Below is an article and Q & A originally posted at macleans.ca. The reporter sat down with Daniel Thune, the official at the State Dept. who is in charge of reviewing TransCanda’s application to build the Keystone XL pipeline, to talk about the review process. It’s an enlightening read.
What’s Blocking Up the Keystone XL Pipeline?
by Luiza Ch. Savage, June 17, 2011
Stephen Harper has urged Barack Obama to approve it. Alberta’s energy minister demanded that the President “sign the bloody order,” already. But the soft-spoken diplomat leading the American government’s review of TransCanada Pipelines Ltd.’s proposed Keystone XL pipeline, Daniel Clune, is keeping his cards close to his chest. The approval of the US$7-billion, 2,700-km pipeline that would bring oil sands crude from Canada, through the U.S. heartland down to the Gulf Coast, has become one of the biggest issues between Canada and the U.S., a hot environmental cause south of the border—and a tug of war between two departments of the Obama administration.
To the pipeline’s backers, the approval process is dragging on longer than any before it—but for critics who oppose building infrastructure to tie the U.S. to even more carbon fuels, and oil sands in particular, it’s whipping by too fast. The State Department has said it will made a decision by the end of the year, and its every move is being scrutinized on both sides for evidence that oil interests have captured the Obama administration—or that federal bureaucrats are about to sabotage the national interest by scuttling a golden opportunity to create jobs and help wean America off Middle Eastern oil.
Congress is watching closely. House Republicans, who tout the pipeline as a “no-brainer,” have introduced legislation to try to fast-track a decision by Nov. 1. Meanwhile, in the Senate, a Republican and a Democrat, both from Nebraska, have expressed concern about the safety of the pipeline, which would traverse their state’s important agricultural aquifer. Several recent leaks in the existing Keystone pipeline that runs from Alberta to the Midwest have heightened those worries.
On June 6, the Environmental Protection Agency issued a formal letter telling State that its environmental impact statement —the department’s second draft, after the EPA criticized the first one—was still insufficient. They asked for more information and more analysis, and environmentalists immediately said State should take extra time to conform with the EPA’s requests.
Managing this contentious process falls to the State Department’s Bureau of Oceans, International Environmental and Scientific Affairs, which deals with everything from polar issues and infectious diseases to whaling and fish. Handling the review is Clune, a veteran diplomat with short-cropped white hair who has a no-nonsense demeanour and the unwieldy title of principal deputy assistant secretary of state. A career diplomat rather than a political appointee, he served as deputy chief of mission in the U.S. Embassy in Canberra, Australia, and had stints in Peru and Indonesia.
In an interview in his State Department office, where he is flanked by a departmental lawyer and a media minder, Clune speaks with the carefully chosen words of someone who understands that every move surrounding the pipeline is likely to one day be scrutinized in court. Some environmental groups have said they will sue if the project is approved.
A central concern for the critics is whether the department can answer the EPA’s concerns and still reach a decision in time for the self-imposed end-of-the-year deadline. Clune says yes. “We still expect to make a decision on whether to issue the permit or not by the end of the year. With respect to the EPA’s comments, we’ve been working very closely with them as well as with other agencies to analyze the environmental impacts of the proposed pipeline, and look forward to working with them on issues described in the letter.”
Asked what criteria will be used to assess the “national interest,” Clune is careful to refer to criteria that have been used in past reviews. “They include environmental impacts, the impact of the proposed project on diversity of supply to U.S. crude oil demand, security of transport pathways, the stability of trading partners from whom the U.S. obtains crude oil, the cross-border facility on relations with the country with which it connects,” says Clune. And how will those factors be balanced? “There is no mathematical formula where you plug in numbers and an answer spits out,” he says. “We will present a full record of all the facts we have gathered in this process to the decision-maker and it will be up to the decision-maker to weigh the various factors.”
Of course, how those facts are presented will matter a great deal. For example, does the State Department assume, as do backers of the pipeline, that if it is not built, Canadian oil sands product will be developed anyway and simply shipped to China? “We’re not assuming anything,” says Clune. What about the critics’ contention that the pipeline will not ultimately increase U.S. supply, but rather it will provide a means for Alberta’s land-locked oil to be shipped overseas via the Gulf of Mexico? “That is an issue we’re looking into but have not made a decision on.” Does the unrest in the Middle East and the conflict in Libya have any effect on evaluating whether the oil sands pipeline is in the U.S. national interest? “These are factors that will be considered in the final decision—among others,” he says.
Even the identity of the final decision-maker remains uncertain. The decision is the President’s, but he has delegated it by executive order to Secretary of State Hillary Clinton. She, in turn, has delegated the task to her deputy secretary, James Steinberg—who is scheduled to leave the department within weeks. Will his replacement or his deputy make the final decision? “No decision has been made yet,” says Clune.
