[House Report 112-703]
[From the U.S. Government Publishing Office]
112th Congress Rept. 112-703
HOUSE OF REPRESENTATIVES
2d Session Part 1
======================================================================
NORTH AMERICAN ENERGY ACCESS ACT
_______
December 17, 2012.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Upton, from the Committee on Energy and Commerce, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 3548]
[Including cost estimate of the Congressional Budget Office]
The Committee on Energy and Commerce, to whom was referred
the bill (H.R. 3548) to facilitate United States access to
North American oil resources, and for other purposes, having
considered the same, report favorably thereon with an amendment
and recommend that the bill as amended do pass.
CONTENTS
Page
Amendment........................................................ 2
Purpose and Summary.............................................. 3
Background and Need for Legislation.............................. 3
Hearings......................................................... 11
Committee Consideration.......................................... 12
Committee Votes.................................................. 12
Committee Oversight Findings..................................... 18
Statement of General Performance Goals and Objectives............ 18
New Budget Authority, Entitlement Authority, and Tax Expenditures 18
Earmark, Limited Tax Benefits, and Limited Tariff Benefits....... 18
Committee Cost Estimate.......................................... 18
Congressional Budget Office Estimate............................. 18
Federal Mandates Statement....................................... 19
Advisory Committee Statement..................................... 19
Applicability to Legislative Branch.............................. 19
Section-by-Section Analysis of the Legislation................... 19
Changes in Existing Law Made by the Bill, as Reported............ 20
Dissenting Views................................................. 21
AMENDMENT
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``North American Energy Access Act''.
SEC. 2. RESTRICTION.
(a) In General.--No person may construct, operate, or maintain the
oil pipeline and related facilities described in subsection (b) except
in accordance with a permit issued under this Act.
(b) Pipeline.--The pipeline and related facilities referred to in
subsection (a) are those described in the Final Environmental Impact
Statement for the Keystone XL Pipeline Project issued by the Department
of State on August 26, 2011, including any modified version of that
pipeline and related facilities.
SEC. 3. PERMIT.
(a) Issuance.--
(1) By ferc.--The Federal Energy Regulatory Commission shall,
not later than 30 days after receipt of an application
therefor, issue a permit without additional conditions for the
construction, operation, and maintenance of the oil pipeline
and related facilities described in section 2(b), to be
implemented in accordance with the terms of the Final
Environmental Impact Statement described in section 2(b). The
Commission shall not be required to prepare a Record of
Decision under section 1505.2 of title 40 of the Code of
Federal Regulations with respect to issuance of the permit
provided for in this section.
(2) Issuance in absence of ferc action.--If the Federal
Energy Regulatory Commission has not acted on an application
for a permit described in paragraph (1) within 30 days after
receiving such application, the permit shall be deemed to have
been issued under this Act upon the expiration of such 30-day
period.
(b) Modification.--
(1) In general.--The applicant for or holder of a permit
described in subsection (a) may make a substantial modification
to the pipeline route or any other term of the Final
Environmental Impact Statement described in section 2(b) only
with the approval of the Federal Energy Regulatory Commission.
The Commission shall expedite consideration of any such
modification proposal.
(2) Nebraska modification.--Within 30 days after the date of
enactment of this Act, the Federal Energy Regulatory Commission
shall enter into a memorandum of understanding with the State
of Nebraska for an effective and timely review under the
National Environmental Policy Act of 1969 of any modification
to the proposed pipeline route in Nebraska as proposed by the
applicant for the permit described in subsection (a). Not later
than 30 days after receiving approval of such proposed
modification from the Governor of Nebraska, the Commission
shall complete consideration of and approve such modification.
(3) Issuance in absence of ferc action.--If the Federal
Energy Regulatory Commission has not acted on an application
for approval of a modification described in paragraph (2)
within 30 days after receiving such application, such
modification shall be deemed to have been issued under this Act
upon expiration of the 30-day period.
(4) Construction during consideration of nebraska
modification.--While any modification of the proposed pipeline
route in Nebraska is under consideration pursuant to paragraph
(2), the holder of the permit issued under subsection (a) may
commence or continue with construction of any portion of the
pipeline and related facilities described in section 2(b) that
is not within the State of Nebraska.
SEC. 4. RELATION TO OTHER LAW.
(a) General Rule.--Notwithstanding Executive Order 13337 (3 U.S.C.
301 note), Executive Order 11423 (3 U.S.C. 301 note), section 301 of
title 3, United States Code, and any other Executive Order or provision
of law, no presidential permits shall be required for the construction,
operation, and maintenance of the pipeline and related facilities
described in section 2(b) of this Act.
(b) Applicability.--Nothing in this Act shall affect the application
to the pipeline and related facilities described in section 2(b) of--
(1) chapter 601 of title 49, United States Code; or
(2) the authority of the Federal Energy Regulatory Commission
to regulate oil pipeline rates and services.
PURPOSE AND SUMMARY
H.R. 3548, the ``North American Energy Access Act,'' was
introduced by Rep. Lee Terry (together with several other
representatives) on December 2, 2011. The legislation requires
the U.S. Federal Energy Regulatory Commission to issue, within
30 days, a permit for the Keystone XL pipeline project in
accordance with the terms of the August 26, 2011 Final
Environmental Impact Statement from the Department of State.
BACKGROUND AND NEED FOR LEGISLATION
Energy is often found far from where it is needed, and
North American crude oil is no exception. A Canadian pipeline
company, TransCanada, has long sought to increase the capacity
of its Keystone pipeline system in order to bring more oil from
Alberta to American refineries in the Midwest and Gulf Coast. A
permit application for its proposed 1,700 mile expansion
project, Keystone XL, was submitted to the U.S. Department of
State (DOS) in September 2008.
In the more than four years since--an unusually long period
for such permits--the Nation has faced consistently high
gasoline prices, stubbornly-high unemployment rates, and
continued risks of relying on oil from the Middle East.
Approval of Keystone XL would help address all of these
concerns, but the Obama Administration denied approval for the
pipeline in January 2012. The Administration's latest
announcement delaying a decision on a resubmitted application
for Keystone XL until 2013 raises serious questions about its
commitment to the project. In addition, a point may be reached
soon where continued inaction will force the Canadian
government to pursue other markets for its oil, at which time
the benefits to the American people of Keystone XL would be
lost.
Additional Canadian oil would benefit America in many ways.
Meeting the Nation's demand for petroleum and motor fuels
remains a challenge. However, domestic oil production growth is
limited by the Federal government. Many promising domestic
onshore and offshore areas are explicitly off-limits to energy
leasing, and even those that are not, may be subject to
permitting delays or regulatory constraints that effectively
make them so. Oil imports are needed to fill the gap between
consumption and domestic production.
Unfortunately, many nations that serve as a source of these
imports continue to display substantial instability as well as
anti-American hostility. This raises concerns about the risks--
both economic and otherwise--of continued reliance upon such
nations. Further, declining production from Venezuela and
Mexico, both important sources of supply for the large
concentration of refineries located along the Gulf Coast, are
leading to shortfalls that will need to be made up through oil
supplies from elsewhere.
For these reasons, Canadian oil is critical to America's
energy future. In addition to being a very stable country, a
strong ally, and our largest trading partner, Canada is
America's single largest source of oil imports. Canadian output
is on the rise, especially oil sands production from the
province of Alberta. The untapped potential is vast--Alberta is
second only to Saudi Arabia in proven reserves with an
estimated 175 billion barrels of recoverable oil. Canada
currently produces more than enough oil for its own needs and
sends most of the rest south, via pipelines, to American
refineries.
Thus, Alberta oil sands production represents a nearly
ideal source of supply for the American market that will
increase in the years ahead. And pipelines are the safest means
of transporting that oil. However, the existing pipeline system
between the two nations is unable to keep up with the growing
volumes (and especially the capacity from Canada to the Gulf
Coast), necessitating the need for a major expansion project
such as Keystone XL.
Once completed, the Keystone XL project would add at least
700,000 barrels per day to the 591,000 barrels per day capacity
of the existing pipeline, more than enough to substantially
reduce imports from the Middle East, as well as make a
difference in the price at the pump. And it can do so for the
long term, as the output from Alberta is expected to provide
this additional oil for decades to come. The pipeline also
would furnish a safe and efficient means of transporting the
growing domestic supplies of oil from the Bakken formation in
North Dakota and Montana to refineries in the Midwest and Gulf
Coast.
