Nebraska Approves Keystone XL Pipeline -- But Sets a New Route

by | November 21, 2017

By Andrew Harris, Meenal Vamburkar and Kevin Orland

TransCanada Corp. won Nebraska's permission to build its long-delayed Keystone XL crude oil pipeline across the state.

The Public Service Commission voted 3-2 Monday, removing one of the last hurdles to the Calgary-based company's construction of the $8 billion, 1,179-mile conduit, which has been on its drawing boards since 2008. The commission, though, approved an alternative route that could throw more uncertainty into the mix for Keystone XL.

Jane Kleeb, president of the environmental advocacy group Bold Alliance, said green-lighting the alternative may have helped the commission reach a "middle ground solution." At the same time it opens new questions that she said her group would explore in federal court. She argued the secondary route wasn't adequately vetted.

That view mirrored a dissenting opinion from Commissioner Crystal Rhoades. She said that TransCanada didn't meet "the burden of proof" in proving that the pipeline is in the state's public interest, and that the alternative route needed more study on both the state and federal level. For example, she said, Nebraska's Department of Environmental Quality didn't analyze the alternative route at all in its 2013 report.

"It is clear" TransCanada "never intended it to be considered," Rhoades said.

In its post-hearing brief, TransCanada told the panel its "preferred route was the product of literally years of study, analysis and refinement by Keystone, federal agencies and Nebraska agencies," and that no alternate route, even one paralleling the Keystone mainline as the approved path does, was truly comparable.

XL's route flexibility is also limited by where the pipeline exits South Dakota and enters Nebraska. Any "material" change to that path would require the approval of South Dakota's Public Utilities Commission, according to the company's PSC filing.

The PSC determined the project is in Nebraska's public interest, overriding the objections of environmental conservationists, Native American tribes and landowners along the pipeline's prospective route. The project had the support of the state's governor, Republican Pete Ricketts, its chamber of commerce, trade unions and the petroleum industry.

With Nebraska's go-ahead in hand, TransCanada still must formally decide whether to proceed with construction on the line, which would send crude from Hardisty, Alberta, through Montana and South Dakota to Nebraska, where it will connect to pipelines leading to U.S. Gulf Coast refineries. The company's open season for gauging producers' interest closed late last month, and TransCanada executives have indicated that they've secured enough shipping commitments to make the project commercially worthwhile.

President Barack Obama's administration rejected TransCanada's bid for permission to build across the U.S. border in 2015. President Donald Trump vowed to reverse that determination and, in January, invited the company to reapply. Approval was quickly granted. He also championed completion of the Energy Transfer Partners LP-led Dakota Access Pipeline, which runs from northwestern North Dakota to Illinois via South Dakota and Iowa.

The panel heard testimony and took in evidence during a four-day August hearing. Its power over the project is drawn from the state's constitution.

"The evidence overwhelmingly shows Keystone XL would have positive economic and social impacts in this state," TransCanada's lawyers said in a post-hearing brief.

The U.S. State Department found the KXL project would support about 42,100 jobs and contribute $34 billion to the economy _ including millions of dollars of new economic activity, millions of dollars in annual property tax revenue and hundreds of jobs for Nebraskans _ according to the company's filing.

Omaha attorney David Domina, who's been fighting construction of the Keystone XL for more than five years, represented more than 90 landowners in the case, many of whom had fought the project to a standstill two years ago. He urged the commission to reject the project, contending TransCanada's lawyers hadn't met their burden of proof.

"The pipeline will neither load nor unload products for Nebraskans," Domina said in a post-hearing submission, adding that the project's alleged economic effect on jobs and taxes within the state are overstated. "TransCanada failed to prove its tax claims, failed to prove its job numbers, failed to defend its 'fixed starting point' contention _ which proved to be designed to mislead you," the attorney said.

Environmental groups spearheaded by Bold Alliance and the Sierra Club claimed the conduit would require an 80- to 110-foot-wide construction right-of-way, fifty feet of which would remain after completion, with the potential to devastate environmentally sensitive areas and harm endangered species.

TransCanada disputed that assertion, telling the commission its preferred route was selected because it would minimize disruption to "sensitive environmental resources" and avoided the state's landmark Sandhills region.

Native American tribes claimed it threatened their historic lands and cultural sites.

(Harris reported from Washington, Vamburkar from New York, and Orland from Calgary.)

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