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The Keystone XL pipeline

Photo: Flickr/tarsandaction

Updated Jan. 18, 2012 | President Obama announced today that the federal government would deny TransCanada’s permit for the Keystone XL pipeline. Obama emphasized that the decision was “not a judgment on the merits of the pipeline,” but due to a Republican-mandated deadline that granted insufficient time for the government to conduct environmental impact reviews to approve the project.

One of the biggest political battles currently brewing in Washington is over the controversial Keystone XL pipeline, a $7 billion proposed pipeline that would carry oil from Canada’s “tar sands” down to U.S. refineries by the Gulf of Mexico. The debate has embroiled environmental groups, politicians from both parties, lawyers, labor unions, landowners and celebrities alike as protests continue on in front of the White House.

Because the pipeline crosses international borders and a Canadian company, TransCanada, owns the project, the U.S. Department of State has had the responsibility of approving or rejecting a permit to allow the proposed pipeline. While the State Department had originally planned to make a decision by the end of the year, the barrage of debates, demonstrations and legal challenges to the pipeline will likely delay the decision – and President Obama announced last week that the final word will ultimately come from him.

What exactly makes the Keystone XL project so controversial, and what’s at stake for the country and the Obama administration? Here are five things to know:

1. Keystone XL supporters champion energy independence and job creation as reasons to go ahead with the project.

The Keystone XL project is a proposed extension of the Keystone pipeline, which became operational in June 2010. The existing Keystone pipeline transports oil from the “tar sands” of Canada’s Alberta province through Illinois and Oklahoma. The proposed extension currently awaiting approval by the Obama administration would also run from Alberta, traveling almost 1,700 miles directly through the United States to refineries in Texas, passing through Nebraska, Montana, South Dakota, Oklahoma, Kansas and Texas.

Canadian company TransCanada proposed both the Keystone Pipeline and Keystone XL, and has argued (pdf) that the proposed extension will create “about 20,000 construction and manufacturing jobs” and “generate more than $585 million in new taxes for states and communities along the pipeline route.” The estimated 20,000 new jobs have been a key selling point for Keystone XL, and some labor unions have come out with vocal support for the project.

Other groups, however, have questioned TransCanada’s figures. A report from the Global Labor Institute at Cornell University conducted its own evaluation of the project and found that the job creation estimates were “unsubstantiated,” and that “the project could actually kill more jobs than it creates” due to fuel price increases in the Midwest and the effects of pollution.

Regardless, supporters also argue that an increased use of Canadian oil resources would limit the U.S.’s dependence on foreign oil, strengthening our domestic energy security agenda. Earlier this month, the Washington Post ran an editorial in support of the Keystone XL project, declaring, “The more American refineries source their low-grade crude via pipeline from Canada and not from tankers out of the Middle East or Venezuela, the better, even if not every refined barrel stays in the country.”

At Slate, Michael Levi argues that the promise of absolute energy security for the U.S. is largely overblown, but does have a basis in reality. “Greater access to oil tends to push down world crude prices; as a result, adversaries like Iran, Russia, and Venezuela would make less money,” he writes. “If oil prices remained stable in the face of Canadian expansion, it would be because states like Saudi Arabia had compensated by curtailing their production — and shrinking their revenues. The security benefit here is limited and indirect, but it’s real.”

Courtesy: U.S. State Department. Click to enlarge.

2. Opponents say the pipeline poses a threat to the environment and personal safety for those living nearby.

One of the chief concerns of Keystone opponents centers on the nature of “tar sands” oil, which environmental groups argue is more corrosive than the crude oil the U.S. normally imports, increasing the chances that pipes might wear away more quickly and result in leaks or spills. The raw form of Canada’s tar sands oil carries diluted bitumen, a “highly corrosive, acidic, and potentially unstable blend of thick raw bitumen and volatile natural gas liquid condensate,” according to the Natural Resources Defense Council.

Many have noted that there has been scant independent scientific research dedicated to uncovering the actual likelihood of accidents in transporting tar sands oil over a long distance, but opponents say that the lack of information makes it all the riskier to go ahead with the proposed pipeline. Earlier this year, Need to Know contributor Eric Hoffner argued that “a much longer pipeline almost certainly means a greater chance of spills, potentially bringing the impacts of our nation’s reliance on the Alberta tar sands to our own neighborhoods.” TransCanada, meanwhile, maintains (pdf) that tar sands oil is “very similar” to other types of oil already being transported via pipeline, and that the Keystone extension will use stronger steel and more advanced technology than other pipelines.

