On September 5th the Nebraska Supreme Court hears oral arguments in the state’s appeal of a ruling that found that the expedited process used by governor to approve the route for the Keystone XL tar sands pipeline was unconstitutional. While the Supreme Court’s ruling – expected in early 2015 – could significantly prolong the Keystone XL decision process, it’s important to remember that TransCanada has been the primary cause of its own pipeline’s delays. Time and time again, TransCanada has sought to circumvent the process for approving a route through Nebraska. It currently does not have a route through Nebraska because it lobbied for an unconstitutional shortcut that would allow it to avoid a transparent pipeline citing process by Nebraska’s Public Service Commission (PSC). TransCanada spent years telling state and federal officials that it couldn’t consider any route other than its preferred route through the sensitive Sandhills. This resulted in TransCanada not having any alternative routes ready when state and federal officials found its preferred route unacceptable in 2011. Then, TransCanada’s allies in Congress forced the denial of the first Keystone XL permit application in 2012 when they mandated that the Administration make a decision before TransCanada had proposed a new route through Nebraska. That resulted in TransCanada having to reapply, starting the Presidential Permitting process anew. While some may try to cast the court, the process or the Keystone XL’s opponents as the cause of delay, the reality is that the repeated attempts by TransCanada and its allies to bypass and undercut state and federal permitting processes have only undermined their own interests.
As observers consider the impact of the Nebraska Supreme Court’s decision on the Keystone XL decision process, here are four major questions to consider.
1. Why is Keystone XL’s route through Nebraska so controversial?
When TransCanada first proposed Keystone XL, it drew a straight line from the U.S. border to Steele City, Nebraska. That line placed the Keystone XL tar sands pipeline through Nebraska’s Sandhills region – one of North America’s most sensitive and water rich regions at the heart of the Ogallala Aquifer. The Ogallala Aquifer is the United State’s largest groundwater aquifer, overlaying eight states. But most of its water is concentrated in Nebraska. In Nebraska’s Sandhills, the aquifer is nearly a thousand feet deep and characterized by sandy soils which would be particularly vulnerable to a tar sands spill. Meanwhile, public scrutiny revealed substantial risks associated with the 830,000 barrel per day (bpd) Keystone XL pipeline, including a real time leak detection system unable to identify leaks smaller than half a million gallons a day, widespread safety issues associate with the construction of other TransCanada pipelines, and experiences from the Kalamazoo River tar sands spill showing that tar sands is particularly damaging to water resources.
2. Why haven’t alternative routes for Keystone XL already been identified and evaluated?
TransCanada is primarily responsible for the lack of route alternatives for keystone XL. When TransCanada first proposed Keystone XL in late 2008, the company maintained an entrenched position that the only route it would consider was its preferred route through the Sandhills. Throughout the environmental review process, TransCanada told State Department officials that a reroute to avoid the Sandhills would make the project uneconomic. As Nebraska’s state lawmakers pressed TransCanada to consider route alternatives, TransCanada doubled down, writing:
"As we discussed in the meeting, at this late date in the federal Presidential Permit process, it is impossible for us to move the route to avoid the Sandhills." Alex Pourbaix, Oct. 18, 2011
TransCanada’s blustering “our way or the highway” attitude forced the hands of Nebraska’s lawmakers, who passed a pipeline citing law in November 2011 which created a rigorous process for new pipeline proposals called the Major Oil Pipeline Siting Act (MOPSA). While TransCanada had been bluffing about impossibility of a reroute, Nebraska’s action caught TransCanada flat footed, without viable alternatives ready.
Because TransCanada had applied for a permit for Keystone XL before MOPSA was passed, lawmakers established a special process for Keystone XL. The solution was a compromise. Despite the fact that TransCanada was largely responsible for the failure of officials to proposed alternative routes, the shortcut created an expedited process because the environmental review for the project had already been completed.
However, just a few weeks later Keystone XL’s proponents in the U.S. Congress attached an amendment to a Payroll Tax bill that required the Administration to make a decision on the Keystone XL pipeline within 60 days – providing too little time for a route to be proposed even under Nebraska’s expedited law. Rightly refusing to approve a project before its route was known, President Obama rejected Keystone XL’s application.
3. What are the current legal problems with Keystone XL’s proposed route through Nebraska?
The current legal controversy around Keystone XL’s Nebraska is yet another case in which TransCanada has been the author of its own delay. After its permit application was rejected in early 2012, TransCanada had no reasonable basis for avoiding Nebraska’s pipeline siting law. But rather than work with Nebraska’s Public Service Commission (PSC) to create a significantly altered route through the states, TransCanada sought to create a shortcut for itself. In April 2012, it lobbied Nebraska’s Senate to pass a bill – LB 1161 – that would allow it to avoid MOPSA’s more rigorous pipeline siting process. Rather than working the PSC to develop a route with public input, TransCanada was able to provide the Governor of Nebraska with an up or down decision on a new route of TransCanada’s choosing – which only shifted the pipeline’s original route by 19 miles. This was quite a shortcut – but like all of the shortcuts TransCanada has pursued while promoting Keystone XL, it backfired and has extended the process. In Thompson vs. Heineman, landowners alleged that the expedited process was unconstitutional, and Nebraska’s district court agreed.
The court found that the law the governor used to propose Keystone XL route was unconstitutional, the route was void as were any easements TransCanada received through eminent domain or threat of eminent domain. In other words, TransCanada was back to square one in Nebraska.
4. What’s next in Nebraska?
Though the Supreme Court is hearing the case on Friday, it is not expected to rule on the constitutionality of the Governor’s expedited permitting process until early 2015. Meanwhile TransCanada is again putting all of its eggs in one basket. Rather than beginning the process to evaluate a new route through the PSC while it awaits the Supreme Court decision on its existing route, TransCanada is betting everything that the Supreme Court will find that the Governor’s expedited process was constitutional and that it’s minor reroute is valid. If the Supreme Court upholds the District Court’s ruling, TransCanada will be back to square one in Nebraska. TransCanada will have to begin the PSC pipeline siting process, which is likely to take over six months.
As with every major delay in the Keystone XL process, TransCanada will only have itself to blame.