Dec. 13 (Bloomberg) -- TransCanada Corp. won a bid to lift a temporary court order blocking construction of part of its Keystone XL pipeline in the eastern part of the state.
Landowner Michael Bishop sued Calgary-based TransCanada last week, alleging they coerced him into a settlement that granted an easement across his farm near Nacogdoches, about 100 miles (160 kilometers) northeast of Houston. He claimed the pipeline’s permits are invalid because Keystone is permitted to carry only crude oil, not bitumen from Canadian tar sands.
Texas County Court at Law Judge Jack Sinz granted Bishop a temporary restraining order on Dec. 7, which blocked pipeline crews from working on his property for two weeks. Sinz lifted his own order today at a hearing in court in Nacogdoches.
“I feel I have no choice but to dissolve the temporary restraining order,” Sinz said. “You’ve raised some interesting questions but you’ve taken their money and given them an easement. And you knew all this when you did it. The case will proceed and I’ll continue to consider it.”
At the hearing, TransCanada lawyer James Freeman said the company had countersued Bishop, alleging breach of the settlement contract.
“He had the right to settle his issues in the eminent-domain proceeding that he settled in mediation,” Freeman said. “He is in breach of his settlement and his grant of easement.”
Bishop, a 64-year-old retired chemist who owns a biofuels company, told the judge today that he was aware TransCanada planned to transport bitumen through the pipeline but he felt forced to follow his attorney’s advice to settle before the condemnation commission granted the easement at a lower price.
TransCanada has been battling landowners and environmental groups at sites along the southernmost leg of its 2,151-mile pipeline between western Canada and the U.S. refining industry complex on the Texas Gulf Coast.
So far, none of the legal challenges has permanently halted construction on the pipeline, which will carry liquefied bitumen obtained by heating tar sands, along with traditional crude oil produced from fields in North Dakota, Oklahoma and West Texas, Tom Zabel, another of TransCanada’s lawyers, said in an interview.
Sinz asked Bishop and TransCanada to return for another hearing next week, when he will hear evidence regarding definitions of bitumen and petroleum products and consider what substances Bishop’s settlement and the company’s permits allow Keystone to transmit.
“Do you have authority from the state of Texas to transport something other than crude oil?” Sinz asked Freeman.
“Yes, I do,” the attorney replied. “I have my Railroad Commission permits, and if he has a problem with them, he can take it up with the Railroad Commission.”
Bishop has also filed a lawsuit against the Texas Railroad Commission, which regulates pipelines in Texas, challenging the agency’s certification of Keystone as a common carrier under state law. A hearing in that case is set for next week in Austin, the state capital.
Freeman said Bishop has known that Keystone will carry tar sands oil throughout condemnation proceedings that have lasted more than 18 months.
Bishop’s settlement allows TransCanada to build a pipeline that carries liquified bitumen under terms permitting transport of “oil and crude petroleum products,” Freeman told Sinz. “That’s what we negotiated. That’s what he granted, and that’s what he has to live with.”
After the hearing, Bishop said he should be able to rescind his settlement if he can show he signed the agreement as a result of coercion, duress, fraud or misrepresentation.
“Sometimes, you have to do what you have to do, then you come back, regroup and formulate a plan of attack to right the wrong,” Bishop said. “I lost the battle today, but I didn’t lose the war. The fight is on.”
David Dodson, TransCanada’s spokesman, said the ruling will allow construction to resume on Bishop’s property.
“We’re very pleased the judge seemed to agree with us that it is difficult for Mr. Bishop to claim coercion when, in the presence of his lawyer and in mediation, he agreed to the easement and he knew what would be in the pipe,” Dodson said after the hearing.
The case is Bishop v. TransCanada Keystone Pipeline LP, CV1213077, County Court at Law, Nacogdoches County, Texas.
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