Publication / Inside EPA
February 19, 2014
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State Court Ruling Casts Doubts On Keystone

A Nebraska court has blocked construction of the proposed Keystone XL pipeline through the Cornhusker State after finding that a state law approving a new route pushed by TransCanada Corp., the project’s developer, is unconstitutional — a ruling that casts doubt on the the controversial project that is awaiting approval from the Obama administration.

The Lancaster County District Court ruled Feb. 19

 in Thompson, et al. v. Heineman, et al., that LB1161, the 2011 state law governing how Keystone and other pipeline projects are approved, is unconstitutional.

The ruling backed requests from the plaintiffs, local landowners who challenged the law, to block construction. “Plaintiffs’ request for injunctive relief is granted, and the Defendants are permanently enjoined from enforcing LB1161 and from taking any action on the Governor’s January 22, 2013 approval of the Keystone XL Pipeline route,” Judge Stephanie Stacy said.

Nebraska Gov. Dave Heineman (R), the named defendant, said he plans to appeal the decision, according to press reports.

The ruling is likely to further delay planning and approval for the northern leg of the pipeline — slated to transport carbon-intensive tar sands crude across the border from Canada to Oklahoma and beyond — both in Nebraska and at the federal level. Environmentalists and other opponents are seeking to block the project, fearing it will significantly increase the carbon profile of the fuel supply and even encourage increased development of the resource in part because transporting the fuel by pipeline is generally considered cheaper and safer than rail transportation.

The Obama administration, which must issue a special presidential permit for such cross-border projects, has already had to revise its environmental review of the proposed project after Nebraska officials forced Keystone to reroute the project away from the state’s sensitive Ogallala Aquifer.

Now that the pipeline’s route through Nebraska is again uncertain, it could force the administration to again revise its recently completed environmental review. And even if the route is not certain, the ruling could nevertheless embolden critics who can continue to litigate the issue.

The 2011 Nebraska law was intended in part to ease construction of the pipeline through the state. According to Climate Progress, LB1161 allowed pipeline companies to choose whether to submit their pipeline plans to the Nebraska Department of Environmental Quality (NDEQ), which then passes the plans on to the governor for approval or rejection, or the Public Service Commission (PSC), which has a more rigorous process for pipeline permitting that precludes the governor.

But Stacy found that oil pipelines subject to LB 1161 are “common carriers” that should be subject to sole oversight by the PSC rather than environmental regulators and the governor. “Because LB 1161 has the effect of either temporarily or permanently divesting the PSC of control over the routing decisions of oil pipelines subject to the act, and because LB 1161 vests such regulatory control over common carriers not in the Legislature but in NDEQ and the Governor, the evidence before this court clearly establishes LB 1161 violates” the state constitution, she ruled.

The ruling comes as the Obama administration is in the midst of taking comments on its recently revised supplemental environmental impact statement (SEIS).

The SEIS, released by the State Department Jan. 31, acknowledged for the first time that the controversial project could have potentially adverse climate effects, a finding that is bolstering environmentalists and other opponents who say it meets President Obama’s veto requirement that the project not result in a net increase in greenhouse gas (GHG) emissions.

But the report also continued to restate the department’s belief that development of tar sands oil is inevitable, downplaying the GHG impacts of actually using the transported oil, a considerable win for industry.

EPA Administrator Gina McCarthy said on MSNBC’s Chris Hayes show Feb. 18 that EPA will soon file comments that she expects will “impact” any decision going forward.

“EPA and other agencies are going to be commenting on that. I think people are aware that EPA has been free to comment, as it should, on the science and the analysis,” she said, adding that, “I’m confident that the right decisions will be made and EPA will be able to impact those with our comments moving forward.”

EPA’s past comments on State Department reviews have urged officials to better assess potential climate impacts of the pipeline.

Some environmentalists believe EPA’s involvement in the Keystone decision has been vital. Tiernan Sittenfeld, of the League of Conservation Voters, called EPA’s role that of a “gatekeeper” that determines how “credible and viable some environmental reviews are.”

“We believe EPA and other departments will be very important in reaching a place that may be very different in what was started,” she said at a Feb. 19 event.