LINCOLN — A prominent attorney advising Nebraska state senators said Tuesday that legislators can craft a law that influences routing of crude-oil pipelines without risking an expensive legal defeat.
The legal analysis, from Alan Peterson, a Lincoln attorney with experience in environmental regulatory issues, is sure to provide ammunition for senators seeking legislation to reroute the controversial Keystone XL pipeline around Nebraska's ecologically sensitive Sand Hills.
Lawmakers are scheduled to begin a special session Tuesday.
"The fear of litigation should not lead us to inaction," said State Sen. Annette Dubas of Fullerton, who is taking advice from Peterson in drafting a bill.
Officials from pipeline developer TransCanada Inc., meanwhile, told The World-Herald earlier Tuesday that they would assist in drafting such routing legislation — as long as it pertained to future pipelines, not the Keystone XL.
TransCanada CEO Russ Girling said a three-year federal review has already concluded that a route through the Sand Hills would have “minimal” environmental impacts and is better than other alternatives studied.
Girling said passing a new state law now — with a decision expected on a federal permit in the next two months — would be like changing the rules of a football game “when you’re at the 5-yard line.”
“We’ve never seen anything like this before,” he said.
Gov. Dave Heineman on Monday called lawmakers back for the session, saying Nebraskans expect them to determine whether there are ways the state can reroute the pipeline legally and constitutionally.
Heineman said he plans to assist in that process, using advice from the state's best legal minds.
That would include Peterson, who helped a five-state compact win a $145 million bad-faith lawsuit against the State of Nebraska for rejecting a license for a low-level radioactive waste depository.
A main question heading into the special session has been whether Nebraska risks another expensive court judgment if it tries to influence the pipeline routing at such a late date. In two months, the U.S. Department of State is scheduled to decide whether the 1,700-mile-long pipeline gets a federal permit.
Peterson, who was retained by the Sierra Club of Nebraska, had some experience in that radioactive waste case — he helped win the $145 million for a five-state waste compact. A federal judge ruled that then-Gov. Ben Nelson had acted in bad faith in influencing the rejection of the project.
Peterson said Tuesday that the waste case is not “remotely similar” to the pipeline issue and that TransCanada would not be able to recover any damages from Nebraska under most claims because the state enjoys sovereign immunity. (That immunity was waived by the state when it joined the waste compact.)
The state would risk “minimal to nonexistent” damages if a bill was found to be unconstitutional special legislation or a “regulatory taking” of TransCanada’s investment, the lawyer said. “Anonymous … phantom issues” raised by company lobbyists of “budget-breaking” lawsuits, Peterson said, were scare tactics.
Peterson’s comments came in a nine-page memo distributed to state senators.
Right now, he wrote, the company doesn’t have a certified route. Claims that the $7 billion project would be scuttled by a delay for a state review of the routing is “just plain astounding,” he wrote.
“Almost all major contracts contain delay forgiveness for such contingencies as governmental actions,” he wrote. “It would seem that a multinational publicly traded corporation would include such contingencies in its contracts.”
Girling, the TransCanada CEO, said the oil refinery customers of the pipeline would most likely look elsewhere for ways to obtain oil if the Keystone XL were rerouted.
Such rerouting, he said, would require an entirely new federal review, delaying the project another 36 months and threatening contractual deadlines in 2014 to deliver Canadian crude oil to Gulf Coast refineries.
Girling blamed the controversy in Nebraska — where opposition to the Keystone XL is most intense — on national environmental groups, such as the Sierra Club and the Natural Resources Defense League.
He said Heineman called the special session because citizens have been “scared to death” by claims of such “anti-oil” groups that “oil will flow from faucets” and that leaks, if they happen, would foul wide areas of the aquifer.
“We’re not going to contaminate all the drinking water in Nebraska. That’s impossible,” he said.
An attorney for the Sierra Club of Nebraska disputed Girling’s claims that a “Sierra Club bill” was being drafted by Dubas and that national groups were fomenting the controversy here.
Lawyer Ken Winston said Peterson is being paid by Nebraska members of the Sierra Club. He said it was ironic that a foreign corporation was telling Nebraskans they “don’t have a right to speak out.”
“It’s actually kind of humorous to suggest that Gov. Heineman is a pawn of the Sierra Club,” Winston said, or that Sen. Mike Johanns has been manipulated by environmental activists.
Both elected officials favor a change in the route but favor the pipeline.
Winston said the Sierra Club opposes the project entirely but as a fallback wants the route to bypass the Sand Hills.
Girling said Nebraskans are “extremely naive” if they believe that changing the route will resolve the pipeline situation. It will just open the doors to new complaints and additional legal scrutiny about any new route, he said.
“(The Sand Hills) is not the most sensitive area and is not the only sensitive area,” he said, emphasizing that TransCanada has decades of experience in areas with high water tables.
A spokeswoman for Heineman said he would have no comment on the newest legal analysis.
The governor issued his official “call” Tuesday for the special session, stating that its subject would be oil-pipeline legislation.
Sen. Mike Flood of Norfolk, speaker of the Legislature, said the broadly worded call provided “the widest, longest runway possible” for a bill to legally land.
Flood said that is necessary for a special session that begins without a clear consensus of a possible solution.
Last week, Flood issued his own legal opinion, recommending against a special session because of the “legal minefield” senators confront in passing a bill that would not be overturned in court.
But that analysis was based on Dubas’ original bill, which she said no longer exists. Flood said Tuesday that he will have an open mind concerning any legislation proposed in the special session.
Dubas is redrafting her bill — which would require a state review of pipeline routes — with the help of Peterson and several other attorneys, according to her legal aide, Joselyn Luedtke.
Luedtke would not name the attorneys but said they were not from the State Attorney General’s Office and were “the greatest legal minds in the state.”
Contact the writer:
402-473-9584, paul.hammel@owh.com
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