KEYSTONE XL:

Sutley's departure may alter internal dynamic as Obama admin studies pipeline

The departure of White House Council on Environmental Quality Chairwoman Nancy Sutley, announced yesterday, risks leaving U.S. EPA and the State Department without a referee in their long-running tug of war over the contentious environmental review of the Keystone XL pipeline.

Sutley's exit, set for February, also ensures that new personalities will occupy every role in the Obama administration's internal KXL drama compared with the oil sands pipeline's previous rejection in 2011 -- except, of course, for the president himself. Secretary of State John Kerry has replaced Hillary Clinton, EPA chief Gina McCarthy has replaced Lisa Jackson, and now Sutley's little-understood part is set to fall to a new player or remain unoccupied when the $5.4 billion project receives its final ruling, likely sometime next year.

"We need some referee to look at differences of opinion between agencies" on KXL, which would ship more than 700,000 barrels per day of heavy Canadian crude to the Gulf Coast if the White House approves it, Natural Resources Defense Council Canada Project leader Danielle Droitsch said in an interview yesterday. "That's certainly a role that CEQ has played and should play."

Using its authority to weigh in under the National Environmental Policy Act (NEPA), the 1970 law that governs the federal analysis of KXL, EPA has on several occasions publicly criticized State's review of the pipeline. But under Sutley, EPA never elevated its concerns to the formal level of a NEPA objection that would bring CEQ into the process, a choice that many KXL kremlinologists attributed to an emphasis on collegial interagency relations under Obama (Greenwire, Oct. 27, 2011).

Whether a new CEQ chairman would change that culture, if one is in place while EPA's 25-day NEPA clock begins to run for KXL, remains to be seen.

"It's really tough to speculate without knowing" when State releases a final environmental impact statement on the controversial pipeline what impact CEQ might have on the endgame, National Wildlife Federation senior counsel Jim Murphy said in an interview. "Having a CEQ person with a different approach, whether it's more hands-on or more hands-off, might give different signals to the agencies about how hard to push."

That long-delayed final word from State, whipsawed by political pressure from emboldened environmental groups and a frustrated oil industry, easily could stay under wraps until next year, given that State's inspector general is still investigating greens' conflict-of-interest accusations surrounding the private contractor that produced a previous draft version (Greenwire, Aug. 23). Greens remain worried that State will continue to embrace the rationale it used to sign off on KXL in March, that the pipeline's emissions impact would prove meager, given that rail could help fill the oil sands transportation gap that would open if Obama were to deny the project a border-crossing permit.

EPA's most recent letter of objection rated State's review in the middle of three quality scales for NEPA analyses, a level that Sutley had indicated would not lead to CEQ involvement in the KXL decision. But the intense campaign by pipeline critics to raise White House awareness of the pipeline as a climate change litmus test has in many ways pulled the bureaucratic lever that EPA declined to pull, bringing the decision to Obama's desk no matter what happens in the coming months.

"I'd say the impact is nil" from CEQ, Center for Biological Diversity senior counsel Bill Snape said via email, because "this appears to be a decision on the president's desk."

However, CEQ has made its power known in meaningful ways. The administration did not seek public comment on its national interest determination for Enbridge Inc.'s Alberta Clipper oil sands pipeline in 2009, giving the pipeline a permit two months after State delivered a favorable environmental review -- but KXL is in line to receive an open comment period.

EPA also has extracted some small-scale concessions through its middle-volume complaints to State. An independent pipeline safety analysis of KXL's spill potential, though its time frame is uncertain, came to fruition at EPA's behest (Greenwire, June 19).

Should Sutley give way to the more outspoken adviser that many environmentalists hope Obama engages, particularly after the departure of former climate aide Heather Zichal in October, the final lap of KXL's long journey through the federal bureaucracy could see a more robust White House involvement. A new CEQ leader more in the mold of Carol Browner, Obama's first-term environmental counselor, could assuage the concerns of some anti-KXL activists that flared after McCarthy suggested a less strong resistance to the pipeline than they saw in Jackson (E&E Daily, Nov. 5).

Adding a new wrinkle to the cast of characters for the pipeline is the lineage of Zichal's replacement, Dan Utech, a veteran aide to Clinton, who added the first fuel to greens' KXL fire in 2010 by saying that she was "inclined to" approve the project.

If EPA renews its objections after State releases a final review, Natural Resources Defense Council Canada Project's Droitsch said, "at that point, the president has the information he needs" to nix the pipeline.