And then there is the question of what happens if State approves the project but the EPA continues to consider it problematic. On paper, the EPA has the power to “refer” the matter to a White House body called the Council on Environmental Quality. But it’s unlikely that the White House wants to be forced to mediate a high-profile spat between agencies. Clune is optimistic State can satisfy the EPA. “We have been working very closely with the EPA over the course of the past year and will continue to work closely with them on the environmental impact statement. We’ve already adopted many of their suggestions and will continue to talk with them about ways to make the [environmental impact statement] even better,” he says.
Asked to respond to the frustration in Alberta that the process is too slow, Clune replies, “First of all, it’s in all of our interests that this process be carried out in a fair and even-handed manner that is consistent with all the applicable laws and regulations, and I believe the applicant [TransCanada] has made statements to that effect as well. And second, we’ve stated publicly that we expect to come to a decision by the end of the year.”
Environmentalists see in State’s decision to stick to its deadline evidence that the department wants to approve the project, and that the EPA’s concerns will not be adequately addressed. Asked why it is important to be done by Dec. 31, Clune says only, “It’s our estimate of when this process will be finished. People have asked us when we will be finished, and that is our answer.”
Environmentalists rejoiced when State announced this month that six more public meetings would be held examining the project—one in each state the pipeline passes through, and one in Washington. But they were disappointed when it emerged that the hearings would be held after the environmental impact statement was complete—taking it as another sign that State intends to approve the project. Clune confirmed that the public meetings will be held not as part of the environmental review, but as part of the broader national interest determination—which will also include the issues that favour the pipeline, such as energy security. “Since other considerations are coming into play in the national interest determination, we thought it would be of interest to hear from the public on some of these other issues,” he explains.
Asked whether there is any doubt that the pipeline will be approved, Clune is vehement that the issue has not been prejudged. “I’m serious when I say that we haven’t made a decision yet on the application,” he says. “That decision we expect before the end of the year—but we don’t know what that decision is going to be. Seriously.”
Q – Why is this approval process taking so much longer than the ones for Keystone I and Alberta Clipper?
A – It’s a very important process. As I’m sure you’ve noticed, the application has received quite a bit of attention and is the subject of a good deal of controversy. And we as the State Department have the responsibility of deciding whether to issue a presidential permit for the pipeline to cross the border.
Q – Is there something different about it from the last two [Canada-US pipeline approvals] – or is it just the controversy?
A – Well, it’s just a question of making sure we do a very thorough job at looking at all the issues that are involved. It’s a process that is defined by law, executive directive, and we need to proceed in a very objective, even-handed way.
Q – So the Alberta minister who said “just sign the bloody order” was misunderstanding the process? It wouldn’t be good for them if that’s what happened – because then the decision would be subject to litigation?
A – Let me describe the process a little bit and where we are in the process. Because the pipeline would have impacts on the environment, we are in the midst of conducting an Environmental Impact Statement and that process is consistent with the National Environmental Policy Act. So we are in the midst of that process and there are rules regarding that process that we are following with regard to public comment. And we need to analyze the public comment and prepare successive drafts of the statement itself.
Once a final Environmental Impact Statement is issued, there is a 90-day period in which interested federal agencies can comment on whether issuance of the permit is in the national interest. Following completion of that process, a decision is made on whether to issue the permit.
Q –As part of that process, the Environmental Protection Agency (EPA) issued its letter [on June 6] with a lot of things they say were still inadequate in terms of analysis. They asked for more analysis and more detailed information. Given that then you need to have this 90-day period of comment, do you have time to do that analysis and still meet the deadline of the end of this calendar year?
A – We still expect to make a decision on whether to issue the permit or not by the end of the year. With respect to the EPA’s comments, we’ve been working very closely with them as well as with other agencies to analyze the environmental impacts of the proposed pipeline and look forward to working with them on issues described in the letter.
Q – You mentioned the National Interest Determination. What are the criteria you use to determine that? Is this pipeline important to US interests?
A – The Supplemental Draft Environmental Impact Statement, which is that large document sitting on the table there, lists in section 1.3 the types of factors that have been considered in previous national interest determinations. They include environmental impact, the impact of the proposed project on diversity of supply to US crude oil demand, security of transport pathways, the stability of trading partners from whom the US obtains crude oil, impacts of the cross-border facility on relations with the country to which it connects…
Q – So how does all that get balanced? That’s a broad array of things that cut in different ways…
A – There is no mathematical formula where you plug in numbers and an answer spits out. What we are doing is gathering facts to present to the decision maker. We will present a full record of all the facts that we have gathered during this process to the decision maker and it will be up to the decision-maker to weigh the various factors.
