Preeminent Law Firms Find Nebraska Pipeline Siting Legislation Likely Unconstitutional

OMAHA, NEBRASKA--(Marketwire - Oct. 31, 2011) - TransCanada Corporation (TSX:TRP) (NYSE:TRP) (TransCanada) today released two detailed memoranda that analyzed the legalities of the Nebraska legislature introducing pipeline siting legislation in the coming weeks. The analyses found that introducing such legislation at this point in the approval process for Keystone XL would be unconstitutional.

The legal memos were prepared by the international law firm of Sidley Austin LLP and the firm of McGrath North Mullin & Kratz, PC LLO from Omaha, Nebraska. Both firms have extensive experience in analyzing and litigating constitutional and statutory issues.

TransCanada believes the following conclusions would be drawn from these opinions:

• Under the U.S. Constitution and controlling federal law, it is the role of federal agencies - not individual states - to determine whether the route and construction of an interstate pipeline raise a risk of environmental damage and to weigh any risk against the economic and other benefits of the proposed pipeline.

• If individual states could make these decisions, the decisions would be based on the limited interests of those states, potentially defeating broader national interests. The Federal Constitution – and particularly the Commerce Clause - was established to prevent this from happening.
  

• Any pipeline siting act enacted in the Special Session would be targeted exclusively at stopping or re-routing Keystone XL. This would constitute unconstitutional discrimination against interstate commerce.

• Congress has delegated the regulation of interstate pipeline safety exclusively to the federal government, not to individual states. States cannot avoid that restriction simply by taking the word 'safety' out of pipeline siting legislation. It is the impact of a law – not its wording – that determines whether it is prohibited pipeline safety legislation. A bill intended to keep the Keystone XL pipeline out of the Ogallala aquifer obviously would be pipeline safety legislation.

• Federal pipeline safety regulation already specifically protects areas that are unusually sensitive to environmental damage if there is a pipeline accident, such as areas like the Ogallala aquifer. Based on the federal Pipeline Safety Act and the federal government's comprehensive regulation, state legislation that intrudes into this area is unconstitutional.

"We felt it was important for Nebraskans to hear from all sides in this debate. We are hopeful that this information will provide some balance and insights related to proposed draft legislation to alter the Keystone XL route," said Alex Pourbaix, TransCanada's president, Energy and Oil Pipelines. "Speaker Flood recently identified concerns with pipeline siting legislation following his own legal analysis. The conclusions raised in that legal brief are quite similar to the findings of our outside counsel's analysis."

Pourbaix adds Governor Heineman offered similar caution during his news conference October 25 when he said legislators may find that they do not have the legal or constitutional grounds to move forward with siting legislation.

Since 2008, the U.S. Department of State has been leading a comprehensive environmental review of all aspects of Keystone XL. The environmental review culminated August 26, 2011 with the release of the Final Environmental Impact Statement for the project. This review was the most detailed and comprehensive environmental review ever undertaken for a cross border pipeline.

The FEIS concluded that 'The analyses of potential impacts associated with construction and normal operation of the proposed Project suggest that there would be no significant impacts to most resources along the proposed Project corridor.' With the issuance of the FEIS, the only route that is approved for Keystone XL to follow is the approved route. It is not possible to materially move Keystone XL's route without nullifying the entire federal review and ignoring the rules that TransCanada was required to follow when making its application for a Presidential Permit.

Keystone XL would create 20,000 jobs during construction and offer Americans a choice of receiving conflict-free oil from Canada and domestic oil from the United States through the pipeline rather than higher-priced crude from the Middle East and Venezuela.

To read the legal briefs please access the following links:

http://www.transcanada.com/reports/mcgrath-north-legal-analysis-nebraska-siting-legislation.pdf

http://www.transcanada.com/reports/sidley-legal-analysis-nebrasks-siting-legislation.pdf

With more than 60 years experience, TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure including natural gas and oil pipelines, power generation and gas storage facilities. TransCanada's network of wholly owned natural gas pipelines extends more than 57,000 kilometres (35,500 miles), tapping into virtually all major gas supply basins in North America. TransCanada is one of the continent's largest providers of gas storage and related services with approximately 380 billion cubic feet of storage capacity. A growing independent power producer, TransCanada owns, or has interests in, over 10,800 megawatts of power generation in Canada and the United States. TransCanada is developing one of North America's largest oil delivery systems. TransCanada's common shares trade on the Toronto and New York stock exchanges under the symbol TRP. For more information visit: www.transcanada.com and follow us on Twitter @TransCanada.

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