Two thousand miles west of Washington, D.C., on the vast Nebraska prairie, you can drive for hours on roads that were once wagon trails, and rarely pass another car or truck. When one finally comes by, the driver will usually give you a little wave, like a lone hiker saluting another on a backcountry trail. And if you pull over to the side of that road, shouldered with wild sunflowers in late summer, a perfect stranger will worry enough about your stopped vehicle to circle back half an hour later to make sure that you are okay.
It was here, among the soft-spoken corn farmers and the tight-lipped cattle ranchers, and the billboards proclaiming, “Nebraska?.?.?.?the good life,” that troubles for the Keystone XL pipeline began.
The case for TransCanada’s proposed pipeline from the Alberta oil sands, through America’s heartland, to refineries on the Gulf Coast of Texas was simple: the Texas refineries depended on declining supplies of “heavy” crude oil from Mexico and Venezuela. The landlocked oil sands had growing, cheap supplies of the kind of crude in which the refineries specialized. All that was lacking was the pipeline to get it there. Because the pipeline crossed the border, it required a permit from the president. George W. Bush had approved TransCanada’s first Keystone pipeline, from Alberta to the U.S. Midwest, in less than two years. Obama quietly okayed another oil sands pipeline to the Midwest, the Alberta Clipper, in 2009.
Access to Canadian oil had been so coveted by successive U.S. administrations that American negotiators had made it a priority in free trade negotiations in the 1980s. TransCanada assumed they’d have a permit by 2010.
The stakes were high. For the U.S., the project meant refining profits, stable supplies from a non-hostile regime and, in the aftermath of a recession, thousands of related jobs. For Canada, it was the key to unlocking the economic engine that the oil sands had become. The pipeline’s proposed 830,000 barrels per day would come on top of the two million per day already heading from northern Alberta to the U.S.—Canada’s only customer. Without access to southern refineries, Canadian oil was piling up in the Midwest and selling at a discount. As wars raged in the Middle East, Canadian officials pushed a vision of continental energy integration: “Working together we can achieve what was dreamed about,” said Natural Resources Minister Joe Oliver, “and that is North American energy independence.”
But as energy markets analyst Bob McNally would later put it, “In the case of Keystone XL, just about everything that could possibly go wrong, did.”
The five-years-and-counting Keystone XL pipeline saga has become among the highest-profile environmental controversies to engulf North America in the 21st century and fodder for the merciless machinery of presidential politics. It has bred mistrust between Ottawa and Washington, and led a wary Prime Minister to press for a historic turning away from our largest trading partner toward markets entire oceans away. But even as its consequences mount, the full story of the Keystone XL dispute remains little understood. Attention has focused on Hollywood stars protesting the oil sands, and a standoff between Obama and Republicans over jobs and energy security.
The story is more than that. The Keystone XL project was ensnared as much by concerns over water as over air, and its first—and in some ways most effective—opponents were Republicans, operating far from the cameras of the national media. Their story opens a window on the unpredictable interplay between conservatism’s business wing and its grassroots, libertarian wing, and underscores how America’s restless and kaleidoscopic politics can confound Canadian diplomacy.
The storm around Keystone XL is remarkable not least because of where it began. In all its history, the state of Nebraska has voted for a Democrat for president exactly once: back in 1964. That this thoroughly Republican state of rural conservatism could trip up the cross-border energy trade occurred to no one when the pipeline was first proposed in 2008.
CHAPTER 1: STAND WITH RANDY
Randy Thompson, a tall, reserved cattleman rarely seen without his 10-gallon hat, was not the first or only Nebraska landowner to raise his voice against the pipeline, but he would become the face of the fight. Thompson’s grandfather arrived in Kansas, near the Nebraska border, around 1880 as a young boy in a covered wagon with settlers from Tennessee. The shotgun that made that journey, “Old Zulo,” still hangs alongside a collection of vintage saddles and steer-themed belt buckles in Thompson’s home on a 23-acre homestead outside the state capital, Lincoln.
Thompson, 66, moved to Nebraska as a child, and grew up poor, without indoor plumbing or electricity; the family used kerosene lanterns and an outdoor privy that spooked him and his siblings at night. “You ran as fast as you could so the bogeyman didn’t get you,” recalls his sister, Joyce Petit. His parents had married during the Great Depression and eked out a living on rented land. “At some points they had nothing—just what they raised on their land to eat,” Petit said. Only late in life did they buy their own 400 acres in Merrick County: cornfields and cattle pasture—“a really big deal,” their daughter says.
At six feet tall, their son Randy was a high school linebacker who was recruited to college in Colorado where he “majored in football.” He came back to Nebraska, married his high school sweetheart and became a farmer and rancher, and later, a cattle buyer, travelling from auction to auction across the Midwest, buying herds for ranchers back home. The deals could exceed $100,000 on a handshake. “I’ve never had a signed contract in my life with any of my customers,” says Thompson. He kept two horses, Whipped and Cream; above the red barn door hung his livestock brand: “Lazy RT.” Politics and activism were the last thing on earth Thompson imagined for himself before TransCanada came along and made him “mad as hell.”
His parents’ hard-won land happened to lie on the route where the Canadians planned to bury their 36-inch diameter pipeline on its way from Alberta to Texas. By the time the company came asking for an easement across an 80-acre parcel, Thompson’s father had died and his elderly mother, Frances, lived in a nursing home and rented out the land to pay for a portion of her expenses. The phone call came “out of the clear blue sky,” recalls Thompson. He and his brother and sister met with TransCanada’s land agent at their parents’ old homestead. The siblings said they were not interested and assumed that was the end of the matter. “We’re naïve enough to think this is a private company and this is a foreign company so there is no way in hell they’re going to be able to force us to give up our land,” says Thompson.
TransCanada would eventually make them a “final offer” of $17,861 for use of their land. The Thompsons had 30 days to accept or, the company said in a letter, “we will initiate the eminent domain process,” in which the government can force an owner to allow development on private property.
By raising the spectre of expropriating the land, TransCanada had hit on one of the holiest grails of conservatism and lifelong Republicans like Thompson: property rights. “You feel like you’ve been violated,” says Thompson. “I’ve never seen any asterisk in the Constitution that says this property is only yours until a big corporation wants it.”