Keystone XL opponents also argue that expanding the practice of extracting oil from tar sands itself threatens the environment, noting that tar sands oil extraction has been chiefly responsible for depleting Alberta’s boreal forests and wetlands in the area. A New York Times editorial published in August staunchly opposed approving the project, arguing that tar sands extraction is a much more complex process than regular crude oil extraction, and would produce more greenhouse gas emissions that contribute to our ongoing climate change crisis.

The Keystone debate has also become a personal issue for Midwest communities living far from the pipeline route. Current plans would have the Keystone XL pipeline run over Nebraska’s portion of the Ogallala aquifer, a shallow water table that supplies drinking and farming water for multiple states. Because of the proximity to the aquifer, leaks or accidents could have a devastating effect on the 1.5 million people that rely on the water supply, as well as 20 percent of the nation’s irrigated farmland that draws water from the same source.

3. Legal battles are on the horizon.

Although environmental groups like the Natural Resources Defense Council and Friends of the Earth have been vociferously urging the Obama administration to block the pipeline project, another front of the battle is taking place in the legislative arena. Last week, the Nebraska state legislature convened a special session to debate four bills concerning the state’s control over the portion of the pipeline that would fall within its borders, with the hopes of working out legislation that would compel TransCanada to change the proposed pipeline route.

TransCanada has also set itself up to face a host of smaller legal battles with landowners in various states. The company has invoked the legal action of eminent domain – by which private property can be seized for the sake of a public good – against 34 landowners in Texas and 22 in South Dakota to date, and has sent letters to several other landowners in Nebraska, according to the New York Times. State laws differ on the practice of eminent domain, and lawyers and judges in the region have offered various opinions on whether TransCanada can justifiably invoke it, particularly even before the project has even been approved. If President Obama does allow the Keystone project to go forward, however, these legal skirmishes will continue to escalate.

4. Questionable ties between TransCanada and the State Department cloud the project.

Earlier this summer, the State Department issued its own report on the safety and environmental impact of the Keystone XL pipeline, declaring that if operated within the proper regulations and safety precautions, it would have “limited adverse environmental impacts.” However, a series of investigations following the report revealed questionable ties between the State Department and TransCanada, throwing doubt on the impartiality of the report. Paul Elliott, a prominent lobbyist for TransCanada and a former aide for Secretary of State Hillary Clinton’s 2008 presidential campaign, has been thrust in the middle of most of this controversy. Several environmental groups jointly filed a Freedom of Information Act request to obtain internal State Department documents that uncovered a “cozy relationship” between Elliott and State Department employees. The documents revealed that in one instance, a State Department Embassy employee congratulated Elliott for a political endorsement for the Keystone XL project.

The environmental groups filed a complaint to President Obama on the matter, citing the correspondence as further evidence that the “State Department has not taken seriously its obligation to impartially evaluate the impacts that this pipeline would have on the environment.” The potential conflict of interest at play has become a substantial enough concern that last week, a group of congressional Democrats requested that State Department’s inspector general to conduct a full investigation of the department’s ties to TransCanada, and that the Keystone XL decision be delayed until the investigation was complete.

5. High stakes for President Obama

As the Keystone decision drags on, the debates have only become louder. Obviously, with such a high-stakes project, President Obama’s decision will be a major factor in many voters’ decisions in next year’s election. At GOOD, Sarah Laskow writes, “Many environmentalists see this issue as a litmus test: the administration has abandoned climate change legislation, increased oil drilling, and failed to support the Environmental Protection Agency — if the president cannot stand with the environmental community against the pipeline, some say, why should they stand with him at all?”

But as long as unemployment in the U.S. continues to hover around 9 percent, the promise of new jobs is difficult to ignore. And many labor unions, which comprise part of Obama’s base, have lobbied heavily for the president to approve the pipeline. The CEO of Enbridge, a competitor company that operates another large oil pipeline in the U.S., told Canada’s Financial Post that rejecting the pipeline would set a precedent for rejecting pipeline projects in the future, as well, impacting the companies, their suppliers and all the employees involved. Meanwhile, TransCanada has argued that further delaying the Keystone project could result in the company losing approximately $1 million a day.