Nebraska tries to draw line in sand over Keystone pipeline

OMAHA, Neb Mon Oct 31, 2011 5:45pm EDT

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OMAHA, Neb (Reuters) - Nebraska may try to draw a line in the sand when it convenes a special session of the state legislature on Tuesday to debate whether to seek changes to a planned $7 billion oil pipeline traversing the state.

At issue is whether TransCanada's Keystone pipeline from Canada to Texas should cross the ecologically sensitive Sand Hills area of Nebraska, which sits atop a major source of the region's water, the Ogallala aquifer.

Opposition to the pipeline has grown so much in Nebraska that Republican Governor Dave Heineman, who once said a special legislative session would be a waste of time and money, changed tack last week and called just such a conclave.

Heineman said the purpose of the session is to "find a legal and constitutional solution to the sitting of the pipeline within the state."

"I believe Nebraskans are expecting our best efforts to determine if alternatives exist ... that could impact the route of the pipeline," he said.

TransCanada has said that it is too late to change the route of the pipeline, which would extend from the oil sands of Canada to Texas refineries. A change in the route would force costly delays in the project, which TransCanada said is already about a year behind an initial schedule.

The ultimate authority to approve or reject the pipeline rests with Secretary of State Hillary Clinton, who until recently had hoped to issue a decision by the end of the year. But last week U.S. government officials said that timetable would be delayed.

In a statement on the eve of the special session, TransCanada said that based on two legal analyses it commissioned, Nebraska does not have the authority to force a move in the pipeline.

"We felt it was important for Nebraskans to hear from all sides in this debate. We are hopeful that this information will provide some balance and insights related to proposed draft legislation to alter the Keystone XL route," said Alex Pourbaix, TransCanada's president, Energy and Oil Pipelines.

An independent expert agreed with TransCanada.

"They (Nebraska) may have a good policy argument for why it should be re-routed around the aquifer, but under our system of law some decisions are reserved for the federal government. I am afraid this is one of them," said Pat Parenteau, senior counsel for the Vermont Law School Environmental and Natural Resources Clinic.

Supporters of the pipeline argue that it will provide jobs and help U.S. energy independence by bringing more crude from Canada rather than the politically-volatile Middle East.

But opponents in Nebraska, citing the BP oil spill in the Gulf of Mexico last year and an Exxon pipeline leak into the Yellowstone River in Montana earlier this year, said the risk is too great of a similar accident tainting the aquifer.

The special session of the legislature is scheduled for two weeks but could last until Thanksgiving in late November, Nebraska legislative sources said.

The action during the first week is expected to be mainly the introduction of bills, likely focusing on three areas. These are: the route of the pipeline, liability for any oil leak, and "eminent domain" laws covering how TransCanada can acquire the land for the pipeline route.

In the second week of the session, the bills are likely to be examined by the Natural Resources Committee and through public hearings starting no earlier than November 7, the legislative sources said. Floor debate and possible approval of any new state laws would be unlikely until mid-November.

Nebraska is the only state in the nation with only one legislative chamber.

TransCanada and supporters of the pipeline have launched a lobbying effort to head off any Nebraska action. Last week, residents of Omaha, Nebraska's largest city, found flyers in their mailboxes from a group called, "Nebraskans for Jobs and Energy Independence."

"The Keystone XL Pipeline is safe for the Ogallala Aquifer and good for Nebraska's economy," the pamphlet said. It added that the pipeline, "will have 16,000 sensors reporting every 5 seconds. These sensors are monitored by satellite 24/7, 365 days a year."

For a factbox on the Keystone pipeline, click here

(Additional reporting by Timothy Gardner in Washington; editing by Greg McCune and Andrea Evans)

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