He was offended by what he saw as a sense of entitlement to the modest property that had been the crowning achievement of his parents’ lives. “They didn’t earn this land,” he says of TransCanada. “They didn’t carry heavy milk buckets and walk through the snow and the slop like my Mom did.”
While most landowners along the pipeline route reached negotiated agreements with the company, Thompson was one of a determined lot who did not want to allow the pipeline at any price. Some of the pipeline opponents were the fourth or fifth generation to farm the same land settled by their ancestors, the original homesteaders whose unsmiling portraits still looked down in judgment from the farmhouse walls.
The landowners had another concern that went beyond property rights: water. Much of Nebraska sits on top of the giant Ogallala Aquifer, a formation of shale and gravel that holds fresh water like a giant, underground sponge. The water table here is so high farmers can hit water when digging post-holes in the spring. Agriculture in the state depends on the water pumped up from the earth. On Thompson’s small farm, a 30-foot-deep well pumps 4,500 gallons per minute. A pinhole leak in the pipe, he worried, could contaminate his well and leave his entire land useless. TransCanada’s additional safety enhancements like additional remote-controlled shutoff valves and increased inspections didn’t persuade him. “If it’s buried on your property, that’s going to be a constant worry for the rest of your life,” says Thompson.
Making matters more fraught, TransCanada’s chosen route was to cross a fragile ecosystem in north-central Nebraska called the Sand Hills, where the sandy soil can shift in the wind like snow drifts. “Basically it’s grass-covered sand dunes, and it’s one of the last intact grass-covered sand dunes in the world—the largest in the Northern Hemisphere,” says rancher Sarah Sortum, who gives Jeep “safari” tours of her family’s ranch that include bird-watching, hunting and annual expeditions to witness the unique mating dance of prairie chickens.
The Sand Hills include fragile wetlands, a variety of plants and animals including at-risk species, and grazing for hundreds of thousands of head of cattle. Sand Hills ranchers are local cultural icons: immortalized in bronze sculptures and celebrated in their own Hall of Fame. Wherever they live in the state, Nebraskans have a special place in their hearts for the Sand Hills.
As word about the pipeline spread through the state, TransCanada’s assurances about pipeline safety were no match for the alarming scenes that Nebraskans saw on their television screens in 2010. That spring, BP’s Deepwater Horizon oil rig exploded in the Gulf of Mexico, leaking five million barrels of oil into the sea. Then, in July, an Enbridge pipeline, known as Line 6B, carrying the same kind of diluted bitumen from Alberta that the Keystone XL would transport, spilled 900,000 barrels into the Kalamazoo River in Michigan—the largest on-land oil spill in U.S. history.
The Enbridge spill highlighted a worrisome feature of diluted bitumen—it behaved differently from conventional oil when spilled into water. The U.S. Environmental Protection Agency would later report: “In that spill, oil sands crude sank to the bottom of the Kalamazoo River, mixing with the river bottom’s sediment and organic matter, making the oil difficult to find and recover.” The Michigan cleanup would take more than three years and required the dredging of river bottom sediments because “the oil sands crude associated with the Enbridge spill will not appreciably biodegrade.”
“I thought, here we go,” says Thompson. “That could be Nebraska.”
But when it came time to translate their passion into results, the rural pipeline fighters weren’t sure how to be heard. They wrote letters to local newspapers and politicians. “I contacted the governor’s office and I got back a nice pamphlet written by TransCanada telling me all about the pipeline,” Thompson says. “And that was all I got back.” Max Nelson, an 85-year-old retired farmer, wrote an 11-page letter about the pipeline to Michelle Obama. “If I wrote it to the President, it might get ash-canned,” he reasoned. “But she could read the letter and pass the information on to him when they go to bed at night.”
Things changed when Jane Fleming Kleeb got involved. A telegenic former head of the Young Democrats of America in Washington, D.C., Kleeb, 40, sported a tattoo of the defiant goddess Lilith and had cut her teeth on targeting young voters. The daughter of conservative activists in Florida, Kleeb broke with Republicans over the Iraq War and embraced progressive causes. She married a Democrat green energy entrepreneur, and followed her new husband to Nebraska, his home state, where he ran, unsuccessfully, for Congress.
Kleeb started a non-profit progressive group, Bold Nebraska—initially to promote issues such as the President’s health care reform. Then in May 2010, she attended a community meeting where ranchers and farmers spoke out passionately against the pipeline. She had a “gut feeling” her group needed to embrace their cause. “I saw tough ranchers and cowboys speaking out, and grandmothers concerned about native prairie grass. I said to myself, ‘Wait a second, somebody has got to organize these folks,’ ” recalls Kleeb.
Her husband’s family had homesteaded in the Sand Hills, and their ranch had been her first experience of Nebraska. “I knew how tough they were, how much they protected their land, and how much it meant to them in a soulful way. If you don’t know ranchers or farmers, you don’t immediately get how connected to the land they are—even more so than the environmentalists.”
With her national political experience and savvy, Kleeb would raise the landowners’ fight to a new level. She had a professional website, multiple cellphones, an active Twitter account and stamina. “This is my full-time job,” she says. “It consumes every ounce of me.” With her non-profit’s budget of about $200,000 per year, she held hundreds of community meetings each month, and met individually with landowners. Kleeb had a knack for coming up with media-friendly ideas that would draw TV camera crews to the cause. One project would be building a solar-powered barn directly on the pipeline route—to create irresistible footage if the company came to tear it down.
Bold Nebraska would eventually amass an email list of 25,000 Nebraskans. They would collect around 15,000 signatures for an anti-pipeline petition to the State Department.
But Kleeb felt she had become a target of pipeline supporters and felt uneasy when large men would show up at community meetings and stand, as she put it, “a little too close to me.” That was when she noticed Randy Thompson, who’d discovered her group online, appearing wordlessly at her side. “He’s very tall. Not somebody you want to mess with.” His strong, silent presence sparked the slogan “Stand with Randy,” which she would plaster on T-shirts, posters and websites.
“We had the villain: TransCanada,” says Kleeb. “We needed a hero.” She hired an artist to design a logo using Thompson’s face and hat and pitched him on becoming the public face of the anti-pipeline campaign; the cattleman agreed reluctantly. “I kind of looked like the Pillsbury Doughboy,” says Thompson. “He said he was too fat and too white,” laughs Kleeb. “So we browned him up and slimmed him down.”
