    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

                        AMERICAN JOBS NOW: A LEGISLATIVE HEARING ON
                     H.R. 3548, THE NORTH AMERICAN ENERGY ACCESS ACT
    =======================================================================

                                    HEARING

                                   BEFORE THE

                        SUBCOMMITTEE ON ENERGY AND POWER

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 SECOND SESSION

                                   __________

                          JANUARY 25, FEBRUARY 3, 2012

                                   __________

                               Serial No. 112-108

    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

            Printed for the use of the Committee on Energy and Commerce
                            energycommerce.house.gov
                                  __________

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                        COMMITTEE ON ENERGY AND COMMERCE

                              FRED UPTON, Michigan
                                     Chairman

    JOE BARTON, Texas                    HENRY A. WAXMAN, California
      Chairman Emeritus                    Ranking Member
    CLIFF STEARNS, Florida               JOHN D. DINGELL, Michigan
    ED WHITFIELD, Kentucky                 Chairman Emeritus
    JOHN SHIMKUS, Illinois               EDWARD J. MARKEY, Massachusetts
    JOSEPH R. PITTS, Pennsylvania        EDOLPHUS TOWNS, New York
    MARY BONO MACK, California           FRANK PALLONE, Jr., New Jersey
    GREG WALDEN, Oregon                  BOBBY L. RUSH, Illinois
    LEE TERRY, Nebraska                  ANNA G. ESHOO, California
    MIKE ROGERS, Michigan                ELIOT L. ENGEL, New York
    SUE WILKINS MYRICK, North Carolina   GENE GREEN, Texas
      Vice Chairman                      DIANA DeGETTE, Colorado
    JOHN SULLIVAN, Oklahoma              LOIS CAPPS, California
    TIM MURPHY, Pennsylvania             MICHAEL F. DOYLE, Pennsylvania
    MICHAEL C. BURGESS, Texas            JANICE D. SCHAKOWSKY, Illinois
    MARSHA BLACKBURN, Tennessee          CHARLES A. GONZALEZ, Texas
    BRIAN P. BILBRAY, California         JAY INSLEE, Washington
    CHARLES F. BASS, New Hampshire       TAMMY BALDWIN, Wisconsin
    PHIL GINGREY, Georgia                MIKE ROSS, Arkansas
    STEVE SCALISE, Louisiana             JIM MATHESON, Utah
    ROBERT E. LATTA, Ohio                G.K. BUTTERFIELD, North Carolina
    CATHY McMORRIS RODGERS, Washington   JOHN BARROW, Georgia
    GREGG HARPER, Mississippi            DORIS O. MATSUI, California
    LEONARD LANCE, New Jersey            DONNA M. CHRISTENSEN, Virgin
    BILL CASSIDY, Louisiana              Islands
    BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
    PETE OLSON, Texas
    DAVID B. McKINLEY, West Virginia
    CORY GARDNER, Colorado
    MIKE POMPEO, Kansas
    ADAM KINZINGER, Illinois
    H. MORGAN GRIFFITH, Virginia

                                     7_____

                        Subcommittee on Energy and Power

                             ED WHITFIELD, Kentucky
                                     Chairman
    JOHN SULLIVAN, Oklahoma              BOBBY L. RUSH, Illinois
      Vice Chairman                        Ranking Member
    JOHN SHIMKUS, Illinois               JAY INSLEE, Washington
    GREG WALDEN, Oregon                  JIM MATHESON, Utah
    LEE TERRY, Nebraska                  KATHY CASTOR, Florida
    MICHAEL C. BURGESS, Texas            JOHN D. DINGELL, Michigan
    BRIAN P. BILBRAY, California         EDWARD J. MARKEY, Massachusetts
    STEVE SCALISE, Louisiana             ELIOT L. ENGEL, New York
    CATHY McMORRIS RODGERS, Washington   GENE GREEN, Texas
    PETE OLSON, Texas                    LOIS CAPPS, California
    DAVID B. McKINLEY, West Virginia     MICHAEL F. DOYLE, Pennsylvania
    CORY GARDNER, Colorado               CHARLES A. GONZALEZ, Texas
    MIKE POMPEO, Kansas                  HENRY A. WAXMAN, California (ex
    H. MORGAN GRIFFITH, Virginia             officio)
    JOE BARTON, Texas
    FRED UPTON, Michigan (ex officio)

                                      (ii)
                                 C O N T E N T S

                                  ----------

                                JANUARY 25, 2012

                                                                       Page
    Hon. Ed Whitfield, a Representative in Congress from the
      Commonwealth of Kentucky, opening statement....................     1
        Prepared statement...........................................     3
    Hon. Lee Terry, a Representative in Congress from the State of
      Nebraska, opening statement....................................    10
    Hon. Bobby L. Rush, a Representative in Congress from the State
      of Illinois, opening statement.................................    10
    Hon. Fred Upton, a Representative in Congress from the State of
      Michigan, opening statement....................................    12
        Prepared statement...........................................    14
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................    15

                                   Witnesses

    Kerri-Ann Jones, Assistant Secretary of State, Bureau of Oceans
      and International Environmental and Scientific Affairs.........    17
        Prepared statement...........................................    19
        Answers to submitted questions...............................    67
    Jeff C. Wright, Director, Office of Energy Projects, Federal
      Energy Regulatory Commission...................................    25
        Prepared statement...........................................    27

                               Submitted Material

    H.R. 3548, A Bill to facilitate United States access to North
      American oil resources, and for other purposes.................     5
    Application for Intervenor Status, dated May 19, 2009, Hearing
      Order No. OH-1-2009, of the National Energy Board, Canada,
      submitted by Mr. Waxman........................................    40
    Media notes on Keystone XL Pipeline, dated March 15, 2011, and
      April 15, 2011, Department of State, submitted by Mr. Terry....    55

                                FEBRUARY 3, 2012

                                                                       Page
    Hon. Ed Whitfield, a Representative in Congress from the
      Commonwealth of Kentucky, opening statement....................    93
        Prepared statement...........................................    95
    Hon. Greg Walden, a Representative in Congress from the State of
      Oregon, opening statement......................................    96
    Hon. Bobby L. Rush, a Representative in Congress from the State
      of Illinois, opening statement.................................    96
    Hon. Joe Barton, a Representative in Congress from the State of
      Texas, opening statement.......................................    97
    Hon. Lee Terry, a Representative in Congress from the State of
      Nebraska, opening statement....................................    98
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................    99

                                   Witnesses

    Margaret Gaffney-Smith, Chief, Regulatory Program, Army Corps of
      Engineers......................................................   101
        Prepared statement...........................................   103
    Mike Pool, Deputy Director, Bureau of Land Management, Department
      of the Interior................................................   111
        Prepared statement...........................................   113
    Steven M. Anderson, Brigadier General (Retired), United States
      Army...........................................................   142
        Prepared statement...........................................   145
    Randall F. Thompson, Nebraska rancher............................   147
        Prepared statement...........................................   149

                               Submitted Material

    Memo, dated June 22, 2011, from Carmine Difiglio, Deputy
      Assistant Secretary for Policy Analysis, Office of Policy and
      International Affairs, Department of Energy, to Keith J. Benes,
      Attorney-Advisor, Department of State, submitted by Mr. Terry..   126
    Article, dated February 1, 2012, ``Obama's Enemies List,'' by
      Theodore B. Olson in the Wall Street Journal, submitted by Mr.
      Pompeo.........................................................   151
    Article, dated December 31, 2011, ``Mike Klink: Keystone XL
      pipeline not safe,'' by Mike Klink in the Lincoln Journal Star,
      submitted by Mr. Waxman........................................   156
    Letter, dated February 1, 2012, from Mike Klink of Auburn,
      Indiana, to Mr. Waxman, submitted by Mr. Waxman................  .158

       AMERICAN JOBS NOW: A LEGISLATIVE HEARING ON H.R. 3548, THE NORTH
                       AMERICAN ENERGY ACCESS ACT--DAY 1

                                  ----------

                          WEDNESDAY, JANUARY 25, 2012

                      House of Representatives,
                      Subcommittee on Energy and Power,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 8:05 a.m., in
    room 2123 of the Rayburn House Office Building, Hon. Ed
    Whitfield (chairman of the subcommittee) presiding.
        Members present: Representatives Whitfield, Sullivan,
    Shimkus, Walden, Terry, Burgess, Bilbray, Scalise, Olson,
    McKinley, Gardner, Pompeo, Griffith, Barton, Kinzinger, Upton
    (ex officio), Rush, Inslee, Markey, Green, Doyle, Gonzalez, and
    Waxman (ex officio).
        Staff present: Charlotte Baker, Press Secretary; Caroline
    Basile, Staff Assistant; Mike Bloomquist, Deputy General
    Counsel; Anita Bradley, Senior Policy Advisor to Chairman
    Emeritus; Maryam Brown, Chief Counsel, Energy and Power;
    Allison Busbee, Legislative Clerk; Patrick Currier, Counsel,
    Energy and Power; Garrett Golding, Professional Staff Member,
    Energy; Cory Hicks, Policy Coordinator, Energy and Power; Peter
    Kielty, Senior Legislative Analyst; Heidi King, Chief
    Economist; Ben Lieberman, Counsel, Energy and Power; Dave
    McCarthy, Chief Counsel, Environment and Economy; Mary Neumayr,
    Senior Energy Counsel; Katie Novaria, Legislative Clerk; Phil
    Barnett, Democratic Staff Director; Greg Dotson, Democratic
    Energy and Environment Staff Director; Caitlin Haberman,
    Democratic Policy Analyst; Elizabeth Letter, Democratic
    Assistant Press Secretary; and Alexandra Teitz, Democrat Senior
    Counsel, Environment and Energy.

      OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
               CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

        Mr. Whitfield. I would like to call this meeting to order
    this morning, and the subject of this hearing is ``American
    Jobs Now,'' and we are going to be considering H.R. 3548, the
    North American Energy Access Act.
        I would also like to welcome those members of the referee
    training class. I didn't realize you all were going to be with
    us this morning but we are delighted you are here on the second
    row, and I hope you will enjoy the hearing as well.
        Today's hearing gives us the opportunity to learn why the
    Obama administration denied a permit to build the Keystone
    pipeline from Canada though parts of the United States. How
    could the Obama administration when presented with the chance
    to create thousands of jobs and at the same time significantly
    reduce our dependence on oil from the Middle East say ``no'' to
    the American people?
        Today we will examine how such a harmful decision was made
    and explore opportunities to reverse that decision. While the
    administration struggles to find a rational reason to reject
    the construction of Keystone pipeline, we are going to look for
    ways to build the Keystone pipeline.
        This is a project that would cost about $7 billion to
    build. There would not be any government money involved in this
    project. It is all being supplied by private industry, and it
    would immediately put at least 20,000 people to work. That
    certainly sounds like the national interest to me.
        If our President decides that sending three aircraft
    carrier strike groups to the Strait of Hormuz to defend the
    free flow of oil, if he thinks that is in the national
    interest, then one would also think a pipeline from Canada that
    would help us be less dependent on Middle Eastern oil would
    also serve the national interest.
        The President's own State Department determined that the
    pipeline would have no significant impact on the environment.
    The President said it himself. His rejection of the Keystone
    pipeline is not based on its merits. He said that, which makes
    us belief that the decision to reject the pipeline was solely a
    political decision to help him be reelected.
        [The prepared statement of Mr. Whitfield follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        [H.R. 3548 follows:]
        [GRAPHICS NOT AVAIALBE IN TIFF FORMAT]

        Mr. Whitfield. At this time, I would like to yield the
    remainder of my time to Mr. Terry.

       OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF NEBRASKA

        Mr. Terry. Thank you, Mr. Chairman, for holding this
    hearing on this bill.
        A couple of points with the couple of minutes I have. This
    is what the State Department has by way of environmental
    studies on the Keystone route. As you can see, it is very
    voluminous and it is difficult to understand why this would
    just be discarded, and we will get into some of the points
    later during questioning.
        I want to go off my regular script and just express my
    displeasure that the State Department decided or objected to
    our Nebraska witness that could help put in context the
    Nebraska exemption and what Nebraska is doing. The State
    Department objected because they don't sit on the same panel as
    a State witness, so the head of our Nebraska Department of
    Environmental Quality is not worthy enough to sit there, and
    because of time constraints, his ability to answer our
    questions had to be deleted from this panel and frankly, I am
    disturbed by that.
        But we are going to get into the false excuse of using the
    State of Nebraska as the reason--reading your testimony--as the
    reason for the denial. In fact, the bill was written so you
    wouldn't have to make that decision, and we will get into those
    statements. I yield back.
        Mr. Whitfield. I thank the gentleman for yielding back.
        I might say also that last night the President in his State
    of the Union address talked about the importance of
    infrastructure for America to remain competitive.
        Mr. Rush. I am really going to have to say that regular
    order isn't in order, and the 5 minutes is up, so we should
    proceed because the regular order is up. Your time is up, Mr.
    Chairman.
        Mr. Whitfield. Well, I think when you said that, there was
    still 30 seconds left.
        Mr. Rush. I looked at it and it was----
        Mr. Whitfield. We will enforce the 5-minute rule and
    recognize the gentleman for 5 minutes.

     OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Mr. Rush. Thank you, Mr. Chairman. Thank you for
    recognizing me.
        Mr. Chairman, I am also delighted to see the referees
    there. This is a good opportunity for them to exercise their
    craft because I expect there to be a big battle to take place
    this morning at this morning's hearing, because, Mr. Chairman,
    today we are holding yet another hearing on the Keystone XL
    pipeline as a follow-up to the last hearing, the last markup
    and the former we had where the majority attempted to force the
    Obama administration to hastily make a decision on the Keystone
    XL pipeline. Let me remind you, the majority first tried to
    move legislation that required the administration to forego its
    legal obligations and its due diligence and come out with a
    favorable decision for Keystone XL by November 1 of last year,
    and the majority's reckless and irresponsible view if the
    American public was left unprotected because the administration
    did not have the time needed to conduct a thorough review, I
    want to repeat, a thorough review and oversight of this
    project. For my Republican colleagues, as long as industry got
    what it wanted, then that was the most important role of this
    Congress.
        After that tactic failed, the majority held hostage the
    payroll tax cut extension, which would benefit millions of
    middle-class working families, in order to attach a rider that
    attempted to force President Obama to come out in favor of
    Keystone XL within 60 days of the bill's enactment, and we all
    know how well that strategy worked out.
        Again, the majority said too bad if ordinary Americans
    might have been negatively impacted by a lack of Federal
    oversight, and who cares if the Republican governor and
    legislators Nebraska have yet to even identify a new route for
    the pipeline. As was the theme all last year, my Republican
    colleagues continue to push this false notion that if you would
    just roll back government oversight and protections for average
    Americans and allow industry to do what it wants without
    restriction, and unfettered, then somehow miraculously, jobs
    will be created and millions of out-of-work Americans will be
    gainfully employed. After all, Mr. Chairman, we saw how well
    this well-defined philosophy worked during the Bush years with
    the collapse of our total financial institutions and our
    economy.
        Mr. Chairman, it is ironic that 25 Energy and Power
    Subcommittee and joint hearings, the nine bills that originated
    from this subcommittee that went through the House last year,
    the only piece of legislation that actually became law was the
    Pipeline Safety Reauthorization bill, which expanded regulation
    in order to address public safety. In fact, the pipeline safety
    bill enjoyed unanimous support from this committee and so it
    would appear that my Republican colleagues are not always
    opposed to Federal regulation and oversight, especially when
    their districts are directly affected.
        So Mr. Chairman, today we are here on another proverbial
    fishing expedition by the majority party, again to try to
    sidestep Federal regulations and oversight in order to help
    industry get what they want and the American public be damned
    in the process. I am not sure if the majority's goal is simply
    to show TransCanada that they are working feverishly on their
    behalf for more campaign contributions, even when they know
    that the underlying legislation would never, ever become law--
    --
        Mr. Terry. Mr. Chairman----
        Mr. Rush [continuing]. Or they are trying to keep this
    issue----
        Mr. Terry [continuing]. I think the gentleman's time has
    expired and I want his words taken down.
        Mr. Rush [continuing]. With the millions of dollars that
    the----
        Mr. Terry. I move that his words be stricken.
        Mr. Rush [continuing]. American Petroleum Institute is
    pouring into commercials supporting Keystone XL.
        Mr. Whitfield. The gentleman's time is expired.
        Mr. Rush. And I yield back the balance of my time.
        Mr. Whitfield. Recognize the gentleman from Nebraska.
        Mr. Terry. The gentleman made an accusation saying that we
    are tied to campaign contributions. A, that is wrong, but that
    is against our rules. His words need to be taken down.
        Mr. Whitfield. We will have the clerk review the
    transcript, and then we will proceed at that time, and I will
    remind everyone that we do not need to be making accusations
    about what people are and are not doing as far as legal
    campaign finance laws and whatever.
        At this time I would like to recognize the gentleman from
    Michigan for 5 minutes, Mr. Upton, the chairman of the full
    committee.

       OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF MICHIGAN

        Mr. Upton. Well, thank you, Mr. Chairman. I notice we have
    a number of referees in that second row. Welcome to the big
    house. I note that you have got red flags, and of course, that
    is not a yellow flag, that is a red flag. A red flag usually
    means it is a review of the play. We look forward to having a
    review of the play. In fact, that vote did pass in this
    committee and on the House Floor by a two-to-one margin, and we
    are looking to have the ruling on the field confirmed again and
    perhaps again and again.
        It is not often that Congress can take a single step that
    will simultaneously help reduce the future price at the gas
    pump, strengthen the Nation's energy security, and create
    literally tens of thousands of jobs. And it is certainly not
    often that we can accomplish all of these important goals at
    absolutely no cost to the taxpayer. But this is exactly what
    approving the Keystone XL pipeline expansion project would do
    and why I support this legislation, H.R. 3548, the North
    American Energy Access Act.
        Keystone is a shovel-ready project whose construction would
    create badly needed jobs. Once completed, it would allow more
    oil from our ally Canada to come to the United States, taking
    the place of imports from far less friendly producers. The oil
    would go to refiners in the Midwest and the Gulf Coast,
    increasing the supply of American-made gas and preserving
    domestic refining jobs. The pipeline would also provide an
    outlet for the growing supplies of domestic oil produced in the
    Bakken formation in North Dakota and Montana, relieving a
    potential bottleneck there. And every penny of the $7 billion
    project will be paid for by the private sector.
        Given the many benefits of Keystone, it is no surprise that
    so many Americans consider this decision to be a no-brainer,
    especially since the environmental impacts of the project have
    been extensively studied for years and found to be minimal.
        Last July, the House passed a bill requiring the State
    Department to make the long-overdue decision on Keystone by
    November 1st. It was certainly bipartisan, 47 Democrats joining
    nearly all the Republicans in supporting the reasonable
    measure. The bill probably would have garnered even more votes
    if not for the administration's repeated assurances that it is
    going to make a decision before the end of 2011, and that a
    legislated deadline was not necessary.
        But sadly, as the end of the year approached, the
    administration reversed position and postponed its decision
    until 2013 at the earliest. In response, Congress gave the
    President a second chance to do the right thing by providing
    him yet another 60 days to approve Keystone as part of the
    payroll tax bill, but last week he decided to reject the
    proposal after only 26 days. You see, 60 days wasn't enough.
        Make no mistake, time is of the essence. Not only are
    unemployed Americans anxiously looking for jobs, not only is
    Iran threatening the Strait of Hormuz, not only is the price at
    the pump headed towards perhaps 5 bucks in the next couple of
    months, but the Canadian government is understandably growing
    impatient with the endless red tape and delays coming from
    Washington. Canada is rapidly increasing its oil production,
    and if the United States foolishly refuses to be a customer for
    these new supplies, Canada will build a pipeline not to the
    south but to the Pacific coast and the oil will be exported to
    China, where they are waving their hands because they want it
    there.
        That is why we are again offering an opportunity to approve
    Keystone. I believe that this approach, this legislation giving
    the decision-making authority to the FERC, the Federal Energy
    Regulatory Commission, is a good one. I look forward to moving
    it through the committee, and I would yield to anyone on our
    side that would like time, and if not, will yield back the
    remainder of my time.
        [The prepared statement of Mr. Upton follows:]
        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. The gentleman yields back the balance of his
    time.
        At this time I recognize the gentleman from California for
    5 minutes, Mr. Waxman.

    OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. Waxman. Thank you, Mr. Chairman.
        Today, we once again consider legislation to approve the
    Keystone XL tar sands pipeline.
        This legislation exempts one pet project from every Federal
    and State permitting requirement. Yes, one project would be
    exempted from every review. Now is that a way to approve an
    important and controversial pipeline? I hardly think that is
    the case.
        The fact is that the legislation we are considering today
    is an earmark that benefits just one project. You remember the
    Republicans saying they were against earmarks? Well, not when
    it helps their friends. And the arguments for the project just
    don't stand up to scrutiny. This tar sands pipeline won't boost
    our energy independence or lower gas prices or create the
    inflated jobs being promised.
        Why have the Republicans introduced bill after bill to
    short-circuit the permitting process on Keystone XL? They say
    it will make the country more energy independent. That is a
    myth. Oil prices are set by the global markets. This pipeline
    will have no impact on our vulnerability to price spikes or
    Iranian brinksmanship.
        In fact, Keystone won't even reduce our imports. It will
    simply allow Canadian oil companies to use the United States as
    a conduit for shipping their tar sands overseas to China.
        Now, I know they say if they don't get this pipeline, they
    are going to go to the West Coast. Well, that is a problem,
    because there are First Nations in Canada that don't want this
    pipeline going in that direction, and it is not so clear they
    can get the approval to do that.
        The Republicans say it will cut gasoline prices. But the
    opposite will happen. Canadian oil that is now being refined in
    the Midwest and suppressing prices in that market will be
    diverted to the Gulf Coast for export, costing consumers in the
    Midwest billions of dollars.
        The Republicans say they support the pipeline because it
    will create tens of thousands of jobs, but that is not right
    either. According to TransCanada, the company seeking to build
    the Keystone XL pipeline, the project will have ``a peak
    workforce of approximately 3,500 to 4,200 construction
    personnel.'' Some labor groups have recently described the
    GOP's antics on Keystone as the ``politics-as-usual strategy of
    a do-nothing Republican Congress.''
        If the Republicans were seriously and actually concerned
    about jobs, they would work with the President passing his jobs
    bill. They have no solution to the jobs crisis. The jobs
    crisis, they say, must be responded to by tearing away
    regulations to protect public health and safety. We will have
    more jobs if we let billionaires keep more money and it will
    trickle down to more jobs. And then they say this one project
    will provide the jobs we need. It is amazing to me. The fact
    is, the legislation we are considering today is one that is
    hard to understand.
        This committee has an obligation to understand who benefits
    from this legislation. Last year, news organizations reported
    that one company, Koch Industries, would be one of the ``big
    winners'' if this pipeline were constructed.
        We asked Koch whether this was true and were told that they
    have no interest whatsoever in the pipeline. But then we
    learned that they have told the Canadian government that they
    have a ``direct and substantial interest.'' Something does not
    add up.
        To understand this situation better, Mr. Rush and I
    requested that we invite the Koch brothers or the Koch
    Industries to come here and testify. The chairman hasn't even
    responded to our letter. We therefore, Mr. Chairman, are
    invoking the minority's rights under rule XI of the House rules
    to have a minority day of hearings. It is important that we
    hear from Koch and other stakeholders.
        I think this pipeline is a bad idea. It ignores the
    concerns of the----
        Mr. Whitfield. The gentleman's time is expired.
        I would also tell the gentleman, we will certainly accept
    the letter and we will follow the rules, but we are not going
    to be subpoenaing the Koch brothers, and we are not asking the
    Koch brothers to appear because the Koch brothers have nothing
    to do with this project.
        Mr. Waxman. Well, how does----
        Mr. Whitfield. At this time I would like to----
        Mr. Waxman. Point of order, Mr. Chairman. You made a
    statement where you were not recognized for the time. You cut
    me off in the middle of a sentence. I would like to know the
    substantiation for your----
        Mr. Whitfield. Your time was up, Mr. Waxman.
        Now, we are going to recess this hearing for 10 minutes,
    and then we are going to come back.
        Mr. Waxman. Are you calling the Koch brothers during the
    recess?
        Mr. Whitfield. Let me tell you something. If you want to
    talk about that, let us talk about the millions of dollars that
    the Obama administration gave companies like Solyndra, to
    people like George Kaiser, who is out there bundling money for
    the President.
        Mr. Waxman. Point of order, Mr. Chairman.
        Mr. Whitfield. Would you like for us to----
        Mr. Waxman. Point of order, Mr. Chairman.
        Mr. Whitfield. Would you like for us to subpoena him, too?
        Mr. Waxman. Why are you interrupting members and then you
    take unlimited time for yourself?
        Mr. Whitfield. I am responding to your questions, your
    allegations. I am the chairman and I am telling you right now,
    we are going to recess for 10 minutes.
        [Recess.]
        Mr. Whitfield. I call the hearing back to order, and at
    this time we will hear the testimony of our two witnesses, and
    I would like to welcome both of you to this hearing today.
        First of all, we have the Honorable Kerri-Ann Jones, who is
    the Assistant Secretary of State, Bureau of Oceans and
    International Environmental and Scientific Affairs, and we also
    have Mr. Jeffery Wright, who is the Director, Office of Energy
    Projects at the Federal Energy Regulatory Commission.
        So once again, I welcome you all to the hearing. Each one
    of you will be recognized for 5 minutes, and then we will have
    questions for you at that time.
        So Ms. Jones, I will recognize you for your 5 minutes.

