Approve the Keystone XL project and reap the profits
"I want it built, but I want a piece of the profits."
"I want it built, but I want a piece of the profits."
At the urging of President Donald Trump, the State Department has issued a presidential permit for TransCanada's Keystone XL, an important step forward for construction of the pipeline and a complete reversal of a decision made under former President Barack Obama.
The State Department permit, issued March 24, is necessary for the pipeline to cross the U.S.-Canadian border. The pipeline would transport more than 800,000 barrels of oil from Western Canada to Nebraska, then connect with an existing pipeline system.
The Obama administration denied pipeline operator TransCanada the State Department permit in 2015, citing environmental concerns. But four days after taking office in January 2017, Trump signed a memorandum inviting TransCanada to re-submit a permit application, as well as encouraging the State Department to expedite its decision.
This step gets Trump closer to fulfilling his promise to build the pipeline, but hurdles remain. The Nebraska Public Service Commission still has to approve the project, and protests from environmental activists and local landowners are expected.
Additionally, Trump said he wants "a piece of the profits," and it is unclear as of yet how Trump or the United States could demand some sort of compensation for building the pipeline.
For now, this promise remains In the Works.
During his first week in office, President Donald Trump signed a presidential memorandum advancing the construction of the Keystone XL pipeline, which is a clear reversal of former President Barack Obama's actions.
This order does not guarantee the final permit needed to build oil pipelines like Keystone, but it invites TransCanada, the pipeline operator, to re-submit a permit application for the extension. It also encourages the secretary of state to "take all actions necessary and appropriate to facilitate its expeditious review" within 60 days of a permit being submitted.
Because the pipeline would have crossed the U.S.-Canada border, it required a presidential permit from the State Department, which the Obama administration denied in 2015. It said the project would hinder the United States' ability to be a leader in climate change action.
(That idea, expressed in a 2015 letter from then-Secretary of State John Kerry, has since been taken down from the State Department website.)
The controversial extension to the Keystone pipeline would transport more than 800,000 barrels of oil from Western Canada to Steele City, Neb., and then connect it with an existing southern pipeline system that opened in early 2014.
As Trump signed the Keystone XL measure on Jan. 24, he said it would create a "lot of jobs, 28,000 jobs, great construction jobs".
A 2014 State Department report, which evaluated the project's environmental and economic impact for the country, found, "A total of 42,100 jobs throughout the United States would be supported by construction of the proposed Project."
Most of those jobs would only last during the construction phase, which was expected to take one to two years in 2014. After the construction phase, the State Department report concluded the project would provide for about 35 permanent employees and 15 temporary contractors.
As for the environmental impact, a 2014 State Department report determined the project is "unlikely to significantly impact the rate of extraction in the oil sands."
But that doesn't mean it would be entirely without negative environmental impact, seeing as the same document found that it would generate more greenhouse gases than alternative methods.
In addition to the Keystone XL memorandum, Trump also signed a presidential memorandum reviving the Dakota Access Pipeline project by ordering the Army to "review and approve in an expedited manner" the construction of the pipeline. He also signed an memorandum asking for a federal plan to incentivize U.S.-made pipes for projects.
Trump has taken the first step to move forward with plans to build the Keystone XL extension. The pipeline still needs to be built, and Trump still needs to profit off it once it's built, so we rate this pledge In The Works.
Donald Trump has repeatedly pledged to approve the 1,179-mile Keystone XL oil pipeline project in exchange for a share of the profits.
The controversial extension to the Keystone Pipeline would have transported more than 800,000 barrels of oil from Western Canada to Steele City, Neb., and would have connected with an existing southern portion of the pipeline system that opened in early 2014.
Because the pipeline would have crossed the U.S.-Canada border, it required a presidential permit from the State Department. The Obama administration denied the permit in 2015 and claimed the project would hinder the United States' ability to fight climate change.
Trump has hinted he will move forward with his agenda very soon, a direct contradiction of President Barack Obama's actions.
"You're going to have a decision fairly quickly, and you'll see that," Trump told Fox News on Dec. 11, 2016.
WHY HE'S PROMISING IT
Trump wants the U.S. government to profit off of the pipeline and create jobs.
"I want it built, but I want a piece of the profits," Trump said May 26, 2016, before delivering an energy speech to an oil-industry audience in North Dakota. "That's how we're going to make our country rich again."
According to a 2014 State Department report, the construction of Keystone XL would create 41,200 jobs. After construction, however, the pipeline would only employ about 50 people, primarily for maintenance.
WHAT NEEDS TO HAPPEN
Trump could revive the pipeline project in a number of ways. But first some background. TransCanada, the pipeline operator, filed multiple application permits to build the project extension.
Before the State Department rejected the final permit application from TransCanada, it considered the pipeline's impact on the economy, environment and energy security. After nearly a four-year review, Secretary of State John Kerry and Obama rejected the permit for Keystone XL in 2015 under enormous pressure from environmentalists.
After the plan was rejected, TransCanada Corp. filed a legal claim in the summer of 2016 in an attempt to recoup the costs of Obama's rejection.
So how could Trump change things?
James Coleman, an energy law professor at Southern Methodist University, said that the administration could settle the TransCanada lawsuit by approving Keystone XL. He noted that environmental groups may intervene, but he said it's hard to stop a government from settling.
Trump also could withdraw the executive order that gives the president and State Department authority over cross-border energy projects on his first day in office.
Another option: The State Department could reconsider the evidence that led to the 2015 permit rejection. Coleman said the State Department's initial report was "relatively favorable to the pipeline." For instance, it said that the pipeline would actually reduce world greenhouse gas emissions.
Finally, the last option is to not enforce any laws that prohibit TransCanada from following through with the pipeline.
As for Trump's plan to allow the United States to get a piece of the profits, that's not as clear cut.
Coleman said he didn't think there was any way the president could demand compensation. One option, however, would be to reach an informal arrangement with the company to fund certain projects that are in the public interest.
The cost of the pipeline was around $8 billion in 2015.
WHAT'S STANDING IN HIS WAY
Coleman pointed out a few problems that could arise when Trump makes his decision. First, environmental groups could sue and demand the president stick to the previous decision.
There also is the issue of civil disobedience in the form of protests, much like what's happening with the Dakota Access Pipeline.
The timeline for this promise depends on the route Trump takes to reverse Obama's decision. Rescinding the executive order could be done on Day 1, but other options have no concrete time frame. Once the approval step is completed, the construction phase will begin, which could take around two years.