The story of two pipeline projects provides one explanation of how a morass of government regulations is obstructing economic activity and recovery. President Obama proposed work on “shovel-ready projects” to spur economic activity, and it would be tempting to think that the number of shovels needed to build long pipelines would be viewed favorably by a government and country hungry for new jobs. One of the pipelines has been completed despite massive regulatory interferences, and will transport natural gas from the Wyoming to Oregon. The other is a planned 1711 mile pipeline that would transport crude oil from the tar sands in Alberta to refineries in Oklahoma and Texas.
El Paso, a Texas-based company, constructed the 682 mile Ruby natural gas pipeline at a cost of $3.65 billion in the three-and-a-half years required to obtain regulatory approvals and complete the project. The project came in at 23% over budget and missed scheduled completion by four months, primarily because of delays in meeting demands of dozens of U.S., State, and local agencies. The project created thousands of jobs and provided revenues for communities, counties, and state governments.
The Ruby project provided jobs not only to construction people but to environmental specialists who had to complete studies and publish a detailed Environmental Impact Statement (EIS). The EIS had binding requirements for rights of way and endangered species such as the black footed ferret and the Ute ladies’ tresses orchids. There were also descriptions required on how the nearly 6000 workers would be housed. Paleontology rules required that the pipeline had to avoid the “rock stacks” used by Native Americans as navigational tools, even though the pipeline did not cross any reservations. It took two and a half years and 125 meetings and agency “scoping hearings” for El Paso to receive the final signoff to build the pipeline. There were 215 archeologists in the field at the height of construction to “mitigate affects to cultural resources,” as required by the National Historic Preservation Act of 1966. A Forty-four member team monitored migratory bird protection, and they did succeed at moving a nest containing four eggs. The ditch where the pipeline was being laid had to be outfitted with temporary ramps so wild horses and burros could climb out if they fell in. Apparently the workers couldn’t be trusted to hoist out an animal if one did fall in.
The expensive gamble by El Paso to build the pipeline was initiated in the face of natural gas prices that would be slashed in half during the construction of the pipe line. The workers, land owners where the pipeline was constructed, regulators, and environmental groups (who were paid to secure their cooperation) all profited from the risk taken by El Paso. Property tax revenues were boosted by 25% in some areas. Pre-filling the pipeline has begun under the watchful eye of regulators. A Federal Energy Regulatory Commission director warmed El Paso that they are monitoring El Paso efforts to prevent the spread of nonnative foliage and will take corrective action if restoration doesn’t meet their requirements.
The other proposed pipeline, called Keystone XL, is intended to deliver tar sand oil from Canada to U.S. refineries. It is estimated that the $20 billion dollar project would produce 13,000 union jobs, and would seem to be the kind of “shovel ready” project that people looking to stimulate the economy would favor despite the fact the jobs aren’t “green jobs.” Applications were filed in 2008, and there have been dozens of public meeting with the entire large mix of regulatory agencies. Even State Department approval will be required because the pipeline would cross the 49th parallel. The draft EIS concluded the project poses little risk to the environment. The EPA didn’t like that EIS, and sixteen months later a new eight volume report that included consideration of “direct impacts to beetles” also concluded “no significant impacts to the environment.” The EIS now goes into a 90 day review to determine whether the project is “in the national interest.” In addition to environmental impact the project must prove economic, energy security, and foreign policy benefits to at least eight federal agencies.
The “green movement has geared up against the project, and there have been organized protests outside the White House. The Sierra Club is warning President Obama that he can’t count on their votes in the next election if he approves projects such as Keystone XL. We’ll see whether those 13,000 workers standing by with their shovels to build a pipeline take precedence over bureaucratic red tape.