Environmentalists Knock Themselves Out On The Keystone XL Pipeline

As you are undoubtedly aware, today’s environmental movement has become almost entirely fixated on the effort to stave off “climate change” by having governments impose restrictions on the use of fossil fuels. But, despite what is now a few decades of end-of-days hysteria designed to force political action on the issue, the political process, both here and in most foreign countries, has led to the adoption of remarkably few of the restrictions sought by the activists. And even with a few restrictions imposed here and there (California, anyone?), total usage of fossil fuels continues to increase rapidly worldwide, most particularly in third-world countries that are still in the early phases of building out their electrical systems.

What is an environmental activist to do? Outside the United States, activists rarely have much in the way of alternative avenues to follow in their quest to block fossil fuel development. But here in the U.S., we have our nearly-infinitely-complex legal system, with fifty independent state court systems and 94 different federal district courts to look to — not to mention places like Puerto Rico and Guam if you want to get really clever — and endless statutes and common law theories, plus of course the Constitution itself, to support some kind of cause of action. If your goal is to block some project or development, somewhere out there there must be a theory to throw out and a judge who will give you an injunction for something. You just need to be creative, and to find the right judge. Go for it!

And thus we find that pretty much every project that anyone tries to get off the ground that involves fossil fuels in any way draws a lawsuit — or maybe two or five — seeking to block it. And then, many such projects — and perhaps most of them — get blocked, at least to the degree that some court issues an injunction of some kind. But here’s the remarkable thing: the forces of capitalism have tremendous creativity in getting around these things and going right on producing and transporting the fossil fuels. Is the flood of litigation actually having a meaningful effect? It is certainly driving up costs, but in terms of reducing the availability of the energy, I haven’t seen it.

If you want to look at a case to teach you the basics of how this game is played, you would be hard-pressed to find a better example than the recently-decided litigation over the Keystone XL pipeline. Let’s take a tour through the facts of that situation.

The Keystone pipeline system was originally proposed in the early 2000s by the TransCanada Corporation to bring crude from the Alberta tar sands in Canada to refineries in the southern U.S. Here is a history of the project at Wikipedia. The project involved crossing the Canada/U.S. border, and therefore needed a permit from the U.S. State Department. During the G.W. Bush administration, this wasn’t a problem. Three initial “phases” of the project got under way, and got built, opening after President Obama had taken office in the period from 2010 to 2014. The first three phases have the capacity to carry about 1.3 million barrels/day of crude.

And then came Phase IV, known as Keystone XL, which was proposed in about 2009 to take a shorter route with a bigger-diameter pipe (36”), to carry over 800,000 bbl/day, thus adding about 60% to the total capacity of the system. By then, President Obama had taken office. You know of course that before the federal government will issue a permit for something like this, it will need to produce an Environmental Impact Statement to comply with the National Environmental Policy Act, and that the EIS will need to evaluate any and all significant environmental impacts of the project. An initial Final Environmental Impact Statement for Keystone XL came out from the State Department, then in the hands of Hillary Clinton, in August 2011. Here is a link to the Executive Summary of same, which runs to 24 pages. The full document is thousands of pages.

It was in 2011 that then NASA/GISS administrator and climate activist James Hansen supposedly told fellow climate activist Bill McKibben that the Keystone XL pipeline, if built, would be “game over for the planet.” Exactly why this particular phase of a much larger pipeline project was the thing that would put an end to the planet — as opposed to phases I to III of the same project, let alone the thousands of jet planes and “fracked” wells and power plants being built around the world — has never been explained. However, it was in 2011 that McKibben began the organization of massive protests against Keystone XL. It became an icon of the environmental movement.

But the 2011 FEIS found no significant adverse environmental impact to warrant not proceeding with the project. The State Department indicated that it would approve. And then the project sat, waiting for some kind of go-ahead from the President, for year after year after year. The story was that the administration was continuing to “evaluate” the project. More study, and yet more, was undertaken. In January 2014, the State Department, now in the hands of John Kerry, issued a new document called the Final Supplemental Environmental Impact Statement for Keystone XL. Here is a link to the Executive Summary, now 38 pages long. And, just to give you an idea of the magnitude of these things, here is a link to the whole thing. Of course, it has no consecutive numbering to make it easy to figure out how many total pages are here, but it is many, many thousands. Still, no significant environmental detriment could be found.

