Big data center, Keystone XL in spotlight

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February 15, 2012 - 6:00pm

Tax incentives designed to lure a huge data center project to Nebraska moved a step closer to enactment Thursday, while controversy resurfaced over the proposed Keystone XL oil pipeline.

Lawmakers advanced the data center tax incentives, but not before an attempt to expand them ran into resistance. As introduced, the bill would offer tax incentives to companies that invest at least $300 million, and create at least 30 new jobs. Sen. Abbie Cornett, chairwoman of the Revenue Committee, proposed lowering the investment threshold to $200 million. "This change just makes us more competitive with our surrounding states, as their thresholds are all $200 million," she declared.

Sen. Abbie Cornett

Cornett said since the bill was introduced, several companies considering data center projects have contacted the state.

Omaha Sen. Burke Harr objected to the amendment to expand the incentives.

"We have a fiduciary duty to our constituents to make sure that we spend their money - it's not our money, and it's not any company's money -- wisely. And we don't even know how much this is going to cost," he complained.

Sen. Burke Harr

Cornett said the one big data center project, while it would cause a dip in state revenues after the first couple of years, would still be a net plus to the state of $20 million over 14 years. The unnamed company behind the project is said to be considering one site in Nebraska, possibly Kearney, and two in Iowa. The Des Moines Register recently reported speculation that the company was Apple, Facebook, or even the federal government.

Faced with opposition to expanding the proposed incentives, Cornett withdrew her amendment, at least for now, and lawmakers then gave second-round approval to the bill with the original $300 million threshold on a voice vote.

In an afternoon hearing, backers of the proposed Keystone XL oil pipeline supported a proposal to let the Nebraska Department of Environmental Quality go ahead with a review of a new pipeline route. After pipeline company TransCanada promised to propose a new route that would avoid the Sandhills, the Legislature passed a law last November giving the Department authority to review the route. But that authority was limited to pipelines, like the Keystone XL, for which an application had already been submitted to the federal government.

After Congress tried to force President Obama to decide by this month on the overall project, he rejected it, but said TransCanada could reapply. The bill by Senator Jim Smith of Papillion would extend DEQs authority to review a new proposed route for the rest of this year.

Sen. Jim Smith

Smith described his motivation, saying "This is simply what we're trying to do to make certain that Nebraska, the process that was established in the special session is able to adequately, properly review all potential sites and make certain those sites work for Nebraska."

TransCanada officials supported the bill, as did DEQ director Mike Linder, who said he was supporting the process, not necessarily the project itself.

Opponents called the bill unnecessary. Mary Pipher of Lincoln accused supporters of pandering to TransCanada. "Why is this hearing even necessary? And why was the Smith bill submitted?" Pipher asked. "There is no pending pipeline permit. And there is not even a tentative route that we know about."

Linder said TransCanada was on the verge of submitting a new route proposal before its permit application was rejected in January, and had even shown the department a map of what it was considering.

TransCanada lawyer Jim White said that while Congress is considering proposals to transfer the approval process from the State Department, or even approve the pipeline outright, by far the most likely scenario is that TransCanada will resubmit its proposal to the State Department.




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