Washington Energy Report > Troutman Sanders LLP

Obama Expedites Federal Permitting Process; Announces Support for Portion of Keystone

On March 22, 2012, President Obama issued an executive order aimed at streamlining the federal infrastructure permitting process.  Just one day earlier Obama announced he will make the southern portion of TransCanada Corp.’s Keystone XL pipeline (“Keystone pipeline”) a priority.  The Keystone pipeline is an expansion that would start in Hardisty, Alberta and extend south to a point in Port Arthur, Texas.  The northern half of the Keystone pipeline has already been denied a permit because the State Department declared it would need until 2013 to determine if the project would serve national interest (see January 23, 2012 edition of the WER).  The southern portion that the Obama administration is supporting begins in Cushing, Oklahoma and continues to the Gulf of Mexico.  The executive order also established a committee, the “Steering Committee on Federal Infrastructure Permitting and Review Process Improvement” to coordinate and facilitate the acceleration of the federal permitting process.

The executive order has come under scrutiny from both environmentalists and members of the Republican Party.  Some environmentalists oppose the Keystone pipeline because it could ultimately be used to transport oil from the tar sands in Canada.  Republicans have criticized President Obama’s recent Keystone announcement because they claim: 1) the only remaining approvals necessary for the southern portion of the Keystone pipeline do not require the President’s signature; 2) the announcement is intended to detract from the recently released 2013 energy budget that would end several tax subsidies for oil and gas companies; and 3) Obama is now contradicting his earlier actions that initially delayed the northern part of the pipeline due to the recent increase in gas prices and high unemployment.

The Keystone pipeline debate highlights an interesting dichotomy in America’s energy policy.  Although the United States has made strides in developing renewable energy sources, the U.S. has also increased fossil fuel production in recent years.  In the last four years alone, domestic production of oil has increased to 5.7 million barrels a day (up from 4.9 million barrels a day in 2008).  Obama’s administration has approved several new gas and oil pipelines over the last three years.  This increase in production is attributed to the development of hydraulic fracturing and horizontal drilling.  Both technologies are now employed to access large domestic supplies of oil and gas in certain geographic areas that were too expensive to develop before.  However, this increase in domestic production has also been met with certain offsetting trends (such as a decrease in demand for gasoline and other fuels to keep) that have allowed the price of oil to rise.  Environmentalists have criticized the resurgence of domestic production of fossil fuels, but it has also been praised as moving the country towards more independence from foreign countries.  As the Keystone pipeline progresses, the conflicting interests of America’s energy policy will continue to permeate the debate surrounding this project. 

A link to the Executive Order on federal permitting is available here.