Eight Years Later: KXL Still Controversial

By: Maggie Coulter

On June 25, under the District’s beating sun, President Obama removed his jacket and wiped his brow once, twice, numerous times during the course of his 48 minute speech, the focus of which – some would say quite aptly, given the temperature – was climate change. But of the nearly 6,000 words the President spoke on the subject, one in particular should’ve caught your ear: Keystone. And by Keystone, he meant the Keystone XL Pipeline. If you haven’t been following the saga of the Keystone XL Pipeline, no one can blame you – between problems with government oversight, conflicts of interest, and opposition from environmental groups, review of the project has dragged on for almost eight years.

Initially proposed by TransCanada Corporation in 2005, the planned Keystone Pipeline System would transport tar sands crude oil from Canada to Midwestern and Gulf states. Because the pipeline would cross the U.S.-Canada border, the project required oversight by the Department of State in the form of a Presidential Permit. Under the Bush Administration, in March of 2008, the U.S. State Department issued a Presidential Permit authorizing the first two phases of the Keystone Pipeline System. The first two phases of the project began operation in 2010 and 2011.

The third phase, from Oklahoma to the Texas Gulf coast, is currently under construction. Though this segment of the pipeline would not cross any international borders, the utility of the pipeline was arguably dependent upon the connecting segments. In a standard environmental impact analysis, an agency may not segment a project into smaller parts to mask environmental impacts. However, the State Department sidestepped the Presidential Permitting process by framing the third phase as a project with independent utility – meaning it could stand on its own, separate from the rest of the pipeline. Because this third phase would not cross any international borders it  didn’t require a Presidential Permit.

The fourth and final phase, commonly known as the controversial Keystone XL pipeline, is currently under review by the State Department and awaiting the issuance of a Presidential Permit. Both oil industry big-wigs and environmentalists are up in arms over this, the final section of the pipeline.

On President’s Day 2013, environmentalists gathered in Washington, DC to encircle the White House with a symbolic pipeline in the largest environmental rally in history – estimates state that nearly 50,000 people attended. (President Obama, however, was not in attendance; he was out of town.) With 48 other environmental leaders, Bill McKibben, a climate change scientist, author and founder of 350.org, participated in an act of civil disobedience by chaining himself to the front of the White House. (The 350 in 350.org refers to 350 parts per million (ppm) of carbon dioxide, the number most scientists agree is the maximum amount the Earth’s atmosphere can sustain before catastrophic and irreversible changes occur; current measurements show that levels reached 400ppm two months ago, in May of 2013.)

Environmentalists oppose the pipeline because it will facilitate the transportation of tar sands oil from Canada to the Gulf coast for export. Opponents to the pipeline explain that tar sands crude oil generates two to four times the amount of greenhouse gases per barrel than conventional crude oil, which would exacerbate global warming. With the increase in the concentration of atmospheric carbon dioxide, environmental groups argue that the only way to prevent the most drastic impacts of global warming is to keep oil in the ground. Further, the tar sands oil is currently land locked; allowing a portal to the coast would make possible the exportation of the oil on a very lucrative global market. Without a market for the tar sands oil, it will be too expensive for the oil industry to conduct the energy intensive extraction of tar sands oil.

Proponents of the pipeline, mainly oil industry companies, argue that it will create new jobs, reduce U.S. dependence on oil from overseas, and that tar sands will be developed regardless of the pipeline’s construction. The oil subsidy in the United States is one of the most powerful in the nation; fossil fuel subsidies range from $10 to $52 billion per year – an important interest that cannot be understated.

However, phase four of the pipeline was a lot closer to being approved three years ago than it is today. In 2011, the State Department had just conducted its first environmental review of the Keystone XL project. That was when the first bomb dropped – the private contractor employed by the State Department to complete the required Environmental Impact Statement (EIS) on the final phase of the Keystone Pipeline, Texas-based Cardno Entix, turned out to be a preexisting client of TransCanada – a blatant conflict of interest. Congress quickly requested a review of the contracting process, and the Inspector General investigated and established new conflict of interest guidelines.

To rectify the flaws in the first EIS, the State Department contracted with another private company to complete a Supplemental Environmental Impact Statement (SEIS) with the British multinational corporation ERM. Then, the unthinkable happened – again. ERM lied on its conflict of interest forms, stating that it had not done business with TransCanada within the last three years when it had in fact worked on a pipeline in Alaska with TransCanada since 2011.

In addition to the same insufficiencies found in the initial EIS, environmental groups are arguing that the new SEIS is flawed. The EPA has publicly recognized that the Keystone XL Pipeline will not bring the 50,000+ jobs touted by oil industry leaders, but rather, will only supply between 5,000 to 6,000 temporary construction jobs. Additionally, the argument that the creation of the pipeline will reduce dependence on foreign oil and result in cheaper gas prices is misleading. A pipeline to bring oil from Canada to the United States already exists and the Keystone XL segment of the pipeline system would bring the tar sands crude oil to the Gulf coast for export into the international market. In all likelihood, export of tar sands oil would increase domestic gas and oil prices. Even industry groups have begun to question the inevitability of tar sands development, after a Canadian pipeline that would transport tar sands crude oil from Alberta through British Columbia to the coast was rejected by Canadians.

So what could be in store for the Keystone XL Pipeline? As it awaits its Presidential Permit, it is unlikely that the State Department will issue yet another environmental review, even though both the EIS and SEIS were found to have conflicts. As he did in 2011 right before his reelection, President Obama alone holds the power to grant or deny the Presidential Permit. In the past, he hasn’t hinted much at how he will proceed.

However, in a blink-and-you’ll-miss-it moment in his June climate change speech, President Obama surprised environmentalists and the oil industry alike when he mentioned the fate of the Keystone XL Pipeline:

“Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward. It’s relevant.” (emphasis added)

Environmentalists are hoping that this statement of support for climate change science and reinforcement of the environmental review standards are portentous of the Keystone XL outcome. Further, now that he has begun his second administration, the President can focus on his legacy projects: healthcare, Afghanistan, and now climate change. The President will have to adhere to this statement made in his June climate change address, or face looking like a backpedaler. Evidence is mounting that after eight years in limbo, a decision on the Keystone XL Pipeline is on the horizon.

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