Keystone XL Pipeline sparks national political debate

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The Keystone XL debate: 2008 to present

Keystone XL: environment destroyer or job creator?

From D.C. to the Midwest, Keystone XL brews political storm

WINNER, S.D.— A final decision on the Keystone XL pipeline isn’t expected until after the November presidential election, but landowner John Harter is anxiously awaiting November for an added reason.

That month, a jury in South Dakota will decide how much Canadian company TransCanada should pay him to place the pipeline across his property. But Harter feels like he’s already lost.

He said his 1,200 acres of land — and his livelihood — could be ruined by the pipeline. A spill could contaminate his land’s underground water supply, which in turn would harm the people and animals on his property, he said.

John Harter, a rancher in Winner, S.D., stands on his land near where the Keystone XL Pipeline will cross if it is approved in early 2013.
(Ali Durkin/MEDILL)

“How we make a living means nothing to these people,” he said. “I think they all need to go on a 90 day fast—no water, no food. Give them a bottle of oil to drink. And see how they come out in 90 days. See if they have a little more respect for the people out here growing the food that America and the world eats.”

The proposed Keystone XL pipeline will carry tar sands oil from Canada to refineries on the Gulf Coast of Texas. The South Dakota Public Utilities Commission approved TransCanada’s construction permit in 2010, granting TransCanada the right to eminent domain and stirring up a property rights debate in the state.

“We’re a pretty Republican state…and I think there’s been a lot of confusion as to why this main Republican ideals of private property rights are being cast aside in favor of a large foreign corporation,” said Luke Temple of Dakota Rural Action, a South Dakota grassroots organization that has worked to organize landowners to negotiate collectively with TransCanada.

South Dakota Gov. Dennis Daugaard, a Republican, supports the pipeline. TransCanada has said it needs the right of eminent domain to proceed with construction. The state ruled that the pipeline is “a common carrier,” meaning its oil is open to purchase by the general public.

“I don’t care where you are in America, that gasoline got there through a pipeline,” said John Smith, general counsel for the South Dakota Public Utilities Commission. “It’s just something we all take for granted, but it’s just a fact of life, that’s the reality of it. And a lot of people just don’t realize that. … All of those pipelines are owned by private companies and essentially none of them can probably practically be built without eminent domain authority.”

While Harter waits for a decision on the price of his land, environmental groups continue to lobby against the pipeline in the hope of convincing President Barack Obama that it will have a devastating environmental impact.

In January, Obama denied TransCanada’s first permit for Keystone XL. Forced to make a decision due to a payroll tax bill that required an approval or denial within 60 days, Obama said there was not adequate time to examine the issues, pushing the decision into next year — after the November election. TransCanada reapplied to the State Department in May.

But TransCanada has already begun developing the portion or the pipeline from Cushing, Okla., to the Gulf of Mexico, which doesn’t require a presidential permit because it doesn’t cross an international border. The decision to be made in 2013 only refers to the portion of the pipeline that extends from Canada to Steel City, Neb.

Many of the environmental concerns center on the Ogallala Aquifer, one of the world’s largest aquifers, from the southern part of South Dakota to North Texas.

The first Keystone pipeline, which extends from Canada to Pakota, Ill., had12 spills in 2010, according to reports from multiple organizations.

“Down here, if that happens, you are talking about not only the Ogallala Aquifer…but going across some of the bigger waters around here—the rivers here,” said Rodney Bordeaux, president of the Rosebud Sioux Tribe in South Dakota.

The pipeline path skirts the reservation of the Rosebud Sioux, but will go over their treaty lands, which extend much farther, Bordeaux said. Most of the residents of the Rosebud Sioux reservation get their drinking water from the aquifer, he said.

“We want to preserve that source of good quality water,” he said.

Concerned about the effect of the pipeline on the Nebraska Sand Hills, a large dunes and prairie environment, Nebraska residents and lawmakers put pressure on TransCanada to reroute the pipeline’s path. Nebraska Sens. Ben Nelson, a Democrat, and Mike Johanns, a Republican, lobbied in Washington against the original route.

On Nov. 14, 2011, TransCanada announced that it would reroute the path of the pipeline to avoid the Sand Hills.

