One county has been losing tax revenue for decades. Residents were counting on the pipeline to stop the bleeding.
There are about 1,400 miles of mostly gravel roads carving up the rolling hills of McCone County, Mont., and it is Allen Rosaaen’s job to keep them navigable.
Rosaaen is one of nine county road department workers responsible for clearing snow and ice from the roads that take a beating during Montana’s frigid winters, and shaping and grading the roads during the summers, plugging potholes and spreading gravel when and where they can.
McCone’s 400-plus farms rely on these rural roads to bring their wheat, oats, oilseeds and beans to market. But as the years go by – and as the county’s population shrinks – simply maintaining the roads keeps getting harder and harder for Rosaaen’s crew.
Problems with the roads are the top complaint from local residents, county leaders told National Review. They were eyeing a potentially huge influx of tax revenue from the Keystone XL oil pipeline to fix them. But in January, in one of his first executive orders as president, Joe Biden revoked the pipeline’s permit, bowing to environmentalist pressure and saying it was not consistent with “my Administration’s economic and climate imperatives.”
It was a gut punch to McCone County and communities like it up and down the proposed pipeline’s route. Many of those communities had been anticipating tens of millions of dollars in annual tax revenues that could have transformed their aging and fading towns. In Montana counties with oil pipelines, the oil companies often are – by far – the biggest taxpayers.
Keystone XL was McCone’s opportunity to jump aboard the oil-pipeline money train, likely doubling or tripling – and maybe much more – the county’s annual property tax revenues.
The problems with McCone County’s roads, and its public infrastructure generally, comes down to basic math. In terms of land – with more than 2,600 square miles and more than 1.3 million acres of farmland – McCone County is big. But in terms of people, it’s small and getting smaller.
Every farmer or rancher who passes away, and every high-school grad who leaves for college and never comes back is one fewer person paying to maintain the community’s roads.
The result: McCone’s roads are battered. They’re run with pit gravel, essentially gravel that Rosaaen and his crew dig up and haul around in second-hand 1970s-and-80s-era dump trucks.
“What we pull out of the ground is what we get to put on the road, because we have no money to crush it or to make any better grade of material out of it,” said Rosaaen, a county road foreman. “Everything we do, we just have to do it at a bare minimum.”
While the pipeline was never going to be a panacea for McCone, it did offer a promise of a higher quality of life for the people who remained.
The pipeline meant improving the roads, and maybe hiring some new road department workers and investing in new equipment, community leaders said. It also meant the possibility of repairing dilapidated public buildings; fixing the school’s old gym and music room, among other updates; repairing aging water and sewer lines; upgrading the phone system; hiring some needed new county employees; and increasing wages for teachers, sheriff’s deputies and other local workers.
Two Keystone pumping stations in the county were expected to double energy demand from the local electric co-op, which would help to stabilize rates for the rest of the co-op’s customers. And the arrival of hundreds of pipeline workers to a so-called “man camp” on the outskirts of town also promised a real, though temporary, boost for local businesses.
“It would have been huge,” said Nita Crockett, McCone County’s treasurer.
An Appealing Proposition
Located on the northeastern plains, just south of the U.S. and Canadian border, McCone County is largely a farming and ranching community.
The county seat is the small town of Circle, with a population of about 500 people. The downtown portion of Main Street is only a few blocks long with a couple of eateries, a bank, and a True Value hardware store. The closest Walmart is 75 miles away. The closest Target is about three-and-a-half hours away. Circle’s commercial strip is further from a Starbucks than any other Main Street in America, according to a 2014 NBC News profile of the town.
Life is slow, the people are hard-working and made of tough stock.
“It’s still a great place to live, let me tell you,” McCone County Commissioner James Moos said of the community. “Most of the people are just good people. They’re good neighbors.”
Yet people continue to leave. In fact, McCone County has been bleeding people since the Great Depression, according to U.S. Census data. Nearly 5,000 people lived there in 1930. By 1980, it was down to about 2,700. As of 2019, only 1,664 people remained, according estimates.
And as they leave, there are fewer and fewer taxpayers left to maintain the basics, like the community’s roads, water and sewer lines, and electrical grid. And that’s why the Keystone XL was so appealing. It could have lifted the burden off individual residents.
First proposed in 2008, the 1,980-mile Keystone XL pipeline was designed to pump 800,000 barrels of oil a day from Alberta, Canada, southeast over the border, cutting diagonally through Montana, South Dakota, and Nebraska, and ultimately heading south to the refineries in Houston, Texas. The Keystone XL was in addition to the initial leg of Keystone pipeline – now in operation – that pumps thick Alberta oil sands east through Canada, south through the Dakotas, and then east again to a tank farm in Patoka, Illinois.
About 285 miles of the Keystone XL was supposed to run through six Montana counties, including 40 miles running through McCone County. Five of those counties, including McCone, are officially designated high-poverty areas. It promised to be a financial boon, generating $58 million in annual tax revenues for the state and local communities, according to Montana Attorney General Austin Knudsen’s office.
It would have been a particular boon to McCone County. There already are more than 3,900 miles of oil pipeline crisscrossing the state of Montana, but not through McCone. Those pipelines can be huge tax revenue generators for otherwise small, rural communities.
