LINCOLN — With a tentative compromise struck to reroute a controversial crude-oil pipeline around Nebraska's ecologically sensitive Sand Hills, a special legislative session turned Tuesday to working out the details of the deal.
It may not be completely smooth sailing for the stunning agreement, hailed as a "win-win" for protecting the state's abundant groundwater while clearing the way for the crude oil and construction jobs the 36-inch pipeline will deliver.
On Tuesday, a leading opponent of the project questioned why Nebraska would pay the cost — estimated at a couple of million dollars — to conduct an environmental review of a yet-to-be-determined new pipeline route that would bypass the Sand Hills.
"I'm not happy that Nebraska taxpayers will have to pay for TransCanada's mistake," said Jane Kleeb of BOLD Nebraska. She referred to the pipeline developer and its initial choice to cross the Sand Hills, a highly erodible area of sand-covered dunes with high water tables that is dotted with shallow lakes and marshes.
State Sen. Mike Flood of Norfolk, the speaker of the Nebraska Legislature and architect of the compromise, said it was his idea that Nebraska pick up the cost of a new, state-led environmental review.
Flood said the cost was worth it to protect the state's natural resources and to ensure that a state review would be impartial.
A major criticism of a federal review of the $7 billion project has been the hiring of a former contractor of TransCanada's, Cardno Entrix, to conduct the assessment for the U.S. State Department.
"We will pay for this because it's the right thing to do," Flood said.
Another key legislator, Sen. Lavon Heidemann of Elk Creek, said that if Nebraska avoids litigation over the pipeline, the cost of the new review will be "money well spent."
The cost issue was expected to generate plenty of conversation Tuesday afternoon at a public hearing at the State Capitol on the proposed compromise. The Nebraska Department of Environmental Quality, which will oversee the state's review, is expected to produce a better estimate of the cost later this week.
The unlikely compromise was announced Monday.
It came after Nebraska political leaders and landowners had for months called for detouring the 1,700-mile-long pipeline around the Sand Hills.
For months, TransCanada insisted that it was "impossible" to change the route, which the State Department in August ruled brought "minimal" environmental impacts.
State senators had settled in for an expected long and emotional debate over whether Nebraska could legally force a change in the route when Flood announced that a deal had been struck.
TransCanada agreed to voluntarily reroute its high-pressure crude-oil pipeline around the Sand Hills. In exchange, the state will help the company find an acceptable new pipeline path through Nebraska, one that could end up hastening federal approval of the project.
"This is a win-win for everybody," said Flood.
At a press conference later, TransCanada President Alex Pourbaix said that by finding a new route, the project should win federal approval. He said he hoped it would also hasten the approval process.
Last week, the State Department ordered a delay in its review, until early 2013, so concerns about routing a pipeline through the Sand Hills could be studied further.
"This removes, by far, the greatest obstacle to approval," Pourbaix said. "With the outcome today, I think it gives a great deal of confidence to our shippers that we can get a pipeline through Nebraska built, and built in a timely fashion."
The deal will require approval by state senators, who appeared poised to reject any siting legislation in the special session. Unanswered questions remain, including whether a new route will spawn new objections.
But judging by the smiles, handshakes and back-slapping around the State Capitol on Monday afternoon, this is a deal headed for swift approval, so that lawmakers can be home by Thanksgiving. It also removes the threat of lawsuits from TransCanada and would put in place a state regulatory process to deal with future pipeline routes.
"There's going to be a spirit of cooperation here that wasn't here before. Everybody wants to get this done. We'd all like to win," said Sen. Ken Haar of Malcolm, a leading critic of TransCanada and its original route.
At a press conference after Monday's developments, Haar interrupted his comments to shake the hands of Pourbaix and other TransCanada officials.
Haar and other lawmakers said most Nebraskans did not oppose the pipeline, just its route.
Kleeb, the anti-pipeline activist who had organized dozens of protests against the project, expressed pride in citizens "for pushing state leaders to do the right thing."
"It's not often that citizens win against big oil, but they did today," Kleeb said. "But we do not trust TransCanada. They have bullied and misled landowners and citizens."
Some national environmental groups began weighing in on the Nebraska compromise on Tuesday. The Natural Resources Defense Council called the deal "a victory" for Nebraska, but voiced hope that the State Department would ultimately reject the pipeline because it would cause increased greenhouse gas emissions.
Gov. Dave Heineman, who had criticized the Sand Hills route and called senators back for the special session, was at a National Governors Association meeting in Tennessee on Monday and unavailable for comment. But he scheduled a press conference in Lincoln for Tuesday afternoon.