But, Russell Eagle Bear, historic preservation officer of the Rosebud Sioux, said the Indians lack the political power in Washington to convince TransCanada to move the pipeline away from the aquifer.

“In Nebraska, the governor and the people stood up and said no. With us, the Indian tribes saying no, you think they’re going to listen to us? Hell no,” he said.

Many environmental groups have also used the Keystone XL pipeline debate as a forum to highlight what they believe to be an even more critical issue: America’s dependence on fossil fuels, said Dennis Johnson, economics professor emeritus at the University of South Dakota.

“Tar sands oil is the most toxic fuel on the planet that leaves in its wave scarred landscapes and a web of pipelines and polluting refineries all while delaying our transition to a clean energy economy,” according to the Sierra Club.

Meanwhile, supporters are pushing just as intensely to get the pipeline built, arguing it would have a multitude of economic benefits for the U.S. economy.

Gulf refiners are paying higher prices for crude oil than refineries in the Midwest, said Ted Gayer, an economist with the Brookings Institution, because of the lack of infrastructure available to carry oil to the Gulf. “By building this infrastructure, you’d be able to kind of close that gap and get real wealth gains.”

Those gains would come in many forms, but one would be job creation, he said. Republicans have blasted Obama’s delay of the pipeline construction, painting his actions as a barrier to job growth.

A television ad launched May 18 titled “Day One” shows Republican presidential nominee Mitt Romney on his potential first day in office. On day one, Romney “immediately approves the Keystone pipeline, creating thousands of jobs Obama blocked,” according to the ad.

The pipeline would create roughly 20,000 construction and manufacturing jobs and bring $585 million taxes for the states along the pipeline, according to TransCanada.

Yet, the number of potential jobs generated by Keystone XL has been furiously debated. Opponents argue that the number of jobs would likely be much lower and would only be temporary.

But, noted Gayer, “in this economy (that) is not so bad.”

And the economic benefits are about more than just jobs, he said. “This is a Canadian company that wants to spend $700 billion. So in some sense, it’s a $700 billion stimulus package that is financed outside of U.S. taxpayers.”

With the United States in limbo on approving Keystone XL, TransCanada has been looking for other potential buyers for its oil.

“It’s not like the Canadians are not going to extract it,” Gayer said. “They’re not just going to sit on it. This is a valuable commodity for them.”

TransCanada has been looking specifically to China. Economists say TransCanada will build a pipeline West and sell the oil to China if the Keystone XL permit is denied in 2013. But, that won’t necessarily be a win for environmentalists, they say.

A big environmental concern is the amount of greenhouse gases produced in the tar sands extraction process, Gayer said. “When it comes to greenhouse gases it doesn’t matter where it’s going,” he said. “It’s a global pollutant, so whether or not they ship it to China or to a pipeline down to the Gulf it has the same environmental impact.”

In fact, the environmental impact of the tar sands oil being sent to China might even be worse, Johnson said. It has more lax environmental standards than the U.S., he said.

Others argue that the pipeline would bring a much greater and long-term benefit than job creation: It would provide the U.S with a stable source of energy and reduce American dependence on imports from unstable areas in the Middle East.

“Ensuring the availability of this critical resource is crucial to the future performance of the U.S. economy, particularly in cases where it provides access to additional petroleum resources,” according to study from Perryman Group in Waco, Texas, that is featured on TransCanada’s website.

But Johnson countered that because the global oil market has become interconnected, increased oil from Canada would not make the U.S. immune to the rise and fall of global oil prices.Canada is already the largest exporter of crude oil to the U.S., in fact, far exceeding exports from the Middle East, according to the Energy Information Administration.

Gayer agreed with Johnson’s assessment. “I think [energy independence] can be overstated as a benefit to us,” Gayer said. “I mean we are talking about 50,000 barrels a day. In the global market we are not looking at something that’s earthshattering.”

But the debate over the Keystone XL pipeline has not yet played a major role in the 2012 election. And with the economy clearly the central issue of the race between Obama and Romney, that is not likely to change.

“I don’t think it’s going to be a huge issue politically. There’s enough issues going on.,” Gayer said. “Where this goes after the election is what’s interesting.”

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