Today, the taxable value of McCone County property is about $7.7 million, with revenues of about $4 million, said Crockett, the county treasurer. According to Department of Revenue estimates from 2012, the pipeline alone was expected to generate $22.1 million in annual tax revenue for McCone County. No one knew for sure how much it would actually bring in, but Crockett said she was optimistic the county’s tax revenues would at the very least double or triple once the pipeline was operating, though there was a real chance for much more.
“I was definitely hoping, thinking for that,” she said. “I think the potential was there.”
She pointed to Carter County, Montana, a small, rural county on the state’s southeast border. Carter’s estimated population of 1,252 is smaller than McCone’s. But Carter has eight oil pipelines running through it, and overall taxable value of about $53 million – dwarfing McCone. About $49 million of that, or 92 percent, is generated by pipelines, the county treasurer said.
With the county’s oil money, Carter has built a new grade school, a new hospital building, upgraded the county’s airport, improved roads and bridges and upped pay for the county’s workforce without placing a significant additional burden on taxpayers.
“That’s what the pipelines have done for that little county,” Crockett said.
No Serious Impact on Greenhouse Gases
In 2014, an environmental impact report published by then-President Barack Obama’s State Department found the Keystone XL pipeline would have no serious impact on greenhouse gas emissions, and blocking the project wouldn’t stop the oil from being extracted and developed.
The Obama administration nixed the pipeline anyway, only for Donald Trump to revive it during his first week in office.
As far as oil pipelines go, the Keystone XL wasn’t particularly unique, said Christopher Guith, senior vice president of policy for the U.S. Chamber of Commerce’s Global Energy Institute. There are oil pipelines running through all 50 states, and there are already dozens of lines running across U.S. borders, including 31 oil pipelines crossing the Canadian border.
Keystone XL was really no different, Guith said. “It just became a symbolic touchpoint.”
The oil that Keystone XL was designed to pump down to the Gulf Coast is thick and heavy, as opposed to the light, sweet crude that comes from most of the U.S., Guith said. It’s the kind of oil that the environmentalist left hates, because it produces more CO2 when it’s burned. But it’s the kind of oil U.S. refineries love, because they can get it cheap.
Environmentalists seized on the Keystone XL leg because of its connections to the Alberta oil sands, which they want to keep in the ground to cut emissions. Environmentalists and tribal groups opposed to the pipeline also cited fears of leaks and oil spills damaging land and waterways.
Guith said not building the pipeline is a bad move for the environment, for the economy, and for U.S. energy security. Stopping construction of the Keystone XL does nothing to impact demand for oil, which will be satisfied from somewhere, likely via imports from U.S. competitors, Guith said.
And as the State Department report indicated, killing the Keystone XL won’t keep the Alberta crude in the ground. Rather, it will be transported via trucks and trains, which have a much larger greenhouse gas footprint and a greater likelihood for accidents. Last month, three tanker cars loaded with fuel burst into flames in Texas after they were T-boned by an 18-wheeler, according to news reports. Two train crashes in rural Saskatchewan in December 2019 and February 2020 spilled millions of liters of oil. And in 2015, a CSX train hauling crude oil derailed in West Virginia, sending fireballs into the air.
“If you stop this pipeline, you prevent it from getting from Point A to Point B in the most efficient way possible, but … you’re not going to stop it from getting here,” Guith said.
Moos, the county commissioner, said that over the years he’s attended lots of meetings and had many discussions with representatives for TC Energy, the company behind the project. He’s confident the project is safe, he said, “and they know everybody is watching them very closely.”
‘They’ve Gone Too Far This Time’
At this point, the future of the pipeline is cloudy at best. Last month, Knudsen, the Montana attorney general sent a letter to Biden urging him to reinstate the pipeline permit. The letter was signed by 14 attorneys general across the country, but Guith said, “I don’t think anyone expects President Biden to change his mind.”
In Congress, Republicans, led by Senator Steve Daines of Montana and Representative Kelly Armstrong of North Dakota introduced a bill that would allow the pipeline to be constructed without presidential permission, but it’s a long shot.
It’s possible a new president elected in 2024 could greenlight the project again, if TC Energy is still invested in it. Moos, the county commissioner is skeptical.
“I was disappointed it didn’t get going under (President) Trump, and I don’t know it will be any better under another one,” he said. “I think it needs to get pushed through the right channels and get done, whether it’s under Biden or the next president. I think eventually TC Energy is just going to say, ‘To heck with it, we’re done.’”
Ken Ehli, the mayor of Circle, is still bullish on the project. Too much work has been done already – including the portion crossing the border – for the pipeline to be abandoned, he said.
“I really do think it’s going to happen. I really do,” he said. “They’ve gone way too far this time to not do it. But I don’t know.”
Ehli still has a vision for his community with a new shine, reinvigorated by oil money.
By investing in the town – fixing the roads, updating infrastructure, increasing local pay – they could attract people to the community who want to build businesses there. More businesses could draw in more residents. And with the rise in virtual work, he believes more young people may be interested in the small-town lifestyle his community offers.
“I just hope it brings the kids back home,” he said.