As Thompson’s fight to protect his mother’s land intensified, her health declined. One day in May 2011, Kleeb had arranged for him to fly to Washington to testify against the pipeline before a congressional committee. But Thompson took a wrong turn and missed his flight. Then the nursing home called with the news that his mother had passed away. “TransCanada called after my mom died. They asked to go on the property and walk around,” he recalled. “I said, ‘I never want to see you sons of bitches again.’ ” The day before the funeral, TransCanada sent him a bouquet of flowers. Thompson threw it in the trash.
His anger, mixed with fresh grief, would soon have a national impact.
CHAPTER 2: THE PATH OF MOST RESISTANCE
Back in his office tower in Calgary, Alex Pourbaix, the affable, rosy-cheeked head of pipelines for TransCanada, still marvels at how a western Canadian oil company came to be so hated by ranchers in Nebraska.
“TransCanada didn’t just dream up the route out of thin air,” he insists. But Nebraska landowners could never understand why the company didn’t simply follow the route of the first Keystone project, along the far eastern edge of the state, out of the Sand Hills and away from the aquifer. The new path struck them as so illogical that some believed only secret ulterior motives could explain it. “What we’re really afraid of is that once the tar sands run out, they are going to be piping into the aquifer to get the water so that they can export the water to other areas of the country or overseas,” speculated one Nebraska farmer, Art Tanderup.
Pourbaix was amazed by the mistrust. “I don’t even know what to say to that,” he says, dismissing the water-piping scenario as a “conspiracy theory.”
The chosen route was simply the shortest, Pourbaix says. “Because the single-largest environmental impact of a pipeline is the construction, we have an obligation to minimize the miles of pipeline.” Following the Keystone I route would have added several hundred kilometres.
Pourbaix also defends the eminent domain letters as part of a legal process set out by state law. “Part of that process is to send a letter to landowners letting them know what their rights are and what the process is,” he says.
TransCanada’s strategy was to seek out the land rights while the State Department’s review churned along. That review was governed by federal statutes and executive orders, and would include public hearings in Washington and along the route, various studies, public comment periods and successive draft reports leading up to a final environmental impact statement. Then the secretary of state would weigh a variety of factors—environmental, economic, and strategic—and recommend to the President whether the cross-border project was in the U.S. “national interest.” How the competing factors would be weighed was political art, not science. “There is no mathematical formula where you plug in numbers and an answer spits out,” a State department official who for a time led the review, Daniel Clune, told Maclean’s.
The brewing opposition in Nebraska meant that TransCanada would not get its permit in 2010. The landowners’ concerns led to delay as the State Department commissioned supplemental studies of water, wildlife and alternative routes through Nebraska. The State Department also told the landowners their state government had the power to demand a different route, which energized the activists. TransCanada could have moved the pipeline path but resisted because it had one big fear of its own: that changes to the route would require starting the lengthy federal review process from scratch. “Thousands and thousands of hours and untold effort had gone into developing that route,” says Pourbaix. “We knew that if we changed that route, we would invalidate a large amount of that work.”
Instead, the company had promised to add 57 safety enhancements making Keystone XL “the safest pipeline of its type ever developed,” says Pourbaix. TransCanada also ramped up its spending in Washington. What had been a few hundred thousand dollars most years suddenly jumped to $1.5 million in 2011. The company hired as its in-house lobbyist Paul Elliott, the former deputy director of Hillary Clinton’s presidential campaign. As secretary of state, Clinton was in charge of the review process.
A series of U.S. government reports would eventually ease some concerns about the pipeline. For example, in March 2013, the State Department would conclude that a large-scale oil leak into the aquifer could pollute water no more than around 300 m downstream, what it called a “localized effect” that “would not extensively affect water quality.” It was no comfort to farmers on the route, but a far cry from the prospect of contaminating the water supply of millions of people. Critics had also argued that diluted bitumen was unusually corrosive and more likely to leak. But in April 2013, the State Department would find “no evidence?.?.?.?that Alberta’s pipeline contents are more corrosive than average crude oil.” In its own study, the independent National Research Council (part of the National Academy of Sciences) agreed. Environmentalists critiqued the studies, but Pourbaix took satisfaction in these rebukes to what he calls “lies and misinformation” about the project. “I could go on for hours about this,” he says.
Even before those studies, TransCanada had reason for optimism: Washington had always wanted Alberta oil. Obama had approved the “Alberta Clipper” without controversy. (It now carries 450,000 barrels per day into the Midwest, and Enbridge has applied for an expansion.) In that case, the State Department said that increasing crude oil imports from Canada would advance U.S. “strategic interests” and send a “positive economic signal”—presumably, the same rationale would support the Keystone XL.
TransCanada was encouraged on Oct. 15, 2010, when Clinton was asked about permitting the pipeline at a speech in San Francisco. “We are inclined to do so,” she said. Until the U.S. developed more clean energy, she added, “We’re either going to be dependent on dirty oil from the Gulf or dirty oil from Canada.”
Even well into the summer of 2011, from TransCanada’s point of view, things still looked promising. The State Department approval looked tantalizingly close to completion. A year earlier, State had issued a draft environmental impact statement concluding that the emissions impact of the pipeline “would be minor” because the oil would mostly replace other supplies of similarly heavy crude. A year later, another draft report repeated the conclusion. Then in August 2011, the State Department issued what was supposed to be the final environmental impact statement. It said the project would have “no significant” environmental impacts because demand in Gulf Coast refineries would continue to grow and oil sands crude would continue to be developed, regardless of the pipeline: without it, the Alberta oil would just be transported by other means. The study also downplayed the worst fears about water in Nebraska. “In no spill-incident scenario would the entire Northern High Plains Aquifer system be adversely affected,” it stated.
A green light seemed imminent. At a meeting in Washington on August 5, 2011, Clinton told Foreign Affairs Minister John Baird: “We expect to make a decision on the permit before the end of this year.” But despite all these early signs, TransCanada’s strategy of aggressively pursuing land rights before they had a presidential permit firmly in hand would cause problems. Instead of accelerating the project, it would slow it down, as the landowners’ backlash in Nebraska collided with a restless national climate movement looking for action from the president. Soon, the political winds would shift.
