Battle rages over Obama’s climate standards for Keystone XL pipeline

Two weeks after President Obama said he would support the proposed Keystone XL pipeline only if it “does not significantly exacerbate” greenhouse-gas emissions, the political battle over how to define that is still raging.

This week, the American Petroleum Institute unveiled a new eight-state ad campaign backing the project, environmental groups renewed conflict of interest charges against a State Department contractor, and Rep. Henry A. Waxman (D-Calif.) and Sen. Sheldon Whitehouse (D-R.I.) wrote a 20-page letter to the State Department arguing that the pipeline does not meet the president’s climate test.

The State Department — which has permitting authority because the Keystone XL pipeline crosses an international border — issued a preliminary environmental impact statement in March, arguing that approving the pipeline would have no climate impact because bitumen from Canadian province Alberta’s oil sands could reach markets via railroads even without a pipeline route.

Waxman and Whitehouse said Wednesday that the State Department’s analysis was “fundamentally flawed” and that transportation constraints were already increasing costs and driving down prices paid to oil sands producers, discouraging oil sands expansion plans. Some producers report discounting oil sands crude by $50 or more a barrel to compensate for high rates charged by rail operators.

The two lawmakers also argued that recent opposition in Canada had cast doubt on the viability of alternative pipeline routes within the country.

Meanwhile, Friends of the Earth and the Checks and Bal­ances Project on Wednesday renewed allegations that the firm the State Department hired to help write its report on the pipeline failed to disclose conflicts of interest around its past work for a different pipeline project involving TransCanada, the Keystone owner and major oil companies with interest in the Alberta oil sands.

The international consulting firm, ERM, is a member of the American Petroleum Institute, has worked for several big oil companies with stakes in oil sands production and has worked as a subcontractor on a proposed Alaska Pipeline Project that has not come to fruition.

“ERM lied on its conflict of interest disclosure form, and State was either asleep at the wheel or chose to look the other way,” said Ross Hammond, senior campaigner for Friends of the Earth.

State Department officials said that they have known about ERM’s other projects and that most reputable environmental consulting firms working in the pipeline industry have done business for big oil and gas corporations. ERM’s work for the Alaska Pipeline Project was done for another consulting firm, which was in turn working for Exxon Mobil, the U.S. partner in the pipeline that was to cross Canada on its way to the lower 48 states. Trans­Canada is the Canadian partner, but that project has stalled.

“Our rigorous conflict of interest procedures ensure that no contractors or subcontractors have financial or other interests in the outcome of a project,” said State Department spokesman Jen Psaki. “To save taxpayers’ dollars, third-party contracts are common for environmental reviews of projects proposed by private applicants. The selected contractor works directly with and under the sole direction of the Department of State while the applicant pays for the work. The contractor certifies that it has not had, and does not have, any direct contracts with the applicant.”

ERM did not reply to calls for comment.

API said its new ad campaign in favor of the Keystone XL pipeline will feature comments by former presidents Bill Clinton and George W. Bush, as well as investor Warren Buffett. The ads will target national politics, running in states far from the actual route, including Delaware, Florida, Pennsylvania and New Mexico.

While the State Department is not expected to complete its final report on the Keystone XL pipeline until late summer or early fall, TransCanada has pushed ahead with the southern leg of the project, running from Cushing, Okla., to the Texas Gulf Coast, which Obama has supported. TransCanada said Wednesday that this portion is 80 percent complete and should be in service by the end of the year.

Limited pipeline capacity has contributed to heavy reliance on railroads to move crude oil to refineries. With U.S. crude production at the highest level in two decades, the amount of crude oil and refined petroleum products transported by rail was close to 356,000 carloads, or about 1.4 million barrels a day, during the first half of 2013, up 48 percent from the same period in 2012, the Energy Information Administration said Wednesday.

Steven Mufson covers the White House. Since joining The Post, he has covered economics, China, foreign policy and energy.
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