Keystone XL, part II

The Stanley Cup Finals are over, the Vancouver Canucks emerging as the slightly less violent and significantly less effective team over seven games. Some of us supposedly urbane and gentile Vancouverites, however, seem to be trying to make up for the Canucks being the less violent team. Some appear eager to hear the words "Vancouver" and "Detroit" used in the same sentence, in the hopes that the words "Stanley Cup" might also be appear.

The Keystone XL controversy will be much more drawn out, and perhaps violent and riotous in its own political way. Is there any law to rescue discourse on Keystone? Probably not much. Sometimes I get carried away with being an all-knowing economist, and forget to pontificate about the legal aspects of an environmental problem. Such was the case with my recent posting on Keystone XL.

There are, as I see it, four legal factors involved with oil sands development and the necessity of the Keystone XL pipeline: (1) the legal implications of greenhouse gas emissions; (2) the transboundary pollution issues from the pipeline, (3) the local pollution and resource effects of oil sands development, and (4) environmental assessment practices. None of these seem very constraining on oil sands development, except for the last one.



The legal implications of the large greenhouse gas emissions are straightforward. There are none, and there will not likely be any for the foreseeable future. There is a lot of movement in many industries in preparation for a lower-carbon future. American Electric Power, for example, historically a coal-burning utility, is investing heavily in renewable energy sources and natural gas. But while carbon pricing in the United States is temporarily off the table, AEP is planning ahead, for a future beyond the time horizon relevant to Keystone XL. And the fact that the oil sands are producing a product that will ultimately emit carbon dioxide does not seem relevant in any legal context; a products liability claim for producing crude oil would likely fail given the small contribution that even oil sands oil would make towards warming the planet.

What do we consider the transboundary pollution issues for a pipeline that will run from Canada to the United States, for the purpose of supplying the United States with crude oil? Would leaks in Keystone XL be considered a case of transboundary pollution? My sense is wherever the locus of a leak, pipeline owner TransCanada would be on the hook. Since TransCanada could easily be hauled into an American court, this doesn't seem like a transboundary pollution problem.

Thirdly, the local pollution and resource effects don't seem to pose any threat to oil sands development. Regulation of the massive land disturbance and water usage falls squarely within Alberta's jurisdiction. Cross-provincial effects seem relatively small. Alberta, of course, its wealth very much predicated to oil sands production, shows no inclination towards greater protection of its massive Northern boreal forest.

Finally, the most interesting class of questions has to do with how to do environmental assessments for a oil sands projects and their attendant infrastructure, like Keystone XL. Andrew Leach has blogged about how the environmental assessment process is not the right place to complain about the greenhouse gas emissions of petroleum combustion. I generally agree, though we should acknowledge that in any change in public sentiment, there will be watershed events that take on symbolic meaning, and Keystone XL may be one of them. The question of exactly how greenhouse gas emissions will be incorporated into environmental assessment processes is a live one. Unfortunately, Canadian agencies and courts have thrown their hands up in the air, holding that greenhouse gases must be a part of environmental assessment, but that apart from token mitigation measures (which do not have to actually reduce greenhouse gas emissions), individual project proponents do not have to do anything about climate change. Again, I am sympathetic to the problem, but disappointed in the wishy-washy inconsistency of the two principles. The White House Council on Environmental Quality issued a draft guidance in 2010 that is a bit better, but mainly because the US National Environmental Policy Act already mandates the consideration of things like cumulative impacts and the aggregation of programmatic impacts, concepts that have yet to be taken seriously in Canada (For example, see Friends of the West Country Assn. v. Canada (Minister of Fisheries & Oceans), "The independent utility principle originated in the United States where questions of constitutional jurisdiction and the applicable statutory scheme of the relevant environmental protection legislation undoubtedly differ from those in Canada. I do not find the independent utility principle or the portions of the Guide which may reflect the independent utility principle helpful for the purpose of interpreting subsection 15(3) of the CEAA…" Rothstein, J.). The US State Department's draft environmental impact statement of Keystone XL gave Keystone a pass, which was criticized by EPA.

Acknowledging as I have earlier on this blog that environmentalists should not seek to make an example out of the oil sands, what ought we do about oil sands and its attendant infrastructure, as a matter of legal policy? For an enterprise this big, shouldn't there be legal questions that are at least close? Maybe that speaks to the inadequacy of the legal framework in Canada and internationally. Even if I stay agnostic about the desirability of oil sands development, I can still lament that there appears no legal basis for mounting a reasonable challenge to the whole business.