Keystone pipeline could face new hurdle in Nebraska – Nathan Vanderklippe (Globe and Mail – October 25, 2011)

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Nebraska’s governor has ordered a special session of the state legislature to examine potential new oil pipeline rules, a reversal of course that opens the possibility of substantial delays to the controversial Keystone XL project.

Republican Governor Dave Heineman made a surprise announcement on Monday, calling the Nov. 1 sitting, which he said in a statement will “determine if siting legislation can be crafted and passed for pipeline routing in Nebraska.”

Such a rule would give the state the power to approve or deny the pipeline’s intended path. Draft siting legislation has been underway for many months, but needed a special legislative session to be enacted before construction begins on the pipeline.

There are questions about whether such a rule can withstand legal scrutiny. If passed, it will present the most formidable obstacle to the Keystone XL project to date. It could take several years for Keystone backer TransCanada Corp. (TRP-T43.65-0.30-0.68%) to gain approval for an amendment of the current route.

In an interview Monday, state Senator Ken Haar, the chief champion of siting legislation, said he is “delighted” the special session will be held. He believes a draft bill can be made into law

between now and the end of the year, when the U.S. State Department is expected to announce whether it approves the $7-billion project.

“We think we’re almost there and we can have a siting law in place before Secretary [of State Hillary] Clinton gives the okay to cross the border,” said Mr. Haar.

“The majority of Nebraskans say you shouldn’t put it through the Sand Hills and over our most precious water supply. And we think the majority of senators will be there, too.”

Keystone XL would carry Canadian oil sands crude to the U.S. Gulf Coast. It is supported by the highest levels of Canada’s industry and government – Prime Minister Stephen Harper, for example, has called its approval a “no-brainer.” Industry, too, has pushed hard to have the pipeline built, out of concerns that without it, oil sands crude will be locked in Alberta.

The pipeline has set off a loud debate in Nebraska, where it would cross both the important Ogallala aquifer and the environmentally sensitive Sand Hills regions, which covers part of the underground water reservoir.

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