TransCanada Seeks to Halt Texas Keystone Suit Over Easement

TransCanada Corp. (TRP) asked a Texas judge to dismiss a landowner’s bid to take back an easement that lets the Keystone XL Canadian tar-sands pipeline cross his farm.

At a hearing today in Nacogdoches, TransCanada told County Court at Law Judge Jack Sinz that he lacks jurisdiction to decide the matter. James Freeman, the pipeline’s lawyer, characterized the dispute as one for “the recovery of land,” which he said falls outside of a county judge’s authority under state law.

“Regardless of how a plaintiff characterizes his claims, if the gist of a cause of action is in fact an adjudication of title, a county court does not have jurisdiction,” Freeman said in papers filed Jan. 2. “The case should be dismissed.”

Michael Bishop, a 64-year-old retired chemist who owns a biofuels company, urged Sinz to continue presiding over the dispute, which he claims doesn’t concern title to Keystone’s easement across his 20-acre farm.

Bishop said he is still listed on county tax rolls as the landowner because TransCanada acquired solely a right of way, not title to the tract in Nacogdoches, about 140 miles (225 kilometers) northeast of Houston.

‘Contractual Dispute’

“TransCanada said itself in an earlier filing that this boils down to a simple contractual dispute,” Bishop said in an interview before the hearing. “I’m seeking rescission of a contract based on fraud. I’ve never questioned title to the property. I’ve questioned eminent domain, which is within the statutory authority of this court.”

Bishop sued Calgary-based TransCanada in November to rescind the easement, which he claims the company acquired by fraudulently misrepresenting what Keystone will transport. The pipeline is the southern leg of a 2,151-mile pipeline intended to carry tar-sands crude from western Canada to the U.S. refining industry complex on the Texas Gulf coast.

Bishop agreed to sell TransCanada the easement in November after fighting the company in condemnation proceedings for more than two years. He said he felt pressured to accept the company’s offer before TransCanada took the easement anyway at a much lower price through eminent domain.

Bishop has asked Sinz to determine whether TransCanada fraudulently obtained the easement by deceiving landowners and state regulators that diluted bitumen, which is obtained from tar sands, is a form of crude oil when opponents of the pipeline contend it isn’t.

Toxic, Corrosive

Bishop and environmental groups claim diluted bitumen is more toxic and corrosive than conventional crude oil. Bitumen has the consistency of peanut butter at atmospheric temperatures and pressure and must be diluted for pipeline transport, according to court filings.

Bishop claims TransCanada “intentionally misled and misrepresented” the nature of its product to regulators, landowners and the public in order to obtain permits and eminent domain rights to push its project through.

Sinz deferred hearing evidence on that aspect of the case until he determines proper jurisdiction for the dispute.

Environmental protesters and landowners have battled TransCanada construction crews at numerous locations along the pipeline route in an attempt to highlight what they claim is the Keystone’s potential for environmental catastrophe, should the line leak or rupture.

At least three other landowners are pursuing legal challenges in Texas courts designed to block Keystone from crossing their properties. So far, none of these court challenges has permanently stopped construction on the line.

The case is Bishop v. TransCanada Keystone Pipeline LP, CV1213077, County Court at Law, Nacogdoches County, Texas.

To contact the reporter on this story: Laurel Brubaker Calkins in Nacogdoches at laurel@calkins.us.com.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.