Clinton Review of Canada Pipeline Ignores Risks, Groups Say

The U.S. State Department has failed to respond to environmental concerns over a proposed oil pipeline from Canada ahead of an assessment that may come as soon as tomorrow, environmental groups said.

There is “no evidence” the department is analyzing whether TransCanada Corp. (TRP)’s proposed $7 billion Keystone XL project should be rerouted or may be prone to leaks, said Susan Casey-Lefkowitz, international program director at the New York- based Natural Resources Defense Council. The department in April found that the pipeline to carry Canadian oil to the U.S. Gulf Coast would have “limited adverse environmental impacts.”

Should the project clear a final environmental assessment, it must still be found to “serve the national interest,” a review that will consider issues such as U.S. efforts to enhance energy security and the pipeline’s impacts on “broader foreign policy objectives,” according to the department. Opponents include Senator Mike Johanns, a Nebraska Republican, who says the current route threatens a major water aquifer in his state.

“My sense is that the most important concerns will not be satisfied,” Casey-Lefkowitz said yesterday in an interview. “These are major pieces of analysis identified as being needed. We see no evidence that’s happening.”

Secretary of State Hillary Clinton has final say on the plan under an order issued in 2004 by President George W. Bush.

The outcome on the pipeline will be an issue in President Barack Obama’s campaign for re-election, said Michael Brune, executive director of the San Francisco-based Sierra Club.

‘Big Polluters’

“The decision-making authority is solely the president’s,” Brune said today on a conference call with other groups. “It will be increasingly difficult to mobilize the environmental base and to mobilize in particular young people to volunteer, to knock on thousands of doors, to put in 16-hour days, to donate money when they don’t think the president is showing the courage to stand up to big polluters.”

Following a draft environmental review in April, the U.S. Environmental Protection Agency said additional analysis was needed on the potential for pipeline spills, how the project would affect communities along the route and the project’s impact on climate change. Representative Henry Waxman, a California Democrat, said the pipeline will carry oil from Canada’s tar-sands region, “the dirtiest source of transportation fuel currently available.”

‘Substantively Failed’

The State Department has “substantively failed to respond to a number of key statutory requirements,” Damon Moglen, director of the Climate and Energy Program at the Washington- based environmental group Friends of the Earth, said in an interview. “If the State Department were being a neutral agency here they would be demanding that TransCanada go back to the drawing board and come up with an alternative.”

The Keystone XL pipeline would deliver 700,000 barrels of crude a day from Alberta’s oil sands to the Gulf through Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas.

“The State Department has been thorough in their process,” Terry Cunha, a spokesman for Calgary-based TransCanada, said in an interview.

The department has been reviewing Keystone XL since September 2008, Cunha said.

“Keystone XL will promote oil dependency, which is precisely what undermines America’s energy security,” Danielle Droitsch, a senior adviser with the Natural Resources Defense Council, said today on the conference call.

Public Meetings

Clinton said the final environmental assessment of the project will be issued this month and that a final decision on the pipeline will be made by the end of the year. The department has scheduled public meetings to determine whether the project “would serve the national interest.”

Meetings will be held in Texas, Kansas, Montana, Nebraska, South Dakota, Oklahoma and in the District of Columbia, beginning Sept. 26, according to a Federal Register note today.

Some Nebraska property owners are refusing to grant TransCanada easements and say they will contest the line in court, a tactic that may delay construction.

Johanns said he shares the concerns of environmental groups such as Friends of the Earth, Bold Nebraska and the Sierra Club, which say a leak may pollute the Sandhills region and the Ogallala aquifer, which supplies 80 percent of Nebraska’s drinking water and serves 1.5 million people.

Supporters of the pipeline such as the American Petroleum Institute, a Washington-based group that represents oil and gas companies, say the project will create jobs and deliver secure energy supplies from a stable ally instead of the Middle East.

Alberta holds estimated reserves of 173 billion barrels of oil based on current technology, the second-largest crude reserves behind Saudi Arabia, according to the Canadian Association of Petroleum Producers.

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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