[House Report 113-61]
[From the U.S. Government Publishing Office]


113th Congress       }                               {     Report 
1st Session          }    HOUSE OF REPRESENTATIVES   {     113-61 

======================================================================
 
                      NORTHERN ROUTE APPROVAL ACT

                                _______
                                

                  May 17, 2013.--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. 3]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Energy and Commerce, to whom was referred 
the bill (H.R. 3) to approve the construction, operation, and 
maintenance of the Keystone XL pipeline, and for other 
purposes, having considered the same, report favorably thereon 
without amendment and recommend that the bill do pass.

                            C O N T E N T S

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     5
Committee Consideration..........................................     6
Committee Votes..................................................     6
Committee Oversight Findings.....................................    13
Statement of General Performance Goals and Objectives............    13
New Budget Authority, Entitlement Authority, and Tax Expenditures    13
Earmark, Limited Tax Benefits, and Limited Tariff Benefits.......    13
Committee Cost Estimate..........................................    13
Congressional Budget Office Estimate.............................    13
Federal Mandates Statement.......................................    14
Duplication of Federal Programs..................................    14
Disclosure of Directed Rule Makings..............................    14
Advisory Committee Statement.....................................    14
Applicability to Legislative Branch..............................    15
Section-by-Section Analysis of the Legislation...................    15
Changes in Existing Law Made by the Bill, as Reported............    16
Dissenting Views.................................................    17

                          PURPOSE AND SUMMARY

    H.R. 3, the ``Northern Route Approval Act,'' was introduced 
by Representative Lee Terry (together with a bipartisan group 
of 93 original cosponsors) on March 15, 2013. The legislation 
removes the requirement of a Presidential Permit for approving 
the Keystone XL pipeline, deems the final EIS that was issued 
in August 2011 by the Department of State to be sufficient in 
satisfying the requirements of the National Energy Policy Act 
and the National Historic Preservation Act, and issues all 
Federal permits necessary for constructing Keystone XL 
pipeline, including permits required by the Endangered Species 
Act, the Mineral Leasing Act, the Federal Land Policy and 
Management Act of 1976, the Federal Water Pollution Control 
Act, the Rivers and Harbors Appropriations Act of 1899, and the 
Migratory Bird Treaty Act. The legislation also limits judicial 
challenges to the project.

