Guest Post: TransCanada XL Route Through Nebraska is Ruled Unconstitional

Today we bring you a guest post authored by OCA Nebraska member-attorney, William Blake, a partner in the Lincoln office of Nebraska law firm Baylor Evnen.  Bill discusses the recent Nebraska District Court ruling which struck down a state law that allowed the Governor to approve a route for the TransCanada Keystone XL pipeline to cross the state.

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Condemnation lawyers who represent property owners tend to appreciate events that shed light on this dark corner of the law, especially those events that help to shape public opinion in favor of property rights. The recent Keystone XL decision by Lancaster County District Judge Stephanie Stacy (a former partner of this author), is being cast in that mold, but in the process, the litigation is somewhat misunderstood. The ruling is 50 pages long with almost 250 footnotes, and is written in the style of a law review article. The misunderstanding is probably excusable, but it is not an eminent domain case. Eminent domain is only a side effect, and really not much of a side effect. The driving issue has always been the environment, whether the pipeline is going to be dependably safe enough to let it go through the fragile Nebraska Sandhills and over the Ogallala Aquifer? See Thompson v. Heineman, Lancaster County Nebraska District Court, Case No. 12-2060 (2012).

The underlying question is how the Nebraska Legislature (the Unicameral) can delegate the authority to regulate the siting of a major pipeline. When the first Keystone pipeline was constructed through Nebraska in 2008, the State had a statute that simply empowered pipeline companies to build pipelines through the State and to use eminent domain to do so. There was no oversight.

When plans for a second pipeline (the XL) were announced, Nebraskans started saying there should be some oversight, some regulation and say in the routing process. Denying the right to condemn was briefly discussed but failed to gain any serious traction with our lawmakers. The issue before the Unicameral with was how to deal with the routing of pipelines through our state, not whether a pipeline company or a foreign corporation should have the right to condemn.

The issue in the litigation is whether TransCanada will build the XL pipeline as a ‘common carrier’. The law dealt with by Judge Stacy gave the primary regulatory power for siting major pipelines to the Governor. The Nebraska Constitution requires that common carriers be regulated by an elected Public Service Commission, as determined by the legislature. It is not clear whether a pipeline that just goes through Nebraska and does not pick up or deliver any product in Nebraska is a common carrier. Judge Stacy ruled that such pipeline is a common carrier.

The appeal has already been filed, and there is another set of statutes that may allow the matter to go to the Public Service Commission. The offending statutes do not give TransCanada the power to condemn, and the alternative regulatory scheme does not give that power. It has been there all along, and even if all of the regulatory schemes offend the Constitution, that statutory power will remain. This author has handled the negotiations with TransCanada on behalf of over fifty property owners for the two Keystone projects, and the concerns have always been primarily routing, safety, permanent property damage, temporary inconvenience and money, usually in that order. At this writing a great majority of the easements for the route through Nebraska have been obtained, and TransCanada continues to negotiate with willing property owners for the remainder of the proposed route.

The recent litigation might have some small effect on public awareness and opinion regarding the questions of who should have the power of eminent domain, and when the entity is a profit centered corporation, should ‘just compensation’ be measured by something other than fair market value.

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