November 8, 2011
Nebraska and the Keystone XL Pipeline: State Bills May Have Preemption and Dormant Commerce Clause Issues
Nebraska's location in the "heartland" of the continent makes it an attractive - - - and some would say necessary - - - crossing of the controversial Keystone XL Pipeline transporting crude oil from the Athabasca Oil Sands of Canada's Alberta Province to the refineries of Oklahoma and the Gulf of Mexico states in the US.
Nebraskans, however, may not be so keen to have the pipeline crossing their state. At the moment, there are no less than 5 bills in the Nebraska legislature that seek to regulate some aspects of the pipeline. The first, LB1, introduced on Nov 1, was the subject of hearings on November 7. It would create the Major Oil Pipeline Siting Act, defining a major oil pipeline as one greater than six inches in inside diameter and establishing an application process for the routing of a major oil pipeline including public hearings regarding siting proposals and evaluating and approving applications before a company was granted eminent domain rights to build the pipeline. LB 3 and LB4 as well as LB5 and LB6 also regulate aspects of the pipeline, although somewhat less expansively. For example, LB6 would require the carrier to file proof of an indemnity bond of $500 million with the Nebraska secretary of state.
Any state law could be preempted by the Pipeline Safety Act, 49 U.S.C. § 60101 et seq., concerning safety of interstate pipeline construction. However, as the LA Times reports, amid mounting criticism of the federal government's approval of the pipeline, the State "Department’s inspector general's office announced Monday that it was opening an investigation to determine whether the department had complied with federal laws in evaluating the $7-billion project," and that this is "in response to charges by pipeline opponents that builder TransCanada Corp. has improperly influenced what is supposed to be an independent assessment of whether the pipeline is in the national interest and meets U.S. environmental standards." SEE UPDATE BELOW.
Additionally, any state law could run afoul of the dormant commerce clause. Nebraska's bills do not seem protectionist per se and seem to be for the legitimate and non-economic purpose of protecting the local environment. The most applicable case is most likely Kassel v. Consol. Freightways Corp., 450 U.S. 662 (1981), a case populating many constitutional law casebooks and involving Iowa's regulation of the length of tractor trailers. In Kassel, any discussion of the Iowa regulation's burden on interstate commerce is inextricably tied to Iowa's location and the choices of other surrounding states; recall that Iowa's safety choice appeared less "renegade" when compared to similar regulations in New England as Rehnquist argued in dissent.
Any effort by Nebraska to regulate the XL Pipeline is sure to engender litigation. The TransCanada Corporation has already made available legal memoranda arguing against the constitutionality of Nebraska regulation. And arguing for the constitutionality of possible acts by Nebraska, legal memoranda are posted on the site of Bold Nebraska.
UPDATE: 10 November 2011: The State Department has put the XL Pipeline on hold with approval from the White House.
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