Alberta, Canada contains the Athabasca oil sands, the largest crude bitumen reservoir in the world. TransCanada Pipeline Co. has proposed the construction of the Keystone XL pipeline to transport oil sands bitumen and crudes from Alberta to refineries on the U.S. Gulf Coast. The Keystone XL project has faced unceasing challenges by environmental advocacy groups. Despite an executive order mandating accelerated development of such projects, federal approval of the pipeline's construction has been pending since September 2008 to respond to environmentalists' objections.

Overview of Keystone XL

The Keystone XL pipeline would transport hydrocarbons from Alberta's oil sands fields to Gulf Coast refineries in Texas. Keystone XL would nearly double the U.S.'s import of oil from Canadian oil sands, and would have a nominal transport capacity of 700,000 barrels per day. Keystone XL's supporters point out that the project would reduce U.S. dependence on overseas oil sources, inject billions of dollars in direct investment in the U.S., create up to 100,000 jobs, and help reduce gasoline prices via legitimate market forces. But some environmentalists and landowners worry about the pipeline's potential environmental impacts, including the greenhouse gas emissions from the processing of oil sands crude, the consequences of a pipeline rupture, and the effects on migratory birds and other wildlife. President Obama has publicly worried about potentially “destructive” effects of oil sands production.

Because the pipeline would cross the U.S.-Canadian border, the project requires a Presidential Permit, the approval process for which has been delegated to the State Department. The process must comply with the National Environmental Policy Act (NEPA), and the State Department has determined an environmental impact review is necessary before it can approve the project.

Federal Administrative and Legislative Activity

The State Department issued its draft environmental impact study (DEIS) for Keystone XL on April 16, 2010, concluding that the project would have a minimal impact on the environment. EPA and environmental advocacy groups claimed that the DEIS was inadequate, and the State Department agreed to delay final approval of the project. On April 22, 2011, the State Department released a supplemental draft environmental impact study (SDEIS), which acknowledged environmentalists' concerns about the greenhouse gas emissions involved in producing oil sands crude, but remained supportive of Keystone XL. The public comment period for the SDEIS closed on June 6, 2011, and the State Department is completing its final environmental impact study for the project. In addition, members of Congress have written Secretary of State Clinton to express their concerns about Keystone XL. Most recently, on July 15, seven Democratic senators, including Environment and Public Works Chairwoman Barbara Boxer (D-CA) and Patrick Leahy (D-VT), who chairs the appropriations subcommittee responsible for State Department funding, delivered a letter cataloging their environmental concerns in light of the Silvertip accident.

On July 26, the House of Representatives passed H.R. 1938, a bill aimed at accelerating the approval process for the Keystone XL project. The bill establishes a November 1, 2011 deadline for the administration to make a final decision on the pipeline. Meanwhile, to address bipartisan concerns surrounding Keystone XL, House Energy and Commerce Committee Chair Fred Upton (R-MI) recently released a draft bill that calls for stricter federal regulation of all oil and gas pipelines. The bill would set new standards for pipeline burial depth, require more advanced testing measures to gauge pipeline health, and direct companies to notify the National Response Center “not later than one hour” after a spill. The draft has received support from both Republicans and Democrats, and Rep. Upton plans to bring the bill to the floor in early fall.

Shortly after Leon Panetta's investiture as Secretary of Defense, the Department of Defense (DOD) entered the oil sands debate. In a statement to Congress, DOD voiced support for Section 526 of the Energy Independence and Security Act of 2007, which prohibits federal agencies from purchasing alternative fuels that produce higher greenhouse gas emissions than conventional fossil fuels. Rep. Henry Waxman (D-CA), who was Chairman of the Committee on Oversight and Government Reform at the time of Section 526's passage, argued that Section 526 bars the purchase of oil sands crude oil by federal agencies. The Senate is now considering the House's Defense Appropriations Act for 2012, which would eliminate funding for Section 526. DOD argued that Congress should maintain Section 526 for national security, economic, and environmental purposes.

Challenges Moving Forward

The Silvertip spill has intensified this already complex debate over the Keystone XL project. It is likely the Silvertip spill will heighten the scrutiny the Keystone XL pipeline receives from regulators and the public. It is therefore now more critical than ever for the project's supporters to articulate why Keystone XL should be approved. In the meantime, the spirit of the Presidential executive order mandating acceleration of energy development remains frustrated.