Did go-slow approach on Keystone XL pipeline just get slower?

A court ruling in Nebraska means that state will have to start over in its approval process for the controversial Keystone XL pipeline. That hold-up might make the Obama administration less inclined to decide soon whether to OK a federal permit for the project.

The ruling by a Nebraska judge Wednesday striking down a law to let the controversial Keystone XL pipeline stretch across the state may postpone the ultimate decision on the transcontinental project for years, or at least provide political cover for the Obama administration's go-slow approach to giving a thumb's up or thumb's down on a permit to build it.

“The Obama administration has not been too eager to make any sort of decision quickly on the pipeline, and for understandable political reasons. This might give them even less reason to move quickly,” says Kevin Smith, chairman of the political science department at the University of Nebraska in Lincoln.

Lancaster County District Judge Stephanie Stacy agreed that the proposed oil pipeline “has become a political lightning rod for both supporters and opponents,” but said that was not the issue before the court. She ruled that Nebraska Gov. Dave Heineman (R) does not have the authority to approve a project route through the state, which he did in January. Under the state constitution, she found, that authority rests with a five-person state commission that specializes in oil and gas transport issues.

TransCanada, the pipeline operator, is "disappointed" with the decision and "analyzing the ruling" to determine next steps, said company spokesman Shawn Howard in an e-mail. "This is a solvable problem. TransCanada has dealt with many Keystone XL issues in the past and we are confident we can overcome this latest hurdle," he said.

While the state is certain to appeal her decision to Nebraska's high court, the ruling is a setback, experts say, because a legal fight is likely to further delay resolution of the entire project's fate.

“If the [judge's] decision stands, it will get more complicated. [The project proposal] will have to go through a fairly complicated administrative process that has many different components. It has the potential to really bog things down,” says Dan Frost, an attorney with Snell & Wilmer in Denver who specializes in oil and gas pipeline issues.

The $5 billion, 1,179-mile pipeline extension, of which 250 miles would stretch through Nebraska, also needs federal approval because it would cross the border between the US and Canada. The project would allow crude extracted from tar sand formations in Alberta to flow southward through the US to refineries along the Gulf Coast in Texas. Stopping the project is a priority for environmentalists, who say the heavy crude will emit up to 30 percent more greenhouse gases than conventional crude oil and thus unduly accelerate global warming.

President Obama has stressed, as recently as Wednesday, that he is concerned that building the pipeline would hasten climate change.

“Frankly [climate change] has to affect all of our decisions at this stage, because the science is irrefutable,” he said Wednesday. “We are already seeing severe weather patterns increase. It has consequences for our businesses, for our jobs, for our families, for safety and security. It has the potential of displacing people in ways that we cannot currently fully anticipate.”

Some see the US foot-dragging on the Keystone XL project as motivated more by political concerns than by environmental ones. Obama "wanted to delay it [a permit decision] before the [2012] election to not alienate part of his base,” says Bruce Buchanan, a political scientist at the University of Texas in Austin.

An environmental review the US State Department released last month did not raise significant environmental concerns to the Keystone XL pipeline, and some analysts say that signals the Obama administration is positioned to grant the permit. At that time, all six states the pipeline extension would traverse – Montana, South Dakota, Nebraska, Kansas, Oklahoma, and Texas – had signed off on their segments.

The Nebraska hold-up has no direct effect on the federal permitting process. But with the setback in Nebraska, Obama may pause again if conflict remains at the state level, some say.

“Whatever the federal authority, he seems to not want to get out ahead of the states if they may not authorize it,” says Professor Buchanan. “He does not want to appear swinging in the wind, but will want to clear the deck so his decision is authoritative.”

Others agree. Administration officials will “probably wait until Nebraska has legally approved the pipeline route before they decide whether to approve its permit,” says Daniel Weiss, senior fellow and director of climate strategy at the Center for American Progress in Washington.

"This court decision provides more uncertainty for pipeline proponents, and more time to organize for pipeline opponents,” Mr. Weiss told the Los Angeles Times.

The current Keystone pipeline carries crude from Hardisty, Alberta, to markets in Illinois and Oklahoma. The proposed extensions, one to connect Alberta to Steele City, Neb., and a second to link Cushing, Okla., and refineries along the Texas Gulf Coast, will expand TransCanada’s distribution channels for heavy crude oil derived from Alberta's tar sand formations.

The extension proposed to run underground through Nebraska has been of concern because original plans had it stretching along the Ogallala Aquifer, an underground water supply that is the greatest irrigation source to America’s farmland, supplying eight states.

The aquifer component has brought together an unusual political coalition: liberal environmentalists and conservative ranchers, says University of Nebraska's Professor Smith. Those group "could be fairly persuasive at the state level," he adds, perhaps offsetting assurances from TransCanada, the pipeline operator, that the project would generate jobs and reduce energy dependency.

“The underpinning of the [Nebraska] economy is agriculture, and agriculture depends on that water resource. When you lay a big hunk of pipeline on top of that aquifer, that makes people nervous,” Smith says. “You can have all the environmental impact reports you can produce that say the risk is minimal, but I’m not sure that will assuage certain people whose livelihood depends on that water being there.”

According to the US State Department, a 30-day comment period regarding its environmental review of the Keystone XL pipeline runs through March 7.