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Is the Keystone Pipeline Really Dead?

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Thousands of people are descending on the White House to join hands with one another and stand up to the Keystone XL pipeline.
KAREN BLEIER/AFP/Getty Images

Back in 2008, when TransCanada officially applied to the State Department for permission to build the pipeline, hardly anyone noticed. "We did not anticipate much opposition," says Terry Cunha, a spokeswoman for the company. "It's a fairly routine operation." Earlier that same year, the Bush administration had rubber-stamped Keystone I, a pipeline that takes an even more circuitous route from Alberta to Oklahoma. Why would the Keystone XL be any different? The permit was handed off to the Bureau of Oceans and International Environmental and Scientific Affairs, a low-profile office responsible for negotiating international treaties that draw little scrutiny, like negotiating technology-sharing agreements with Uzbekistan. The only major hurdle facing the pipeline was an environmental-impact assessment, which the State Department – hardly a bastion of expertise in the myriad ways an oil-sands pipeline can harm the environment – would perform more or less on its own. Responsibility for handling the environmental review, in fact, fell mostly to a young member of the Foreign Service named Betsy Orlando, a lawyer with zero scientific background.

Sure enough, when the State Department issued its draft report early last year, it concluded that the pipeline would have only a "minimal" impact on the environment. The EPA immediately criticized the report, rating it as "inadequate" – the lowest possible designation. Among other things, the State Department failed to consider alternative routes for the pipeline, and understated the likelihood of harmful spills that could devastate the Sand Hills, one of the most ecologically fragile areas of Nebraska.

The study was further called into question when Friends of the Earth, relying on the Freedom of Information Act, obtained e-mails and other documents revealing that TransCanada had hired Paul Elliott, a deputy director of Hillary Clinton's failed 2008 presidential campaign, as a principal lobbyist on the project. The e-mails show that federal officials enjoyed an extremely cozy relationship with Elliott, even coaching TransCanada on how to respond to the environmental impact statement. In one e-mail exchange from September 2010, a senior diplomat at the U.S. Embassy in Ottawa, Marja Verloop, praised Elliott after he won support for the pipeline from Sen. Max Baucus, a Democrat from Montana. "Go Paul!" Verloop gushed. "Baucus support holds clout."

Even more shocking, as The New York Times reported, the State Department's environmental impact statement had actually been written by Cardno Entrix, a Houston-based consulting firm selected by none other than TransCanada. Cardno Entrix lists the pipeline developer as a "major client," and the two companies have a direct financial relationship. Such outsourcing of government responsibility is as unusual as it is inappropriate. "This violates not only the intent but the very language of the law," says Oliver Houck, a professor at Tulane University who specializes in environmental and criminal law. A month after the Times article appeared, the State Department's inspector general announced that he was conducting a special investigation into the handling of the pipeline permit.

Even before it rigged the State Department assessment in Washington, TransCanada dispatched representatives throughout the Midwest to buy right-of-way easements along the pipeline route in Montana, South Dakota and Nebraska. In 2007, a TransCanada rep contacted Randy Thompson, a 64-year-old cattle rancher and proud Republican, and asked to meet him at his 400-acre spread in southern Nebraska. As it turned out, messing with Thompson was a huge mistake.

When the rep arrived, he told Thompson that TransCanada was going to run the pipeline across his land, and offered to pay him $9,000 for a 100-year easement. Thompson was alarmed when he saw that the pipeline would be sunk four feet deep – directly in the water table. "They would be burying the pipeline right in my water supply," he says. "Even a small spill or leak would ruin my land."

TransCanada warned Thompson that if he didn't sell them the right of way, the company would seize his land under eminent domain. "I told them to take a hike," Thompson says. But the scare tactic worked on other ranchers, who signed away their property for the pipeline. The move pissed Thompson off: In Nebraska, foreign corporations are not allowed to seize property until they have a federal permit in hand. "These deals were made under false pretenses," says David Domina, a Nebraska attorney representing ranchers against TransCanada. "They will not stand up in court, which would find them invalid."

But what really turned Thompson against the pipeline was TransCanada's callous disregard for the environment. The company elected to route Keystone directly through the Sand Hills, a sensitive region that even die-hard conservatives in Nebraska believe should be left untouched. A spill in the Sand Hills, where the soil is extremely porous, could be devastating to the nation's most important agricultural aquifer. John Stansbury, a professor of environmental engineering at the University of Nebraska, found that even a tiny, undetected leak from an underground rupture could contaminate almost 5 billion gallons of drinking water with dangerous levels of benzene, a known carcinogen.

Spills, in fact, are all too common on the nation's pipelines: Since 1990, according to federal regulators, there have been at least 100 "significant" spills on pipelines every year that have released 110 million gallons of hazardous waste. The Keystone I had so many spills – a dozen in its first year alone – that it had to be temporarily shut down. Last July, a pipeline operated by Enbridge Energy dumped nearly a million gallons of tar sand sludge into the Kalamazoo River. Estimated cleanup costs: $700 million.

Outraged by TransCanada's tactics, Thompson began appearing on TV and writing letters to newspapers warning of the dangers posed by a pipeline rupture. Bold Nebraska, a statewide activist group, distributed T-shirts that read I STAND WITH RANDY. Before long, a grassroots movement had sprung up in Nebraska to force TransCanada to reroute the pipeline around the Sand Hills. Last month, Gov. Dave Heineman called a special session of the Nebraska legislature to block the pipeline.

To counter such opposition, TransCanada preyed on the public's economic insecurity, claiming that the pipeline would create 20,000 jobs in construction and manufacturing, plus an additional 118,000 spinoff jobs that would inject $20 billion into the U.S. economy. Fox News went even further, suggesting that the pipeline "could provide up to a million new high-paying jobs" in the U.S. The numbers came from a report by a Texas consulting operation called the Perryman Group – which, upon closer inspection, turned out to be little more than an ex-professor from Southern Methodist University who accepted funding from TransCanada for predicting a jobs boom. The State Department, by contrast, estimated that building the pipeline would employ no more than 6,000 construction workers – and that once Keystone was finished, the number of permanent pipeline jobs could be as few as 50.

As for the idea that the pipeline would increase America's energy security: Much of the tar sands shipped to Texas would likely wind up overseas. Valero, one of the biggest refiners contracted to buy the oil from the pipeline, already exports six percent of its gasoline and 18 percent of its diesel, mostly to South America. What's more, the most profitable market for refiners right now is selling diesel to Europe. "For the refiners, this is all about buying low-cost tar sands crude and selling into high-profit markets in the European Union," says Stockman, the researcher at Oil Change International. "This oil is not going to replace oil from the Middle East. That's not the way the global oil market works. This is not instead of – it's as well as." The Keystone pipeline, in short, wouldn't increase our energy independence – it would just further fuel our oil addiction.

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