Still No Approved Route for Keystone XL in Nebraska as Resistance Mounts
By Brian Palmer
"Trump administration approves Keystone XL pipeline," the headlines blared. It was March 24, only two months after he'd taken office, when it appeared that President Trump had cleared the way for the long-contested tar sands conduit with a stroke of his pen.
In reality, summarily declaring that the pipeline is in the national interest—despite a seven-year U.S. State Department review process that had concluded the opposite—won't magically bring it to life. The president, together with TransCanada, the energy company behind the Keystone XL pipeline, still have many obstacles to overcome before Canadian tar sands crude can flow through KXL and into the United States.
The first formidable hurdle they face is the state of Nebraska, which TransCanada has treated with contempt in recent years. First, the company drew the pipeline's route through the heart of the state's fragile Sand Hills ecosystem. Confronted by environmental concerns, TransCanada said that rerouting the pipeline would be "impossible."
Mounting resistance, however, forced the oil giant to relent and nudge the proposed route around some of the most sensitive parts of the Sand Hills. The pipeline would still, however, run through the important Ogallala aquifer—one of our largest underground stores of freshwater, which would be at significant risk in the event of a leak.
Now that the controversial tar sands pipeline has been reactivated by President Trump's decision, TransCanada must obtain the consent of the Nebraska Public Service Commission and secure easements from the landowners along the proposed route through the Cornhusker State. It will not be smooth sailing. Six weeks after Trump's announcement, Nebraskans flocked in chartered buses to a public hearing the commission convened in York, where opponents steeply outnumbered supporters, as the Omaha World-Herald reported.
In August, there will be five additional days of hearings in Lincoln, where formal intervenors, such as landowners along the route, environmental groups and labor unions, will get their chance to testify. (The Nebraska Public Service Commission also has an online form to collect comments.)
If, despite these objections, TransCanada obtains approval from the commission, it will most likely be forced to win easements from landowners through the eminent domain process. Some of the holdouts who have refused to sell permission to build on their properties claim to have turned down offers as high as $300,000.
Eminent domain is a notoriously fraught issue, especially for Republicans, many of whom have railed against it as an abuse of government power. Sen. Ted Cruz, for example, called it a "fancy term for politicians seizing private property to enrich the fat cats who bankroll them." This proposed exercise of eminent domain is particularly irksome to many Nebraskans because TransCanada is a foreign company.
Landowners have a right to challenge a taking under eminent domain through the state courts, and some Keystone XL opponents have already vowed to do so. Whatever the outcome, the litigation could tie up the process for months or years.
In addition to the individual legal challenges—and despite Trump's support—there are also some potential hurdles the project could face at the federal level. Natural Resources Defense Council and other environmental organizations have challenged the Trump administration's approval of Keystone XL in federal court, contending that it relied on outdated information and arbitrarily reversed the previous administration's decision on the matter.
On top of this federal litigation and the challenges of obtaining a route and easements in Nebraska, TransCanada will also have to obtain federal permits under the Clean Water Act. This step used to be straightforward for pipeline builders, but the 2016 Dakota Access Pipeline (DAPL) controversy revealed the water permits as a political and legal pressure point.
The U.S. Army Corps of Engineers, which has primary responsibility for issuing the permits, failed to fully clarify its role and policies during the DAPL fight, and some of those unsettled issues could reemerge if and when Keystone XL gets to that stage. The water permit process also allows for another round of public hearings, where opponents will again be able to voice their concerns and potentially further delay construction.
Which brings us to a point that cannot be stressed enough: delays cost money. The biggest threat to Keystone XL may not be government regulators or Nebraska state judges, but simple finances.
Keystone XL has always been an economically risky proposition. Tar sands oil is expensive to extract, process, and transport, and the cost of the pipeline is now expected to exceed $8 billion—up from the $5.4 billion the company estimated in 2011. Back then, when crude oil cost $95 per barrel and tar sands production was ramping up, spending that exorbitant sum on a pipeline project might have been financially viable.
But in an era of relatively low crude oil prices (today, about $48 per barrel), cheap natural gas, and unprecedented drops in the price of renewable energy, it doesn't make much sense to bother turning Canadian mud into oil. In recent years, fossil fuel companies including Shell, ConocoPhillips, Total, and Statoil have fled the tar sands mines of northern Alberta, canceling projects. This trend poses an existential financial problem for an 830,000-barrel-per-day pipeline that requires a substantial expansion of tar sands production to fill it.
TransCanada doesn't have the cash to build the pipeline. The company will depend on banks like JPMorgan Chase, Citibank and Wells Fargo to front the money required to complete Keystone XL. Not only does TransCanada have to prove to its backers that KXL can be profitable, but it also has to convince them that investing in the pipeline is worth the public blowback. A recent Quinnipiac University national poll shows public support is dwindling for the project, and opponents have turned up the heat on the banks by launching a public-facing campaign targeting lenders involved.
Donald Trump has placed his rubber stamp on Keystone XL, but he's not the decider. The state of Nebraska still has a say. Landowners still have their say. Judges will have their say. And you still have many opportunities to raise your voice as well.