In addition to the energy benefits, the construction phase
of Keystone XL would create thousands of American jobs. The
completed pipeline will sustain many permanent jobs, including
those associated with refining the oil into gasoline and other
products. Alleviating potential bottlenecks in the Bakken
formation also will facilitate continued oil-industry job
growth there.
The substantial benefits of Keystone XL would come at no
cost to the American taxpayer; TransCanada will pay the
project's estimated $7 billion. In fact, over the lifetime of
the project, billions in revenue will be created in local,
State and Federal taxes.
Keystone XL Permitting Timeline
Ordinarily, the U.S. government does not have permit
authority for oil pipelines, even interstate pipelines.
Generally, the primary siting authority for oil pipelines would
be established under applicable State law. However, the
construction, connection, operation, and maintenance of a
pipeline that connects the United States with a foreign country
historically has required executive permission conveyed through
a Presidential Permit. Executive Order 13337 delegates the
President's authority to receive applications for Presidential
Permits to the Secretary of State.
TransCanada submitted an application for a Presidential
Permit with DOS in September 2008. In November 2008,
TransCanada submitted a comprehensive environmental report to
DOS, thereby initiating the National Environmental Policy Act
(NEPA) review process.
On January 28, 2009, DOS issued its Notice of Intent to
Prepare an Environmental Impact Statement (EIS), which
commenced a public scoping period to identify significant
environmental issues. Among other things, this included public
meetings held in more than twenty impacted communities. On
April 16, DOS issued a Draft Environmental Impact Statement
(DEIS) and extended the public comment period to 77 days.
On July 2, 2010, DOS closed the comment period on the DEIS.
The Environmental Protection Agency (EPA) determined that the
DEIS was inadequate, requiring DOS to perform additional review
in a Supplemental Draft Environmental Impact Statement (SDEIS).
The SDEIS was issued on April 29, 2011, and initiated an
additional 45-day comment period. DOS ultimately concluded that
``the information in this SDEIS does not alter the conclusions
reached in the [DEIS] regarding the need for and the potential
impacts of the proposed Project.''
On June 6, 2011, EPA again informed DOS that the SDEIS
contains insufficient information and requested additional
analysis be performed for the Final Environmental Impact
Statement (FEIS).
The FEIS was issued by DOS on August 26, 2011. It compiles
three years of work by fourteen Federal and State bureaus and
agencies. Its issuance commenced a 30-day public comment period
and a 90-day multi-agency comment period on the National
Interest Determination.
Since the President denied approval for the first Keystone
XL application on January 18, 2012, the process has essentially
begun anew. On May 4, 2012, TransCanada resubmitted an
application for a Presidential Permit for a revised Keystone XL
pipeline route with the Department of State. On June 15, 2012,
the Department of State filed a notice of intent in the Federal
Register to prepare a Supplemental Environmental Impact
Statement (SEIS) to the August 2011 EIS on Keystone XL. The
work on the SEIS continues to be ongoing.
The ongoing permitting process for Keystone XL has taken
over 50 months thus far, and has included multiple
opportunities for input from every affected level of government
as well as the public. By comparison, the original Keystone
pipeline project was permitted in less than 24 months.
Keystone XL Legislative Timeline
In order to address the Administration's delays in
approving this project, Rep. Lee Terry (R-NE) introduced H.R.
1938, the ``North American-Made Energy Security Act of 2011,''
on May 23, 2011. This bill would have required the President to
make a final decision on Keystone XL by November 1, 2011.
On May 23, 2011, the Subcommittee on Energy and Power held
a hearing on H.R. 1938. On June 15, 2011, the Subcommittee
favorably reported the bill to the full Committee on Energy and
Commerce. On June 23, 2011, the full Committee on Energy and
Commerce favorably reported H.R. 1938 to the House. On July 27,
2011, it passed the House by a vote of 279-147.
However, on July 25, 2011, the President issued a Statement
of Administration Policy in opposition to the bill. The
Administration did not reject Keystone XL explicitly, but
asserted that imposing a statutory deadline of November 1, 2011
``is unnecessary because the Department of State has been
working diligently to complete the permit decision process for
the Keystone XL pipeline and has publicly committed to reaching
a decision before December 31, 2011.''
On November 10, 2011, the White House reversed position and
announced that DOS will need additional time beyond 2011 to
make a decision on Keystone XL, suggesting a target date of
2013 at the earliest. The ostensible reason for the delay was a
dispute in Nebraska over a portion of the pipeline's route
through that State. That dispute is currently being resolved by
the State government of Nebraska.
The Nebraska State legislature and Governor have made clear
that it was never their intention for a relatively minor route
change to become a rationale for lengthy Federal delays or to
jeopardize the entire 1,700 mile project. On November 15, 2011,
Governor Dave Heineman stated that ``Nebraskans have been clear
about our position on the pipeline--we support it.''
On December 23, 2011, Congress passed and the President
signed H.R. 3765, the ``Temporary Payroll Tax Cut Continuation
Act.'' It included provisions requiring the President to
approve Keystone XL within 60 days unless he determines that
doing so is not in the national interest. On January 18, 2012,
well before the 60-day period had run, the President rejected
the pipeline, claiming that more time is needed for DOS to
review it. Though this rejection was purportedly for Nebraska's
benefit, Governor Heineman responded that ``I am very
disappointed with the actions of President Obama and his
decision to deny a jobs-creating pipeline,'' and the Governor
asserted that the President ``should be focused on putting
Americans back to work, and could have done so by issuing
conditional approval of the pipeline.''
It should be noted that the intra-state concerns in
Nebraska are completely unrelated to the reason for Federal
involvement in Keystone XL--the fact that the pipeline would
cross the border from Canada into the U.S.
Notwithstanding H.R. 3765, Mr. Terry introduced H.R. 3548,
the ``North American Energy Access Act,'' on December 2, 2011.
This bill would require FERC to issue a permit for the Keystone
XL project in accordance with the terms of the FEIS. If FERC
does not do so within 30 days, the project is deemed to be
approved. The bill also requires that FERC incorporate, in a
timely fashion, any proposed route modifications or other
changes approved by the Governor of Nebraska.
H.R. 3548 does not alter or short circuit the environmental
reviews and other requirements necessary for Keystone XL to
obtain its Federal permit. Indeed, the project has been studied
extensively and all legitimate concerns have been raised and
addressed in the FEIS. H.R. 3548 simply requires the FERC to
approve the project based on the FEIS.
The Energy Benefits of Keystone XL
Once completed, the Keystone XL project would add another
700,000 barrels per day of pipeline capacity to the system's
existing 591,000 barrels per day, bringing this oil to
refineries in the Midwest and Gulf Coast. Subsequent upgrades
could boost additional throughput to over 800,000 barrels per
day. In addition to the Canadian oil, the pipeline also could
carry up to 100,000 barrels per day of American oil from the
Bakken formation.
According to an assessment of Keystone XL conducted for the
Department of Energy and included in the SDEIS (DOE KXL
Report), the project holds ``the potential to very
substantially reduce U.S. dependency on non-Canadian foreign
oil, including from the Middle East.''
Rapidly-growing production from Alberta's oil sands is the
reason the pipeline expansion is needed. America currently
imports approximately 2 million barrels per day (mbd) from
Canada, of which 1.1 mbd is from oil sands. However, oil sands
production is relatively new, and its potential has only begun
to be realized. According to testimony at the May 23, 2011
hearing from James Burkhard, Managing Director of IHS CERA,
``the oil sands make Canada one of the very few countries in
the world that could substantially increase oil production for
the next several decades.'' He added that ``over the past
decade production growth picked up rapidly and supply more than
doubled to about 1.5 mbd in 2010. This is greater than the 1.2
mbd that Libya exported to the global market in 2010, before
the civil war.''
Oil sands production is expected to continue its rapid
growth. Murray Smith, former member of the Legislative Assembly
of Alberta and Minister of Energy, testified that ``Alberta's
production is expected to increase to over 3 million barrels a
day by the end of the decade.'' In other words, Canada has more
than enough oil to dramatically increase exports to the United
States and maintain them for the foreseeable future. The only
limiting factor is pipeline capacity.
