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Keystone pipeline could face new hurdle in Nebraska

Nebraska's governor has ordered a special session of the state legislature to examine potential new oil pipeline rules, a reversal of course that opens the possibility of substantial delays to the controversial Keystone XL project.

Republican Governor Dave Heineman made a surprise announcement on Monday, calling the Nov. 1 sitting, which he said in a statement will "determine if siting legislation can be crafted and passed for pipeline routing in Nebraska."

Such a rule would give the state the power to approve or deny the pipeline's intended path. Draft siting legislation has been underway for many months, but needed a special legislative session to be enacted before construction begins on the pipeline.

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There are questions about whether such a rule can withstand legal scrutiny. If passed, it will present the most formidable obstacle to the Keystone XL project to date. It could take several years for Keystone backer TransCanada Corp. to gain approval for an amendment of the current route.

In an interview Monday, state Senator Ken Haar, the chief champion of siting legislation, said he is "delighted" the special session will be held. He believes a draft bill can be made into law between now and the end of the year, when the U.S. State Department is expected to announce whether it approves the $7-billion project.

"We think we're almost there and we can have a siting law in place before Secretary [of State Hillary] Clinton gives the okay to cross the border," said Mr. Haar.

"The majority of Nebraskans say you shouldn't put it through the Sand Hills and over our most precious water supply. And we think the majority of senators will be there, too."

Keystone XL would carry Canadian oil sands crude to the U.S. Gulf Coast. It is supported by the highest levels of Canada's industry and government – Prime Minister Stephen Harper, for example, has called its approval a "no-brainer." Industry, too, has pushed hard to have the pipeline built, out of concerns that without it, oil sands crude will be locked in Alberta.

The pipeline has set off a loud debate in Nebraska, where it would cross both the important Ogallala aquifer and the environmentally sensitive Sand Hills regions, which covers part of the underground water reservoir.

Environmental critics, some landowners and the state's U.S. senators have all opposed that route, suggesting the risk of a spill in the Sand Hills, a scenic and iconic part of the state, isn't worth it. Those issues have made Nebraska the most important state with regard to construction of Keystone XL. If the state succeeds in ordering a new route, it would force TransCanada to obtain new environmental approvals. That could take two or three years, and would add to the cost of the project.

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But it's not clear the state can legally get such a bill into law in time to affect Keystone XL. State Senator Mike Flood, a lawyer and speaker of Nebraska's single-chamber legislature, issued a letter last week, saying that "after careful analysis, it would be both reckless and disingenuous for me to suggest that siting legislation, if enacted in special session, would redirect the proposed route and be vindicated in court."

On Monday, his office said Mr. Flood "welcomes" the special session. "If a solution is to be found that does more than present a short-term, feel-good 'band-aid' to the legitimate concerns about the proposed route, I will carefully consider and thoughtfully act on such a bill," the Senator said in a statement.

TransCanada, however, pointed to some of Mr. Flood's findings from last week, saying a special session would be unlikely to move the route of the current pipeline, and warning that "the long-term ramifications on the State of Nebraska – legal and financial – could be significant and very expensive to Nebraska taxpayers."

TransCanada spokesman James Millar pointed to the State Department's review of Keystone XL, which found it would "have minimal impact on the environment. Fourteen routes were analyzed, eight that would impact Nebraska," he wrote in an e-mail. "The pipeline takes the safest route – physically and environmentally."

Mr. Haar said he has obtained advice suggesting legislation could be legally enacted. But in remarks to the press, Gov. Heineman acknowledged that the pursuit of siting rules enters the state into "a potential legal mine field. However, I believe Nebraskans are expecting our best efforts to determine if alternatives exist."

Opponents of the pipeline, meanwhile, celebrated the calling of the special session.

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"We're thrilled," said Jane Kleeb, executive director of Bold Nebraska, which has played a central role in organizing opposition to Keystone XL. "This will definitely get people very excited to get down to the state capitol to push for a strong bill."

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About the Author
Asia Bureau Chief

Nathan VanderKlippe is the Asia correspondent for The Globe and Mail. He was previously a print and television correspondent in Western Canada based in Calgary, Vancouver and Yellowknife, where he covered the energy industry, aboriginal issues and Canada’s north.He is the recipient of a National Magazine Award and a Best in Business award from the Society of American Business Editors and Writers. More

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