U.S. President Barack Obama’s administration may have refused a permit for the $7-billion Keystone XL last month, but both supporters and opponents seem determined to keep the pipeline in the headlines and make it a centerpiece of this year’s election campaign.
Speaking to a joint session of Congress in his third State of the Union address on January 24, President Obama called for policies that harness a mixture of fossil-fuel and alternative-energy resources. He said his administration would open most of the nation’s offshore oil-and-gas resources for development, continue supporting shale-gas production and put more renewable-energy projects on federal lands.
Missing from Obama’s speech was any mention of the Keystone XL pipeline, which the State Department denied a permit for over concerns about a congressionally imposed February 21 decision deadline. Republicans had tried to force Obama’s hand on the permit, and now he’s forced theirs.
On January 30, a group of 44 senators – all but one Republican – introduced legislation into the U.S. Senate that would bypass the president and permit construction to begin on TransCanada Corp.’s 1,600-mile (2,575-kilometer) pipeline without further delays. In floating the bill, the senators cited Congress’ powers under the Commerce Clause (Article 1, Section 8, Clause 3).
The Keystone project has been seeking regulatory approval since TransCanada announced it in 2008. If constructed, the line would carry about 830,000 barrels per day (b/d) of oil-sands crude from Alberta, Canada, to U.S. Gulf Coast refineries. At least 200,000 b/d would go to an existing oil terminal in Oklahoma, with the remainder sent further to points in Texas to be refined, according to TransCanada’s plans.
Proponents say such a pipeline would serve the growing output from the Bakken shale-oil fields in Montana; ease the bottleneck of crude at the key Cushing, Okla., hub; and eventually hook up with cross-border lines.
The Senate measure was announced less than a week after a Texas Republican lawmaker introduced a similar bill into the House of Representatives.
Titled, Keystone for a Secure Tomorrow Act (K-FAST)(HR 3811), it was introduced January 24 by Rep. Ted Poe (R-Humble).
The legislation declares “Congress finds the delivery of oil from Alberta, Canada, to domestic markets in the United States is in the national interest” (Section 2), according to Rep. Ted Poe (R-Humble).
It further declares “the permit ... is hereby approved” (Sec. 3 (a)). “No further federal environmental review shall be required” (Sec. 3(c)(3)(C)). The bill retains language from the previous legislation requiring reconsideration of the route through the State of Nebraska and instructs the president to coordinate with the state governor.
Keystone XL would deliver tar-sands crude from Canada to refineries in Houston and Port Arthur, Texas – the latter of which is in Poe’s district.
The bill is modeled on the Trans-Alaska Pipeline Authorization Act, a similar bill, passed in 1973, that secured the approval of the Trans-Alaska Pipeline, a pipeline that moves roughly 20% of U.S. oil production, according to the Alaska Pipeline Co.
In a January 27 interview with Hart Energy, Poe said Congress cannot wait on the White House.
“There is nothing certain in politics, of course; but we have to move forward,” said Poe, who cosponsored K-FAST with Rep. Dan Boren, a conservative Democrat from Oklahoma.
“The Alaska pipeline was similar, and they found it was in the national interest, so it’s been done before,” Poe said.
In December, Congress had tried to expedite a permit for the line by approving legislation ordering the president to issue one within 60 days or write to Congress explaining why it was not in the national interest.
The provisions were tacked onto the Temporary Payroll Tax Cut Continuation Act (HR 3630) approved by both houses and signed into law by Obama.
But the last piece of legislation left the president some room to maneuver, which he has duly used to refuse a permit. This time around, the proposed legislation would cut the president out of the process altogether and simply authorize the pipeline by statute, Poe says.
“The purpose of the Keystone bill is to get this done now,” Poe told Hart Energy. “It’s jobs. It’s energy security, and it will make Middle Eastern politics less relevant to our national security.”
Another bill – HR 3548 – introduced by Nebraska Congressman Lee Terry (R) in December 2011, would alternatively transfer the permitting power from the president to the Federal Energy Regulatory Commission (FERC) and require the commission to issue it within 30 days or the line would be deemed to have been issued anyway.
The House Energy and Commerce Committee was expected to debate Terry’s proposal on January 25. Assistant Secretary of State Kerri-Ann Jones, who served as the point person on Keystone XL, was scheduled to testify and explain the decision against a permit, Poe said.
Some observers have queried whether Congress has authority to do this, but they misunderstand the extent of congressional power, according to a legal analysis of the project released January 23 by the Congressional Research Service (CRS).
Congress most likely does have the constitutional authority to force President Barack Obama to rule on TransCanada Corp.’s controversial Keystone XL pipeline. While the executive branch has historically had the final say on cross-border projects, the Constitution gives Congress broad powers to regulate trade with other countries, the report notes.
“If Congress chose to assert its authority in the area of border-crossing facilities, this would likely be considered within its constitutionally enumerated authority to regulate foreign commerce,” the non-partisan CRS analysis states.
Legislation on cross-border “facilities” like pipelines “is unlikely to raise significant constitutional questions, despite the fact that such permits have traditional been handled by the executive branch alone,” it said.
Trans-Alaska vs. Keystone XL
Opposition to the Trans-Alaskan Pipeline System (TAPS) – built between 1974 and 1977 – primarily came from two sources: Alaska Native groups and conservationists.
The pipeline carries Alaska North Slope crude from Prudhoe Bay to Valdez, which is then loaded onto oil tankers.