By way of comparison, in June 2011, President Obama
responded to the Libya-induced price spike by authorizing the
release of 30 million barrels of oil from the Strategic
Petroleum Reserve (SPR) for a period of 30 days--an additional
million barrels per day. Keystone XL has the potential to add
80 percent as much oil per day as this SPR release, but with
two critical differences. First, the SPR is not a source of
newly-produced oil, but a stockpile previously set aside for
emergency use. The oil coming from Canada via Keystone XL would
represent a genuine addition to the Nation's supply. More
importantly, while the SPR stockpile is available for a short
time span and then would need to be replenished, Keystone XL
could supply oil every day for several decades--truly part of
the long-term solution to the Nation's demand for all of its
petroleum needs.
These benefits would largely be lost if Keystone XL is not
built. Although some of Canada's growing oil production could
reach the U.S. through other pipelines, as well as alternatives
like rail transport, most of it would bypass the country
without Keystone XL. The Canadian government has stated that
continued delays would leave them little choice but to increase
pipeline capacity west to Pacific ports for transport by tanker
to China and other Asian markets. Indeed, Canadian Prime
Minister Steven Harper expressed ``profound disappointment''
with the President's January 18, 2012 decision not to approve
Keystone XL, and said that Canada ``will continue to work to
diversify its energy exports.'' Subsequently, the Prime
Minister has visited China, and among the agenda items was a
Canadian proposal to build an oil pipeline from Alberta to the
Pacific Coast.
The loss of Canadian oil to Asia would damage the Nation's
energy security. The KXL DOE Report finds that the choice for
Canadian exporters ``is between moving increasing crude oil
volumes to the USA or to Asia,'' and that if these ``crudes
move to Asia instead of the U.S., the `gap' would be filled by
offsetting increases in crude oil imports from other foreign
sources, especially the Middle East (as the primary balancing
supplier).'' Similarly, the FEIS concludes that if the pipeline
is not built, Gulf Coast refineries ``would be forced to rely
on oil shipped by barge or tanker from areas outside of North
America from regions which are experiencing declining
production or are not secure and reliable sources of crude
oil.''
Unlike Canadian oil flowing through a pipeline to the
Pacific Coast and on to tankers headed for Asia, virtually all
of the oil flowing through Keystone XL would go to American
refineries. DOE Deputy Assistant Secretary for Policy Analysis
Carmine Defiglio concluded in a June 22, 2011 Memorandum to DOS
that the export of Keystone XL oil from American ports would be
``unlikely.'' Further, while most of the products refined from
Canadian oil sent to Asia would stay in Asia, most of the
gasoline and other fuels made from Keystone XL oil would serve
the American market.
The Economic Benefits of Keystone XL
In addition to the benefits of a secure supply of oil from
a strong ally, approval of Keystone XL also is projected to
create a substantial number of jobs. Stephen Kelly, Assistant
General President of the United Association of Plumbers and
Pipe Fitters, testified in favor of H.R. 1938 at the May 23,
2011 hearing. According to estimates cited by Kelly, the
project is ``expected to create approximately 13,000 high-
quality, good-paying construction jobs.'' Kelly testified that
the wages and benefits for these jobs would be approximately
$50 per hour.
The benefits will go well beyond the direct jobs building
the pipeline. For example, most of the construction equipment,
pipe, and other supplies used to build Keystone XL would be
U.S.-sourced, as well as much of the technical expertise
associated with the project. Kelly testified that the indirect
jobs ``include 7,000 manufacturing jobs associated with the
production of materials and components for the pipeline, and
over 118,000 spin-off jobs in various sectors related to the
design, construction and operation of the pipeline.''
The strong labor union support for Keystone XL was
reaffirmed at the December 2, 2011, hearing on H.R. 3548 before
the Subcommittee on Energy and Power. Representatives of the
Laborers' International Union of North America, the
International Union of Operating Engineers, the United
Association of Plumbers and Pipe Fitters, and the International
Brotherhood of Electrical Workers all testified in support of
H.R. 3548. For example, Brent Booker, Director of the
Construction Department at the Laborers' International Union of
North America, stated that ``Keystone XL will create good-
paying jobs here in the United States and Canada and will
increase the nation's energy security by providing a reliable
source of crude oil from a friendly and stable trading partner.
And it will provide state and local governments with new
revenue that can help them provide the needed services to the
public.'' These four union witnesses estimated that Keystone XL
would create, respectively, 3 million, 3 million, 2.5 to 3
million, and 64,000 worker-hours for their members--and they
are not the only unions that would be involved in the project.
Even after the construction phase is complete, Keystone XL
would provide employment associated with its operation. Along
with Canadian oil, the pipeline also would alleviate potential
oil bottlenecks that might otherwise limit growing oil
production in North Dakota and Montana, ensuring continued job
growth there. In addition, Canadian oil can take the place of
declining Mexican and Venezuelan supplies reaching Gulf Coast
refineries, helping to maintain or expand jobs at those
facilities. Further, given the well-established inverse
relationship between energy costs and employment, the reduction
in oil and gasoline prices as a consequence of Keystone XL
would yield additional jobs throughout the economy.
Ironically, during the span in which the Keystone XL permit
has languished at DOS, the Obama Administration and Congress
enacted and implemented a $787 billion stimulus package in an
attempt to reduce unemployment and jump-start the economy.
Keystone XL would have been a prime example of the ``shovel-
ready'' projects that proponents of the stimulus package had
hoped to initiate--one that creates a large number of well-
paying jobs and boosts economic activity. Furthermore, while
the stimulus package cost taxpayers a great deal of money (and
whether it actually created an appreciable number of jobs is a
matter of considerable debate), the $7 billion Keystone XL
project would be financed privately. In fact, rather than
require tax dollars, Keystone XL would generate substantial tax
revenues for State and local communities along its route as
well as the Federal government--an estimated $138.4 million in
annual property tax revenues alone.
It is worth noting the stark contrast between Keystone XL
and the growing number of Federally-funded failures like solar-
panel maker Solyndra, the first recipient of stimulus money to
go bankrupt. The former has the potential to create thousands
of jobs while adding to the Nation's energy supply and
generating government revenues, while the latter is currently
providing no jobs and no energy, but is costing taxpayers more
than half a billion dollars.
The Environmental Benefits of Keystone XL
The FEIS makes a strong environmental case for building
Keystone XL. Indeed, it finds that every alternative to this
project carries relatively higher environmental risks.
Throughout the lengthy permitting process, any and all
environmental and safety concerns have been addressed. The FEIS
noted that DOS worked with the Pipeline and Hazardous Materials
Safety Administration (PHMSA) to require 57 project-specific
special conditions. As a result, ``DOS determined that
incorporation of the Special Conditions would result in a
Project that would have a degree of safety greater than any
typically constructed domestic oil pipeline system under
current regulations and a degree of safety along the entire
length of the pipeline system that would be similar to that
required in high consequence areas as defined in the
regulations.'' In effect, the FEIS is requiring Keystone XL to
be the safest oil pipeline in existence. At the December 2,
2011 hearing, David Barnett, Special Representative of the
United Association of Plumbers and Pipe Fitters, criticized the
irrational preoccupation with the risks from Keystone XL. He
stated that ``there are thousands of miles of 50 and 100-year
old oil and gas pipelines that are well beyond their useful
life,'' but that ``in focusing attention on Keystone XL, we
have zeroed in on the model pipeline rather than the problem
pipelines.''
Nonetheless, the FEIS concedes that Keystone XL carries
some risks, but concludes that it is ``preferred alternative''
to any other option. In fact, it states that ``DOS does not
regard the No Action Alternative [not building the pipeline] to
be preferable to the proposed Project.''
The Keystone XL pipeline represents the shortest path
between North America's largest source of new oil supplies
(Alberta) and North America's largest demand center for that
oil (the refineries of the Gulf Coast). Further, pipelines are
the safest mode of oil transport, as compared to tanker, barge,
train, or truck. Without the Keystone XL pipeline linking
Canadian production with American refining, Alberta's growing
oil supplies will travel longer distances over less safe means
to reach Asia, while Middle Eastern and other oil supplies will
do the same to reach the Gulf Coast. As discussed previously,
this would be counterproductive from an energy security
standpoint, but it would also be counterproductive from an
environmental standpoint. Beyond the risk of spills, the FEIS
notes that ``transport of crude oil by tanker rather than by
pipeline would likely result in greater transportation-related
GHG emissions.''
