LINCOLN — President Barack Obama's rejection of the Keystone XL pipeline has cast a legal shadow on what Nebraska can do next in seeking an alternative pipeline route that avoids the Sand Hills, state officials said Thursday.
Gov. Dave Heineman said the state must sort out whether it can continue to work with TransCanada on a new route, or if the company must start over and face an entirely different state siting process.
Heineman said the president and the U.S. State Department were "playing political games and stalling" the $7 billion, 1,700-mile-long project, which the governor said would have provided thousands of jobs.
Earlier Thursday, a spokesman for the Nebraska Department of Environmental Quality said the agency's work was in a holding pattern.
The agency is waiting for federal approval of a "memorandum of understanding" that lays out what review work the state and federal officials would undertake on a proposed Sand Hills detour.
The state submitted a proposed memorandum three weeks ago but has not gotten a response.
Approval of the memorandum was seen as a prelude to submission of a new route, which Nebraska had promised to review and act on within six to nine months.
"Right now, we're in the analysis mode to see what our role is," said Brian McManus, a DEQ spokesman.
Heineman said there are several issues facing the state now.
A major question is which of two Nebraska pipeline siting laws — passed during a special legislative session in November — now applies to the Keystone XL project.
It's a $2 million question, because one bill comes with that expense for Nebraska taxpayers while the other pins the cost on a pipeline company.
One measure, Legislative Bill 4, was part of a compromise with TransCanada to reroute the pipeline about 100 miles around the groundwater-rich Sand Hills, if Nebraska would conduct a streamlined review of the new route.
As part of the deal, Nebraska agreed to finance the estimated $2 million environmental review by the state in conjunction with the State Department.
A second bill, LB 1, was passed to handle any future pipeline projects.
That measure requires a pipeline firm to pay for the environmental study, and it would be done by a different state agency, the Nebraska Public Service Commission. This bill exempted the Keystone XL, identifying it by its federal "executive order" number.
Heineman said the state now needs to determine if a new federal application for the pipeline comes with a new executive order — which would make LB 1, rather than LB 4, apply to TransCanada.