TransCanada Asks Washington to Suspend Keystone Pipeline Review

5 November 2015

The Canadian company petitioning for the construction of the Keystone XL pipeline – a transboundary project which would bring crude oil and bitumen from the Athabasca tar sands in Canada’s western province of Alberta to US refineries – has asked Washington to put on hold its review of the project’s permit application.

The TransCanada Corporation, based in Calgary, said in its 2 November letter to US Secretary of State John Kerry that they would prefer that the review be put on hold until the Nebraska Public Service Commission decides whether to grant its approval of the preferred route that the pipeline would take through that particular state.

The State Department has been tasked with the permit application, given that the pipeline would cross the US-Canada border. A decision had been reportedly expected this week, though whether this will proceed on schedule was unclear at the time of this writing.

A State Department spokesperson told the Financial Times that the agency is still reviewing the letter. The US agency does not need to approve the suspension request and can continue with its process if it chooses.

The White House, for its part, has indicated that US President Barack Obama still aims to take action on the pipeline before he leaves office in early 2017, hinting that the suspension request could be denied.

“Given how long it’s taken, it seems unusual to me to suggest that somehow it should be paused yet again,” said White House Press Secretary Josh Earnest on Tuesday, referring to the State Department’s review of the pipeline permit. “There’s reason to suspect there may be politics at play” in the suspension request, he said.

Legal uncertainty

The reasoning behind the suggested delay, TransCanada explained on Tuesday, was the legal uncertainty in Nebraska over whether a proposed alternative route through that state can go forward.

“We note that when the status of the route in Nebraska was challenged last year, the [State] Department found it appropriate to suspend its review pending resolution of that challenge,” said Kristine Delkus, TransCanada’s Executive Vice President, Stakeholder Relations and General Counsel, in the letter.

“We submit that, in the current circumstances, a similar suspension of the review process would be appropriate,” Delkus continued.

TransCanada had applied with the Nebraska Public Service Commission in early October for sign-off on the route. While the revised route put forward in 2013 had received approval from Nebraska Governor Dave Heineman, questions were later raised over whether the law giving the governor that authority was in line with the state’s Constitution, prompting the change in strategy.

The Nebraska Public Service Commission regulates major oil pipelines, natural gas jurisdictional utilities, telecommunications carriers, and various other utilities in the Midwestern US state. The route that the pipeline would take through Nebraska has become especially sensitive given some of the environmentally sensitive regions in the state, with the revisions proposed by TransCanada in 2012 purportedly aiming to avoid them.

“After careful review, we believe that going through the [Public Service Commission] process is the clearest path to achieving route certainty for the Keystone XL Project in Nebraska,” said Russ Girling, TransCanada’s president and chief executive officer in late September in announcing the move. “It ultimately saves time, reduces conflict with those who oppose the project and sets clear rules for approval of the route.”

If and when the Keystone pipeline is constructed, it would transport 830,000 barrels of crude oil a day from Western Canada to Nebraska, crossing through other US states in the process. Some of the oil it would transport could also come from the US, specifically from North Dakota. Once in Nebraska, the pipeline would then connect with existing pipelines to bring the oil to the Gulf Coast.

While supporters of the project argue that it could increase jobs and provide safe, reliable access to oil, detractors have warned against the massive carbon footprint from the extraction and refining of Canadian sands oil, among other concerns, while questioning how many jobs would actually be created in the long-term.

Environmental groups have welcomed the TransCanada request to suspend the review, while highlighting still the need for a final rejection from the Obama administration of the pipeline project.

“It’s one of the great victories for this movement in decades,” said Bill McKibben, the founder of environmental NGO 350.org. “In defeat, TransCanada is asking for extra time from the referees, and clearly hoping they’ll get a new head official after the election. It’s time for the current umpire, President Obama, to reject this project once and for all, and go to Paris as the first world leader to stop a major project because of its effect on the climate.”

Years-long saga

Earlier this year, Obama vetoed legislation which would have required the construction and approval of the pipeline, arguing that Congress was interfering with “established executive branch procedures.” (See Bridges Weekly, 26 February 2015)

The move was yet another development in a saga that now dates back seven years and has been cast by many environmental groups as an indicator of the US President’s overall approach to climate change.

Two years ago, Obama made headlines when he declared that the pipeline would only be approved by the State Department if it was clear that it would not increase net carbon emissions. Meanwhile, the US President has continued his work to shore up his administration’s climate legacy in other ways, which has already included executive actions and regulations aimed at slashing carbon emissions from power plants, as well as methane emissions from the oil and gas sector, among others. (See Bridges Weekly, 27 June 2013 and 22 January 2015)

The TransCanada request also comes just weeks ahead of the UN Framework Convention on Climate Change’s (UNFCCC) annual Conference of the Parties in Paris, France. Countries are aiming to ink a new, universal climate deal in Paris that would take effect from 2020 onward, replacing the current Kyoto Protocol when it expires. The US’ stance on domestic and global climate issues both at and ahead of the meet is therefore being watched closely by international observers.

According to the TransCanada letter, the approval process by the Nebraskan agency should take approximately seven to twelve months to complete. Effectively, that would mean that, should the State Department agree to suspend or delay the review – which the White House has strongly suggested is unlikely – a final US decision could come during the final months of the general election process.

Any decision on Keystone, however, is expected to also play a role in presidential election politics, with that process already well underway in the US. The general election is scheduled for November 2016, with the primaries for the Democratic and Republican nominations set for earlier that same year.

The two leading candidates in the Democratic presidential nominating contest, Vermont Senator Bernie Sanders and former Secretary of State Hillary Clinton, have both publicly come out against the pipeline.

“I think it is imperative that we look at the Keystone pipeline as what I believe it is – a distraction from important work we have to do on climate change,” Clinton said in September in announcing her opposition to the project.

The pipeline has generally received a more sympathetic response from Republican Party candidates, however. Candidates currently at the front of the pack for that party’s nomination have generally indicated that they support Keystone, in a rare instance of agreement in an otherwise heated contest.

Across the Northern border, new Canadian Prime Minister Justin Trudeau is in his first weeks in office. The new premier has said in the past that he backs the pipeline, though analysts have questioned whether this position is indeed in line with some of Trudeau’s climate priorities, as well as his interest in strengthening ties with the US. 

ICTSD reporting; “TransCanada asks US to suspend Keystone XL application,” FINANCIAL TIMES, 3 November 2015; “Is the Keystone pipeline dead?” ASSOCIATED PRESS, 3 November 2015; “New Canadian PM Justin Trudeau brings same support for Keystone XL pipeline,” WASHINGTON POST, 20 October 2015; “TransCanada Requests Suspension of U.S. Permit for Keystone XL Pipeline,” THE WALL STREET JOURNAL, 2 November 2015; “Keystone XL Developer Drops Lawsuits,” THE NEW YORK TIMES, 29 September 2015; “Obama Won’t Yield to Company’s Bid to Delay Keystone Pipeline,” THE NEW YORK TIMES, 3 November 2015.

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