Q – And is that the Secretary [of State Hillary Clinton]? Or above her? Or below her? Who actually decides?
A – There is an executive order. If you are interested in looking at it, it’s executive order number 13337 and it describes the process. It says it’s the Secretary of State who has the responsibility of to make the decision. She can delegate the responsibility. In the case of Keystone pipeline the authority was delegated to Deputy Secretary Steinberg. Unfortunately for us, he is leaving the State Department in a couple of weeks and will not have the responsibility for this pipeline.
Q – So will it be his replacement or his deputy?
A – It could be. No decision has been made yet.
Q – So in terms of the foreign policy and national interest aspects of this, is it State’s underlying assumption that if this pipeline is not built, all this oil will be developed anyway and simply go to China as a lot of the backers of the pipeline say?
A – We haven’t reached any decision yet on the permit. And we won’t make a decision until this process is complete. Likewise, we haven’t reached a final determination on any of the facts that are at issue. That issue is one of them and it has been treated at length of the first draft in the Environmental Impact Statement and the supplemental draft. But the purpose of this process is to lay out preliminary thoughts and facts and get reaction…
Q – So it’s not a clear-cut case that this oil will end up going to China… if you’re still analyzing and thinking about it, then you’re not just assuming that to be the case?
A – We’re not assuming anything. We are in the process of gathering facts. The question of what would happen if the permit is not issued is one of the areas we have looked into and will continue to look into.
Q – One issue that gets raised about the pipeline is will it displace oil from other countries that are hostile to US interests. There was a Department of Energy report on that. Is that something that is settled? Still open to debate? Where do you stand on that?
A – Again, that is one of the issues that we are still looking into. It is also described in the draft Environmental Impact Statement and the Supplemental. There is a report that was commissioned by the Department of Energy, called the ENSYS report, which is an appendix to the Supplemental, which considers that issue.
Q – So just because there is this report doesn’t mean you accepted its conclusion?
A – Again, we are in the process of gathering facts and this report is a very useful contribution but we haven’t made a final determination of any of the issues or on the issuance of the permit itself.
Q – What about the issue of whether the pipeline could serve as a transport route to the Gulf [of Mexico] and lead to this oil being exported [overseas]?
A – I guess one fact that is not in contention is that it would serve as a transport route to the Gulf.
Q—Right, but whether it adds to US supply or whether this will be a transport route to send it off somewhere else? Because one of the issues is whether this adds to energy security for the US…
A – Again, It’s an issue we are looking into but have not made a decision on.
Q — What happens if you come out with a final Environmental Impact Statement and EPA still says it’s inadequate? What happens next? Does it go up to the White House? IS there some other dispute resolution that happens between agencies? This is the biggest mystery to people. Okay, so State is in charge but EPA has a role. What does that mean at the end of the day?
[At this point in the interview, a State Department lawyer clarifies that the EPA does not normally rate final Environmental Impact Statements, but can choose to do so.]
A – They do have the option of referring a final Environmental Impact Statement that they find to be inadequate to the [White House] Council on Environmental Quality.
Q – And then the process keeps going? Or do they make a decision?
[At this point, the State Department lawyer says the Council on Environmental Quality has a process laid out in their regulations for mediating between the agencies.]
A – But we have been working very closely with EPA over the course of the past year and will continue to work closely with them on the EIS. We’ve already adopted many of their suggestions and will continue to talk with them about ways to make the Environmental Impact Statement even better.
Q – One area [EPA’s letter] focused on was insufficient analysis of alternative routes. Obviously there is a lot of concern in Nebraska. Is there time, will you do analysis of alternative routes and ways of avoiding the [Ogallala] aquifer in Nebraska?
A – I think if you look at the Supplemental Environmental Impact Statement, you’ll see it does contain very extensive analysis of alternative routes.
Q – But EPA was saying it’s inadequate…
A — I believe what EPA was saying is they would like to see more explanation about the economic and technical reasons that the alternatives were not examined in the same level of detail as the proposed route.
They would like a better explanation of why the draft Supplemental Environmental Impact Statement and the Supplemental Environmental Impact Statement did not examine – although it did contain a very extensive analysis of alternatives – it did not examine the alternatives in the same way as the proposed route.
Q – What would you say to the Alberta politicians and people in the industry who feel that this has dragged on for awfully long time, and don’t we know enough already just to move on one way or the other?
A – I’d say two things to them. First of all, it’s in all of our interests that this process be carried out in a fair and even-handed manner that is consistent with all the applicable laws and regulations and I believe the applicant [TransCanada] has made statements to that effect as well.
And second, we’ve stated publicly that we expect to come to a decision by the end of the year.