      STATEMENTS OF HON. KERRI-ANN JONES, ASSISTANT SECRETARY OF
      STATE, BUREAU OF OCEANS AND INTERNATIONAL ENVIRONMENTAL AND
      SCIENTIFIC AFFAIRS; AND JEFF C. WRIGHT, DIRECTOR, OFFICE OF
         ENERGY PROJECTS, FEDERAL ENERGY REGULATORY COMMISSION

                      STATEMENT OF KERRI-ANN JONES

        Ms. Jones. Thank you, Mr. Chairman, and good morning,
    Chairman Whitfield, Ranking Member Rush and other members of
    the Subcommittee on Energy and Power. I appreciate the
    opportunity to appear before you today.
        The U.S. Department of State received the application for
    Keystone XL pipeline project in September 2008. We undertook a
    thorough, rigorous and transparent process to determine whether
    issuance of a Presidential Permit for this pipeline was in the
    national interest.
        In December, Congress passed the Temporary Payroll Tax Cut
    Continuation Act of 2011, which required a determination by the
    President within 60 days of whether the Keystone XL proposal
    project would serve the national interest. On January 18, 2012,
    the Department of State recommended to the President that the
    application for a Presidential Permit be denied due to
    insufficient time to conduct the necessary analysis. The
    President accepted our recommendation and determined that the
    Keystone XL pipeline project, as presented and analyzed at that
    time, would not serve the national interest.
        I would like to provide some further details about this
    process and also comment briefly on the administration's view
    of H.R. 3548.
        On April 30, 2004, President Bush issued Executive Order
    13337, which designated and empowered the Department of State
    to receive the applications for Presidential Permits for all
    oil infrastructure projects that cross a United States border.
    The Executive Order indicates that the permit should be granted
    based on whether it is in the national interest. The
    Department's national interest determination factors include
    numerous issues including energy security, foreign policy,
    economic effects, health, safety and environmental
    considerations including climate change as well as any other
    factor the Department believes is relevant to the national
    interest. To make an informed decision, the Department is
    directed in the Executive Order to request additional
    information as needed from the applicant.
        In order to analyze the potential environmental impacts of
    the project as required by the Executive Order, the Department
    determined that it would prepare an Environmental Impact
    Statement, or EIS, consistent with NEPA, the National
    Environmental Policy Act of 1969. We also carried out processes
    mandated by the National Historic Preservation Act of 1966 and
    the Endangered Species Act. Following NEPA requirements, we
    engaged in a robust public outreach effort including meetings
    along the proposed pipeline route.
        On August 26, 2011, we issued the final EIS. Following its
    issuance, we began an interagency review period for the
    national interest determination and we conducted an additional
    public comment period that closed on October 9, 2011. We held
    meetings along the pipeline route including in the Sand Hills.
    These meetings were passionate with strong opinions and
    rationale on both sides. In Nebraska, we heard concerns about
    the fragile and unique Sand Hills of Nebraska. We heard about
    their important to the Nation and to the people of Nebraska.
    Indeed, the people of Nebraska felt so strongly about this
    issue that their legislators met in special session to draft a
    law to ensure the Sand Hills would be protected. That is why we
    paused the process in November 2011, and based on experience
    with pipelines of similar length, we estimated that it would
    take until early 2013 to complete our assessment.
        In December 2011, as we were cooperating with Nebraska's
    Department of Environmental Quality, the Temporary Payroll Tax
    Cut Continuation Act was enacted into law. We knew that 60 days
    was not enough time to complete the work and the analysis
    needed relevant to the national interest determination. We
    decided based not on the merits but on the inadequate time
    period and incomplete review to recommend that the President
    deny the permit.
        This now brings me to H.R. 3548. The proposed legislation
    imposes narrow time constraints and creates automatic mandates
    that prevent an informed decision. We also feel the legislation
    raises serious questions about existing legal authorities and
    appears to override foreign policy and national security
    considerations implicated by a cross-border permit, which are
    properly assessed by the State Department.
        Mr. Chairman, internationally we remain fully engaged with
    all our key partners and suppliers including Canada as we work
    on issues of energy security and diplomacy. As we do this, the
    State Department remains committed to carrying out its
    responsibilities under the Executive Order with diligence and
    fairness to the applicants but with ultimate concern for the
    best interest of the American people.
        Thank you again for this opportunity to testify, and I
    would be pleased to answer any questions.
        [The prepared statement of Ms. Jones follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Thank you, Ms. Jones.
        Mr. Wright, you are recognized for 5 minutes.

