By Alison Sider and Alicia Mundy 
 
 A Nebraska judge ruled Wednesday that the law allowing the controversial Keystone XL oil pipeline to be built across the state is unconstitutional. 
 
 Lancaster County District Court Judge Stephanie Stacy sided with three landowners who argued Nebraska's governor shouldn't be able to approve the pipeline's route. That power was given to the governor in 2012 when the state legislature hastily passed a law giving the governor pipeline approval in addition to Nebraska's Public Service Commission. 
 
 The judge's ruling said the legislature overstepped its bounds. Nebraska Gov. Dave Heineman's approval "must be declared null and void," because it was based on an unconstitutional law, the judge ruled. 
 
 Nebraska Attorney General Jon Bruning, who defended the law in court, and Gov. Heineman said the state would appeal the decision. 
 
 State Sen. Jim Smith, a strong proponent of the pipeline and author of the law that was struck down, said he was very disappointed in the court decision. 
 
 "When I introduced that legislation in 2012, we had good, lengthy floor debates, public input, and 44 of the 49 legislators voted for it. We sent it to the governor with overwhelming support," he said in an interview. 
 
 He said he is pleased that the attorney general will appeal the ruling, but added, "That could take a long time." 
 
 TransCanada Corp. originally proposed building the massive pipeline from Canada's oil sands to the U.S. Midwest in 2008 but had to devise a new route through Nebraska in 2012. Landowners and lawmakers in the state objected to plans that called for crude oil to move through the ecologically sensitive Sand Hills area, where the Ogallala Aquifer is located. Gov. Heineman approved a revised route in 2012. 
 
 TransCanada said it was disappointed with the decision and offered no details on what its next steps would be. 
 
 Nebraska landowners were represented by attorney Dave Domina, who said Wednesday's ruling prevents the company from taking over contested property to build the pipeline. "TransCanada has no approved route in Nebraska. TransCanada is not authorized to condemn the property against Nebraska landowners," he said. "The pipeline project is at a standstill." 
 
 TransCanada hasn't filed an application to the Nebraska Public Service Commission, according to the agency. The commission can take up to seven months to review an application before deciding whether to approve or deny it, and that time frame can be extended in certain cases. 
 
 Keystone XL's fate has been uncertain for years. Building a pipeline across an international border requires U.S. State Department approval, which the project doesn't have. Earlier this month the State Dept. released its final environmental analysis, saying Keystone XL would have little impact on climate change. But the department hasn't yet determined whether building the oil pipeline is broadly in the U.S.'s interest. 
 
 President Barack Obama is expected to make the final decision on Keystone XL. The White House referred all requests for comment to the State Dept., which didn't comment. ||||| TransCanada Corp. (TRP)’s Keystone XL pipeline route through Nebraska was ruled illegal by a state court judge in a decision seen as setting back the project by as long as a year as U.S. officials consider approving it. 
 
 The ruling resets the pipeline approval process in Nebraska as the Obama administration studies the northern portion of the international project. President Barack Obama has been urged by some Democratic supporters to reject the project as too big a contributor to global warming while Republican leaders have pressured him to approve it and Canadian officials have criticized him for taking too long to decide. 
 
 “This gives the U.S. State Department and Obama an out,” said Bob Schulz, a University of Calgary business professor, who predicted there will be an appeal of the ruling. “Why would they decide if they don’t have to decide? I think he’s going to push it back another year.” 
 
 Judge Stephanie Stacy in Lincoln, the state’s capital, today struck down legislation that shifted the power to approve the pipeline route to Governor Dave Heineman, a Republican, from the state’s Public Service Commission. Legislation depriving the commission of that power violates the Nebraska Constitution, Stacy said, declaring the measure “unconstitutional and void.” 
 
 “Because the governor’s actions of Jan. 22, 2013, in approving the Keystone XL Pipeline route were predicated on an unconstitutional statute, the court also finds the governor’s actions in that regard must be declared null and void,” she said. 
 
