New Oil Sands Legislation Would Strip Clause From 2007 Energy Act

Environmentalists are bracing for a renewed fight with lawmakers and the petroleum industry over whether the U.S. military should be allowed to meet its massive fuel needs with highly polluting Canadian oil sands.

At issue is Section 526, a tiny clause that was tucked into the U.S. Energy Independence and Security Act of 2007. The measure forbids all federal agencies, except for space agency NASA, from purchasing carbon-heavy unconventional fuels that belch more
emissions than traditional oil.

It was supposed to close the long-running debate over the future of oil sands in the U.S. armed forces, the largest U.S. gas consumer. But now, new legislation is being pushed by two senators to remove it from the larger bill.

The draft Oil Energy Security Act of 2010 was quietly introduced last week by Sens. Lindsey Graham (R-S.C.) and Saxby Chambliss (R-Ga.), who both sit on the Armed Forces Committee. It would “promote energy security through the production of petroleum from oil sands,” the one-page bill reads.

The U.S. is the biggest customer of oil sands from the Alberta province, the biggest petroleum deposit outside Saudi Arabia, importing around a billion barrels a day. New pipeline projects under review would double that amount and create a carbon pollution problem.

No one disputes that turning sticky bitumen into sweet crude creates more greenhouse gas emissions than other crude development—but by how much remains subject to debate. Estimates range from up to three times to about 1.4 times the amount.

Environmental groups say repealing Section 526 would further hook America on a fuel that would make global warming worse.

But industry groups say developing oil sands is both a U.S. jobs engine and a strategic imperative to wean the nation off unsteady Middle Eastern oil supplies.

A spokesperson for oil and natural gas trade group American Petroleum Institute said Section 526 also violates the 2005 Energy Policy Act, which orders Congress to develop oil sands.

That law “directs DOD [Department of Defense] to develop a strategy to use these fuels that are extracted and processed in the U.S.,” Carlton Carroll told SolveClimate News.

The issued has generated heavy lobbying for years. A similar amendment to repeal the clause was defeated in 2008 as part of the defense bill. Carroll would not disclose whether API was involved in the new push. “API supports the repeal of 526,” he said.

“No Surprise”

“Industry groups have been trying to repeal this law since it was passed in 2007,” Doug Hayes, an attorney with the Sierra Club’s environmental law program, told SolveClimate News.

This latest attempt, he said, is “no surprise.”

Meanwhile, Sierra Club and other groups are still trying to get Section 526 enforced. They claim the Pentagon continues to buy a mix of crude that includes up to 12 percent from oil sands, in violation of the 2007 law.

Together with the Southern Alliance for Clean Energy

The Graham-Chambliss bill could now make their lawsuit moot. “If that passes, then we wouldn’t have a lawsuit, I guess,” said Gary Davis, an attorney for SACE. However, he noted that he had not seen the bill and could not speculate on its exact legal consequences.

But Hayes said the lawsuit could still live on even if the law were repealed. “Obviously industry would try to move to dismiss the lawsuit,” Hayes said, but added that contracts from 2007 and on “should be contested.”

Industry Joins Lawsuit

Last week, API, the National Petrochemical and Refiners Association and the U.S. Chamber of Commerce filed a petition to intervene on behalf of the DOD in the case.

They say the DOD is in compliance because the Pentagon does not contract specifically with tar sands supplies. It buys an oil cocktail of sorts and has no way of knowing its exact sources.

“Section 526 does not recognize the practical impossibility of determining within a distribution system what fuel is derived from Canadian oil sands and what is not,” Carroll said.

Both Davis and Hayes said they aren’t convinced.

“We don’t buy that,” said Hayes. “It’s just a matter of bookkeeping. They know these fuels can’t be shipped to the pipelines together....They come at different times. Certain refineries are upgraded to accommodate the heavy crude. Others aren’t. They could figure out where this oil is coming from.”

Davis said: “It’s like a bank saying that they have all this money in their vault and they can’t keep track of the money. Well, of course they can.”

In November the court should decide if the groups can intervene. A hearing on summary judgments is scheduled for next month.

Hayes said that “it’s still very early in the game, and there’s really no way to tell” which way the court is leaning on the case.