Proposals for interstate pipeline regulations considered

Interstate pipelines would need to obtain Public Service Commission (PSC) approval and provide financial assurances under three bill heard by the Natural Resources Committee Feb. 9.

LB340, introduced by Fullerton Sen. Annette Dubas, would require companies planning to operate a hazardous liquid pipeline to submit an application to the PSC. The application would include a description of the pipeline’s route, the hazardous liquid transported and the number of employees needed to construct and operate the pipeline. The application also would require an environmental impact study and justification for the pipeline route.

After receiving the application, the PSC would hold a public hearing within 30 days. The PSC would evaluate whether the pipeline is in the public interest by examining the pipeline carrier’s compliance with state laws and regulations, the environmental, economic and social impacts of the pipeline, pipeline safety measures, the impact of the pipeline on development and local government views on the pipeline.

Pipelines receiving PSC approval would be granted eminent domain powers.

Dubas said her bill is modeled after current regulations for intrastate pipelines. LB340 would provide for a public forum to collect citizen input and distribute information about a proposed pipeline, she said.

“This bill is not about whether I support or oppose … pipelines,” Dubas said. “This is about giving our citizens a state agency that will look out for their best interests, allow them an opportunity to register their concerns and ask questions, and hopefully find some objective information.”

LB578, introduced by Malcolm Sen. Ken Haar, would require a pipeline company to provide a surety or other form of financial assurance to cover the costs associated with a decommissioned pipeline or leak. The PSC would be granted regulatory authority to determine the amount of financial assurance.

The bill also would permit local governments to require a greater surety or bond.

Haar said the decommissioning security would be similar to the one required of private wind energy companies in the state.

LB629, introduced by Cedar Rapids Sen. Kate Sullivan, also would require proof of financial responsibility and would delegate authority to the PSC to determine the amount.

The bill would hold pipeline companies liable for all damages resulting from leaks and would require reclamation of land disturbed during pipeline construction. Local governments would be permitted to pursue damages for road repairs caused by the construction, maintenance or operation of a pipeline.

Sullivan said the lack of state government oversight of interstate pipelines requires legislation to ensure pipelines are operated safely.

“Our state government doesn’t have statutory power and authority it needs to protect the most valuable assets of our state: our soil, our water, our citizens,” she said.

Much of the proponent and opponent testimony for the three bills referenced the TransCanada Keystone XL pipeline and its potential effects on the Ogallala Aquifer. Slated for construction in Nebraska in 2011, the 1,661-mile oil pipeline will connect Canadian crude oil suppliers to Texas refineries. The pipeline is intended to run through Boone, Fillmore, Garfield, Greeley, Hamilton, Holt, Jefferson, Keya Paha, Merrick, Nance, Rock, Saline, Wheeler and York counties.

Jay Wolf, representing the Nebraska Cattlemen, testified in support of all three bills. He said pipelines that transport tar sands oil have unique risk factors that could prematurely end their operation, such as high production costs and potential environmental effects. Therefore, he said, state laws are needed to ensure pipeline responsibility.

“It is irresponsible to build a pipeline without a plan for what happens if the line is decommissioned and the carrier has no financial interest in the cleanup or doesn’t have the financial resources to do it,” Wolf said.

Duane Hovorka, representing the Nebraska Wildlife Federation, also testified in support of the bills. He said states that have adopted legislation for pipeline oversight have fared better in the protection of landowners and their natural resources.

Hovorka said pipeline companies need to be liable for leaks. He said Michigan’s Kalamazoo River was polluted by an Enbridge Energy Partners pipeline leak. The company said it would pay for damages caused by oil leaks but did not fulfill that promise.

“Promises are great but they don’t pay the bills,” Hovorka said.

Ken Winston, representing the Nebraska Sierra Club, testified in support of the bills, saying that Nebraska needs to protect its water from pipeline leaks. Due to the corrosive nature of tar sands oil and the ability of the Ogallala Aquifer to resurface contaminants, he said, the state should take steps to prevent spills with adequate oversight.

TransCanada operations director Jim Krause testified in opposition to the bills, which he said would delay or prevent construction of the Keystone XL pipeline. The pipeline has the potential to reduce oil imports from Venezuela, the Middle East and Africa by 40 percent, he said, and will significantly improve U.S. energy security.

Krause said the bills would duplicate federal requirements. Existing laws cover the safe operation of pipelines and should not be replicated, he said.

Paul Fuhrer, also representing TransCanada, called the bills an “eleventh-hour” regulatory attempt that would disrupt planning and construction. While states like South Dakota have similar laws, he said, the company was able to address them early in the process.

In addition, Fuhrer said, TransCanada offered opportunities for public comment during the planning stages for the Keystone XL pipeline.

The committee took no immediate action on the bills.