EDITOR'S NOTE: This story was originally posted at 4:18 p.m.
A Nebraska court blocked construction of the Keystone XL oil sands pipeline through its state Wednesday, as it ruled the Nebraska law that approved a new route pushed by builder TransCanada Corp. unconstitutional.
The Lancaster County District Court decision presents another obstacle for the proposed Canada-to-Texas project as it effectively halts, for the time being, the federal review process at the State Department.
“Under the court’s ruling, TransCanada has no approved route in Nebraska. TransCanada is not authorized to condemn the property against Nebraska landowners. The pipeline project is at standstill in this state," said Dave Domina, the attorney who represented the three Nebraska landowners who filed the lawsuit against Republican Gov. Dave Heineman. Domina is a Democratic Senate candidate for the open seat in Nebraska.
TransCanada now must secure approval for the pipeline route from the state's utility regulators — a step the 2012 Nebraska law sought to circumvent.
Judge Stephanie Stacy said Heineman's move to approve the revised pipeline plan, as the law allowed, was unconstitutional because it wrested control of oil pipeline decisions from the state regulatory body, the Nebraska Public Service Commission. As such, Stacy ruled the law null and void.
"[H]aving found LB 1161 [the Nebraska law] to be unconstitutional, governmental actions taken pursuant to that act, no matter how carefully performed, cannot stand," she wrote in the decision.
Backers of the Nebraska Legislature's move to give Heineman authority over the pipeline say it was meant to alleviate a regulatory logjam.
TransCanada had revised the route to skirt more of the sensitive Sandhills region and the Ogallala Aquifer -- which supplies drinking water to the region -- following concerns from environmental groups and President Obama about the effects of a potential spill of the thick, carbon-rich oil sands.
The State Department, for its part, said in a final environmental report earlier this month that the project posed no significant environmental risk. The business and union groups that support it, along with a majority of lawmakers on Capitol Hill, have pointed to that as reason for approving the pipeline.
But environmental groups say the new route hasn't done enough to reduce their concerns, and argue the pipeline would exacerbate climate change.
The project is currently undergoing an interagency review to determine whether it is in the national interest. That ruling from State could come by June.
When asked what the ruling meant for the federal review process, a State Department official told the Washington Examiner that Foggy Bottom "is aware of the decision in Nebraska today, however, we will not comment on ongoing litigation."
Supporters of the pipeline said they were still trying to assess what the ruling meant going forward.
"Because the state of Nebraska made a thorough review of the alternative route, we would expect the Nebraska Public Service Commission to make the same decision as the governor in approving the new route and to do so in a timely manner," Sen. John Hoeven, R-N.D., said in a statement.
Project opponents suggested it put the project in limbo.
"President Obama and Secretary (of State John) Kerry will probably wait until Nebraska has legally approved the pipeline route before they make any decision on whether to approve its permit," said Daniel J. Weiss, senior fellow and director of climate strategy with left-leaning think tank the Center for American Progress. "This court decision provides more uncertainty for pipeline proponents, and more time to organize for pipeline opponents."