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The Grid: Energy, Resources, Environment, Sustainability | Bloomberg

This Is Not the Keystone Decision That You Think It Is

Photographer: Daniel Acker/Bloomberg

Construction of the Gulf Coast Project pipeline in Prague, Oklahoma, on March 11, 2013. The 485-mile crude oil pipeline is being constructed by TransCanada Corp. as part of the Keystone XL Pipeline Project. Close

Construction of the Gulf Coast Project pipeline in Prague, Oklahoma, on March 11, 2013.... Read More

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Photographer: Daniel Acker/Bloomberg

Construction of the Gulf Coast Project pipeline in Prague, Oklahoma, on March 11, 2013. The 485-mile crude oil pipeline is being constructed by TransCanada Corp. as part of the Keystone XL Pipeline Project.

The U.S. State Department released its long-awaited report on the Keystone XL oil pipeline, which would connect the Alberta oil sands to the Gulf of Mexico. If you think it’s time to break out the shovels, this is not the Keystone decision that you think it is.

The environmental impact study says the pipeline won’t greatly boost oil-sands production or have a significant climate impact. The report calls for additional safety measures to prevent and deal with spills, but it’s generally being received as a thumbs up for the project. Whether you find yourself disappointed or delighted, the Keystone fight is far from over. Here are three of the biggest hurdles that remain:

Hurdle 1: More Government Reviews

Today’s report will start a 90-day clock for eight U.S. federal agencies to weigh in. That includes the Environmental Protection Agency and the Department of Interior, which have both expressed reservations about the pipeline in the past. It was the EPA’s objections to the State Department’s draft assessment in March that prompted this new report in the first place. If the EPA objects again, it will pressure the final referee, President Barack Obama, to make a tough call.

Hurdle 2: Contractor Controversy

The report's analysis was contracted out to Environmental Resources Management (ERM), a U.K. company that environmentalists later criticized for potential conflicts of interest. The scrutiny is about to get heated.

Two environmental groups, Friends of the Earth and the Checks and Balances Project, accused ERM in July of lying about its ties to TransCanada, the Calgary-based company that wants to build the pipeline. Specifically, the groups charged that ERM claimed not to have worked with TransCanada for at least three years, when in fact the two companies had worked together more recently on a pipeline project in Alaska.

The allegations are being investigated by the State Department’s Inspector General. In December, 25 members of the U.S. House of Representatives sent a letter to Obama asking for the final impact study to be delayed pending the outcome of that probe. That didn’t happen, but the conflict, if true, could conceivably lead to a do-over, which is not without precedent.

Hurdle 3 (the big one): The President’s Pen

Ultimately, this decision is for Obama to make. The State Department’s assessment is just one of many things Obama will need to consider, including pressure from his political base, public opinion, advice of scientific advisors, relations with Canada and U.S. energy security.

The Keystone report is a Friday afternoon news dump of Super Bowl proportions. By Sunday, even many Americans who oppose Keystone will be more concerned with the Denver Broncos and the Seattle Seahawks than the Canadian tar sands. Maybe that’s just as well, because the real Keystone decision is yet to come.

More from Tom Randall:

Follow @tsrandall on Twitter for more on KXL.

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