Analysis. Public services regulators in the state of Nebraska signed off on the controversial Keystone XL oil pipeline Tuesday. But by rejecting the Canadian company’s preferred path, they may have derailed the project for good.

By approving Keystone XL, regulators may have killed it

With three votes in favor and two against, the state of Nebraska has given TransCanada the green light to build the highly contested Keystone XL oil pipeline, whose aim is to deliver the crude oil extracted from tar sands in the Canadian province of Alberta to refineries in Texas. However, the Commission rejected the route proposed by TransCanada for the pipeline, de facto putting a stop to its construction.

The Nebraska Public Service Commission (NPSC) issued a positive verdict, despite the fact that just a few days ago, in neighboring South Dakota, there had been a spill of 6,600 tons of crude oil caused by a leak in the Keystone pipeline.

In effect, Keystone XL was already in possession of the necessary environmental permits, granted by Trump, who, as a newly elected president, removed the ban on the construction of the pipeline that had been put into place by Barack Obama at the end of his term.

As a result, analyzing the risk of spills was outside the NSPC’s jurisdiction. Its role was limited to judging whether the route proposed by the Canadian oil multinational was in the interest of the state of Nebraska.

Against this background, the final decision of the commission is not surprising. It ordered a detour of the initial path of the pipeline to one approximately 30 km east of TransCanada’s preferred option. This kicks off a bureaucratic process of obtaining permissions all over again. The company says it has already sunk $3 billion into the $8 billion project.

Will the pipeline ever be built? The introduction of an alternative route opens the door to another series of legal and regulatory challenges, which could bog down the pipeline project in bureaucratic purgatory.

“It’s a huge victory,” said Brian Jorde, a Nebraska lawyer who represented landowners who refused to lease their land to TransCanada, in an interview with the Los Angeles Times. “The commission sent TransCanada down a new, long and twisting road of appeals to get this pipeline built.”

Nebraska state Senator Jim Smith, a Republican who has been offering strong support for the project, tweeted after the vote his own sense that the project may be doomed: “This creates unnecessary uncertainty. Too bad.”

As for the Canadians, they can do nothing but accept the situation: “As a result of today’s decision, we will conduct a careful review of the Public Service Commission’s ruling,” Russ Girling, TransCanada’s president, said through clenched teeth.

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