Demonstrators protest against the proposed Keystone XL oil pipeline in San Francisco

Keystone XL oil pipeline held up by court decision

The Keystone XL oil pipeline has hit another snag after a Nebraska court voided its permission to pass through the state.

The Midwestern state’s governor Dave Heineman last year supported legislation that cleared the way for TransCanada's $5.4bn (£3.2bn) pipeline, designed to link Canada's oil sands with refineries in Texas, to cross parts of his state.

But some landowners objected to the legislation, saying it disregarded their property rights and, yesterday, the District Court of Lancaster County sided with them, adding months of delay to a project that is already more than five years in the planning.

The Nebraska Public Service Commission, or PSC, is the proper state agency to decide pipeline matters, Judge Stephanie Stacy wrote in a lengthy ruling, declaring the governor's decision "unconstitutional and void".

State officials and a lawyer for landowners agreed a new permit application for the pipeline could require at least six months of work – and probably much longer. Heineman filed a notice later on yesterday appealing the decision to a state appeals court but an appeal could also take months.

"The legislature will either have to fix [the law] or the attorney general will have to decide to take his chances in the state Supreme Court, one of the two, or both," said David Domina, who represented several landowners in the case.

The planned 1,179-mile northern leg of the Keystone pipeline would run from the province of Alberta to Steele City, Nebraska, where it would connect with an already operational line that runs to the US Gulf – a system that could move more than 800,000 barrels of crude each day.

Canada's oil sands are the world's third largest crude oil reserve, behind those of Venezuela and Saudi Arabia, but extraction of the thick, gritty substance is emissions-intensive.

Supporters say Keystone XL would create thousands of jobs and cut US fuel costs by reducing the nation's reliance on oil imports from countries less friendly than Canada and they also cite US government reports about the dangers of moving crude oil by rail as an alternative to the pipeline.

But critics say it would harm the environment and hasten climate change by promoting oil-extraction methods in Alberta that produce high levels of carbon dioxide emissions.

Republican lawmakers have urged President Barack Obama for years to approve the pipeline and the President has said he will have the final word on the project, but that decision is not expected before May and those opposed to Keystone said they hoped to make the most of additional delays.

"This court decision provides more uncertainty for pipeline proponents, and more time to organise for pipeline opponents," said Dan Weiss, a senior fellow with the Center for American Progress, which opposes the plan.

Responding to the decision on Wednesday, TransCanada said it was disappointed and would examine its legal options. "We will now analyse the judgment and decide what next steps may be taken," company spokesman Shawn Howard said.

Laura Demman, director and legal counsel for the Nebraska PSC, said TransCanada would need to submit an application to route the pipeline through the state. The commission would have seven months to review the application and could get an extension of up to 12 months.

The US State Department said on 31 January in an 11-volume environmental impact statement that approving Keystone XL would not unduly worsen climate change.

Several federal agencies were given up to 90 days to weigh in with their own views. It is unclear how the Nebraska ruling will affect that process.

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