President Trump recently signed executive actions to advance the construction of the Keystone XL and Dakota Access pipelines. Both oil pipelines were delayed or denied under former President Obama.[i]
The Keystone XL pipeline was delayed for around 7 years and then denied by the Obama Administration in late 2015 because he felt it would undercut U.S. efforts to obtain a global climate change deal that became part of his “Paris Agreement” legacy. TransCanada, the pipeline company behind the Keystone XL pipeline, sued the Obama Administration for $15 billion in damages due to the costs it incurred awaiting a final decision.[ii]
After the Dakota Access pipeline was approved, permitted, and under construction, the Obama Administration halted its construction because the Standing Rock Sioux Tribe and its supporters claimed the pipeline threatened the drinking water and their cultural sites. Despite two federal courts ruling in favor of the Dakota Access pipeline, the U.S. Army Corps of Engineers decided it needed to explore alternate routes for the pipeline at the end of last year when the pipeline was already over 90 percent complete.[iii] The Trump executive order “directs agencies to expedite reviews and approvals for the remaining portions of this pipeline.”[iv]
TransCanada is to submit a new permit application, and the State Department is to make a decision on the pipeline in 60 days. President Trump vowed to “renegotiate some of the terms” of the Keystone XL pipeline. Trump also issued executive actions streamlining the regulatory process for pipeline construction and shortening the environmental review process.[v]
Keystone XL Pipeline
The Keystone XL pipeline is designed to move 830,000 barrels a day of oil sands from Canada to the U.S. Gulf Coast where many refineries are located that are configured to process heavy oil. Because the Keystone XL pipeline would cross the Canadian border, it requires a Presidential permit. Studies reviewed by Obama’s State Department showed that the pipeline would not have a significant impact on the environment. Never the less, Obama delayed a decision regarding the pipeline for 7 years and then rejected it shortly before an international conference converged in Paris to hammer out a climate agreement that Obama viewed as part of his environmental legacy.
The Obama State Department also noted that the pipeline would not impact the surrounding water, vegetation, wildlife or air quality. Further, the pipeline would help the environment, because moving oil by pipeline produces 42 percent fewer emissions than transporting oil by rail, which is how the oil is being transported in lieu of the new pipeline.[vi] Since 2008, the use of rail to ship oil had increased by a factor of 50, adding $5 to $10 per barrel in additional cost and greater environmental and safety risks.[vii] TransCanada plans to build Keystone XL according to rigorous safety standards, including 59 new safety rules federal regulators added to TransCanada’s proposal.[viii]
According to the State Department, the construction of Keystone will create 3,000 to 4,000 local jobs, which translates into about $100 million in earnings for American workers. TransCanada will also pay millions of dollars in local property taxes.
Dakota Access Pipeline
The Dakota Access Pipeline is a $3.8 billion, 1,100-mile oil pipeline under construction in the Upper Midwest that will move 470,000 to 570,000 barrels of oil per day from the Bakken basin in North Dakota to Illinois.[ix] It was planned to be completed by year-end 2016 until the Obama Administration stopped its construction near Lake Oahe when the pipeline was over 50 percent complete. Obama’s halt to the pipeline came despite a judge ruling in favor of the pipeline and against the Standing Rock Sioux tribe and other opponents, who wanted construction halted because they claim there may be possible contamination of drinking water and disruption to culturally important sites. Despite having already granted approval last July, the U.S. Army Corps of Engineers said it would not allow construction near Lake Oahe until it determined whether it needed to reconsider its previous approvals under the National Environmental Policy Act.
U.S. District Judge James Boasberg did not grant an injunction sought by the tribe because the Army Corps of Engineers had done due diligence and documented dozens of attempts to consult with the tribe from the fall of 2014 through the spring of 2016, including at least three site visits to Lake Oahe to assess any potential effects on historical properties.
Despite an environmental impact statement having already been undertaken and showing no significant impact on the environment, in December, Assistant Army Secretary for Civil Works Jo-Ellen Darcy indicated that a broader environmental impact statement was warranted, which can take up to two years to complete. Earlier this month, the Army Corps of Engineers said that they were going to launch a full environmental study of the crossing at the Missouri River reservoir in North Dakota and that they wanted to examine alternate routes.[x]
The pipeline company, Energy Transfer Partners, asked U.S. District Judge James Boasberg to stop the Corps from publishing a notice in the Federal Register announcing the study and to rule on whether the company has the necessary permits to proceed with laying pipes under Lake Oahe.