                  BACKGROUND AND NEED FOR LEGISLATION

    A Canadian pipeline company, TransCanada, has long sought 
to increase the capacity of its Keystone pipeline system in 
order to bring more oil from the Canadian oil sands to U.S. 
refineries in the Midwest and Gulf Coast. The pipeline also 
could accept U.S. crude from the Bakken oil fields that are 
being developed in North Dakota and Montana. A Presidential 
Permit application for its proposed 1,384 mile expansion 
project, Keystone XL, was submitted to the U.S. Department of 
State (DOS) in September 2008.
    During the more than 1,700 days since the original permit 
application was filed, the U.S. has faced consistently high 
gasoline prices, stubbornly-high unemployment rates, and 
continued risks of relying on oil from unstable sources that 
are often adversaries to U.S. interests. Construction of 
Keystone XL would help address all of these concerns, but the 
Obama Administration denied approval of the Presidential Permit 
for the pipeline in January 2012.
    TransCanada submitted a new application for a Presidential 
Permit in May 2012 that will undergo the same lengthy review 
process as the previous application, with zero certainty that 
the President will approve the application. Even if the 
Presidential Permit application is eventually approved, the 
pipeline faces litigation and additional Federal permits that 
are required under various environmental laws, further eroding 
certainty that the pipeline will ever be completed. 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 the U.S. in many 
ways. Oil imports are needed to fill the gap between 
consumption and domestic production. Although domestic 
production has soared in recent years, the U.S. still imported 
about 40% of its oil in 2012. Unfortunately, many nations that 
serve as a source of these imports continue to display 
substantial instability and anti-American hostility, such as 
Nigeria, Venezuela, and Russia. This raises concerns about the 
risks--both economic and otherwise--of continued reliance upon 
such nations.
    For these reasons, Canadian oil is critical to U.S. energy 
security. In addition to being a very stable country, a strong 
ally, and our largest trading partner, Canada is the single 
largest source of oil imports for the U.S. Canadian output is 
on the rise, especially oil sands production from the province 
of Alberta. Coupled with incredible growth in oil and gas 
development in the U.S., multiple independent analysts project 
that the Canadian oil sands can be a key factor in helping 
create North America energy self-sufficiency.
    One of the critical factors in reaching self-sufficiency is 
expanding the existing pipeline infrastructure to move oil and 
gas resources from development sites to areas that have 
consumption needs. And pipelines are among 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.
    The Keystone XL project, if fully completed, would be able 
to move 830,000 barrels of oil per day from the oil sands 
region of Alberta, and it also could accept U.S. crude from the 
Bakken oil fields. This would reduce substantially the need for 
imports from the Middle East, as well as providing a stable 
source to help protect supply disruptions. 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. According to a 
memorandum produced by the Department of Energy in June 2011, 
domestic demand for Canadian oil sands crude ``will be much 
higher than can be supplied by just the Keystone pipeline'' in 
the future, which shows how vital Keystone XL is.
    TransCanada estimates that it would spend approximately $7 
billion to construct the full project and would directly create 
20,000 jobs. In the draft supplemental EIS that was issued on 
March 1, 2013, the Department of State estimated approximately 
42,100 direct and indirect jobs would be created over the 
project construction period, of which 3,900 would be directly 
involved with project construction.
    Once constructed, Keystone XL would be the most advanced 
and safest pipeline in the world. Transporting oil via pipeline 
is the most economically efficient and environmentally sound 
means of doing so. In addition to operating under rigorous U.S. 
pipeline safety laws, Keystone XL will incorporate an 
additional 57 safety standards recommended by the Pipeline and 
Hazardous Materials Safety Administration.
    In order to address the continued regulatory uncertainty 
Keystone XL pipeline faces, Rep. Terry introduced H.R. 3, the 
``Northern Route Approval Act,'' which removes the need for a 
Presidential Permit, deems the NEPA compliance work that has 
been done to be sufficient analysis for the project, and 
addresses other necessary Federal permits. In addition, the 
legislation limits litigation challenges to the Keystone XL 
pipeline in a manner similar to the legislation authorizing the 
Alaska Natural Gas Pipeline, which was enacted in 2004.

Keystone XL permitting timeline

    The President's authority to approve applications for 
Presidential Permits is delegated to the Secretary of State 
under Executive Order 13337. Issuance of a Presidential Permit 
is dependent upon a finding that the project would serve the 
``national interest.'' Also, pursuant to the National 
Environmental Policy Act (NEPA), an Environmental Impact 
Statement (EIS) must be prepared by the Department of State 
because of the determination that Keystone XL would constitute 
a major Federal action have a significant impact upon the 
environment.
    Through this determination process, the Department of State 
was required to coordinate with and receive views from the 
following Federal agencies:
           Army Corps of Engineers;
           Department of Agriculture (Farm Service 
        Agency, Natural Resource Conservation Service, and 
        Rural Utilities Service);
           Department of Energy (Office of Policy and 
        International Affairs and Western Area Power 
        Administration);
           Department of Interior (Bureau of Land 
        Management, National Park Service, Fish and Wildlife 
        Service, and Bureau of Reclamation);
           Department of Transportation;
           Environmental Protection Agency;
           Department of Defense;
           Department of Justice;
           Department of Homeland Security; and,
           Department of Commerce.
    The September 2008 application's NEPA process resulted in a 
draft EIS that was issued on April 16, 2010, followed by a 
supplemental draft EIS that was issued on April 15, 2011, to 
address EPA's concerns that the draft EIS was ``inadequate,'' 
and a final EIS that was issued August 26, 2011. Issuance of 
the final EIS started the 90-day public review period for the 
Department of State to gather information to inform its 
national interest determination. On November 10, 2011, the 
Department issued an announcement that additional information 
was needed to make a determination, which may include the need 
for an additional supplemental EIS, which would further delay a 
determination until 2013. A provision included in the Temporary 
Payroll Tax Cut Continuation Act of 2011 required the Secretary 
of State to issue a Presidential Permit for the project unless 
the President determined it was not in the national interest. 
On January 18, 2012, President Obama denied the application for 
Keystone XL's Presidential Permit.
    On May 4, 2012, TransCanada submitted a second application 
for a Presidential Permit for the Keystone XL pipeline project. 
This application triggered a new NEPA review process and 
national interest determination requirement. The new 
application was for 875 miles of pipeline for the Keystone XL 
project; the southern Gulf Coast segment, which did not require 
a Presidential Permit, had already begun construction and is 
currently 50 percent to 60 percent complete. On March 1, 2013, 
the Department of State issued a draft supplemental EIS for the 
second Presidential Permit application.
    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.