Moreover, claims of environmental damage attributable to
production of the oil sands in Alberta--including assertions of
substantially higher greenhouse gas emissions relative to
conventional oil--are particularly misplaced in the context of
the U.S. approval process for Keystone XL. For example, the on-
site impacts and emissions are the responsibility of the
Alberta government, and there is no need for a redundant
consideration of these matters. At a May 23, 2011 hearing
before the Subcommittee on Energy and Power, Dan McFayden,
Chairman of the Energy Resources Conservation Board of Alberta,
testified to the rigor and thoroughness of its approval process
and the many safeguards that have been put in place; ``Every
oil sands project is subjected to regulatory scrutiny
throughout its life cycle, from authorization and operational
compliance to end-of-life closure,'' he said.
More importantly, the Canadian and Alberta provincial
governments have made clear that they will allow oil sands
production to increase regardless of Keystone XL's fate. Thus,
approval or disapproval of the project ultimately makes no
difference regarding the environmental impacts and emissions
associated with the production of Albertan oil sands.
These conclusions are further supported by the DOE KXL
Report, which includes an assessment of global life-cycle GHG
impacts of scenarios evaluated in this study. That study
concluded ``no significant change . . . in global refinery CO2
and total life-cycle GHG emissions whether KXL is built or
not.'' Changes in lifecycle emissions were calculated with
models and methodology used in deriving indirect impacts of
petroleum consumption for the EPA's renewable fuels standard
program.
The Trans-Alaska Pipeline Precedent
There are many parallels between Keystone XL and the debate
over the Trans-Alaska Pipeline in the early 1970s. Back then, a
major discovery of oil in the North Slope of Alaska at Prudhoe
Bay--the largest on the continent prior to development of the
Alberta oil sands--necessitated a pipeline to bring this oil to
southern Alaska for transport to West Coast refineries. A
consortium of energy companies proposed to build the 800-mile
Trans-Alaska Pipeline.
The project was thoroughly studied for several years during
which all legitimate environmental and safety concerns were
addressed. Nonetheless, Federal approval became bogged down by
NEPA-related delays similar to those currently impeding
Keystone XL.
However, Middle-East turmoil and rising oil prices finally
sparked Congressional action. In 1973, Congress passed and
President Nixon signed the Trans-Alaska Pipeline Authorization
Act, which removed all Federal roadblocks to the project and
deemed it approved. The statute's purpose was ``to insure that,
because of the extensive governmental studies already made of
this project and the national interest in early delivery of
North Slope oil to domestic markets, the trans-Alaska oil
pipeline be constructed promptly without further administrative
or judicial delay or impediment.''
Construction on the Trans-Alaska Pipeline began in 1974.
Despite numerous engineering challenges associated with
Alaska's extreme temperatures and rugged terrain, the pipeline
was completed on time in 1977. It has been in operation ever
since.
To date, the pipeline has delivered over 16 billion barrels
of oil to the American market, considerably more than a number
of the project's critics had predicted. It has contributed
substantially to the health of Alaska's economy while creating
jobs across the country and strengthening national security.
And, notwithstanding the many dire predictions at the time from
anti-pipeline activist groups (several of whom now oppose
Keystone XL), the pipeline has amassed an excellent
environmental and safety record, and it did so using technology
far less sophisticated than what is required in the FEIS for
Keystone XL. Most consider the pipeline to be a great success--
indeed, many see it as a source of national pride as well as
oil.
The Trans-Alaska Pipeline Authorization Act was an
acknowledgement by Congress that the environmental review
process it created had gotten out of hand, and that a project
clearly in the national interest was being jeopardized. With
that bill, Congress took back control of the process and put an
end to the unnecessary delays. As a result, an important
pipeline project at risk of being stopped by red tape was
allowed to proceed. The North American Energy Access Act seeks
to accomplish much the same thing.
HEARINGS
On December 2, 2011, the Subcommittee on Energy and Power
held a legislative hearing on the ``North American Energy
Access Act,'' and received testimony from:
Mr. Brent Booker, Director, Construction
Department, Laborers' International Union of North
America;
Mr. Jeffrey Soth, Assistant Director,
Department of Legislative and Political Affairs,
International Union of Operating Engineers;
Mr. David Barnett, Special Representative,
Pipe Line Division, United Association of Journeymen
and Apprentices of the Plumbing and Pipe Fitting
Industry of the United States and Canada;
Mr. Bruce Burton, International
Representative, International Brotherhood of Electrical
Workers;
Mr. Jerome Ringo, Chief Business Officer,
BARD Holdings Inc.; and,
Ms. Jane Kleeb, Executive Director, Bold
Nebraska.
A second legislative hearing was held on January 25, 2012,
and testimony was received from:
The Honorable Kerri-Ann Jones, Assistant
Secretary of State, Bureau of Oceans and International
Environmental and Scientific Affairs; and
Mr. Jeffrey C. Wright, Director, Office of
Energy Projects, Federal Energy Regulatory Commission.
A third legislative hearing was held on February 3, 2012,
and testimony was received from:
Ms. Margaret Gaffney-Smith, Chief--
Regulatory Programs, U.S. Army Corps of Engineers;
Mr. Mike Pool, Deputy Director, Bureau of
Land Management;
Mr. Steven M. Anderson, Brigadier General
(Retired), U.S. Army; and,
Mr. Randall F. Thompson, Nebraska rancher.
COMMITTEE CONSIDERATION
On December 2, 2011, H.R. 3548, the ``North American Energy
Access Act,'' was introduced.
On December 2, 2011, January 25, 2012, and February 3,
2012, the Subcommittee on Energy and Power held legislative
hearings on H.R. 3548.
On February 6 and 7, 2012, the full Committee on Energy and
Commerce met in open markup session. During the markup, 6
amendments were offered, of which 1 was adopted, and the
Committee ordered H.R. 3548 favorably reported to the House.
COMMITTEE VOTES
Clause 3(b) of rule XII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. A
motion by Mr. Upton to order H.R. 3548, reported to the House,
as amended, was agreed to by a record vote of 33 yeas and 20
nays. The following reflects the recorded votes taken during
the Committee consideration, including the names of those
Members voting for and against.
COMMITTEE OVERSIGHT FINDINGS
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee made findings that are
reflected in this report.
STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES
H.R. 3548 facilitates United States access to North
American oil resources.
NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee finds that H.R.
3548, the ``North American Energy Access Act,'' would result in
no new or increased budget authority, entitlement authority, or
tax expenditures or revenues.
EARMARK, LIMITED TAX BENEFITS, AND LIMITED TARIFF BENEFITS
In compliance with clause 9(e), 9(f), and 9(g) of rule XXI,
the Committee finds that H.R. 3548, the North American-Made
Energy Security Act, contains no earmarks, limited tax
benefits, or limited tariff benefits.
COMMITTEE COST ESTIMATE
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
CONGRESSIONAL BUDGET OFFICE ESTIMATE
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
H.R. 3548--North American Energy Access Act
H.R. 3548 would establish procedures and requirements
related to issuing federal permits for the proposed Keystone XL
pipeline, which would be constructed by a private company to
carry crude oil from Alberta, Canada, to destinations on the
U.S. Gulf Coast. Under current law, the proposed pipeline
requires a Presidential permit because it would cross
international borders. The Department of State is responsible
for issuing such permits.
H.R. 3548 would modify current law to exempt the sponsors
of the Keystone XL pipeline from the requirement to obtain a
Presidential permit for that project and would specify
procedures for the Federal Energy Regulatory Commission (FERC)
to issue necessary permits. Under the bill, FERC would have 30
days to review an application for a permit to construct,
operate, and maintain the proposed pipeline; if FERC did not
act on the application within that time, the permit would be
deemed to have been issued. In addition, the bill would specify
procedures related to federal reviews of any future
applications to modify the route of the proposed pipeline and
accompanying environmental reviews required under the National
Environmental Policy Act.
CBO estimates that enacting H.R. 3548 would have no
significant impact on the federal budget. Based on information
from affected agencies, CBO estimates that the bill would not
significantly affect spending for regulatory activities related
to the proposed Keystone XL pipeline, which would be subject to
appropriation. Further, because FERC recovers 100 percent of
its costs through user fees, any change in its administrative
costs would be offset by an equal change in fees that the
commission charges. Enacting H.R. 3548 would not affect direct
spending or revenues; therefore, pay-as-you-go procedures do
not apply.