                      STATEMENT OF JEFF C. WRIGHT

        Mr. Wright. Thank you. Chairman Whitfield, Ranking Member
    Rush and members of the subcommittee, my name is Jeff Wright
    and I am the Director of the Office of Energy Projects at the
    Federal Energy Regulatory Commission, and I appreciate the
    opportunity to appear before you today. The Office of Energy
    Projects is responsible for, among other things, the
    certification of interstate natural gas pipelines pursuant to
    the National Gas Act.
        H.R. 3548, the North American Energy Access Act, addresses
    the Keystone XL pipeline project. I have no position on the
    proposed bill, but should Congress direct the Commission to act
    on an application for the project, the Office of Energy
    Projects as the Commission's infrastructure review branch would
    likely take a primary role in advising the Commission on the
    matter. Therefore, I will offer comments on the proposed bill
    with the goal of seeking to ensure that if Congress gives this
    responsibility to the Commission, the legislation should
    provide clear and effective procedures for conducting this
    review.
        Before commenting on specific sections, I do note that the
    authorization provided by the bill would differ substantially
    from the Natural Gas Act in that the proposed act does not make
    any explicit provision for procedures such as public notice,
    public comment, issuance of an order supporting a Commission
    decision, rehearing or judicial review in conjunction with the
    Commission's consideration of an application.
        I now turn to specific provisions of the act. Section 3(a)
    of the bill would require the Commission to approve the project
    within 30 days of receipt of an application, and if the
    Commission has not acted on the application within these 30
    days, the application is deemed approved. The 30-day deadline
    would not permit construction of an adequate record of allow
    for meaningful public comment in arriving at a decision. In
    fact, section 3 could be read as giving the Commission no
    discretion in the issuance of the permit.
        The section also states that the permit is to be
    implemented in accordance with the terms of the final
    Environmental Impact Statement. However, it is not clear
    whether the Commission or any other entity would have authority
    to ensure and enforce compliance with the measures required by
    that document.
        Section 3(b)(1) allows for the applicant or permit holder
    to propose a modification of the route or other terms of the
    final Environmental Impact Statement and for the Commission to
    authorize such a modification. The bill, however, does not
    articulate a standard or a process for such a decision. Section
    3(b)(2) of the bill states that the Commission will enter into
    a memorandum of understanding with the State of Nebraska for an
    effective and timely review under the National Environmental
    Policy Act of any route modification of the project in the
    State of Nebraska. Upon approval of the modification by the
    Governor of Nebraska, the Commission will have 30 days to
    finish its review and to approve the modification, and Section
    3(b)(3) provides that if the Commission has not acted within 30
    days, a modification shall be deemed approved.
        The proposed process here is unclear. The bill appears to
    contemplate that such entity, either the Commission or the
    State, will issue a NEPA document regarding a Nebraska
    modification after which the Governor of Nebraska will have the
    opportunity to approve the proposal. The Commission then would
    have 30 days to complete consideration of and approve such
    modification. This section could be read to mean that the
    Commission has no discretion but to approve a Nebraska
    modification, and further, this section does not appear to
    provide a process for public notice and comment, opportunity
    for hearing or rehearing.
        Section 4 of the proposed legislation states that a permit
    issued under this act shall be the sole legal authority
    required to construct and operate the pipeline except for the
    safety oversight of the Department of Transportation's Pipeline
    and Hazardous Materials Safety Administration and the
    Commission's existing rate and tariff authority. The language
    makes it unclear whether such permits from other Federal
    agencies would still be required. Further, while the Department
    of State is responsible for issuing the Presidential Permit
    that authorizes the border crossing facilities, individual
    States or subdivisions thereof, depending on State law, have
    authority to site oil pipelines within their jurisdiction. This
    proposed legislation could be construed as providing that
    Federal jurisdiction supplants local authority.
        This concludes my testimony, and I will be happy to answer
    any questions you may have.
        [The prepared statement of Mr. Wright follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Thank you very much, Mr. Wright.
        I will recognize myself for 5 minutes of questions. Ms.
    Jones, on October 15, 2010, Secretary of State Clinton said she
    was inclined to approve the Keystone pipeline permit. On
    October 31, 2011, White House Press Secretary Jay Carney stated
    the fact is that this is a decision that will be made by the
    State Department, and the very next day, President Obama said
    the decision would rest with him. But in the President's
    announcement last week to reject the pipeline's permit, he said
    he had accepted the State Department's recommendation to do so.
        So my question would be, were you involved in the decision
    made at the State Department and did you recommend to the
    President that he reject this permit?
        Ms. Jones. Thank you, Mr. Chairman. The recommendation that
    went to the President was a State Department recommendation,
    and it came from my bureau and other bureaus. It came through
    the deputy and through the Secretary to the President.
        Mr. Whitfield. So your bureau recommended that the----
        Ms. Jones. Yes, sir.
        Mr. Whitfield [continuing]. Permit be denied?
        Ms. Jones. Yes, sir.
        Mr. Whitfield. And what other bureaus at the State
    Department were involved in that decision making?
        Ms. Jones. The other bureau that is involved is the Bureau
    of Economic Affairs. The State Department looks at this
    pipeline across all of the issues that are involved so there
    are multiple bureaus involved in all of the meetings and
    discussions that we have. We also have some energy expertise,
    and we also have of course the regional bureau which handles
    matters with Canada.
        Mr. Whitfield. Now, I think Mr. Walden over there has a
    copy of the impact statement, which is quite voluminous, but
    isn't it true that the State Department's draft Environmental
    Impact Statement concluded that the Keystone pipeline would
    have limited adverse environmental impact?
        Ms. Jones. Mr. Chairman, what the statement said was, it
    suggested that there would be little adverse impact to most
    resources. It then went on to say that was the case if the
    applicant followed all of the State and local rules and all of
    the mitigation procedures that were outlined. It then went on
    to say there were three or four areas that were of concern
    where there could be impact: called out spills a possibility,
    called out cultural resources related to Native Americans,
    called out wetlands and some other areas where trees and shrubs
    would not be put back after the pipeline was put in. The
    Environmental Impact Statement is very long. The summary is
    just a page, but there are many other pieces throughout the
    document.
        Mr. Whitfield. Isn't it true that the State Department's
    own Environmental Impact Statement included review of an
    alternative not to build the pipeline at all and didn't the
    Environmental Impact Statement conclude that building the
    pipeline along the preferred route was better environmentally
    than no pipeline at all?
        Ms. Jones. In the Environmental Impact Statement, we looked
    at many alternative routes and we analyzed those, and we looked
    at routes that avoided the Sand Hills. We looked at routes that
    took short little jogs and made different changes. The
    Environmental Impact Statement did not identify any of those
    alternative routes as more preferable to the proposed route at
    that time based on the different environmental considerations
    that the different routes had as well as economic and some
    technical issues.
        But Mr. Chairman, the denial of this permit is related not
    to all of these pieces but to the timeline that we had in that
    we did not have a complete route to look at at this point.
        Mr. Whitfield. Well, Ms. Jones, reading directly from the
    Federal Environmental Impact Statement, it says, ``As a result
    of these considerations, the Department of State does not
    regard the no action alternative, that is, not to build the
    pipeline, we do not regard that alternative to be preferable to
    the proposed project.'' So this language in here is very clear
    that as opposed to not doing anything, the State Department
    concluded it was preferable to build the pipeline. So we found
    ourselves confused about how all of a sudden the State
    Department and the President reverse themselves on this. After
    all, this was a study that went on for 40 months or so.
        My time is expired. At this time I would like to recognize
    the gentleman from Illinois, Mr. Rush, for 5 minutes.
        Mr. Rush. Thank you, Mr. Chairman.
        Ms. Jones, most people would agree that haste makes waste.
    So my question is, why did the State Department recommend that
    the President deny the Keystone XL pipeline application?
        Ms. Jones. We recommended the denial because we felt we did
    not have the time to get the information that was needed on the
    alternative routes in Nebraska, and with not getting that
    information, we would also be unable to look at the other
    factors, economic, socioeconomic factors, environmental factors
    as well as foreign policy and energy security. We did not have
    the time to do that, and that is why we recommended denial. It
    was not based on the merits of the project.
        Mr. Rush. Well, maybe you can further explain this. Why was
    the ``full assessment'' not completed by the arbitrary deadline
    set forth by the Republican bill and what additional issues did
    the State Department not have time to consider?
        Ms. Jones. In November when we identified that there was
    the need for additional information and in-depth analysis on
    alternative routes that would avoid the ecologically unique
    area, the Sand Hills in Nebraska, we recognized that there are
    many pieces to that information, and the first piece we don't
    have yet is to just identify what some of those alternative
    routes may be. So we don't even have a complete route for this
    pipeline, which goes through the whole central part of the
    country. That is one thing we don't have.
        We also don't have the level of detail. If we were to have
    a route, we would then have to get into the level of detail
    regarding all of the different kinds of information--the
    topography, the number of bodies of water crossed, if it
    crossed any aquifers. Then we would also have to look at if
    there were any endangered species issues, and of course, we
    would have to interact with the communities along that new
    route to hear their concerns and to understand what any issues
    might be there. So that overall process would take several
    months and the estimate that we put out there was supported by
    both the applicant and the State of Nebraska when we talked to
    them about this. So this is the process that we had defined and
    worked with partners, both the applicant and the State of
    Nebraska, to understand what would be needed to get the
    information that we thought we needed to make a decision that
    would be very well informed.
        Mr. Rush. Do you think then that it would have been
    irresponsible, reckless and potentially harmful to the American
    public had you tried to grant permits within these artificial
    deadlines as established by the Republicans in this situation?
        Ms. Jones. Well, I think it would have been irresponsible
    because we didn't have defined a significant portion of a major
    pipeline that would be a major piece of infrastructure that
    would affect our country for many years. So I think having that
    information was an important piece, and that is what we based
    our first decision on November 10th and this most recent
    decision is based on the fact that we did not have the time to
    get the information we think we needed.
        Mr. Rush. In all of your experience in your particular role
    and your capacity at the State Department, have you ever had
    any similar instances whereby Congress enacted some artificial
    deadline that did not allow you the time to thoroughly and
    completely perform your responsibilities to the American
    public?
        Ms. Jones. Not that I can recall, Congressman.
        Mr. Rush. Thank you, Mr. Chairman. I yield back.
        Mr. Whitfield. Thank you, Mr. Rush.
        At this time I would like to recognize the gentleman from
    Texas, Mr. Barton, for 5 minutes.
        Mr. Barton. Thank you, Mr. Chairman.
        I need to make a disclosure before I ask my questions. My
    Congressional district in Texas, if it were a State, at one
    time would have been the fifth largest energy-producing State
    in the country. I have producing oil wells, producing natural
    gas wells. I have producing coal mines. I have coal-fired power
    plants. I have gas-fired power plants. I have oil pipelines. I
    have natural gas pipelines. I have water pipelines existing
    that are in use, and some that are not in use but are still
    underground. I have big pipelines and little pipelines. So I
    think I know a little bit about this subject.
        I have listened with interest to the gentlelady from the
    State Department's explanation, and I will say that she puts
    the best face possible on a terrible decision that her
    department has made. One of the things that you just said,
    Madam Secretary, was that there were socioeconomic factors that
    had to be considered. Where is that in the law, especially the
    State Department, socioeconomic factors?
        Ms. Jones. Congressman, the----
        Mr. Barton. No, is it in the law? I don't need a long,
    dodge answer. Is there a statute under law that says the State
    Department has to consider socioeconomic factors, yes or no?
        Ms. Jones. It is in the Executive Order.
        Mr. Barton. Oh, it is in the Executive Order. That is not a
    law.
        Ms. Jones. It is in NEPA as well, sir.
        Mr. Barton. I see. Well, I would like you to provide it, if
    that is the case.
        Is it a socioeconomic factor that a project might bring
    thousands of high-paying jobs to a region? Is that a
    socioeconomic factor?
        Ms. Jones. Yes, it is.
        Mr. Barton. Is it a socioeconomic factor that a project
    might bring much-needed energy to the mid-continent and the
    lower Southwest and southeastern States? Is that a
    socioeconomic factor?
        Ms. Jones. Yes, it is.
        Mr. Barton. OK. And were those considered?
        Ms. Jones. Absolutely.
        Mr. Barton. Absolutely? So----
        Ms. Jones. The decision at this time was not based on those
    factors.
        Mr. Barton. So those socioeconomic factors might be the
    reason that until the radical environmentalists begin to
    protest and petition against it that when the Secretary of
    State was asked out in California the status of the
    application, she indicated that she was inclined or the State
    Department was inclined to approve it? Is that a fair
    statement?
        Ms. Jones. We considered--we were considering all of those
    factors that you mentioned, Congressman, but we were unable to
    complete that analysis because of the deadline that was put
    forward.
        Mr. Barton. What is the statutory deadline in the law for
    consideration? Isn't it 180 days after receipt of the
    application?
        Ms. Jones. I am not sure, sir.
        Mr. Barton. OK. I know it is not 4 years, OK? I am not
    going to swear it is 180 days but I think it is 180 days.
        Ms. Jones. My understanding is that in previous cases where
    we have reviewed pipelines, it has taken 2 years or so. So I
    don't know what the statutory timeline is.
        Mr. Barton. Well, there are three phases of a pipeline. You
    have the construction phase, you have the operation phase, and
    unfortunately, on occasion, you can have a catastrophic
    accident once it is in operation. Were there concerns about the
    construction of the pipeline? What I am trying to get at is,
    the primary concern of the State Department. Is it the
    construction phase concern, is it an operation phase concern or
    is it a concern about some sort of a catastrophic event that
    would spill oil out into the environment?
        Ms. Jones. Our concern at this point, sir, was that we did
    not have time to do the analysis. All of the dimensions of the
    issue that you are talking about, we had been studying.
    Certainly the spills, certainly the issues around construction
    and operation, but the reason the decision was taken was
    because we did not have the time----
        Mr. Barton. But we fought and won World War II in less time
    than it has taken so far to evaluate this project. I mean, with
    all due respect, it is an insult to the American people to say
    that you need more time. There are 10 other agencies that
    reviewed this project, and correct me if I am wrong, but my
    understanding is that the Corps of Engineers approved it, the
    Department of Agriculture approved it, the Energy Department
    approved it, the Department of Interior approved it, the
    Department of Transportation approved it, the Environmental
    Protection Agency, believe it or not, approved it, the Defense
    Department approved it, the Justice Department approved it, the
    Homeland Security Department approved it, and the Department of
    Commerce approved it. Only the State Department, which I
    believe by law is required to look at the international
    implications, since it is TransCanada, only the State
    Department did not approve it.
        Mr. Whitfield. The gentleman's time is expired.
        Mr. Barton. With that, I yield back, Mr. Chairman.
        Mr. Whitfield. At this time I would like to recognize the
    gentleman from California, Mr. Waxman, for 5 minutes.
        Mr. Waxman. Thank you very much, Mr. Chairman.
        When we first held a hearing on this subject a year ago,
    there were press reports that Koch Industries would be one of
    the ``big winners'' if this pipeline was constructed, and we
    asked Koch Industries whether this was true.
        Mr. Sullivan. Will the gentleman yield?
        Mr. Waxman. No.
        And we were told----
        Mr. Sullivan. Will the gentleman yield?
        Mr. Waxman [continuing]. That they had no interest
    whatsoever in the pipeline, but then we learned that they have
    told the Canadian government they have a direct and substantial
    interest. Something doesn't add up, and I have before me a
    document. This is the application for intervenor status in
    Canada, and this is an application from a company called Flint
    Hills Resources Canada of Flint Hills, which is a subsidiary of
    Koch Industries, and they said, ``What is your specific
    interest in this proceeding?'' They said, ``Flint Hills
    Resources of Canada is among Canada's largest crude oil
    purchasers, shippers and exporters, coordinating supply for its
    refinery in Pine Bend, Minnesota. Consequently, Flint Hills has
    a direct and substantial interest in the application.''
        Mr. Chairman, I would like this document to be made part of
    the record.
        Mr. Whitfield. Without objection.
        [The information follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Waxman. This document raises the issue that the
    statement that Koch Industries was not involved is inaccurate
    because they are involved and they claim to intervene in Canada
    because they are involved, and that is why I think we need to
    get more information.
        Now, the Keystone XL tar sands pipeline poses substantial
    risks for Americans. This would pump tar sands almost 2,000
    miles across the middle of America from Canada to the Gulf of
    Mexico. Even if the pipeline is rerouted around Nebraska, the
    Sand Hills, it will almost certainly still go through the
    Ogallala Aquifer, endangering water supplies for 2 million
    Americans, their farms and their businesses. The State
    Department's analysis indicates that shifting to tar sands oil
    from crude oil would increase carbon pollution and that
    increase could be substantial.
        Now, these are risks. They are real and they are serious.
    The benefits for oil companies are also real. They will finally
    be able to export tar sands to Asia. Port Arthur is even a tax-
    free trade zone. But the benefits for Americans are a lot less
    clear.
        Dr. Jones, how many jobs would the pipeline generate,
    according to the State Department's analysis?
        Ms. Jones. Economic analysis and economic consideration is
    part of the review we have been doing that was cut short with
    the deadline we faced, but in the final Environmental Impact
    Statement, we approximated based on the number of work crews
    that would be used to build the pipeline at 5,000 to 6,000
    construction jobs would be needed per year.
        Mr. Waxman. Per year. For how many years?
        Ms. Jones. For 2 years.
        Mr. Waxman. Well, the oil industry has been saying this
    would create 20,000 or even 100,000 jobs. They haven't provided
    any information to us supporting those claims or challenging
    your estimate. Have they submitted information to you
    challenging your estimate?
        Ms. Jones. Congressman, we have seen many different
    estimates on the number of jobs that would be created with this
    pipeline, and the job creation issue is a very complicated
    issue because----
        Mr. Waxman. Have the oil companies challenged your data and
    your claim?
        Ms. Jones. Well, we have had a lot of challenges coming
    from a lot of different directions but that is the number that
    we have gotten through the----
        Mr. Waxman. Let me get back to my time because as soon as
    my time is up, that gavel is going to be smashed.
        The Washington Post claimed that this project will create
    tens of thousands of jobs. This was called a Two Pinocchio
    challenge when this statement was made. The economy is
    recovering. We need millions of new jobs to reduce unemployment
    and get the economy moving again. The President proposed an
    American jobs bill. Instead of doing that legislation, we are
    considering legislation to ram through one pipeline. I think
    that is a pitiful excuse for a jobs policy.
        I want to ask you about the review, Dr. Jones. Assuming
    that TransCanada reapplies for a permit and the State
    Department is still the relevant agency, you will need to
    assess the application in light of a new route. Will you commit
    to examine other questions about addressing U.S. carbon
    emissions and climate change when you look at this question?
        Ms. Jones. Congressman, should a new application be
    submitted, it would be reviewed without prejudice and we would
    look at all of the different aspects of the project, and as you
    mentioned, certainly greenhouse gases as well as the economic
    considerations and other broader environmental issues, foreign
    policy, everything would be considered, and we would just do
    that in all fairness and transparency as we have tried to do
    with this process, and it would be a new application.
        Mr. Waxman. Thank you.
        Thank you, Mr. Chairman, for your generosity on the time.
        Mr. Whitfield. At this time I would like to recognize the
    gentleman from Oklahoma, Mr. Sullivan, for 5 minutes.
        Mr. Sullivan. Thank you, Mr. Chairman, and I would like to
    yield 1 minute of my time to my friend from Kansas, Mr. Pompeo.
        Mr. Pompeo. Thank you.
        You know, I have sat here for a year and watched folks on
    the left obsess about one of my constituents, Koch Industries.
    But today we reached a new place. We reached a place where they
    have now asked a private company to come talk about whether
    they happen to benefit from a particular permit application.
    This makes no sense to me. We are supposed to do good policy.
    We are not supposed to decide whether a particular company
    benefits or not. I can't understand why whether Koch Industries
    benefits or not would be relevant to our decision. We should
    decide if this is in the American national interest.
        I would not for a moment suggest that we should bring
    Warren Buffett in to testify about whether his company and his
    rail interest would benefit from this permit application. I
    have read that he would be greatly benefited if we do not get
    that permit approved. I cannot believe that anyone on this
    committee would have their decision on whether or not to vote
    for this piece of legislation turn on whether Koch Industries
    or any other private company benefited or was harmed by this.
    This is not what we are supposed to be doing.
        The Constitution tells us we are supposed to do good public
    policy and we should not be making decisions based on whether
    one company or another benefits.
        I yield back.
        Mr. Whitfield. Mr. Pompeo, Mr. Sullivan didn't want you to
    go over 1 minute.
        Mr. Sullivan. Well, thank you, Mr. Pompeo. Thank you, Mr.
    Chairman.
        Mr. Pompeo. Thank you, Mr. Sullivan.
        Mr. Sullivan. Thank you, Ms. Jones, for being here today.
    And it has taken, you know, 3 years, no decision, and my
    constituents are wondering about this, and I know the
    government is kind of slow, but when do you think you could
    make a decision? Do you think 10 years from now? Do we need to
    reapply, or when do you think you can make a decision?
        Ms. Jones. Congressman, when we made the decision in
    November that we needed additional information, we put an
    estimate out there that it would take until probably the first
    quarter of 2013, but at this time we recommended the denial
    because we didn't have the time to do that.
        Mr. Sullivan. Well, these other departments seem to have
    approved. We heard from Mr. Barton about that. Why are they so
    nimble and you are so slow?
        Ms. Jones. Congressman, I didn't have a chance to respond
    to Congressman Barton's comments, but we did not finish the
    national interest determination of consultations with other
    agencies so I was not clear as to what kind of approval that
    was referring to because we didn't finish the process.
        Mr. Sullivan. OK. Ms. Jones, on January 11th, Secretary of
    State Hillary Clinton made remarks calling Iran's Strait of
    Hormuz threats ``provocative and dangerous.'' She also called
    the strait ``the lifeline that moves oil and gas around the
    world.'' According to the Department of Energy, about 15.5
    million barrels of oil a day, or a sixth of the global
    consumption, passes through the Strait of Hormuz between Iran
    and Oman at the mouth of the Persian Gulf. The fact is that
    crude oil futures have risen 7.4 percent since December 16th on
    increasing concern that Iran, OPEC's second largest producer,
    would close the passage in the face of pressure from the U.S.
    and European governments to abandon a suspected nuclear weapon
    program.
        In light of these national and energy security threats from
    Iran, why has it taken 3 years for the State Department to
    review the Keystone XL pipeline? And do you agree that it is in
    our national interest for the United States to be more energy-
    independent from regimes such as Iran that want to harm our way
    of life, impose energy security threats, and would you agree
    that fluctuating oil prices demonstrate how our economic and
    national security is threatened by reliance on unstable sources
    of oil? And Ms. Jones, as you noted earlier, Secretary of State
    Hillary Clinton is concerned about Iran's provocative actions
    in the Strait of Hormuz. Does the State Department share the
    same concerns with our good friend and neighbor, Canada? Yes or
    no on the Canada thing.
        Ms. Jones. Yes, we share a commitment with Canada to work
    towards energy security. It is one of the areas that is part of
    our very strong bilateral relationship. And as you point out,
    the whole issue of energy independence and energy security is a
    very important national priority and it was and is one of the
    considerations when pipelines are being reviewed.
        We did not have the opportunity to complete that review. We
    did not have a complete route for this pipeline. That is the
    reason why we took the action, made the recommendation that we
    did last week. It is only partially defined, this pipeline at
    this point.
        Mr. Sullivan. Well, Ms. Jones, Keystone XL pipeline is a
    game changer for energy security. The pipeline when fully
    completed could transport nearly 1.3 million barrels of oil per
    day from Alberta and North Dakota to refineries in the Midwest
    and Gulf Coast. I believe it is in our national interest to
    move forward with this pipeline, and the State Department's 3-
    year delay in considering this pipeline is a national travesty
    and I wish it would have happened a lot sooner.
        Thank you, and I yield back.
        Mr. Whitfield. At this time I recognize the gentleman from
    Texas, Mr. Gonzalez, for 5 minutes.
        Mr. Gonzalez. Thank you very much, Mr. Chairman, and good
    morning to the witnesses.
        First, in full disclosure, I support the building of the
    pipeline, and I also believe that given the proper timelines to
    look at all factors that eventually this application will be
    approved with recommendations. It is a matter of time, and I
    will agree that time is of the essence and that we need to move
    forthwith, however, not to rush it. We can still do this
    properly and address all the concerns that have been mentioned
    by the two witnesses.
        I believe that it will lead to energy security. It is my
    understanding if we do this, if we do this, the total
    production out of Canada and the United States will exceed the
    production of Saudi Arabia. That to me is energy security. I
    also believe it will result in more jobs in America just merely
    on the construction side. I also believe that it will lead to
    more jobs as a result of the United States being an exporter of
    fuel.
        Now, the only problem I have is the representation that is
    consistently made by members of this committee and on the floor
    that this is going to inure to the benefit of the American
    consumer in lower gasoline prices. That is not going to happen,
    and the sooner they acknowledge that it is a world market and
    the leading export for the United States last year, according
    to a story that appeared in the Associated Press on the last
    day of last year, was fuel. Fuel. And there are tremendous
    implications for the United States as a result of that. But as
    a result of world market forces and selling it to the highest
    bidder means that the American public is not going to be paying
    less for fuel, and we need to continue to emphasize alternative
    means and fuels and hybrids and more efficiency and
    conservation.
        The only real reservation I have is that we are placing all
    our eggs in one basket, and it may be the Keystone pipeline,
    and it is a distraction from pursuing more responsible energy
    policies that truly will lead to energy independence in this
    country but in a way that is safe and is cleaner, more
    efficient and cheaper to the American people. But this is part
    of it. I do believe that it is part of it.
        Now, Dr. Jones, there has not been made any final
    determination on the application, and is it clear from your
    testimony that the reason it has not been approved is that you
    have not been given sufficient time?
        Ms. Jones. Yes, sir, that is the reason.
        Mr. Gonzalez. Mr. Wright, let me ask you, now, you are not
    new to your job. I asked my staff to look into your background.
    I think you have been with FERC since the inception of the
    department that you worked with.
        Mr. Wright. In 1979, I began at FERC.
        Mr. Gonzalez. Since 1979. And your testimony today that
    what we are attempting to do or the proposition to basically
    circumvent or introduce a new process at this point in time
    would not be workable in its present form. Is that correct?
        Mr. Wright. Well, my testimony is based upon my experience
    with the siting of natural gas pipelines under the Natural Gas
    Act. Given the strictures of the Natural Gas Act and my
    experience with gas pipelines trying to extrapolate to oil
    pipelines, it doesn't appear that would be enough time, as I
    mentioned, for procedures to be followed with public notice,
    public comment, time allowed to do an appropriate study under
    the National Environmental Policy Act.
        Mr. Gonzalez. Well, this is not the first time that
    Congress is unhappy with basically one department or one
    agency, and we try to transfer it to another, and the other
    agency or department is telling us it is still not going to
    work with the wording and the process that we are proposing. So
    I am hoping that we are listening. I hope that we can all be on
    one page. Understand that if we do this properly and correctly,
    it will be beneficial to the people of the United States of
    America in every respect, but let us just give it the time that
    is necessary.
        And with that, I yield back. Thank you, Mr. Chairman.
        Mr. Whitfield. At this time I recognize the gentleman from
    Illinois, Mr. Shimkus, for 5 minutes.
        Mr. Shimkus. Thank you, Mr. Chairman. So many questions, so
    little time. Thanks for you all coming.
        Last night, the President used a great phrase that was
    really coined by Republicans a couple years ago, which is, we
    need an all-of-the-above energy strategy. In fact, I was
    sitting with my friend on the other side of the aisle and I
    looked at him and he goes, yes, he should have credited you,
    Shimkus, for that phrase. All of the above means all of the
    above--nuclear, solar, wind, natural gas, crude oil, energy
    security. So we applaud him for that statement based upon that
    definition.
        I want to continue to frame this debate. This is not a
    partisan debate by Members of the House of Representatives.
    When the first Keystone bill passed, 47 Democrats joined us in
    that piece of legislation. I think the vote was 279 to 147.
    This not also a debate against business versus labor because we
    had right at the same table you are at a strong group of
    friends from organized labor from the laborers to the operating
    engineers all supporting this, and why? They support it for job
    creation.
        Last night in the Speaker's box, we had the owner and
    manufacturer of pipe. He has already built 600 miles of pipe
    from Arkansas, which is not part of your job calculations of
    job creation if you are just considering people who are putting
    the pipe in the ground. You fail to mention the people who
    built the pipe and the coke and the coal that goes into
    steelmaking nor do you consider the people who created the
    electric generators for the pumping stations. So that is where
    it is easy to say 20,000 jobs because, you know, we built
    pipelines. And you know how many people it takes for a mile
    pipe. So just multiply that by 1,700, 1,660, I think is the
    mileage. So it doesn't take a rocket scientist to figure out
    the job creation statistics and that is why organized labor,
    who is usually not real friendly to the Republican side, joined
    us, joined 47 Members on the Democrat side and was very, very
    supportive of this piece of legislation. So just on the record.
        Another issue, in the Speaker's box, I had two refinery
    managers from close to my current district, and it will be in
    my new Congressional district, Ray Brooks from the Marathon oil
    refinery in Robinson, Illinois, hundreds of jobs, and they are
    already using oil sands right now from the Keystone pipeline.
    So we have done research on moving oil crude, oil sands crude,
    through pipelines. We are already doing it. Also in attendance
    was Mr. Jay Churchill, the manager of the ConocoPhillips
    Company in Wood River. The ConocoPhillips refinery for the past
    3 years had a $2 billion expansion to be able to refine and
    crack this new crude oil. Thousands of members of organized
    labor were on the ground during the worst economic times. That
    is why I am proud to continue to talk about the brown economy.
        You talk about energy security growing our country and what
    my friend Mr. Gonzalez said is absolutely correct. The brown
    economy creates more, better, high-paying jobs with great
    benefits and it doesn't get the credit that it deserves.
        For Ms. Jones, because I guess I should ask a question. Did
    you know that in the Wall Street Journal January 4th that the
    Athabasca Oil Sand Company sold 40 percent of their oil sands
    interest? Do you know to which country?
        Ms. Jones. No, sir, I do not.
        Mr. Shimkus. China. Do you know why?
        Ms. Jones. No.
        Mr. Shimkus. Because they will now have the controlling
    interest in that oil field so they can do what? Develop it.
        In political speak, what does profoundly disappointment
    mean in State Department international relations speak? What
    does profoundly disappointment mean?
        Ms. Jones. Sir, it usually means exactly what it says.
        Mr. Shimkus. They are ticked off, I hear. In State
    Department language, they are very angry.
        Ms. Jones. That one.
        Mr. Shimkus. I think the Chinese are profoundly pleased.
    The Canadians, our allies, are profoundly disappointed, and I
    yield back my time.
        Mr. Whitfield. At this time I would like to recognize the
    gentleman from Texas, Mr. Green, for 5 minutes.
        Mr. Green. Thank you, Mr. Chairman, and I am glad to know
    my colleague from Illinois is now going to represent two
    refineries. I have still got three more up on you, so----
        Mr. Shimkus. I am going to work for more. I am going to
    work for more.
        Mr. Green. And I am also glad you are all for the above
    because I know you traditionally come from a coal area. I
    welcome you to the natural gas and oil caucus.
        Mr. Chairman, I realize this hearing's primary focus is on
    H.R. 3548, the North American Energy Access Act. I am a strong
    supporter of the Keystone pipeline and have been from the
    beginning. We need this product, and I think by stopping
    Keystone pipeline from being built, we are preventing the
    future production of the Canadian oil sands and mitigated all
    air quality concerns associated with its production.
    Environment and safety concerns need to be dealt with, but
    without this product, we will continue to feed monies into
    countries that hate us for everything we stand for.
        Having said that, I don't think we should be rewriting a
    longstanding process for one pipeline, which is why I do not
    support this bill and particularly the approach to last week's
    decision, but I do have some questions about the process and I
    will use my time to address it.
        Ms. Jones, the Executive Branch exercises permitting
    authority over the construction and operation of pipelines,
    etc. for petroleum literally since the Executive Order in 1968.
    Is that correct? And the Executive Order from President Bush
    13337 amended that authority but did not substantially alter
    the exercise of that authority with the delegation to the
    Secretary of State. Is that correct?
        Ms. Jones. That is correct.
        Mr. Green. Ms. Jones, how many permits have been issued
    under this order since 1968 for pipelines crossing
    international boundaries?
        Ms. Jones. I know of three.
        Mr. Green. I am sorry?
        Ms. Jones. I know of three at this point. I am not sure if
    that is accurate.
        Mr. Green. OK. I guess because I have a district in Texas
    and most of our pipelines would come from Mexico instead of
    Canada, but it seems like there would be a number of them that
    crossed international borders between Mexico and the United
    States and, of course, Canada.
        What is the average time that these permits have taken? And
    it is my understanding that other pipelines of a similar nature
    have been granted permits between 18 and 24 months.
        Ms. Jones. That is right. It has been about 2 years or so.
        Mr. Green. OK. And I know the State Department issued a
    favorable Environmental Impact Statement in August on the
    pipeline, and then you held several public hearings as a part
    of the interagency review. And by the way, I appreciate the
    State Department a couple years ago granting my request for a
    hearing in eastern Harris County east of Houston--actually, it
    was in Congressman Poe's district but it was right across the
    street from mine--where we could have our constituents talk
    about it.
        You held those hearings, and when you announced in November
    that you were delaying decision, you pointed to concerns raised
    by Nebraskans about the pipeline going through Sand Hills. My
    question centers on the language included in the payroll tax
    extension that allowed for TransCanada to continue on the
    alternative route through Nebraska. I understand the
    President's frustration at having to decide in a 60-day time
    frame, but given the favorable EIS, the 57 special safety
    conditions agreed upon by the operator and the language
    allowing for the Nebraska issue to be dealt with, why were you
    not able to make the decision in 60 days? Because the average
    time was 18 to 24 months for previous pipelines, and this has
    been well over 3 years now. Why wasn't 60 days enough time?
        Ms. Jones. Congressman, we felt we did not have the
    information we needed, particularly related to alternative
    routes in Nebraska, and since we did not have that and we
    didn't have all of the other related information that would go
    along with that route, and that is a significant portion of the
    pipeline. So it was an arbitrary timeline and we knew it would
    take more time for us to do the analysis.
        Mr. Green. Well, granted, it was arbitrary but again,
    previous permits have taken 18 to 24 months. Now, this is a
    longer pipeline than others. I know the original Keystone
    pipeline that goes into Congressman Shimkus's district and
    Indiana is much shorter, but it just seems like 3-1/2 years is
    plenty of time, and to give someone 60 days and say OK, you
    have done all these environmental studies, you need to make a
    decision, even though the pipeline, I have to admit, my
    colleague from Nebraska, Mr. Terry, may have a different
    opinion, but there are pipelines crossing Sand Hills right
    here. Did the EIS find that out?
        Ms. Jones. No, sir. We didn't see any oil pipelines
    crossing the Sand Hills.
        Mr. Green. OK. There are six pipelines, and I am not sure
    whether they are natural gas or what product they have, but
    there are already six pipelines, and I understand this pipeline
    route would be in that easement that is already being used by
    other products, and so that is the frustration.
        And Mr. Chairman, I know I am almost--in fact, I am out of
    time. I don't know if we are going to have a second round or
    not, but I would be glad to submit follow-up questions.
        Mr. Whitfield. I doubt that we are because we are going to
    be voting on the floor, and then I think there is going to be a
    ceremony for Ms. Giffords.
        Mr. Green. I would like to, like we always do, if we could
    submit questions, because I didn't even get to FERC but to the
    State Department.
        Mr. Whitfield. At this time I recognize the gentleman from
    Oregon, Mr. Walden, for 5 minutes.
        Mr. Walden. Thank you very much, Mr. Chairman, and I
    welcome our witnesses today. This is interesting. I have been
    reading through the FEIS to a certain extent. I know you are
    all quite familiar with it.
        On November 12, 1973, the United States House of
    Representatives under Democrat control took a similar sort of
    action in approving the TransAlaska pipeline on a vote of 361
    to 14 and 60. They deemed that that pipeline met the standards.
    The Senate took it up and approved it on a 49-49 tie, and then
    Vice President Spiro Agnew cast the deciding vote, and that
    pipeline continued. Now, that was 800 miles of pipeline. It
    brought oil out of Prudhoe Bay and it was about that period
    that we had the Arab oil embargo. President Nixon at the time
    said, you know, we have got to do something about using
    America's energy reserves, and at least the pipeline came along
    and was deemed approved by Congress.
        So this is not an unheard-of act to grant sufficiency. Now,
    maybe in the State Department you have not been involved in one
    of these. I get that. As somebody that represents a district
    that has 55 percent Federal and has watched things over the
    years, I believe in the Clinton administration there were
    circumstances involving forestry where NEPA was deemed to have
    been sufficiently achieved in a cleanup down in Texas after a
    windstorm, and I think even in North Dakota, maybe South Dakota
    after a fire. It is not unheard of and the Congress has done it
    before.
        I want to get on the issue of jobs. In your final EIS on
    3.10.58, it says that there is $7 billion to construct the
    proposed project. We don't have any disagreement on that
    number, do we? Seven billion. And then you talk about the
    number of jobs, and in the FEIS, it talks about hiring of 5,000
    to 6,000 workers over the 3-year construction period. The
    related income benefits would be substantial--these are the
    words of the FEIS--and the proposed project would generate
    $349.4 million in total wages--that is in the FEIS--and if the
    maximum construction workforce were 6,000 people, a total of
    $419.28 million in wages would be generated.
        You also talked about the effect beyond that. These numbers
    are only related just to the actual construction of the
    pipeline, correct?
        Ms. Jones. Yes, sir.
        Mr. Walden. And I was trying to find table 2.3.2-1 to get
    into the more localized, because the 5,000 to 6,000 jobs aren't
    the only jobs related to approval of this construction of the
    pipeline, are they?
        Ms. Jones. That is right. I didn't get a chance to speak to
    the indirect jobs.
        Mr. Walden. I am going to give you that chance right now
    because I believe--I mean, I have a company--not I, I mean
    there is a company in Oregon that is building the pumps for the
    XL pipeline. Could you talk to us, tell me what the FEIS says
    relative to the total number of jobs both construction direct
    and all the indirect jobs associated were the President to
    approve this. What is your best estimate?
        Ms. Jones. We were in the process of analyzing the indirect
    jobs, and there are multiple models that people use for that.
        Mr. Walden. Sure.
        Ms. Jones. We did not complete that because of the
    timeline. We were candid, and we have----
        Mr. Walden. It is not in the FEIS, the final Environmental
    Impact Statement?
        Ms. Jones. We have the direct job numbers in there. We
    don't have the indirect. We were looking at that through the
    national interest determination and engaging with other
    agencies. We have some rough estimates that are similar to what
    the applicant is saying in terms of----
        Mr. Walden. And what would those be?
        Ms. Jones. I think it was approximately 35,000 per year.
        Mr. Walden. For how many years?
        Ms. Jones. Well, that is another point of discussion. One
    timeline was extraordinarily long, and there has been a lot of
    confusion about using person-years versus particular jobs. But
    we do not----
        Mr. Walden. Well, how then in the executive summary of the
    FEIS does it say ``operation post project would also result in
    long-term to permanent beneficial socioeconomic impacts
    including employment and income benefits resulting from long-
    term hires and local operating expenditures and increased
    property tax revenues. An estimated $140.5 million annual
    property tax revenues would be generated by the proposed
    project.'' Somebody has done some of that to get to that,
    right?
        Ms. Jones. Yes. Some of that is in the FEIS but that is
    only one piece of the analysis, and we did not finish the rest
    of it. We recognize that the economic impact is a very
    important consideration but we did not finish that because we
    do not have the complete route for this pipeline.
        Mr. Walden. My time is expired.
        Mr. Whitfield. At this time I would like to recognize the
    gentleman from Pennsylvania, Mr. Doyle, for 5 minutes.
        Mr. Doyle. Thank you, Mr. Chairman.
        Mr. Chairman, I just think the discussion over this
    Keystone pipeline, the back and forth has been unfortunate and
    it sort of mirrors the discussions we have on energy policy in
    general. People talk about the need for us to have an all-of-
    the-above strategy but you hear that said a lot but in reality
    and in practice, this seems to always be an either-or strategy
    on this committee when we have energy debates. If you are for
    coal or if you are for oil, then you can't be solar and wind,
    and vice versa. And the reality is, we do need to do all of
    this if we are going to have energy security in the country,
    and we need to pay particular attention to these nascent
    technologies in clean energy that are slowly but surely over
    time going to start to replace fossil fuels because, as we all
    know, fossil fuels aren't an infinite supply. They are a supply
    that is going to go down, and something has to take its place.
    Now, it is not going to take its place tomorrow. It is not
    going to take its place even 5 or 10 years from now. But if we
    don't start making investments in clean energy now, we are
    going to be in trouble down the road. So we need to do that
    also.
        But having said that, it is in our interest to develop
    domestic supplies in this country and also to continue the
    relationship that we have with Canada. This pipeline is a small
    piece of that puzzle, and let us not delude ourselves, as Mr.
    Gonzalez said, that this is a silver bullet for anything. This
    is not going to lower people's gas prices, and this pipeline
    will not result in us having to no longer buy oil from OPEC
    nations. That is just not accurate and we shouldn't make people
    think that that is the case.
        You know, there is going to be 800,000 tons of steel pipe
    in this project. I wish I could sit here and say that that
    steel is coming from the United States of America.
    Unfortunately, TransCanada has contracted with an Indian
    multinational company, Welspun Corp Limited, and a Russian
    company to manufacture the steel pipe for the Keystone XL
    pipeline. Now, as someone coming from Pittsburgh where we still
    make steel and headquarters of U.S. Steel, I would feel a lot
    better about this project too if just one little drop of U.S.
    steel was being made in this pipeline. Now, it is unfortunate
    that it isn't.
        Having said all of that, I think that probably what has
    doomed this application more than anything was the politics
    that has been played when we passed the Payroll Tax Act to put
    in this 60-day clause and put this gun to the President's head
    and said you have to make this decision in 60 days, and it is
    just pure election-year politicking that has been going on on
    this issue. I agree with Mr. Gonzalez that eventually after the
    environmental reviews are done with this and we make sure that
    we have a route that is environmentally safe and all these
    things are checked, that this project should move forward but
    not until we do that, and I don't think we are there yet.
        This legislation in front of us from a good friend of mine,
    Lee Terry, who I have tremendous affection and respect for,
    once again imposes this artificial deadline of 30 days and
    takes this out of the hands of the State Department to an
    agency that does gas pipelines but not oil pipelines. I think
    it is a misguided effort.
        So with the time I have left, I do want to ask a couple
    questions. Secretary Jones, I know we had planned earlier to
    have the Nebraska DEQ with us today but for whatever reason Mr.
    Linder is not appearing today, but I note in his testimony he
    lays out a timeline for his State intended to follow to
    establish this new route through Nebraska and complete any
    necessary environmental reviews and allow for public comment.
    Mr. Linder said in his statement that ``If this were done on an
    aggressive schedule, a new route could be approved by October
    of 2012 at the earliest.'' Ms. Jones, does the State Department
    believe that the 60-day timeline laid out in the payroll tax
    bill has allowed for a complete recommendation from the State
    of Nebraska on the new route for the pipeline?
        Ms. Jones. No, sir, we feel that we do need the time that
    Mr. Linder had put out in his estimate. We had talked to both
    the Department of Environmental Quality as well as to the
    applicant and the estimates of time that came in from all of
    them were within the same range.
        Mr. Doyle. Thank you. Has the State Department ever
    recommended a pipeline be in the national interest without
    having the entire proposed route before them? Have you ever
    done that before?
        Ms. Jones. No, sir.
        Mr. Doyle. Was there any indication that the State of
    Nebraska would be able to complete a modified route proposal by
    February 21, 2011, which was the deadline imposed in the
    Payroll Tax Act?
        Ms. Jones. No, sir, and that is why we felt we could not go
    forward.
        Mr. Doyle. Thank you. Did this lack of a complete route
    proposal--I see my time is expired. Thank you, Mr. Chairman.
        Mr. Whitfield. Now, Mr. Doyle, I am trying to get through
    everybody before we have to go vote because we are not going to
    be able to come back, so thank you.
        Mr. Terry, you are recognized for 5 minutes.
        Mr. Terry. Thank you, Mr. Chairman, and I have great
    affection and respect for my friend from Pittsburgh. Just to
    add some clarification, I think it is about 60 to 65 percent of
    the steel in this pipeline is U.S. steel. In fact, Mr. Shimkus
    mentioned that. The reason why Mr. Linder isn't here is because
    our State Department, Dr. Jones, objected to him being on the
    panel because it was beneath them to have a State official. So
    that is why he is not here and that his testimony----
        Mr. Doyle. Would my friend yield for just one second?
        Mr. Terry. Well, I have got a lot of questions. There is an
    email chain verifying that. I may have put a little editorial
    to it.
        Let me just state that I am profoundly disappointed that
    the State Department objected to Mr. Linder being on the panel,
    and therefore he is not.
        Now, for the record, I would like to introduce a media note
    from the State Department April 15th saying ``In conclusion,
    the U.S. State Department expects to make a decision whether to
    grant or deny the permit before the end of 2011.'' Another one
    making the same statement of March 15, 2011, an Executive
    Office of the Management of Budget from the White House saying
    the same thing, that they are working with the State Department
    and all entities are working diligently and will have all of
    the information they need and will be able to make their
    decision by December 31, 2011. I would like to submit those for
    the record.
        [The information follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Then the point here is that we are using the State of
    Nebraska as the excuse to delay the decision until after the
    election. I don't think it is any coincidence that the State
    Department and the entities feel like they would be in a
    position to make a decision within about 60 days after the
    election. I think the point--or they said in the first quarter
    of 2013. It certainly flies in the face of all of their
    previous statements. And I read a quote from Environment News
    Service. I don't have the date handy on it, but it is after the
    Nebraska legislature met. ``Kerri-Ann Jones, Assistant
    Secretary of State, said, 'I am confident that the Department
    and Nebraska authorities would be able to efficiently work
    together in preparing any documents necessary to examine the
    alternative routes in the State of Nebraska that satisfy the
    Federal laws and any State law of Nebraska.''' So they were all
    set and ready to go with the State of Nebraska. Now, if Mr.
    Linder would have been allowed to participate in this hearing
    today but for the objections of the State Department, he would
    have said ``On December 1, 2011, we contacted the State
    Department to begin to explore the process of entering into an
    MOU between two agencies which would outline responsibilities
    and define a schedule. We received the first draft of the
    agreement from the State Department within the next 2 weeks and
    exchanged comments to which what we considered to be an
    executable document which we submitted to the State Department
    in December 2011. No further progress had been made on that
    front.'' I think it is odd or interesting that the State
    Department in the middle of December 2011 decided that they
    weren't going to work on this project anymore and then come in
    here and say they don't have enough time. In the legal field,
    there is a doctrine of clean hands. You can't be the one
    delaying it and then object to the delays.
        May I also submit for the record the actual language of the
    bill that was signed into law that created the Nebraska
    exemption? Let me wait for just a second on that one, because
    as I understand from reading your report to Congress, you were
    objecting because not later than 60 days after the enactment of
    this act the President acting through the Secretary of State
    shall grant the permit under Executive Order 13337 for the
    Keystone XL pipeline. You said many times in your testimony and
    answers today, Dr. Jones, that it is that 60-day requirement,
    the absurdity that--darn. But yet there is Nebraska exemption
    in here that specifically said that is carved out and that 60
    days for Nebraska doesn't run until all of the reports are done
    and certified by the Governor. Darn. I yield back.
        Mr. Whitfield. Sorry. We are going to have some votes.
        Dr. Burgess, you are recognized for 5 minutes.
        Mr. Burgess. Thank you, Mr. Chairman.
        Dr. Jones, according to some information that I have,
    October 15, 2010, Secretary of State Clinton said she was
    inclined to approve Keystone's permit. On October 31, 2011--
    that is over a year later--White House Press Secretary Jay
    Carney stated, ``The fact is, this is a decision that will be
    made by the State Department or is housed within the State
    Department.'' The very next day, President Obama said the
    decision would rest with him. In the President's announcement
    last week to reject the pipeline's permit, he said he had
    accepted the State Department's recommendations to do so. So
    everything seems to be pointing to you guys at the State
    Department. So can you tell the committee who was the one who
    made the call, made the decision to reject the Keystone XL
    permit?
        Ms. Jones. Congressman, based on the act, the Payroll Tax
    Cut Act, which had specific language in it regarding what the
    President needed to do in a certain time, we, the State
    Department, recommended to the President----
        Mr. Burgess. Who is ``we''?
        Ms. Jones. ``We'' is the Deputy Secretary through the
    Secretary to the President.
        Mr. Burgess. And the name of that person is?
        Ms. Jones. Bill Burns.
        Mr. Burgess. Bill Burns was the one who made the decision?
        Ms. Jones. No, he recommended to the President that this
    decision be taken, and the President decided.
        Mr. Burgess. Did the White House exert any influence over
    the State Department's recommendation?
        Ms. Jones. No, sir.
        Mr. Burgess. Mr. Chairman, it seems to me that there is an
    individual there that is missing then from this hearing today
    that perhaps we should ask if we should be able to submit some
    questions to that individual.
        You know, we all know and the State Department in
    particular knows what is going on in the Strait of Hormuz. I
    was in Iraq in August, and although our military presence now
    there has wound down, there is still a big State Department
    footprint in Iraq, isn't there? In Basra, where I was, there is
    in fact one of the largest State Department operations, and the
    reason, my understanding, the reason is because that is where
    Iraq kind of narrows down going to the Gulf and all the oil
    flowing from the southern part of that country will go through
    Basra and the four pipelines that go through there, so the
    State Department felt they needed to have a large presence
    there. I don't get it. Why do we have to have--I mean, there
    are jobs there but I would rather have the pipeline through
    Texas where, yes, we can be hard to deal with sometimes but we
    are not nearly as hard to deal with as people in the Middle
    East.
        So just food for thought. Let us build this pipeline
    where--you know, why make it hard on ourselves. Why make it
    hard on our country. We need American jobs. We need American
    energy. This seems so straightforward.
        Mr. Chairman, I would like to yield, if he wants the time,
    to Mr. Pompeo. Are you good? Mr. Terry, did you get to finish
    everything you needed to do?
        Mr. Terry. Generally.
        Mr. Burgess. Generally? I will yield back to you, Mr.
    Chairman.
        Mr. Whitfield. At this time I recognize the gentleman from
    Washington State, Mr. Inslee, for 5 minutes.
        Mr. Inslee. Thank you. My understanding is, there is
    potential that some of the product that would flow through this
    proposed pipeline could be exported. It could be used and
    consumed by other countries rather than consumers in the United
    States. Under this bill, would the United States government be
    able to assess the impact of that export on consumer prices in
    the United States at all?
        Ms. Jones. Congressman, I assume you mean the bill that is
    proposed here?
        Mr. Inslee. Yes.
        Ms. Jones. I can't answer that question as to how that bill
    would approach it. That consideration was one of the
    considerations in the national interest determination that we
    were in the process of doing when we were given this timeline
    and didn't have a route to really analyze and to have an
    informed decision.
        Mr. Inslee. So I guess the question is, right now, my
    understanding is, this product is being used by American
    consumers in their gas tanks in their cars. If it goes to the
    Gulf and then is exported, other people around the world will
    be bidding on it. We will be bidding against them for the
    gasoline when we consume it domestically. In other words, there
    will be another person who will be bidding on the product in
    the export market. I think that has the potential to affect the
    price we pay at the pump because now we are competing for the
    same product with someone else who might be bidding more, which
    then drives up our prices potentially. Now, I don't know the
    answer to that question but I just wonder, under this bill,
    would the U.S. government assess that as part of this decision-
    making process?
        Mr. Wright. I would say as part of the NEPA analysis, as
    part of the overall national interest analysis, the
    socioeconomic impacts, that would probably be something that
    would be assessed.
        Mr. Inslee. Thank you.
        Mr. Whitfield. Does the gentleman yield back his time?
        Mr. Inslee. Yes.
        Mr. Whitfield. OK. I tell you what, we have a vote on the
    floor. We are not going to be able to come back. We have a lot
    of people still wanting to ask questions, so I am going to give
    everybody 3 minutes in an effort to try to get through
    everybody.
        So Mr. Bilbray, you are recognized for 3 minutes.
        Mr. Bilbray. Thank you very much.
        Ms. Jones, what is your experience on these cross-border
    issues? How long have you been working on cross-border issues
    for the State Department?
        Ms. Jones. I have been at the State Department since August
    2009.
        Mr. Bilbray. OK. Some of us that have more than a passing
    interest in cross-border and environmental problems, so let me
    just say, this is a 1,700-mile pipeline. We have 2,300,000
    miles of pipeline in this country. How much jurisdiction does
    the State Department have over that 2 million-plus pipe?
        Ms. Jones. The State Department is involved only in permits
    that cross international boundaries.
        Mr. Bilbray. Just across that line. OK. Then any
    environmental impact report or statement obviously looks at the
    impact of the no-project option. What is the emissions that
    would be created--well, first of all, let me back up. What is
    the ability under NAFTA for Canada to bring trucks across the
    border?
        Ms. Jones. I don't think I can answer that question, sir.
        Mr. Bilbray. It is pretty unrestricted, though?
        Ms. Jones. Um-hum.
        Mr. Bilbray. So the no-project option on a pipeline is to
    train or truck it across that area. What is the total emissions
    annually if we went to that option rather than using a
    pipeline?
        Ms. Jones. I couldn't give you that number, but I do know
    that in the final Environmental Impact Statement, there was
    some analysis done that if the pipeline wasn't built, it was
    likely that other modes of transportation would pick up and
    continue to move crude.
        Mr. Bilbray. And wouldn't consider the fact that not only
    would those modes, train and truck, be putting out emissions
    but those emissions are diesel emissions, which have been
    categorized as a toxic emission above and beyond what dioxin
    is. Did they also point out that trains are three times more
    dangerous with fatalities than a pipeline and that trucks are,
    I think the latest number is 87 times more dangerous than a
    pipeline. So my question is this: Did you consider the fact
    that the no-project option or the denial or the delay, the
    denial would end up having more emissions total that we
    reflected by use of truck and train?
        Ms. Jones. The denial that was taken last week was based on
    the fact that we didn't have the time to do all the analysis
    that you are talking about.
        Mr. Bilbray. OK. Let me just say this. I am very happy to
    see you approve, the President approve a cross-border agreement
    with a private company to be able to operate airports across
    the border, and the fact is, just because the gentleman who is
    financing it is a billionaire from Chicago, I am not going to
    attack that agreement, but I would ask, when you did this
    agreement at Alta Mesa, did you consider the increased
    emissions and the global impact of Mexico's air operations that
    would be operating in relationship to this border crossing that
    you approved, that the President approved just recently?
        Mr. Whitfield. Go ahead and finish.
        Ms. Jones. I wasn't involved with that. I can't respond to
    that. I could go back and get more from the Department.
        Mr. Bilbray. I would appreciate that. Thank you for
    approving that project.
        Mr. Whitfield. Mr. Scalise, you are recognized for 3
    minutes.
        Mr. Scalise. Thank you, Mr. Chairman. I appreciate you
    having this hearing. I thank the witnesses for coming.
        I think what irritates me, what irritates a lot of people
    that are concerned about the economy, getting the economy back
    on track and creating jobs is that the President made a
    political decision to throw away 20,000 American jobs and to
    hurt our relationship with Canada, who is a strong, strong
    friend, maybe one of the best friends of America in the world.
    Canada had been trying to get this project done for over 3
    years. Is it true, Ms. Jones, that Canada submitted their
    application for this Keystone XL pipeline back in September
    2008?
        Ms. Jones. TransCanada, the company, submitted it then,
    yes.
        Mr. Scalise. So, you know, you sit here at the table and
    the President said this time and time again, he didn't have
    enough time. He has had 40 months. You know, if you look at the
    original Keystone pipeline, because this is a separate
    Keystone, Keystone XL, the original Keystone pipeline was
    approved back in 2008 after less than 2 years of review. It
    doesn't take 40 months to review a project like this. And so at
    some point in time you have to decide whether you are going to
    fish or cut bait, and ultimately, that is what Congress decided
    in a bipartisan way. It is not a partisan issue. It is not a
    House versus Senate issue. It is one of the few things we
    actually came together on and agreed, Republicans and
    Democrats, House and Senate, said Mr. President, stop wasting
    time, stop delaying this project for political purposes, make a
    decision, yes or no, and then unfortunately, he used you all
    because you all back in August of last year, you all said this
    is something you should do. Hillary Clinton back in 2010, the
    quote was, ``We are inclined to do so'' when asked about
    approving the Keystone pipeline in 2010. And then you go
    through the timeline and then you get to August of last year
    where you all came with your report and you basically said this
    is something that we should do, we don't see any real problems
    with the Keystone pipeline. I will use the exact--``There would
    be no significant impacts.'' That was State Department on
    Keystone back in August of 2011. And what happened after that?
    What happened after that is in November, on November 7, 2011,
    radical environmentalists went and had a big rally at the White
    House. You know, Darryl Hanna got arrested real famously, a
    bunch of radical environmentalists went and said Mr. President,
    don't approve the Keystone pipeline. They threatened his
    reelection. And gee whiz, coincidentally, 3 days after this
    rally by radical environmentalists, the President then reversed
    his course and says we are going to push the decision on
    Keystone until after the election. He is one who gave the
    arbitrary date, not because of environmental reasons, because
    of political reasons because he was getting beaten up by
    radical environmentalists who didn't want this thing approved
    at all so he said I will just kick the can until after the
    election and maybe this will go away, and Canada said, we can't
    wait that long because China wants the oil, they want to do
    something, they want to participate with us. But instead, the
    President said no, we don't want the jobs, let China get that
    oil, and now of course we go to the statement by the prime
    minister of Canada who said they are profoundly disappointed
    with this decision. He has hurt our relationships and hurt our
    national security with a political decision.
        Mr. Whitfield. Mr. Markey, you are recognized for 3
    minutes.
        Mr. Markey. Thank you.
        We have been repeatedly told that we need to get over the
    concerns about the pipeline and the environment because the oil
    coming through this pipeline would enable us to reduce our
    dependence on oil imported from unfriendly Middle Eastern
    nations. TransCanada's application for its permit even states
    that the proposed pipeline will serve the national interest of
    the United States by providing a secure and reliable source of
    Canadian crude oil to meet the growing demands by refineries
    and markets in the United States. However, some have questioned
    these assertions of energy security benefits, citing plans by
    Gulf Coast refineries with whom TransCanada has entered into
    long-term sales contracts to re-export diesel and other fuels
    made from the Keystone crude to Latin America, Europe and
    beyond. In fact, nearly all of these refineries where the
    Keystone crude will be sent to are located in Port Arthur,
    Texas, which is designated as a foreign trade zone. This means
    that if these refineries re-exported diesel or other fuel, they
    wouldn't even have to pay U.S. taxes on these exports.
        Earlier this month, Canadian Prime Minister Stephen Harper
    said that when you look at the Iranians threatening to block
    the Strait of Hormuz, I think that that just illustrates how
    critical it is that supply for the United States to be North
    American. But in December when I asked the president of
    TransCanada whether he would agree to ensure that the oil and
    refined products stay here in this country instead of re-
    exporting it, he said no, sitting right at this table. In other
    words, if the permit for this pipeline is legislatively
    mandated by this bill, the United States may just become the
    middleman for shipping products made from some of the dirtiest
    crude oil on earth to foreign markets around the world.
        Secretary Jones, does the process the administration was
    following to determine whether Keystone XL was in the national
    interest allow for the consideration of issues like whether the
    project would reduce dependence on Middle Eastern oil?
        Ms. Jones. Yes, sir, that is one of the considerations when
    we look at energy security.
        Mr. Markey. Thank you. So if the Republicans hadn't forced
    the administration to deny the permit because it wasn't given
    enough time to review it, the administration could have issued
    a permit that required the Keystone oil and fuels to be sold
    only in the United States. Isn't that right?
        Ms. Jones. I am not sure of that, sir, what we can restrict
    in terms of exports.
        Mr. Markey. You could restrict it?
        Ms. Jones. No, we would have to study that. I don't think
    that we can restrict exports, but that is something we would
    continue to study.
        Mr. Markey. That could be in the national interest. Is that
    correct? To keep the oil here.
        Ms. Jones. We would have to study it in regard to export.
        Mr. Markey. No, could it be in the national interest,
    though, potentially to keep the oil here?
        Ms. Jones. It would certainly be a consideration but we
    were unable to really study all that.
        Mr. Markey. That is right, so we never got a chance to look
    at that.
        Now, for both Ms. Jones and Mr. Wright, does the Republican
    legislation provide FERC with explicit authority to issue a
    permit that contains a requirement that the oil or fuels have
    to be sold in the United States? Does it contain that
    provision?
        Mr. Wright. I did not see that explicitly.
        Mr. Markey. Do you, Ms. Jones?
        Ms. Jones. No, I do not see that there.
        Mr. Markey. OK. Well, make no mistake, I think this is a
    pipeline----
        Mr. Whitfield. The gentleman's time is expired.
        Mr. Markey [continuing]. Out of the United States and into
    other----
        Mr. Whitfield. Mr. Olson, you are recognized for----
        Mr. Olson. I thank the chair for the recognition.
        Mr. Whitfield. We are going to have to go down to 2 minutes
    because we have, like, 4 minutes left on the floor. Three
    hundred and twelve people still have not voted, and I want
    everyone to get an opportunity to say something. So 2 minutes.
        Mr. Olson. I will be quick. I promise. I appreciate the
    witnesses' time today.
        We all know the benefits of the Keystone XL pipeline:
    20,000 jobs, energy from Canada as opposed to Middle Eastern
    oil, national security and energy security. And as a former
    naval aviator who has flown in the Persian Gulf in what we call
    strait transits, right through the Strait of Hormuz, I have
    unique perspective on Iran, and we all know that Iran has
    threatened to close the straits, stopping 30 percent of the
    world's supply of oil from getting to market. Now, I can't
    expand upon this enough but that is a very real threat. The
    straits are narrow, about 9 miles wide in some places, and they
    are shallow. If a vessel would sink, vessels in the middle of
    the straits, they would be blocked for months, if not years. In
    fact, three of our 11 nuclear-powered aircraft carriers have
    been deployed to the region because our Commander in Chief, our
    President, sees the threat as real.
        The State Department has a history of approving new
    pipelines in the interest of national security because of
    political tensions. The most recent example is the Alberta
    Clipper pipeline in the Midwest part of the United States. This
    is another Canadian pipeline. And let me read you a section
    from the record of decision for the Alberta Clipper pipeline,
    and this is a quote: ``The Department of State has determined
    through review of the Alberta Clipper project application that
    the Alberta Clipper project would serve the national interest.
    In a time of considerable political tensions in other major
    oil-producing region countries, by providing additional access
    to a proximate, stable, secure supply of crude oil with minimal
    transportation requirements from a reliable ally and trading
    partner, the United States, which we have free trade agreements
    that further augments the security of this energy supply.'' Why
    is the situation now different? Yes or no, Ms. Jones, is the
    situation now more dire than the situation was when we approved
    the Alberta Clipper pipeline? Yes or no.
        Ms. Jones. Energy security is still a major priority for
    this country and this administration. However, we did not
    reject this project on the merits. It was an issue that we did
    not have time. Those considerations you raised would be
    considered if we had the entire route and if we had the time to
    conduct the process that we feel the American people need to
    have.
        Mr. Whitfield. All right. Time is expired.
        Mr. Olson. Ma'am, with all due respect, you changed your
    mind in October.
        Mr. Whitfield. Mr. McKinley, you are recognized for 2
    minutes.
        Mr. McKinley. Thank you, Mr. Chairman.
        Just some quick questions, and perhaps if you could just
    respond, Ms. Jones, in writing to us rather than take time. The
    first is, could you submit to us a chronological order of the
    process since it began in September of 2008, why in God's name
    it would take 3-1/2 years? I just know from the private sector,
    firms would be fired for taking that long to go through a
    process. Can you get back to us as to whether the railroads in
    Montana and North Dakota and Oklahoma, are those captive
    railroads? I don't know whether they are not. Do you understand
    the term?
        Ms. Jones. I think we will have to get an answer back to
    you on that.
        Mr. McKinley. Sure. I am not expecting you to answer these
    things right now. So I am asking for the record if you will get
    back to us on that on whether or not these are captive
    railroads?
        Ms. Jones. Yes, we will.
        Mr. McKinley. And can you also respond, please, to the
    editorial that was in the Investment and Business Daily back on
    November 16th in which the editorial board there is suggesting
    that there could be a link between the railroad systems and
    this decision, especially given that it is a political
    decision. We all know that. Anyone who would postpone this
    until after the election is already crying out, this is a
    political decision. So since they are linking it to two major
    individuals, global figures, I would like your response back to
    that or perhaps even the person that made the ultimate decision
    to cancel this project. Because it wasn't based on the time
    frame. We understand that, and I think the American public is
    going to come to understand that. But thank you. If you get
    back to us in writing, I would appreciate it. Thank you.
        Mr. Whitfield. Mr. Gardner, you are recognized for 2
    minutes.
        Mr. Gardner. Is job creation the number one national
    interest? Yes or no. Is job creation the number one national
    interest?
        Ms. Jones. Yes.
        Mr. Gardner. Does this pipeline create jobs?
        Ms. Jones. Yes, but the number is----
        Mr. Gardner. Just a yes or no question, and you denied the
    pipeline. You recommended not moving forward with the pipeline.
        Ms. Jones. We denied it based on the time we were given.
        Mr. Gardner. You denied it, and it is your number one
    national interest so you acted at odds with the number one
    national interest.
        Ms. Jones. Sir, we were reviewing the job situation, the
    economic issues as part of the review.
        Mr. Gardner. I will accept that. You turned it down. That
    is fine.
        I want to go back to this amount of paper here, the final
    Environmental Impact Statement from August 2011. the EIS
    identified a particular route as the preferred alternative? Yes
    or no.
        Ms. Jones. Yes.
        Mr. Gardner. And among the other alternatives you
    considered, you considered a no-action alternative? Yes or no.
        Ms. Jones. Yes.
        Mr. Gardner. And the final EIS expressly concluded the
    preferred alternative was way better than not building a
    pipeline at all? Yes or no.
        Ms. Jones. Yes, but there was more to that. These are
    simple pieces coming out of the FEIS.
        Mr. Gardner. ``As a result of considerations, the
    Department of State does not regard the no-action alternative
    to be preferable to the proposed project.'' That is from the
    final EIS. Thank you.
        The reason you concluded that all things considered,
    transporting the oil in a state-of-the-art pipeline is better
    than shipping it by rail, truck and cargo ships because it is
    better than shipping it from the Middle East. Yes or no? Yes.
    Thank you. You have to agree with that, it is better to ship
    from Canada.
        Ms. Jones. Yes, I do. It is part of energy security.
        Mr. Gardner. But if we delay this, if the White House
    delays it, we run the risk of no pipeline at all. Your delays
    run the risk of no pipeline. You said jobs are the number one
    national interest, and yet you said to the White House we don't
    want to do this.
        Ms. Jones. We have to work with the pipeline where we have
    the route and we would do a comprehensive----
        Mr. Gardner. You have said jobs are the number one national
    interest and you have said no to this. These delays risk the
    killing of this pipeline, and so you will end up with no
    pipeline, which is not the preferred alternative as the
    Department of State has already said in their final EIS. So if
    you do this, you are going to have none of the jobs. You are
    going to kill the job. You are going to have none of the
    energy, and China wins.
        Mr. Whitfield. Mr. Pompeo, you are recognized for 2
    minutes.
        Mr. Pompeo. Thank you, Mr. Chairman. I think I can do it in
    1 minute.
        I have one question. Ms. Jones, are you lacking any
    information that you were constrained for time about how this
    impacts a particular private company? That is, are you
    interested in how this might or might not affect any particular
    private company? Is it relevant to your decision at all?
        Ms. Jones. No, sir. The issue is, the route through
    Nebraska and all of the impacts that possibly could have.
        Mr. Pompeo. So testimony about how any private company
    would be impacted would be irrelevant to your decision-making
    process.
        Ms. Jones. Sir, we are looking at the route as we had
    explained.
        Mr. Pompeo. Thank you.
        One last statement. Mr. Waxman suggested that because Koch
    Industries had filed as an intervenor before the Canadian
    National Energy Board, that that suggested that they must have
    a financial interest in this transaction. That is just false.
    This notion that they have an interest there has been shredded.
    There are many, many intervenors including the Sierra Club of
    Canada, who I don't think has a financial interest in the
    Keystone XL pipeline, the Alberta Federation of Labor, the
    Communication, Energy and Paper Workers of Canada. This is a
    silly concept, and I want to make sure the record reflected
    that this mere intervenor status makes no indication about
    whether any company has an interest in this pipeline at all.
        With that, I yield back my time, Mr. Chairman.
        Mr. Whitfield. Mr. Griffith, you are recognized for 2
    minutes.
        Mr. Griffith. Thank you, Mr. Chairman.
        You know, I am sitting here kind of curious. The State
    Department keeps talking about its studies in Nebraska but
    isn't your job supposed to determine what the impact is because
    it is international and what the impact is on the international
    relationship with our friends in Canada?
        Ms. Jones. Because we have the authority for the
    permitting----
        Mr. Griffith. I understand you have the authority for the
    permitting but you got all this done by the agencies that would
    normally do that. Isn't your job as the State Department to
    focus on the relationships with our foreign friends and not to
    be interfering in internal decisions made by other agencies?
        Ms. Jones. Our job in this situation is to look at the
    entire pipeline for the impact it could have on the country.
        Mr. Griffith. So everything these people did was worthless?
        Ms. Jones. No, sir. That is important analytical
    information.
        Mr. Griffith. Well, then, why do you have to redo it all?
        Ms. Jones. We don't have the route through Nebraska.
        Mr. Griffith. I really believe that this was a political
    decision. You are not supposed to comment on that, and I
    understand that. But I believe that you had the President in a
    political quandary with labor versus radical environmentalists
    and he had to delay until after the election. That is what I
    believe and that is what I believe the evidence shows. I am not
    asking for a comment.
        I would say to you, more oil refined in the United States,
    particularly when it is coming from a closer supply, means more
    jobs in the United States, more profits in the United States,
    more taxes paid to the United States and more U.S. supply
    available. All of those things I think are good things, and
    because you are from the State Department, I would say that we
    have damaged our relationship with a good ally and a close
    neighbor and friend, and to me, that seems counter to the
    purpose of the State Department and all of this would indicate
    that everything that you all are doing is counter to the
    interest of the United States of America, and I yield back.
        Mr. Whitfield. That concludes today's hearing. I want to
    thank the two witnesses for being with us today, and the record
    will remain open for 10 days for additional documents, and some
    questions were submitted to you all and we would appreciate you
    all getting that information back to us. Thank you.
        [Whereupon, at 10:05 a.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

