Canada: Nebraska Supreme Court Clears Roadblock For Keystone XL Pipeline Project

Last Updated: February 18 2015
Article by John H. Grady III

On January 9, 2015, the Nebraska Supreme Court upheld former Nebraska Governor Dave Heineman's approval of TransCanada Corp.'s Keystone XL pipeline route, removing a roadblock frequently cited by President Obama as part of his hesitation to sign a bill approving the project. The proposed pipeline—which would move up to 830,000 barrels of oil a day from Canada's oil sands to Gulf Coast refineries—has become a hot political issue over climate change and economic growth.

The Nebraska lawsuit challenging the state's approval, Thompson et al. v. Heineman et al., No. S-14-158, was premised on plaintiffs' contention that a statute allowing the governor to set the route violated the Nebraska Constitution. The suit was filed in March 2013 by three landowners seeking a declaratory judgment that the law violated the equal-protection, due-process, and separation-of-powers provisions of the Nebraska Constitution, along with its prohibition of special legislation. The suit alleged that the bill unconstitutionally delegated to the governor powers over a common carrier that exclusively belonged to the Nebraska Public Service Commission, and unconstitutionally delegated plenary authority over the exercise of eminent domain power that belonged exclusively to the state legislature. The challenged law, L.B. 1161, allows "major oil pipeline" carriers to bypass the regulatory procedures of the state's public service commission and, as an alternative, permits pipeline carriers to obtain approval from the governor to exercise the power of eminent domain for building a pipeline in Nebraska.

The Nebraska Supreme Court actually voted 4 to 3 to uphold a lower court judge's opinion that a law allowing the governor to set the route violated the Nebraska Constitution and that the landowner appellees had standing to raise the issue. However, under the Nebraska Constitution, a five-vote supermajority is required for the court to rule that a law is unconstitutional. Although the majority bloc was in favor of overturning the pipeline-siting route, it lacked the necessary five-vote supermajority. Accordingly, L.B. 1161 remains intact and the former governor's approval of the permit stands.

Although the Nebraska Supreme Court ruling focused on the permitting process and state constitutional issues, President Obama, and other opponents of the pipeline, have repeatedly alleged concerns about the pipeline's impact on climate change. The President has asserted that a pending review process within the State Department should be completed before he makes a final decision. The State Department review, known as a national-interest determination, considers several factors, including the pipeline's impact on energy security, the environment and climate change, geopolitics, and the economy. Notably, in January 2014, the State Department issued a Final Supplemental Environmental Impact Statement report in which it concluded that the construction of the pipeline is unlikely to have significant effects on climate-change-causing greenhouse gas emissions. The State Department previously extended the time to complete its review process based, in part, "on the uncertainty created by the on-going litigation in the Nebraska Supreme Court...." On February 2, 2015, the EPA submitted comments to the Final SEIS. In its letter, the EPA stated that it was providing comments now, rather than when the Final SEIS was published, because of the possibility that the Nebraska Supreme Court decision could have led to changes to the Final SEIS. In its letter, the EPA disagreed with the State Department's conclusions the construction of the pipeline is unlikely to have significant effects on climate-change-causing greenhouse gas emissions because of the recent large declines in oil prices.

On the same day as the Nebraska Supreme Court ruling, the U.S. House of Representatives passed a bill approving the route and, on Monday January 12, the whole U.S. Senate cleared a procedural hurdle allowing the Senate's version of the Keystone bill, which had cleared the Senate Energy and Natural Resources Committee on the previous Thursday, to be brought to the Senate floor for debate. President Obama has formally threatened to veto the measure.

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