(Bloomberg) -- Nebraska’s approval of an alternative route could throw more uncertainty into the mix for the long-delayed Keystone XL oil pipeline.
The Public Service Commission approved TransCanada Corp.’s project on a three-to-two vote, removing one of the last hurdles to the Calgary-based company’s construction of the $8 billion, 1,179-mile (1,897-kilometer) conduit, which has been on its drawing boards since 2008. The decision, though, wasn’t wrinkle-free: The commission approved an alternative route that was immediately targeted by foes as lacking adequate vetting.
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.” But it opens new questions that she said her group would explore in federal court.
That view mirrored a dissenting opinion from Commissioner Crystal Rhoades, who spoke before the final vote. TransCanada didn’t meet "the burden of proof” in determining that the pipeline is in the state’s public interest, Rhoades said. The alternative route, she said, needed more study on both the state and federal level, and it failed to give landowners along that different path the ability to address the commission.
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.
‘Years of Study’
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.
TransCanada didn’t immediately respond to emails and telephone calls seeking comment. Following the vote, the company’s shares rose 2.3 percent in New York trading.
The panel’s decision overrode 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 XL pipeline would add the ability to move 830,000 barrels a day, more than doubling the existing line’s capacity.
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 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 seven 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.
Native American tribes claimed it threatened their historic lands and cultural sites.
The case is In the Matter of the Application of TransCanada Keystone Pipeline LP for Route Approval of the Keystone XL Pipeline Project, 0p-0003, Nebraska Public Service Commission (Lincoln).
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