TransCanada request keeps heat on Obama admin

By Manuel Quiñones | 11/03/2015 01:16 PM EST

Article updated at 3:31 p.m.

TransCanada Corp.’s surprise request yesterday that the State Department pause permitting for the Keystone XL oil pipeline from Alberta is intensifying pressure on the Obama administration.

The State Department and the White House must now determine whether to stay the course in reviewing KXL or agree to the company’s wishes, potentially leaving the final decision on the pipeline to the next administration.

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State, as of this morning, was still reviewing TransCanada’s request. A spokeswoman did not say how long it would take the agency to say whether it would indeed pause its KXL review.

White House spokesman Josh Earnest said this afternoon that State was still trying "to determine exactly what the request is and what is motivating that request."

He added, "This is a process that has taken an extensive amount of time to complete. Given how long it’s taken, it seems unusual to me to suggest it should be paused yet again."

At least some environmental advocates, who over the years turned KXL from another pipeline project into a proxy fight in the greater war about climate change action, are declaring victory.

They say TransCanada is running out the clock on the Obama administration, knowing the current White House was likely to reject the project.

"Clearly TransCanada has lost and they recognize that," said Bill McKibben, 350.org founder, in one of the most blunt statements. "It’s one of the great victories for this movement in decades."

But greens know victory is not complete — or at least close — until the White House formally denies TransCanada permission to cross the border. They are pressuring against the pause.

"This is President Obama’s decision, and he shouldn’t cave to a foreign oil company trying to twist his arm into punting it to future presidents," said Elijah Zarlin, climate campaign director for the group CREDO.

TransCanada’s request stems from its recent decision to turn its back on a governor-issued permit to run KXL through Nebraska and, instead, seek Public Service Commission approval (Greenwire, Sept. 30). The company filed papers early last month in a process it says could take seven months to a year.

"We believe that a pause to resolve the Nebraska route issue gives us the best opportunity to achieve overall approval of the project," TransCanada said this morning.

Risky gamble?

Because the administration has delayed its review of KXL before, citing permitting and routing uncertainties in Nebraska, TransCanada says it only makes sense to do so again.

"We feel under the current circumstances a similar suspension would be appropriate," the company said in a statement. "Make no mistake, TransCanada remains firmly committed to moving forward with the project."

Christine Tezak, an analyst at ClearView Energy Partners LLC, called it "a reasonable request to allow State to conserve its resources in case additional changes to the route are made."

And she said the upside for the company may be to "forestall a negative decision from this administration before President Obama’s term concludes. If a GOP candidate succeeds in securing the presidency, the prospects for an approval would seem brighter."

American Petroleum Institute CEO Jack Gerard said during an interview this morning: "I think it’s very ironic that the president would use the Nebraska delay as a reason not to make a decision, and now the company has asked for a delay so they can make sure they get Nebraska right so they can make a decision, and so anybody that declares this a victory at this point obviously has a very lopsided or specific agenda they’re trying to advance."

If TransCanada is indeed trying to make the KXL permitting process outlive the Obama administration, it could prove a risky gamble. While Republican presidential candidates have promised to permit the pipeline, Democrats have all expressed opposition.

Environmental advocates, tribes and landowners are likely to mount a vigorous fight against KXL at the Nebraska PSC. While already moving to intervene in that process, opponents say commissioners can’t move forward unless state courts agree to scrap the law allowing governor-issued permits. KXL called that analysis false.

KXL critics are also throwing roadblocks to South Dakota Public Utilities Commission proceedings to renew the pipeline’s permit to run through that state. The process has been going on for more than a year.

Anthony Swift, the Natural Resources Defense Council’s Canada project director, said in another statement: "Pause or no pause, we now know more than enough to do the right thing — reject the pipeline because it would worsen climate change. Altering its route through Nebraska isn’t going to change that. Keystone XL isn’t in the national interest and the president should reject it."

TransCanada said, "Our focus is not on the various political machinations or on what the President may or may not do, or what a new administration may or may not do. Our focus remains on continuing to demonstrate that the project is in the interests of the United States, something we believe has been clearly shown."

The company went on, "If it is judged on its merits, it will be approved. If it is judged on science over symbolism, it will be approved."

Political football

Whatever happens, KXL will continue being a political football. It played a significant role during recent Canadian elections and will likely keep coming up in U.S. races.

"I think it’ll be an issue again because in shorthand it’s easy for voters to understand who’s for this and who’s against this," said Glen Bolger, partner and co-founder of the GOP polling firm Public Opinion Strategies, said during a public forum in Washington, D.C., this morning. "I do think that Keystone will come back as an issue in 2016."

Gerard agreed. "Here’s a simple issue: Build a pipeline, create 40,000 jobs, makes us more energy independent," he said. "The president has refused to do that over seven long years, the public says enough’s enough."

Pollster and analyst Keith Frederick, who has worked with pro-KXL Democratic politicians, said the discussion would have to be about pocketbook issues. He called the climate argument more "esoteric," one that resonates with fewer undecided voters.

That’s perhaps why opponents, while touting polls showing climate concern among Americans, have also worked to downplay the project’s economic and U.S. energy impacts. President Obama has also been increasingly dismissive of KXL’s potential benefits.

Despite some support for KXL within the party, the Democratic National Committee is using TransCanada’s decision to rally supporters. An email blast said what happened was "far from victory." It said, "So if you’re still in this fight against the threat of climate change, add your name right now."

Canadian elections

Many observers thought Obama would rule on KXL following the recent Canadian elections, and as the United States prepares for the international climate talks in Paris later this month.

But more permitting delays may put pressure on incoming Prime Minister Justin Trudeau, who has pledged to consider greenhouse gas emissions in reviews for new energy projects.

"That is a huge departure from the former [Canadian] government," said Erin Flanagan, oil sands analyst at the Pembina Institute, about the incoming government’s perspectives.

Trudeau will have to work to reconcile his support for KXL with promises to act on climate. During the campaign, Trudeau sharply criticized the outgoing government for focusing so much on KXL.

If TransCanada is successful in delaying U.S. review for the pipeline, then Trudeau would want to show that he is a better advocate for the project than outgoing Prime Minister Stephen Harper was, said James Coleman, an assistant professor at the University of Calgary Faculty of Law. If a Republican wins the White House next year, "his job would be pretty easy," said Coleman.

Trudeau’s plan is not clear yet, however, and it’s uncertain how much his coming energy plans might change the outlook for oil pipelines generally.

A new KXL delay may also generate renewed attention to alternative and also controversial oil sands pipelines like TransCanada’s Energy East project.

Still, Coleman noted, "The provinces, not the federal government, are generally responsible for onshore oil and gas development."

Alberta’s climate policy — which the province’s new premier, Rachel Notley, is reviewing — is more important for the long-term trajectory of oil sands production, he said.

Reporters Christa Marshall and Hannah Northey contributed.

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