Keystone pipeline route in Nebraska to be reviewed

November 10, 2011

The Obama administration will delay action on a controversial cross-country oil pipeline in order to assess a shift in its route, officials announced Thursday, effectively putting off a politically vexing decision until after next year’s election.

The move is the latest twist in a more-than-three-year review process that has evolved from a fairly routine decision within the federal bureaucracy to a very public debate over national energy policy. It pitted environmental activists and an array of citizens along the pipeline’s proposed route against business groups, oil companies and unions whose members would be employed as part of the $7 billion project.

Officials at the State Department, which oversees the permitting process, had once promised a decision on the proposal by Alberta-based TransCanada by year’s end. But they said Thursday that they had to extend their review of the 1,700-mile pipeline to address Nebraskans’ objections to building across the state’s sensitive Sandhills region. That area provides habitat for imperiled wildlife and covers the Ogallala Aquifer, a critical source of drinking and irrigation water for state residents.

Kerri-Ann Jones, assistant secretary in the Bureau of Oceans and International Environmental and Scientific Affairs, told reporters that choosing a new route for the Nebraska portion of the pipeline will require a new environmental assessment, which will probably take at least 15 months.

“We’re being responsive to what we’ve heard from the public,” Jones said.


Jones said she and other State Department officials had consulted with the White House in recent days as they began to explore the possibility of a supplemental environmental assessment.

But she emphasized that they were spurred by concern that Nebraskans lacked a regulatory or legal framework to help influence the pipeline’s route. The Nebraska legislature is in a special session to consider its own options for directing the pipeline.

“This is not a political decision,” she said, adding that when it came to White House involvement, “there was no effort to influence our decision.”

Once the State Department broached the idea of a delay, Obama’s political and campaign team began floating the idea to environmental leaders and influential donors who had warned that approval of the project could dampen enthusiasm for the president’s reelection. A number confirmed discussions of the proposal over the past several days.

“Because this permit decision could affect the health and safety of the American people as well as the environment, and because a number of concerns have been raised through a public process,” President Obama said in a statement Thursday, “we should take the time to ensure that all questions are properly addressed and all the potential impacts are properly understood.”

Senior Canadian officials and TransCanada chief executive Russ Girling said Thursday that they remain optimistic the pipeline would win final approval.

“We remain confident Keystone XL will ultimately be approved,” Girling said in a statement, adding: “This project is too important to the U.S. economy, the Canadian economy and the national interest of the United States for it not to proceed.”

The company said in a statement that among the 14 routes already reviewed by State Department officials was one that “would have avoided the entire Sandhills region and Ogallala Aquifer and six alternatives that would have reduced pipeline mileage crossing the Sandhills or the aquifer.”

National Wildlife Federation President Larry Schweiger said the pipeline had crystallized the issue of climate change and corporate influence over national policy in a way few other issues had in recent years.

“Many Americans are today tired of corporations calling the shots in Washington. This is a shot called not by the corporations, but by the ­voices of the people who were outside the fence of the White House on Sunday,” he said. “This is a sleeping giant, and they have awakened the giant of the environmental movement.”

Proponents of the pipeline, meanwhile, said the delay would cost Americans jobs and do nothing to address the country’s ongoing dependence on imported oil. Stephen Brown, vice president of government affairs for the Tesoro oil refinery, said Obama was lucky that Nebraska Gov. Dave Heineman (R) had come out against the pipeline.

“Terrible decision for the energy future of the country, brilliant decision for the president’s reelection campaign,” Brown said by e-mail. “And the administration owes a debt of thanks to the Republican leaders of Nebraska for providing an escape hatch on this.”

Jane Kleeb, executive director of the environmental group Bold Nebraska, said the bipartisan nature of Nebraskans’ opposition helped sway the decision. “We stuck together, despite differences in what is on our voter-registration cards, and stayed focused on stopping the pipeline from destroying the Sandhills and risking the Ogallala Aquifer,” she said.

It remains unclear whether the delay will mean what the Sierra Club’s executive director, Michael Brune, called “the death knell for a pipeline that never should have been considered.” Brune and other environmental leaders focused on the global warming implications of the project, which would transport oil that is unusually energy-intensive to extract.

Glenn Hurowitz, a senior fellow at the Center for International Policy, warned that environmentalists might be celebrating prematurely. “Let’s not delude ourselves,” he said by e-mail. “President Obama is just kicking the climate can down the road to a point when he may not even be the one to make the decision.”

It is uncertain how oil companies now expanding operations in Alberta would react. Pipeline experts said that by adding pumping stations, companies could boost output on existing pipelines.

“The same oil will get down to the gulf coast as long as economics are compelling, even if Keystone gets nixed,” said an oil analyst who spoke on the condition of anonymity to preserve
his business relationships with Trans­Canada.

Valero Energy, the largest refiner in the United States, said in a statement that “any delay in opening the Keystone XL pipeline extension is unfortunate for our nation,” adding that “this decision is due to a small and misguided group of extremists who fail to realize that fossil fuels will continue to be consumed because they are efficient and economically viable.”

Several Republican congressional leaders and presidential candidates, including Newt Gingrich and Jon Huntsman Jr., criticized the decision as a blow to the economy.

“Once again, President Obama has demonstrated that he cares more about appeasing radical constituencies than making energy more affordable for American families and businesses, creating more American jobs, and lowering our dependence on oil from unfriendly nations,” Gingrich said in a statement.

Sen. Max Baucus (D-Mont.), who has endorsed the pipeline, also criticized it as “more bureaucratic red tape.”

“We’ve done enough analysis,” he said. “It’s time to put Montanans back to work.”

House Speaker John A. Boehner (R-Ohio) also joined the fray, criticizing Obama for “punting” on the project: “The current project has already been deemed environmentally sound, and calling for a new route is nothing but a thinly veiled attempt to avoid upsetting the president’s political base before the election.”

Staff writer Steven Mufson contributed to this report.

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