The Trans-Alaska Pipeline precedent

    There are many parallels between the debate over Keystone 
XL and the debate over the construction of the Trans-Alaska 
Pipeline in the early 1970s. In that case, 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. In 
addition, the pipeline has amassed an excellent environmental 
and safety record using technology far less sophisticated than 
what will be required for Keystone XL.
    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 the same thing.

                                HEARINGS

    The Subcommittee on Energy and Power held a hearing on H.R. 
3, the `Northern Route Approval Act', on April 10, 2013. The 
Subcommittee received testimony from:
           Alexander Pourbaix, President, Energy and 
        Oil Pipelines, TransCanada;
           Anthony Swift, Attorney, Natural Resources 
        Defense Council;
           Keith Stelter, President, Delta Industrial 
        Valves, Inc.;
           David Mallino, Jr., Legislative Director, 
        Laborers International Union of America; and,
           Mark Jaccard, Professor and Research 
        Director, Simon Fraser University.

                        COMMITTEE CONSIDERATION

    On April 16, 2013, the Subcommittee on Energy and Power met 
in open markup session and approved H.R. 3 for full Committee 
consideration, without amendment, by a record vote of 17 yeas 
and 9 nays.
    On April 17, 2013, the Committee on Energy and Commerce met 
in open markup session and ordered H.R. 3 reported to the 
House, without amendment, by a roll call vote of 30 yeas and 18 
nays.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII 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.


                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a legislative 
hearing and made findings that are reflected in this report.

         STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

    H.R. 3 will approve construction of the Keystone XL 
pipeline and limit the types of judicial challenges that can be 
brought against the project. The legislation removes the 
requirement of a Presidential Permit for approving the Keystone 
XL pipeline, deems the final EIS that was issued in August 2011 
by the Department of State to be sufficient in satisfying the 
requirements of the National Energy Policy Act and the National 
Historic Preservation Act, and issues all necessary federal 
permits necessary for constructing Keystone XL pipeline.

   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. 
3 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 
of the Rules of the House of Representatives, the Committee 
finds that H.R. 3 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:

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 1, 2013.
Hon. Fred Upton,
Chairman, Committee on Energy and Commerce, House of Representatives, 
        Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3, the Northern 
Route Approval Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Megan 
Carroll.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 3--Northern Route Approval Act

    H.R. 3 would specify various procedures pertaining to 
federal review and permitting of 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. In particular, the bill would exempt the 
proposed project, which would cross international borders, from 
the existing requirement to obtain a Presidential permit. In 
addition, H.R. 3 would deem various actions by federal agencies 
involved with permitting decisions related to the proposed 
pipeline to be satisfied and certain federal permits to be 
granted.
    CBO estimates that implementing H.R. 3 would have no 
significant impact on the federal budget. Based on information 
from affected agencies, CBO estimates that the proposed changes 
to administrative procedures would not significantly affect 
federal spending for such activities relative to current law. 
The bill would not affect direct spending or revenues; 
therefore, pay-as-you-go procedures do not apply.
    H.R. 3 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act.
    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.

                    DUPLICATION OF FEDERAL PROGRAMS

    No provision of H.R. 3 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  DISCLOSURE OF DIRECTED RULE MAKINGS

    The Committee estimates that enacting H.R. 3 directs to be 
completed zero specific rule makings within the meaning of 5 
U.S.C. 551.

                      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 THE LEGISLATION

Section 1: Short title

    Section 1 provides the short title for the legislation, the 
``Northern Route Approval Act.''

