Obama Just Vetoed The Keystone XL Pipeline. NOW WHAT?

Feb 25, 2015 by


Dozens of demonstrators rally in support of Obama's pledge to veto any legislation approving the Keystone XL pipeline, outside the White House in Washington on Saturday, Jan. 10, 2015.

Dozens of demonstrators rally in support of Obama’s pledge to veto any legislation approving the Keystone XL pipeline, outside the White House in Washington on Saturday, Jan. 10, 2015.

CREDIT: AP Photo/Jose Luis Magana

A two-month legislative battle over the Keystone XL pipeline has come to its tentative end.

President Obama on Tuesday vetoed a bill to approve construction of the controversial pipeline, which would bring tar sands oil from Canada down to refineries on the Gulf coast. The decision comes — as White House spokesman Josh Earnest said it would — with little fanfare. Obama had been widely expected to reject the bill, and there’s been no indication that the Republican-led Congress has enough votes to override him.

So now what? For starters, pretty much everyone has noted that Keystone is not dead. All the veto means is that Congress isn’t able to force the pipeline’s construction through legislation — the process is just going back to being centered on the State Department’s administrative review procedure, as it largely has been for the last six years.

After it’s finished reviewing the pros and cons of Keystone XL, the State Department will ultimately make a recommendation to Secretary of State John Kerry on whether Keystone XL is in the national interest. Kerry will then make the official determination, which will likely sway the President’s final decision.

For now, there’s no telling when that will happen. As Neela Banerjee reported for InsideClimate News, Kerry has no deadline to make his decision on whether Keystone XL is in the national interest. But while everyone waits for that to happen, there are at least three things in the works that could heavily influence the future of the pipeline.

The fight over property rights in Nebraska

If you’ve been following the Keystone XL process closely, then you’re familiar with the fact that Nebraska has been a key battleground for the project. That’s because of challenges to the pipeline’s proposed route through the state, specifically from landowners who don’t want the pipeline running through their properties. TransCanada, the Canadian company that wants to build Keystone, has filed for eminent domain on those properties.

The latest development is that two weeks ago, a Nebraska district judge said TransCanada cannot yet use eminent domain, placing a temporary injunction on land seizure.

That injunction will remain in place until Nebraska’s Supreme Court takes up the landowners’ case against state law LB1161, which effectively gave TransCanada the right to seize land under eminent domain in the first place. The landowners are arguing that the law is unconstitutional.

Until this case is decided, there is no final pipeline route through Nebraska. So in terms of Keystone’s future, this is a pretty important case to watch.

Low oil prices increasing Keystone’s climate impact

President Obama has said he would only approve Keystone XL if it didn’t significantly increase carbon emissions. For many, this has been a signal that he might approve the pipeline, given the The State Department’s assessment that the project would have little impact on climate change.

Now, however, the U.S. Environmental Protection Agency is calling on the State Department to “revisit” that determination, and that’s because of oil prices.

Oil prices have been relatively low for nearly a year. With little indication that they’re going to rise much in the near future, the U.S. Environmental Protection Agency recently said Keystone XL could be more important for the future of tar sands development, and therefore the climate.

Tar sands oil produces as much as three times the greenhouse gas emissions of conventionally produced oil, but the State Department said that Keystone XL would not impact the climate because that oil would inevitably be developed, pipeline or not. But now, with such low oil prices, it’s becoming less and less profitable to extract tar sands, and some companies are even pausing their planned development. So now, the EPA says Keystone might be a project that will accelerate the carbon-intensive tar sands process, and therefore have a greater impact on the climate.

A fueled debate over exports

One of the arguments President Obama has used against the pipeline is that it won’t do anything to improve U.S. energy security. “Understand what this project is,” Obama said at a Nov. 14 press conference. “It is providing the ability of Canada to pump their oil, send it through our land, down to the Gulf, where it will be sold everywhere else.”

It is true that Canadian crude, unlike most U.S.-produced oil, can be sent overseas. And, as CNN Money noted in a 2013 report, exports from the United States will likely rise because of the Keystone XL pipeline.

There’s been a fierce debate over how much of that oil would stay in the U.S. and how much would be exported. And that debate is only going to heat up now that a new study, released Monday by the analysis firm IHS Inc., said that the majority of it would stay in the country. Specifically, the study said that 70 percent of the Canadian heavy oil would stay in the country after being refined, while the remaining would likely be exported.

If true, that’s a burn for pipeline opponents who argue that most of the oil would be shipped oversees and wouldn’t contribute to U.S. energy security. But 30 percent of 830,000 barrels per day is not a small amount of oil to be exported, so it’s unlikely opponents will totally lay off the point that much of Keystone’s oil is for other countries. Indeed, the Senate rejected an amendment to the Keystone XL bill that would have required all the pipeline’s oil stay in the United States.

The refineries that do process Keystone’s tar sands oil in the United States will also produce large amounts of petcoke — the black, dusty byproduct of tar sands oil refining — which will also likely be exported. Petcoke is coal-like and can be burned as a fuel in power plants, but is too dirty to be burned in America. Petcoke was the second-most exported product from the United States last year.

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