(Adds detail of $2.4 bln in pipeline costs, share price,
By Patrick Rucker
WASHINGTON, Sept 4 Nebraska's top court will
hear arguments on Friday about how the Keystone XL pipeline
might cross the state - a narrow question of routing and
permitting that has clouded the project's fate after more than
five years of wrangling at the federal level.
At issue is a 2012 law that gave Governor Dave Heineman
authority to approve a route for TransCanada Corp's
proposed Canada-to-Texas project.
Siting issues are typically settled by the state's Public
Services Commission (PSC). In February, a Nebraska court ruled
that the governor had been wrong to interrupt that process.
The decision was a win for landowners and environmentalists
who oppose the Keystone project, aimed at transporting at least
730,000 barrels per day from the oil sands region of Western
Canada to Gulf Coast refineries.
The Nebraska court decision forced the U.S. State Department
to put on hold its review of project pending a resolution,
which might not come until early 2015.
Because the pipeline would cross the U.S.-Canada border en
route from Alberta to Texas, the State Department must either
bless or reject the proposal based on its evaluation of the
If the Nebraska Supreme Court ruling favors TransCanada, the
State Department could quickly return to its review. But if the
court rebuffs the company, a new bureaucratic process would
begin that could keep the issue tied up in Nebraska at least
through the spring.
A key question for the Nebraska court is whether the
pipeline, which would simply cross the state, deserves the same
scrutiny as a project meant to serve in-state customers.
The lower court, the District Court of Lancaster County,
said TransCanada must be regulated as a "common carrier," a task
that should fall to the PSC.
But lawyers for the governor argued that projects such as
Keystone that involve cross-state shipments can be approved
through other channels.
The legislation "can be reasonably construed to apply to
(the) route of interstate pipelines" that may be regulated
outside PSC authority, the governor has argued in legal briefs.
TransCanada is braced for any outcome, although the current
dispute is a narrow question of state law.
"We'll have to wait and see exactly how they rule and what
direction they provide," said spokesman Shawn Howard.
The governor, through a spokesperson, declined to comment.
Defining the Nebraska route has added delays to a project
that has already cost TransCanada roughly $2.4 billion. Among
other things, TransCanada has already procured pipe, pump
station material and other infrastructure in anticipation of the
project going ahead.
Under an earlier routing plan, the pipeline would have
crossed Nebraska's environmentally sensitive Sand Hills and
parts of the giant Ogallala Aquifer, which provides much of the
groundwater used for irrigation.
The state also lacked a pipeline siting law, and the
disputed 2012 legislation was intended to provide a process for
Keystone and future projects to seek approval.
That legislation was "quite clearly enacted with
TransCanada's Keystone XL pipeline in mind," Judge Stephanie
Stacy wrote in the February decision.
In the end, according to Keystone foes, TransCanada may have
brought on further delays by encouraging legislation
hand-tailored to resolve its specific concerns.
"They pushed a shortcut that proved to be unconstitutional,"
said Anthony Swift, a campaigner against the project with the
environmental group Natural Resources Defense Council.
TransCanada closed near steady at C$59.72 in Toronto. The
shares have gut record highs this week.
(Reporting by Patrick Rucker; Editing by Ros Krasny, David
Gregorio and Leslie Adler)