11/10/2011 09:40 EST | Updated 01/23/2014 06:58 EST

TransCanada VP says Nebraska bill to keep pipeline out of Sandhills 'fundamentally unfair'

LINCOLN, Neb. - The executive in charge of a proposed transnational oil pipeline told Nebraska lawmakers that attempts to block the project with legislation are "fundamentally unfair," given his company's co-operation with state and federal authorities.

Robert Jones, TransCanada's vice-president for pipelines, said Wednesday that a measure to ban large oil pipelines from the Nebraska Sandhills would jeopardize the entire 1,700-mile crude oil pipeline that would run through six states.

"The Keystone XL process has been under way for more than three years," Jones told the Legislature's Natural Resources Committee. "We have properly submitted to every federal and state process that was in effect. For Nebraska in the 11th hour to impose new exclusion zones is fundamentally unfair and jeopardizes the viability of the project."

Nebraska lawmakers have attempted to regulate pipelines in past sessions, but pipeline critics in the one-house Legislature say they've been stonewalled by industry lobbyists.

Jones made his comments in testimony against a bill that would force the project away from the Nebraska Sandhills.

The bill by state Sen. Ken Haar of Malcolm would create so-called "exclusion zones" where pipes larger than 8 inches in diameter could not run. If approved, the measure would prevent the 1,700-mile Keystone XL from running through Sandhills, certain cold water streams, or other regions where groundwater is near the surface.

Pipeline opponents said Haar's bill would help protect the state's natural resources, including economic and agricultural interests. They also have said TransCanada should not have proceeded as they have without federal approval. Asked about Jones' statement outside the hearing room, Haar wiped an imaginary tear from eye.

"I call those crocodile tears," he said. "We don't owe them that. Nebraskans shouldn't have to make their business plan work."

Jones' testimony came on the third day of an emotionally charged debate over the proposed route. The pipeline would snake through part of the Nebraska Sandhills, a grass-strewn expanse of loose-soil hills, and the Ogallala aquifer, a drinking and irrigation water supply that lies beneath parts of eight states. A coalition of environmentalists, landowners, and state lawmakers fear the pipeline could leak and contaminate the Ogallala aquifer.

The testimony came as U.S. officials confirmed that the State Department is considering a plan that would reroute the Keystone XL away from the environmentally sensitive area in Nebraska. The action could delay a final decision on the project until after the 2012 election.

The Nebraska Legislature opened a special session this week to consider changing the law to give the state more control over the Keystone XL and other major oil lines. TransCanada has promised to file court challenges if Nebraska tries to intervene, saying the decision is a federal issue.

Susan Luebbe, a fourth-generation rancher from Stewart, said the proposed route would run less than 200 yards past her home. Luebbe said she was worried that a pipeline leak would foul her family's water supply and spread to their cattle, which are sold to grocers and restaurants.

Calgary-based TransCanada Corp. is seeking to build the $7 billion pipeline to carry oil derived from tar sands in Alberta, Canada, to refineries on the Texas Gulf Coast. The pipeline, which would travel through Montana, South Dakota, Kansas, Nebraska and Oklahoma before reaching Texas, would double the capacity of an existing pipeline that opened last year.

Nebraska Gov. Dave Heineman has said he wants a legal and constitutional solution to address the controversial Keystone XL route. The Republican governor has declined to comment since he announced the special session last month. Lawmakers have introduced five bills, three of which could lead to a pipeline rerouting.

Pipeline supporters say the project would create U.S. construction jobs, help lower gas prices and reduce dependence on Middle East oil. The company also says it would lose millions of dollars if opponents delay or derail the project.

Brigham McCown, a Texas attorney and former administrator for the federal Pipeline and Hazardous Materials Safety Administration under the Bush administration, told lawmakers that TransCanada has taken steps far beyond what other pipeline operators would traditionally do.

"This pipeline meets and exceeds the most stringent safety mandates conceived by our nation's legislature," McCown said. "Frankly, TransCanada should be commended for going the extra mile when not every pipeline operator would make the same concession when they're not required to do so by law."