Background Briefing on the Keystone XL Pipeline
MODERATOR: Thank you so much. And thanks, everyone, for joining us this afternoon. Look, you’ve all seen the President’s announcement. You’ve seen, no doubt, Secretary Kerry’s statement that was just issued.
The purpose of this call is just to give you a bit more background on the determination itself but also the process behind it. So just to go through the ground rules very quickly, this is a call on background, but I will, for your information, give you the names of our participants today, our speakers.
The first speaker is [Senior State Department Official One]. The second is [Senior State Department Official Two] and finally, [Senior State Department Official Three]. So, again, the call is on background. And with that, I will hand it over to Senior State Department Official Number One to say a few words.
SENIOR STATE DEPARTMENT OFFICIAL ONE: Thank you. After thorough review of the record, including extensive analysis conducted by the State Department, the Secretary determined today that the national interests of the United States would be best served by denying TransCanada a presidential permit for the Keystone XL Pipeline. The Secretary based his determination on several key findings outlined in the Record of Decision, the National Interest Determination, known as the RODNID. And for continued transparency, we’re putting this document as well as interagency comments about it on the state.gov website this afternoon.
Let me note that this particular application elicited an unprecedented degree of interest from the public. All told we received nearly 5 million comments for review, all of which were considered as appropriate in our analysis.
As you know, presidential permit decisions require extensive analysis and careful consideration of a broad range of factors. Notably, the review process reached a few key conclusions about the impact of the pipeline. Let me state a few of them.
The State Department’s analysis concluded that the significance of the pipeline for U.S. energy security of supply is limited. We understand how important this project is to Canada. Canada is one of our closest strategic allies and energy trading partners, and that will not change.
The State Department concluded that the pipeline would not lead to lower gasoline prices for American consumers. The Record of Decision notes that the price of refined products in the United States continues to be set largely by global crude prices, which are tied to global production and consumption rather than availability of pipelines.
We concluded that the Keystone XL’s long-term contribution to our economy would be relatively limited. The department found that the proposed project’s contribution represents approximately .02 percent of annual economic activity across the nation. The Final Supplemental Environmental Impact Statement concluded that the Keystone XL Pipeline on its own will not significantly impact the level of GHG emissions.
So as you can see, there are a variety of factors that were presented to the Secretary including but not limited to foreign policy, energy security, environmental, cultural, and economic impacts, and compliance with applicable law and policy.
As the Secretary said today, “The reality is that this decision could not be made solely on the numbers, jobs that would be created, dirty fuel that would be transported here, or carbon pollution that would be ultimately unleashed. Critical factor in my determination was this: Moving forward with this project would significantly undermine our ability to continue leading the world in combating climate change.”
So let me turn over to my colleague, Senior State Department Official Number Two, to discuss the Final Supplemental Environmental Impact Statement. After that it will be followed by comments by Official Number Three on the impacts of KXL, or Keystone XL, on U.S. climate leadership.
SENIOR STATE DEPARTMENT OFFICIAL TWO: Thank you very much. I’ll talk a little bit about how the Final Supplemental Environmental Impact Statement relates to the determination made by the Secretary.
The Department of State released the Final Supplemental Environmental Impact Statement or Final SEIS for the presidential permit application for the proposed Keystone XL Pipeline on January 31st, 2014. The Final SEIS is available for public view on the Keystone XL State Department website.
Consistent with that National Environmental Policy Act, the Final Supplemental Environmental Impact Statement was a technical assessment of potential environmental impacts of the construction and operation of the proposed Keystone XL Pipeline. It provided a baseline assessment of the existing conditions in the project area and then evaluated the potential impacts of the proposed project. Where potential environmental impacts were identified, the Final SEIS looked at potential mitigation steps that could be taken.
The Final SEIS did not make any recommendations as to whether the pipeline should be approved or denied. I should also add that as in all parts of this process, the Department took America’s public – American public’s input very seriously. The department held two public comment periods on the Supplemental Environmental Impact Statement – one during the scoping period in the summer of 2012 and one following the release of the Draft Supplemental Environmental Impact Statement in March 2013. Additionally, the department held a public meeting in April 2013 in Nebraska which gave individuals the opportunity to comment in person on any issues they believed should be taken into consideration.
