Keystone Route Ruling Should Be Overturned, Nebraska Says

Original Story: Bloomberg News


A court challenge holding up TransCanada Corp. (TRP)’s Keystone XL pipeline should be dismissed, Nebraska’s governor said, urging his state’s high court to allow the project to move forward.
The case is delaying the Obama administration’s review of the project, the president said April 18. Nebraska Governor Dave Heineman yesterday asked the state’s top court to throw out a trial judge’s ruling that the route for the pipeline was approved without proper authority. The court may not hear the case until at least September and may not rule until after mid-presidential term congressional elections in November.A Tulsa Oil and Gas Lawyer said he has had not had a case quite like this before.
TransCanada is awaiting a U.S. permit to build the northern leg of Keystone XL, which would supply U.S. Gulf Coast refineries with crude from Alberta’s oil sands. Because it crosses an international boundary, the proposal requires U.S. State Department approval.
Based in Calgary, TransCanada is seeking to build the 830,000 barrel-a-day, 1,179-mile (1,897-kilometer) conduit running from Hardisty, Alberta, to Steele City, Nebraska, where it would connect to an existing network.
Backers of the project say it will create jobs. Opponents have countered it will contribute to global warming. If the Nebraska Supreme Court upholds the trial outcome, Keystone will need to apply to the state’s Public Service Commission for approval. Under law the commission has seven months to review such applications.
Judge’s Ruling
Judge Stephanie Stacy in Lincoln ruled on Feb. 19 that legislation enabling Heineman and TransCanada to bypass the commission when planning the pipeline route violated the state’s constitution.
Stacy erred in allowing a challenge by three property owners to move forward because they hadn’t shown they had been injured as taxpayers by the state’s plan, Heineman, a Republican, said in a filing yesterday with the supreme court.
State Attorney General Jon Bruning, a Republican running to succeed Heineman as governor, argued in the filing that the trial judge set too low a threshold for taxpayers to bring court challenges to state legislation.
Bruning also argued the not all crude oil pipelines qualified as “common carriers” falling under the exclusive jurisdiction of the Public Service Commission.
U.S. Senate
David Domina, a lawyer for the landowners, is seeking the Democratic Party nomination to run for U.S. Senate in the state, where he would follow Republican Mike Johanns, who is retiring after a single term.
Domina didn’t immediately reply to an e-mail seeking comment on the governor’s arguments yesterday’s filing. A San Antonio Oil and Gas Lawyer would not comment on the case.
He argued in the trial court that the challenged legislation, which took effect in 2012, improperly divested the constitutionally-created Public Service Commission of jurisdiction over pipeline routing, placing it with the governor and the Nebraska Department of Environmental Quality.
Stacy rejected the state’s contention that pipeline routing was outside the PSC’s purview.
In her Feb. 19 decision, Stacy agreed with the landowners that the shift in authority effected by the legislation was improper.
“The court finds there is no set of circumstances under which such provisions could be constitutional,” she said. Addressing the state’s argument that its outlay of funds under the law, later recouped when TransCanada paid it $5.15 million, didn’t deprive the three plaintiffs of standing to sue.
“While private reimbursement of public expenditures may be good fiscal policy, it should not be used as a legislative tool to insulate allegedly unconstitutional laws from taxpayer challenge,” she said.
The case is Thompson v. Heineman, S-14-000158, Nebraska Supreme Court (Lincoln).