Never had a president raised environmental expectations so high. “Generations from now, we will be able to look back and tell our children?.?.?.?that this was the moment when the rise of the oceans began to slow and our planet began to heal,” then-senator Barack Obama declared while accepting the Democrat presidential nomination on June 3, 2008.
Supporters took him at his word.
“A lot us were very excited that we would actually finally have an opportunity to confront the fact that the U.S. has been one of the worst climate actors in the world,” recalls Danielle Droitsch, Canada director of the Natural Resources Defense Council, a major U.S. environmental group. “There was basically an expectation that we would turn things 180 degrees from where we were under president Bush.”
Obama had delivered one major victory for the climate movement: In May 2009, he mandated the first-ever nationwide fuel-economy standards for cars and trucks, which the White House predicted would save 1.8 billion barrels of oil. Canada followed suit.
But the environmental movement’s big ask of the new President was help in passing climate change legislation that would create a so-called cap-and-trade system. The result would put a price on the use of carbon, ultimately driving down overall outputs of gases that cause climate change; if such a system were in place, environmental goals could be achieved regardless of whether new pipelines added to the potential supply of oil to Texas refineries.
In a victory for the environmental movement, the cap-and-trade legislation narrowly passed the Democrat-controlled House of Representatives in June 2009. But it died in the U.S. Senate the following year when supporters failed to muster the 60 votes needed to overcome a threatened Republican filibuster on the bill (some coal-state Democrats resisted and Obama could not persuade them). Environmentalists vowed to try again, but that fall Democrats lost control of the House of Representatives in the 2010 midterm elections. The dream of a cap-and-trade system was politically dead, and Obama, focused on health care reform, was blamed for not working harder to prevent its demise.
Obama went on to disappoint many of his supporters with his “all the above” energy policy. In March 2011, he gave a speech at Georgetown University that called for funding alternative energy, but also for “finding and producing more oil at home” and “encouraging offshore oil production.” Another blow came that September: Obama rejected stricter ozone emissions limits proposed by his own EPA as too costly in a weak economy.
After a string of defeats, the pipeline would become a new red line for many activists. As it regrouped after the defeat of its legislation, the environmental movement looked for actions the President could take without Congress.The timing could not have been worse for Keystone XL. Says David Manning, Alberta’s envoy to Washington: “We stuck our head up out of the gopher hole just as the lawnmower was heading right for us.”
Bill McKibben, a tall, former New Yorker journalist who wrote a dozen books on climate change, was a leading U.S. environmental organizer who in 2011 focused national attention on the pipeline. “This is a place where [Obama] has freedom of action,” he explained. “The Republicans who have thwarted him in many places can’t thwart him here.”
Not only was the decision entirely in Obama’s hands, but environmentalists saw the pipeline as a prerequisite to industry’s plan to expand production in the oil sands, where extraction is significantly more carbon-intensive than conventional oil. By the time the oil is burned in a car, it creates 17 per cent more carbon emissions than the average crude oil refined in the U.S., according to the State Department.
Moreover, in a world in which estimated reserves of conventional oil are falling, environmentalists held out hopes that market forces would spur innovation of clean, renewable energy. The Canadian oil sands, as a potential replacement supply, represent a threat to that vision. On June 3, 2011, James Hansen, a former NASA scientist and a prominent climate change evangelical, had harnessed those fears in a call to arms about Keystone XL he posted to fellow activists on the Internet. “The U.S. Department of State seems likely to approve a huge pipeline to carry tar sands oil (about 830,000 barrels per day) to Texas refineries unless sufficient objections are raised,” he wrote. “The scientific community needs to get involved in this fray now. If this project gains approval, it will become exceedingly difficult to control the tar sands monster.”
In a reference to the Nebraskan ranchers’ rebellion, Hansen noted that the pipeline project had already met with some objections due to “the likelihood of spills along the pipeline’s pathway,” but he predicted that such fears alone were highly unlikely to stop it. He urged environmentalists to join the fight by flooding the State Department with objections to the permit based less on fears of spills than on climate change. “If emissions from coal are phased out over the next few decades and if unconventional fossil fuels are left in the ground, it is conceivable to stabilize climate. Phasing out emissions from coal is itself an enormous challenge. However, if the tar sands are thrown into the mix it is essentially game over.”
Hansen’s “game over” quip—which he would later repeat on the high-profile op-ed page of the New York Times—would become a rallying cry. (It also drove Canadian officials nuts because he made it in the context of the entire amount of carbon estimated to be locked in the Albertan oil sands; the officials said that it was not technologically possible to develop more than a small fraction of it.)
In late June 2011, the actor Danny Glover lent his name to an open letter also signed by McKibben, Hansen, Canadian writer Naomi Klein, and others calling for environmentalists to descend on Washington for protests at the White House in August. Not only would the pipeline “cross crucial areas like the Ogallala Aquifer where a spill would be disastrous,” they wrote, but it “would also be a 1,500-mile fuse to the biggest carbon bomb on the continent, a way to make it easier and faster to trigger the final overheating of our planet.”
Hollywood joined in. Stars like Robert Redford and Julia Louis-Dreyfus filmed ads against the “mega-stupid mega-pipeline.” Canadian actress Evangeline Lilly from Lost told a rally: “I am ashamed that we are knocking on your door with dirty oil.”
The climax came in August, when more than 1,200 people came from all over the U.S. to get arrested during sit-ins in front of the White House. The national climate movement was zeroing in on the pipeline just as Obama was gearing up his re-election campaign. The campaign depended heavily on energizing his loyal supporters to show up to vote. Approving Keystone XL would have angered many of these loyalists. “Protesters were ringing the White House. He was being heckled on college campuses,” says McNally. “These were by his people, if you will, his closest political supporters.”
They were people like Richard Fireman, a retired medical doctor from Mars Hill, N.C., who had worked for Obama’s election in 2008, but now declined to raise money or knock on doors as he ran for re-election. “I was very disappointed and still am disappointed,” said Fireman, who accused Obama of having “bailed” on the climate agenda. If Obama approved Keystone XL, Fireman says he would vote for the Green Party candidate. The pipeline was no longer just about the Sand Hills; Fireman called it “a line in the sand.”