H.R. 3548 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The CBO staff contact for this estimate is Megan Carroll.
The estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
FEDERAL MANDATES STATEMENT
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
ADVISORY COMMITTEE STATEMENT
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
APPLICABILITY TO LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
SECTION-BY-SECTION ANALYSIS OF LEGISLATION
Section 1: This section provides the short title for the
legislation, the ``North American Energy Access Act.''
Section 2: This section provides that no person may
construct, operate, or maintain the oil pipeline described in
the Final Environmental Impact Statement (FEIS) issued by the
State Department on August 26, 2011, except with a permit
issued under the Act.
Section 3--Issuance of Permit: Subsection 3(a) provides
that Federal Energy Regulatory Commission (FERC) is required to
issue a permit for the construction of the pipeline if the
application is for the pipeline described in the FEIS. FERC is
required to issue a permit for the pipeline within 30 days of
receiving an application. If FERC fails to act on the
application within 30 days of receipt, the permit shall be
deemed issued upon expiration of the 30 days.
Modifications Generally: Subsection 3(b) provides that the
applicant may make a substantial modification to the pipeline
only with the approval of FERC.
Nebraska Modification: Subsection 3(c) provides that FERC
must enter into a memorandum of understanding with the State of
Nebraska to complete a review, pursuant to the National
Environmental Policy Act of 1969, of any modification to the
proposed pipeline route in Nebraska. FERC is required to
approve the modification within 30 days after receiving
approval of the proposed modification from the Governor of
Nebraska. The modification shall be deemed approved if FERC
fails to act within 30 days of receiving the application for
modification.
Section 4: This section provides that a no presidential
permit shall be required to construct pipeline, and that the
pipeline remains subject to pipeline safety standards and FERC
rate regulation, as applicable.
CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED
This legislation does not amend any existing Federal
statute.
DISSENTING VIEWS
BACKGROUND
Keystone XL is a highly controversial $7 billion pipeline
that would transport up to 830,000 barrels per day (bpd) of tar
sands crude oil almost 2,000 miles from Alberta, Canada to
refineries in the Gulf Coast.\1\ Under existing law,
transboundary pipeline projects require Presidential approval
to proceed. The President has delegated the authority to permit
transboundary pipeline projects to the State Department under
Executive Orders 11423 and 13337, which require a finding that
a project is in the national interest.\2\ Pursuant to the
National Environmental Policy Act, in considering a project,
the State Department must prepare an environmental impact
statement (EIS) assessing the project's impacts on the
environment and evaluating alternatives that would avoid or
minimize adverse environmental effects.\3\ E.O. 13337
recognizes that these complex decisions involve matters within
the expertise of multiple federal agencies, and it provides
specified federal agencies 90 days to comment on the
application.\4\
---------------------------------------------------------------------------
\1\TransCanada Keystone Pipeline, L.P., Application of TransCanada
Keystone Pipeline, L.P. for a Presidential Permit Authorizing the
Construction, Operation, and Maintenance of Pipeline Facilities for the
Importation of Crude Oil to be Located at the United-States-Canada
Border, 7-9 (Sept. 19, 2008); U.S. Department of State, Supplemental
Draft Environmental Impact Statement, Keystone XL Project, Applicant
for Presidential Permit: TransCanada Keystone Pipeline, LP, 1-5 (Apr.
22, 2011).
\2\Exec. Order No. 11423, 33 Fed. Reg. 11741 (Aug. 16, 1968); Exec.
Order No. 13337, 69 Fed. Reg. 25299 (Apr. 30, 2004).
\3\National Environmental Policy Act of 1969, Pub. L. No. 94-83.
\4\Exec. Order No. 13337, Sec. 1(c), 69 Fed. Reg. 25299 (Apr. 30,
2004).
---------------------------------------------------------------------------
The Department of State published a draft EIS on April 16,
2010, for public comment. Pursuant to NEPA, EPA, DOE, and other
federal agencies commented on the draft EIS, and there were
also extensive public comments. EPA reviewed the adequacy of
the draft EIS and rated the draft as ``Category 3--Inadequate
Information,'' which is the lowest rating possible.\5\ In
response, the State Department published a supplemental draft
EIS (SDEIS) on April 22, 2011, providing additional information
and analysis on various aspects of the project.\6\ The comment
period ended on June 6, 2011.
---------------------------------------------------------------------------
\5\Letter from Cynthia Giles, Assistant Administrator for
Enforcement and Compliance Assurance, U.S. Environmental Protection
Agency, to Jose W. Fernandez, Assistant Secretary, Economic, Energy and
Business Affairs, U.S. Department of State and Dr. Kerri-Ann Jones,
Assistant Secretary, Oceans and International Environmental and
Scientific Affairs, U.S. Department of State (Jul. 16, 2010).
\6\U.S. Department of State, Notice of Availability of the Draft
Environmental Impact Statement for the Proposed TransCanada Keystone XL
Pipeline Project, 75 Fed. Reg. 20653 (Apr. 16, 2010); U.S. Department
of State, Notice of Availability of the Supplemental Draft
Environmental Impact Statement for the Proposed TransCanada Keystone XL
Pipeline Project, 76 Fed. Reg. 22744 (Apr. 22, 2011).
---------------------------------------------------------------------------
Subsequently, on August 26, 2011, the State Department
issued a final EIS.\7\ At that time, the State Department
planned on a 90-day review period in which it would consult
with other federal agencies to determine if issuing a permit
for the project is in the national interest.\8\ The public was
also invited to submit comments on the national interest
determination during the first 30 days of that period.\9\
---------------------------------------------------------------------------
\7\U.S. Department of State, Final Environmental Impact Statement
Fact Sheet (Aug. 26, 2011); U.S. Department of State, Final
Environmental Impact Statement for the Proposed Keystone XL Project;
Public Meetings, 76 Fed. Reg. 53525 (Aug. 26, 2011); U.S. Department of
State, Notice of Availability of the Final Environmental Impact
Statement for the Proposed Keystone XL Project, 76 Fed. Reg. 55155
(Sept. 6, 2011).
\8\U.S. Department of State, Supplemental Draft Environmental
Impact Statement, Keystone XL Project, Applicant for Presidential
Permit: TransCanada Keystone Pipeline, LP at ES-4 (Apr. 22, 2011)
(hereinafter ``SDEIS'').
\9\U.S. Department of State, State Department Announces Next Steps
in Keystone XL Pipeline Permit Process (Mar. 15, 2011).
---------------------------------------------------------------------------
However, there were widespread public concerns about the
pipeline and the adequacy of the review process. In particular,
the State Department received numerous comments on the final
EIS regarding the unique and sensitive nature of the Sand
Hills, including its wetlands, ecosystem, and shallow
groundwater, and the Nebraska legislature had convened a
special session to consider these issues.\10\ Given the
increased concern regarding the proposed route's potential
environmental impacts on the Sand Hills, the State Department
determined that additional information was needed to make a
National Interest Determination for the Presidential
Permit.\11\
---------------------------------------------------------------------------
\10\Id.
\11\Id.
---------------------------------------------------------------------------
Thus, the State Department announced on November 10, 2011,
that it would seek additional information and study alternative
routes in Nebraska, given the extensive concerns regarding the
proposed route through the Sand Hills area.\12\ The Department
estimated that the process, including issuance of a supplement
to the final EIS and the subsequent public comment period,
could be completed by early 2013.\13\
---------------------------------------------------------------------------
\12\U.S. Department of State, Keystone XL Pipeline Project Review
Process: Decision to Seek Additional Information (Nov. 10, 2011).
\13\Id.
---------------------------------------------------------------------------
Following the State Department's announcement, President
Obama stated his support for the Department's decision. The
President noted the potential effects of the pipeline on
health, safety, and the environment, as well as the extensive
concerns raised through the public review and comment process.
He concluded that ``we should take the time to ensure that all
questions are properly addressed and all the potential impacts
are properly understood.''\14\ Further, the President stated
that the final decision regarding the Keystone XL permit
``should be guided by an open, transparent process that is
informed by the best available science and the voices of the
American people.''\15\
---------------------------------------------------------------------------
\14\The White House, Statement by the President on the State
Department's Keystone XL Pipeline Announcement (Nov. 10, 2011).