       AMERICAN JOBS NOW: A LEGISLATIVE HEARING ON H.R. 3548, THE NORTH
                       AMERICAN ENERGY ACCESS ACT--DAY 2

                                  ----------

                            FRIDAY, FEBRUARY 3, 2012

                      House of Representatives,
                      Subcommittee on Energy and Power,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:00 a.m., in
    room 2322 of the Rayburn House Office Building, Hon. Ed
    Whitfield (chairman of the subcommittee) presiding.
        Members present: Representatives Whitfield, Sullivan,
    Walden, Terry, Burgess, Bilbray, McMorris Rodgers, Olson,
    Pompeo, Griffith, Barton, Rush, Dingell, Markey, Engel, Capps,
    Gonzalez, and Waxman (ex officio).
        Staff present: Mike Bloomquist, Deputy General Counsel;
    Maryam Brown, Chief Counsel, Energy and Power; Allison Busbee,
    Legislative Clerk; Garrett Golding, Professional Staff Member,
    Energy; Cory Hicks, Policy Coordinator, Energy and Power; Ben
    Lieberman, Counsel, Energy and Power; Jeff Baran, Democratic
    Senior Counsel; Greg Dotson, Democratic Energy and Environment
    Staff Director; Caitlin Haberman, Democratic Policy Analyst;
    Angela Kordyak, DOE Detailee; Billie McGrane, Democratic
    Assistant Clerk; and Alexandria Teitz, Democratic Senior
    Counsel, Environment and Energy.

      OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
               CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

        Mr. Whitfield. Committee will come to order. Today's
    hearing on American Jobs Now, H.R. 3548, the North American
    Energy Access Act, is being held pursuant to Rule XI of the
    House Rules at the request of Mr. Rush, Mr. Waxman, and other
    members of the minority.
        Although we gave opening statements at the first hearing,
    pursuant to an agreement between the minority and the majority,
    each side this morning will be given 10 minutes for opening
    statements, and at this time I would like to recognize myself
    for 5 minutes for the purpose of making an opening statement.
        Like many people, I was quite disappointed when the
    President decided the Keystone Pipeline was not in the national
    interest, and the reason that he gave for making that decision
    was that there was not enough time to collect and review
    information regarding the route through Nebraska. We all are
    very much aware, however, that the application for the permit
    was filed in September of 2008. That was almost 3 \1/2\ years
    ago.
        As a matter of fact, as far back as October 2010, in a
    speech at the Commonwealth Club of San Francisco, Secretary of
    State Hillary Clinton in response to a question said that she
    was inclined to approve the permit for the Keystone Pipeline
    based on the information she had.
        I also want the public to know, and I am sure they are very
    much aware of this also, that five major labor unions supported
    and still support the building of this pipeline. In an article
    entitled, ``Labor Civil War over Keystone XL,'' the author
    reported some of President Barack Obama's biggest labor
    supporters are fuming over his decision. Unions representing
    construction workers that would directly benefit from building
    the pipeline, as he said in his article, feel stabbed in the
    back by unions that joined environmental groups to kill the
    project. Laborers' International Union of North America General
    president Terry O'Sullivan said the decision was so repulsive
    and disgusting that he was going to pull his union out of the
    Blue Green Alliance, a coalition of environmental groups and
    labor unions that represented nearly all of the groups that
    signed a statement, a joint statement supporting the President.
        Mr. O'Sullivan said unions and environmental groups that
    have no equity in this work have kicked our members in the
    teeth, and anger is an understatement as to how we feel about
    it. We will not sit at the table with people that destroy our
    members' livelihood.
        The labor union supporting the project issued a
    particularly forceful statement condemning the decision as
    politics at its worst, and Mr. Sean Sweeney, who is the
    director of Global Labor Institute at Cornell University, who
    did a study about the jobs that this would create, made it very
    clear when he said that this decision was really about the
    President being reelected. The President's reelection is at
    stake, and he said there is certainly more at stake here than a
    simple pipeline.
        In closing I would simply like to quote from an editorial
    in the Chicago Tribune. ``Keystone should be approved. This is
    a good project. It will give us energy and give us jobs. You
    want stimulus? This is it. This is a $7 billion project to be
    done with private dollars. Taxpayer dollars will not be used.
    President Obama made a decision that we think is the wrong
    decision.''
        [The prepared statement of Mr. Whitfield follows:]
        [GRAPHIC] [TIFF OMITTED] T6343.054

        Mr. Whitfield. And with that, I would--does anyone seek
    recognition for a minute and 48 seconds?
        No. I will recognize you later.
        All right.
        Mr. Walden. Sure, Mr. Chairman.
        Mr. Whitfield. I yield the balance of my time to you, Mr.
    Walden.

      OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF OREGON

        Mr. Walden. I thank the gentleman for yielding. I
    appreciate his comments. I was just reviewing the testimony by
    I believe it is Mr. Pool from the Bureau of Land Management. I
    just find it interesting that how much our government rules and
    regulations come into play here for so little land. He says in
    his testimony the total permanent right of way on BLM-managed
    public lands for this Keystone Project would be approximately
    50 feet wide and comprise a total of approximately 270 acres.
        Now, let that sink in. You think about how minor a role the
    Federal Government is playing in terms of this land and yet--
    and they have issued their approval is my understanding. Final
    biological assessment has been issued and shows no jeopardy
    under the Endangered Species Act. The Federal Government BLM at
    least, 270 acres, 50 feet wide. We have got horrible
    unemployment problem. It is getting a little better, but, you
    know, 8.3 percent is nothing to brag about. You got a $7
    million potential investment here, private sector funds, that
    could create thousands of jobs and new property tax base
    payments to local governments throughout that region, and I
    just think it is time to get this done.
        So I yield back.
        Mr. Whitfield. Thank you, Mr. Walden.
        At this time I recognize the gentleman from Illinois, Mr.
    Rush, for 5 minutes.

     OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF ILLINOIS

        Mr. Rush. Good morning. Thank you, Mr. Chairman, for
    holding this important hearing that the minority side requested
    in order to hear from some of the important stakeholders who
    were not invited to participate in last week's hearing and to
    shed light onto some of the ramifications of the legislation
    before us, H.R. 3548.
        Mr. Chairman, this bill is simply another bite at the apple
    in the majority's attempt to backdoor the Obama administration
    and green light a project that has not yet been fully vented in
    what amount to be an application of the Federal Government's
    oversight responsibilities.
        In fact, why don't we simply call this bill for what it
    really is. Instead of the North American Energy Access Act,
    this bill should be renamed the Republicans and Congress Favor
    to TransCanada Act. This bill does not make sense. Legally it
    doesn't make sense. Sensibly it doesn't make sense because it
    shifts the responsibility for a cross-water pipeline from the
    State Department to FERC, an agency which has no experience in
    signing this type of national project, specifically, or on
    pipelines generally. This bill does not make sense frankly, and
    it does not make sense morally.
        As we heard from the Assistant Secretary of State Kerri-Ann
    Jones last week, she--of the Bureau of Oceans and International
    Environment and Scientific Affairs, the recommendations for
    denying the permit was made simply because there was not
    sufficient time for the agencies to complete its due diligence
    and perform its legal oversight responsibility, mainly due to
    the fact that currently there is not even a proposed route for
    the State Department to review. It would have been a gross
    negligence and recklessness for the Obama administration to
    approve a permit for a pipeline that would cut through the
    heart of the country where when the policymakers in those very
    states that are mostly affected, like Nebraska, haven't even
    identified the most appropriate route for the pipeline to move
    through.
        While the language the Republicans passed in their initial
    efforts to force the administration to come up with a decision
    within 60 days of enactment of the Middle Class Payroll Tax
    Extension was inconsiderate and irresponsible, I must say that
    the language in this new bill, which was transferred in the
    decision to a different and completely inexperienced agency,
    FERC, and also implying permission to make a decision within 30
    days or the project will be automatically approved is even more
    irrational and more irresponsible.
        Assistant Secretary of State Kerri-Ann Jones stated at last
    week's hearing regarding her agency's recommendation, and I
    quote, ``That decision was based on the fact that the exact
    amount of the pipeline has yet to be identified in 24 areas. As
    a result there are unresolved concerns for a full range of
    issues including energy security, foreign policy, economic
    effects, health, safety, and environmental impacts among other
    considerations.''
        Ms. Jones went on to say, ``The legislation raises serious
    questions about legal authorities, questions of continuing
    force of much of the Federal and all of the State and local
    environmental and line use management authority over the
    pipeline,'' and Mr. Chairman, I want to emphasize this, ``It
    overrides foreign policy and national security considerations
    implicated by a cross border permit which are properly assessed
    by the State Department.''
        Mr. Chairman, with such dire warnings of this bill I think
    we owe it to the American public to fully explain the
    consequences of this legislation to ensure that the public
    interests were taken, and with that I yield back the balance of
    my time.
        Mr. Whitfield. Thank you, Mr. Rush.
        At this time I would like to recognize the gentleman from
    Texas, Mr. Barton, for the purpose of making an opening
    statement, 5 minutes.

       OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF TEXAS

        Mr. Barton. I am not--I won't use that much time, Mr.
    Chairman, but thank you.
        This is a continuing hearing. Everything that can be said
    about Keystone has been said, but sometimes it needs to be
    repeated. This is an extremely important project for our
    Nation's future.
        Just in the last month or so we have had a number of
    announcements that refineries in the United States, in the
    Northeast, and in the Virgin Islands are going to be closed,
    several in Pennsylvania, one in the Virgin Islands, I think one
    in Ohio. Altogether they are taking about a million barrels of
    refinery production off the books, and while the Keystone
    Pipeline is not building a new refinery, it is bringing
    additional crude oil to the Gulf Coast where we still have
    refinery capacity. That crude oil will be used to be refined
    into products that then can be transshipped up into the Midwest
    and the Northeast.
        If you shut down refineries in the Midwest and offshore
    that serve that market, and if you don't build Keystone, that
    is a double whammy. The absolute certainty is that the prices
    will go up, shortages will exist, our economy will suffer.
        On the other hand, if we build the Keystone Pipeline, we
    are going to have additional crude coming into the United
    States, approximately 800,000 barrels a day. It doesn't offset
    in totality the closure of these other refinery facilities, but
    it will alleviate them, and as my good friend from Oregon, Mr.
    Walden, just pointed out, to have to go through the
    bureaucratic red tape that this project has gone through for
    the reasons it has been subjected to it just doesn't seem to
    make good sense in any way. In any way.
        So, Mr. Chairman, I look forward to the hearing. There is
    another hearing downstairs on the Chemical Facilities Act, so I
    will be shuffling back and forth, but I do appreciate you
    holding the hearing, and I obviously appreciate being allowed
    to speak.
        I would like to yield the balance of my time to Mr. Terry
    of Nebraska, who has been a strong voice for this project.

       OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF OREGON

        Mr. Terry. Thank you, Mr. Chairman emeritus. Just to
    clarify a few points, the State Department issued three
    statements over the summer that they would have all of the
    information, and they were doing all of the due diligence to
    have a decision made by the end of 2011, and we took them at
    their word for that, and it turned out to be not true.
        I think one of the key points here that has been missed in
    the State Department's testimony, in particular in the basis
    for their decision, is that they are using Nebraska as the
    excuse to deny the permit. The reality is in the legislation
    that the President signed specifically exempting Nebraska out
    of this, this was going forward on the other parts of the
    pipeline in the other states. It carved out a time that--or a
    trigger that would review the Nebraska portion, the 30 or 40
    miles that the pipeline would be moved based upon when the
    governor certified that it was ready. So I am amazed at why
    that hasn't been brought out.
        Now, I am glad that the Corps of Engineers is here today
    because they do play a vital point and in their testimony
    raises a valid point that we had already vetted and had planned
    to change and that is we want to make it clear that what the
    legislation does is remove the Presidential permission part and
    gives it to the agency, the Federal agency that actually has
    experience in pipelines. We thought that was a rational
    approach with this bill.
        So I want to let the Corps know that we aren't usurping,
    and we will change the language of issuing permits of any
    project that crosses the waterway under your jurisdiction.
        So we knew there were other permits that they would have to
    file and receive once the Presidential authorization was made.
    I am disappointed that we invited the Corps of Engineers and
    the BLM to our hearing last week, and they denied or refused to
    come, but yet when Henry Waxman asks to testify in opposition,
    you are here loaded forebear. So that concerns me.
        One last point in my 6 seconds is I think the message that
    the President's denial of this permit sent the world is that
    the far left of the environmental community is now in charge of
    our energy and foreign policy.
        I yield back.
        Mr. Whitfield. At this time I recognize the gentleman from
    California, Mr. Waxman, for 5 minutes for the purpose of an
    opening statement.

    OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. Waxman. Mr. Chairman, today we are holding a
    legislative hearing on a bill to mandate approval of
    TransCanada tar sands pipeline Keystone XL.
        This tar sands pipeline is hugely controversial, and for
    good reason. The American people will bear the risks, and Big
    Oil will reap the rewards. With this pipeline we get more
    carbon pollution, more dangerous oil spills, land seizures by a
    foreign country, and higher oil prices in the Midwest.
        Big Oil gets the ability to extract more profits from the
    Midwest, a conduit for exporting tar sands products to China,
    and the green light to exploit the tar sands at maximum speed
    regardless of the consequences.
        President Obama listened to differing views of American
    citizens and made a responsible decision. He would not approve
    the pipeline through the ecologically-fragile Sand Hills area
    of Nebraska, but the State Department would consider an
    alternative route.
        Nebraska is taking the time to find a route that is
    acceptable, and the President is making sure that he has all
    the information he needs to make the right decision.
        This bill takes the opposite approach. It gives the
    pipeline an unprecedented regulatory earmark. It directs the
    Federal Energy Regulatory Commission, directs them to approve
    the pipeline, even though we don't yet know what route it will
    take through the State of Nebraska. It exempts the pipeline
    from the requirement to obtain permits from the Corps of
    Engineers before crossing rivers and wetlands. It takes away
    the Department of Interior's authority to protect sensitive
    public lands.
        For a year I have been asking a simple question: Who
    benefits from this extraordinary Congressional intervention in
    the regulatory process?
        Last year Reuters reported that Koch Industries would be
    one of the big winners from this earmark, and there is evidence
    to support this.
        We know that Koch is one of the largest crude oil exporters
    in Canada. We know it owns an oil terminal in Hardisty, Canada,
    where the pipeline would begin. And we know it has a refinery
    in Texas near where the pipeline is going to end.
        Last May, I contacted Koch to inquire about the nature of
    its interest in the pipeline, and Koch responded that despite
    the evidence to the contrary, it had no financial interest in
    whether the pipeline was built or not, and I accepted that
    answer.
        But then I learned that Koch had told the Canadian
    government that the company had a ``direct and substantial
    interest'' in the pipeline.
        I want to know why Koch would tell the U.S. Congress one
    thing and the Canadian government the exact opposite. So I
    asked Chairman Upton and Chairman Whitfield to invite Koch
    Industries to testify today.
        Well, they refused, and Koch refused to appear without an
    invitation from the chairman.
        So we are left with unanswered questions. Why is Koch
    Industries being placed in a witness protection program? What
    does the company have to hide? And why does the company get
    special treatment while the American people get left in the
    dark?
        I also asked the chairman to invite the operator of the
    pipeline, TransCanada. Members on our side want to ask
    TransCanada reasonable questions, like what route it plans to
    follow in Nebraska.
        We also want to know about these claims of jobs. State
    Department testified that we would get 5,000 to 6,000 temporary
    jobs if this pipeline is approved. These jobs would be around
    for 2 years. TransCanada said it is going to be 20,000 jobs, or
    over 100,000. Aand where do they get the number 100,000? Well,
    that is looking at the lifetime of the pipeline for 100 years.
    This is the Republican jobs bill. Twenty-thousand jobs, they
    say. Maybe 100,000 jobs and yet the State Department did an
    analysis, and there is 5,000 to 6,000 jobs for 2 years.
        I regret that Koch and TransCanada are not here today, and
    I ask the chairman to refrain from moving this bill until they
    are available to testify.
        I am glad we have excellent witnesses here today who are
    going to give us their views: two departments that are going to
    be excluded from giving their usual review of the project--that
    might change, I am pleased to hear--and two gentlemen who have
    special insight at what this project will mean.
        Thank you, Mr. Chairman, for this 7 seconds beyond the
    time, and I yield back whatever time I have left.
        Mr. Whitfield. Thank you, Mr. Waxman.
        Today we have two panels of witnesses. On the first panel
    if you--those of you on the first panel would come forward,
    that is Ms. Margaret Gaffney-Smith, who is Chief, Regulatory,
    for the U.S. Army Corps of Engineers, and Mr. Mike Pool, who is
    Deputy Director of Bureau of Land Management, U.S. Department
    of the Interior. We appreciate both of you being here with us
    this morning, and as you know, we are going to ask each of you
    to give a 5-minute opening statement and at the end of that
    time then questions will be asked.
        I might also point out that we have been told that there
    will be five or six votes on the House Floor somewhere around
    11:00 or so, but we are going to proceed as long as we can and
    then we will vote and then we will come back. So thank you all
    for being with us this morning.
        At this time, Ms. Gaffney-Smith, I would like to recognize
    you for 5 minutes for the purpose of an opening statement, and
    be sure and turn your microphone on, and I guess that little
    box there on the table, a red light will come on when the 5
    minutes is up. So you are now recognized.

        STATEMENTS OF MARGARET GAFFNEY-SMITH, CHIEF, REGULATORY
        PROGRAM, ARMY CORPS OF ENGINEERS; AND MIKE POOL, DEPUTY
    DIRECTOR, BUREAU OF LAND MANAGEMENT, DEPARTMENT OF THE INTERIOR

                  STATEMENT OF MARGARET GAFFNEY-SMITH

        Ms. Gaffney-Smith. Thank you, sir. Chairman Whitfield and
    members of the committee, I am Meg Gaffney-Smith, Chief of the
    Regulatory Program for the U.S. Army Corps of Engineers. Thank
    you for the opportunity to discuss the Corps' regulatory
    authority under Section 404 of the Clean Water Act and Section
    10 of the Rivers and Harbors Act related to utility line
    projects and to discuss our regulatory involvement in the
    proposed Keystone XL Pipeline.
        Section 10 of the Rivers and Harbors Act requires
    authorization from the Corps for the construction of any
    structure such as the Keystone Pipeline in, under, or over any
    navigable water of the U.S. Section 404 of the Clean Water Act
    requires authorization from the Corps for the discharge of
    dredged or fill material into waters of the United States.
        Utility line projects may require 404 permits for temporary
    fills such as access roadways, storage and work areas, as well
    as temporary or permanent impacts associated with grading, bank
    stabilization, or the cross itself. When discharges of dredged
    or fill material are associated with activities of a similar
    nature and are expected to cause no more than minimal effects,
    individually or cumulatively, they may be authorized by a
    general permit.
        Activities that do not meet the criteria for a general
    permit are typically processed through the Corps' individual
    standard permit procedures. When implementing the Corps
    Regulatory Program, the Corps is neither an opponent nor a
    proponent of any specific project. Our responsibility is to
    make fair, objective, and timely decisions that protect the
    aquatic environment and are not contrary to the public
    interest. The authority to make the final decisions on permit
    applications rests with out 38 district commanders.
        Nationwide permit 12 is a general permit promulgated under
    Section 404(e) of the Clean Water Act that may be used to
    authorize utility line construction. The permit authorizes the
    discharge of dredged and/or fill material in association with
    temporary or permanent activities related to the construction,
    repair, maintenance, and removal of utility lines provided the
    activity does not result in the loss of greater than one-half
    acre of waters, including wetlands, for a single and complete
    project.
        Under Nationwide Permit 12 there are seven notification
    requirements, and if any one of these are triggered, a project
    proponent must submit a preconstruction notification request to
    the appropriate Corps district office before they begin work in
    waters of the United States.
        Other statutes impact the ability of the Corps to authorize
    activities under a nationwide permit. In accordance with the
    nationwide permit rules and the Endangered Species Act, no
    activity may be authorized that would be likely to jeopardize
    the continued existence of threatened or endangered species or
    destroy or adversely modify the critical habitat of such
    species. In addition, no activity may be authorized by a
    nationwide permit until the requirements of Section 106 of the
    National Historic Preservation Act have been fulfilled.
    Further, the Corps' nationwide permits do not obviate the need
    to obtain other Federal, State, or local permits, approvals, or
    authorizations that are required by law.
        In September and October, 2011, TransCanada submitted
    preconstruction notifications to our Corps districts in
    Galveston, Fort Worth, and Tulsa and requested that work in
    waters of the U.S. in association with the Keystone XL Pipeline
    be verified under Nationwide Permit 12. In November and
    December each of the three districts made decisions to exercise
    their discretionary authority and suspended Nationwide Permit
    12 for all work and discharges of dredge or fill material into
    waters of the United States associated with the Keystone XL
    Pipeline application. These decisions were made because of
    concerns identified by the Department of State that could not
    be addressed until a final decision was made on the pending
    Presidential permit application.
        The President has since determined that based on the State
    Department's view that 60 days was an insufficient period to
    obtain and assess the necessary information, that the Keystone
    XL Pipeline project, as presented and analyzed at that time,
    would not serve the national interest. Should circumstances
    change in the future, our districts will process any future
    requests that are submitted for Department of Army permits in
    accordance with the appropriate procedures based on our
    statutory authorities and implementing regulations.
        If H.R. 3548 is enacted, only the Federal Energy Regulatory
    Commission, and not the Corps, would be responsible for issuing
    any permit required in conjunction with construction,
    operation, and maintenance of the pipeline. At present, only
    the Corps has a statutory mandate to review projects like
    Keystone XL for the permit under the provisions of Section 10
    of the Rivers and Harbors Act and Section 404 of the Clean
    Water Act.
        However, none of these statutory reviews would be allowed
    for this project under the language in Section 4(a) of this
    bill, and no Corps permit would be required.
        I appreciate the opportunity to be here today, and I would
    be happy to answer any questions you may have.
        [The prepared statement of Ms. Gaffney-Smith follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Thank you very much, Ms. Gaffney-Smith.
        Mr. Pool, you are now recognized for 5 minutes for the
    purpose of making an opening statement.