 Alberta, Texas 
 
 TransCanada, based in Calgary, is seeking to build the 830,000 barrel-a-day pipeline through the U.S. heartland, connecting oil sands in Alberta with refineries along the Gulf Coast of Texas and Louisiana. The 1,179-mile (1,897-kilometer) pipeline would run from Hardisty, Alberta, to Steele City, Nebraska. From there it would connect to an existing network. 
 
 Stacy’s ruling comes in a case pressed by three Nebraska property owners who sued to block the proposed path. Stacy heard arguments over the siting legislation on Sept. 27. Her decision prohibits the governor or the state’s Department of Environmental Quality from taking any further action on the pipeline project. 
 
 Heineman, whose term expires at the end of this year and is barred by law from seeking re-election, had referred calls about the ruling to the office of Nebraska Attorney General Jon Bruning. 
 
 “We’re reviewing the decision,” Bruning’s spokeswoman, Shannon Kingery, said in an e-mailed statement. 
 
 State Department 
 
 Heineman said in a statement later that Bruning has already told the court the state plans to appeal. “This is an important issue for the state of Nebraska,” the governor said. 
 
 Because the pipeline crosses an international boundary, it is subject to U.S. State Department review. 
 
 Canadian Prime Minister Stephen Harper has called Keystone XL a “no-brainer” for the U.S. and last month criticized Obama for “punting” the decision on the line. While the project remains on hold, Harper’s government has redoubled efforts to get new oil conduits built to Canada’s Atlantic and Pacific coasts, by making faster regulatory reviews law and increasing discussions with aboriginal groups along pipeline paths. 
 
 Harper, Obama 
 
 Obama met today in Toluca, Mexico, with Harper and Mexican President Enrique Pena Nieto. Obama gave no ground on speeding up the review of the Keystone XL after the meeting. 
 
 “Keystone will proceed along the path that’s already been set forth,” Obama said at a press conference after the meeting. He said he and Harper discussed “a shared interest in dealing with greenhouse gas emissions. This is something we have to deal with.” 
 
 Harper said he and Obama “had an exchange” on the Keystone XL project. “We’ll continue on that discussion,” he said. 
 
 Today’s court’s decision strikes down a 2012 law passed by the Nebraska legislature that expedited pipeline route review and created a procedure under which siting could be determined by Heineman and the state’s Department of Environmental Quality, rather than the Public Service Commission. 
 
 If Stacy’s decision survives appeal, the routing process will revert to the commission, which was granted oversight in 2011. That legislation was passed amid opposition by the governor and other leaders and ranchers to TransCanada’s original proposed route that would have taken the Keystone XL through the state’s environmentally sensitive Sand Hills region. 
 
 Special Treatment 
 
 The commission never began a review of the pipeline because the legislation created a different process, said state Senator Annette Dubas, who sponsored the 2011 bill. 
 
 The 2012 law created special treatment for TransCanada’s proposal, Dubas said in a phone interview. 
 
 “I believed all along that the bill was unconstitutional and would run into problems,” she said. 
 
 The ruling effectively rescinds Heineman’s notification to the Obama administration that Nebraska legal procedures for approving the pipeline had been satisfied, said attorney David Domina, who represents the suing landowners. 
 
 “Now it is back to the drawing board for Governor Heineman and the Legislature,” Domina said in a statement. 
 
 Stacy said in her ruling that the case isn’t about the merits of the Keystone XL pipeline project. 
 
 “We are disappointed and disagree with the decision,” Shawn Howard, a TransCanada spokesman, said today in an e-mailed statement. “We will now analyze the judgment and decide what next steps may be taken.” 
 
 ‘Secure Supply’ 
 
 The company continues to believe in the project and the benefits it would confer to the U.S., including thousands of jobs and “a secure supply of crude oil from a trusted neighbor in Canada,” he said. 
 
 The Nebraska commission has seven months to approve or deny a pipeline route application, according to state documents that outline the commission’s regulations. 
 
 The commission doesn’t take into account safety concerns and is instructed to weigh the reputation of the applicant, how a company proposes to mitigate any potential environmental damage and any economic and social effects, according to the documents. 
 
