Texas judge halts TransCanada oil pipeline work over landowner's fraud claim

HOUSTON – A Texas judge has ordered TransCanada to temporarily halt work on a private property where it is building part of a pipeline designed to carry diluted bitumen from the oilsands in Alberta to the U.S. Gulf Coast.

Landowner Michael Bishop, who is defending himself in his legal battle against the Canadian oil giant, argues that TransCanada (TSX:TRP) lied to Texans when it said it would be using the Keystone XL pipeline to transport crude oil.

Oilsands oil — or diluted bitumen — does not meet the definition as outlined in Texas and federal statutory codes which define crude oil as “liquid hydrocarbons extracted from the earth at atmospheric temperatures,” Bishop argues in the latest legal battle to plague the project.

When bitumen is extracted, the material is almost a solid and “has to be heated and diluted in order to even be transmitted,” he told The Associated Press.

“They lied to the American people,” Bishop said.

Texas County Court at Law Judge Jack Sinz signed a temporary restraining order and injunction Friday, saying there was sufficient cause to halt work until a hearing Dec. 19. The injunction went into effect Tuesday after Bishop posted bond.

David Dodson, a spokesman for TransCanada, said courts have already ruled that the oilsands product is a form of crude oil and that the injunction would not delay the project.

Environmentalists are concerned that if the pipeline leaks or spill occurs, the heavy bitumen will contaminate water and land. Bitumen, they argue, is more difficult to clean than regular crude, and U.S. pipeline regulations are not suited to transport the product.

They also say refining the product will further pollute the air in the Gulf Coast, a region that refines most oil in the United States and has long struggled with air pollution.

TransCanada has run into a number of roadblocks its attempts to further the project. To cross the U.S.-Canadian border, the company needs a presidential permit, which was rejected earlier this year by President Barack Obama, who suggested the company reroute to avoid a sensitive environmental area in Nebraska. The company plans to reroute that portion.

In the meantime, Obama encouraged the company to pursue a shorter portion of the pipeline from Oklahoma to Texas. TransCanada received the necessary permits for that southern portion earlier this year and began construction.

But many Texas landowners have taken to the courts to fight the company’s land condemnations in a state that has long wed its fortunes to oil.

Bishop said he at first fought the company’s attempt to condemn his land but settled because he could not afford the lawyer’s fees of $10,000.

Bishop said he settled under “duress,” so he bought a law book and decided to defend himself.

Aware that the oil giant will have a battery of lawyers and experts at the hearing later this month, Bishop, a 64-year-old retired chemist currently in medical school, said he is determined to fight.

“Bring ’em on. I’m a United States Marine. I’m not afraid of anyone. I’m not afraid of them,” he said. “When I’m done with them, they will know that they’ve been in a fight. I may not win, but I’m going to hurt them.”