Keystone XL Pipeline: What Is the President Thinking?

by William Yeatman on May 17, 2011

in Blog, Features

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Last night over dinner with a knowledgeable source, I heard the skinny on the $7 billion Keystone XL pipeline extension that would double U.S. imports of tar sands oil from western Canada…if the Obama administration allows it.

The 1,700 mile pipeline would link expanding Canadian crude production with America’s first-class refining hub in the Midwest and along the Gulf. It was one of three diplomatic priorities articulated by Canadian Prime Minister Stephen Harper during his February sit-down with President Barack Obama (the other two were Afghanistan and trade policy). That’s why the State Department is behind it.

However, oil production from tar sands is more carbon-intensive than traditional production, so environmentalist groups are staunchly opposed to the Keystone XL pipeline. As a result of the greens’ organized opposition, the Environmental Protection Agency in July, 2010, rebuked the State Department’s draft Environmental Impact Assessment* of the pipeline, stating that it contained “inadequate information.”

*[Because the pipeline crosses an international border, the primary permitting agency is the State Department. Under the National Environmental Protection Act (NEPA), any federal agency action (ie, permitting) must adequately account for the environmental impact of the permitted action. Generally speaking, there are two ways to do so: with a less detailed “Environmental Assessment” and a more detailed “Environmental Impact Statement.” Because of the magnitude of the Keystone XL pipeline, the State Department had to conduct a detailed Environmental Impact Assessment. This is the document that the EPA critiqued.]

In order to address the EPA’s concerns, the State Department in March undertook a supplemental Environmental Impact Assessment, for which the comment period ended in mid-April. A final draft has not yet been issued.

For now, the project is in limbo, and the pipeline’s proponents are worried that the Environmental Impact Statement might be referred to the Council on Environmental Quality, the bureaucracy responsible for administering NEPA. Such a referral could lead to lengthy, costly delays.

Of course, all these agencies (State, EPA, and CEQ) work for the President. So what does he think about this inter-agency conflict? I believe it’s his doing, to provide himself political cover. Canada is out closest friend, literally and figuratively, and the pipeline is a major priority for our northern neighbors. I can’t imagine that the President would check such a vital Canadian interest. At the same time, he must cater to the needs of his environmentalist base. It would be politically savvy of the President, knowing full well that he will approve the pipeline, to have the EPA question the pipeline as a sop to the greens, and then have the State Department answer the EPA’s questions. The politics of high gas prices further suggests that the President is a pipeline proponent.

Then again, this Administration is waging war on domestic energy production, so maybe I’m giving the President too much credit.

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