No greasing these wheels

Asked his views about “tar sands” at a town hall in Pennsylvania last week, U.S. President Barack Obama said that importing from Canada is a “good thing,” but added there are “some environmental questions about how destructive” the oil sands are. That comment, along with the prolonged permit process for the proposed Keystone XL pipeline from Alberta to the Gulf of Mexico, has raised hackles in Canada and on Capitol Hill, where Republicans held a hearing on March 31 to proclaim the “Urgent Case for Canadian Oil.”

The $7-billion pipeline, which would increase by 50 per cent the exports of oil sands crude to the U.S., was raised by Prime Minister Stephen Harper during his meeting with Obama in January. The Obama administration has been studying the project since December 2008. Alberta’s energy minister, Ron Liepert, let it be known he’s fed up with the delays. “I just wish he’d sign the bloody order and get on with it,” Liepert told the Calgary Herald last week. Yet that’s the last thing Alberta should want Obama to do.

It was the U.S. Congress that passed a law requiring a multi-step review process by the State Department before the permit can be issued. Under the Environmental Protection Act, the State Department, which is in charge of international pipelines, must issue an “environmental impact statement” and then a “national interest determination” of all pipelines crossing the U.S. border. Last July, the Environmental Protection Agency said State’s draft environmental impact statement on Keystone XL was inadequate, and asked State to study potential impacts on everything from greenhouse gas emissions, spill response and impacts on wetlands and birds. If State had refused, “they would open themselves to litigation,” says Danielle Droitsch, director of U.S. policy for the Pembina Institute, an Alberta environmental think tank. Such lawsuits, she adds, happen “a lot.”

So it grinds on. State is working on a “supplemental” statement due this month, and two more government-commissioned studies are expected: one on pipeline safety and another on greenhouse gas emissions. After more consultation and a decision on the “national interest,” a final permit decision is expected by the end of the year.

Permit decisions are made by a deputy secretary and passed to Secretary of State Hillary Rodham Clinton. Only if there is a major dispute between State and the EPA would the issue land on the President’s desk. At this stage, Obama is not entitled to intervene. “It is a legal impossibility for the President or the State Department to sign the order today,” explains David Goldwyn, a former senior State Department energy official. “All this is prescribed by Congress and there is not much discretion there,” he says, agreeing that a decision would be “subject to litigation if the people have not followed the process meticulously.”

The approval process for this pipeline has already been much more extensive than for TransCanada’s first Keystone pipeline, which took only 22 months. There are several reasons why. In Washington, where Democrats failed to pass a climate-change bill through Congress, the pipeline debate has become a proxy for the dispute over greenhouse gas emissions and the future of energy policy. Keystone XL represents a long-term commitment to American reliance on oil sands crude. “Once the infrastructure happens, the dependence gets locked in,” says Droitsch. The Department of Energy commissioned a study that said the Canadian crude would merely displace imports from elsewhere, but environmentalists disagree.

And the tables have turned on Canada’s image. Where once Canada lectured the U.S. on climate-change inaction, environmentalists now view Canada’s climate policy as “almost non-existent,” Droitsch says. Safety concerns also loom large in the wake of the BP spill in the Gulf of Mexico and the Enbridge pipeline spill in 2010 that leaked 800,000 gallons of oil in Michigan. In Nebraska, there is concern that the pipeline would cross a major aquifer.

Whatever the outcome, the process has had an impact. TransCanada spokesman Sean Howard says 57 changes were made to safety procedures that go beyond regulatory requirements. Provincial regulators increased scrutiny of the oil sands, too. “I think the U.S. process had a very significant impact on the tempo of those changes, and that is good for Canadians and Americans,” says Goldwyn, who has testified in favour of the pipeline.

Meanwhile, Obama said in Pennsylvania that he won’t put his “fingers on the scale before the science is done,” or else people “might question” the merits of the final decision. TransCanada doesn’t mind. Says Howard: “There was nothing he said that we disagree with.”