Bring Out Your Dead

TransCanada announced yesterday that it would submit its Keystone XL pipeline proposal for full consideration by the Nebraska Public Service Commission and withdraw efforts to take landowners’ property via eminent domain. Given that the company spent three years trying to shortcut the state’s approval process, this is major news.

The concession further complicates a process that was already a tangled mess. Here’s my attempt to untangle it.

Keystone XL…that’s still a thing?

KXL’s friends in Congress have made several attempts to force approval of the pipeline, which is designed to transport tar sands crude from Canada’s northern Alberta to refineries on the Gulf coast. All those efforts have ended in either legislative defeat or a presidential veto.

The president still holds the right to approve or reject the pipeline, and his public comments have hinted at the latter. He called tar sands oil “extraordinarily dirty” in March and debunked claims that the project would create thousands of U.S. jobs. But we’re still waiting for his final decision.

In other words, Keystone XL is only mostly dead. There’s a big difference between mostly dead and all dead.

Does TransCanada’s move bring the pipeline closer to all dead?

Sort of. In November 2011, the Nebraska legislature passed a law that required TransCanada to seek approval for the KXL route from the state’s Public Service Commission, or PSC. The PSC would hold public hearings and have the right to make changes to the route rather than simply accept or reject it.

TransCanada didn’t like that, especially because opposition to the pipeline had been gaining steam. So in April 2012, the company successfully lobbied for a new state law cutting the PSC out of the process. The bill gave the governor the sole right to approve the pipeline—and he did. Landowners sued, and the case went to the Nebraska Supreme Court.

In January, TransCanada won the case on a legal technicality. Only four justices voted to strike down the approval—one short of the required super majority. The other three justices ruled that the landowners lacked legal standing to bring the case because TransCanada hadn’t yet filed for eminent domain. Once the company moved to seize the land (only days after the decision), the property owners went back to court and won a series of injunctions in lower courts. Most observers assumed the supreme court would have eventually sided with the landowners as well.

At that point, TransCanada must have seen the writing on the wall—it was going to have to go through the PSC eventually. Yesterday’s announcement is an acknowledgement of this reality.

So what’s changed?

Well, the announcement eliminates some legal uncertainty, and it confirms that the PSC is back in the process. TransCanada now faces a very uncertain future in Nebraska. Landowners, environmentalists, and other opponents of the pipeline will appear in droves at the hearings to pressure the commission to reject the application.

“The Public Service Commission is not a rubber stamp,” says Anthony Swift, director of NRDC’s Canada Project (disclosure). “That’s why TransCanada was trying so hard to avoid it.”

Even if TransCanada wins approval, it will probably have to adjust the route to avoid sensitive environmental areas like the grassy dunes known as the Sandhills. Then the company would have to buy easements from landowners along the new route and begin new eminent domain proceedings against those who don’t sell voluntarily.

So did TransCanada suddenly decide to do the right thing?

Some (including Amy Harder in the Wall Street Journal) have speculated that the move is a calculated attempt to slow down the federal approval process. If true, there’s an amusing irony here—TransCanada CEO Russ Girling complained earlier this year that the approval process was taking too long. Perhaps his view has changed, now that noises emanating from the current resident of 1600 Pennsylvania Avenue are decidedly anti-KXL. The company may prefer to try its luck with the next president.

Now what?

TransCanada still needs approval from both the state of Nebraska and President Obama. The White House has indicated in the past that it could not issue a decision while the Nebraska lawsuit was pending, because that process would help inform the State Department’s assessment of whether the pipeline is in the national interest. TransCanada may be pinning its hopes on the president continuing this policy of waiting for the states before deciding.

There is, however, no clear reason for the president to delay a rejection, if that is his decision.

“There are enough disadvantages associated with the project—from climate change to its route through environmentally sensitive areas—to reject it right now,” says Swift. “It would be a waste of public resources to allow the Nebraska process to go any further.”

So when can we go through KXL’s clothes and look for loose change? Only the president knows.