How unlikely was this compromise?
A week ago, Flood said he was ready to call in his parish priest to pray for a miracle.
As of Monday morning, he and other state lawmakers were girding for an all-out, into-the-night debate over the contentious pipeline and whether Nebraska could legally force a route change.
A filibuster, a talkfest that blocks all legislative progress, was being readied by some senators, who said changing the route after three years of federal review was unfair, most likely unconstitutional and "anti-business."
But Flood, a master at negotiating compromises, saw an opening.
By 1:10 p.m. Monday, Flood said he received confirmation via fax from the State Department that Nebraska could conduct its own environmental review of a new route.
That confirmation was important, Flood said, because it would give Nebraska a say in a new pipeline route while sidestepping some of his legal concerns about interjecting the state into regulation of the Keystone XL project after it had undergone a three-year federal review.
At 3:40 p.m., the speaker took to the floor of the Legislature to announce the compromise plan. Flood outlined a two-step "path forward."
The first was to introduce and pass a bill to have the State Department of Environmental Quality, in conjunction with federal officials, conduct a supplemental environmental impact statement on a new pipeline route from TransCanada.
The review could take six to nine months. In the end, the governor must approve the new route. The state would pay for the review and any private consultants.
The second step was to revive and pass another bill to provide a Nebraska review of any future pipeline routes.
The Legislature did that Tuesday morning, giving 44-0 first-round approval to Legislative Bill 1.
That measure, proposed by Sen. Annette Dubas of Fullerton, would require the State Public Service Commission to review any future pipeline projects and approve their route.
Key lawmakers were to meet with attorneys with TransCanada, pipeline opponents and the Public Service Commission Tuesday afternoon to work out legal issues surrounding LB 1. Lawmakers need to maneuver around federal law, which pre-empts states from regulating pipeline safety but allows them to determine pipeline routes.
"We should put oil pipeline legislation in the books so we never have to live through this nightmare again," Flood said in announcing the proposed deal on Monday.
Ken Winston, an attorney for the Sierra Club of Nebraska, called the proposal "a big win for everybody, the people of Nebraska and the residents of the Sand Hills."
"It definitely proves the process works," Winston said.
Several state lawmakers praised TransCanada for its willingness to pursue a new route bypassing the Sand Hills.
TransCanada's Pourbaix said last week's decision by the State Department provided "an opportunity" to do that. The company also had its back to the wall to meet a 2014 deadline to deliver oil to its customers, oil refineries along the U.S. Gulf Coast.
Until the State Department "changed the rules," he said, the company was required to stick with its Sand Hills route, which the State Department deemed in August to present "minimal" environmental risks and to be better than other alternatives studied.
Pourbaix said he couldn't say exactly where a new route would go but indicated that it would be beneficial for everyone to use as much of the planned route as possible. More than 91 percent of the right of way for that route has been obtained. Perhaps only 30 to 40 new miles of pipeline would be needed.
That short distance precludes moving the XL to parallel the route of TransCanada's existing Keystone pipeline. The Keystone crosses eastern Nebraska, with thicker, clay soils instead of porous sand. Heineman, as well as U.S. Sens. Mike Johanns and Ben Nelson, have said the existing pipeline route would be best for the XL.
By finding a new route, Pourbaix said, the company would forgo money paid for right of way it won't use. But he said the amount was not significant.
Bigger money, he said, will be spent rerouting the pipeline. Nebraska utilities, he said, have spent several million dollars to string power lines to sites of proposed pumping stations.
Some questions remain:
>> What will the Legislature do about eminent domain? Several landowners have complained that TransCanada threatened to take them to court to obtain right of way when it might not have had the right to do so.
>> Will the bill affecting future pipeline routing run afoul of legal and constitutional concerns?
>> And will moving the pipeline route simply spawn a new crop of upset landowners? Probably, officials said, but at least the route will bypass the Sand Hills.
"Siting energy infrastructure is, in some ways, more of an art than a science," Pourbaix said. "You're never going to make everyone happy."
One Sand Hills landowner at the press conference, Bruce Boettcher of Bassett, Neb., said it was "great, great, great" that the pipeline would bypass his area.
"Common sense tells you to not put a pipeline in places where there's a high water table," said Boettcher, whose ranch is within a half-mile of the current route.
If the new pipeline passes through heavier clay soils, the rancher said, he'll be satisfied, though he knows owners of that land may not.
"I feel for them," he said.
Contact the writer:
402-473-9584, paul.hammel@owh.com
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