\15\Id.
---------------------------------------------------------------------------
On December 23, 2011, Congress passed the Temporary Payroll
Tax Cut Continuation Act of 2011, H.R. 3765, which included a
provision requiring the President to determine within 60 days
whether the Keystone XL pipeline is in the national interest.
On January 18, 2012, the State Department recommended to
President Obama that the permit for the proposed pipeline be
denied because the Department did not have sufficient time to
obtain the information necessary to assess whether the project
is in the national interest.\16\ There was no identified
alternative route through Nebraska that avoided the
ecologically-sensitive Sand Hills area, so the ultimate route
of the proposed pipeline was unknown.
---------------------------------------------------------------------------
\16\U.S. Department of State, Report to Congress Under the
Temporary Payroll Tax Cut Continuation Act of 2011, Section 501(b)(2),
Concerning the Presidential Permit Application of the Proposed Keystone
XL Pipeline (Jan. 2012).
---------------------------------------------------------------------------
Based on the State Department's recommendation, President
Obama denied the pending application for the construction of
the Keystone XL pipeline on January 18, 2012. The President
stated that ``the rushed and arbitrary deadline insisted on by
Congressional Republicans prevented a full assessment of the
pipeline's impact, especially the health and safety of the
American people, as well as our environment.''\17\ TransCanada
Corporation, the company that seeks to build the Keystone XL
pipeline, can reapply for a permit at its discretion. According
to the State Department, the ``denial of the permit application
does not preclude any subsequent permit application or
applications for similar projects.''\18\
---------------------------------------------------------------------------
\17\The White House, Statement by President Barack Obama on the
Keystone XL Pipeline (Jan. 18, 2012).
\18\U.S. Department of State, Media Note: Denial of the Keystone XL
Pipeline Application (Jan. 18, 2012).
---------------------------------------------------------------------------
In February 2012, TransCanada announced that it would move
forward with construction of the southern leg of the Keystone
XL pipeline, which would extend from Cushing, Oklahoma to the
Gulf of Mexico. If pursued as a discrete project, the southern
leg of the pipeline does not require a presidential permit, as
it does not cross an international border. President Obama
announced his support for the southern portion of the pipeline
on March 22, 2012, all necessary federal permits were final as
of July 2012, and construction of the southern portion began in
August, although public protests and opposition have
continued.\19\
---------------------------------------------------------------------------
\19\See, e.g., Keystone XL pipeline construction begins amid
protests, Los Angeles Times (Aug. 16, 2012); Keystone XL pipeline
opponents turn to civil disobedience, Washington Post (Oct. 15, 2012).
---------------------------------------------------------------------------
H.R. 3548 would eliminate the need for a presidential
permit for the Keystone XL pipeline, and it would give
permitting authority to the Federal Energy Regulatory
Commission solely for the Keystone XL pipeline. It would also
eliminate all authority for FERC to exercise discretion
regarding the permitting process, requiring FERC to issue a
permit for the construction of the Keystone XL pipeline within
30 days of receipt of an application. If FERC does not act on
the permit application within 30 days, the permit would be
deemed to have been issued. In addition, the bill would
prohibit FERC from imposing any conditions on the permit,
without exception. The bill also provides that the applicant
may make a substantial modification to the pipeline route or
final EIS with FERC approval, upon expedited consideration.
With regard to the proposed pipeline route in Nebraska,
H.R. 3548 requires FERC to enter into a memorandum of
understanding with the State of Nebraska within 30 days of
enactment to complete an environmental review of any
modification to the proposed route through the State. FERC
would be required to approve such a modification within 30 days
of approval by the Governor of Nebraska. If FERC does not act
on an application for approval of the modified route within 30
days, the modification would be deemed to have been issued. The
bill would also allow construction of the pipeline to begin
while the proposed Nebraska route modification is under
consideration.
ANALYSIS
H.R. 3548 eliminates the President's authority to permit
the Keystone XL pipeline, mandates approval of the pipeline,
and overrides and short-circuits an appropriate review process
for a highly controversial project with significant long-term
effects. Even for many who want to see the Keystone XL pipeline
built, H.R. 3548 is not an acceptable or appropriate way to
move this project forward. The Administration needs sufficient
time to get the necessary factual information to address the
numerous and complex issues that have been raised regarding
this project.
Supporters of H.R. 3548 assert that transferring the
permitting authority for Keystone XL to FERC will simply move
it to an agency with appropriate expertise. Congressman Terry
stated that the bill takes a ``rational approach'' of giving
the authority to ``the federal agency that actually has
experience in pipelines.''\20\ In actuality, this transfer of
authority for a single pipeline project clearly is not intended
to utilize FERC's technical expertise, as it gives FERC no
discretion in the matter, requiring FERC to issue the permit
within 30 days of receipt of the application and preventing
FERC from establishing any conditions on the permit.
---------------------------------------------------------------------------
\20\Statement of Representative Terry, Committee on Energy and
Commerce, Subcommittee on Energy and Power, American Jobs Now: A
Legislative Hearing on H.R. 3548, the North American Energy Access Act,
112th Cong. (Feb. 3, 2012).
---------------------------------------------------------------------------
Supporters of H.R. 3548 also claim that this bill is
necessary to avoid unnecessary delay in getting the Keystone XL
pipeline built. Congressman Sullivan criticized the State
Department's three-year review of the permit application as a
``travesty'' and asserted that it ``is in our national interest
to move forward with this pipeline.''\21\ However, there is
reason to believe that the review process for Keystone XL has
been entirely appropriate given the immense scope and
considerable implications of the project. Likewise, the
President's decision to deny the permit was necessary under the
circumstances, as additional information was needed to properly
evaluate the application, including the lack of a final route
through Nebraska for the State Department to evaluate, and
Congress had set an arbitrarily short deadline for an up-or-
down decision under the Temporary Payroll Tax Cut Continuation
Act of 2011.
---------------------------------------------------------------------------
\21\Statement of Representative Sullivan, Committee on Energy and
Commerce, Subcommittee on Energy and Power, American Jobs Now: A
Legislative Hearing on H.R. 3548, the North American Energy Access Act,
112th Cong. (Feb. 3, 2012).
---------------------------------------------------------------------------
Rather than allowing the existing review process to produce
a decision based on relevant information, H.R. 3548 would
create an unprecedented legislative earmark that would grant
special treatment to one company for a single project,
requiring FERC to rubberstamp the permit application for the
Keystone XL pipeline. As one Nebraska ranch owner concerned
about the pipeline testified before the Subcommittee on Energy
and Power, ``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.''\22\
---------------------------------------------------------------------------
\22\Testimony of Randall F. Thompson, Committee on Energy and
Commerce, Subcommittee on Energy and Power, American Jobs Now: A
Legislative Hearing on H.R. 3548, the North American Energy Access Act,
112th Cong. (Feb. 3, 2012).
---------------------------------------------------------------------------
Key issues that have been raised about the pipeline include
whether it will enhance energy security, the extent to which it
would create jobs and use materials manufactured in North
America, concerns regarding pipeline safety, and accusations of
aggressive negotiating tactics by TransCanada Corporation,
including using threats of eminent domain to take private
property rights for the pipeline. There are also strong
concerns related to climate change because the pipeline will
import large quantities of tar sands crude, which has
substantially higher lifecycle carbon emissions compared to
conventional crude oil.
Supporters of the Keystone XL pipeline argue that it will
enhance energy security by reducing reliance on oil imports
from the Middle East and Venezuela. Other energy experts assert
that the Keystone XL pipeline will not have any noticeable
impact on America's energy security or will actually harm our
security. Retired U.S. Army Brigadier General Steven Anderson
testified before the Subcommittee: ``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.''\23\ A
report by EnSys for the Department of Energy found that
construction of the pipeline would not substantively change the
quantity of Canadian fuel imported to the United States
because, if this pipeline were not built, market demand would
drive broadly similar capacity.\24\ In addition, a prominent
oil market analyst asserted that the pipeline will facilitate
the export of Canadian crude to countries other than the United
States.\25\ Most recently, the newest EIA projections find that
dramatic improvements in fuel efficiency in vehicles, together
with growing domestic oil production, will slash our reliance
on imported oil by 25% between 2010 and 2020.\26\
---------------------------------------------------------------------------
\23\Testimony of Mr. Steven M. Anderson, Brigadier General
(Retired), U.S. Army, Committee on Energy and Commerce, Subcommittee on
Energy and Power, American Jobs Now: A Legislative Hearing on H.R.
