Transcanada Keystone Pipeline, LP v. Dunavan (In re Application No. Op-0003)

Decision Date23 August 2019
Docket NumberNo. S-17-1331.,S-17-1331.
Citation303 Neb. 872,932 N.W.2d 653
Parties IN RE APPLICATION NO. OP-0003. TransCanada Keystone Pipeline, LP, et al., appellees and cross-appellees, v. Susan and William Dunavan et al., appellants, Yankton Sioux Tribe of South Dakota and Ponca Tribe of Nebraska, appellees and cross-appellants, and Sierra Club, Nebraska Chapter, et al., appellees.
CourtNebraska Supreme Court

David A. Domina, Omaha, and Brian E. Jorde, of Domina Law Group, P.C., L.L.O., for appellants.

Douglas J. Peterson, Attorney General, L. Jay Bartel, David A. Lopez, and Lynn A. Melson, Lincoln, for appellee Nebraska Public Power Service Commission.

James G. Powers and Patrick D. Pepper, of McGrath, North, Mullin & Kratz, P.C., L.L.O., Omaha, for appellees TransCanada Keystone Pipeline, LP, et al.

Jennifer S. Baker and Leonika R. Charging, Omaha, of Fredericks, Peebles & Morgan, L.L.P., for appellee Yankton Sioux Tribe.

Brad S. Jolly, of Brad S. Jolly & Associates, for appellee Ponca Tribe of Nebraska.

Kenneth C. Winston, for appellee Sierra Club, Nebraska Chapter.

Heavican, C.J., Miller -Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

Funke, J.

The Nebraska Public Service Commission (PSC) granted the application filed by TransCanada Keystone Pipeline, LP (TransCanada), pursuant to the Major Oil Pipeline Siting Act (MOPSA), Neb. Rev. Stat. §§ 57-1401 to 57-1413 (Reissue 2010 & Cum. Supp. 2018), for approval of a major oil pipeline route and eminent domain authority. The PSC approved the "Mainline Alternative Route" (MAR), a 36-inch major oil pipeline and related facilities to be constructed through Nebraska, from the South Dakota border in Keya Paha County, Nebraska, to Steele City, Nebraska. The landowners, two Indian tribes, and the Sierra Club, Nebraska Chapter (Sierra Club), all intervened in the proceedings. The landowners appealed, the Indian tribes cross-appealed, and the Sierra Club attempted to appeal from the PSC’s decision.

The intervenors raise numerous arguments on appeal. Each of these arguments raises issues of public concern and represents profound, deeply held beliefs. Upon de novo review of the PSC’s decision, we find the matters in controversy are resolved based on the determination of four overarching issues: The first, whether the PSC had jurisdiction to consider TransCanada’s application; the second, whether TransCanada met its burden of proof; the third, whether the PSC properly considered the MAR; and the fourth, whether the intervenors were afforded due process. We answer each of these questions in the affirmative.

At the outset, we observe that this appeal comes to us in a completely different legal framework than we confronted in Thompson v. Heineman .1 While both cases involve the statutory process for obtaining route approval of an oil pipeline, the issues in this appeal are distinctly different from those in Thompson because here, route approval was sought from the PSC using the MOPSA procedure. In this opinion, we describe the procedures enacted by the Legislature to effectuate proceedings under MOPSA. We discuss the record in detail and show that TransCanada carried its burden of proving that the MAR is in the public interest. We then determine that the errors assigned by the intervenors are without merit. Accordingly, we affirm the PSC’s determination that approval of the MAR is in the public interest.


TransCanada is a limited partnership organized in Delaware with its principal place of business in Houston, Texas. In 2008, TransCanada applied for a presidential permit to construct a pipeline across the Canadian border into the United States. The proposed route would have passed through the Nebraska Sandhills at a time when no legal standards existed in Nebraska to constrain an oil pipeline carrier’s right to exercise eminent domain authority.2 In 2011, Gov. Dave Heineman called a special session of the Legislature to enact siting legislation for pipeline routing.


