Oil pipeline regulation bill amended, advanced

Lawmakers advanced a bill from general file March 29 related to oil pipeline routing in Nebraska.

LB1161, sponsored by Papillion Sen. Jim Smith, would make changes to law enacted during a November 2011 special session called by Gov. Dave Heineman to regulate oil pipeline routing in Nebraska.

Concern over the state’s lack of oil pipeline regulation was sparked by TransCanada’s proposed Keystone XL pipeline, which is intended to carry crude oil from Canada to Gulf Coast oil refineries.

Lawmakers passed LB4 during the special session, authorizing the state Department of Environmental Quality (DEQ) to collaborate with a federal agency in a review under the National Environmental Policy Act involving a supplemental environmental impact statement (EIS) for oil pipeline projects within the state.

The bill also specified that Nebraska would fully fund the state portion of the process and the preparation of the supplemental EIS, to avoid any appearance of impropriety.

Smith said LB1161 was introduced in response to action taken at the federal level since the November special session. DEQ had hired a consultant for the supplemental EIS regarding TransCanada’s permit application for the Keystone XL pipeline, he said, when the federal government abruptly halted the process.

A Natural Resources Committee amendment was adopted on a 34-2 vote and replaced the bill. An amendment offered by Schuyler Sen. Chris Langemeier and adopted 33-2 in turn replaced the committee amendment.

As amended, the bill would broaden DEQ’s authority to study proposed pipeline routes and allow a DEQ study to determine the route of an oil pipeline within the state to be included in an application to a federal agency or agencies.

A pipeline carrier that did not file for a required federal permit or did not use DEQ’s evaluation would be required to reimburse the department for the cost of the evaluation within 60 days after notification of the cost.

As amended, the bill also would change the effective date of the Major Oil Pipeline Siting Act, passed as LB1 during the November special session.

Under the act, the Public Service Commission (PSC) is responsible for evaluating and approving pipeline siting applications, as well as holding public hearings to gather citizen input. In addition, an approved application is required prior to a company being granted eminent domain rights.

As amended by LB1161, the Major Oil Pipeline Siting Act would apply only to applications received after Jan. 1, 2013.

Langemeier said the amendment would uphold the agreement made during the special session because TransCanada intends to reapply for a permit to construct Keystone XL.

“The whole purpose of the amendment was to keep with the spirit of what was negotiated during the special session,” he said.

But Sen. Ken Haar of Malcolm said Nebraska should not grant TransCanada a one-year extension in order to exempt Keystone XL from the regulatory framework of the pipeline siting act.

“I believe that TransCanada is the victim of their own machinations,” he said. “I believe that LB1 is the law that should be applied in this case.”

Omaha Sen. Steve Lathrop expressed concern that changing the operative date of the Major Oil Pipeline Siting Act would result in TransCanada being the only company that would be subject to the provisions of LB4, effectively creating a closed class.

Doing so would create constitutional concerns, he said, and could result in costly legal battles.

“It seems like every time we try to fix something – whether we’re doing it in Lincoln or in Washington, D.C. – we’re making it worse,” Lathrop said.

Smith said LB1161 does not create a closed class because there is no legal impediment to another company meeting the criteria of LB4 prior to the Major Oil Pipeline Siting Act taking effect.

“[This bill] creates a responsible and reasonable process for all pipelines going forward,” he said.

The bill advanced to select file on a 35-2 vote.