Nebraska's governor today signed into law new pipeline construction standards and a plan for a state-funded environmental review of the Keystone XL oil link, opening a new chapter in the local battle to shape the future of the controversial Canada-to-U.S. project.

The final approval of pipeline bills by Gov. Dave Heineman (R) capped a tumultuous month for the XL proposal, which saw its federal permit bid delayed by the Obama administration until after the 2012 election amid a groundswell of resistance from environmentalists as well as Cornhusker State landowners. While the new Nebraska laws mark a victory for green groups, the move by Keystone XL backer TransCanada Corp. to reroute its $7 billion pipeline around the state's ecologically vulnerable Sandhills is unlikely to quiet debate over the project (E&E Daily, Nov. 15).

"We still have work to do," anti-XL advocate Jane Kleeb, chief of the liberal-leaning group Bold Nebraska, wrote in a blog post after the state pipeline bills advanced to their final lap. "We still need to watch TransCanada like a hawk because they have proven they cannot be trusted. We still need President Obama to deny the permit" for Keystone XL.

Whether the generally conservative, pro-oil Nebraskans who helped force Alberta-based TransCanada to embrace a new path for its pipeline will remain in the anti-XL camp, however, remains an open question. Industry-aligned interests that praised the state's rerouting compromise -- which exempts the 1,700-mile XL project from Nebraska's new application process for pipeline siting -- today vowed to keep the pressure on for a smooth process heading into 2012.

"Given that we have already seen some groups announce that they will oppose the new route just as vigorously as the original route proposed by TransCanada, regardless of merit or circumstance, we hope that Governor Heineman and the other political leaders in Nebraska will aggressively support the new route in order to prevent a replay of the current controversy over the project next year," Consumer Energy Alliance Vice President Michael Whatley, whose pro-XL group testified against Nebraska bills that would have negatively affected the pipeline, said in a statement.

The XL-centric bill signed into law today formalizes Nebraska's plans to conduct its own supplemental environmental review of a new route for the pipeline, which would significantly boost U.S. import capacity of emissions-intensive Canadian oil sands crude if granted a federal permit. That state-level review could take as little as six months to complete, potentially putting pressure on the Obama administration to finish its own process ahead of the current 2013 deadline (E&E Daily, Nov. 17).

The new XL statute sets a taxpayer-funded budget of up to $2 million for the rerouting review. It also addresses concerns among conservationists as well as congressional Democrats that the contractor chosen for a federal assessment of the pipeline was too close to TransCanada by stating that Nebraska "shall make every reasonable effort" to use third-party advisers without conflicts of interest.

The second pipeline bill, affecting future oil lines running through the state, creates an application process for companies that includes privately funded hearings for Nebraska voters to weigh in on proposed routes and restricts the use of eminent domain to claim land until after that public debate concludes. The bill also requires an examination of alternative pipeline routes and empowers the state's governor to make the ultimate decision on siting of oil lines.

The large greenhouse gas footprint of Canadian oil sands crude and the safety risk of any spill from Keystone XL have driven environmentalist and landowner opposition to the project. The oil industry, business groups and labor unions, by contrast, hail the pipeline as a job creator and guarantor of long-term fuel supplies from one of the United States' closest trading partners.