The pipeline will provide millions in state and local revenues during the construction phase and an estimated $129 million annually in property and income taxes–an estimated $50 million annually in property taxes and nearly $74 million in sales taxes to the states of North Dakota, South Dakota, Iowa and Illinois to support services such as schools, roads, and emergency services. But, the Obama Administration delays are costing the company an estimated $1.4 billion just in the first year alone.[xi]
Former President Obama in his halting of the construction of the pipeline was carrying out the demands of 31 environmental groups, who requested that the president intervene and repeal the permits for the pipeline. Many of these groups are part of the “keep it in the ground” movement, which seeks to deny Americans the use of any oil, natural gas or coal and opposes all aspects of fossil energy exploration, development, production or transportation. Fossil energy supplies over 80 percent of our energy today and is expected to supply almost as much by 2040, according to many forecasters.
These pipelines will improve U.S. energy security and create new jobs, which President Trump realizes by issuing the executive actions. Pipeline infrastructure also represents the most cost-effective and safest method of transport, and reduces congestion on roads and railways, freeing up their use to move other commodities. President Trump by issuing these orders is demonstrating that the federal government can work for the people, rather than obstructing growth, entrepreneurship, and ingenuity.
[i] New York Times, Trump Revives Keystone Pipeline Rejected by Obama, January 24, 2017, https://www.nytimes.com/2017/01/24/us/politics/keystone-dakota-pipeline-trump.html and Boston Globe, Trump advances Keystone XL, Dakota Access pipelines, January 24, 2017, http://www.bostonglobe.com/news/nation/2017/01/24/trump-advance-keystone-dakota-access-pipelines/ozRWsCjgkWiiR55H5OgQ0H/story.html
[ii] Financial Post, With Donald Trump’s blessing, Keystone XL is getting ready for its revival, December 12, 2016, http://business.financialpost.com/news/energy/with-donald-trumps-blessing-keystone-xl-is-getting-ready-for-its-revival?__lsa=e765-c467
[iii] Daily Caller, Dakota Tribe Says Trump’s Pipeline Approval Violates Groups’ Treaty Rights, January 25, 2017, http://dailycaller.com/2017/01/25/dakota-tribe-says-trumps-pipeline-approval-violates-groups-treaty-rights/
[iv] CNBC, Trump signs executive orders to advance Keystone XL, Dakota Access pipelines, January 24, 2017, http://www.cnbc.com/2017/01/24/trump-to-advance-keystone-dakota-pipelines-with-executive-order-on-tuesday-nbc.html
[v] CNN, Trump advances controversial oil pipelines with executive action, January 24, 2017, http://www.cnn.com/2017/01/24/politics/trump-keystone-xl-dakota-access-pipelines-executive-actions/
[vi] Washington Times, Criticism of Keystone proving baseless, embarrassing, June 9, 2015, http://www.washingtontimes.com/news/2015/jun/9/drew-johnson-criticism-of-keystone-pipeline-provin/
[vii] Institute for Energy Research, http://instituteforenergyresearch.org/analysis/keystone-xl-it-is-time-for-president-obama-to-approve-it/
[viii] U.S. News, EPA: Keystone XL Will Impact Global Warming, February 3, 2015, http://www.usnews.com/news/articles/2015/02/03/epa-keystone-xl-pipeline-will-impact-global-warming
[ix] Wall Street Journal, U.S. Agencies Order Dakota Access Pipeline Work Halted After Judge Rules It Can Proceed, September 9, 2016, http://www.wsj.com/articles/judge-rules-3-8-billion-dakota-access-pipeline-can-proceed-1473450128
[x] The Bismarck Tribune, Dakota Access company seeks to block pipeline study, January 17, 2017, http://bismarcktribune.com/news/state-and-regional/dakota-access-company-seeks-to-block-pipeline-study/article_c9a13fd3-db63-59fa-9ffa-41c98b8b4bf2.html
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