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Nebraska lawmakers vote to reroute pipeline

By Michael Avok

LINCOLN, Nebraska (Reuters) - Nebraska lawmakers on Tuesday voted unanimously to reroute a controversial proposed U.S.-to-Canada oil pipeline away from an ecologically-sensitive region in the state, and the governor quickly signed the measure into law.

Governor Dave Heineman signed bills to reroute TransCanada Corp's proposed $7 billion Keystone XL pipeline away from the ecologically sensitive Sandhills region and Ogallala aquifer and to fund an environmental study for a new pipeline route.

The Obama administration earlier this month delayed approval of the proposed pipeline until after the 2012 U.S. election, bowing to pressure from environmentalists and sparing President Barack Obama a damaging split with liberal voters he may need to win re-election.

The administration's decision to explore a new route for the pipeline to avoid fragile territory in Nebraska dismayed the Canadian government, which had lobbied vigorously for the project.

After working with Nebraska lawmakers last week, TransCanada Corp agreed to find a new route for its pipeline that would deliver 700,000 barrels a day of crude from Alberta's oil sands to Texas refineries.

Environmentalists strongly oppose the project, because of concerns about spills and carbon emissions from production of oil sands crude. Advocates for the pipeline say it would create jobs and reduce U.S. dependence on Middle East oil.

The governor was quick to sign the measures, bringing to a close a 15-day special legislative session called solely to craft pipeline regulations.

"Our work is done," Heineman said.

At issue was the potential environmental impact a pipeline could have on the Sandhills region and the Ogallala Aquifer, which supplies water to many cities and ranches and supports the agriculture industry with water for irrigation.

Nebraska forged ahead with pipeline legislation even after the State Department's decision to put off giving TransCanada a permit for the Keystone XL line until 2013.

(Reporting by Michael Avok; Editing by Will Dunham, Mary Wisniewski and Greg McCune)

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