Even Randy Thompson flew to Washington to get arrested along with the likes of Robert Kennedy Jr. and actress Darryl Hannah. All went smoothly until it was Thompson’s turn to be put into paddy wagon—the former linebacker wouldn’t fit. Embarrassed, Thompson was only able to wedge himself in after an officer removed his hand restraints. Once in custody, he found himself next to Hansen, the former NASA scientist. Thompson enjoyed their chat: “Actually, he’s an Iowa farm boy, so we had quite a bit to talk about.”
Criticism would emerge of the environmentalist movement for its focus on Keystone XL, arguing that it had picked the wrong target. Some U.S. liberals argued that the climate movement should focus on pushing Obama to issue strict new regulations on coal-fired power plants. (Activists said they could do both.) The Canadian government also frequently pointed to America’s coal dependency. “The oil sands are less than one-30th of the emissions from coal-fired electricity in the United States,” complained Natural Resources Minister Joe Oliver. Canada used less coal, and had lower greenhouse gas emissions, even on a per capita basis. Said Oliver: “We are actually doing better than the U.S. overall.” The governments of Canada and Alberta pressed the message in Washington, through diplomats, ministers, lobbyists and advertising campaigns. Lawmakers from Capitol Hill and Nebraska were invited on tours of oil sands operations. McKibben accused Ottawa of turning Canadian diplomats into “shills for dirty oil.”
But the intensity of the growing number of demonstrations, petitions and actions at Obama campaign offices across the country in 2011 surprised even the organizers. “The movement around the tar sands issue,” says Droitsch, “has grown beyond even what we imagined it could be.”
The national climate movement seemed to have boxed Obama into a political corner as the election approached. But it would be events on the ground back in Nebraska that offered his administration a way out.
CHAPTER 3: POLITICAL DOMINOES
Away from the protests in Washington, another battle was being fought inside Nebraska’s state legislature, a dramatic 15-storey art deco tower that looms over downtown Lincoln.
Nebraska’s Republican governor, Dave Heineman, had been silent on the pipeline; landowners assumed he and his government supported it. But Heineman, a former Army ranger turned career politician, approached the pipeline with caution. A committed conservative who signed into law tax cuts and some of America’s toughest abortion laws, he owed his initial election as governor to rural voters in the state. Heineman was caught between the grassroots conservatives fighting to protect their property rights and agricultural livelihoods, and the national Republican effort to support the energy industry and brand Obama a job-killer.
Thompson dismissed the temporary construction jobs the pipeline would bring as a “bad deal” if it meant risking the water and livelihoods of farmers and ranchers. That view resonated locally. While other states along the routes had substantial oil interests, in Nebraska, agriculture was king, accounting for a quarter of the state’s economy and more than 90 per cent of its land.
With Jane Kleeb’s guidance, the landowners mobilized public opposition to the route through the Sand Hills and demanded that the governor call the legislature into a special session to create a pipeline siting process for the state, which had until then deferred the authority to the federal government. In August 2011, more than 500 people marched to Heineman’s mansion in Lincoln to point flashlights into the governor’s windows as a way to “shine a light” on his inaction.
Finally, in October, Heineman gave in. He formally asked the Obama administration to deny the permit for the Keystone XL route through the Sand Hills and called state legislators to Lincoln to pass a new pipeline law. “We were kind of shocked when he did it,” says Thompson, who surmised that the governor simply “couldn’t take the heat anymore.” Kleeb suspects that Heineman assumed Obama would approve the permit, and he wanted to be on the opposite side of the issue.
But lawmakers arrived bitterly divided. Supporters of the pipeline threatened to filibuster new laws. TransCanada brandished a legal opinion warning that retroactive law affecting their project could be unconstitutional. The company was also spending money lobbying in Lincoln. In preceding years, TransCanada had been spending $10,000 to $20,000 per quarter on lobbyists in the state, according to legislature records. But in the fourth quarter of 2011, that number soared to half a million dollars. A new group, Nebraskans for Jobs and Independence, was created, which did not have to disclose its funders but had ties to the company. The group argued the pipeline would bring hundreds of millions of dollars in tax revenues and income to the state.
As the session opened on Nov. 1, 2011, the Speaker of the legislature was a young Republican named Mike Flood, who supported the pipeline and wanted to avoid any action that would restart the State Department’s review process, potentially adding years of delay. “I went to bed on Sunday night—the night before [the session]—totally at a loss,” Flood later told the Lincoln Journal Star newspaper. “I had no idea what we were going to do.”
In a last-minute flurry of back-and-forth with the State Department, Flood asked for and received a fax assuring him that moving the route through Nebraska could be dealt with through a “supplemental” environmental review—and would not require restarting the federal process from scratch. On that basis, Flood brokered a deal that seemed to soothe all sides: an independent commission would be put in charge of reviewing future oil pipeline routes. Keystone XL would be exempt from the new law, but TransCanada would voluntarily move the route out of the Sand Hills—and off Randy Thompson’s land. The compromise passed unanimously.
Not everyone was happy: Jane Kleeb recalls being brought into room with lobbyists and state senators and shown the map that would be used to define the Sand Hills. “I pushed the map back across the desk. I knew it was smaller than what the Sand Hills are.”
It had taken the company three years to accept that their route had to move. “As I spent more and more time in Nebraska, it became clear that routing through the Sand Hills became a very emotional issue for Nebraskans,” says Pourbaix. “We made the decision to move the pipeline out of the Sand Hills and show that we were listening.”
But that was just the beginning. As the special session unfolded in Lincoln, the State Department responded with its own bombshell. On Nov. 10, 2011, State announced that because Nebraska had no pipeline review process yet in place to deal with the landowners’ concerns, the State Department would undertake an in-depth examination of alternative routes around the Sand Hills. It would not start the review process from scratch, but it would take more than a year to produce a “supplemental” environmental impact statement, complete with new public hearings. The decision that TransCanada thought would be done in 2010, and that Hillary Clinton had told her Canadian counterpart, John Baird, would be done by the end of 2011, would now be delayed until at least the first quarter of 2013.
