On Wednesday, a Nebraska trial court struck down a state law allowing Governor Dave Heineman’s to approve the proposed route for TransCanada Corp.’s Keystone XL Pipeline. The decision comes just weeks after the State Department released the final environmental impact statement for the pipeline, clearing the way for federal approval of the project.
In a 50-page opinion, Nebraska District Judge Stephanie F. Stacy ruled that Nebraska Legislative Bill 1161—a 2012 law passed after the original route raised concerns about potential damage to valuable ranchland—violated Article IV, Section 20 of the Nebraska Constitution “by divesting the [Nebraska Public Service Commission] of control over the routing decisions of oil pipelines . . . and vesting such regulatory control” in the governor’s office.
Because Governor Heineman’s approval of the Keystone XL Pipeline was “predicated on an unconstitutional statute,” the approval itself was null and void, and accordingly the court entered a permanent injunction preventing the state “from taking any action on the Governor’s January 22, 2013 approval of the Keystone XL Pipeline route.”
Nebraska Attorney General Jon Bruning, who defended LB 1161 in court, has said that the state plans to appeal the decision. But if the state does not succeed in overturning Judge Stacy’s ruling on appeal, authority of the pipeline route will shift to the Nebraska Public Service Commission (PSC), a 5-member body that oversees natural gas lines, railroads, and other “common carriers.”
At this point, the PSC has not received an application from TransCanada for approval of the Keystone XL Pipeline. The application process can take several months, depending on the complexity of the request.
Still, in a Thursday conference call with reporters, TransCanada’s President and CEO Russ Girling reiterated the company’s commitment to the Keystone XL project, saying that while he was “frustrated and disappointed by the continued delays,” TransCanada remains “undeterred” and “100 percent committed” to building the pipeline.
Industry experts agree that the project will still ultimately move forward, with Carl Kirst of BMO Capital Markets telling Reuters that he “still believe[s] that the odds ultimately favor it happening.” At the very least, however, the ruling will result in substantial delays for the project. Every other state on the proposed route—which moves through parts of Montana, South Dakota, Kansas, Oklahoma, and Texas—has already approved the project. In fact, the Oklahoma-to-Texas portion of the pipeline is currently operational. Given the uncertainty surrounding the Nebraska leg, however, a decision from the federal government will likely be pushed back until after the 2014 election cycle.