The Nebraska Supreme Court will announce as soon as Thursday that it will hear oral arguments in the case over the Keystone XL pipeline's route in early September, effectively postponing any final federal decision on the controversial project until after the midterm elections.
In April, the State Department announced that it would not issue a determination on whether the pipeline was in the nation's interest until Nebraska resolved whether the project's path through the state complied with state law. A group of landowners is challenging the decision by Nebraska Gov. Dave Heineman (R) to sign legislation designed to speed the project by approving its route and letting the company use the power of eminent domain in negotiating right of way for the project.
Court officials confirmed Monday that it will hear arguments in the case, Thompson v. Heineman, in the first week of September. Under that schedule, a final ruling would not come out until October at the earliest, though it could take some months longer than that.
A administration official familiar with the State Department's decision-making process, speaking on the condition of anonymity to discuss internal deliberations, said it is "highly unlikely that a decision will be made before the mid-term election" given the court's schedule.
"This is not because of politics. It’s just a reflection of the gravity of this decision," the official said. "It doesn’t make sense to have the agencies give us their best opinion on whether or not the Keystone pipeline should go forward if the information on which they base it changes dramatically, and it’s entirely possible the Nebraska Supreme Court could require a change in the route and nullify the opinions given to the Secretary of State about this project."
A lower court has declared the state's route-setting process as unconstitutional, finding that the legislature did not have the right to wrest the decision away from the state's five-member Public Service Commission. If the state Supreme Court upholds that ruling, it would take several more months for Nebraska to finalize a new route.
The delay provides a political reprieve for President Obama, who is under pressure from environmentalists to deny the cross-border permit to the project's sponsor TransCanada on the grounds that it will accelerate climate change by easing the energy-intense extraction of heavy crude oil. Americans support the pipeline by a wide margin, viewing it as a project that will create jobs and enhance the nation's energy security.
Rep. Lee Terry (R-Neb.) said the administration could still grant the permit so the project's construction could proceed. "But it seems the president's only interest is placating his environmental base in an election year," Terry said in a statement.
It is less clear how postponing a final decision will affect vulnerable Democratic senators in energy states such as Mary Landrieu (La.) and Mark Begich (Alaska), who have come under fire for their ties to the president and his environmental policies.
Proponents of the pipeline, which would transport roughly 830,000 barrels of crude oil a day through a network stretching from Canada’s oil sands region to refineries in Port Arthur, Tex., argue that Obama can approve the permit without waiting for resolution of the Nebraska case. On Tuesday, more than 40 business groups sent Secretary of State John F. Kerry a letter saying, "The issue of our national interest will not be affected or changed by the outcome of the Nebraska decision."
A State Department official, who was not authorized to speak on the record, said the department had received the letter, and its office of the legal adviser "has been monitoring developments in Nebraska."
"The permit review process will conclude once factors that have a significant impact on determining the national interest of the proposed project have been evaluated and appropriately reflected in the decision documents," the official added.
The long delays in the federal permitting process — the project has now been under review for more than five years — also mean TransCanada must re-certify the conditions under which it obtained a permit for its route through South Dakota. TransCanada spokesman Shawn Howard wrote in an e-mail that the conditions for certification "are stronger" than they were several years ago, and it did not expect that it would encounter a problem. "When we received the original permit, we did not have the long-term contracts in place for Bakken crude to be transported through Keystone XL (which we do now)," he wrote.
However, Jane Kleeb, who heads the pipeline opposition group Bold Nebraska, said TransCanada could face a fight in South Dakota since some tribal groups may oppose re-certification of the construction permit. More broadly, she said she was confident that the administration would eventually block the pipeline.
"If the president was going to approve this pipeline, he would have approved it a long time ago," she said in an interview. "Time clearly has been on our side."