The Keystone Pipeline is again in the news as Congress gets ready to approve
the pipeline route through Nebraska. The pipeline, which has already been
completed in several states, is a 36-inch pipe that would carry 830,000
barrels of crude oil per day, mostly originating in Canadian tar sands,
to be refined on the Gulf Coast, in Texas.
Proponents of the pipeline are optimistic they have sufficient votes in
the House and Senate to overturn a threatened Presidential veto. They
note the pipeline would provide $55 million annually in property tax payments,
including $11.8 million for Nebraska; allow for Canadian oil to replaced
Venezuelan oil; and that pipelines are the safest and most efficient means
to transport oil.
The pipeline was delayed for several years due, in part, to the actions
of former Governor Dave Heineman, who, in response to special interests,
called for a special session of the legislature in November 2012 to review
the proposed route of the pipeline.
In response to the special session, the Legislature passed Legislative
Bill (LB) 1161 in 2012. The bill allowed major oil pipeline carriers to
bypass regulatory procedures of the Public Service Commission (PSC) –
a Nebraska constitutional regulatory body charged with regulating,
inter alia, common carriers – and submit a proposed pipeline route directly
to the Governor for approval in order to receive power of eminent domain
for the route. The Nebraska Governor then approved an amended route.
Clearing the way for the Congressional vote to approve the amended pipeline
route through Nebraska, today the Nebraska Supreme Court decided
Thompson, et. al., v. Heineman, et. al., 289 Neb. 798 (2015). In this case, the landowners (plaintiffs) asserted
LB 1161 had unconstitutionally assigned the powers of the PSC in regulating
pipeline routes to the Governor.
In an unusual ruling, the Nebraska Supreme Court held, while a majority
of the justices found LB 1161 unconstitutional and that the landowners
had standing to challenge the constitutionality of LB 1161, the Nebraska
Constitution, Art. V., § 2, requires no legislative act shall be
found unconstitutional without a supermajority (5 of the 7 justices).
Because 3 judges of the court concluded the landowners lacked standing
to bring suit and declined to exercise their option to address the constitutional
issues, the Court never got to the merits of the case, i.e., whether LB
1161 was constitutional. By not addressing the merits, LB 1161 is, by
default, allowed to remain the law of the land.
In reaching its holding the Court explored a number of important propositions
of law. For example, the Court noted "standing" is a jurisdictional
component of a party's case and only a party that has standing –
a legal or equitable right, title, or interest in the subject matter of
the controversy – may invoke the jurisdiction of a court.
Further, in reviewing whether the landowners had standing to sue, the Court
noted, under common-law, standing usually required a litigant to demonstrate
an injury in fact that is actual or imminent to the litigant, but there
are some exceptions. For example, taxpayer standing is a recognized exception
to the injury-in-fact requirement for standing. A resident taxpayer, without
showing any interest or injury peculiar to itself, may bring an action
to enjoin the illegal expenditure of public funds raised for governmental
purposes on a matter of great public concern. The majority stated, in
these cases, there is no requirement that the taxpayer show the alleged
unlawful act would otherwise go unchallenged because no other potential
party is better suited to bring the action.
The majority also noted, unless the Legislature enacts legislation to specifically
restrict the authority of the PSC and retains control over that class
of common carriers, it cannot constitutionally deprive the PSC of its
regulatory powers. Further, an oil pipeline carrier, such as TransCanada,
is a common carrier if it holds itself out as willing to transport oil
products for a consideration to all oil producers in the area where it
offers its transportation services; however, in its historical context,
it is unclear the Legislature intended only to ensure only intrastate
carriers are regulated by the PSC.
Further, the Court explained eminent domain. In general, a citizen's
property may not be taken against his will; however, through the sovereign
power of eminent domain, property may be taken for a public purpose. Only
the Legislature can authorize an entity, whether public or private, to
take property by eminent domain. The reason common carriers were allocated
the right of eminent domain by the Legislature lies in their quasi-public
vocation of transporting passengers or commodities for others; however,
if taken by eminent domain, just compensation must be paid.
Although the majority did not have the supermajority required by the Nebraska
Constitution to overturn LB 1161, it did support the decision of the district
court that the Legislature's silence on regulation of interstate oil
pipeline carriers allowed for the PSC to have jurisdiction over interstate,
as well as intrastate carriers, to the extent state regulation was not
pre-empted by federal law. In short, the delegation of power under LB
1161 was an unconstitutional delegation of the PSC's constitutional
jurisdiction to the Governor.
In contrast, writing for the minority, Chief Justice Heavican and Judges
Stephan and Cassell never reached the determination LB 1161 was constitutional;
the minority of the Court concluded the landowners did not have standing
to challenge the constitutionality of the legislation, so the Court lacked
the jurisdiction to address the issue.
In support of their finding, they noted courts have an obligation not to
decide cases that are not properly before the Court. The district court
that tried the case had been unable to determine whether the landowners
who filed suit were situated along the current pipeline route and thus
actual parties to a controversy. Further, the landowners never asserted
they had standing based on a matter of great public concern or sought
mandamus, but that they were taxpayers with interests in unlawful expenditure
of state funds as required by LB 1161. The minority noted the Governor
or the PSC chose the pipeline route was not a matter of great public concern
and the landowners failed to establish, under the resident taxpayer exception,
no one was better suited to maintain the action challenging the classification.
In sum, the minority disagreed with the majority the landowners had standing
to sue and the district court erred by failing to dismiss for lack of
jurisdiction. Due to the Nebraska constitutional requirement for a supermajority
to find a statute unconstitutional, the minority on the Court carried the day.