After a five-year battle, TransCanada Corp. may be close to winning approval for its $5.3 billion Keystone XL pipeline, which will transport crude oil from the oil sands of Alberta to Steele City, Neb., 1,179 miles away.
It’s the last leg of a mega pipeline that leads to the Gulf Coast, and the project has been deeply controversial, pitting environmentalists and some landowners against proponents who argue that it will provide a secure source of energy and boost the U.S. economy.
A core group of in-house counsel along with outside lawyers and lobbyists has assisted TransCanada on multiple fronts. A TransCanada spokesman declined to provide information about the company’s legal representation, but public records show that national firms including McKenna Long & Aldridge, Sidley Austin and SNR Denton as well as a host of local counsel have helped the Calgary, Alberta-based energy giant rally political support in Washington, beat back environmental challenges, resolve permitting, zoning and other compliance issues and, acre by acre, secure right-of-way from landowners along the pipeline’s route.
"We’ve prevailed on all cases at this point," said Thomas Zabel, a partner at Zabel Freeman in Houston who represents the company in disputes with people in Texas who don’t want the pipeline to cross their land.
SNR Denton St. Louis partner John Haug, who for six years has been one of the company’s go-to lawyers for right-of-way acquisitions as well numerous regulatory issues, said in a statement that his "relationship with TransCanada and Keystone are among the most satisfying of my career. We are thankful to be viewed not as ‘outside counsel,’ but as true business partners."
Haug and his team have represented TransCanada in Kansas, Missouri, Illinois and Texas in helping secure more than 1,000 miles of pipeline right-of-way acquisitions. He’s also assisted on everything from archeological issues to engineering compliance to tax matters.
LOBBYING TO WIN
The latest win for TransCanada came on March 1, when the State Department issued a favorable draft environmental impact statement. Because the pipeline crosses the Canadian border, the State Department is charged with considering how it will affect the environment and whether it’s in the national interest.
TransCanada’s lengthy State Depart­ment permit application was signed by the company’s deputy general counsel for pipelines and regulatory affairs Kristine Delkus, who began her career in Morgan, Lewis & Bockius’ Washington office, and associate general counsel James White, a former counsel in Sidley’s energy practice in Washington.
In reviewing the application, the State Department found that "there would be no significant impacts to most resources along the proposed Project route." The department also concluded that the Canadian oil sands will be developed whether or not the pipeline gets built, so the impact on climate change is essentially a wash. Public comments are being accepted for 45 days, with a final report to follow later this year. The ultimate decision whether to grant the permit will rest with President Obama, who has yet to indicate his position.
To help bolster support in Washington, TransCanada spent $930,000 on lobbying last year, though the bulk of the work — $770,000 worth — was done in-house, according to data from the Center for Responsive Politics. Records show the company’s chief lobbyist in Washington is Paul Elliott, who was the national deputy campaign manager for former Secretary of State Hillary Clinton’s 2008 presidential campaign.
TransCanada paid McKenna Long & Aldridge $80,000 to lobby for the pipeline in 2012, tapping lobbyists including Alex McGee, a managing director in the firm’s public policy group who previously held a senior post in the Department of Energy and associate Andrew Shaw, who once worked for the U.S. Environmental Protection Agency and for former Rep. Dennis Moore (D-Kan.). Also, Bryan Cave pulled in $80,000 for lobbying work related to electric utilities.
Both firms declined to discuss any aspect of their work for TransCanada — but their reticence has not spared them occasionally uncomfortable attention. On November 5, about 50 protesters from Chesapeake Earth First! and Occupy DC stormed McKenna’s Washington office, chanting, "No pipeline! No tar sands! No destruction of indigenous lands!" Video footage by the groups shows protesters in the lobby of McKenna’s building and lying on the floor outside the firm’s glass-walled reception area. The following day, protesters reportedly descended on Bryan Cave but were unable to gain entrance to the firm’s Washington building.
Environmental groups including the Sierra Club and the Center for Biologi­cal Diversity have tried to stop the pipeline with litigation, but have met with limited success. To defend these suits, TransCanada has turned to Sidley Austin, with environmental group head David Buente Jr. serving as lead counsel, according to court papers. A Sidley spokeswoman said the firm declined to discuss its work for TransCanada.
In one suit brought in U.S. District Court for the Western District of Okla­homa in June 2012, the Sierra Club alleged that the U.S. Army Corps of Engineers improperly issued permits for the southern portion of the pipeline, which environmentalists said would destroy 130 acres of forested wetlands.
SPLIT IN TWO
In early 2012, TransCanada split the pipeline project in two after Obama denied the company’s first permit application. The president said the review was too rushed, and he was concerned about damage to environmentally sensitive land in Nebraska.
Although approval for the Alberta-to-Nebraska leg (subsequently re-routed to avoid the sensitive land) is still pending before the State Department, Trans­Canada proceeded with the southern leg, which crosses no international borders and doesn’t need a presidential green light. The 485-mile southern leg, now under construction, connects Cushing, Okla., with refineries on the Gulf Coast. In its suit, the Sierra Club objected that TransCanada essentially side-stepped proper review, obtaining a "Nationwide Permit 12" from the U.S. Army Corps of Engineers to proceed.
Such permits, the Sierra Club said, should only be issued for projects with "minimal adverse environmental effects" — not the case here, lawyers argued — and there should have been public notice and comment. But Buente in court papers countered that the fast-track permit was appropriate, serving "the balance between efficiency and environmental protection that Congress intended," and that the pipeline’s environmental impact was "minimal."
He said that TransCanada agreed to route the pipeline to avoid bald cypress-tupelo swamps, or "where avoidance is impossible, to route the pipeline under the swamps by means of ‘horizontal directional drilling.’ " As for the destruction of forested wetland, Buente defended the Army Corps’ conclusion that wetlands won’t be lost, they’ll just be converted to herbaceous wetlands or scrub shrub.
In August, U.S. District Judge David Russell in Oklahoma City sided with TransCanada and refused to enjoin the project. Though he found the pipeline "will admittedly involve the disturbance of wetlands," he ruled that the Army Corps decision to issue the permit was not arbitrary and capricious and that the Sierra Club was not likely to succeed on the merits.
With the pipeline’s southern leg well under way, securing right-of-way from property owners has been a major job. Zabel of Zabel Freeman said more than 95 percent of the necessary land has been acquired in Texas, and that most property owners are "very happy to have the compensation." But those that aren’t have fought back with legal challenges as well as in the court of public opinion. Julia Trigg Crawford, for example, has been featured in The New York Times and dozens of other publications for resisting TransCanada’s attempt to run pipeline across her family farm in Lamar County, Texas.
If a landowner does not reach a voluntary compensation agreement with TransCanada — in Crawford’s case, she told the Times that the offer was $21,626 — then TransCanada can exercise its right of eminent domain and take the land — known as condemning an easement.
Crawford and several other landowners are challenging their condemnations. In appeal filed on February 25 in Texas’ Sixth Court of Appeals in Texarkana, Crawford, represented by Plano, Texas, solo practitioner Wendi Hammond, argued that TransCanada lacks the authority to take her property. Under Texas law, she argued, a private corporation building a pipeline to bring crude oil from outside Texas into Texas does not qualify as a common carrier with eminent-domain authority.
The appeal is pending, but in Decem­ber, another Texas court of appeals, in Beaumont, sided with TransCanada in a similar challenge.
Zabel said long-standing Texas law is on TransCanada’s side, providing for "the power of eminent domain in exchange for the regulatory burden of being a common carrier."
Jenna Greene can be contacted at email@example.com.