Energy Business

Nebraska Supreme Court OKs Keystone XL Route

The Nebraska Supreme Court on Friday tossed the hot potato otherwise known as the Keystone XL pipeline back in the lap of the U.S. State Department and, ultimately, President Barack Obama. The court reversed a lower court decision that blocked construction of the pipeline on what are essentially technical grounds.

Under Nebraska’s constitution, five of the state’s seven Supreme Court justices must concur in a decision to strike down legislation as unconstitutional. In this case four justices determined that the landowners who challenged legislation related to the pipeline had standing to bring the case and that the legislation was unconstitutional, supporting the lower court’s ruling. Three justices concluded that the landowners lacked standing and, therefore, declined to address the constitutional issues. Lacking a supermajority of five votes, the lower court’s ruling was vacated and the legislation “must stand by default.”

Now that Nebraska has ruled on the pipeline by saying that the legislation that allowed the governor to exercise the power of eminent domain to permit the building of the Keystone XL pipeline in Nebraska, the way is clear for the State Department to issue its ruling.

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The U.S. House of Representatives voted 266 to 153 Friday to approve construction of the pipeline, and the Republican-controlled Senate is expected to begin debating the bill next Monday. The Republican-controlled Senate is expected to approve the legislation and President Obama is expected to veto it.

The president said in late December that the proposed Keystone XL pipeline is “not going to be a huge benefit to U.S. consumers,” and then added, “It’s not even going to be a nominal benefit for U.S. consumers.”

During the debate earlier this week in the Senate Energy and Natural Resources Committee hearing, the Republicans on the committee noted the jobs the pipeline would create and the result of a State Department review that concluded that the new pipeline would have little impact on climate change.

The Wall Street Journal reported that Democratic Senator Elizabeth Warren echoed the president, “Why is this bill so urgent? The answer is money. … The pipeline might not do much for the American people, but it’s worth a lot to the Canadian oil industry.”

If the legislation passes both houses of Congress and the president makes good on his veto threat, there do not appear to be enough votes to override that veto.

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TransCanada Corp. (NYSE: TRP), the company that will build and operate the pipeline, has lifted its initial estimate for building the line from $5.4 billion to $8 billion, and it also has begun work on a proposal to build a 1-million barrel a day pipeline from Alberta to Canada’s east coast. Two additional pipelines to Canada’s west coast are also under review, and none of the three passes through the U.S. Keystone XL may be a white elephant before it even gets approved for construction.