Section 2: Findings

    Section 2 offers seven separate Congressional findings 
regarding the need for energy infrastructure, the national 
security benefits of Canadian oil imports, the employment and 
economic benefits from the Keystone XL pipeline, the review and 
approval by the State of Nebraska of the Keystone XL pipeline, 
the length and breadth of the Federal review process, the 
safety and environmental benefits of transporting oil via 
pipeline, and the resemblance to the action that was needed to 
approve the Alaska Pipeline in 1973.

Section 3: Keystone XL permit approval

    Section 3 removes the requirement for a Presidential Permit 
for the Keystone XL pipeline described in the application filed 
by TransCanada on May 4, 2012, and that was supplemented to 
include the reroute approved by the Governor of the State of 
Nebraska. It deems the final EIS issued on August 26, 2011, and 
the Final Evaluation Report issued by the State of Nebraska to 
satisfy all requirements of NEPA and the National Historic 
Preservation Act (NHPA).

Section 4: Judicial review

    Section 4 vests, except for review by the Supreme Court, 
the U.S. Court of Appeal for the District of Columbia Circuit 
with sole jurisdiction over specifically listed legal 
challenges regarding Keystone XL pipeline. These are limited to 
the review of any final decisions by Federal agencies regarding 
the project, questions of constitutionality, and the adequacy 
of any analysis. Any claims must be brought within 60 days of a 
decision giving rise to a claim. Any action brought under this 
section shall receive expedited consideration.

Section 5: American burying beetle

    Section 5 deems an incidental take permit to have been 
issued for the American burying beetle for the construction, 
operation, and maintenance of the Keystone XL pipeline.

Section 6: Right-of-way and temporary use permit

    Section 6 deems a right-of-way and temporary use permit to 
have been issued according to terms set forth in an application 
filed with BLM.

Section 7: Permits for activities in navigable waters

    Section 7 states that no later than 90 days after an 
application is filed, the Secretary of the Army shall issue all 
permits necessary under section 404 of the Federal Water 
Pollution Control Act and section 10 of the Rivers and Harbors 
Appropriations Act. The application shall be based on the 
administrative record, which shall be considered complete. The 
Secretary is given the authority to waive any procedural 
requirements, and if the Secretary has not issued the permits 
in 90 days, then the permits are deemed to have been issued. 
The Administrator of the Environmental Protection Agency (EPA) 
may not prohibit or restrict any activities in this section.

Section 8: Migratory Bird Treaty Act permit

    Section 8 deems a special purpose permit under the 
Migratory Bird Treaty Act to have been issued that is described 
in an application filed with the U.S. Fish and Wildlife 
Service.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    This legislation does not amend any existing Federal 
statute.