And with that, I’ll turn it over to State Department Official Number Three.
SENIOR STATE DEPARTMENT OFFICIAL THREE: Thanks very much. Let me speak briefly about the climate change aspect of this decision. This is a critical time for climate change. The science of climate change is clear and widely accepted. Over the course of this year, countries in every continent around the world have been determining the actions they will undertake to reduce their domestic emissions over the next 10 to 15 years, and their plans and implementation of those targets will come next.
The United States is the world’s largest economy and second-largest emitter of greenhouse gases. As such, strong U.S. policy domestically to combat climate change sets an important example for other countries and puts credibility behind the U.S. message. The United States ambitious efforts at home help spur ambitious climate action by other countries, driving global emission trends in the right direction. The extent to which the United States takes action and is understood to be a leader is directly correlated to the United States effectiveness in encouraging other countries to step up and take strong action on climate change.
The decision to approve or deny a presidential permit for the proposed project will be understood by many foreign governments and their citizens as a test of U.S. resolve to undertake significant and difficult decisions as part of a broader effort to address climate change. The decision to approve the proposed project would have been viewed internationally as inconsistent with the broader U.S. effort to transition to less polluting forms of energy; it would have undercut the credibility and influence of United States in urging other countries to put forward ambitious actions and implement efforts to combat climate change.
I think we’re happy to take questions at this point.
MODERATOR: Great, thanks so much for everyone’s input. We’ll now turn it over to your questions. Just – we probably have time for about three or four questions, I apologize, but due to time constraints on our participants’ participation. So we’ll hand it over now. Go ahead, [Operator].
OPERATOR: Once again, for questions it’s * then 1. Our first question will come from the line of Angela Greiling Keane of Bloomberg.
QUESTION: Hi, thanks for doing the call. Can you tell us if they – if you’re going to publish the National Interest Determination now? And then second question: Can TransCanada reapply or sue? What are the next steps procedurally for them?
SENIOR STATE DEPARTMENT OFFICIAL ONE: Yes, we are planning to publish the National Interest Determination. And the second part of your question is what does this mean for TransCanada; is that right? I think on that you would probably have to ask TransCanada. At this point their application that was pending before the department has been denied. It is up to the company how they proceed from here, whether they apply or not.
MODERATOR: Great. Next question, please.
OPERATOR: We’ll go to the line of Amy Harder at Wall Street Journal.
QUESTION: Hi, thank you so much for holding this call. I have two quick questions. My first one is on climate change. So I know you just said that this is important to not undermine – that an approval would have undermined the Administration’s position in the climate talks. But in his remarks today, Obama went out of his way to say that he thought this was – the entire debate around the pipeline was over-inflated. So how can you say on one hand that you thought this was an over-inflated debate but on the other hand say that it would have undermined these climate talks, which are supposed to be about substantive commitments as opposed to symbolism?
And my second question is can – this is from a legal and technical perspective. Could another administration reverse this decision, or would the company have to reapply if they would want to get approval? Thank you very much.
SENIOR STATE DEPARTMENT OFFICIAL THREE: I’ll take the first of those questions. I don’t think there’s any inconsistency. I think that the notion of there being an over-inflated perception of this has more to do with the notion of the extent of material impact on emissions, among other things that this pipeline would entail.
At the same time, though, I think it’s absolutely true that the perception of U.S. leadership on climate change, the perception of what this President and this Administration have been doing, and the resolve that they have been showing over the course of the last number of years has been enormously important to the U.S. posture internationally. I see it all over the world when I meet with my counterparts, and I think that the kind of test of U.S. resolve is – as in everything else, it’s seen most clearly when decisions come down the pipe which are hard ones. And I think that the fact that the President and the Secretary of State are taking this kind of action is, again, a test of U.S. resolve and leadership and will be looked at as such. And I think the opposite would have – would also have had an opposite effect. So I don’t actually think there’s any inconsistency there. Thanks.
