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Keystone XL Route Runs Through Nebraska Top Court

Nebraska Governor Dave Heineman is asking the state Supreme Court today to reverse a trial judge’s decision to kill legislation allowing the out-going Republican and the Canadian company to chart the pipeline’s course through Nebraska. Photographer: Cliff Owen/AP
Nebraska Governor Dave Heineman is asking the state Supreme Court today to reverse a trial judge’s decision to kill legislation allowing the out-going Republican and the Canadian company to chart the pipeline’s course through Nebraska. Photographer: Cliff Owen/AP

Sept. 5 (Bloomberg) -- The course of TransCanada Corp.’s proposed $5.4 billion Keystone XL pipeline runs through Nebraska’s highest court, which can either speed the project on to U.S. President Barack Obama or delay it indefinitely.

Governor Dave Heineman is asking the state Supreme Court today to reverse a trial judge’s decision to kill legislation allowing the out-going Republican and the Canadian company to chart the pipeline’s course through Nebraska.

The president’s approval is required because the 1,179-mile (1,897 kilometer) conduit starts in Hardisty, Alberta, and crosses the U.S. border en route to a junction in Steele City, Nebraska.

Obama, who has cited environmental worries in withholding approval, further delayed a decision after the legislation was found to violate the state’s constitution. While a state high court ruling upholding that decision would add another obstacle to the project, a reversal may put Obama on the spot, forcing him to choose between union supporters who back the pipeline and environmentalists who don’t.

“There’s a benefit to a delay that was precipitated by something beyond the administration’s control,” said Christine Tezak, managing director of ClearView Energy Partners LLC in Washington.

Jurisdiction over the pipeline and its siting resides with the state’s Public Service Commission under Nebraska’s constitution, Judge Stephanie Stacy said in her ruling in February. State lawmakers can’t delegate that duty to the governor, she said.

Commission’s Power

Heineman’s lawyers argue the commission is charged with regulating only intra-state common carriers and that the Keystone XL falls outside its purview.

The state also contends Stacy erred in her February decision giving landowners legal standing to sue as injured taxpayers, arguing the enabling legislation obligates TransCanada to assume the cost of any environmental impact assessment.

The three landowners who filed the lawsuit are represented by Omaha attorney David Domina, the Democratic nominee for U.S. Senate. Domina argued in a court filing that TransCanada, if it isn’t a common carrier, can’t use eminent domain to take land for the project.

Supporting their effort is a political action group, Bold Nebraska, founded by former Young Democrats of America leader Jane Kleeb. As the conduit won’t take on or off-load crude in the state, it isn’t for the common good of Nebraskans, she said in a phone interview.

Eminent Domain

“Foreign corporations shouldn’t be able to use eminent domain on Nebraska landowners,” Kleeb said.

Kleeb also cited the dangers inherent in Keystone crossing the Ogallala Aquifer, the subterranean water source for Nebraska and other states on the American plains.

TransCanada, which already operates one pipeline under the Keystone name in Nebraska, submitted a friend-of-the-court filing supporting the reversal of Stacy’s decision. In January the southern leg of the Keystone XL pipeline began moving oil to Texas refineries on the Gulf of Mexico.

“We believe the law was constitutional,’ said Shawn Howard, a company spokesman. ‘‘It was worked on very carefully by many people, including those in the legislature who didn’t actually support the route.”

Those backing the state and the pipeline include Nebraskans for Jobs and Energy Independence and an Omaha-based trade union, each of which says the project will create jobs.

‘Cooler Heads’

Ron Kaminski, business manager for the Laborers International Union of North America, Local 1140, said its members worked on the earlier TransCanada Keystone pipeline in Nebraska.

“We think once all is said and done, the cooler heads will prevail and we think the project will be approved,” Kaminski said.

The benefits far outweigh the risks, said Chris Peterson, a spokesman for Nebraskans for Jobs and Energy. “It’s past time to move forward,” he said.

“The pipeline is both good and bad,” said Michael Webber, deputy director of Energy Institute at the University of Texas in Austin. The benefits, he said, would include the economic advantages for Canada, the biggest U.S. trading partner, and the construction and refinery jobs it would create.

“Crude would go to American refineries, through a pipeline on America soil built by America workers,” Webber said. The negatives are all environmental, he said, likening the tar sands from which the pipeline oil would be extracted to a “carbon bomb.”

Pipeline ‘Fuse’

“The pipeline is the fuse,” Webber said.

Alternatives to the Keystone XL include shipping crude by rail or perhaps bypassing the U.S. entirely, Webber said.

Calgary-based TransCanada has already proposed building Energy East, a 4,600 kilometer (2,859 mile) conduit to that nation’s Atlantic Coast.

This is the second time Nebraska has delayed a presidential decision on the Keystone XL. Its previously planned route took it through the state’s environmentally sensitive Sandhills region and over the aquifer drawing opposition from Heineman, who urged Obama and then Secretary of State Hillary Clinton to deny permission for the project in 2011.

Domina said Nebraska’s top court is unlikely to rule before the Nov. 4 elections that could propel him to the U.S. Senate. The elections might also flip control of the Senate to Republicans.

“Two months would be very quick and that would be after the election,” he said.

The case is Thompson v. Heineman, S-14-000158, Nebraska Supreme Court (Lincoln).

To contact the reporter on this story: Andrew Harris in Nebraska Supreme Court in Lincoln at

aharris16@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Peter Blumberg

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