                            DISSENTING VIEWS

                               Background

    As originally proposed by TransCanada, Keystone XL is a 
multi-billion dollar pipeline that would transport up to 
830,000 barrels per day (bpd) of tar sands crude oil almost 
1,700 miles from Alberta to refineries in the Gulf Coast.\1\ 
That project is now proceeding in two parts. The southern 
portion, which extends from Cushing, Oklahoma to the Gulf 
Coast, does not require a presidential permit and is already 
under construction. The northern portion would extend 875 miles 
from the border crossing in Montana to Steele City, 
Nebraska.\2\
---------------------------------------------------------------------------
    \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 for the Keystone XL Project, 1-5 
(Apr. 22, 2011) (online at http://keystonepipeline-xl.state.gov/
documents/organization/182272.pdf).
    \2\U.S. Department of State, Draft Supplemental Environmental 
Impact Statement for the Keystone XL Project (Mar. 1, 2013) (online at 
http://keystonepipeline-xl.state.gov/draftseis/index.htm) (hereinafter 
Draft SEIS). The pipeline would extend another 329 miles into Canada.
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    The President has delegated the authority to permit 
transboundary pipeline projects to the State Department 
pursuant to Executive Orders 11423 and 13337, which require a 
finding that a project is in the national interest.\3\ Prior to 
making the national interest determination, the National 
Environmental Policy Act (NEPA) requires the State Department 
to prepare an environmental impact statement (EIS) that 
assesses impacts on the environment that would result from a 
project and evaluates alternatives that would avoid or minimize 
adverse environmental effects.\4\
---------------------------------------------------------------------------
    \3\Exec. Order No. 11423, 33 Fed. Reg. 11741 (Aug. 16, 1968); Exec. 
Order No. 13337, 69 Fed. Reg. 25299 (Apr. 30, 2004).
    \4\National Environmental Policy Act of 1969, Pub. L. No. 94-83.
---------------------------------------------------------------------------
    The State Department issued a final EIS on August 26, 
2011.\5\ On November 10, 2011, the State Department announced 
that it needed to seek additional information and study 
alternative routes in Nebraska, given concerns from the State 
of Nebraska and many commenters regarding the proposed route 
through the sensitive Sand Hills area.\6\ President Obama 
supported this decision, noting the potential effects of the 
pipeline on health, safety, and the environment. He concluded 
that ``we should take the time to ensure that all questions are 
properly addressed and all the potential impacts are properly 
understood.''\7\ Further, the President stated that the final 
decision on the permit ``should be guided by an open, 
transparent process that is informed by the best available 
science and the voices of the American people.''\8\
---------------------------------------------------------------------------
    \5\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); 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).
    \6\ U.S. Department of State, Keystone XL Pipeline Project Review 
Process: Decision to Seek Additional Information (Nov. 10, 2011).
    \7\The White House, Statement by the President on the State 
Department's Keystone XL Pipeline Announcement (Nov. 10, 2011).
    \8\Id.
---------------------------------------------------------------------------
    On December 23, 2011, Congress passed the Temporary Payroll 
Tax Cut Continuation Act of 2011, which required 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 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.\9\ At that 
time, there was no identified route through Nebraska. Based on 
the State Department's recommendation, President Obama denied 
the application, stating 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.''\10\
---------------------------------------------------------------------------
    \9\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).
    \10\The White House, Statement by the President on the Keystone XL 
Pipeline (Jan. 18, 2012).
---------------------------------------------------------------------------
    TransCanada then split the project into two pieces, and 
submitted a new application for a presidential permit for the 
northern portion on May 4, 2012, triggering the need for a 
supplemental EIS.\11\ On January 22, 2013, the Governor of 
Nebraska approved a new route for the pipeline through the 
state.\12\
---------------------------------------------------------------------------
    \11\TransCanada Keystone Pipeline LP, 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 (May 4, 2012) (online at http://keystonepipeline-xl.state.gov/
proj_docs/permitapplication/index.htm); U.S. Department of State, 
Notice of Intent to Prepare a Supplemental Environmental Impact 
Statement (SEIS) and To Conduct Scoping and To Initiate Consultation 
Under Section 106 of the National Historic Preservation Act for the 
Proposed TransCanada Keystone LX Pipeline Proposed To Extend From 
Phillips, MT (the Border Crossing) to Steele City, NE, 77 Fed. Reg. 
36032 (June 15, 2012).
    \12\Governor Dave Heineman, Governor Approves Pipeline Route (Jan. 
22, 2013).
---------------------------------------------------------------------------
    On March 1, 2013, the State Department released a Draft 
Supplemental Environmental Impact Statement (SEIS) for the 
newly defined project.\13\ The 45-day public comment period 
closed on April 22, 2013, and the State Department received 
over one million public comments on the SEIS.\14\ The State 
Department will finalize the SEIS and begin a 90-day period for 
making the national interest determination, with input from 
other agencies and an opportunity for public comment during 
that period.\15\ The draft national interest determination will 
be circulated to other agencies and finalized after 15 days 
absent objection from another agency.
---------------------------------------------------------------------------
    \13\U.S. Department of State, Draft SEIS.
    \14\See, e.g., Keystone Foes Say 1 Million Comments Show Grassroots 
Power, Bloomberg (Apr. 23, 2013) (online at www.bloomberg.com/news/
2013-04-23/keystone-xl-foes-say-1-million-comments-show-power-of-
grassroots.html).
    \15\Letter from Kerri-Ann Jones, Assistant Secretary of State for 
Oceans and International Environmental and Scientific Affairs, U.S. 
Department of State to Danielle Droitsch, Senior Attorney, Natural 
Resources Defense Council (Apr. 19, 2013).
---------------------------------------------------------------------------

