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Nebraska up in arms about TransCanada’s Keystone XL

While the cross-border outcome for TransCanada’s Keystone XL pipeline is still uncertain, U.S. opposition to the southern section currently under construction in Texas and Oklahoma is escalating.

On Monday, Associated Press reported that a Lancaster County judge refused to dismiss a lawsuit challenging the constitutionality of Nebraska’s new pipeline siting law, filed in May last year.

The claim states the law passed in April unlawfully delegated powers to the Governor that should be the Public Service Commission’s.

The suit also says the law came after unconstitutional special legislation because it only benefits one company, Calgary-based TransCanada (TSX, NYSE:TRP).

Keystone XL’s southern leg is on schedule to begin operations by the end of 2013. Once it does, it will transport oil from Cushing, Oklahoma — the pricing point for U.S. crude— to refineries on the Texas coast.

Canada’s federal government wants to see the pipeline built, as it claims Keystone XL will create employment and inject billions of dollars into the Canadian economy, while also helping the U.S. secure its energy needs.

According to a report ordered by the U.S. government in 2010, however, Canada’s claims are not entirely true, as there is supposed to be already enough pipeline capacity to deliver oil to the U.S. until at least 2030.

Currently, the country exports 2 million barrels of oil per day to the U.S.

Alberta’s crude output is set to more than double to 3.7 million barrels by 2025 out of a total of 4.7 million for Canada as a whole. Production in the U.S., particularly from the Bakken basin in North Dakota will see the country ramp up its current 7.8 million barrels to 10.9 million barrels over the next few years.