Alaska Natives were upset that the pipeline would cross the land traditionally claimed by a variety of native groups, but no economic benefits would accrue to them directly. Conservationists were angry at what they saw as an incursion into America’s last wilderness.
Both opposition movements launched legal campaigns to halt the pipeline and were successful in preventing construction from 1970 to 1973.
“It was four years before the Alaskan pipeline was approved by Congress,” Congressman Poe said. “Keystone for a Secure Tomorrow Act (K-FAST) (HR 3811) is modeled after the Trans-Alaska Pipeline Authorization Act, which passed in 1973.”
As with Keystone XL, environmental, legal and political debates followed the discovery of oil at Prudhoe Bay in 1968. But some key differences between the legal and Congressional issues surrounding each pipeline are worth noting.
The Trans-Alaska pipeline was built only after the 1973 oil crisis provoked the passage of legislation designed to remove legal challenges to the project.
On October 17, 1973, the Organization of Petroleum Exporting Countries announced an oil embargo against the United States in retaliation for its support of Israel during the Yom Kippur War. Because the United States imported about 35% of its oil from foreign sources at the time, the embargo had a major effect.
The price of gasoline shot upward, gasoline shortages were common and rationing was considered. Most Americans began demanding a solution to the problem, and then-President Richard Nixon began lobbying for the Trans-Alaska Pipeline as at least a part of the answer.
Nixon actually supported the pipeline project even before the oil crisis. In September 1973, he released a message stating that the pipeline would be his priority for the remainder of the Congressional session that year.
On November 8, 1973 – with the embargo in place for three weeks – Nixon reaffirmed that statement. Under pressure from their constituents, members of Congress created the Trans-Alaska Pipeline Authorization Act, which removed all legal barriers from construction of the pipeline, provided financial incentives and granted a right-of-way for its construction.
The act was drafted, rushed through committee, and approved by the House on November 12, 1973, by a vote of 361(yey)-14(ney)-60(abstentions). The next day, the Senate passed it, 80-5-15. Nixon signed it into law on November 16, and a federal right-of-way for the pipeline and transportation highway was granted on January 3, 1974. A little over three years later, on June 20, 1977, oil began flowing through the pipeline.
One of the new Keystone bills (or something similar) will almost certainly be approved by the House of Representatives, where the Republican Party has a substantial majority, observers say.
But in sharp contrast to Trans-Alaska Pipeline Authorization Act, the Keystone XL legislation likely faces an uphill battle in the Senate and with the president, according to those following the situation.
The Democrat-controlled Senate approved the last Keystone provisions by a lopsided majority of 89-10, but that was in a bill rolling them together with the extension of popular tax cuts, and providing the president with wiggle room, many analysts say.
Poe said it’s unlikely the new Keystone provisions on their own could muster the 60 votes necessary to break a threatened filibuster and win approval.
“This is a ‘Siesta Senate;’ they don’t vote on anything. Legislation we send there goes to the graveyard,” Poe said. “I suspect that it would have to be attached to another piece of legislation.”
Even if the bill somehow secured Senate approval, it is certain to be vetoed by the president. If that occurs, supporters would need to find two-thirds majorities in both chambers to over-ride Obama’s veto.
“It is the moral obligation and legal authority of Congress to say ‘yes’ to this pipeline,” Poe told Hart. “I don’t care how it gets passed and who gets credit for it. We just need to get this done.”
The need for a veto over-ride raises the effective number of votes needed to approve the measure to 67 in the Senate and 290 in the House, the Congressman added. The last Keystone provisions were approved in the House by a majority of only 234-193.
Many analysts say the Keystone bills therefore set up a familiar game of cat and mouse between the White House, House Republicans and Senate Republicans – in which any and all proposals on taxes, spending or policy issues will be potentially held hostage to the pipeline’s approval.
Perhaps most interesting is that both sides, Democrat and Republican, seem to calculate that Keystone XL is a vote winner in an election year – President Obama with environmentally concerned voters and Republicans with the business lobby and electors concerned about high energy prices.
TransCanada has already filed again for the permit – allowing it to stay on track for a late 2014 start-up date – and is currently in the process of determining the safest route for Keystone XL, one that avoids the Ogallala water aquifer in Nebraska, according to the company website. The company expects to have a new route plan by October.
Meanwhile, reintroducing Keystone legislation will undoubtedly keep the issue in the headlines and provide a recurrent source of political conflict.
By keeping Keystone on the agenda, both the president and congressional Republicans will try to energize their core political constituents while trying to appeal to independents by drawing a sharp clash between clean technology and the environment versus affordable fossil energy and jobs, many analysts say.
“Every option is on the table,” House Speaker John Boehner (R) told Fox News on January 22. “We’re going to do everything we can to try to make sure that this Keystone pipeline is, in fact, approved.”
In addition to emboldening Republicans, the Congressional Research Service (CRS) report also provides some support for states like Nebraska that have made their own attempts to influence the pipeline’s path. The proposed route crosses into Nebraska’s environmentally sensitive Sand Hills region, near an underground reservoir that provides much of the state’s irrigation and drinking water.
In November 2011, Nebraska passed legislation that would carve out a role for state agencies in siting oil pipelines that run through it and would require collaboration with the U.S. State Department on environmental impact studies.
Four CRS attorneys found that similar state efforts did not violate federal law, which prohibits one state from acting to protect its own interests to the detriment of other states.
For the moment, the Keystone legislation, and the oil the pipeline would transport may not be going anywhere. But a nearly forgotten pipeline across a remote part of Alaska is likely to continue shaping the debate about what kind of energy system America wants in coming years.
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