 The Nebraska ruling is “another bump in the road for Keystone” and may have a “mildly negative” impact on TransCanada’s share price, Robert Kwan, an analyst at RBC Capital Markets, said in a research note. 
 
 “We would not be surprised if the administration used the events in Nebraska as a reason to delay making a decision as part of the presidential permit process,” Kwan said. 
 
 Difficult Path 
 
 Jim Murphy, an attorney with the National Wildlife Federation, which opposes the pipeline, said in a phone interview he doesn’t believe Secretary of State John Kerry could approve a route that a judge threw out as improper. 
 
 “The State Department analyzed a certain route in Nebraska and a judge has now thrown that route out,” Murphy said. “I would think that a path to approval is very difficult.” 
 
 The landowners’ lawyer, Domina, predicted in an interview last month that the case would go to the state’s Supreme Court. 
 
 “The chances are 99.82 percent,” the attorney said then, adding it may take as long as 10 months for Nebraska’s top court to render a ruling. Domina last month declared himself a Democratic candidate for the U.S. Senate. The seat is currently held by Republican Mike Johanns, who has said he’s retiring. 
 
 Oil Bottleneck 
 
 TransCanada first applied to build Keystone XL in September 2008 to connect rising volumes of oil-sands crude with U.S. Gulf Coast refineries. Producers are counting on the project to help ease a transportation bottleneck and raise the price of Canada’s heavy crude, which averaged $24.50 a barrel lower than the main U.S. benchmark last year. 
 
 Oil is Canada’s most valuable export, with shipments worth about C$73 billion ($65.9 billion) in 2012, according to the national statistics agency. Almost all Canadian crude exports go to the U.S. 
 
 While the Nebraska route issue may delay Keystone XL, the effect on TransCanada from another hold-up on the pipeline isn’t as big as it would have been in 2008 because the company is focusing on other projects, said Juan Plessis, an analyst at Canaccord Genuity Corp. in Vancouver. 
 
 “Will the stock open lower tomorrow because of this? Probably not,” Plessis said. “Most investors are quite jaded by the delay. They’ve pretty much seen everything. It’s been five years since this was put forth to the U.S.” 
 
 For TransCanada, Keystone XL’s significance is being overshadowed by a much larger crude pipeline it now plans to build, the C$12-billion Energy East project that would carry oil-sands production to eastern Canadian refineries and a port on the nation’s Atlantic Coast for export as far as India. 
 
 The case is Thompson v. Heineman, CI 12-2060, Lancaster County, Nebraska, District Court (Lincoln). 
 
 To contact the reporters on this story: Andrew Harris in federal court in Chicago at aharris16@bloomberg.net; Rebecca Penty in Calgary at rpenty@bloomberg.net 
 
 To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Susan Warren at susanwarren@bloomberg.net ||||| A Nebraska judge Wednesday struck down a state law that allowed Gov. Dave Heineman to approve the route of the controversial Keystone XL pipeline, a decision that could significantly delay the $5.3 billion project. 
 
 Lancaster County District Judge Stephanie F. Stacy said the 2012 law violated the state constitution. She permanently blocked Heineman (R) and other defendants “from taking any action on the governor’s January 22, 2013 approval of the Keystone XL Pipeline route,” such as allowing land to be acquired by eminent domain for the project. 
 
 Stacy concluded that the state legislature could not take the routing power away from its Public Service Commission and allow Heineman to make the decision. More than 200 miles of the proposed pipeline, which would carry as many as 830,000 barrels of heavy crude oil daily from Canada to refineries in the Gulf of Mexico, would run through Nebraska. 
 
 The judge’s decision to overturn LB 1161, enacted in the final hours of the state’s 2012 session, means “there is no approved route across Nebraska now,” said David A. Domina, the lawyer who represented the three landowners who filed the lawsuit. “This statute is the only statute we have out here that creates a procedure for getting a permit” for a pipeline, said Domina, who is running for U.S. Senate as a Democrat this fall. 
 
