President Barack Obama's expected veto of a bill approving the Keystone XL pipeline this week will hardly matter, because the controversial project faces new obstacles that go beyond the politics of the nation's capital.

White House officials have said Obama will veto the bill, passed February 11. Lawmakers plan to send the measure to him this week, now that they're back in town after a recess and around to denounce his veto from the bully pulpit of the House or Senate floor.

Despite any rhetorical fireworks, Obama's veto will do little to end the drama of the controversial pipeline. The reason? The multibillion-dollar project faces other challenges in Nebraska and South Dakota—two states that the 1,179-mile (1,897-kilometer) northern leg of the pipeline would cross as it moves oil from Hardisty, Alberta, to Steele City, Nebraska.

Right now, the pipeline's owner—Calgary-based TransCanada—lacks an approved route through Nebraska and a usable construction permit in South Dakota. Until these problems are fixed, the project can't move forward—regardless of what happens in Washington, D.C.

So the protracted fight, now largely a test of Obama's commitment to the environment, will drag on. Proponents say Keystone will provide jobs and bolster North America's energy security by ensuring delivery of Canadian oil. Opponents say it will foster the development of Alberta's oil sands, which will in turn emit more heat-trapping carbon dioxide when burned and thus exacerbate global warming. (See "Do Plummeting Oil Prices Weaken Case for Keystone?")

Legal Fight in Nebraska Escalates

This week, Nebraska's Holt County will hold a hearing on whether to expedite the schedule for resolving a legal challenge to Keystone's route. On February 12, a county judge issued a temporary injunction to stop TransCanada from using eminent domain to force landowners to sell rights allowing the pipeline on their property.

As a result, TransCanada agreed not to use eminent domain anywhere in Nebraska until the state's supreme court finally settles the legal wrangling over Keystone's route across the state. Just when that will happen is difficult to say.

View Images Keystone opponents built this barn directly on the proposed route in a snowy cornfield near Bradshaw, Nebraska. Photograph by Nati Harnik, AP

"Both sides are looking for clarity—the sooner, the better," says TransCanada spokesperson Mark Cooper, adding that the company expects the process to take about a year.

"It could take a year or two years for the [state's] supreme court to hear the case," says Jane Kleeb, director of the anti-pipeline group Bold Nebraska. The latest Nebraska injunction is a "huge victory" for opponents, she says.

TransCanada, which first proposed the Keystone XL project in 2008, seemed to be making progress earlier this year. The new GOP-controlled Congress said it would force an Obama decision, and, for the first time, both the House and Senate passed a bill approving the project—although not by veto-proof margins. (See related post: "Keystone XL Veto Threat: Does 'No' Really Mean No?")

Also, the Nebraska state supreme court issued a decision in January that upheld the law approving the Keystone route in that state. Yet that ruling didn't prevent other lawsuits from challenging the law. (See related post: "Nebraska Ruling Throws Keystone XL Decision Back to State Department.")

So in late January, after TransCanada filed paperwork to begin using eminent domain to acquire land from owners who didn't agree to sell easement rights, landowners sued. Kleeb says about 40 landowners in Holt County and another 20 in York County object to the pipeline on their property. TransCanada says it has approvals from 90 percent of Nebraska landowners along the pipeline's path.

"For us, it's the last resort," Cooper says of eminent domain, adding that TransCanada prefers to work with landowners to reach voluntary agreements.

Opposition Mounts in South Dakota

Not all landowners see TransCanada as cooperative. In South Dakota, rancher Paul Seamans says he initially opposed Keystone because of the way the company "treated us, bullied us." Now, he says he's also concerned about the potential environmental damage, citing possible pipeline spills into waterways and the climate change impact of using the fuel extracted from Canada's oil sands.

So Seamans's grassroots group Dakota Rural Action, along with 42 other individuals and groups, are challenging TransCanada's bid to extend its construction permit in South Dakota.

In March 2010, the state's Public Utilities Commission approved such a permit as long as the company met 50 conditions and began construction within four years. Since TransCanada was unable to begin construction, given legal appeals in Nebraska and delays in the federal review process, its permit has essentially lapsed.

In September, the company filed paperwork to certify that it continues to meet the 50 conditions. It's up to the PUC to decide.

"It will all culminate in the first week of May with a public hearing," says PUC chair Chris Nelson, noting the hearing could last four or five days. He says there's no deadline for a decision but his commission will act quickly. "When I say expeditiously," he says, "I mean it."

"We know we have strong support in the state," Cooper says of South Dakota. Polls show two-thirds of residents back Keystone and 100 percent of landowners along the pipeline route have agreed to easement rights, so eminent domain won't be needed, he added.

Still, Seamans says there are nearly three times as many groups or individuals challenging the construction permit now than did five years ago. "The tribes have got involved quite a bit more," he says, noting their concern about protecting tribal lands.

Kleeb, whose Nebraska group is also intervening in the South Dakota case, expects the PUC will grant TransCanada's certification but might tweak the pipeline's route through the state. She says such a revision might necessitate a new supplemental environmental impact statement from the U.S. State Department, which has a responsibility to review Keystone because it crosses an international border.

The State Department has already spent years studying the environmental impacts of various Keystone routes. TransCanada split the initial, 1,700-mile (2,736-kilometer) project into two parts, and in January 2014, it finished building the southern leg from the Midwest to Gulf Coast refineries.

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