And then the matter continued to sit in the Obama administration for another nearly two years. On November 3, 2015, Kerry issued a determination rejecting the Keystone XL project as “not in the public interest.” The basis? Kerry found that there was a "perception" among foreigners that the project would increase greenhouse-gas emissions, and that, whether or not this perception was accurate, the decision would therefore "undercut the credibility and influence of the United States" in climate-change-related negotiations. (The FSEIS itself had found no significant impact on greenhouse gas emissions, since the Canadian crude would be produced whether or not this particular pipeline was built.). Three days later, President Obama followed Kerry’s determination. For the moment, Keystone XL was blocked.

But President Trump had a different idea. On March 24, 2017, barely two months after taking office, Trump announced that he had approved Keystone XL. Three days later, on March 27, a complaint was filed in Montana federal district court on behalf of two environmental groups calling themselves the “Indigenous Environmental Network” and the “North Coast Rivers Alliance,” seeking an injunction to block the project. The main basis asserted was that the seven or so years and thousands upon thousands of pages of environmental impact statements that had been produced up to that time had missed some key issues. The plaintiffs drew as their judge an Obama appointee named Brian Morris.

Now knock another year and eight months off your life while this case has been kicking around the Montana district court, going through preliminary skirmishing and then rounds of summary judgment briefing. Last week, Judge Morris issued his 54 page Order. Read it, and you might think that this was almost entirely a win for the government. On issue after issue, Judge Morris finds that the government’s EIS adequately considers the matter in question, and no revision of the EIS is needed. But on a few seemingly trivial issues, he finds the opposite. For example, at pages 16 and 17, the good judge finds that the 2014 EIS was based on oil prices in the range of $100 and up per barrel; but that since that time oil prices have fallen to a range of $50-80 per barrel. Does this make a difference? It needs to be evaluated! Then on pages 19 to 22 the good judge finds that, although greenhouse gas emissions issues were extensively considered, there was no specific consideration of the joint effect on greenhouse gas emissions of this Keystone XL pipeline in conjunction with another pipeline project called the “Alberta Clipper.” Does this make a difference? It needs to be evaluated!

And thus, nearly nine years into the environmental review process, an injunction has been issued, pending re-evaluation of a handful of issues on which this judge has found the thousands upon thousands of pre-existing pages of review to be inadequate.

At first glance, you might think this setback to be insignificant for this project. The issues at hand seem extremely minor. Do some re-evaluation, reissue the EIS, and move on. Not so fast! Even if the re-evaluation will take only a few weeks, or even a month or two, that is only the beginning of the process. What will immediately follow? The next lawsuit! Which will allege not only that whatever re-evaluation has been done is inadequate, but also that numerous changes in the world since the January 2014 EIS require yet another round of re-evaluations. It will be at least another year, and probably closer to two, before that case gets fully briefed and in front of the judge. At which point, he could well find another round of issues requiring re-evaluation.

And so, you will not be surprised to find that almost all of the press coverage of this court decision finds it to be a huge victory for the opponents of the pipeline. And perhaps it is, in one sense: as trivial as the issues are, the Keystone XL pipeline may well now be dead, killed by endless reviews and delays.

But is this a victory for the “climate”? It seems that the oil producers have been holding off on doing deals with railroads, expecting Keystone XL to proceed imminently. The railroads have been demanding multi-year contracts to support substantial investments in new tank cars and locomotives, and the oil producers would prefer to have a pipeline, which is cheaper and safer. But with the latest court decision promising extensive additional delays, the rail deals are suddenly moving forward. From Bloomberg, November 16:

A tally of plans from five producers including Cenovus Energy Inc.Canadian Natural Resources Ltd. and Imperial Oil Ltd. shows they’re looking to add about 270,000 barrels a day of exports on tank cars to potentially surpass 400,000 by the middle of next year. Most of it is headed to the U.S. Gulf Coast. . . . Initially reluctant to commit to rail, producers are giving in after court filings delayed two major pipeline projects that would relieve the glut: Trans Mountain’s expansion to Vancouver and the TransCanada Corp. Keystone XL that would ship crude to the U.S. “Much of the industry was on the sidelines because they didn’t want to commit to the long-term contract,” Jihad Traya, manager of strategic energy advisory services for HSB Solomon Associates LLC in Calgary. “Now they are compelled to.”

400,000 bbl/day is about half the capacity of Keystone XL, and that will be in place within about 6 months. Give them another 6 months, and they’ll have a substitute for the whole thing. No need for an EIS here — the railroad has already been built! So the net result is vast piles of paper, endless work for lawyers, a pipeline blocked, and yet still the crude oil gets to the refineries and turned into gasoline and burned by the evil SUV drivers. The environmental activists have knocked themselves out, and have achieved a great “victory.” Oh, and meanwhile the rail shipments use more energy and have more risk of spills than the pipeline. And China and India and Africa are building a few thousand additional coal power plants.