          Impact of the Keystone XL Pipeline on Climate Change

    The draft SEIS estimates that tar sands crude, on average, 
has 17% greater greenhouse gas emissions on a lifecycle basis 
than the average crude refined in the United States. Thus, it 
finds that if the project were to induce growth in the rate of 
tar sands development, it could cause additional greenhouse gas 
emissions.\16\ However, the draft SEIS concludes that approval 
or denial of the project is ``unlikely to have a substantial 
impact on the rate of development in the oil sands.''\17\
---------------------------------------------------------------------------
    \16\U.S. Department of State, Draft SEIS at ES-15.
    \17\Id. 
---------------------------------------------------------------------------
    The basis for this conclusion is a market analysis finding 
that if the Keystone XL pipeline is denied and alternative 
pipelines are also blocked (as appears likely), tar sands crude 
could still reach the Gulf coast through a massive expansion of 
rail transport at relatively little additional cost, which 
would not be sufficient to make most new tar sands projects 
unprofitable under most of the scenarios analyzed.\18\ These 
conclusions depend on assumptions regarding a number of 
factors, many of which are highly uncertain, including the 
logistical availability and cost of rail transport (including 
the assumption that competition for rail capacity between tar 
sands and U.S. shale oil would have minimal effects); the 
break-even costs of new tar sands projects; future world oil 
prices; and the relative attractiveness of alternative 
investments in oil production from shale oil in the United 
States, deep sea deposits, and Iraq. Overall, the draft SEIS 
estimates that because of the presumed availability of 
alternative transport, if all pipeline capacity were 
restricted, including the Keystone XL pipeline, tar sands 
production could decrease by approximately 2% to 4% by 2030, 
reducing greenhouse gas emissions by up to 5.3 
MMTCO2e (million metric tons of CO2-
equivalent).\19\
---------------------------------------------------------------------------
    \18\Id. at ES-15, 1.4-1 to 1.4-71, 2.2-9 to 2.2-18. See also, id. 
at 2.2-27 (draft SEIS eliminates the options of moving additional 
volumes of tar sands crude west through British Columbia (beyond the 
current Kinder Morgan expansion) through either additional expansions 
or the proposed Enbridge Northern Gateway Pipeline from detailed 
analysis, given the uncertainty regarding such projects due to 
substantial opposition).
    \19\Id. at 4.15-106.
---------------------------------------------------------------------------
    In comments to the State Department, EPA noted that the 
draft SEIS's ``market analysis and conclusion that oil sands 
crude will find a way to market with or without [Keystone XL] 
is the central finding that supports the DSEIS's conclusions 
regarding the [pipeline's] potential GHG emissions 
impacts.''\20\ But EPA notes that the draft SEIS is ``not based 
on an updated energy-economic modeling effort'' and recommends 
the final SEIS include a more careful review of ``rail capacity 
and costs, recognizing the potential for much higher per barrel 
rail shipment costs than presented in the DSEIS.''\21\
---------------------------------------------------------------------------
    \20\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 (Apr. 22, 2013).
    \21\Id.
---------------------------------------------------------------------------
    Dr. Mark Jaccard, Professor and Research Director at Simon 
Fraser University in Vancouver, British Columbia, raised 
questions about the draft SEIS's market assumptions in 
testimony before the Subcommittee on Energy and Power. He 
stated:\22\

    \22\Testimony of Dr. Mark Jaccard, Simon Fraser University, 
Committee on Energy and Commerce, Subcommittee on Energy and Power, 
Legislative Hearing on H.R. 3, the Northern Route Approval Act, 113th 
Cong. (Apr. 10, 2013).

        Quite simply, in the absence of Keystone XL, oil sands 
        producers will find it more difficult to profitably get 
        their product to market. Over the next two decades, the 
        oil sands industry is considering plans to triple its 
        production. To move forward, these projects require a 
        significant expansion of low cost transportation 
        infrastructure. They have potential alternatives to 
        Keystone XL, but these are more costly and more 
        difficult to scale up to the capacity of Keystone XL, 
---------------------------------------------------------------------------
        and each faces significant impediments.