3548, the North American Energy Access Act, 112th Cong. (Feb. 3, 2012).
\24\EnSys, Keystone XL Assessment--Final Report, 116 (Dec. 23,
2010).
\25\Philip K. Verleger, The Tar Sands Road to China (May 2011).
\26\U.S. Energy Information Administration, Annual Energy Outlook
Early Release 2013, Total Energy Supply, Disposition, and Price
Summary, Reference case (table) (online at www.eia.gov/oiaf/aeo/
tablebrowser/#release=AEO2013ER&subject=9-AEO2013ER&table=1-
AEO2013ER®ion=0-0&cases=early2013-d102312a).
---------------------------------------------------------------------------
Supporters of H.R. 3548 also assert that if the Keystone XL
pipeline is not built, Canada's tar sands crude will be sent to
Asia instead. In fact, this is by no means certain.\27\
Expansions of existing pipelines to British Columbia could
provide a limited amount of additional capacity. The new
pipelines and expanded tanker operations that would be needed
to supply capacity comparable to the Keystone XL pipeline face
strong opposition in British Columbia and by a unified group of
First Nations' peoples.\28\
---------------------------------------------------------------------------
\27\See U.S. Department of State, Final Environmental Impact
Statement for the Proposed Keystone XL Project, 3.14-62 (acknowledging
that although various pipeline projects have been proposed to transport
crude oil to the Canadian west coast ``they face significant opposition
in the regulatory process'') (Aug. 26, 2011).
\28\See, e.g., Gateway pipeline risks exceed rewards, B.C. Premier
says, Toronto Globe (Jul. 22, 2012); First nations claim alliance is
barrier that pipelines won't break, Vancouver Sun (Dec. 1, 2011).
---------------------------------------------------------------------------
The potential for job creation from the Keystone XL
pipeline is another disputed issue. In the final EIS, the State
Department estimated that approximately 5,000 to 6,000
temporary workers would be employed during the construction
phase.\29\ In data it submitted to the State Department,
TransCanada, the company seeking to build the Keystone XL
pipeline, predicted ``a peak workforce of approximately 3,500
to 4,200 construction personnel.''\30\ Subsequently, however,
the industry began citing much higher numbers. For example,
TransCanada and the American Petroleum Institute have claimed
that the project would generate 20,000 construction and
manufacturing jobs in the short term.\31\ This figure, which is
three to four times higher than the State Department estimate
and nearly five to six times higher than TransCanada's own
original estimate, has been criticized as inflated.\32\ In
addition, a Perryman Group study commissioned by TransCanada
predicts the project would result in more than 118,000 person-
years of employment, including indirect and induced jobs, over
the assumed 100-year lifetime of the project.\33\ However, this
figure also has been called into question as flawed and poorly
documented by independent third-parties such as the Cornell
University Global Labor Institute (GLI).\34\ GLI's report
concluded that the Keystone XL pipeline ``will not be a major
source of U.S. jobs, nor will it play any substantial role at
all in putting Americans back to work.''\35\ The Washington
Post Fact Checker also cast doubt on exaggerated claims that
Keystone XL would create ``tens of thousands'' of jobs.\36\
---------------------------------------------------------------------------
\29\U.S. Department of State, Final Environmental Impact Statement
for the Proposed Keystone XL Project, Executive Summary, ES-22 (Aug.
26, 2011).
\30\TransCanada Keystone Pipeline, LP, Keystone XL Project
Environmental Report, 2-42 (Nov. 2008).
\31\TransCanada, (online at www.transcanada.com/
economic_benefits.html) (accessed on Nov. 30, 2011); American Petroleum
Institute, Keystone XL? The benefits are stacking up. (2011) (online at
www.api.org/aboutapi/ads/upload/Stacks_Up_KeystoneXL_COS.pdf) (accessed
on Jan. 24, 2012).
\32\See, e.g., Keystone Pipeline debate heats up, Washington Post,
(Nov. 5, 2011).
\33\The Perryman Group, The Impact of Developing the Keystone XL
Pipeline Project on Business Activity in the US (June 2010).
\34\Cornell University Global Labor Institute, Pipe Dreams? Jobs
Gained, Jobs Lost by the Construction of Keystone XL, 17-21 (Sep.
2011).
\35\Id. at 2.
\36\Keystone pipeline jobs claims: a bipartisan fumble, Washington
Post (Dec. 14, 2011).
---------------------------------------------------------------------------
It is also unclear to what extent steel and other materials
and goods used in the Keystone XL pipeline will be sourced from
the United States, despite claims that the project will
significantly benefit our manufacturing industries. TransCanada
has made repeated representations to congressional offices
regarding the domestic manufacturing opportunities presented by
the Keystone XL pipeline project. For instance, on December 2,
2011, Alex Pourbaix, TransCanada's president for energy and oil
pipelines, testified before the Energy and Commerce Committee
that ``we are using the latest technologies and the strongest
steel pipe from American mills to build the pipeline.''\37\ On
February 2, 2012, TransCanada informed Committee staff that
``[a]pproximately 74% of the pipe required for the Project in
the United States was sourced from North American based mills--
Evraz Regina Canada and Welspun Little Rock, U.S.''\38\
TransCanada also stated that ``[w]e have not sourced any steel
from India.''\39\
---------------------------------------------------------------------------
\37\Testimony of Alex Pourbaix, President, Energy and Oil
Pipelines, TransCanada Corporation, Committee on Energy and Commerce,
Subcommittee on Energy and Power, Hearing on The American Energy
Initiative: Expediting the Keystone XL Pipeline: Energy Security and
Jobs, 112th Cong. (Dec. 2, 2011).
\38\Email from Government Relations Staff, TransCanada Corporation,
to Staff, Energy and Commerce Committee (2:35pm, Feb. 2, 2012).
\39\Email from Government Relations Staff, TransCanada Corporation,
to Staff, Energy and Commerce Committee (12:17pm, Feb. 2, 2012).
---------------------------------------------------------------------------
Information obtained by Congressman Doyle indicates that
these statements may not be accurate. On February 6, 2012,
Welspun Tubular, LLC in Little Rock informed Congressman Doyle
that the steel to be used in the construction of the Keystone
XL pipeline was produced in India. The GLI also concluded that
a significant portion of the pipes and components, and the
steel used to manufacture them, are likely to be imported,
significantly reducing any potential job impacts for U.S.
manufacturing.\40\ However, the majority reported H.R. 3548
without attempting to resolve these inconsistencies regarding
materials sourcing and manufacturing, and thus without solid
information regarding the degree to which the project would
actually benefit American industry.
---------------------------------------------------------------------------
\40\Cornell University Global Labor Institute, Pipe Dreams? Jobs
Gained, Jobs Lost by the Construction of Keystone XL, 11-13 (Sep.
2011).
---------------------------------------------------------------------------
Pipeline safety and the risk of oil spills is another area
of concern. Critics argue that bitumen is more corrosive than
conventional oil and may exacerbate pipeline deterioration.\41\
A series of recent ruptures and other pipeline failures in the
United States and Canada, resulting in cumulative leaks of
almost 2.5 million gallons of oil, have heightened these
concerns.\42\ In addition, reports of substandard foreign steel
used by TransCanada in the leak-prone Keystone I pipeline and
supplied by Welspun, the same company with which TransCanada
has contracts for Keystone XL, have further contributed to
safety concerns.\43\ A whistleblower who worked as a safety
inspector on TransCanada's first Keystone pipeline has raised
numerous safety concerns about Keystone XL based on his
experience, including that it will be ``built with foreign
materials which are not up to standards necessary for proper
construction'' to handle the high-pressure pumping of tar sands
oil, which ``has the consistency of peanut butter'' and the
abrasiveness of ``heavy grit sandpaper.''\44\
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\41\Anthony Swift et al., Tar Sands Pipelines Safety Risks, a Joint
Report by the Natural Resources Defense Council, National Wildlife
Federation, Pipeline Safety Trust, and Sierra Club, 6 (Feb. 2011)
(online at www.nrdc.org/energy/files/tarsandssafetyrisks.pdf).
