Deal struck on pipeline route

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LINCOLN — For months, Nebraska political leaders and landowners dug in their heels in defense of the ecologically sensitive Sand Hills.

And for months, pipeline developer TransCanada stuck to its guns, saying its 36-inch Keystone XL pipeline couldn't find a better, safer route than across the groundwater-rich region of cattle ranches and hay meadows.

Then, like a bolt of lightning, a unlikely compromise emerged Monday afternoon.

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 $7 billion, 1,700-mile project.

"This is a win-win for everybody," said Speaker of the Legislature Mike Flood of Norfolk, who negotiated the deal.

TransCanada President Alex Pourbaix said that by working with Nebraska on a new route, the company should win federal approval for the project, perhaps more quickly than expected.

Last week, the U.S. 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."

Flood announced the compromise as initial debate was beginning in the special session called on the pipeline routing issue.

The deal will require approval by the once-split Legislature and still leaves unanswered questions, including whether a new route will spawn new objections.

But judging by the smiles, handshakes and back-slapping around the State Capitol afterward, all that will be worked out, and the special session will end before Thanksgiving — without the threat of lawsuits from TransCanada and with some kind of 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 through the Sand Hills, a vast region of grass-covered sand dunes dotted by shallow lakes and marshes, where groundwater in places is only a couple of inches below ground level.

Jane Kleeb, an anti-pipeline activist who had organized dozens of protests against the project, said she was glad the route will bypass the Sand Hills and 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."

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, said he saw an opening last week during a public hearing on one of the pipeline bills.

Sandra Zellmer, a University of Nebraska-Lincoln environmental law professor, testified that the state could conduct a streamlined review of an alternative route for the pipeline, bypassing a longer, more extensive federally run review.

By 1:10 p.m. Monday, Flood said he received confirmation via fax from the State Department that such a supplemental environmental impact statement could be done.

That OK 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 pipeline safety regulation, which is mostly the responsibility of the federal government.

At 3:40 p.m., the speaker took to the floor of the Legislature to announce a "major development": that TransCanada had voluntarily agreed to move the route around the Sand Hills, which overlie the Ogallala Aquifer.

Flood outlined a two-step "path forward" to resolve a possible legislative stalemate.

The first was to introduce and pass a bill to have the Nebraska 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 and would require the governor's approval. The state would pay for the review and any private consultants, which could amount to several million dollars.

But Flood said the cost was worth it to protect the state's natural resources. It would also allow the state to choose consultants with no ties with TransCanada; a private contractor the State Department hired to conduct its review drew criticism because it had worked with TransCanada in the past.

"We will pay for this because it's the right thing to do," Flood said.

A public hearing on the proposed state environmental review will be held Tuesday.

The second step was to revive and pass another bill to provide a Nebraska review of any future pipeline routes.

The Legislature's Natural Resources Committee quickly advanced Legislative Bill 1 to debate by the full Legislature. That debate will begin Tuesday.

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.

"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.

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 was also facing pressure to meet a 2014 deadline to deliver oil to 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.

That would seem to preclude 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 and U.S. Sens. Mike Johanns and Ben Nelson have pointed to the existing pipeline route 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" the pipeline would bypass that area.

"Common sense tells you to not put a pipeline in places where there's a high water table," said Boettcher, whose ranch was 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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