Coast but has become a symbol in the debate over climate change. Opponents argue the 830,000-barrels-per-day project will lead to increasing greenhouse gases by providing an easy, cheap route to U.S. refineries for Canada's energy-intensive oil sands. Earlier this month, Democratic presidential front-runner Hillary Clinton stated her opposition to the project.
Last week TransCanada announced it will cut a fifth of its senior leadership positions, and will soon begin laying off some of its rank-and-file employees. It cited low oil prices and regulatory delays stemming from environmental opposition to some of its projects as factors.
Uncertainty over the legality of TransCanada's route permit in Nebraska had previously been used by Mr. Obama to justify further delay in his decision.
Nebraska landowners opposed to the pipeline have argued former Republican governor Dave Heineman trampled on due process by blessing Keystone XL himself, bypassing the review by the state's Public Service Commission (PSC). The Holt County, Neb., case about whether Mr. Heineman violated the state's constitution by granting a route and eminent domain rights to TransCanada was set to go to trial Oct. 19.
However on Tuesday, TransCanada said that instead of taking its argument to the courts, it will instead go to the Nebraska Public Service Commission to seek approval for the pipeline route through the state. TransCanada spokesman Mark Cooper said that process will take less than a year.
"We believe that going through the PSC process is the clearest path to achieving route certainty for the Keystone XL Project in Nebraska," Mr. Cooper said. "It ultimately saves time, reduces conflict with those who oppose the project and sets clear rules for approval of the route."
He added that the company has followed every process put before it, and 91 per cent of landowners signed voluntary easements for the construction of Keystone XL. He said the use of eminent domain – or the compulsory sale of land – for some Nebraska landowners was a "last resort for TransCanada, but an important tool" that allows for key commodities to be transported.
"Despite having route authority to construct Keystone XL, uncertainty in the courts around the constitutionality of how the route was approved was very likely to carry on once again to the Nebraska Supreme Court," Mr. Cooper said.
Ms. Kleeb said the company's decision to take the issue out of the courts is likely due to mounting legal expenses, and the potential for a legal loss. She said TransCanada could have gone through the commission from the outset if it had wanted to.
She added that TransCanada may hope that a Keystone-friendly Republican wins the U.S. presidential race next year but "Nebraska will still be a major roadblock for them, regardless of who is in the White House."
However, current Nebraska Republican Governor Pete Ricketts sent a letter to the President in July urging approval of the pipeline so the state "can reap the economic and other benefits."