Obscure Nebraska PSC board could get pipeline hot potato

By Deena Winter | Nebraska Watchdog

LINCOLN, Neb. — An obscure, five-member elective board that was formed to regulate railroads could eventually decide whether TransCanada should be allowed to build the Keystone XL oil pipeline through Nebraska.

The Public Service Commission, which has been criticized for taking campaign contributions from the industries it regulates, could be tossed the hot potato pipeline next, and if it does, it would mark the first time the commission has made such a decision on an oil pipeline.

The PSC normally regulates things like telecommunications companies, natural gas utilities and grain warehouses, but may find itself in the spotlight after a Nebraska judge struck down the state’s pipeline siting law that gave the state Department of Environmental Quality and governor authority over major oil pipelines. The judge said the law is unconstitutional because the state constitution gives that authority to the PSC.

The state is appealing that ruling, but that appeal is expected to take at least a year. In the meantime, TransCanada could try to get its pipeline route approved by the PSC under legislation passed in 2011 giving the commission the authority to approve major oil pipelines, or pipelines with a diameter of at least six inches.

The prospect worries a watchdog group called Common Cause of Nebraska, which recently released a report showing 76 percent of campaign contributions to public service commissioners came from the industries they regulate.

“Proponents are assuming the PSC will be concerned and working on environmental issues and from what we’ve seen in the past, the Public Service Commission has been heavily funded by the corporations they regulate,” said Jack Gould of Common Cause. “And the money is extensive.”

Common Cause has tried and failed to get the Legislature to prevent commissioners from accepting contributions from those they regulate. While commissioners have received a negligible amount of money from the energy industry up to now, Gould expects that could change now that oil pipelines are within their purview.

“If you start moving the responsibility to them, we have to watch to see if the contributions follow,” Gould said.

While foreign companies like TransCanada cannot legally contribute directly to commissioners’ campaigns, TransCanada has been a major spender on lobbying in Nebraska.

While it’s legal to accept campaign contributions from the industries they regulate, Gould thinks it’s wrong.

Valid route?

TransCanada’s position has been that its existing proposed route through Nebraska is still valid while the lawsuit is being appealed.

“We have not yet made a decision on the Public Service Commission path,” TransCanada spokesman James Millar said recently.

Jane Kleeb, executive director of Bold Nebraska, which has fought the current proposed Keystone XL route through Nebraska, said while she understands Common Cause’s concerns, she thinks the PSC has set up a fair, transparent approval process.

“That obviously is a red flag, but our experience so far is they have been fair,” she said.

After the PSC was given the authority to regulate pipelines in 2011, the following year it began putting together its rules governing the application process. Bold Nebraska helped craft the rules; TransCanada did not — although the Association of Oil Pipelines and American Petroleum Institute did.

Kleeb said she thinks TransCanada arrogantly thought it had the governor and Legislature “in its pocket” and “didn’t have to play by the PSC’s rules.”

“I’m sure they’re kicking themselves now,” she said.

Kleeb said she felt the PSC conducted a fair rule-making process, with several hearings where citizens, landowners and environmentalists gave input. The PSC included a lot of the rules they suggested, such as requiring the pipeline company to disclose the materials that would be flowing through the pipe and consult with local governmental bodies along the route.

When the American Petroleum Institute resisted requiring pipeline companies to disclose the materials that would run through their pipes, the PSC pushed back, she said.

Kleeb said it’s better than the process used by the DEQ, which “literally had no standards” to evaluate the route. If the pipeline goes to the PSC, she said her group will push for it to be moved into the same corridor as the existing Keystone One oil pipeline that runs through eastern Nebraska, away from the Sandhills and Ogallala Aquifer.

Laura Demman, director of the PSC’s natural gas department, said TransCanada didn’t file any comments during the rule-making process, which requires the PSC to approve or deny pipelines within seven months of application, although that can be extended to a year or longer if all parties agree. However, if a federal permit is granted to TransCanada, no extension can go more than eight months after the federal permit is granted.

President Obama said Monday his administration will make a decision in the next couple months on the federal permit allowing the pipeline to cross the border.

Among the other PSC rules governing oil pipeline applications:
• Within 30 days of receiving a pipeline application, eight state agencies must file a list of potential issues and estimate the costs of generating a report addressing those issues. The PSC can request they weigh in on the route at least 10 days before the public hearing.
• The rules say the PSC shall not evaluate safety considerations, including the risk or impact of spills from the pipeline.
• The PSC can consider the environmental impact, estimated tax revenue that would be generated along the route, other possible utility corridors and the views of governing bodies along the route.

If a pipeline application is filed, a public hearing — where rules of evidence could be invoked — must be scheduled by the PSC within 60 days. The commission can hold additional public meetings as close to the proposed pipeline path as possible.

To get approval, the pipeline would have to be deemed in the public interest by three of the five commissioners, one of whom, Anne Boyle, is up for election in November but not running for re-election. So far, three Democrats and one Republican are running for the seat representing District 2 in Omaha. That race is sure to draw more interest than usual.

Contact Deena Winter at deena@nebraskawatchdog.org. Follow Deena on Twitter at @DeenaNEWatchdog

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