 “I am more or less ecstatic that we won this first round anyhow,” added Randy Thompson, one of the plaintiffs and co-owner of 400 acres of land in Merrick County. “A good day for me will be when I see TransCanada’s taillights cross the Canadian border, heading north.” 
 
 View Graphic Map of the Keystone XL pipeline. 
 
 Heineman and the other defendants immediately appealed the ruling to the Nebraska Court of Appeals. 
 
 “I’m pleased that Attorney General [Jon] Bruning is appealing this decision,” Heineman said in a brief statement. “This is an important issue for the state of Nebraska.” 
 
 TransCanada, which is seeking permission from the U.S. State Department to build the 1,179-mile northern leg of the pipeline, issued a statement saying it disagreed with Stacy’s ruling and was disappointed by it. 
 
 “TransCanada continues to believe strongly in Keystone XL and the benefits it would provide to Americans — thousands of jobs and a secure supply of crude oil from a trusted neighbor in Canada,” spokesman Shawn Howard said. 
 
 Experts said that the ruling and subsequent appeal could push any final decision on the project until after the November election. It remains unclear whether the case will receive an expedited hearing, and the administration could choose to delay the process as it did in January 2012 when Trans-­ 
 
 Canada was devising an alternative route around the Nebraska Sandhills, a sensitive habitat. 
 
 Environmentalists have seized on the pipeline as one of the most visible symbols of U.S. dependence on fossil fuels whose use they say is warming the planet. They repeatedly have demanded that the State Department and President Obama deny TransCanada permission to build the pipeline, in part as a way to slow the extraction of crude from oil sands in Canada. Nebraska activists have expressed concern about oil spills from the pipeline, especially ones that could seep into the vast aquifer that supplies water for the state and others in that region. 
 
 They suffered a setback last month when the State Department’s final environmental assessment concluded that the pipeline would probably not alter emissions of global greenhouse gases. A official from the State Department said it would have no comment about the Nebraska decision because it is ongoing litigation. 
 
 The Nebraska law struck down Wednesday allowed TransCanada to seek approval of the project from the state’s elected five-member Public Service Commission or from Heineman. After approving the route, Heineman gave the pipeline company power of eminent domain to acquire land. 
 
 “I think TransCanada went to the governor because it was a sure bet. It was a political sure bet. It was faster and . . . there is no provision in the statute for appellate review of the governor’s decision,” Domina said. 
 
 But Stacy ruled that the state legislature could not pass such a law. “It is clear,” she wrote, “the Legislature cannot . . . divest the PSC of jurisdiction over a class of common carriers and vest such power in another governmental agency, body of government, or branch of government, except the Legislature.” 
 
 In addition to the court appeal, Nebraska activists said, the legislature could go back and pass another law restoring the PSC’s power to determine the route. That might require a special session, because the legislature is near the end of its 60-day 2014 session. 
 
 TransCanada also could give up or seek a route that does not go through Nebraska. Jane Kleeb, who has led the Nebraska opposition to the pipeline, speculated that the company might seek a route through Kansas instead. 
 
 But she said she now thinks the pipeline won’t be built. “I think the opposition is too strong. I think citizens have their eyes open now on how pipeline companies treat landowners.” 
 
 Juliet Eilperin contributed to this report.
– The Keystone XL pipeline was dealt yet another setback yesterday when a Nebraska judge struck down a law that the governor had used to approve the pipeline's route in the state, and seize land for it via eminent domain. The judge sided with three Nebraska landowners who argued that under the state's constitution, only the Public Service Commission has routing authority, the Wall Street Journal reports. "I am more or less ecstatic," one of the landowners said. "A good day for me will be when I see TransCanada's taillights cross the Canadian border, heading north." The legislature gave Gov. Dave Heineman the power to OK a revised pipeline route in 2012, after the original drew objections because it passed through ecologically delicate areas. Now, "there is no approved route across Nebraska," the plaintiffs' lawyer said. Nebraska immediately vowed to appeal, but experts tell the Washington Post that could delay a final decision on the project—which still requires White House approval—until after the November elections. "This gives the US State Department and Obama an out," a business professor tells Bloomberg. "I think he's going to push it back another year."