                         STATEMENT OF MIKE POOL

        Mr. Pool. Thank you, Mr. Chairman, and thank you for
    inviting the Department of Interior to this hearing on H.R.
    3548, the North American Energy Access Act.
        Legislation directs the Federal Energy Regulatory
    Commission to approve the Keystone XL Pipeline Project. The
    Department has concerns with several provisions of the
    legislation.
        The proposed $7 billion pipeline project would span more
    than 1,700 miles between Hardisty, Alberta, Canada, and
    multiple destinations in Oklahoma and Texas. Under Executive
    Order 13337, all proposed oil pipeline projects that cross the
    U.S. borders require a Presidential permit, including a
    determination that the proposed cross-border pipeline is in the
    national interest.
        The State Department reviews applications for a
    Presidential permit and consults with eight other agencies
    including the Department of Interior in its review. The State
    received an application for Keystone XL Project from
    TransCanada Keystone Pipeline in September of 2008. The
    proposed 1,700-mile pipeline crosses through eastern Montana
    for 228 miles and includes approximately 42 miles of scattered
    parcels of Federal land managed by the BLM. The BLM was a
    cooperating agency with the State Department as was the U.S.
    Fish and Wildlife Service and the National Park Service in the
    preparation of an environmental impact statement to address the
    environmental effects of the proposed pipeline construction and
    operation activities.
        The BLM identified pipeline routes across Federal lands in
    Montana that would minimize environmental impacts of pipeline
    construction. The final EIS was issued on August 26, 2011.
        In addition, under the Mineral Leasing Act the BLM is
    authorized to issue rights of ways for crude oil pipelines that
    cross Federal lands. TransCanada Keystone Pipeline filed rights
    of way applications with the BLM in 2008. The Keystone Project
    would include a permanent 50-foot right of way along the
    scattered 42 miles of BLM-managed lands in Montana and comprise
    a total of 270 acres.
        Applications were also filed for temporary use permits and
    for electrical transmission lines on public lands in Montana to
    supply power to the proposed pumping stations. Temporary rights
    of ways for construction purposes would comprise of 200
    additional acres dispersed on BLM-managed tracts of land and
    would be used for a period of 3 years then reclaimed by
    Keystone. These permit applications have not been withdrawn.
    Their processing is on hold.
        The North American Energy Access Act appears to make the
    Federal Energy Regulatory Commission the sole Federal agency
    responsible for the project. It would also give the commission
    sole authority to permit construction, operations, and
    maintenance for the pipeline and related facilities. The
    legislation is not clear on how these--how the pipeline
    construction, operation, and maintenance would be carried out
    on Federal lands and what role, if any, the BLM would have with
    regard to spills on Federal lands from the pipeline.
        This departure from current law would also preclude the BLM
    from collecting rents and cost recovery related to the pipeline
    and rights of way on Federal lands.
        Thank you for the opportunity to testify before the
    subcommittee. I am pleased to answer any questions.
        [The prepared statement of Mr. Pool follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Mr. Pool, thank you very much, and at this
    time I will recognize myself for 5 minutes for questions.
        There has been a lot of discussion on the Keystone Pipeline
    about the Koch Brothers, and the Koch Brothers have indicated
    that they have no financial--direct financial interest in this
    pipeline, and for that reason we have never really called them
    as a witness. And I might say that we know that the Burlington
    Northern Santa Fe Railroad has direct routes right into Canada
    and Alberta and that if the pipeline is not built, that maybe
    some of that oil will move by rail into the U.S., and, of
    course, the owner of that railroad is Warren Buffett of
    Berkshire Hathaway.
        We have not made any effort to call Warren Buffett to
    testify in this hearing because even though his company might
    benefit if the pipeline is not built, we do not think he has a
    direct financial interest in it, and I really in my view do not
    view Warren Buffett and the Koch Brothers any different on this
    situation.
        So I simply wanted to mention that. I would also say that
    the State Department when it issued its final environmental
    impact statement in August of 2011 actually made the comment
    that it would be better to build this pipeline than to not
    build the pipeline. If you were looking at these two options,
    it would be better to build it than not to build it.
        And so other pipeline projects requiring the Presidential
    permit usually take 18 to 24 months to review and approve.
    Keystone is now in its 40th month. So when these additional
    delays appear to be mounting early in 2011, the U.S. House
    passed bipartisan legislation with 47 Democrats voting yes that
    simply instructed President Obama to make a final decision one
    way or the other on the Presidential permit by November 1,
    2011. At the time the White House stated the legislation was
    unnecessary because the State Department would be making the
    decision by the end of 2011.
        But as President Obama's campaign began to warm up for
    President, the President's political advisors realized that the
    environmental groups would be quite upset if the President said
    yes to this pipeline. On the other hand, the labor unions were
    going to be quite upset, at least five or six of them, if the
    President said no to the pipeline.
        So at that time the President instead of making a decision
    said that he would wait until after the election to make a
    decision. So from our perspective this really was nothing but a
    political decision, and since we have had 40 months of detailed
    study and analysis on this, we felt like that there was no
    reason to delay anymore, because we do need to be less
    dependent upon foreign oil. We can bring in this oil from our
    friendly neighbor to the north, Canada, and we can create jobs
    as well.
        So I wanted to just make that comment about the Koch
    Brothers and the fact that I don't see that they are in much of
    a different position than Warren Buffett is except they are on
    different sides of the issue perhaps.
        And I yield back the balance of my time, and Mr. Rush, I
    will recognize you for 5 minutes for questions.
        Mr. Rush. Mr. Chairman, I would just suggest that maybe you
    should invite Warren Buffett and the Koch Brothers here. That
    would be a dandy old hearing.
        Mr. Whitfield. That would.
        Mr. Rush. Right.
        Mr. Whitfield. We would get a lot of press.
        Mr. Rush. Right. I want to ask Mr. Pool regarding the
    Bureau of Land Management's current role in--how--I think you
    hit on it, but I want you to expound on this. How does this
    bill affect the role of your agency? How does this bill affect
    the role of your agency?
        Mr. Pool. It does raise concerns. The BLM has a long
    history of issuing the rights of ways under the Mineral Leasing
    Act, approximately 32,000. We have experience, we have the
    practitioners in the field that are familiar with the right-of-
    way program and the importance of working through NEPA and
    taking into account any cultural biological concerns.
        So and we have got that experience. We have dealt with
    pipelines many times in the past, so the bill the way it is
    worded seems to confer all of our responsibility under the
    Mineral Leasing Act to FERC, and some of the accelerated
    timeframes in the bill it begs the question whether or not if
    there is any additional consultation requirements under Section
    106 of the National Archeological Protection Act or any
    additional consultations that may be required through the Fish
    and Wildlife Service if that is possible.
        I think the other thing that I think is very important is
    the BLM has established relationships in the west. We have many
    offices geographically in the west. We are accustomed to
    working with county, local governments, State governments. We
    work with our Federal counterparts as well. So we have been in
    this process for 3 years as it relates to our right of way, the
    right away application in Montana, so we have an already-
    established relationship with our Federal and State entities as
    we work through, you know, this particular project or future
    projects.
        And I think that helps ensure ourselves and with the
    involvement of the Federal agencies that we are fulfilling, you
    know, our Congressional mandates.
        Mr. Rush. As far as you are concerned does FERC have the
    same vast foot front in the west to make similar decisions?
        Mr. Pool. Well, I know from a jurisdictional ownership
    standpoint they do not. They are a regulatory entity. I mean,
    you know, when it comes to transcontinental natural gas line,
    FERC usually assumes that lead, and when they are in that role,
    we are a cooperating agency.
        But it is important to point out that, you know, and the
    more recent example being the Ruby Pipeline in the west, they
    had the lead, but all our other mandates regarding segments
    that cross public lands or other Federal jurisdictions, that
    was administered and authorized under the Mineral Leasing Act,
    and all other mandates were also required as well.
        Mr. Rush. Ms. Gaffney-Smith, the Army Corps of Engineers
    has a role in this submitting process and concerning this--so
    your responsibilities and some of your activities regarding
    this matter. Would you care to expound more on how this bill
    will affect your role?
        Ms. Gaffney-Smith. Our interpretation and understanding of
    the bill as it is currently proposed would eliminate any
    opportunity for the Corps of Engineers to process any
    applications related to Section 404 of the Clean Water Act or
    Section 10 of the Rivers and Harbors Act, and so we would
    have--under the current language within the bill, we would have
    no authority to regulate the activities in waters that are
    under our jurisdiction under those two laws.
        Mr. Rush. So this would aggregate your significant
    responsibilities and dilute the authority and the experience
    the Army Corps of Engineers have built up over centuries?
        Ms. Gaffney-Smith. Yes. It would remove all of our
    authority and remove any existing experience that we could lend
    to the review of the proposal.
        Mr. Rush. All right. Can either of you tell the committee
    on the provision of this bill which agency or agencies would
    then be responsible for enforcing the terms of the
    environmental impact statement?
        Ms. Gaffney-Smith. From the Corps of Engineers perspective
    it looks like the entire responsibility would be provided to
    the Federal Energy Regulatory Commission.
        Mr. Rush. Do you agree, Mr. Pool?
        Mr. Pool. That is the way the bill comes across to us as
    well. It is the transfer of authority that we currently have at
    BLM in terms of, you know, issuing the rights of ways from the
    Mineral Leasing Act, and that would be conferred to FERC.
        I think it is also important to point out that in terms of,
    you know, BLM's Rights of Way Program, that these are cost
    reimbursement programs for--so the work that we perform, the
    studies that may be necessary depending on where any pipeline
    may be right across public land, industry provides a cost
    reimbursable account. So that account would, under this bill
    would pretty much, you know, we would not happen anymore. We
    would be out of the picture.
        Mr. Rush. Thank you, Mr. Chairman.
        Mr. Whitfield. At this time I recognize the gentleman from
    Oklahoma, Mr. Sullivan, for 5 minutes.
        Mr. Sullivan. Thank you, Chairman Whitfield.
        During this State of the Union address President Obama
    turned his back on the Keystone Pipeline. He actually rejected
    the advice of his own Jobs Council who recommended an all-in
    approach to energy policy that included expediting energy
    projects like pipelines.
        Like many Americans I was surprised that the primary reason
    the President stated for his denial saying Congress forced his
    decision with an arbitrary deadline. If excuses were barrels of
    oil, this administration would have filled out strategic
    petroleum reserves several times over.
        The truth of the matter is the administration had 3 years
    to reach a decision on Keystone XL but failed to do so. If more
    than 1,100 days is not enough time, then exactly how much time
    do you need to secure our energy future, Mr. President?
        This begs the question of just who is in control of our
    national, Nation's energy agenda. Time and time again we hear
    about President Obama's commitment to American-made energy that
    creates jobs and reduces our dependence on foreign oil, yet he
    rejects a no-brainer like Keystone XL. The truth is he made a
    calculated political decision to reject it to keep his anti-
    jobs environmental base happy in an election year.
        By rejecting the pipeline President Obama turned his back
    on American jobs. What logical reason could there be to say no
    to 20,000 new private sector jobs and potentially 100,000
    indirect jobs while our Nation's unemployment rate remains
    above 8 percent? It is in both our economic and national
    security interests to use the oil and gas reserves right here
    in our own backyard.
        Mr. President, why not embrace bolstering our energy supply
    with a stable source of oil from Canada and North Dakota
    instead of politically tumultuous OPEC nations. Unlike the
    trillion-dollar failed stimulus law, the Keystone Project is
    privately funded and does not cost the taxpayers one dime. The
    Keystone XL Pipeline is a game changer for energy security. The
    pipeline when fully complete would transport nearly 1.3 million
    barrels of oil per day from Alberta and North Dakota to
    refineries in the Midwest and Gulf Coast.
        I believe this is in our national interest to move forward
    with this pipeline, and the State Department's 3-year delay is
    considering--in considering this pipeline is a national
    travesty. Three years into the Obama's Presidency he has
    severely limited access to both on and offshore oil and gas
    reserves, pushed the most expensive environmental regulatory
    agenda in history, and sent a half-billion dollars of taxpayer
    money to Solyndra, a now-bankrupt solar company.
        The fact of the matter is that our country needs all the
    energy we can get to continue growing our economy. With gas
    prices expected to rise in the coming months, his decision to
    reject the Keystone Pipeline means that our energy security is
    now in the hands of China, Iran, and other OPEC nations; not a
    good choice.
        Mr. Chairman, the Keystone Pipeline is the right thing to
    do to create jobs and make our Nation more energy secure. I
    would like to yield the balance of my time to Congressman Lee
    Terry from Nebraska.
        Mr. Terry. If the gentleman doesn't mind, can I reject that
    since I only have a minute 30 left?
        Mr. Sullivan. Yes, you can.
        Mr. Terry. But I appreciate that opportunity.
        Mr. Sullivan. Yes, sir.
        Mr. Whitfield. The gentleman yields back his time.
        At this time I will recognize the gentleman from
    California, Mr. Waxman, for 5 minutes.
        Mr. Waxman. Mr. Chairman, the topic that we are discussing
    is the Keystone Pipeline, but I must say the Republicans are
    like Keystone cops in the way they have handled this whole
    issue. They have been going way out on a limb to get this
    pipeline approved, even to the point where a tax cut for middle
    class Americans and unemployment benefits and money for
    physicians was--a bill was held up to make sure that there was
    a provision that gives special treatment to the Keystone
    Pipeline.
        But these brilliant people put in a provision that said the
    President has to decide the issue within a certain period of
    time. They forgot to tell him how he had to decide it, and the
    President said, ``I want to get all the facts first, and I am
    not going to approve it in this timeframe.''
        So now they have come up with a bill. This is a remarkable
    bill. This bill says--I wish people would read it. This--it
    says--this is a--the pipeline in this bill is the Keystone XL
    Pipeline. No question about it, and they are exempted from
    review except for 30 days, but if the FERC doesn't give them a
    permit in 30 days, then they will be deemed approved. They are
    not taking any chances now.
        And in addition they say that the two other agencies and
    all the other agencies that might be involved in reviewing this
    bill will no longer have the power to review the bill. So we
    have witnesses here from two of the agencies that ordinarily
    would review any legislation, not legislation, any application
    for something that would go over public lands, over waterways.
    Suddenly they are out. They can't review it.
        So when we found out, when Mr. Terry found out that was the
    case, he just said to us for the first time this morning, oh,
    we are not going to do that. We are going to put them back in
    the bill.
        So the application has to be approved in 30 days, or it is
    approved. If they want to make a modification, they can ask for
    a review for 30 days, but if it is not approved in 30 days, it
    is approved. For this one project.
        Now, we wanted to find out what interest the Koch
    Industries had. Now, why did we want to find that out? Well,
    the Koch Industries is one of the largest crude oil exporters
    in Canada. The Koch Industries own the terminal in Canada where
    the pipeline would begin. The Koch Industries has a refinery
    near where the pipeline would end, and the chairman said they--
    he would take their word for it they don't have any interest,
    even though there is evidence to the contrary.
        But then he throws out a real herring as no one better than
    a Keystone cop could do, and his argument, oh, well, wait a
    minute. There is another guy who agrees with the Democrats some
    of the time, who owns a railroad, and they might put the coal,
    tar sands on the railroad. So really what the Democrats are
    doing is fronting for another industry. Boy, does that make
    sense. You got the crude oil owner with the pipeline and a
    refinery, and we should just take their word for they have no
    interest, but we should then point the finger at Warren
    Buffett's company.
        And then what did they do? They say in hearings, well, we
    know what is going on. We are attributing the worst possible
    motives to the President of the United States. It is all
    political. Well, that is quite a statement. How did they get
    into the President's head? What the President said is I want to
    get information before I approve it, and they said, aha. What
    is really going on is the President is trying to take care of
    the environmentalists, and he is going to annoy them. They have
    got it all written down. They could be on 24-hour news radio.
    They have figured it all out without getting more information.
        Well, we have two witnesses right now, and before acting we
    should get some further information about this special interest
    bill. It directs the FERC to deal with the matter, but Ms.
    Gaffney-Smith, under the section 404 of the Clean Water Act,
    the U.S. Army Corps of Engineers has a permitting process to
    ensure that wetlands are protected from discharges of dredge or
    fill material.
        Now, doesn't this bill take away jurisdiction of your
    agency over this pipeline?
        Ms. Gaffney-Smith. It appears to do so. Yes.
        Mr. Waxman. And Mr. Pool, the--your agency has to do with
    wildlife. Tell me what your agency would ordinarily review and
    whether you have that ability to review it.
        Mr. Pool. Congressman, we--all these type actions we review
    them per land-use plans. That is the Congressional mandate
    under----
        Mr. Waxman. And now are you being taken, is that
    jurisdiction being taken away from you?
        Mr. Pool. It appears it would, that we would no longer
    apply those other Congressional----
        Mr. Waxman. We used to have a party in this country called
    the Know Nothings, and the people that are pushing this bill
    want us to know nothing about this pipeline except what the
    proponents want us to know, and if the Koch Brothers are
    proponents and are going to benefit, I would like to know about
    it, and the American people ought to know about it as well.
        My time has expired, and I hope we have another round.
        Mr. Whitfield. At this time we will recognize the gentleman
    from Oregon, Mr. Walden, for 5 minutes.
        Mr. Walden. I thank the gentleman very much.
        Mr. Pool, tell me again the agency you are with.
        Mr. Pool. Bureau of Land Management.
        Mr. Walden. And tell me how many acres are at play and that
    you have reviewed as part of the Keystone Pipeline review
    process?
        Mr. Pool. Congressman, the majority of that acreage is in
    Montana.
        Mr. Walden. Yes.
        Mr. Pool. A little over 42-mile segment and it comprises
    given the linear width 50 feet, it comprises about 250 acres
    with an additional 900 acres that would be needed probably for
    staging during the construction phase.
        Mr. Walden. Yes. I was thinking, I was looking for it here
    in your testimony. I thought it was actually 270 acres is what
    your testimony is but it is the same.
        Mr. Pool. Yes.
        Mr. Walden. Two fifty, 270. And you have done the
    environmental work on that. Right? The review process through
    NEPA already?
        Mr. Pool. Our segment was reviewed through the NEPA
    process. That was led by the State Department, and so the
    segment that we are associated with through our mandates was
    evaluated, and as a result of the final EIS that came out in
    August we did not identify any major constraints to that
    segment in terms of authorization.
        Mr. Walden. So you have done the full review, you have been
    through the EIS, the SEIS, the final environmental impact
    statement, and this is all about a 50-foot wide swath that
    covers 278. Now, the other land that you talked about, did you
    say 900, roughly 900 acres?
        Mr. Pool. You know, we issue----
        Mr. Walden. Temporary in and out.
        Mr. Pool. It is. It is, you know, temporary use for grants
    to facilitate staging during the construction phase.
        Mr. Walden. And then that would revert back.
        Mr. Pool. That is for a 3-year period.
        Mr. Walden. OK, and then talk to me about any issues
    related to the work that your fine agency did on the biological
    opinions related to the Endangered Species Act. Did you find
    any threat to threatened or endangered species?
        Mr. Pool. I think the initial biological opinion that was
    provided indicated there would not likely be a jeopardy to the
    existence of threatened or endangered species.
        Mr. Walden. Uh-huh.
        Mr. Pool. Obviously it was subsequently withdrawn and----
        Mr. Walden. But it was an FEIS as well. Right? I mean, it
    had gone through the full----
        Mr. Pool. That is correct. It was issued after the issuance
    of the FEIS.
        Mr. Walden. Right. So your agency, your biologists, all the
    people that do this work have thoroughly reviewed the Keystone
    part that would cross Federal land over which you have
    jurisdiction.
        Mr. Pool. That is correct.
        Mr. Walden. And found no--not--no likely jeopardy of any
    threatened or endangered specie, and you are talking about a
    total of 270 acres roughly for the full pipeline. Correct? So
    the State Department had all that information.
        Mr. Pool. Yes, they do.
        Mr. Walden. On the public lands.
        Mr. Pool. Yes. We were very cooperative to the State
    Department, one of many, so----
        Mr. Walden. Right.
        Mr. Pool [continuing]. That is the area that we were
    responsible is where it crosses public land.
        Mr. Walden. All right.
        Mr. Pool. I think we have got a sliver, about a mile and a
    half, in South Dakota, but the majority of that crossing of
    public land occurs in Montana.
        Mr. Walden. All right. All right. I appreciate that. I
    think that is important for the record because we have heard a
    lot of spin-up rhetoric here, and I just want to get to the
    facts. I went through some of the FEIS in the last hearing we
    had, and, you know, we hear about this jobs number. It gets
    batted all over, you know. I think we would want private sector
    investment, and this is $7 billion, I believe, in shovel ready,
    private sector construction jobs, and there are estimates of
    20,000.
        Now, I think what Mr. Waxman referenced was actually only
    the construction jobs during the phase of the construction, but
    I know having been a small business owner for more than 2
    decades that when you get involved in a big project, it is
    not--I mean, we were just in the radio business, but, you know,
    if I bought a transmitter, somebody had to build that thing,
    and I had to hire an engineer to install it, and I had to go
    through a lot of other efforts.
        There were a lot of other indirect jobs associated, and I
    think that is maybe where the difference of opinion here is on
    the jobs. If you only looked at just exactly the, you know,
    several thousands of jobs that would be there for 2 years in an
    industry that has been devastated over the last 3 years I would
    take whatever jobs we could, and if there is no environmental
    impact on the Federal lands, and it doesn't appear there would
    be.
        I think we can make the change Mr. Terry recommended to
    deal with the issue that Ms. Gaffney-Smith, if we change this
    bill to allow you to continue to have your statutory authority,
    that wouldn't be a problem, would it?
        Ms. Gaffney-Smith. No. We would evaluate all the crossings
    and impacts under the current authority, statutory authorities
    in our----
        Mr. Walden. And have you done that already?
        Ms. Gaffney-Smith. No, we haven't done it. We have only
    received preconstruction notifications for certain aspects of
    the pipeline.
        Mr. Walden. I see. My time has expired. Thank you very
    much.
        Mr. Whitfield. At this time we will recognize the gentleman
    from Texas, Mr. Gonzalez, for 5 minutes.
        Mr. Gonzalez. Thank you very much, Mr. Chairman, and
    welcome to the witnesses, and we had a witness from FERC that
    the way I recall his testimony was, one, they weren't really
    equipped to do it, two, the timeline that is being imposed by
    this particular bill, 3548, was not realistic. And I believe
    what you are providing and what you bring to the equation of
    building this pipeline safely is invaluable and essential, and
    I don't believe that this bill is the best method of
    accomplishing the building out of the Keystone Pipeline, which
    I support. I just don't think this is the way to do it.
        My greater fear and we are going to have some other
    witnesses that may address some other implications, and that is
    unrealistic expectations of what this pipeline is going to
    provide this country. I am going to do this as briefly as I
    can.
        First of all, when it comes to price, fuel prices reduces
    economic growth at a very, very sensitive time in this country.
    High gas prices reduced economic growth in this country in
    2012, by 0.5 percent when we know that total growth for the
    year we are looking at around 2 percent. So it was substantial.
        I do not believe that the Keystone Pipeline would reduce
    fuel prices, and that is what we are telling the American
    public, and we keep going on. I wish we had a hearing that
    would really explore the impact on price, because eventually it
    will be our constituents that will be dumbfounded when we
    complete the pipeline and they are still paying an
    extraordinary amount of money for a gallon of gasoline.
        Gasoline supplies are being exported to the highest bidder.
    I said this last week. Leading all exports in this country was
    fuel last year. So it is a global market. That is what we are
    in competition with, and this is from Tom Kloza, Chief Oil
    Analyst at Oil Price Information Service, which he said it is a
    world market and will go to the highest bidder.
        At a Senate hearing the president of Shell back in May of
    last year said, simply stated, oil is a global commodity, and
    oil companies are price takers, not price makers. That is the
    same lesson that is going to be imposed on refiners. It is a
    global market.
        So who owns all the oil that is coming and is going to be
    stored somewhere? Well, that is really curious, and maybe we
    can understand global markets and how the prices are arrived
    at. This is a story, Dallas Morning News, 15th of May last
    year, some 70 percent of contracts for future oil delivery are
    now bought by financial speculators, largely big investment
    banks, and hedge funds who never take control of the oil. They
    just flip the contract for a quick profit. Only about 30
    percent of oil contracts are bought by a purchaser that
    actually intends to use the oil such as an airline. That is
    according to the Commodity Futures Trading Commission which
    regulates trade in those contracts.
        Michael McMasters, Wall Street investor, testified before
    Congress repeatedly that speculators are pushing prices well
    beyond what the supply and the demand warrant.
        And then I want to end this by--until the early 1990s the
    ratio of speculative trades to trades made by commercial users
    of oil was tilted heavily towards the users of oil, but from
    1991, forward the big financial players such as Goldman Sachs
    and J.P. Morgan won exemptions that freed them from limits on
    how much they could speculate in future markets.
        Now, we have attempted to do something about that, but the
    majority party has fought us tooth and nail on this, whether it
    is Dodd-Frank or anything else that addresses some sort of a
    regulatory scheme that will now allow the play in of futures
    and commodities to the detriment of the American consumers.
    This is all part of it, but we seem to be ignoring a holistic
    approach.
        Now what really concerns me is we are going to have a
    witness that is going to tell us that this may not be the
    answer to national security. Now, I think that it can be
    depending on how we use the raw product and the refined product
    that we derive from oil. But if, in fact, it is a global
    market, the only way you maintain that edge is somehow making
    sure that there is available, accessible, and affordable supply
    in the United States.
        But if you have investors that are charged with the
    fiduciary duty of making a good profit for their investors, and
    that is the American way, and I have no problem with that, what
    do you do? Do you keep it in the domestic market, or do you
    export it?
        So there is not just about the safety of the pipeline. I
    believe that I would rather be dependent on Mexico and Canada
    than Saudi Arabia and Venezuela. I mean, there is no doubt
    about that. Venezuela. But the problem we have is not a
    realistic approach, and I guess that is what really concerns
    me, and I am hoping to return for the witnesses that are going
    to be touching on some of the subject matter that I just
    touched on. I appreciate your testimony today. I think you are
    invaluable to this whole equation of building a safe Keystone
    Pipeline.
        Thank you, Mr. Chairman.
        Mr. Whitfield. At this time I recognize the gentleman, Mr.
    Terry.
        Mr. Terry. Thank you, and I guess I am one that would like
    to submit items for the record, so Mr. Chairman, I ask
    unanimous consent that I may submit for the record a memorandum
    from the U.S. State Department, Mr. Keith Benes, dated June 22,
    2011.
        And on the issue that my friend from St.--not St. Louis,
    San Antonio, a little further south, mentioned, it is on the
    record from the State Department's review of this pipeline that
    eliminating transportation constraints from Cushing to Houston
    would not adversely affect Midwest gasoline consumers. In fact,
    it goes on and says that it would help crude prices decline
    considering that the transportation is consistent, reliable,
    and less expensive.
        Let us keep in mind that what we are talking about is
    around 700,000 barrels initially going up to a million barrels
    that would completely offset the need for us to send tankers to
    Venezuela and fill up with their heavy crude and ship it up
    here. It defies logic----
        Mr. Whitfield. I might just say without objection that----
        Mr. Terry. Thank you. I submit that so I will put it up
    here.
        [The information follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Terry. But it simply defies logic to me that when you
    have a transportation system that the State Department even
    testified was safer, the safest means of transport, the most
    environmentally safe transport that there be arguments that it
    not add to our energy security.
        And then secondly on the jobs, you know, it befuddles most
    Americans as polling has shown that this President denied the
    permit, and the jobs that would be created if you look into the
    union hall at the--for the laborers or the IBEW, there is
    people sitting on the bench waiting to have their names on the
    list to be called that when this starts they go to work. Right
    now in Nebraska there is an engineering company that has ceased
    doing work because of the denial of this permit on the Nebraska
    route.
        And, yes, it befuddles me and most of Americans when my
    friends on the other side of the aisle say that, geez, 6,000
    direct jobs out on the pipeline is not enough for them, and by
    the way it is only temporary. Well, I don't know an
    infrastructure project that isn't temporary. So evidently we
    are against all infrastructure now. It just--it befuddles me
    why they would oppose it.
        Now, Ms. Gaffney-Smith, I appreciate your testimony here
    today and with the help of the State Department you have made
    some valid points that we realized and have decided before this
    hearing today, even after last week, that we needed to make
    sure that we are clear in the fact that the intent of this bill
    was the Presidential authority needed to be moved away from the
    White House to an agency that had expertise in pipelines to
    make a decision on whether it is safety and soundness of the
    pipeline versus the politics that seem to have overwhelmed this
    issue.
        Now, with that making that correction that recognizes that
    we aren't usurping the Corps of Engineers' powers, we want you
    to make that review. Do you have any objections to this
    legislation?
        Ms. Gaffney-Smith. I can't speak to legislation where I
    haven't seen the actual language, but it would be appropriate,
    I think, for us to look at that and see if it, in fact, puts us
    back.
        Mr. Terry. Can I ask why when we asked the Corps of
    Engineers last week why----
        Mr. Whitfield. Your microphone.
        Mr. Terry. That you didn't want to be here, but you are
    here to be an opposing, hostile witness.
        Ms. Gaffney-Smith. I am not aware that an official
    invitation was provided.
        Mr. Terry. Let me ask you, Mr. Pool, in the State of
    Nebraska--thank you. I hear it now. In the State of Nebraska
    what Federal lands did the original route take? Did the
    original route go through an Federal lands?
        Mr. Pool. Yes, Congressman. There was a small piece of land
    administered by BOR, Bureau of Reclamation, had to do with the
    canal area, that we would have----
        Mr. Terry. That was South Dakota, wasn't it?
        Mr. Pool. No. That is Nebraska.
        Mr. Terry. OK.
        Mr. Pool. Yes, and so----
        Mr. Terry. All right. My time is up. I am sorry. I will
    have to get--I will submit that one for the record for you to
    get back to me on.
        Mr. Pool. I will do.
        Mr. Terry. All right.
        Mr. Whitfield. At this time I recognize the gentleman from
    Michigan, Mr. Dingell, for 5 minutes.
        Mr. Dingell. Mr. Chairman, I thank you for your courtesy. I
    would like to make a couple quick observations.
        In 1970, Scoop Jackson and I wrote the National
    Environmental Policy Act. It was to depoliticize the approval
    of projects and to see to it that we had the information we
    needed when we were going into those kinds of questions. So it
    required an environmental impact statement. That can be speeded
    up and properly so. But I would caution that if you speed it up
    too fast you are going to re-politicize this and make a fine
    mess out of the thing and cause no end of trouble and
    litigation. So I would beg you not to do this.
        I say that parenthetically I want to support this
    legislation. I think the Canadians are going to do this whether
    we like it or not, and they are either going to build a
    pipeline going west or going south, and it is better in my view
    that if that pipeline goes anywhere, it goes south to the
    United States. It will be a much more dependable source of
    energy for the United States.
        So I would urge my colleagues not to drive away members
    like me by moving too fast on this, because if you do, you will
    just simply create a wealth of litigation. The lawyers will
    have a fine time, make lots of money, and the business of the
    country will be, in fact, delayed by carelessness in this
    committee.
        Having said that, first question here to Mr. Pool, did the
    State Department refer the application to your Department or to
    the BLM? Yes or no?
        Mr. Pool. Say again, sir.
        Mr. Dingell. Did the State Department refer the application
    to your Department or to the BLM? Which?
        Mr. Pool. The--well, the application that we received was
    from the applicant for the segment of public land that was
    coming across Montana. It is a right-of-way application.
        Mr. Dingell. Now, Ms. Gaffney-Smith, did the State
    Department refer the application to the Corps?
        Ms. Gaffney-Smith. No. Like the Department of Interior, the
    application came from the applicant.
        Mr. Dingell. OK. Did BLM provide views on the permit
    application? Answer yes or no.
        Mr. Pool. Provide what, sir?
        Mr. Dingell. Did BLM provide views on the permit
    application? Please answer yes or no.
        Mr. Pool. We were part of the environmental impact process
    that was led by the State Department, and so the mandates that
    we have obligations with in terms of issuing a right-away grant
    in Montana then we did review the application in the context of
    the overall NEPA product.
        Mr. Dingell. Now, Ms. Gaffney-Smith, did the Corps provide
    views on the permit application?
        Ms. Gaffney-Smith. In three Corps districts in Galveston,
    Fort Worth, and Tulsa District we received a preconstruction
    notification for Nationwide Permit 12. We initiated
    coordination with other agencies, and we did provide a response
    to the applicant in accordance with our Nationwide Permit rules
    based on comments we received from the Department of State.
        Mr. Dingell. So your answer is yes?
        Ms. Gaffney-Smith. Yes.
        Mr. Dingell. Under H.R. 3548 environmental review process
    would need to be completed within 30 days. Even though BLM
    would no longer be involved in the permit review process under
    this bill, is 30 days enough time for BLM to do the necessary
    due diligence on submitting its views for the Keystone
    Pipeline? Yes or no?
        Mr. Pool. Congressman, I would say no, it is not enough
    time.
        Mr. Dingell. Very good. Ms. Gaffney-Smith, the same
    question to you. Is 30 days enough time for the Corps to submit
    its views?
        Ms. Gaffney-Smith. No, I don't believe so.
        Mr. Dingell. Do you believe--this goes to both, yes or no.
    Do you believe that FERC has the experience that BLM has to
    review a permit of this scope? Please answer yes or no.
        Mr. Pool. I don't believe they do.
        Mr. Dingell. Thank you. Madam.
        Ms. Gaffney-Smith. No, sir.
        Mr. Dingell. All right. Now, Ms. Gaffney-Smith, do you
    believe that FERC has the experience that the Corps has to
    review a permit of this scope? That is practically the same
    question as the prior one, but it is a little more subtle. Yes
    or no?
        Ms. Gaffney-Smith. No.
        Mr. Dingell. Now, and I want to thank you and apologize for
    the fact that I curtailed you in your time.
        Mr. Chairman, we could hurry this process in a way which is
    going to create lots of trouble and wind up ultimately with a
    delay or veto or profound litigation that could go on for
    years. If that occurs, we will then find ourselves in the
    splendid position of having to reenter this issue with all of
    the politics that goes to it and all the difficulty, or we
    could begin moving to try to work this thing out. I would like
    to move in that direction. I hope the committee will exceed to
    that kind of view, and we can begin working on this in that way
    rather than getting ourselves in a splendid fight which will
    generate monstrous ill will and create a situation where there
    will actually be more delay rather than less.
        Thank you, Mr. Chairman.
        Mr. Whitfield. Thank you, Mr. Dingell.
        We do have votes on the floor, but we do have about 6
    minutes left, so Ms. Capps, I believe you were here, so I would
    recognize you for a period of 5 minutes.
        Mrs. Capps. Thank you, Mr. Chairman, and because I know Mr.
    Markey also was here and wants to speak, I am asking Mr.
    Markey, do you want some of my time? OK. I will do it.
        I come from an area that is energy producing as well, and I
    am very impressed with--I have one image in my mind because it
    was you, Mr. Pool, when you were in charge of the BLM for the
    State of California, and I was newly elected, who escorted me
    for the first time to see what we call the Shangri-La of the
    West, the Carrizo Plain, eastern portion of San Luis Obispo
    County, fragile ecosystem that is remnant of the way the land
    was 300 years ago, in which the--all of the vested interests,
    the mineral rights, the cattle ranchers, and all of the
    stakeholders have found a way to preserve the natural history
    under the leadership of the BLM. And also make that an
    economically viable area.
        Oil and gas industry have all--have their role there, and I
    picture this pipeline going through the Carrizo Plain, and I am
    very concerned that we take the time that is needed to preserve
    in the Midwest what I know from my area to be the possibility
    of protecting the land as well as furthering economic interest.
    And I see this latest attempt by House Republicans to short-
    circuit the review process, and I want to ask you because I
    know your expertise, Mr. Pool, and I also have a number of Army
    Corps projects in my district as well and have had the pleasure
    of working with that agency.
        Mr. Pool, would it make sense for the Bureau of Land
    Management or the Fish and Wildlife Service to issue permits
    for a pipeline with an unknown route, which is what we have
    before us today?
        Mr. Pool. Congresswoman, I can only speak to the segment in
    Montana that we are knowledgeable of that area, and the
    application is very precise as to where it will be located.
        Mrs. Capps. Right, but now for the further part of it you
    have no knowledge exactly where the precise, about the
    preciseness. Is that correct?
        Mr. Pool. Generally speaking we do on a map. I mean, we see
    the whole delineation of the pipeline from north to south, but
    if it doesn't fall within public land jurisdiction, then it is
    not going to pertain to BLM.
        Mrs. Capps. OK. Would you like to respond and then I want
    to turn to my colleague?
        Ms. Gaffney-Smith. Can you repeat the question, please?
        Mrs. Capps. Does it make sense for the--does the Army Corps
    of Engineers typically provide permits for pipeline projects
    when the route of the pipeline is unknown?
        Ms. Gaffney-Smith. No. We only evaluate permits for
    applications that have been submitted by project applicants
    that have a project.
        Mrs. Capps. And I would like to yield the balance of my
    time to Mr. Markey.
        Mr. Markey. I thank the gentlelady. Under this bill are
    there any guarantees that all of the friendly Canadian oil that
    is sent through the pipeline will be sold here in the United
    States? No. No. So let me get this plan right.
        Step one. TransCanada puts the dirtiest oil on the planet
    into the brand new pipeline that the Republicans are giving
    them.
        Step two. TransCanada sends that oil to the Gulf Coast
    where they can make billions more than where they currently
    sell it in the Midwest.
        Step three. Refineries in the Gulf Coast re-export it to
    other countries at world oil prices and don't pay any taxes for
    doing it.
        Step four. Americans get higher gas prices and no increase
    in energy security.
        And step five. TransCanada and the sheiks in Saudi Arabia
    laugh all the way to the bank.
        That is pretty much what this bill allows. Make no mistake.
    This bill is not about energy security. It is not about jobs.
    It is about oil company profits plain and simple. This bill
    just turns the United States into a middleman in a multi-
    national oil deal between Canada, South America, Europe, or
    China.
        The Republican slogan last year was ``drill here, drill
    now, pay less.'' Now we are letting Canada drill here, ship
    here, and re-export so all we have to do is pay more, both in
    terms of money at the gas pump and costs to the environment.
        Today I along with Mr. Waxman and Congressman Cohen and
    Connolly and Welsh will introduce a bill to require that if
    this pipeline is permitted, the oil will stay here to benefit
    Americans. If we are going to go to the extreme lengths of
    legislating the construction of an environmentally-destructive
    pipeline to benefit a Canadian company, we should at least be
    sure that we in the United States can realize the energy
    security and consumer benefits that we have been told the
    project will bring. Let us play it straight about the Straits
    of Hormuz. Without my bill this pipeline will not do a thing to
    enhance the security of our country or of our brave men and
    women stationed all over the world for purposes of protecting
    our fossil fuel interests.
        We need a bill, if it does pass, that guarantees the oil
    from this pipeline stays here in the United States. The CEO of
    TransCanada sat right there and said he would not support that
    legislation. That is all we have to know about our relationship
    with this TransCanada company. This oil is to be exported
    around the world, not to keep prices lower here in the United
    States.
        I yield back the balance of my time, Mr. Chairman.
        Mr. Whitfield. I might say that of all the U.S. petroleum
    products today we are currently exporting less than 5 percent.
        At this time----
        Mr. Markey. The number one export for the United States in
    2011, was oil petroleum products. That was the number one
    export of all products in the United States.
        Mr. Whitfield. We want to increase our exports and----
        Mr. Markey. Not of oil. Not our security.
        Mr. Whitfield. All the Members are gone. We still have a
    vote on the floor, so I am going to release this panel. Ms.
    Gaffney-Smith, thank you for being here. Mr. Pool, thank you
    for being here.
        We will recess for about I would say 35 or 40 minutes, and
    then we will come back, and we will begin with panel two. Thank
    you. We are in recess.
        [Whereupon, at 11:22 a.m., the subcommittee recessed, to
    reconvene at 11:57 a.m. the same day.]
        Mr. Whitfield. I will call the hearing back to order, and
    before I introduce the witnesses I--as we were finishing up
    with the first panel there was a lot of back and forth about
    whether or not we were going to release the first panel, and in
    consultation with the majority, a decision was made to release
    them, but I had already told Mr. Bilbray before he left that he
    could come back and ask them questions, and since they are not
    here, I am going to recognize Mr. Bilbray for 3 minutes to say
    whatever he wanted to say about the Corps of Engineers or
    whatever the issue was.
        Mr. Bilbray. Thank you, Mr. Chairman, and Mr. Chairman, I
    appreciate you giving me the time. It is frustrating that you,
    you know, think you have an agreement and I think some of these
    questions are important, but I will raise them even with the
    Army Corps here because I have got a little experience in 404
    permit. I was actually cited or given my Miranda rights for a
    potential violation of the 404 permit because I was involved in
    damming up sewage coming in from Mexico, and they constituted a
    sewage break as possible navigable waters. So it is very near
    and dear.
        Also, Mr. Chairman, there is a lot of talk here in
    Washington, DC, about certain jobs, aggressive job programs by
    the Federal Government, and the Tennessee Authority was one of
    them that has been cited again and again, and I would like to
    point out to everybody that the Tennessee Authority, though it
    crossed thousands of so-called navigable waterways, never
    received one 404 permit because there was no such thing as a
    404 permit there.
        So when we talk about all these great job programs as ways
    of stimulating the economy that were in the past, we have got
    to remember just how much regulatory oversight and regulatory
    obstructionism de facto has occurred since then, that there
    were things that we have done in the past that would not be
    legal to do under today's regulations, and we need to address
    that.
        The other issue I wanted to raise was the fact that though
    it takes a 404 permit to build a--put a pipeline over a
    navigable waterway to transport oil, there is no 404 permit
    required to transport the same oil by truck over a bridge that
    spans a navigable waterway, the same way there is no
    requirement for a 404 permit for a train to go across a bridge
    that spans a navigable waterway, even though statistically the
    risk of having spills caused by truck and train transport into
    those navigable waterways is much higher. There is also the
    issue of the fact that no one talks about is they look at the
    risk of the pipeline but don't look at the no-project option
    risk that if you transport the same oil that 1,700 miles, it is
    87 times more dangerous to human life that an accident would
    occur than with transport by oil.
        So as--when we get into these issues, if somebody has
    worked in environmental agencies, have had the privilege of
    being a regulator, I think the environmental impact of the no-
    project option is one that any reasonable person who really
    cares about the environment has to understand. And the fact
    that the State Department has admitted that the transport of
    this oil by alternative sources on the same route or in any
    route related to it would be many times more polluting than the
    use of a pipeline, I am shocked that the same State Department,
    though, cannot quantify how many metric tons a year would be
    admitted by going to those other alternative transports, the
    truck and the train.
        I mean, coming from California and working on the Air
    Resources Board we would tell you down to the minute of what it
    is because we use good science to make those decisions. The
    State Department admits that the air pollution impacts for
    transport by the alternatives are higher than the transport of
    this pipeline. So I think in all fairness the adverse
    environmental impact of the no-project option has not been
    given a fair hearing, has not been identified and quantified in
    a responsible way. And before you start turning down these
    projects, you have got to look at what is going to be the
    impact to the environment before you do that.
        And let me just close. One of the things I am really
    concerned about is that Canada is being treated like we can't
    trust Canada with their environment. I think their history on
    environmental issues is something that really puts into
    question why we approved the many crossings in Mexico and we
    are holding up this one to Canada.
        And I yield back, Mr. Chairman.
        Mr. Whitfield. Thank you, Mr. Bilbray.
        At this time I would like to----
        Mr. Waxman. Mr. Chairman.
        Mr. Whitfield. Yes, sir.
        Mr. Waxman. I understand Mr. Engel would like to have his 3
    minutes on our side as well----
        Mr. Whitfield. Sure.
        Mr. Waxman [continuing]. And I hope he can be recognized.
        Mr. Whitfield. Absolutely.
        Mr. Engel, you are recognized for 3 minutes.
        Mr. Waxman. Would the gentleman yield to me?
        Mr. Engel. Yes. Yes. I will yield to the----
        Mr. Waxman. I want--I thank you for yielding because this
    last statement by my colleague from California made no sense to
    me. He is criticizing the different alternatives of bringing
    these tar sands down from Canada and saying if it is done by
    railroad as opposed to a pipeline. The real issue is whether
    they are going to do these tar sands at all because if they
    can't bring it into the United States, they are not going to
    develop those tar sands, and in developing those tar sands,
    which is the dirtiest source of coal, they have to spend so
    much energy to refine it sufficiently to have it go through a
    pipeline and maybe on a train. At some point it is going to
    have to be refined, and the energy used to refine it adds to
    the greenhouse gases.
        So I just want people to understand there is not just a
    question of how it is going to be transported. If it is going
    to be transported, a pipeline is a way we often use to
    transport these things. We have pipelines, by the way. We are
    not against pipelines but any pipeline ought to be reviewed by
    the appropriate agencies, and the two witnesses we had on the
    first panel who are going to be taken out of their opportunity
    to review any proposal, and, of course, this bill isn't about
    pipelines. It is only about one specific pipeline that is going
    to be given a treatment that no other pipeline has had, and
    that is--nobody reviews it. If they review it, they have 30
    days, and they got to come up with the right conclusion.
        That is a special interest bill earmarked for this one
    project, and it is really troubling because we have had--we are
    going to be adding to the greenhouse gases which not just
    affects Canada but the whole world at a time when we ought to
    be reducing greenhouse gases. We are going to be committed to
    that source of energy where we ought to be looking for other
    ways to use less energy and make us more independent. I think
    our witnesses on the second panel have more to say about that
    issue.
        I thank the gentleman for yielding part of his time.
        Mr. Engel. I would like to reclaim my time and say, you
    know, I have an open mind in general about the whole issue of
    Keystone, but I have--I am very concerned about this. Removing
    all Federal review of all agencies except FERC and then
    mandating that FERC issues the permit to me doesn't sound like
    we are really weighing the pros and cons. We are rushing to
    make a decision on one side.
        The health and safety of the American people is paramount,
    and if we are not going to take that seriously, it really
    troubles me.
        The other thing that troubles me is that I have, you know,
    I would feel much more comfortable if I knew that the oil that
    was coming down to be refined from Canada to be refined in
    Texas went for domestic consumption in the United States. I sat
    through hearings that this committee has had, and I am still
    not satisfied or convinced that that oil isn't going to get
    shipped to China or some other place.
        So those are some of the questions that I have about this.
        Mr. Waxman. Mr. Chairman, just for the record I misstated.
    I said the word coal. I didn't mean coal. I meant oil. This is
    the dirtiest source of oil from these tar sands, and that is
    what I meant to say.
        Mr. Whitfield. I am glad you were not talking about coal.
        Mr. Waxman. Yes. We are not. I wouldn't want to take you on
    on that issue.
        Mr. Whitfield. At this time I would like to introduce the
    panel, the second panel. We have with us Retired Brigadier
    General Steven Anderson, United States Army. He was originally
    from California, and we have Mr. Randall Thompson, who is a
    rancher in Nebraska, and we welcome you to the hearing. We
    appreciate your being here very much, and at this time, General
    Anderson, I will recognize you for your 5-minute opening
    statement, and I think the little box on the table there, a red
    light will come on when the 5 minutes is up. So you are
    recognized for 5 minutes.