The new date was a game-changer. There would be no permit decision until well after the presidential election—a delay that unburdened the president of making a controversial decision in the midst of his re-election campaign. The delay had other impacts, too. It gave the national climate movement another year to build further opposition to the project. It remains a matter of debate whether the delay was a naked political calculation, genuine bureaucratic necessity or some combination. McNally, who had worked on international energy issues inside the Bush White House, assumed the decision came from the top. “With issues like Keystone, which become top-tier political issues, while the President may say he is going to rely on the State Department to complete this process and make a decision, in fact it is being closely coordinated and monitored and controlled by the White House.”
This much was certain: the Nebraska governor had given Obama political cover. “When you have a rock-ribbed Republican state and a Republican governor saying, ‘Whoa, hold on here, we don’t want this,’ it gave an opening to the President,” says political analyst Norman Ornstein. “Because a delay now would give him an opportunity to deflect some of the harsh charges from his Republican opponents that this was cynical politics.”
The political dominoes were not finished falling. Back in Congress, Republican lawmakers were overwhelmingly in favour of the pipeline and were fed up with delays. They wanted Obama to approve the permit while Nebraska ironed out the details of its new route. Rep. Lee Terry, a Republican whose district included Omaha, the corporate centre of Nebraska, but not the ranches in the pipeline’s path, had earlier pushed the Republican majority in the House to legislate a 60-day deadline for a permit decision, pulling it back before the presidential election. “I brought this up to our leadership and said, hey, there is this small band of environmentalists that are fighting a pipeline,” Terry says. “They looked into this and said, ‘Hey, this is a real issue. We need to act on that.’ ”
Republicans thought they had a strategy to trap the President. Terry’s 60-day deadline bill was attached to legislation extending a popular payroll tax cut that was set to expire at year’s end. If Obama vetoed the bill, he would raise taxes on millions of working Americans. At a joint press conference with Stephen Harper in December, Obama said he was keeping “an open mind” on the pipeline but would not accept the deadline from Congress. “Any effort to try to tie Keystone to the payroll tax cut I will reject. So everybody should be on notice,” Obama said. But his threat was empty. Congress passed the bill on Dec. 23, 2011, and Obama promptly signed it into law.
The administration wasn’t out of moves yet, however. A few weeks later, the State Department announced it could not complete its review within the mandated 60 days. “The Department does not have sufficient time to obtain the information necessary to assess whether the project, in its current state, is in the national interest,” said a statement. As a result, the permit was denied—although, the State Department noted, TransCanada was welcome to reapply, which it did in May.
The Republican tactic had backfired. “I think the Congressional Republicans got trapped a little bit,” says Ornstein. “They jumped in eagerly to try and impose this 60-day deadline for political purposes and didn’t realize that what they were doing was giving the State Department an opening to do exactly what they didn’t want.”
Or, perhaps, they knew exactly what they were doing: pushing the Obama administration to deny the permit in the midst of a presidential campaign in which they sought to brand him as a job-killer. Whether or not their gambit was a mistake, notes McNally, “depends on whether having the issue is more important than resolving it.”
In any case, it was clear now that the issue had been taken over by domestic U.S. politics. Back in Ottawa, Harper drew his own lesson from the delays. On Feb. 7, 2012, less than a month after the permit denial, he was on a plane to China, seeking new markets for Canadian oil. Harper also told his cabinet to prioritize plans to build a pipeline west to Pacific seaports. A few months later, he conveyed a blunt message during a visit to Washington: Canada could not tolerate a world in which its only energy partner “could say no to our energy products.” Said the Prime Minister: “Look, the very fact that a ‘no’ could even be said underscores to our country that we must diversify our energy export markets.”
Republican presidential candidates had seized on Harper’s message and were using it to hammer Obama. Eventual Republican nominee Mitt Romney even pledged, “I will build that pipeline if I have to myself.” The pipeline went where no Canadian issue had gone before: it became a staple topic in the presidential debates and on the hustings.
Meanwhile, TransCanada tried a new strategy. It carved off the southern portion of the pipeline—the leg from Oklahoma to Texas —renamed it the Gulf Coast Project, and sought permission to build while the federal review continued for the northern, border-crossing piece. A cross-border presidential permit would not be required for the southern leg, and a large chunk of the pipeline could get built. Additionally, the lower leg would help relieve the so-called “glut” of oil from Canada and the western states that was piling up in storage facilities in Cushing, Okla. With his re-election campaign in full swing, Obama flew to Cushing and in front of stacks of large TransCanada pipe, announced his strong support for the Gulf Coast project, which he said would help grow oil and gas production at home–a “critical part” of his “all the above” energy strategy.
White House staff held a conference call trying to assuage environmentalists like Jane Kleeb.
Obama’s critics rolled their eyes at the display, calling it a political stunt, since the President has little role to play in domestic pipelines. “The only role the President has,” said Terry, the Nebraska congressman, “is for that small little bit, called the border between Canada and the United States.”
But Obama’s enthusiastic tone would soon change.
CHAPTER 4: TWO STEPS BACK
By the time Obama delivered his second inaugural address on Jan. 21, 2013, he was no longer promising to “stop the rise of the oceans,” but climate change was back on his agenda. “We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations,” he pledged.
And there was a new face at the helm of the Keystone XL review. Hillary Clinton, who had once said she was “inclined” to sign off on the pipeline, exited government at the end of 2012. Obama replaced her with Massachusetts senator John Kerry, a long-time climate advocate who often boasted that he had held the first congressional hearings on climate change with Al Gore some 20 years earlier. Kerry’s appointment was “potentially a game-changer,” says Danielle Droitsch of National Resources Defense Council (NRDC). “He is an international climate champion.” But his personal influence was debated. By the time Kerry arrived, “the issue had already become presidential in my view. It had gone beyond the State Department,” says Bob McNally, the energy analyst. “Kerry has to operate now under a clear White House supervision.”
The day after Obama’s inauguration, Nebraska Gov. Heineman officially approved the new route proposed by TransCanada, under a new law the legislature had quietly passed after the special session; it allowed the governor to get around going to the independent commission. The project got another boost on March 1, 2013, from the latest draft of the State Department’s much-anticipated environmental report, which had been pushed past the election. Over the years, the document had inflated to thousands of pages. When David Jacobson, then-U.S. ambassador to Canada, asked his staff for a printed copy, it filled a box on the floor. He injured his back lifting it to his desk.