SENIOR STATE DEPARTMENT OFFICIAL ONE: As far as the second question, if the State – for the State Department to reconsider the application at any time, the company would have to reapply.
MODERATOR: Great, thank you. Next question, please.
OPERATOR: We’ll go to the line of Carrie Tait at Globe and Mail.
QUESTION: Hi. Thanks for taking my question. I’m wondering how this might affect alternative methods of transportation. Out of Canada we’re seeing increased rail and barging to the Texas coast. Do you intervene on those if part of the problem is climate change rather than, perhaps, something like pipeline safety or jobs, considering those are escalating because the pipeline doesn’t exist?
SENIOR STATE DEPARTMENT OFFICIAL ONE: As we looked at all the different factors that would emerge from this decision, we looked at alternative methods of transportation. And in fact, denying this pipeline application is not likely in the short term to have or in the long term to have on its own effect on production of crude oil. That will be set more by global oil prices, global markets, and decisions by individual companies.
Second, related to your question, there are other methods of transportation for this crude – some of it by existing capacity and existing pipelines, and some, as you mentioned, by rail. So there will be – I would anticipate that there could be an increase of transport by rail. I think that you’ve seen that we address consistently – not only regarding this decision – the importance of safety when it comes to rail transport of crude. I think that that’s something that the government in Canada that – and the Administration here care deeply about, and we will continue to look at how we can ensure safety of crude by rail into the future. But I think that’s unrelated to this decision. That is something that’s an ongoing objective of ours.
MODERATOR: Great. I think we have time for a couple more questions. So next question, please.
OPERATOR: Joe Duggan at The Omaha World-Herald.
QUESTION: Thank you. The question I have is: Why did the decision take so long given that past cross-border permits have been decided much more quickly? I think the original Keystone Pipeline through Nebraska took less than two years. So if you could address that a little bit.
SENIOR STATE DEPARTMENT OFFICIAL ONE: Thank you for that. TransCanada filed the presidential permit application that we’re discussing today for the proposed Keystone XL Pipeline in May of 2012. The permit – these kind of permit decisions carefully consider a broad range of factors and weigh whether the proposed project serves the national interest. As you said, we have – this is not the only application and this has taken longer than others. We know that. But it is also a unique case where we’ve had nearly 5 million comments and a lot of different factors that go into a project the size and – the size of this one. So different parts of this process all elicited their own comments for that point in the process. They were all reviewed very carefully. And especially in a project like this, we take – as official number two said, we take the comments by the American public extremely carefully and with a lot of consideration.
So we reviewed them all and that takes an enormous amount of time, as do the other aspects of considering a project of this importance and detail.
MODERATOR: Great, thank you. I think we’re up to our final question here, so go ahead.
OPERATOR: That will come from the line of Bruce Cheadle with the Canadian Press.
QUESTION: Hi. Thanks for taking my call. You’ve mentioned that this is going – was a decision that shows resolve because it’s a hard decision by the Administration. We’ve heard today that the – it does not have an economic – significant economic impact in the U.S., so it does not have a significant impact on supply. But it will have a significant impact on Canadian producers, so I just want to question whether this hard decision is actually coming at the expense of Canada rather than the U.S.
SENIOR STATE DEPARTMENT OFFICIAL ONE: Let me address that. We actually – in our analysis, we do not conclude that this project denial will impact, on its own, production in Alberta or in Canada. The production increases that are already scheduled to occur are likely to continue, and future decisions on investment in that area for production are like – are more – are going to be more reliant on global oil markets, global oil prices, and the condition of the individual companies and their ability to make those investments. Because – what we’ve said before: Because there are alternative methods of transportation and an ability to get to the U.S. market and U.S. refineries, we don’t believe that this project denial will affect production.
MODERATOR: Okay, great. Well, thank you all for taking out of your – taking time out of your busy days, and as well, thanks to our participants, our speakers today. This concludes the call, and everybody have a great afternoon and a great weekend. Thanks so much.