    STATEMENTS OF STEVEN M. ANDERSON, BRIGADIER GENERAL (RETIRED),
     UNITED STATES ARMY; AND RANDALL F. THOMPSON, NEBRASKA RANCHER

                    STATEMENT OF STEVEN M. ANDERSON

        Mr. Anderson. Thank you, Mr. Chairman. I am Steve Anderson,
    a concerned citizen and part owner of a service-disabled-
    veteran-owned small business based in Knoxville, Tennessee. I
    would like to begin by thanking the subcommittee for this
    opportunity as well as thanking my President for the courageous
    decision he made to deny the Keystone XL Pipeline.
        Frankly, as a political conservative and a long-time
    registered Republican, I don't often agree with President
    Obama, but on this matter he absolutely got it right. I
    strongly oppose the Keystone XL Pipeline because it will
    degrade our national security. The critical element is simply
    this: The pipeline keeps our great Nation addicted to oil, a
    dependence that makes us both strategically and operationally
    vulnerable. As a retired general officer with over 31 years of
    service, I believe that I am fully qualified to comment on both
    of these vulnerabilities.
        The pipeline will keep us dependent upon outside sources to
    meet most of our energy needs. In reality Keystone only
    addresses a symptom of our illness, the source of our oil. It
    does nothing to cure the disease itself, which is our
    overreliance on oil, and as nations like China and India
    continue to demand more oil themselves, competition will
    increase and such international tension threatens our security
    and stability that we enjoy today.
        Additionally, continued carbon-based energy consumption
    drives CO2 emissions that will lead to climate
    change and increasingly catastrophic weather events. The
    potential instability puts us all at risk.
        Furthermore, the pipeline keeps us strategically vulnerable
    because our economy will remain petrocentric, and many
    thousands of companies developing clean energy technologies and
    providing renewable energy solutions won't grow capacity and
    capability as quickly as America needs. I believe Keystone will
    set back the alternative energy industry in this country 20
    years.
        Now, 2 weeks ago I read that Dubai will invest $2.7 billion
    in solar energy next year. Now, Dubai is an emirate surrounded
    by the world's largest oil fields. Their economy is 250 times
    smaller than ours, yet they are astute enough to see the
    consequences of an oil-dependent economy and are willing to
    invest now in renewable energy in a big way. Why aren't we? And
    because we are not fully committed to developing renewable
    energy capabilities, our soldiers in harm's way are
    operationally vulnerable, too.
        Serving for 15 months as General Petraeus's senior
    logistician in Iraq, I struggled with the challenge of
    providing 3 million gallons of fuel every day to sustain our
    forces. I saw the huge impact of not having any renewable
    energy systems and being completely dependent upon oil-based
    power generation.
        In consideration of the fully burdened cost of fuel in the
    combat zone, taxpayers have been spending well over $30 billion
    annually for our fuel needs. That is with a B, billion, and now
    that Pakistan has cut off our access to Afghanistan it will be
    even higher this year. But the dollar cost doesn't concern me
    near as much as the human cost.
        Over 1,000 American troops have been killed during the wars
    in Iraq and Afghanistan executing fuel missions. We should all
    be outraged by this loss of life, and to make matters worse,
    our oil addiction is empowering our enemy. Our long supply
    lines provide thousands of convenient targets, and the revenues
    from satiating our oil habit bring the enemy the resources they
    use to kill us.
        Imagine the benefits to our military if they were fighting
    a much less-capable enemy. Imagine leveraging solar, wind, and
    geothermal technologies to end the war sooner to save billions
    of dollars and soldier lives.
        Now, allow me also to comment on the jobs issues associated
    with this pipeline. As a former soldier I am extremely
    concerned of the high unemployment rates for our vets. Of
    course I want more in employment opportunities for my brethren,
    but they need jobs with staying power. They need careers.
    America is best served by an economic climate that generates
    jobs for vets for 100 years, not 100 days, and every job that
    the pipeline produces, a clean energy economy could produce a
    thousand.
        Bottom line, the pipeline feeds an addiction that makes us
    less secure and enables our enemies. Now is the time to make
    the hard choices and deal with this disease head on and put our
    future economic prosperity in the capable hands of middle
    America rather than big oil. I stand before you today
    absolutely convinced that the national mission and focus that
    put a man on the moon 42 years ago can once again prevail.
    Stopping this pipeline today will help set the conditions
    needed such that our innate American will to win and
    entrepreneurial drive will succeed in breaking our terrible
    addiction to oil.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Anderson follows:]
        [GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Thank you, General Anderson.
        Mr. Thompson, you are recognized for 5 minutes for your
    opening statement.

                    STATEMENT OF RANDALL F. THOMPSON

        Mr. Thompson. My name is Randy Thompson. I am from Martell,
    Nebraska. I am here as a Nebraska citizen and landowner. I
    would like to thank the chairman and the committee for the
    opportunity to be here today.
        I would like to start my testimony today by thanking
    President Obama for making the right decision by denying the
    permit for the Keystone XL Pipeline. I am proud to think that
    the voices of Nebraskans had an impact on his decision. Those
    of us who live and work along the proposed path of this
    pipeline applaud him for placing our welfare ahead of the
    interests of big oil companies.
        As a lifelong Nebraskan I can honestly tell you that I have
    never witnessed any project that has stirred the emotions of my
    fellow Nebraskans like the Keystone XL has. Contrary to what
    you may have heard from some of our elected officials, I can
    assure you that the dust has not settled in Nebraska on this
    issue.
        TransCanada has built a mountain of distrust among the
    ordinary citizens of our State and either with their voluntary
    agreement to move the pipeline out of the Sandhills we remain
    very skeptical. Many Nebraskans, including myself, view
    TransCanada as an overly-aggressive company who thought they
    could come in and intimidate and bully their way across our
    State, and having witnessed TransCanada's actions during the
    application process has made us weary of what they would do if
    they were empowered by a pre-mature permit. And I fear that an
    early permit would place a tremendous amount of pressure on the
    State of Nebraska to hurry through its review process.
        TransCanada has been granted plenty of free passes and now
    they seek yet another. They want their political allies to free
    them from the tangled mess that they themselves help to create.
    Perhaps it is time for the free passes to come to an end. If
    the Keystone XL truly has merit, then it should be able to
    withstand a rigorous and comprehensive review that it deserves
    and has not gotten.
        If this pipeline is built, thousands of us in the
    heartlands will have to live and work next to it for the rest
    of our lives and probably for the rest of my kids and my
    grandkids' lives. It will cross hundreds of our waterways, our
    lakes and streams, and it will only get riskier with the
    passage of time.
        Short circuiting the review process would be an injustice
    and, in fact, a gross injustice to all of us that have to live
    and work along the proposed path of this pipeline. Many of us
    feel that approval of this project would strip us of our
    individual property rights. We do not feel that a foreign
    corporation has any right to take our land for their private
    use and gain, especially when there has been no determination
    that this project is in the national interest. We have seen no
    evidence that this pipeline is anything other than export
    pipeline, providing access to the world oil market for Canadian
    tar sands. Outside of providing a few months of temporary
    employment for some Americans, it yields few other benefits.
        Mr. Terry himself in a speech a week or 2 weeks ago in the
    State of Nebraska said there would be no more than 30 permanent
    jobs as a result--in the State of Nebraska as a result of the
    pipeline project, and we are being asked to risk some of our
    greatest national resources and a lot of folks' livelihoods,
    and we are going to get 30 permanent jobs.
        Completion of the pipeline would actually increase the
    price of the oil we are currently importing from Canada. This
    is an undisputed fact. I mean, really, does this make any
    sense? We help them build the pipeline, and as a result we end
    up with higher oil and fuel prices in the Midwest? You know,
    why don't we just take the gun out and shoot ourselves in the
    foot. That would make more sense to me.
        Perhaps it is just my Nebraska logic, but from my
    perspective it appears that the United States is getting the
    short end of the stick on this deal. Canada and the big oil
    companies are reaping all the rewards while Americans are being
    left behind to fix the fences.
        Thank you very much.
        [The prepared statement of Mr. Thompson follows:]
        [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

        Mr. Whitfield. Thank you, Mr. Thompson. I appreciate your
    opening statement.
        I am going to defer my 5 minutes of questions and at this
    time recognize Mr. Pompeo of Kansas for his 5 minutes of
    questions.
        Mr. Pompeo. Great. Thank you, Mr. Chairman. Mr. Chairman, I
    begin by asking unanimous consent to enter into the record an
    article that appeared in the Wall Street Journal February 4,
    written by Ted Olson. Thank you.
        [The information follows:]
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        Mr. Pompeo. You know, I understand that Mr. Waxman doesn't
    like this pipeline. He called this hearing. He asked for
    witnesses to come, but the incredible political nature of it
    became really apparent when he had his chance to ask questions.
    He had 5 minutes. I watched the clock. He spent 4 minutes and
    31 seconds testifying. So he drug two folks out from the United
    States Government, brought them here this morning ostensibly
    because he was keenly interested. He thought it was absolutely
    critical that this committee hear from them, and he got between
    two and two and a half questions, depending on how you count
    them. Twenty-nine seconds. * * *

