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Keystone Pipeline Lawsuit

In this Nov. 3, 2015 file photo, the Keystone Steele City pumping station, into which the planned Keystone XL pipeline is to connect to, is seen in Steele City, Neb. 

PIERRE | State regulators posted documents Monday for a $15.6 million bond from TransCanada on construction of the Keystone XL oil pipeline through South Dakota.

The state Public Utilities Commission required the bond as a condition of the construction permit granted in 2010 for the South Dakota segment of the project. “Even though construction is not scheduled to begin until 2019, Keystone seeks approval of the bond now because it may transport pipe in 2018 on roads that are the subject of Condition 23,” wrote James Moore, a Sioux Falls lawyer representing TransCanada.

The bond would compensate counties, townships and other governments for any damage beyond normal wear and tear to roads, highways, bridges or other related facilities in the event TransCanada couldn’t pay.

Liberty Mutual Insurance Co. of Boston, Mass., provided the coverage.

Moore asked that a second $15.6 million bond wouldn’t be required until 2020 after work actually started. That schedule would meet the permit condition. The commission would hold the two bonds until the project is completed.

The pipeline would carry crude oil from tar-sands fields in Alberta, Canada, through Montana, South Dakota and Nebraska to a distribution point at Steele City, Kan. From there oil would go to facilities in either southern Illinois or the Texas Gulf Coast.

The 314 miles in South Dakota would cross portions of Harding, Butte, Perkins, Meade, Pennington, Haakon, Jones, Lyman, and Tripp counties.

The state commission will consider today whether to approve the first indemnity bond.

The company seeks the commission’s approval for the bond less than two weeks after the South Dakota Supreme Court rejected legal challenges by two tribal governments and an environment-protection organization that sought to block the project. The justices ruled June 13 state law doesn’t provide for challenges when a company certifies that a project can continue to meet permit conditions.

One of the current opponents, Dakota Rural Action, didn’t appeal the 2010 decision when the commission granted the permit. The other challengers, the Yankton Sioux Tribe and the Cheyenne River Sioux Tribe, weren’t active in the 2009-2010 docket.

All three participated in the nine-day certification hearing the commission held in 2015. The commission’s decision to accept the certification was the basis for the court appeal.

The proposed route skirts the southwest corner of the Cheyenne River reservation. The justices decided state law didn’t give them jurisdiction.

“Although the Commission issued an order accepting TransCanada’s certification, nothing in the statute required that it issue such an order,” the court wrote in its unanimous decision. "Rather, the Commission’s acceptance of TransCanada’s certification was an administrative act that was part of the Commission’s supervisory responsibilities to regulate already permitted activities.”

CRST Chairman Harold Frazier issued a statement criticizing it. He is president of the Great Plains Tribal Chairmen’s Association.

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“The bottom line is the state’s court refused to hear what we have to say. Instead the court decided to dismiss the case out of convenience to the state of South Dakota and their bottom line. I’m not surprised that the state institution would choose the dollar bill over listening to the concerns of their citizens and tribal governments,” Frazier wrote.

“I condemn the Supreme Court of South Dakota for not listening to the arguments by other governments. The Supreme Court of South Dakota will cover its ears and eyes but not its mouth and blame a lack of legislative direction on its lack of moral direction. So once again, a way has been justified to keep us from voicing our concern in this state.

“The state of South Dakota is taking a stance of being right because they will not listen to those who try to tell them when they are wrong. Just because you have made something legal does not make it right,” Frazier continued. “I am constantly amazed about the ability of the powers that be to keep doing what is morally wrong while justifying it as legally right.”

TransCanada’s motion seeking the commission’s acceptance of the bond came two days after the Supreme Court decision.

The decadelong delay occurred largely because President Barack Obama, a Democrat, refused to allow TransCanada to pierce the U.S. border. President Donald Trump, a Republican, invited TransCanada to apply again and the U.S. State Department granted permission March 23, 2017.

TransCanada previously built the Keystone pipeline that follows the general route of the James River through eastern South Dakota. It began during President George W. Bush’s administration.

The commission’s decision comes during the two-day anniversary of the Battle of the Little Big Horn or the Battle of Greasy Grass on June 25-26, 1876, in what today is Montana. Lakota, Arapaho and Northern Cheyenne warriors defeated Custer’s Seventh Cavalry.

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