Misgivings Raised as Nebraska Prepares to Speed Keystone XL Review

Opponents say legislation would undercut a tougher law passed in November.

Nebraska’s legislature is expected to pass a bill on Wednesday that would ease the way for construction of the Keystone XL oil pipeline.

The bill under consideration, LB 1161, would speed Nebraska’s pipeline review process and give TransCanada greater powers of eminent domain along the pipeline’s right-of-way.

Opponents of the project say the bill would undercut tougher legislation state lawmakers passed in November and allow TransCanada and other pipeline companies the option of choosing a murkier, potentially weaker state review process.

The earlier law gives the Public Service Commission (PSC) authority to review oil pipeline applications. The commission has already come up with proposed rules and regulations and has encouraged the public to weigh in. Ken Winston, a policy advocate for the Sierra Club, said the rules place “the burden of proof” on applicants to show that their route is in the public interest.

LB 1161 would allow pipeline companies to bypass the PSC and its rules. Instead, they would have the option of applying directly to the Department of Environmental Quality. Jane Kleeb, founder of the anti-pipeline group Bold Nebraska, fears the DEQ process will be less thorough because it hasn’t set standards for how pipeline routes will be evaluated.

“The DEQ hasn’t published what criteria they’ll use to say whether a route is good or bad, whereas the PSC is going through a very public process, asking citizens to give input on what they should be using as criteria,” Kleeb said.

DEQ spokesman Brian McManus declined to comment on his agency’s criteria. Instead, he referred InsideClimate News to a March 19 letter written by DEQ director Michael Linder. It describes the agency’s intent to prepare a draft supplemental environmental impact statement and to solicit public input for the new Keystone XL route. But McManus said he couldn’t say if DEQ still plans to follow that process.

TransCanada spokesman Shawn Howard said the DEQ is better equipped to handle the reroute because the PSC is “not set up at this time to begin a review … [they’re] probably at least a year away from accepting a pipeline application.”

Laura Demman, director of the PSC’s Natural Gas and Pipelines division, said the agency is collecting comments on the proposed rules and will hold a public hearing on May 21. She said an additional comment period may be necessary if substantial changes are made to the rules. Bold Nebraska, individual citizens and an industry group called the Association of Oil Pipelines are among those who have already submitted comments. TransCanada has not.

Demman said the debate over LB 1161 hasn’t affected the PSC’s work and that she has not been in contact with TransCanada.

Under LB 1161, any pipeline route approved by the DEQ must be sent to the governor for evaluation. If the governor denies the application, the pipeline operator can re-file through the PSC. Gov. Dave Heineman recently told reporters that he supports the rerouted pipeline.

Kleeb said the new legislation has turned the PSC into “plan B” and threatens to make the agency irrelevant. Although pipeline companies can choose to file through the PSC on the first try, “nobody will, because the PSC process is more rigorous.”

LB 1161 is scheduled for a final vote on Wednesday. Winston of the Sierra Club said he expects the bill to pass with an overwhelming majority. “I can’t envision more than four or five people voting against it.”

Alberta-based TransCanada originally routed the Keystone XL through the fragile Nebraska Sandhills. But Nebraskans were so concerned about possible oil spills that state lawmakers held a special session in November to discuss a reroute.

One of the laws passed during the session directed the DEQ to work with the State Department to conduct an environmental review of a new Keystone XL route that avoided the Sandhills. That reroute was still in progress when the Obama administration rejected the federal Keystone XL permit application on January 18.

A second law gave the PSC responsibility for future oil pipeline siting, with the exception of Keystone XL.

After the administration rejected the original plan, TransCanada divided the pipeline—which is designed to move tar sands crude oil from Alberta, Canada to the Texas Gulf Coast—into two parts.

The southern half would run from Cushing, Okla.to refineries in Texas. It would not need State Department approval, because it wouldn’t cross an international border. Howard of TransCanada said the company will also submit a new application for a federal permit to build the second half of the pipeline, from Alberta to Steele City, Neb.

The reroute around the Sandhills will add 30 to 40 miles of pipeline to the project, Howard said. The company has already chosen a corridor where alternative routes could run, but it hasn’t made that information public. He said TransCanada will consult with the DEQ before releasing those details.

Because the DEQ’s authority was tied to the pipeline’s original federal application, Nebraska’s work on the reroute ground to a halt on Jan. 18. Sen. Jim Smith introduced LB 1161 the next day.

Howard calls the bill “a technical amendment [that] allows the DEQ to restart the work they’ve already done … They started this process, they’ve already done a fair bit of the initial groundwork, and they’re definitely in the best position to do that right now.”

But other features have been added to the bill, which has been changed more than 25 times in the past three months. One amendment gives pipeline companies the authority to use eminent domain as soon as the governor approves the route. That would allow TransCanada to begin taking easements for the new route before a federal permit has been issued.

Another amendment makes LB 1161 applicable to all future pipeline applications.

Winston said that amendment was introduced at about noon on Thursday. Citizens and senators alike had only 10 minutes to read the 10-page document before the legislature began discussing the amendment. It was adopted within 30 minutes.

“Usually with a major change there will be a public hearing. But this was a last minute deal, and the lack of transparency in the process is an issue,” Winston said.

Amy Schaffer, a fifth-generation Nebraskan whose family owns a cattle ranch in the Sandhills, said the constant barrage of amendments has created confusion among landowners. On Thursday alone, the legislature withdrew four amendments and adopted two others that were filed the same day.

“It’s just pretty disappointing. The citizens called for the special session, and senators and the governor listened to us,” Schaffer said. Now “they turn around four months later … it’s pointless.”