Q — Where did that deadline come from? Why is it important?
A – It’s our estimate of when this process will be finished. People have asked us when we will be finished and that is our answer.
Q – But is it a hard deadline? Or if you decide you need another month, you take another month?
There is no law that says it has to be decided by December 31, but our expectation is we’ll be finished before then.
Q – Another issue EPA raised was about communities near refineries and the impacts on them. Is that something you’ll be doing more on this summer?
A – The issue there is something called environmental justice, which is an issue of concern to EPA not only in this context but more broadly. It’s an important issue and we’ve already done ext analysis of environmental justice issues in the draft Environmental Impact Statements and EPA in its letter has suggested that we consider doing some additional analysis. And we will look very seriously at their suggestions.
Q – You announced additional public hearings that will be held. Are those part of the environmental process, or does it happen after the Environmental Impact Statement is completed, and is part of the National Interest Determination process?
A – Those public meetings will be held during the first 30 days of the 90-day period in which interested federal agencies have the opportunity to comment on the National Interest Determination.
Q – So it’s after the final Environmental Impact Statement comes out?
A – Correct.
One of the reasons that we decided to hold the meetings then is to give the public the opportunity to comment on the broad range of issues that will be considered in the National Interest Determination because the public comment periods that have been held so far have focused on the environmental aspects of the decision because they have been comments on the Environmental Impact Statement – but since other considerations are coming into play in the National Interest Determination we thought it would be useful to hear from the public on some of these other considerations.
Q – Will they be held along the pipeline route, or will some be held in refinery communities?
A – We haven’t made a decision about exactly where the meetings will be held other than we will have a meeting in each state along the pipeline route, plus one meeting in Washington DC, so we will have to consider what would be the best place for each of the meetings. One possibility in Texas would be at the end of the pipeline where the refineries are, but we haven’t made that decision.
Q – What has been the role of lobbyists in this process? There was a lot of attention from critics who say there was a lobbyist for TransCanada who used to work for Secretary Clinton. What role has he played, and what role have any of the lobbyists played in your process?
A – I think it’s fair to say there are many groups that are interested in the application for the permit for the pipeline. These include environmental organizations, industry associations, the applicant, TransCanada, they include American Indian tribes, the Canadian First Nations, and they all have come to us and asked to meet with us. And we’ve met with them all. We have pretty much an open-door policy and meet with any of these groups who say they are interested. Nebraska landowners is another group. We sit and listen to all their concerns. I wouldn’t call them lobbyists but groups that have concerns.
Q – And as for the concerns about the this specific lobbyist, are they unfounded? Did he have any special influence on this process because of his having worked with her [Clinton]?
A – The short answer to that is no.
Q – In terms of the context for the pipeline, with the revolutions in the Middle East and the war in Libya, is that a factor here when you have to sit back and examine the national interest? Does that broader context affect the final decision or play into it?
A – Among the list of factors I referred to before that play into the National Interest Determination, there are among those the stability of the trading partners from whom the US obtains oil and the relationship between the US and various foreign suppliers of crude oil. So these are factors that will be considered in the final decision among others.
Q – Is there an interest from the White House in this? It’s a huge issue to Prime Minister Harper – he raised it with the president at bilateral meetings. Do you have a sense they are paying attention?
A – This is a process that has attracted attention within and without the government, and across the government. The president was asked a question about this…
Q – But has he been following this?…
A – In the end, this is a presidential permit. The Secretary of State is acting as an agent of the president in making this decision. In the end, it’s a permit that is issued by the president. But, as he’s indicated, there is a process here in place. It’s the one I’ve described.
Q – In Canada, sometimes there is a perception that if Obama wanted this, he could snap his fingers and it could be done…
A – I think most people realize that both Canada and the US are democracies with laws and regulations that we have to follow. We’re doing that and the president respects that process, and the applicant, TransCanada, respects that process, and I think all the other groups that are interested respect that process.
Q – Do you think this process has approved the application?…
A – I think the Supplemental Draft Environmental Impact Statement describes a number of changes that have taken place since the application was submitted. Just to give you one example, the applicant agreed to 57 conditions for operating and maintaining the pipeline which had been reviewed by our Pipeline Hazardous Materials Safety Administration. So that’s one example of a change that has taken place since the application was submitted.
Q – Is there any doubt that this would be approved?… It seems like a matter of how many extra changes and how many extra improvements are made?
A – I’m serious when I say that we haven’t made a decision yet on the application. I don’t know what decision is going to be. I am not the person who is going to make the decision. What we are doing is putting the factual record together and submitting it to the decision-maker for a decision. That decision we expect will be made before the end of the year. But we don’t know what that decision is going to be. Seriously.