Keystone XL pipeline hits another snag. Will it ever be built?

The Keystone XL pipeline suffered a legal setback Wednesday when a state court voided the Nebraska governor's approval of the project. After more than five years of review, the fate of the Keystone XL pipeline still hangs in the balance.  

Nati Harnik/AP/File
A sign reading 'Stop the Transcanada Pipeline' stands in a field near Bradshaw, Neb., along the Keystone XL pipeline route through the state. On Wednesday, a Nebraska judge voided a 2012 law that gave Nebraska Gov. Dave Heineman power to approve the pipeline's route through the state.

A Nebraska court ruling has raised fresh doubts about the fate of the proposed Keystone XL oil pipeline, just as it appeared momentum might be shifting in favor of the controversial project.

On Wednesday, a Nebraska judge voided a 2012 law that gave Nebraska Gov. Dave Heineman power to approve the pipeline's route through the state. It comes just weeks after a final environmental review by the US Department of State seemingly set the table for President Obama to OK the 875-mile long pipeline, which would carry up to 830,000 barrels of crude oil per day from Canada and Montana to Gulf Coast refineries.

The announcement emboldened environmentalists who have strongly objected to the pipeline's construction, saying it would dramatically increase carbon emissions and run the risk of damaging local water supplies. The decision could be overturned, and Keystone XL could still gain approval in Nebraska and at the federal level. But Wednesday's decision puts another serious roadblock in the way of a project that was first proposed in 2008 by Canadian energy firm TransCanada. 

“Under the Court’s ruling, TransCanada has no approved route in Nebraska," said David Domina, the lawyer who handled the case for the landowners fighting the pipeline's construction. "TransCanada is not authorized to condemn the property against Nebraska landowners. The pipeline project is at standstill in this State.” 

The Nebraska case was not about the merits of the pipeline itself, Mr. Domina stressed in a statement, but was specifically a question of landowner rights: Who in the state can authorize a pipeline company to exercise eminent domain against Nebraskans? In 2012, a law was passed that gave that power to Governor Heineman, who later sent a letter to President Obama saying he would allow the pipeline to pass through the state.

Wednesday's ruling found that 2012 law unconstitutional and concluded that Heineman overstepped his authority. According to Nebraska's constitution, the Nebraska Public Service Commission is responsible for regulatory control over pipeline companies, the court found. The decision may require that TransCanada seek approval from individual landowners to build the pipeline, which it says would spur job growth and boost North American trade.

"While we are disappointed and disagree with the judge’s decision, we are analyzing the ruling so we can determine what next steps may be taken," Shawn Howard, TransCanada spokesman, said in a statement e-mailed to the Monitor. "This is a solvable problem. TransCanada has dealt with many Keystone XL issues in the past and we are confident we can overcome this latest hurdle."

TransCanada stock fell 2.55 percent in midday trading Thursday, but the company posted strong fourth-quarter earnings. Profit jumped 37 percent in the last three months of 2013 compared with the same period last year on increased coal and nuclear power production.

Last month, the US Department of State issued its final environmental review of the project, finding no serious environmental objections to the pipeline. President Obama was expected to make a final decision later this year, but the Nebraska case could alter the timeline. 

Canadian Prime Minister Stephen Harper has put pressure on Obama to approve the pipeline, and used Wednesday's North American Leaders Summit to lobby the president again. 

"There has been a process that [Keystone] has gone through, and I know it's been extensive – and at times I'm sure Stephen feels a little too laborious," Obama told reporters at a joint news conference with Harper and Mexican President Enrique Peña Nieto, as reported by USA Today. "But these are how we make these decisions about something that could potentially have significant impact on America's economy and America's national interest."

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