Pipeline regulation considered

The Natural Resources Committee heard testimony Nov. 7 on the first of several bills introduced this special session to regulate the placement of oil pipelines in Nebraska. The hearing began at 10 a.m. and continued well into the evening.

LB1, introduced by Fullerton Sen. Annette Dubas, would create the Major Oil Pipeline Siting Act. Among other provisions, LB1 would define a major oil pipeline as one larger than six inches in diameter and establish an application process for routing a major oil pipeline in Nebraska.

Under the bill, the Public Service Commission (PSC) would be responsible for evaluating and approving applications, as well as holding public hearings to gather citizen input. An applicant would be assessed the cost of any public hearings and investigations relating to the application. In addition, an approved application would be required prior to a company being granted eminent domain rights.

Among other information, an application to construct a major oil pipeline would be required to include a statement of the reasons for selecting a proposed route, evidence of consideration of alternative routes, an estimated number of individuals to be employed during construction and operation of the pipeline and a list of locations along the proposed route that would be in proximity to unusually sensitive ground water areas.

Dubas said the bill would allow the state to impose conditions to ensure that pipelines serve the public interest while providing pipeline companies due process guarantees.

She said senators were hindered in their debate of previous pipeline bills due to uncertainty regarding the state’s legal authority to regulate pipeline siting.

“We were lobbied to be uncertain about what our rights were,” Dubas said. “Now we are faced with citizens who feel we have ignored their concerns and misleading and aggressive threats of billion dollar lawsuits. This makes the challenge before us more difficult, but I don’t believe that it’s insurmountable.”

Under the bill, an application would be granted if the PSC determines a major oil pipeline to be in the public interest. The determination would be based in part upon a pipeline’s impact on the state’s natural resources and evidence of methods to mitigate those potential impacts.

Also included in the determination would be evidence of a pipeline carrier’s efforts to ensure the welfare of residents along a proposed route and the views of governing bodies.

Dubas said the bill’s intent language specifies that safety considerations would not be included in determinations of public interest. States do not have jurisdiction to create pipeline standards involving safety issues, she said, but can regulate siting for other reasons, including protection of land and natural resources for the economic and aesthetic benefit of residents.

“What I seek is what other states have,” Dubas said. “[This bill] is intended to deal solely with the issue of siting.”

Alan Peterson of Lincoln, testifying on behalf of the Nebraska chapter of the Sierra Club, supported the bill. Peterson said his analysis of LB1 indicated that it would withstand a number of challenges put forth by critics.

The bill does not violate the commerce clause, Peterson said, because it does not treat intra- and inter-state entities differently. The bill also is not preemptive or a case of special legislation, he said, because it would apply to all major oil pipelines and not just to TransCanada’s proposed Keystone XL pipeline.

Furthermore, Peterson said, threats of potential legal action against the state resulting from passage of LB1 have been exaggerated. The state of Nebraska and individual office holders cannot be sued for damages due to sovereign immunity, he said, adding that the bill itself likely would hold up well to legal challenges.

“It might be that the first draft of this bill … was kind of a minefield,” he said, “but this bill – LB1 – has had a minesweeper go through it.”

Sandra Zellmer, professor of environmental and water law at the University of Nebraska College of Law, also testified in support of the bill.

Zellmer said Nebraska has sovereign authority to safeguard the state’s natural resources. The federal government sets uniform national standards regarding safety in terms of pipeline construction and operation, she said, but does not take into consideration land use and development.

“That is state authority,” Zellmer said.

Holt County rancher Connie Weichman also testified in support of the bill, saying local agency involvement is important in routing decisions.

“We need Nebraskans who know, appreciate and understand our Nebraska resources,” she said. “TransCanada has been blind to those considerations; our state should not be.”

Under the bill, the PSC would be required either to grant or deny an application within eight months of receiving it. An extension of up to 18 months after a public hearing – or longer if agreed to by all parties – could be granted under the bill. However, an extension would not be granted for longer than eight months past the issuance of a presidential permit authorizing a major oil pipeline.

Duane Hovorka of the Nebraska Wildlife Federation said the eight-month deadline for the PSC to rule on an application would be a “reasonable timeline.”

Testifying in support of the bill, Hovorka said the timeline likely would not cause an undue delay for pipeline carriers.

Nebraska Farmers Union president John Hansen also testified in support of the bill, saying a state clearinghouse for information and conflict resolution would have helped lessen disputes regarding the Keystone XL pipeline.

“The absence of process and of a designated agency has magnified the frustration and conflict,” Hansen said.

But Robert Jones of TransCanada said conflict over the proposed Keystone XL pipeline has been fueled by misinformation and misrepresentation by opponents.

Testifying against LB1, Jones said the State Department solicited information from various Nebraska agencies when compiling the environmental impact study on the Keystone XL pipeline. An additional state level review and permit process would be unnecessary, he said.

“Over the past three years, probably no pipeline has had more review – environmentally or safety-wise – than the Keystone XL,” he said.

In addition, Jones said, passage of LB1 likely would result in significant delays for TransCanada’s pipeline project.

Attorney David Carpenter also testified against the bill. Calling LB1 “patently unconstitutional,” Carpenter said the bill would violate the commerce clause by placing an undue burden on interstate commerce. Nebraska has no intrastate pipelines larger than six inches in diameter, he said, so LB1 would discriminate against out-of-state companies.

Lee Hamann of the McGrath North Mullin and Kratz law firm in Omaha also testified against the bill. Regardless of intent language to the contrary, Hamann said, the bill targets the Keystone XL pipeline, and likely would be considered unconstitutional “special legislation” as a result.

“The focus of this whole discussion that has been going on for months now … is to cause the Keystone XL to be rerouted,” he said.

John Bourne, representing the International Brotherhood of Electrical Workers, opposed the bill, saying it clearly is directed at the Keystone XL pipeline. The proposed pipeline would create jobs for construction workers, he said, who have been among the hardest hit during the current economic recession.

“We need to start this Keystone project as soon as possible,” Bourne said. “We need to put our people to work.”

Mike Hybl, executive director of the PSC, testified in a neutral capacity. He said the bill’s 60-day time frame for the PSC to rule on appeals to a routing determination should be extended.

In addition, Hybl said, the PSC has a small full-time staff and relies heavily on outside consultants. The current staff does not have the background required to analyze pipeline routing applications, he said.

“The bill would require … a dramatic increase in the amount and variety of technical expertise required of the department,” Hybl said.

The committee took no immediate action on LB1.