How much will PSC pipeline rules matter?

2012-10-30T06:00:00Z 2012-12-05T10:07:06Z How much will PSC pipeline rules matter?By ART HOVEY / Lincoln Journal Star

The Nebraska Public Service Commission is scheduled to take another look on Tuesday at its proposed rules for siting petroleum pipelines that come after TransCanada’s Keystone XL.

A final vote is expected by mid-November.

Presumably, the results of months of work will show how rigorously the commission intends to carry out duties assigned to it last November during heated debate over a proposed Sandhills route for Keystone XL in the 2011 special session of the Nebraska Legislature.

Will commissioners, for example, require applicants to disclose what other chemicals potentially harmful to groundwater might be in petroleum shipments besides crude oil?

But the bigger question might be how much these PSC regulations matter.

That’s because the Legislature changed direction in April, during a flurry of amendments in the final days of its regular session, and made the Nebraska Department of Environmental Quality the first stop for future pipeline routing decisions by the state.

That decision moved the state’s pipeline oversight toward a department responsible to the governor and away from independently elected officials.

It also appears to have been an effort to avoid vulnerability in court. But a lawsuit quickly emerged anyway.

Because the change included in LB1161 came after committee hearings, the public never had a chance to weigh in on a departure from the November decision putting the PSC in charge.

And despite the decisive 44-5 April roll call on the final reading, the swiftness of choosing a new course caught some people by surprise, including PSC Commissioner Jerry Vap of McCook.

As recently as the day before an Oct. 16 public hearing, hearing officer Vap thought the commission would preside over pipelines that come after Keystone XL.

In a more recent interview, Vap said he didn’t want to get into a discussion of what might have affected the thinking of state lawmakers between November and April.

“We’ll do whatever the law says we do.”

* * *

Two other commissioners sought out on Monday, Frank Landis of Lincoln and Anne Boyle of Omaha, weren’t willing to speculate on how many pipeline applications might reach their desks under circumstances in which DEQ is the first stop.

Boyle said most other states assign pipeline reviews to an elected commission.

In Nebraska, “it should be before a commission,” she said, “whether I’m there or not.”

Landis said the PSC routine often requires him and his peers to sort through confusion and contradiction on their way to rule making.

Didn’t the special session clarify public intent?

“I will grant you that this was a matter of a special session,” he said of pipeline-siting responsibilities. “That doesn’t necessarily make the issue we’re presented with any less complicated or hazy.”

But state Sen. Danielle Conrad of Lincoln said a bill offered by counterpart Jim Smith of Papillion should not have been passed in April without being sent back to committee for public input.

“The Legislature should have either recommitted it to committee or stopped it dead in its tracks,” Conrad said.

“I think it was really irresponsible of the Legislature to move forward with drastic changes to policy that were forged in special session, through consensus, through hard work,” she added.

“The special session, I think, was responsive to the citizenry. I think LB1161 was not.”

Smith, a member of the Natural Resources Committee, said there’s nothing wrong with the law or with the circumstances under which it became law.

According to Smith, “what we ended up with is something that was definitely in line with what we were hearing in the hearing and what we were hearing from Nebraskans on what they wanted to make sure was in the law.”

The DEQ-PSC change, however, came after the hearing on LB1161.

Passage of LB1, the Major Oil Pipeline Siting Act, in the special session came with a strong show of support from landowners at a public hearing.

Many of them were in the path of Keystone XL through the Nebraska Sandhills and worried about water contamination and soil erosion.

Change in the Legislature’s position took shape as Keystone XL builder TransCanada volunteered to move the portion of its route through northern Nebraska away from the Sandhills and away from the most porous parts of the Ogallala Aquifer.

Its alternative route remains under review by DEQ.

* * *

When he was sought out Monday, DEQ Director Mike Linder was reluctant to look past his Keystone XL assignment.

“We’re very focused on the project in front of us,” Linder said. “And with any future project that would come up, we’ll apply the process and make it work.”

Beyond LB1161, he said, another part of the framework for action is the National Environmental Policy Act and collaboration with federal officials on environmentally sensitive projects.

But up to now, he conceded, “we’ve never been given that assignment” with an oil pipeline.

Meanwhile, a transcript of the legislative debate on April 5 has Smith defending the evolving language through the amendment process in floor debate and resisting efforts to send it back to committee for another round of pro and con reaction from the public.

At one point, he cited proposed amendment language that would change the process for routing oversight so that “the applicant can petition with the Department of Environmental Quality to bypass review by the PSC for a direct review by DEQ.”

More than once during floor debate, Smith alluded to the concerns of other lawmakers about the special session posture of treating TransCanada one way by allowing it to seek review by DEQ and requiring later applicants to go through the PSC.

Might that constitute special legislation and be vulnerable to a lawsuit?

The successful floor amendments eliminated that two-track approach.

The lawsuit, naming Gov. Dave Heineman, Treasurer Don Stenberg and Attorney General Jon Bruning, happened anyway.

One of its cornerstones: That LB1161 infringes on the authority given to the PSC in the Nebraska Constitution.

* * *

Back in the law-making realm of government, Conrad wasn’t satisfied on the 57th day of a 60-day legislative session. And she’s not satisfied now.

In the debate transcript, she pointed to “three to four substantial, substantive changes put forward just in the last four hours on this bill just today and probably five or six versions in the last 24 hours.”

She cited “thousands of emails, phone calls and citizens weighing in during the special session” and called April action to go in a different direction without public input “a disservice to the state, to the citizenry and this body.”

In a recent interview, she described it as “absolutely critical that we have an independent, elected, representative body with experience on these issues” making pipeline siting decisions.

TransCanada, which opposed LB1, supported Smith’s bill and the final result signed into law by Gov. Dave Heineman.

Conrad characterized Smith as too closely aligned with TransCanada’s lobbying forces and “more than happy to do their bidding at every turn, without question.”

Smith called that portrayal “unfortunate.”

He described himself as “a small business and free-market-type person” and said he has “a strong, strong interest in energy issues and energy policy.”

Nebraska and the nation need the oil that pipelines provide, he said, and they also need to support coal and natural gas.

“I’m very proud to stand up for a very strong fossil fuel policy in this country, and I’m very proud to stand up for small business.”

One of the bones of contention during the pivotal floor debate was a flow chart that Smith drew out on a piece of paper that was supposed to help his peers understand the changes in responsibilities assigned to the Department of Environmental Quality and the Public Service Commission.

Other senators said during the debate that the flow chart helped them understand his intent.

Conrad was dismissive of its value.

She said she keeps hearing that government should be operated more like a business.

“I can’t think of any business that would think something scrawled out on a piece of notebook paper is somehow sufficient to conduct billion-dollar business on.”

Reach Art Hovey at 402-473-7223 or at

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