(New throughout, adds color from scene, changes dateline, prev WASHINGTON, adds byline)
By Carson Vaughan
LINCOLN, Nebraska, Sept 5 (Reuters) - Nebraska’s Supreme Court heard arguments on Friday about whether Governor Dave Heineman acted properly when he blessed a route for the Keystone XL oil pipeline, and the court’s decision could weigh on the controversial project.
A lawyer for landowners who may be in the pipeline’s path hoped to persuade the seven-member panel that Heineman overreached and that a decision on the route should be left to an independent state agency.
The 30-minute hearing played out in the court’s somber wood-paneled chamber. Keystone opponents who watched the proceedings from an adjacent room, were not so subdued.
“It just makes sense, how can they not see that,” said Shannon Graves, a Nebraska landowner who opposes the plan and was in the viewing room.
At issue was a 2012 law that gave Heineman authority to approve a route for TransCanada Corp’s proposed $5.4 billion pipeline. The project, which would connect Western Canada’s oil sands region with Texas refineries, is now in a sixth year of debate.
Siting issues are typically a matter for the state’s Public Services Commission (PSC) but the legislature authorized Heineman to settle the Keystone issue and he blessed a route for the 1,700-mile pipeline early last year.
Nebraska law tolerates that kind of intervention from its legislature, argued Katherine Spohn, deputy attorney general.
“The constitution, on its face, allows the legislature to limit the PSC’s authority,” she told the seven-judge panel.
But landowners opposed to Keystone argue that by personally authorizing a route, the governor robbed the PSC of its oversight role and an objective standard to weigh a decision.
“The statute is standardless,” Dave Domina, lawyer for landowner opponents of Keystone, told justices. Domina is a Democratic candidate for U.S. Senate.
A final word from the court, expected by early next year, will restart a bureaucratic process in both Nebraska and Washington that began more than five years ago.
If Heineman prevails, the U.S. State Department will finish its work to determine whether the pipeline is in the national interest and pass a final decision to the White House.
If the court rules in favor of landowners, the question goes back to the PSC and a decision on a Nebraska route might not come before next summer.
The Keystone debate has energized environmental activists who see the pipeline as emblematic of the world’s reliance on fossil fuels blamed for worsening climate change.
President Barack Obama has said he will have the last word on the pipeline and that global warming concerns will weigh on his thinking.
But a State Department review must be completed before the matter reaches the White House. That review was suspended in April due to uncertainty in Nebraska.
Anthony Schutz of the Nebraska School of Law, said lawyers on both sides were fairly matched on the merits of the case but a question of whether the landowners even have a right to challenge the pipeline may be decisive.
“I was surprised that the justices spent so much time over the question of standing,” he said.
Since the exact route of the pipeline has been unsettled for so long, it’s debatable which properties will be touched by the pipeline.
Property owners in the direct line of the pipeline would be on stronger legal footing to challenge the project, Schutz said.
Lawyers for landowners say they also have a right to challenge as Nebraska taxpayers. (Additional reporting and writing by Patrick Rucker in Washington; Editing by Ros Krasny and David Gregorio)