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A worker carries a torch after heating a pipe joint during construction of the Gulf Coast Project pipeline in Atoka, Okla., on March 11, 2013. The Gulf Coast Project is part of the Keystone XL pipeline project.

Daniel Acker/Bloomberg

TransCanada Corp.'s hopes of digging a huge ditch across Nebraska to lay its controversial Keystone XL pipeline not only awaits President Barack Obama's long-delayed decision, it also must pass muster with Nebraska's seven black-robed Supreme Court judges.

"We're not going to let a pipeline company come in here and bully us and trample not only over our property rights but also trample on our state constitution," said Jane Kleeb, who heads Bold Nebraska, one of the leading groups fighting TransCanada's project.

The pipeline was back in court Friday as opponents fought to outlaw Nebraska's route approval – claiming Republican Governor Dave Heineman trampled on due process by blessing Keystone XL himself, bypassing the usual review by the state's Public Service Commission.

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In brief oral arguments Friday morning, the state's deputy attorney-general Katherine Spohn argued that the three landowners lacked proper standing to even challenge the Keystone XL route and claimed Nebraska law limits PSC jurisdiction only to pipelines wholly within the state.

But David Domino, lawyer for the three challenging the process, said his clients deserved standing under Nebraska's constitution. "My clients are landowners and taxpayers and their land is on the route," he told the court. Asked whether his clients' land was on the actual pipeline route, he said: "There is no precise route," only a line that could vary by as "much as a mile" in either direction.

"I'm tremendously proud and tremendously grateful," said Randy Thompson, whose family farm in Merrick County is on TransCanada's route. Mr. Thompson is one of the three plaintiffs who have fought the governor's approval to the state's highest court. Speaking on a conference call after the hearing, he said he was proud to "to fight this ill-conceived idea and to stand up for our Constitution and make sure citizens' rights are being protected."

The court, which must also wade through voluminous briefs, isn't expected to issue a decision for months, likely not until next year.

"I don't expect a decision before Nov. 4, 2014," Mr. Domina said, referring to the mid-term election day.

Mr. Obama pointed to the legal wrangling in Nebraska as part of the reason for the administration's latest decision to again delay deciding on the $5.5-billion project to funnel than 800,000 barrels a day of thick, Alberta oil sands crude across the United States to refineries along the Louisiana and Texas coats.

Unswayed by Prime Minister Stephen Harper's increasingly strident demands for an immediate decision, Mr. Obama has already twice kicked Keystone XL's approval down the road. The President won't decide at least until after November's mid-term elections where Democrats are desperately struggling to retain control of the Senate. Keystone XL is a key issue for his several must-win states, especially Louisiana, where Democrat Senator Mary Landrieu, one of the pipeline's most ardent boosters, is fighting for her political life. A 'no' decision could hurt her chances while a 'yes' would alienate key Obama constituencies – like the young and environmentalists – that Democrats need to vote in November.

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The Nebraska case focuses on a 2012 law that gave the governor new authority to approve a route for major pipelines.

Under previous Nebraska law the PSC must approve applications by common carriers – including pipelines – but the governor's office now contends that applies only to pipelines wholly within the state.

Several landowners challenged that view and won a decision from the District Court of Lancaster County, which ruled TransCanada was a "common carrier," within the meaning of Nebraska law and thus its route application must be approved by the PSC.

In February's lower court ruling. Judge Stephanie Stacy said the 2012 law giving the Governor unprecedented powers to approve a pipeline route  was  "quite clearly enacted with TransCanada's Keystone XL pipeline in mind."

Mr. Domina, an Omaha attorney with a long record of taking on high-profile political cases, is also the Democrat nominee running for a U.S. Senate seat in Nebraska this November.

After the court appearance, Mr. Domina said, "I am proud to stand with Nebraska landowners to protect their rights from being taken by international corporations."

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Although Keystone XL continues to garner broad U.S. public support in public opinion polls, skyrocketing domestic oil production has sharply reduced the need for imported crude.

TransCanada spokesman Shawn Howard said the Canadian company had "followed the rules and procedures it has been required to and we will continue to do so. We will wait for a decision and additional direction from the Nebraska State Supreme Court." The company isn't a party to the case but filed a brief which, among other things, argued the landowners had no right to challenge the route approved by the governor.

Meanwhile, Keystone XL opponents paint the project as a major threat to the environment by providing an easy, cheap route to world markets for Canada's vast, carbon-laden oil sands and thus the funding to develop the vast reserves. That, in turn, would spew far more greenhouse gas emissions and worsen climate change, they claim.

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