Nebraska Supreme Court Holds the Key to Keystone XL's Future

Seven-judge panel to decide whether lower court decision in favor of landowners who oppose the pipeline should stand.

Opponents of the Keystone XL pipeline listen during the Nebraska Supreme Court hearing on September 5, 2014. The high-stakes case involves the legality of the Keystone XL pipeline's route through Nebraska. Credit: J Grace Young for Bold Nebraska

Nebraskan landowners who have fought the Keystone XL pipeline to a standstill there urged the state's Supreme Court on Friday to reaffirm that the legislature acted unconstitutionally when it allowed rubberstamp approval of the pipeline's proposed route across the region's fragile sandhills and vulnerable aquifers. 

Otherwise, said David Domina, the landowners' lawyer, the Canadian pipeline company TransCanada and its political allies would be free to run untrammeled over private landholders and the public interest without due process or judicial review.

The Supreme Court spent just half an hour hearing Nebraska's challenge to the lower court's ruling. The state—and the pipeline project—suffered a significant blow last February, when a district court judge voided the state's 2012 pipeline law. In her decision, Judge Stephanie Stacy of the Lancaster County District Court said the law had unconstitutionally abrogated the power of state regulators to review the route, putting too much power in the governor's hands. 

That court victory by the pipeline's opponents left TransCanada without a legally approved route for the KXL through Nebraska. With the route in legal limbo, the State Department opted to postpone indefinitely its long-awaited recommendation on whether the KXL is in the national interest and should get a presidential permit to proceed.

Although President Obama has declared that his decision will depend largely on whether the pipeline would worsen global warming, the federal government could scarcely approve a proposed pipeline whose route had been rejected by one of the states it must cross. 

If Nebraska's Supreme Court sides with the pipeline's opponents, that would most likely mean yet more delay in TransCanada's six-year quest to build the 800,000-barrel-a-day pipeline. The court's decision is probably still a couple of months away. 

The KXL is intended to carry tar sands crude from the Canadian border toward refineries on the Gulf Coast. It has become a litmus test for the Obama administration's determination to confront global warming, and a dividing line between friends and foes of fossil fuel development.

The state law at issue was used by Nebraska's governor and his environmental agency to expedite approval of the pipeline, allowing it to escape a more intensive review by the state's independent Public Services Commission. 

Assistant Attorney General Katherine Spohn, presenting Nebraska's brief in court, contended that the landowners lack legal standing entitling them to challenge the state law. 

She also argued that the KXL, as an interstate line, is not the kind of in-state pipeline that ought to be considered a common carrier and therefore subject to the PSC's authority.

As the seven-judge panel peppered the contending lawyers with questions, it was impossible to tell whether they were inclined to favor one side or the other.

Domina, who has made many appearances before the court and is now the Democratic candidate for an open seat in the U.S. Senate, argued that there are ample grounds for granting his clients standing to challenge the 2012 law.

Spohn said that others would have more standing. A more appropriate challenger might be a pipeline company opposed to any regulations at all, she suggested; or perhaps the PSC, if it wanted to defend its regulatory turf.

The standing question is significant because courts sometimes use it as a way to dodge difficult questions when they don't want to establish enduring precedents. There are several ways to qualify for standing in court—but also several ways for the court to disqualify a petitioner. Much of the back and forth on Friday was taken up with arguments about standing in this case.

But Nebraska's Supreme Court, like any other, is also jealous of its own standing and may well want to exert its muscle here.

Significantly, Domina reminded the jurists several times that if they overturn the appeals court and reinstate the 2012 law they would be providing for a pipeline route "that is without judicial review." 

"If the governor makes a decision instead of the PSC, there is no judicial review in this statute," he argued. "It was clearly designed to preclude any citizen input ... and any judicial review." 

That may be a clever way of gaining votes on the panel, roughly divided between judges appointed by a Republican governor and his Democratic predecessor—especially since the case, oddly enough, is being argued on legalistic grounds utterly divorced from the underlying question of whether the Keystone project is a good or a bad thing environmentally.

When she voided the 2012 law in February, Judge Stacy said flat out that her decision had nothing to do with the merits of the pipeline, which she reckoned would not be settled by judges.

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