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LINCOLN — The long-delayed Keystone XL pipeline cleared a legal hurdle in Nebraska on Friday, but other hurdles remain that could further delay or derail the $8 billion project.

The Nebraska Supreme Court on Friday affirmed the route across Nebraska of the 36-inch crude oil pipeline, rejecting a lawsuit by pipeline opponents that maintained that the Nebraska Public Service Commission lacked the authority to approve an alternative route across the state.

But three federal lawsuits in Montana still stand in the way of the start of construction, and the leader of an anti-pipeline group vowed to continue its 11-year fight.

“We still have some tools (available),” said Jane Kleeb of Bold Nebraska. “We plan on making sure that this pipeline never touches our soil.”

An oil industry observer, Mark LaCour, editor of Houston-based Oil and Gas Global Network, said Friday that he expects the Keystone XL to eventually be built because of the demand for the heavy crude oil that is pumped out of the tar sands region of western Canada. But exactly when that will happen is up in the air, he said.

“There’s still a bunch of hurdles to jump through,” LaCour said, pointing to the federal lawsuits. He added that since the XL was first proposed in 2008, other pipelines have been built or upgraded to handle shipping demands from Canada. As a result, LaCour said he wouldn’t be surprised if the XL pipeline will be smaller when it’s built.

The unanimous decision by the Supreme Court was hailed by officials at TC Energy, formerly TransCanada, as well as Gov. Pete Ricketts, a longtime supporter of the project.

“It’s time to build the pipeline,” Ricketts said, adding that the project will bring great-paying jobs and property tax revenue to the counties along the route.

Russ Girling, the president and CEO of TC Energy, said the ruling “is another important step as we advance towards building this vital energy infrastructure project.”

Whether the company can begin construction next spring hinges on the outcome of the federal court cases. TC Energy had hoped to begin construction of the Keystone XL segment from Canada to a terminal at Steele City, Nebraska, this spring, but was delayed by the pending litigation.

The Nebraska Supreme Court, in a 59-page opinion that was nine months in the making, ruled that the Public Service Commission’s selection of the “mainline alternative route” was in the public interest and that the commission had the authority to choose such an alternative.

The ruling, written by Supreme Court Judge Jeffrey Funke, said that the State Legislature had entrusted the commission with determining whether major oil pipeline routes are in the public interest and whether they would harm the state’s natural resources or economy.

The commission voted 3-2 in November 2017 to approve the alternative route rather than a “preferred” route chosen by the pipeline developer.

The alternative route shifts the path eastward and aligns the XL with the existing Keystone pipeline for about 90 more miles. The commission ruled that the alternative route produced “many benefits,” including less impact on endangered whooping cranes, fewer river crossings and faster response times for potential leaks.

The PSC’s rationale for choosing the alternative route, Funke wrote, was “compelling.”

“We find that the PSC — after months of investigation reviewing extensive pleadings, exhibits and reports from consultants; holding public meetings and a public hearing; considering written and oral arguments; deliberating; and issuing its opinion and findings — did not err …” the judge wrote.

A group of landowners, along with environmental groups and two Native American tribes, sued over the PSC’s decision, arguing that the commission lacked the authority to approve an alternative route because state law provides for a review of “the proposed route only.” TC Energy’s application was for only its preferred route, their attorneys argued, and because of that, TC Energy needed to repeat the application process.

Brian Jorde, an Omaha attorney who represented landowners, said the court did some “judicial gymnastics” in reaching its decision, arguing that nowhere does state law allow for applying for more than a single route. But he said the ruling might also create new “nuggets” that can create new litigation.

But attorneys for TC Energy and the PSC called the decision thorough and well-reasoned.

“This comprehensive decision not only clears a big legal hurdle for this particular pipeline, it signals that a workable process exists in Nebraska for the approval of future major energy infrastructure projects,” said David Lopez, one of the state attorneys who represented the Public Service Commission. Lopez is now in private practice.

Jim Powers, an Omaha lawyer who represented TC Energy, said the court considered every argument presented by opponents and rejected them. He said it was “indisputable” that the company provided enough information to consider more than one route. He added that even some opponents, during public hearings on the project, had favored the alternative route.

Kleeb said her group will urge landowners to fight TC Energy’s use of eminent domain in local courts and urge the Nebraska Legislature to change “backward” laws that allow a foreign corporation to obtain right of way in court from private landowners.

Kleeb, who is also chairwoman of the Nebraska Democratic Party, said Bold Nebraska also will work to unseat President Donald Trump, who resurrected the Keystone XL project after he took office in 2017.

The three federal lawsuits in Montana were filed after the Trump administration, in a move to sidestep earlier lawsuits, issued a new presidential permit in March for the pipeline to cross into the United States. Friday’s ruling just affects the 280-mile route across Nebraska.

The Keystone XL would carry an estimated 830,000 barrels of oil a day from the oil sands region of Canada to the U.S. Gulf Coast, where refineries are set up to handle the heavy crude that is extracted from the oil sands. The pipeline would be buried at least 4 feet deep, and be at least 25 feet below major streams.

The current route is the third proposed by TC Energy. An initial route, which crossed the state’s fragile Sand Hills, was altered because of concerns about impacts on groundwater.

TC Energy has maintained that it would be the safest pipeline ever built, but landowners cite leaks from the company’s existing Keystone pipeline, as well as pipeline disasters in Michigan, Wyoming and Arkansas, as evidence that pipelines eventually fail.

Canadian oil producers have been seeking increased pipeline capacity for years in hopes of decreasing transportation costs and increasing profits. At least two existing pipelines from Canada are seeking to increase their transport capacity.

On the U.S. Gulf Coast, instability in Venezuela has affected the flow of heavy crude to its refineries, a flow that could be replaced by Canadian oil.

Since the Keystone XL was first proposed, the price of crude oil has dropped from about $147 a barrel to $60 a barrel, which has hurt expansion plans in the Canadian tar sands region and raised some doubts about the economic viability of the $8 billion pipeline.

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Reporter - Regional/state issues

Paul covers state government and affiliated issues. He specializes in tax and transportation issues, following the governor and the state prison system. Follow him on Twitter @PaulHammelOWH. Phone: 402-473-9584.

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