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Keystone XL Clears Hurdle as Nebraska Court Approves Route

Kevin Orland and Rachel Adams-Heard

(Bloomberg) -- TC Energy Corp.’s long-delayed Keystone XL oil pipeline cleared a significant legal hurdle as the Nebraska Supreme Court ruled that regulators’ approval of the conduit’s route through the state was valid.

The court found there was sufficient evidence to support the Nebraska Public Service Commission’s decision that an alternative route for the pipeline was in the public interest, according to a ruling released on Friday.

The ruling removes a key roadblock to construction of the $8 billion pipeline, which has been on the drawing board for a decade. But challenges remain: The project is still tied up in a legal battle in Montana over its Army Corps of Engineers permits, and TC Energy said it has missed the window for starting major construction this year. The company has yet to officially declare it will build the pipeline.

“The Supreme Court decision is another important step as we advance towards building this vital energy infrastructure project,” TC Energy Chief Executive Officer Russ Girling said in a statement.

Keystone XL also faces added scrutiny amid the U.S. presidential election. Democrat Elizabeth Warren has said permits for the pipeline and the similarly controversial Dakota Access project should be revoked. It wouldn’t be the first time the project has been the target of a new U.S. president. President Donald Trump issued a memo on his fourth day in office inviting TC Energy to reapply for a presidential permit that had been rejected by President Barack Obama on environmental grounds.

“With so much scrutiny on the project coming from the left, we believe TC Energy must wait to sanction the pipeline until it knows whether or not President Trump can hold onto the White House,” said Katie Bays, an energy analyst and co-founder of Washington-based Sandhill Strategy LLC. “We don’t expect any near-term action given the enormous binary risk posed by the election outcome.”

The 1,200-mile (1,900-kilometer) pipeline would help carry 830,000 more barrels of crude a day from Alberta’s oil sands to U.S. Gulf Coast refineries, providing relief from the pipeline shortage that has hampered Canada’s oil industry. The project has been a top target of environmentalists, who argue that the pipeline would contribute to catastrophic climate change by allowing more production from the oil sands.

The win “was expected, but it’s still good news for the project in an age where wins aren’t as commonplace as they used to,” said Brandon Barnes, an analyst at Bloomberg Intelligence.

Next up are oral arguments on Sept. 12 for an appeal by the Rosebud Sioux tribe, which argues that the most recent presidential permit didn’t relieve the U.S. State Department from certain obligations, according to ClearView Energy Partners. That comes about a month before a hearing in a separate case by the Indigenous Environmental Network in a federal court in Montana.

TC Energy was the second-best performer of the day in the S&P/TSX Composite Energy index of 40 companies. The stock fell 0.2% to C$64.65 at 3:20 p.m. in Toronto, compared with a 1.9% decline for the broader index.

(Updates with timing for Rosebud case in ninth paragraph.)

To contact the reporters on this story: Kevin Orland in Calgary at korland@bloomberg.net;Rachel Adams-Heard in Houston at radamsheard@bloomberg.net

To contact the editors responsible for this story: Carlos Caminada at ccaminada1@bloomberg.net, Joe Carroll, Joe Ryan

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