\42\Regulators Warned Company on Pipeline Corrosion, New York Times
(Jul. 29, 2010); Nearby Oil Spill Highlights Hazards in Area's
Pipelines, The New York Times (Sept. 16, 2010); Oil Spill Largest in 36
Years, Calgary Herald (May 5, 2011); Keystone Pipeline Spill Raises
Concerns About TransCanada 's Super-Sizing, Forbes (May 11, 2011).
\43\Cornell University Global Labor Institute, Pipe Dreams? Jobs
Gained, Jobs Lost by the Construction of Keystone XL, 13-14, 28-29
(Sep. 2011).
\44\Letter from Michael R. Klink to Representative Henry A. Waxman
(Feb. 1, 2012).
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The potential for oil spills with Keystone XL has been of
particular concern because the proposed route in Nebraska
crossed the sensitive Sand Hills area. It is likely that an
alternative route would still go through the Ogallala Aquifer,
which is part of a system that supplies drinking water for 2
million people and provides about 30% of the groundwater used
for irrigation in the U.S.\45\ Randy Thompson, a Nebraska ranch
owner whose property lies along the proposed path of the
pipeline, testified before the Subcommittee on Energy and Power
about the devastating effects that an oil spill would have on
his livelihood, stating that his livestock watering wells and
irrigation wells would ``become virtually useless'' if
contaminated.\46\
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\45\U.S. Geological Survey, High Plains Regional Ground-Water Study
(online at http://co.water.usgs.gov/nawqa/hpgw/factsheets/
DENNEHYFS1.html) (accessed on Feb. 10, 2012).
\46\Testimony of Randall F. Thompson, Committee on Energy and
Commerce, Subcommittee on Energy and Power, American Jobs Now: A
Legislative Hearing on H.R. 3548, the North American Energy Access Act,
112th Cong. (Feb. 3, 2012).
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Pursuant to a new bipartisan pipeline safety law, a study
is underway by the Pipeline Hazardous Materials Safety
Administration (PHMSA) to determine whether its existing
regulations are sufficient to ensure the safety of pipelines
used to transport diluted bitumen.\47\ Cynthia Quarterman, the
Administrator of PHMSA, testified before the Subcommittee on
Energy and Power that the agency has not previously done a
study to analyze the risks associated with transporting diluted
bitumen.\48\ Yet H.R. 3548 would force the approval of the
Keystone XL pipeline project before a conclusion has been
reached regarding the adequacy of existing pipeline safety
standards.
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\47\Pipeline Safety, Regulatory Certainty, and Job Creation Act of
2011, Pub. L. No. 112-90.
\48\Testimony of the Honorable Cynthia L. Quarterman,
Administrator, Pipeline and Hazardous Materials Safety Administration,
U.S. Department of Transportation, Committee on Energy and Commerce,
Subcommittee on Energy and Power, Hearing on the American Energy
Initiative: Pipeline Safety, 112th Cong. (June 16, 2011).
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H.R. 3548 also would hamstring FERC in any attempts to
ensure the safety of the pipeline. The bill requires FERC to
issue a permit for the Keystone XL pipeline within 30 days of
receipt of the application. Such an expedited process does not
allow for adequate regulatory review. FERC official Jeffrey
Wright testified before the Subcommittee on Energy and Power
that it was impossible to build a record that would yield a
defensible decision in 30 days.\49\ Furthermore, the bill
prohibits FERC from imposing any conditions on the permit.
Thus, even if FERC identified any safety concerns during the
short period of time it will have for review, the agency would
be prevented from addressing them, such as by establishing
conditions that must be met in order to mitigate a safety
problem.
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\49\Testimony of Jeffrey C. Wright, Director, Office of Energy
Projects, Federal Energy Regulatory Commission, Committee on Energy and
Commerce, Subcommittee on Energy and Power, American Jobs Now: A
Legislative Hearing on H.R. 3548, the North American Energy Access Act,
112th Cong. (Jan. 25, 2012).
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Concerns have also been raised over reports of aggressive
negotiating tactics by TransCanada Corporation to take the
rights to private property along the proposed path of the
pipeline. Even before a permit has been issued, TransCanada has
been issuing offers to private property owners for the use of
their land for the pipeline, and then threatening those private
land owners with condemnation proceedings to take their land
through eminent domain if they do not accept the offer within a
short timeframe.\50\ A letter from TransCanada to Randy
Thompson states, ``While we hope to acquire this property
through negotiation, if we are unable to do so, we will be
forced to invoke the power of eminent domain and will initiate
condemnation proceedings against this property promptly after
the expiration of this one month period.''\51\ As Mr. Thompson
testified before the Subcommittee on Energy and Power, he and
other citizens of Nebraska ``view TransCanada as an overly-
aggressive company'' that has tried to ``intimidate and bully
their way across our State.''\52\ Mr. Thompson further stated
that he and other Nebraska land owners ``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.''\53\ H.R. 3548 would reward a foreign corporation
with a legislative earmark for the Keystone XL pipeline,
empowering TransCanada to continue in its efforts to take
rights to private property along the proposed path of the
pipeline.
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\50\Eminent Domain Fight Has a Canadian Twist, The New York Times
(Oct. 17, 2011).
\51\Letter from Tim Irons, Senior Land Coordinator, TransCanada
Keystone Pipeline LP, to Randy Thompson, Nebraska ranch owner (July 21,
2010).
\52\Testimony of Randall F. Thompson, Committee on Energy and
Commerce, Subcommittee on Energy and Power, American Jobs Now: A
Legislative Hearing on H.R. 3548, the North American Energy Access Act,
112th Cong. (Feb. 3, 2012).
\53\Id.
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Some of the strongest opposition to the Keystone XL
pipeline stems from its effect on climate change. It is widely
recognized that tar sands crudes have higher life-cycle
greenhouse gas emissions than conventional crudes, and the
final EIS found that the project could increase U.S. life-cycle
greenhouse gas emissions by up to an additional 21 million
metric tons of CO2-equivalent annually.\54\ EnSys
projected that, if other pipeline projects are not approved,
construction of Keystone XL would increase tar sands production
by 800,000 barrels per day and increase global CO2-
equivalent emission by 20 million metric tons per year by
2030.\55\
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\54\U.S. Department of State, Final Environmental Impact Statement
for the Proposed Keystone XL Project, 3.14-55 (Aug. 26, 2011).
\55\EnSys, Keystone XL Assessment--Final Report at 117 (Dec. 23,
2010); EnSys, Keystone XL Assessment--Final Report, Appendix, 40 (Dec.
23, 2010).
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Other environmental impacts of increased tar sands
production include the destruction of Canada's boreal forests
and wetlands, loss of habitat for wildlife and migratory birds,
and the degradation of water and air quality.\56\ EPA has also
raised concerns about the health impacts on communities that
live near refineries from increased emissions from refineries
processing tar sands crude.\57\
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\56\See Woynillowicz et al., Oil Sands Fever, Pembina Institute,
36-52 (Nov. 2005).
\57\Letter from Cynthia Giles, Assistant Administrator for
Enforcement and Compliance Assurance, U.S. Environmental Protection
Agency, to Jose W. Fernandez, Assistant Secretary, Economic, Energy and
Business Affairs, U.S. Department of State and Dr. Kerri-Ann Jones,
Assistant Secretary, Oceans and International Environmental and
Scientific Affairs, U.S. Department of State (June 6, 2011).
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The majority views dismiss the environmental concerns by
asserting that oil sands production will increase with or
without construction of Keystone XL. However, the International
Energy Agency disagrees, finding that as much as 1 million
barrels per day of production could fail to materialize if new
pipelines are delayed.\58\ Similarly, sources in the oil
industry and Albertan government indicate that access to
pipelines is key to industry's plans to more than double tar
sands production by 2020.\59\
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\58\Pipelines key to growth in North American crude output, IEA
says, Globe and Mail (June 17, 2011).
\59\Untimely pipeline spills: TransCanada, Enbridge buffeted by
accidents; Alberta frets over landlocked bitumen, Petroleum News (June
19, 2011).
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For the reasons stated above, we dissent from the views
contained in the Committee's report.
Henry A. Waxman.
Bobby L. Rush.