Legal challenge to Nebraska law that allowed Keystone XL now in state Supreme Court's hands

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LINCOLN, Nebraska — A law that could clear a path for the Keystone XL pipeline in Nebraska now rests with the state's Supreme Court, which heard arguments Friday in a case that threw the project into legal limbo.

The seven-member court questioned attorneys for 30 minutes as pipeline foes rallied at the Capitol, filling the courtroom and an overflow area to watch the proceedings.

The court agreed to hear the case after a judge in February struck down the 2012 law, which allowed Gov. Dave Heineman to approve a pathway for the pipeline through Nebraska. The ruling came after three Nebraska landowners sued the state, and their victory in the lower court raised questions about whether the route was still valid.

Heineman, a Republican, supports the project, and the route through Nebraska was reviewed by the Department of Environmental Quality, a part of his administration.

Opponents in Nebraska have repeatedly thwarted efforts to finish the pipeline, which would carry 830,000 barrels of oil daily from Canada to Texas Gulf Coast refineries.

The pipeline has gained international attention because of environmental groups, some landowners and Native Americans who argue that the project would threaten groundwater and contribute to global warming. A U.S. State Department report raised no major environmental objections to the $7 billion pipeline, and the project is backed locally by the Nebraska Chamber of Commerce and Industry, some unions and a majority of state senators.

The pipeline is critical in Canada's efforts to export its growing oil sands production. It also comes amid concerns about the dangers of using trains to transport crude oil after some high-profile accidents — including a fiery explosion in North Dakota in January and an explosion that killed 47 people in Canada last year.

The Nebraska attorney general's office, defending the law, argued Friday that the process approved by lawmakers was constitutional and that the landowners who filed the suit lacked the legal standing to bring the case. An attorney for the landowners said they qualified to sue as taxpayers, and argued that the process violated the constitution.

"This statute is a haste-makes-waste, terrible mistake, and it take extraordinary citizens to correct it," said Dave Domina, an attorney for the landowners who also is a Democratic candidate for U.S. Senate.

Domina said the responsibility should fall to the Nebraska Public Service Commission, which serves in a role more akin to judges than politicians.

The elected, five-member commission reviews evidence presented by attorneys and considers such factors as a project's environmental impact, jobs created and support or opposition from local governments.

Members are forbidden from prejudging any project, and their decisions can be challenged in court. Four are Republicans and one is a Democrat. All are elected by district.

"The process is thoughtful, and reflective, and evidence-driven, and not political," Domina said. "The opposite is true of the gubernatorial route."

Nebraska's constitution gives the Public Service Commission exclusive power to regulate "common carriers," such as transmission lines and taxicabs, which are used for transportation.

It also has applied to pipelines, but Attorney General Katherine Spohn said the Keystone XL pipeline doesn't qualify. Nebraska lawmakers have defined a "common carrier" pipeline as one that never crosses the state's borders, she said. The Keystone XL would pass through six states and Canada.

Spohn said the new process approved by lawmakers still gives the public an opportunity to challenge the pipeline through hearings held by the Department of Environmental Quality. And if a company attempts to take a landowner's property through eminent domain, she said, the owner can file a legal challenge and argue that the project serves no public purpose.

Attorney General Jon Bruning said the ruling would likely come before the end of the year.

"I think the Legislature clearly acted within the bounds of our constitution," said Bruning, a Republican who supports the project.

Landowners will attempt to change the route again if the Supreme Court deems the state law unconstitutional, said Jane Kleeb, executive director of the anti-pipeline group Bold Nebraska. Kleeb said pipeline opponents also hope to raise the issue in this year's elections for Nebraska governor and U.S. Senate.

The pipeline's developer, Calgary-based TransCanada, withdrew its original route in 2011 after Heineman called a special legislative session to address complaints that the pipeline would travel through Nebraska's ecologically fragile Sandhills.

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