The Legislature enacted MOPSA, 2011 Neb. Laws, L.B. 1, § 2, 1st Spec. Sess., which gave routing authority to the PSC, an independent regulatory body with duly elected officials.3 MOPSA applies to a pipeline with an interior diameter larger than 6 inches that is built to transport petroleum products within, through, or across Nebraska.4 MOPSA requires a major oil pipeline carrier to apply for and obtain routing approval from the PSC before the carrier is authorized to exercise eminent domain power pursuant to § 57-1101.5

MOPSA recognized that federal law preempts state regulation of safety issues related to oil pipelines and that Nebraska’s laws cannot interfere with the federal government’s uniform standards for pipeline safety, operation, and maintenance.6 Consequently, the Legislature enacted MOPSA to address "choosing the location of the route aside and apart from safety considerations."7 With MOPSA, the Legislature harnessed Nebraska’s remaining sovereign powers with respect to oil pipeline construction, granted the PSC authority to conduct proceedings and decide applications, and determined that "[t]he construction of major oil pipelines in Nebraska is in the public interest of Nebraska ...."8

In the same special session, the Legislature enacted 2011 Neb. Laws, L.B. 4, 1st Spec. Sess., which created a separate procedural avenue for a pipeline carrier to obtain route approval. Independent from the MOPSA process, § 3 of L.B. 4 authorized Nebraska’s Department of Environmental Quality (DEQ) to collaborate with any federal agency for the preparation of a supplemental environmental impact statement (SEIS) for oil pipelines within, through, or across Nebraska, in accordance with the review process under the National Environmental Policy Act of 1969, 42 U.S.C. § 4321 et seq. (2012).9 Once completed, the DEQ was to submit the SEIS to the Governor, who then would have 30 days to indicate his or her approval of a route in writing to the relevant federal agencies.10 Both L.B. 1 and L.B. 4 were passed with an emergency clause and became effective on the same date, November 23, 2011.

On January 18, 2012, the President of the United States denied TransCanada’s permit application. On April 17, 2012, the Legislature passed and the Governor approved 2012 Neb. Laws, L.B. 1161, which amended L.B. 1 and L.B. 4. In its original form, MOPSA did not apply to TransCanada, because the legislation contained an exemption for a pipeline carrier which had a pending application for a presidential permit.11 L.B. 1161 eliminated that exemption, which led TransCanada to seek to obtain route approval from the PSC under MOPSA.12

L.B. 1161 amended § 3 of L.B. 4 so that the DEQ could either prepare the SEIS through collaboration with federal agencies, as L.B. 4 originally had provided, or could independently evaluate a route submitted by a pipeline carrier "for the stated purpose of being included in a federal agency’s or agencies' National Environmental Policy Act review process."13 This amendment allowed the DEQ to continue to review possible routes for the Keystone XL pipeline project, which the DEQ had ceased reviewing following the President’s denial of TransCanada’s application for permit.

In conducting an independent evaluation of a proposed route, L.B. 1161 required the DEQ to hold at least one public hearing, provide opportunities for public review and comment, and analyze "the environmental, economic, social, and other impacts associated with the proposed route and route alternatives in Nebraska."14 The DEQ would then submit its evaluation of the pipeline route to the Governor, and the pipeline carrier could then seek the Governor’s approval of the route.15 L.B. 1161 provided that a pipeline carrier’s authorization to exercise eminent domain power expires "[i]f condemnation procedures have not been commenced within two years after the date the Governor’s approval is granted or after the date of receipt of an order approving an application under [MOPSA]."16


In 2012, TransCanada modified the original route, which would have passed through the Nebraska Sandhills, based on recommendations provided by the DEQ. On September 5, 2012, TransCanada filed a supplemental environmental report with the DEQ regarding the "reroute." The "reroute" avoided the Sandhills and other areas of fragile soils and shallow groundwater identified by the DEQ. On January 3, 2013, the DEQ submitted a final evaluation report to the Governor in accordance with L.B. 1161. On January 22, the Governor approved the "reroute" in a letter to the President and the U.S. Department of State (the Department), asking that the DEQ’s evaluation be included in the federal SEIS report. TransCanada filed condemnation actions, which were later dismissed following litigation challenging the constitutionality of L.B. 1161.

More than 2 years passed after the Governor’s approval of the route, and TransCanada no longer proceeded on that approval. On January 24, 2017, the President invited TransCanada to resubmit its permit application, which TransCanada accomplished 2 days later. On February 16, TransCanada filed an application with the PSC for approval of a major oil pipeline route. On March 23, the Department granted TransCanada a presidential permit.


TransCanada’s application to the PSC sought approval of a route designated as the "Preferred Route" (PR), which was "refined to reflect the recommendations made by the [DEQ] and the Governor’s approval." The "reroute" submitted to the DEQ in 2012 "was used as the basis for developing the [PR]." The PR is 275.2 miles long and begins at the Nebraska-South Dakota border in Keya Paha County and passes through the Nebraska counties of Keya Paha, Boyd, Holt, Antelope, Boone, Nance, Merrick, Polk, York, Fillmore, and Saline before terminating in Steele City.

The application referred to two alternative routes, the MAR and the "Sandhills Alternative Route" (SAR)....

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