The crucial finding had not changed from earlier versions: the pipeline “is unlikely to have a substantial impact on the rate of development in the oil sands, or on the amount of heavy crude oil refined in the Gulf Coast area,” stated the report. By implication, it could not be blamed for increasing greenhouse gas emissions. The reason: trains. Oil-by-rail had been booming and was capable of “providing the capacity needed to transport all incremental Western Canadian and Bakken crude oil production to markets if there were no additional pipeline projects approved,” stated the report.
Pipeline supporters were thrilled. “We think the State Department draft report was factually correct and used common sense. It will make no difference to greenhouse gases,” says Gary Doer, the Canadian ambassador. This had long been a contention of Canada’s: one way or another, the oil would get to market. Critics were appalled. The report was based on “flawed analysis” and made “no sense,” says Droitsch. Environmentalists did not believe that Canada would succeed in building pipelines to the other coasts on account of environmental and Aboriginal opposition. They argued that transport of diluted bitumen would require expensive, specialized railcars that would not keep up with the kind of volumes that would flow through the pipeline. Bill McKibben called Canada’s threats of sending oil to Asia “a bluff.”
The next steps were for the State Department to hold a 90-day public comment period, collect input from federal agencies before making a final environmental report and a final permit recommendation to Obama. The pipeline looked ready to sprint to the finish line. A decision was expected as early as June.
But the battle was far from over. Environmentalists alleged that a third-party contractor hired by State to write the March draft of the report had done recent work for TransCanada, contrary to State Department conflict-of-interest rules for contractors. With the report’s credibility under attack, the department’s internal watchdog, the inspector general, would launch an investigation. Critics would urge State to delay a final report until the investigation was complete, likely in 2014.
The Obama administration was internally divided. On April 22, the Environmental Protection Agency expressed “environmental objections” to the State Department’s report. The EPA was not convinced of the conclusion that oil-by-rail was a cost-effective alternative. As if to underscore the issue, a few months later, a train carrying crude oil derailed and exploded in Lac-Mégantic, Que., killing 47 people. Rail now faced more scrutiny and likely regulation.
The EPA’s letter also recommended that the administration work with Canada to reduce greenhouse gas emissions from the oil sands. Despite committing itself in the Copenhagen Accord to the same emissions reduction targets as the U.S.—a 17 per cent decrease over 2005 levels by 2020—Canada had not made clear how it would get there. Most critically, it had not yet laid out regulations for the oil and gas sector. (In October, Environment Canada reported that Canada will not come close to meeting its targets without policy changes. Development of the oil sands is expected to drive a 23 per cent increase in emissions in the oil and gas sector between 2005 and 2020, the report said.)
Carbon emissions had not been a major factor in decisions about previous pipelines from Canada. But Obama would echo the environmentalists and suddenly put them centre stage. On June 25, he stunned both sides by invoking the project in a climate speech at Georgetown University, where two years earlier, in a speech on energy security, he had said, “Obviously we’ve got to look at neighbours like Canada and Mexico that are stable and steady and reliable sources.”
Now his tone changed.
In what would become a much-scrutinized paragraph, Obama declared, “Our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward. It’s relevant.”
Opinions were divided about what he meant.
The phrase “significantly exacerbate” recalled the State Department’s finding that the pipeline was “unlikely to substantially impact” oil sands development. “I thought they were very consistent with the State Department report in March,” says Gary Doer. Yet environmentalists were encouraged. “I think we’re going to win,” said McKibben. “Because Barack Obama said, ‘If this adds significantly to carbon in the atmosphere, then I won’t permit it.’ If he follows that test in a good-faith way, then there is no possible way he could ever permit it.”
Says a former U.S. ambassador to Canada, David Wilkins, whose lobbying clients had included Alberta: “That was the most skilfully drafted sentence I’ve ever seen. You could interpret it in either way.”
As 2013 progressed, Obama’s tone seemed to get more negative. In July, he told the New York Times that there was “no evidence” the pipeline would be a big jobs generator, and said that beyond 2,000 temporary construction jobs, it would create “somewhere between 50 and 100 jobs in an economy of 150 million working people,” a mere “blip.” The comments ran counter to his own State Department’s projection that it would create 3,900 construction jobs per year over two years, and “could potentially support” 42,000 jobs per year around the U.S.
A lobbying and PR onslaught continued. TransCanada hired the PR firm of former Obama communications director Anita Dunn. It ran ads touting oil sands as “ethical oil.” Environmentalists found their own deep-pocketed sponsors, including Tom Steyer, a billionaire former hedge-fund manager and a major donor to the Democratic Party who in 2012 began pumping money into the anti-Keystone XL campaign.
Then in October came word of a planned $24-million, two-year global campaign by the Canadian government to promote the oil sands internationally. There were ads in the Washington Post and on inside-the-Beltway websites, and even the spectacle of competing pro- and anti-oil-sands poster campaigns in Washington bus shelters.
Meanwhile, environmentalists were growing convinced the pipeline would be used to export Alberta oil through Gulf Coast ports—and therefore not in the interest of U.S. national energy security. The notion of Keystone XL as an “export pipeline” got new traction in January when the American Petroleum Institute called for the lifting of a ban on exporting crude oil from the U.S. that had been in place since the 1970s.
So much time had passed that Washington was now gearing up for midterm congressional elections in November 2014. The Democrats’ fragile majority in the Senate was at stake. And several Democratic senators from conservative states along the pipeline route were pressing Obama to okay the project. “The Keystone pipeline decision has taken longer than it took us to defeat Hitler,” complained Heidi Heitkamp, a Democratic senator from North Dakota, to USA Today in September. In her state, Bakken oil production was booming and would account for up to 20 per cent of the oil that would flow through the pipeline. A majority of the House and Senate had expressed general support for the pipeline, including nine Democratic senators, after Nebraska had approved the new route. However, environmentalists like McKibben pledged massive civil-disobedience actions if Obama approved the permit—a problematic scenario in an election year where the President needs his Democratic loyalists to vote. Losing both houses of Congress would effectively thwart the rest of his presidency.
Despite the efforts of environmental groups, the broad U.S. public remained in favour of the project. A September poll by the non-partisan Pew Center for the People and the Press found that 65 per cent of Americans supported the project. “The only person left is the President,” says Doer.
