Canada lobbied U.S. over pipeline; Keystone project

By Stanley Tromp, National Post, 24 Jan 2011

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Canada's ambassador to the United States wrote to the head of the U.S. Environmental Protection Agency last fall, asking it to disregard greenhouse gas emissions from Alberta oil extraction as it decides whether to support a proposed massive Canadian pipeline to Texas.

As well, one Alberta bureaucrat warned the EPA its greenhouse gas policies could place at risk "the longstanding energy trading relationship between our two jurisdictions."

The letters, including one from Canadian ambassador Gary Doer to the EPA's most senior official and copied to Hillary Clinton, U.S. Secretary of State, reveal an officially polite but tough disagreement over jurisdictional authority and greenhouse gas emissions.

The discord revolves around TransCanada Corp.' s proposed $8-billion, 2,673-kilometre, metre-thick Keystone XL pipeline. The pipeline would ship 500,000 barrels each day of raw bitumen from Alberta to refineries along the Gulf Coast in Texas by 2013, and has the potential to double the U.S. consumption of Canadian crude oil.

The project is staunchly opposed by environmentalists and many U.S. politicians. Calgary-based TransCanada still awaits a presidential permit from the U.S. State Department, which has to approve the pipeline because it crosses an international border. In deliberating, the State Department sought advice about the proposal from the EPA and seven other agencies.

On July 21, 2010 Cynthia Giles, the EPA's assistant administrator for enforcement and compliance assurance, gave the State Department's draft environmental impact statement (EIS) for Keystone XL its lowest possible rating.

She said in an 18-page statement the pipeline approval should be delayed until more data about the greenhouse gas impacts of Alberta's oil sands is available.

In response five days later, the U.S. State Department extended the review period. Ms. Clinton said in a speech last fall the Obama administration was "inclined to" approve the pipeline, but it needed more analysis. Department officials, cited in late October by Reuters, said a final administration decision is still months away.

The industry case was echoed by Canadian officials in letters obtained by the Financial Post from the EPA through a U.S. Freedom of Information Act request. Last Sept. 24, Ernie Hui, Alberta's assistant deputy environment minister, wrote to Ms. Giles of the EPA -- in a letter copied to State Department officials -- stating that: "While we respect the intent of your input to this process, we also believe that the impacts occurring outside your jurisdiction are not substantive to the assessment of the pipeline...

"This is, of course, of an even more serious nature when the relatively superficial information and analysis of this complex subject risks the development of policy that may be discriminatory in nature, and counter to the longstanding energy trading relationship between our two jurisdictions." Mr. Hui is on leave and could not be reached for comment.

Of Mr. Hui's letter, Alberta government spokesperson Chris Bourdeau told the Financial

Post this week that "the reference to the 'longstanding energy trade relationship' was designed to underscore the importance of decisions like this given the highly integrated nature of North American energy systems and that consideration should be given to a number of interrelated issues which do, of course, include our respective trade obligations."

Yet Bourdeau said: "It is not accurate to suggest that the very generic reference to the critical energy trading relationship between Canada and the U.S. represents a formal Alberta policy of linking

trade to U.S. greenhouse gas policy."

Canadian embassy spokesperson Jennie Chen said she is "not able to comment" on whether Mr. Hui's comments represent Canadian federal government policy or not, nor whom he was speaking for. She did say the embassy never advised any U.S. official or politician that a U.S. rejection of the Keystone XL project could result in trade disputes or reprisals against the United Stated by Canada, nor a reduction of other Canadian energy supplies to the U.S. market.

On Oct. 19, Ms. Giles wrote back to Mr. Hui to say that, while the EPA appreciated Alberta's concerns over such "sensitive jurisdictional issues," greenhouse gas (GHG) emissions are a global problem and so it was proper for the State Department to consider them.

Two weeks later, the same kind of exchange on the GHG issue occurred, but at a higher political level.

On Nov. 3, Gary Doer, Canadian ambassador to the United States, wrote to the EPA's most senior official, administrator Lisa Jackson, in a letter copied to Ms. Clinton. "We are concerned with the EPA's recommendation that extraction-related GHG emissions in Canada form part of the Environmental Impact Statement included in the permitting process."

Mr. Doer said both nations should consider that they have historically adopted environmental assessment regimes that "complement" each other, "while respecting the sovereignty of our independent decision-making processes."

He concluded by reminding Ms. Jackson that "it is important to note that Canada is the United States' largest, most accessible and secure supplier of energy."

On Dec. 7, Ms. Jackson replied in a letter to Mr. Doer:

"Given that the possible consequences of greenhouse-gas emissions are global in nature, they include potential impacts on the United States, and we believe that it is appropriate that the State Department consider these upstream greenhouse-gas emissions in its evaluation."

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