The Keystone Cop-Out
You may recall the old black and white movies of the hapless Keystone Cops, who run about frantically in aimless fashion and never seem be able to achieve anything. Whenever I read anything about the Keystone XL Pipeline, I cannot help but think of those grainy images as interested parties, such as environmentalists, unions, Congress, and the Obama Administration, scurry about in every direction and jockey for position and political cover during this election cycle.
The Keystone XL Pipeline Project is a $13 billion investment by TransCanada. The pipeline is designed to transport about 830,000 barrels of oil per day from Alberta, Canada to US refining markets. The proposed pipeline will originate in Hardisty, Alberta and extend southeast through Saskatchewan, Montana, and South Dakota to Steele City, Nebraska, where it would tie into an existing pipeline (Keystone Phase II) running to Cushing, Oklahoma. From Cushing, the proposed pipeline will continue to the Port Arthur/Houston area. The project is stated to create about 20,000 ‘shovel-ready’ construction jobs and an additional 118,000 jobs through increased business for local goods and services. Industry support is near universal and even labor and construction unions have expressed support for the project.
Environmental groups do not support the project, voicing several concerns. The extraction of Canadian tar sands will harm the ecosystem above the tar sands. The processing and refining of tar sands crude oil will emit a higher amount of greenhouse gases compared to currently refined crude oil. As the pipeline travels over important aquifers in Nebraska, the risk of spills and releases from the pipeline is too great. Overall, the common theme seems to be that tar sands are ‘dirty fuels’ and the pipeline will lock the US into dependence on hard-to-extract, polluting fuels.
Because the pipeline crosses the Canadian border into the US, the project must receive a so-called ‘Presidential Permit,’ a process overseen by the Department of State. However, the Administration has not yet approved the project, even though the application was filed in 2008 and the final environmental action statement approved the project in August, 2011. In fact, the Administration recently announced that no decision would be made until after the 2012 election. The stated rationale for the delay is further study to provide time to potentially re-route the pipeline around the aquifers. Many speculate that the reason for the delay is to energize the Administration’s environmentalist base for and until the election.
Several environmental groups have also threatened to sue over the project. Using the Endangered Species Act as a basis for a suit, the groups, which include the Natural Resources Defense Council, claim that the US has not considered the project’s effects on several species, such as the Whooping Crane, the Western Prairie Fringed Orchid, and the Arkansas River Shiner.
Congress has joined the fray. As of this writing, the US House and Senate have included a 60-day decision deadline for the project in separate bills authorizing the extension of the payroll tax cut. The Administration originally indicated it would veto any linkage between the extension and the project. However, if Congress can work out their differences on the extension, it seems a deadline for a decision on the project will be in a final bill that should be signed by the President.
In those old movies, the Keystone Cops were eventually able to overcome their comic disorganization. While most observers and commentators suggest that the Presidential Permit will ultimately be issued, the players in this drama continue to scurry about, hoping to obtain cover or political advantage. In the meantime, though, the rest of us hope the comedy portion of this movie soon ends.
John B. King is a partner with Breazeale, Sachse & Wilson, L.L.P., in Baton Rouge, Louisiana. His practice relates mainly to environmental regulatory permitting and compliance. Prior to joining the firm in 2003, he served as Chief Attorney for Enforcement for the Louisiana Department of Environmental Quality. He may be contacted at email@example.com.