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Powering Down

Federal regulation is killing energy development.

Nov 21, 2011, Vol. 17, No. 10 • By ADAM J. WHITE
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Under ordinary circumstances, this should have marked the effective end of the discussion. But protests outside the White House promptly ensued, with participants responding to the State Department’s thorough environmental impact statement with a banner announcing, “Obama: This Is Our Environmental Impact Statement.” Critics also claim that the State Department’s environmental review was corrupted by a third-party contractor with an alleged conflict of interest.

Reacting to the protests, President Obama intervened. Rather than allowing the State Department to make the final decision, pursuant to the governing executive order delegating power to Foggy Bottom, the president announced in early November that he would make the final decision, and perhaps not for “several months.”

While couching his concerns in terms of environmental protection, the president’s political motivations were obvious. The Los Angeles Times, in reporting that a final decision could be delayed until after the 2012 presidential election, observed that delay would allow the president “to at least temporarily avoid antagonizing either the unions that support the pipeline or the environmental activists who oppose it as President Obama gears up for his campaign.”

Finally, on November 10, the president and State Department announced that they would delay a decision until at least 2013, in order to undertake a study of “potential alternative routes in Nebraska.” Ostensibly, the delay would allow the State Department to consider the pipeline’s potential effect on aquifers. But the State Department already reviewed that issue, in detail, in the environmental impact statement.

The president further stressed the need for “an open, transparent process that is informed by the best available science and the voices of the American people.” But his remarks obscured the fact that the State Department’s three-year review had been open and transparent: The final environmental impact statement included a 100-page appendix responding to public comments. And the process’s scientific bona fides were not seriously in dispute. He may have wrapped his decision in the rhetoric of science and good government, but President Obama was simply bowing to environmental activists’ blunt demands for indefinite delay.

That outcome may be politically convenient for the Obama administration, but in the real world it imposes real costs. According to the corporate official overseeing the Keystone XL project, delays could cost the company $1 million per day. And if the State Department presses for rerouting the pipeline, one analyst warned Bloomberg, Keystone XL’s parent company would “abandon the project”—jeopardizing billions of dollars in economic growth and tens of thousands of new jobs.

In New England, some might joke that Keystone XL is getting off easy. For while Keystone’s project has been mired in regulatory chaos for three years, the Cape Wind offshore wind power project is now in its tenth year of trial-by-bureaucrat. Since first applying for federal approval in 2001, Cape Wind endured three years of review by the Army Corps of Engineers, before Congress transferred jurisdiction over offshore wind to the Interior Department, which then began its own review. Five years later, Interior Secretary Ken Salazar finally approved the project, but only after eleventh-hour waffling comparable to President Obama’s Keystone  politicking. Along the way, Cape Wind fended off efforts at obstruction by state officials, federal legislators, and environmental activists.

Unfortunately for Cape Wind, even the Interior secretary’s approval did not end the process. On October 28, the U.S. Court of Appeals for the D.C. Circuit ruled that the Federal Aviation Administration, acting at Interior’s request, had failed to study sufficiently the wind farm’s possible effects on air traffic. The court vacated the FAA’s study and remanded the matter to the FAA for another try.

Depending on how you count, the next round will be the FAA’s fifth bite at the apple. FAA signed off on the project in early 2003. When that approval expired in late 2004, the FAA approved it again. Another review occurred in 2007, when Cape Wind heightened its planned 426-foot wind turbines by a mere 14 feet. Two years later, the FAA terminated that review and began anew, to ensure that “all potential adverse effects are disclosed .  .  . and to ensure that there is no confusion to those desiring to provide comments.”

Cape Wind commenters may not be “confused,” but the rest of us should be. Looking at the regulatory obstacles confronting Cape Wind and Keystone XL––to say nothing of the regulatory mess that currently plagues the nascent shale gas industry—the public is left to wonder: How can any major infrastructure project be built today?

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