               *       *       *       *       *       *       *

        Mr. Waxman. Mr. Chairman, I want to make a point of order.
    I know the rules on the House Floor would not permit the
    gentleman to make such a personal attack on Members'
    motivations or actions. I am happy to answer it when I get my
    turn, but if I answer it and don't have enough time for
    questions to these witnesses, he will say I didn't ask them
    enough questions. But I think it is inappropriate, and I make a
    point of order that the words be stricken.
        Mr. Pompeo. Mr. Waxman, I----
        Mr. Whitfield. Would the gentleman hold for 1 minute?
        Mr. Pompeo. Certainly.
        Mr. Waxman. Unless the gentleman wants to withdraw those
    comments, and then he can go on with his questions.
        Mr. Pompeo. Well, I am happy to withdraw them so that we
    can proceed this morning. That is fine. I am happy to withdraw
    the comments.
        Mr. Waxman. Then I withdraw my point of order.
        Mr. Whitfield. The gentleman withdraws----
        Mr. Waxman. Appreciate the gentleman----
        Mr. Whitfield [continuing]. At his point.
        Mr. Waxman [continuing]. Withdrawing his personal
    statements.
        Mr. Pompeo. Certainly. We have now this standard that is
    apparently being applied by folks across the aisle. The folks
    across the aisle have this we try and decide whether there is a
    personal benefit, whether someone would or would not benefit
    from a particular stance. This is a private investment. Seven-
    billion-dollar private investment.
        But, you know, I watched. I wasn't here, but I watched this
    committee last year as we were debating and discussing--it was
    a little different. We didn't have hearings like this very
    often, but I watched them on the floor debate Obamacare and the
    Stimulus Package, and there was no discussion from the left
    about who might or might benefit from those takings from the
    taxpayer, those enormous government programs. And I just think
    it is intellectually desperate, dishonest to now for us to all
    have this different standard. We should have a standard about
    policy. We ought all to do that and not have a standard that--
    where we say, Hey, we are looking to see who benefits or who
    does not benefit from a particular piece of legislation.
        And with that I yield back my time.
        Mr. Whitfield. The gentleman yields back the balance of his
    time.
        At this time I recognize the gentleman from California for
    5 minutes for questions.
        Mr. Waxman. Mr. Chairman, before I get to questions I want
    to point out that since it has been commented that I am being
    political, the chairman of the subcommittee raised the issue of
    whether the President is in the full campaign mode trying to
    respond to these extremists in the environmental side,
    attributing his motives for that, and so this is all
    Presidential politics and suggested that perhaps we ought to
    look at Mr. Soros who has a train that could take this tar
    sands oil down to Texas instead of using a pipeline. Well, my
    point was never that----
        Mr. Whitfield. Warren Buffett, not Mr. Soros.
        Mr. Waxman. Excuse me. The other guy that you don't like,
    Mr. Buffett. Mr. Soros, Mr. Buffett. So I consider that an ad
    hominem political kind of argument.
        But my Republican colleagues and the American Petroleum
    Institute make several arguments for building this pipeline.
    They say we need the oil, it will lower gas prices, it will
    make us more secure as a Nation, but the facts just don't
    support these claims.
        The Energy Information Agency, which is part of the
    Department of Energy, is projecting that what America, that
    America's oil consumption is no longer growing. It is no longer
    growing, and the reason it is no longer growing is because we
    have insisted on more efficient automobiles that have better
    fuel mileage. The standards for these model years 2017, through
    2025, will further reduce our oil dependence.
        So with growth and consumption now in check, I don't think
    we have to be stampeded into something like this oil tar sands
    deal from Canada. This pipeline will not reduce gas prices. In
    fact, last year TransCanada admitted to this subcommittee that
    the pipeline will raise crude oil prices in the Midwest. There
    is a debate over how much it will raise those prices, but
    certainly it won't lower them.
        So that leaves the question of national security as a
    reason why we need to go along with this pipeline, and we have
    General Anderson, could you just briefly state what your
    experience, your relevant military experience has been?
        Mr. Anderson. Thirty-one years service in the Army. I am a
    professional logistician, most recently served in the Pentagon
    for 2 years as a chief of logistics operations and readiness in
    the Pentagon, and before that I was general David Petraeus's
    senior logistics officer at the multinational force in Iraq C-
    4.
        Mr. Waxman. In your statement you said that you didn't
    think this pipeline was in our national security interest. You
    said that America's oil dependence threatens our national
    security. Is this a controversial view among national security
    experts?
        Mr. Anderson. I don't think so. Certainly, although I am
    not sure if I would call myself a national security expert, I
    am an expert in regards to experiencing the operational impacts
    of our oil addiction in Iraq and Afghanistan, and I still do
    work in Afghanistan. I have spent quite a bit of time over
    there with my private interests, and I can tell you that we
    haven't changed at all in 10 years over there. We are still
    incredibly wasteful and inefficient, and we don't have any of
    the renewable energy technologies that I believe we need to
    save soldiers' lives.
        Mr. Waxman. This is not oil that is coming out of Canada
    that is going to be put through a pipeline through the United
    States. This is a different kind of oil. It comes from tar
    sands, and therefore, can have problems in the pipeline.
        The TransCanada has already one pipeline. It has been
    around for I think a year and a half, and they have already had
    14 spills over the last year and a half. So a lot of people are
    concerned about the safety of the pipeline, but that is a
    pipeline that is not carrying these--this crude oil tar sands
    if I am--if I understand the situation. It is not going to
    carry this kind of tar sands, and to get the tar sands ready to
    go through any pipeline there has to be such a use of energy to
    refine it sufficiently to go through the pipeline that it is
    going to cause us more greenhouse gases adding to climate
    change problems. Is that the way you see it?
        Mr. Anderson. That is exactly the way I see it, sir, and I
    think that it is very detrimental to this Nation to continue
    the CO2 emissions that we are doing and will no
    doubt do with the encouragement of this pipeline because I
    believe that it ultimately brings about climate change and
    global instability. And when that happens, I think the
    likelihood that soldiers like myself will have to fight and die
    in order to protect the stability of the world is much more
    likely.
        Mr. Waxman. The threat of tar sands oil spills from
    TransCanada's pipeline is another reason why people oppose it,
    and Mr. Michael Klink, who is an engineer and a safety
    inspector for TransCanada's first Keystone Pipeline that had
    those 14 spills, wrote an op-ed in the Lincoln Journal Star,
    which I would like to have put into the record, and he
    describes seeing the first Keystone Pipeline constructed with
    cheap foreign steel that cracked when workers tried to weld it.
        I would like to ask unanimous consent that article be----
        [The information follows:]
        [GRAPHIC] [TIFF OMITTED] T6343.080

        Mr. Waxman. And I also have a letter, this is--in addition
    to his op-ed I also have a letter from Mr. Klink that I would
    also ask unanimous consent to put in the record.
        Mr. Whitfield. Without objection.
        [The information follows:]
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        Mr. Waxman. My time has expired. I want to thank the two
    gentlemen, Mr. Thompson and General Anderson, for their
    testimony. I think that we ought to hear another side to this
    issue, not have it ram-roaded through the Congress, not have it
    given special-interest treatment. This is a big decision. We
    are going to be living with the consequences for maybe 50 to
    100 years, and it is in the wrong direction that it is going to
    take our Nation in terms of greenhouse gases, in terms of
    carbon emissions, in terms of pipeline safety, in terms of
    danger to the people around the pipeline, and the taking of the
    property from those people whose property is going to be taken
    for this special interest purpose.
        I yield back the balance of my time.
        Mr. Whitfield. The gentleman from Virginia, Mr. Griffith,
    is recognized for 5 minutes.
        Mr. Griffith. Thank you, Mr. Chairman, and I do appreciate
    you gentlemen taking your time to be with us today. We may
    disagree on some of this but do appreciate you all's American
    citizen success and your rights under our constitution to speak
    to your government and do commend you for being here.
        I do have some issues with some of the comments about jobs,
    you know. We can always argue over the numbers, but one thing
    that I find just really interesting is is that if you accept
    the argument that folks are going to--the oil is going to come
    in and then the oil is going to go to other countries, and this
    is just a pipeline to send the oil somewhere else, if that
    argument is accepted, you also have to accept the argument that
    before it goes to the other countries, it is going to be
    refined in the United States, thus adding value. To do that you
    have to add jobs to add that value, and when you add that value
    you add strength in our economy and tax dollars.
        So I recognize the situation you have, Mr. Thompson, being
    personal and the property rights involved, and I have not
    personally looked at that, but what I do see is a significant
    situation where it has been studied for a long time, and I do
    believe that there are jobs that are created by having the
    Keystone XL Pipeline, and I think a lot of the opposition, not
    necessarily yours but others, are folks who do not feel that we
    should continue to use carbon-based energy. I think that the
    general falls into that category, and I don't agree with that.
        Coming from a coal ridge and a natural ridge area of the
    United States, I would be remiss if I didn't tell you that I
    think that at least for the foreseeable future we are going to
    need to use oil, we are going to need to use coal, we are going
    to need to use natural gas. While we should be looking at green
    energy sources long term, I certainly wouldn't want to put us
    in a situation where our military had to rely on solar panels
    in order to provide it with the energy that it needs to move
    forward. It is certainly something that we should look at long
    term, but I think over the next 20 years we are still going to
    need our carbon-based fuels, and with that, Mr. Chairman, I
    yield back.
        Mr. Whitfield. The gentleman yields back.
        At this time I recognize the gentleman from Texas, Mr.
    Gonzalez, for 5 minutes.
        Mr. Gonzalez. Thank you very much, Mr. Chairman, and I want
    to thank the witnesses.
        And I am going to agree with my colleague that if you are
    exporting fuels and this is a refined product from obviously
    what we receive from Canada, exporting is good, balance of
    trade, creates jobs and such. The real question then comes as
    to how you refine it, and I just want to remind my colleagues
    on the other side of the aisle that we attended to make sure
    that we did it in a more cleaner fashion and more safe fashion,
    and that they opposed this every step of the way.
        Now, we were able to get a bill out of the House, but we
    have never have been able to conclude that. So I am hoping that
    they recognize the necessity of a safe and clean refining
    industry in this country in the way that we can accomplish and
    meet all of the demands of this country.
        Mr. Anderson, is that right?
        Mr. Anderson. Yes, sir.
        Mr. Gonzalez. Again, thank you for your service, first of
    all, and thank you for being here today. Thank you, Mr.
    Thompson. It is good to hear from you.
        I understand what you are saying, and I am going to agree
    with you. This is my fear. I am for the Keystone. I am from
    Texas, so you know that I still believe in fossil fuel. The
    question is how much longer will we still require a reliable
    source of fossil fuel in this country.
        I understand that many of the studies that are published
    come from the oil companies, and they will tell you that we are
    going to have domestic dependence for some years to come and
    globally even for a longer period of time. I hear your fear
    that my support of Keystone may well simply expand the duration
    of the time that we may be still dependent.
        My position is we will be importing because we need it, and
    I would rather get it from Canada and Mexico than anyone else
    for national security purpose, but that does not mean that we
    should not continue to aggressively view efficiency and
    conservation, renewables and alternatives.
        So I agree with you there has to be a healthy balance to be
    able to accomplish this. To my colleagues on the other side of
    the fence, the problem is that you truly just have almost 100
    percent dedication to fossil fuels. As much as I understand
    that they have to be part of the fix, I am going to give you a
    quote from John Quigley, former Secretary of Pennsylvania
    Department of Conservation and Natural Resources, in making
    reference to how we explore today for fossil fuels and such.
        He says, ``We are burning the furniture to heat the
    house.'' And that is the caution. That is the cautionary tale
    to all of us. Be realistic about our needs in the future, how
    we wean ourselves from the dependency on fossil fuel. Everyone
    is going to tell you that exploration, production, and refining
    of fossil fuels is a twilight industry, but I am here to tell
    you that it is a real long twilight, and we can't afford to be
    caught without an adequate supply and be depending on
    individuals, countries that we will be in jeopardy and in a
    flux for years to come.
        So I do agree with you, and I thank you again for your
    observation.
        Mr. Thompson, I do have a question about you. We hear a lot
    of complaining about regulation and such in this country, about
    its owners, its overburdened. The greatest exercise of
    governmental regulation is eminent domain, and you have made
    reference to that. So I want to know have you been approached
    by TransCanada to negotiate anything regarding some possible
    use of your property?
        Mr. Thompson. Absolutely.
        Mr. Gonzalez. Can you tell me about that experience?
        Mr. Thompson. Yes. We were first notified verbally that
    they intended to use eminent domain if we didn't go along with
    the offer that they had presented us for the use of our
    property. We definitely declined to do--enter into any kind of
    agreement with them. So they followed up with a written letter
    expressly stating that if we did not accept the terms of the
    agreement that they had sent to us, that they--if we did not
    accept those terms within 30 days, that they would then
    immediately proceed to take our land through eminent domain.
        And my problem with that, sir, they were still in the
    permitting process at this time, and yet they are threatening
    me with eminent domain, and they did this throughout the State
    of Nebraska. And I will guarantee you, sir, that many, many of
    the easements that landowners signed was due to the fact that
    TransCanada told them, threatened them with eminent domain. And
    there are not too many ranchers or any other ordinary citizens
    that are willing to take on a multibillion-dollar corporation,
    as we well know.
        Mr. Gonzalez. Well, keep us posted, Mr. Thompson. I would
    ask you that.
        My time is up.
        Mr. Thompson. OK.
        Mr. Gonzalez. And I hate cutting you off, but I thank you,
    and thank you, General. I yield back.
        Mr. Whitfield. I am going to continue to defer all my
    questions, and I will recognize the gentleman from California,
    Mr. Bilbray, for 5 minutes.
        Mr. Bilbray. Thank you very much.
        First of all, General Anderson, I appreciate your concerns
    about, you know, the global environmental issues. Your concern
    about this pipeline and its short-term and long-term impact I
    think is very, you know, what we want to talk about.
        Do you feel that the construction of the Alaskan Pipeline
    in the '70s was detrimental to the national security?
        Mr. Anderson. I think at that time that was the right thing
    to do. It was a different, much different situation, of course.
    Now the world has changed, and greenhouse gases and climate
    change and world instability are all these things that are much
    more in the forefront than they were 40, 50 years ago when we
    contemplated the Alaskan Pipeline.
        Mr. Bilbray. General, do you think that the, you know, the
    physics of environmental reality and the reality of the
    political instability of places like the Middle East have
    changed dramatically since we--the Congress voted on that
    pipeline?
        Mr. Anderson. I am not sure if I understand what you are--
    --
        Mr. Bilbray. I am just saying, I am saying again do you
    believe that the physics of environmental impact, issues like
    climate change, issues like emissions, toxic emissions and
    everything else, and the situations that have historically been
    unstable in the Middle East, do you think that there wasn't,
    those issues weren't at least if not perceived weren't reality
    at that time also?
        Mr. Anderson. No. I don't think that they were as developed
    as they are today, as apparent as they are today. I don't think
    we knew back then the impact of CO2 emissions.
        Mr. Bilbray. We didn't know. That is my point. We might not
    have known, but the fact is that it was still there. Wouldn't
    you agree?
        Mr. Anderson. I would concede you that point. Yes.
        Mr. Bilbray. What--do you believe the use and or the
    development and expansion of the use of nuclear power is a--
    contributing to the national security, or do you think that it
    is a detriment to the national security?
        Mr. Anderson. I consider nuclear power to be clean energy,
    and I support its development.
        Mr. Bilbray. And I appreciate you using that because one of
    the frustrations I have as somebody who has worked in clean air
    is people mix the word renewable as if it is all clean and deny
    clean energies across the line, and as you know the number one
    purchaser of nuclear reactors in this country is the United
    States Government, and I appreciate that.
        Do you believe that the mandated use of ethanol aids in the
    security of this country and its long-term environmental and
    economic and military stability?
        Mr. Anderson. Not really. No, I don't really believe that.
        Mr. Bilbray. In other words, you go along with those of us
    that have addressed in the issue in California that ethanol is
    not only a very expensive, non-sustainable option, but it is
    also a fluting option with evaporative emissions and related
    issues that was not clarified when the mandate occurred here in
    Washington.
        Mr. Anderson. I would agree with that.
        Mr. Bilbray. Even though those of us in California tried to
    warn Washington of this environmental and economic impact.
        Mr. Anderson. I would agree with that. Of course, I am not
    an expert in this field. I am talking about national security.
        Mr. Bilbray. I understand that, but we are getting back to
    this issue of how energy policy affects it.
        Would you agree that giving ethanol all of the benefits or
    the overwhelming majority of benefits like tax credits, blender
    fuels, and everything else while denying other environmental
    options such as algaes, the same packet, is counterproductive
    to the stated purpose of a national energy independence?
        Mr. Anderson. I would agree with that.
        Mr. Bilbray. Well, I want to thank you very much for your
    testimony, and I appreciate that we approach the challenges.
        I would ask that the record show the general very clear
    about the fact that what some people perceived as being
    environmental damaging in Washington may not be perceived by
    the general or myself of being not only damaging but maybe
    absolutely essential for environmental and national security
    purposes.
        And I appreciate it, General, and I yield back.
        Mr. Whitfield. The gentleman yields back.
        At this time I recognize the gentleman from Massachusetts,
    Mr. Markey, for 5 minutes.
        Mr. Markey. The Keystone Pipeline would carry some of the
    dirtiest oil in the world right through the middle of our
    country. It is a double-barrel threat to the environment,
    pumping out millions of tons of the pollutants that cause
    global warming, also risking oil spills into our ground water.
        We have been repeatedly told that approving this pipeline
    would lower gas prices at the pump, even though TransCanada
    projects that oil prices and its profits would rise because
    they can charge more for Keystone oil in the Gulf than it does
    in the Midwest.
        We have also been repeatedly told to get over our concerns
    because the oil coming through this pipeline would enable us to
    reduce our dependence on oil imported from unfriendly Middle
    Eastern nations, but it turns out that these energy benefits
    may be a complete fiction. Many of the refineries where the
    Keystone crude will be sent say they will re-export the refined
    fuels. They are also located in Port Arthur, Texas, which is a
    designated foreign trade zone. This means that when these
    refineries re-export the Keystone oil fuels, they won't even
    have to pay U.S. taxes on those exports.
        And in December when I asked the president of TransCanada
    whether he would agree to ensure that the oil and refined fuels
    stay here in the United States instead of being re-exported, he
    said, no.
        Mr. Anderson, last month Canadian Prime Minister, Stephen
    Harper, said that, ``When you look at the Iranians threatening
    to block the Straights of Hormuz, I think that just illustrates
    how critical it is that supply for the United States be North
    American.''
        Mr., do you think that this bill to legislate a permit for
    the Keystone Pipeline is guaranteed to reduce our dependence on
    oil transported through the Straights of Hormuz if we don't
    have some provision which ensures that the oil stays here in
    the United States?
        Mr. Anderson. No. I do not believe that it will guarantee
    energy security at all for our Nation.
        Mr. Markey. The American Petroleum Institute has cited our
    friendly relationship with Canada and polls that find that
    Americans would prefer to import more oil from Canada. Under
    this bill are there any guarantees that all of the friendly
    Canadian oil that is sent through the pipeline will be sold
    here in the United States?
        Mr. Anderson. No. I am not aware of any guarantees that
    that will happen.
        Mr. Markey. So what I am hearing you saying then is that
    there is a threat because they are extracting the oil from tar,
    that there is a greater likelihood of a dangerous warming on
    the planet and that the benefits as the pipeline goes through
    our country are not certain in terms of the oil staying here in
    our country to break our dependence upon imported oil.
        And so what is the benefit to the American people out of
    such a proposal?
        Mr. Anderson. There is no benefit. I believe it is a
    detriment to the American people.
        Mr. Markey. Again, summarize why is it a detriment?
        Mr. Anderson. The detriment because it keeps our addiction
    to oil, and our addiction to oil makes us strategically and
    operationally vulnerable.
        Mr. Markey. OK. Mr. Thompson, the route that TransCanada
    originally proposed would have gone through Nebraska's
    Sandhills. Even if a new proposed route would avoid the
    Sandhills, won't it still go through the Ogallala Aquifer?
        Mr. Thompson. We--well, we don't know where they are
    proposing a new route, so that is a problem. From that I have
    heard and what initial proposals they were talking about it
    would still cross the Ogallala Aquifer even though----
        Mr. Markey. What is the risk if that happens if there is a
    spill?
        Mr. Thompson. Absolutely there is a risk if that happens.
        Mr. Markey. And what would happen to the water table?
        Mr. Thompson. Well, if I could quickly explain that our
    water table is so high that the pipeline would actually be
    buried or submerged directly in the water in many places.
        Mr. Markey. Wow.
        Mr. Thompson. And so if any type of leak, it is going to go
    into our water supply.
        Mr. Markey. Wow and what would the impact of that be?
        Mr. Thompson. Well, it could be from small to tremendous. I
    mean, you got all kinds of small communities and like myself, I
    have livestock watering wells, I have irrigation wells that
    would be close to the pipeline. They become contaminated, that
    property has become virtually useless.
        Mr. Markey. And how do you feel about that in terms of the
    impact it could have upon your life and the lives of all the
    people in those smaller communities?
        Mr. Thompson. Well, you know, to put it bluntly, I am angry
    as hell when people want to play political football games with
    my livelihood.
        Mr. Markey. Well, we agree with you. We want Nebraska, the
    University of Nebraska to have a good football team, but we
    don't want oil pumping at the football games.
        Mr. Thompson. You are absolutely correct.
        Mr. Markey. With the people in Nebraska and we can see how
    their public health could really be in jeopardy.
        Mr. Thompson. I just think, you know, somewhere in this
    process we need to take a look at the people of America that
    actually are going to be, you know, impacted by this thing. It
    is not all about money and this and that. I mean, there is
    people's livelihoods at stake here, and I mean thousands of us
    and our resources. So that needs to enter the debate somewhere
    in the process.
        Mr. Markey. Thank you, sir, for being here. Thank you,
    General, for being here.
        Thank you, Mr. Chairman.
        Mr. Whitfield. The gentleman's time has expired.
        I will now recognize myself for 5 minutes.
        And the first thing I want to do is read from a memorandum
    from Carmine Defiglio, who is a Ph.D. deputy assistant
    secretary for policy analysis at the U.S. Department of Energy,
    and in this memo he specifically talks about the issue that Mr.
    Markey raised and that is this oil coming from Canada is going
    to be ending up exported out of the U.S. And I am going to read
    this verbatim.
        He said, ``This memorandum provides data and analysis about
    a number of issues. It concludes that refiners in the U.S. will
    likely consume additional Canadian oil sands well in excess of
    what would be provided by the Keystone XL Pipeline. It also
    concludes that exports of Canadian oil sands from Port Arthur
    are highly unlikely.''
        Now, when you hear this argument that as the President
    stated in his decision not to make a decision, he said that one
    of the reasons he was not going to make a decision was that he
    did not have sufficient information to make a decision, that
    Congress did not give him enough time. Well, as I had stated in
    my opening statement, this pipeline has now been under study
    for 40 months.
        In the fall of 2011, a supplemental draft environmental
    impact statement was issued by the State Department. After
    months of public hearings along the proposed route, the State
    Department issued its final environmental impact statement, and
    in that final environmental impact statement between two
    options, one of not building the pipeline versus, two, building
    the pipeline, they indicated that the preferred option was to
    build the pipeline as proposed.
        Now, a person just on the outside not paying any attention
    to this--everyone expected the State Department was going to
    make its final decision some time in the fall of 2011, and then
    all of sudden now it is they said that they would seek a new
    route through the State of Nebraska and undergo another round
    of studies that would not be complete until the first quarter
    of 2013. And that was the stated reason for President Obama not
    making a decision, was that--because of this new route through
    Nebraska.
        Now, when some of the political leaders in Nebraska
    realized their concerns were being used by the President to
    stop this project, they had a special session of the
    legislature was called, and a new law was passed to give the
    Nebraska Department of Environmental Quality the ability to
    cite and evaluate a new route for the pipeline within
    Nebraska's borders in half the timeframe that the State
    Department envisioned.
        So taking that development into account, the Keystone
    provision that was put into the Temporary Payroll Tax Cut
    Extension Act allowed the President to approve the pipeline
    while the State of Nebraska completed its environmental review.
    The final environmental impact statement that the State
    Department issued in August of 2011 was deemed satisfactory of
    all National Environmental Policy Act requirements, and no
    additional Federal review should be required.
        Because the route modification of this long pipeline is, in
    Nebraska is not an interstate modification, there really was no
    Federal role, and since the rest of the pipeline route outside
    of Nebraska and its evaluated environmental impact remained
    unchanged, there was really no reason for the White House or
    State Department to believe that there is not enough time to
    make the decision of the pipeline by February 21.
        I simply wanted to talk about that because when people
    hear, oh, well, the route has changed and that is why we don't
    have enough time, but there was a clear explanation of all of
    this, and I think I clearly stated it.
        In concluding I would just say that, General Anderson, we
    genuinely appreciate you being here. I would also like to thank
    you for your support and service to our country, and Mr.
    Thompson, we appreciate your being here and speaking up on your
    personal views about this issue, and Nebraska is in the Big Ten
    now. Right? Or Big 12. Right? OK. So we know they will continue
    to do well, and we will keep the record open for 10 days for
    any additional material that might want to be submitted, and
    with that we will conclude the hearing, and thank you all very
    much for your assistance and helping us out.
        With that, the hearing is concluded.
        [Whereupon, at 12:50 p.m., the subcommittee was adjourned.]