In the fall of 2013, Republicans in Congress held hearings to mark five years since the original permits were filed, but opponents were also organized and focused. By the fall of 2013, the State Department had received more than one million public comments on the pipeline, all of which had to be posted online. The department could manage to post only around 100,000 per week, adding more delay. Bureaucrats were reading the comments closely, taking care not to overlook any issue. The threat of litigation by either side hung over the closely scrutinized process. The last thing the State Department wanted was to spend more than five years reaching a decision, only to have it overturned by a judge for leaving a scrap of information not considered or a bureaucratic step overlooked. “I would be surprised if there were not a series of legal challenges in the event of an approval,” says Droitsch, a senior attorney at NRDC. “There is one lawyer behind every cherry blossom here in Washington,” quips Doer.
In December it emerged that Obama had brought in an outspoken oil sands critic, John Podesta, as a top White House adviser on climate change. Responding to outrage from pipeline supporters, the White House aides quickly said Podesta would “recuse” himself from pipeline issues; then, responding to outrage from pipeline critics, they softened that statement.
Environmentalists didn’t know how to read the President. “I think he’s truly on the fence,” says Rev. Ingrid Lukas-Howe, a Methodist minister from Massachusetts who had come to the White House to be arrested in 2011, and had found “the same spirit of civil disobedience as there was with Dr. Martin Luther King.” Of Obama, she adds: “Unfortunately this is a president who truly tries to do all of the above and tries to please everybody.”
Energy analyst McNally had put the chance of approval at 70-30 over the summer, but when 2013 came and went without a decision, he began to wonder whether the strategy was “death by delay,” and dropped his odds to 50-50.
Today the fate of the pipeline looks as uncertain as ever. Lee Terry, the pro-pipeline Nebraska congressman, thinks the President “doesn’t want to make a decision at all” and expects congressional Republicans to vote to simply “deem” the pipeline approved if they win control of the Senate next November. Terry is seeking a longer-term change, too. He wants to shift authority over cross-border pipelines from the President to an independent federal agency.
“What we’ve learned is that if the President has to make the decision, it gets caught up in presidential politics,” he says.
Back in Nebraska, another battle is under way. Landowners along the new route say it’s still in the Sand Hills, despite a government map saying otherwise, and a whole new round of rancher and farmer rebellion has begun. Thompson and other landowners filed a lawsuit in state court arguing that the new pipeline law, which allowed the governor to avoid the independent commission in approving the new route, violates Nebraska’s state constitution; arguments were heard in the fall. As of this week a decision in the lawsuit was still pending, with the potential to once again trip up the route through Nebraska.
Whatever the final outcome, the saga has left a trail of mistrust. The era of quick and quiet U.S. approvals for oil pipelines from Canada is over. Canada is now known in the president’s Democratic circles as much for its climate policy as for its universal health care. “Really what has been needed is action on the ground in Canada: stronger federal climate policy; stronger regulations to manage operations; a demonstration of action. That’s not what we’re seeing—and the U.S. government has taken notice,” says Droitsch.
The CBC recently reported that Harper sent a letter to Obama in August proposing “joint action to reduce greenhouse gas emissions in the oil and gas sector,” in exchange for approval of the pipeline. But the Harper government denied any attempt at a quid pro quo. There have still been no regulations proposed.
Even if strict new laws are passed, opposition to the pipeline or to the oil sands would not soften, says McKibben. “No. The Harper government is a wholly owned subsidiary of the fossil fuel industry. And so their endless attempts to pretty up what they are doing are pointless,” he says. “What they are doing is exploiting a huge pool of carbon that has to stay in the ground if we have any hope of dealing with our climate problems.”
The Harper government, meanwhile, is growing frustrated. Last week Foreign Minister John Baird visited Washington and declared in a speech that Canada “can’t continue in this state of limbo.” TransCanada has already announced plans to build Energy East, a pipeline system to an export port in New Brunswick. “That oil is going to get produced under any circumstances,” insists Pourbaix. “The only question is to which markets is it going to go.”
Asked what he’d learned from the Keystone experience, Doer replies: “Don’t put all your eggs in one basket.”
Some have questioned whether a closer relationship between Harper and Obama would have made a difference. “Personal relationships matter a lot,” says David Wilkins, Bush’s former ambassador to Canada. He points to his experience with another bilateral dispute: softwood lumber. But Doer says trade diversification had been key there, too. “By increasing our sales of softwood to Asia, [which was] hard hit by earthquakes, and increasing sales 20 per cent per year, we are much stronger in dealing with the United States on softwood lumber.”
Ornstein, the Washington political analyst, says Obama’s steps on Keystone XL were based on bigger considerations. “I have little doubt that if they were the best of friends, we would be in the same place that we are now.”
There are many lessons for Canadian industry to learn from Nebraska. “Work with the landowners a little bit more,” says Terry, the pro-pipeline congressman, who added companies should be more careful with threats of eminent domain. “They sent out some letters that riled some of our farmers and ranchers. I think that maybe lit the match that lit the fuse.” Pourbaix says he’s learned from the experience. “We have to get into the local communities very early—get the facts into the hands of the people—and we have to go in very humbly and do a lot more listening than talking.” Jane Kleeb believes that if the company had listened to concerns and avoided the aquifer and Sand Hills early on, “they’d be pumping oil by now.”
For Thompson, the rancher who found himself in the centre of a cross-border battle he never wanted, and who became the unwavering symbol of the anti-Keystone movement, it has been “a long and arduous six years.” Years that have left him with some bitter feelings: He and other conservative landowners felt “thrown under the bus” by his state’s Republican establishment that now embraces the project. “But for what’s at stake, I would absolutely do it all again.”
He may yet have to. TransCanada has no intention of giving up, nor, it seems, does the Harper government. And so long as Keystone’s intended path crosses the vast grasslands of Nebraska—even though the new route now bypasses his own property—Randy will be standing there. Or maybe it’ll be some other rancher just like him, ready to fight the foreign company that says it needs his land.
“One would not normally imagine either the foreign affairs of the United States or the broader energy policy and economic interests of the United States being shaped by a handful of people in Nebraska,” says Ornstein, the political analyst. “They just happened to be at the right place at the right time—or the wrong place at the wrong time.”