The U.S. State Department is ordering TransCanada to explore a route for the proposed Keystone XL pipeline that won't go through Nebraska's Sandhills.
The announcement came from the State Department early Thursday afternoon and means final approval for the $7 billion, 1,700-mile pipeline won't come until after the 2012 U.S. election.
The decision is a victory for environmentalists who feared the proposed route could endanger the massive Ogallala Aquifer, which is a source of irrigation and drinking water for a large swath of the central United States.
And it is a setback for TransCanada, which has been working on the project for some three years.
The announcement took some pressure off of Nebraska lawmakers, who are meeting in special session to decide if they should pass legislation that would allow the state to say where major oil pipelines are routed.
The Nebraska Legislature is scheduled to begin debate Monday on LB4, by Sen. Chris Langemeier of Schuyler, which would require companies that want to build major pipelines in the state to apply to the state Department of Environmental Quality for a permit. The governor then would set up a panel to review the project.
But Langemeier said he would consider killing his bill and taking up the matter when the Legislature starts its regular session in January.
"The bill is out to have a discussion, but at this point, maybe a discussion is not needed in a special session. This might be able to be further discussed ... in January," he said. "We still will need a long-term siting authority, but there is no rush" given Thursday's announcement.
Jane Kleeb, of the anti-Keystone XL group Bold Nebraska, hailed the State Department's announcement.
"President Obama is making the right and tough decision for our land and water. The announcement contradicts those in Nebraska that say it's too late to put regulations in place," Kleeb said. "Now, more than ever, the Legislature needs to take action on behalf of the citizens of Nebraska. They have run out of excuses."
Nebraska Speaker Mike Flood of Norfolk declined to say if the State Department announcement took away the sense of urgency to act on legislation.
"It's certainly a major development," Flood said. "We're set to begin debate Monday. I'm going to take tomorrow and the weekend to determine where the Legislature will be going in light of this."
Gov. Dave Heineman called the special session in answer to growing public concern over the pipeline.
He said Thursday's announcement was "an exceptional moment for Nebraskans," but added that it is possible the route that was proposed by TransCanada could still be deemed the best.
"We don't have a done deal yet," he said.
Heineman said the State Department public hearings about the pipeline in Lincoln and Atkinson had an impact on federal officials. He also said he had met with State Department officials twice to express concern about the route.
"This is an opportunity for a common-sense solution," he said. "Change the route where it doesn't cross the heart of the Ogallala Aquifer. Then, construction of the pipeline can begin."
Russ Girling, TransCanada's president and chief executive officer, said he was confident the Keystone XL ultimately will be approved.
"This project is too important to the U.S. economy, the Canadian economy and the national interest of the United States for it not to proceed," he said.
But Girling acknowledged that Thursday's announcement could have potential negative ramifications, especially where shippers and U.S. refiners are concerned.
"Supplies of heavy crude from Venezuela and Mexico to U.S. refineries will soon end," he said. "If Keystone XL is continually delayed, these refiners may have to look for other ways of getting the oil they need. Oil sands producers face the same dilemma -- how to get their crude oil to the Gulf Coast."
The Keystone XL would run from the oil sands of Alberta to refineries along the U.S. Gulf Coast. It was met by fierce resistance from Sandhills landowners and advocacy groups worried about the effects of a spill over the Ogallala Aquifer, the nation's largest.
In all, five pipeline bills were introduced at the start of Nebraska's special session. LB4 was the only one sent to the floor for debate, although some aspects from the other bills were rolled into it.
The Natural Resources Committee advanced LB4 to the full Legislature on a 7-1 vote late Wednesday -- even though four members said they did not necessarily support it.
"Everybody should look at that vote as a vote to have a discussion," said Langemeier, the committee chairman. "I don't think you take the 7-1 vote as any endorsement of a bill. This committee understands that this issue is maybe bigger than our committee and thinks the whole body should have an opportunity to weigh in on it."
TransCanada has said the Keystone XL would use state-of-the-art technology and be among the safest in the world. Other proponents tout jobs the project would create and say the pipeline would help reduce the nation's reliance on overseas oil.
Meanwhile, Republican Sen. Mike Johanns said he supports moving the pipeline but "if it's an attempt to buy time to get past the (2012) election, that would be terribly disappointing and unacceptable."
John Hansen, president of the Nebraska Farmers Union, said Thursday's announcement "provides the Legislature with a green light to get caught up with other states who have already claimed their state authorities for oil pipeline routing and siting.
"Nebraska must use this welcome window of opportunity to claim its routing and siting authority so that the interests of our water, soil and especially our landowners can be protected," Hansen said. "We do not want our state to continue to be dependent on either the political whims of the State Department or the selfish economic interests of oil pipeline companies."
Ken Winston, policy advocate for the Nebraska Sierra Club, also applauded the State Department announcement.
"However, the Nebraska Legislature still needs to exercise its lawful authority to protect its resources and economic interests in the special session," he said. "We cannot rely on the federal government to protect our land and water."
Sen. Ben Nelson, a Democrat, echoed those comments.
"The State Department noted today that state laws govern routes of interstate pipelines, but Nebraska currently has no such law or process in place," Nelson said. "It is my hope that the State of Nebraska will use the State Department's decision today to protect the interests of Nebraska citizens by exercising its authority to determine the appropriate pipeline route in Nebraska, and that the State Department will support Nebraska's decision."
Under Langemeier's bill, the panel appointed by the governor would be chaired by the lieutenant governor and include the heads or representatives of DEQ, the Department of Natural Resources and Game and Parks and Public Service commissions. It also would include a county official and a landowner from each of Nebraska's three congressional districts.
The panel would make its recommendation within 60 days after a company applies for a permit. The governor would have 30 days to make a decision.
The bill also would allow the governor to demand conditions, such as the posting of a bond, before approving a project.
Earlier Thursday, Sen. Galen Hadley of Kearney asked for an attorney general's opinion on various legal questions surrounding the legislation.
Lawyers for TransCanada have said the siting legislation violates the Interstate Commerce Clause of the U.S. Constitution, pre-empts federal authority to oversee safety issues for pipelines and is special legislation targeting the Keystone XL.
Lawyers for Bold Nebraska and the Sierra Club have rejected those arguments.