    Anthony Swift from the Natural Resources Defense Council 
also challenged the draft SEIS's assumptions about the 
viability of transporting tar sands crude via rail car. In 
testimony before the Subcommittee on Energy and Power, Mr. 
Swift noted that while rail has proven a feasible 
transportation option for light crude from the Bakken 
formation, it is ``significantly more expensive to move'' tar 
sands crude by rail than Bakken light crude.\23\
---------------------------------------------------------------------------
    \23\Testimony of Anthony Swift, Attorney, Natural Resources Defense 
Council, Committee on Energy and Commerce, Subcommittee on Energy and 
Power, Legislative Hearing on H.R. 3, the Northern Route Approval Act, 
113th Cong. (Apr. 10, 2013).
---------------------------------------------------------------------------
    Dr. Jaccard also argued that the President should make a 
national interest determination in the broader context of the 
urgent need to cut greenhouse gas emissions and address climate 
change. He said we ``must ask what should happen to the oil 
sands, and associated infrastructure like Keystone XL, in a 
world in which the international community acts to prevent a 2 
+C increase of the average global temperature from pre-
industrial levels--a threshold that scientists find 
significantly increases the likelihood of catastrophic climate 
change in this century.''\24\ Dr. Jaccard testified that 
because the global community has ``procrastinated'' in cutting 
carbon pollution, the only responsible choice is to ``ask 
governments not to allow investments that make it easier to 
increase their contribution to carbon pollution, whether in 
North America or elsewhere. This means denying Keystone 
XL.''\25\
---------------------------------------------------------------------------
    \24\Testimony of Dr. Mark Jaccard, Simon Fraser University, 
Committee on Energy and Commerce, Subcommittee on Energy and Power, 
Legislative Hearing on H.R. 3, the Northern Route Approval Act, 113th 
Cong. (Apr. 10, 2013).
    \25\Id.
---------------------------------------------------------------------------

        Pipeline Safety Implications of the Keystone XL Pipeline

    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.\26\ 
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.\27\ 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.''\28\
---------------------------------------------------------------------------
    \26\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).
    \27\Cornell University Global Labor Institute, Pipe Dreams? Jobs 
Gained, Jobs Lost by the Construction of Keystone XL, 13-14, 28-29 
(Sept. 2011).
    \28\Letter from Michael R. Klink to Representative Henry A. Waxman 
(Feb. 1, 2012).
---------------------------------------------------------------------------
    The potential for oil spills with Keystone XL has been of 
particular concern because the pipeline would pass 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.\29\ Randy 
Thompson, a Nebraska ranch owner whose property lies along the 
original 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.\30\
---------------------------------------------------------------------------
    \29\U.S. Geological Survey, High Plains Regional Ground-Water Study 
(online at http://co.water.usgs.gov/nawqa/hpgw/factsheets/
DENNEHYFS1.html).
    \30\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).
---------------------------------------------------------------------------
    Pursuant to a bipartisan pipeline safety law enacted in 
2012, the Pipeline Hazardous Materials Safety Administration 
(PHMSA) is required to conduct a study and make a determination 
regarding whether its existing regulations are sufficient to 
ensure the safety of pipelines used to transport diluted 
bitumen.\31\ The study is currently being conducted by the 
National Academy of Sciences.\32\ 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.\33\
---------------------------------------------------------------------------
    \31\Pipeline Safety, Regulatory Certainty, and Job Creation Act of 
2011, Pub. L. No. 112-90.
    \32\U.S. Department of Transportation, Pipeline and Hazardous 
Materials Safety Administration, Diluted Bitumen Study (online at 
www.phmsa.dot.gov/portal/site/ PHMSA/menuitem.ebdc7a8a7e39f2e55cf 
2031050248a0c/?vgnextoid=0f22597 c7386310VgnVCM1000 
001ecb7898RCRD&vgnextchannel=623b 143389d8c010VgnVCM1000008049 
a8c0RCRD&vgnextfmt=print).
    \33\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. (Jun. 16, 2011).
---------------------------------------------------------------------------

          Potential Impact of the Keystone XL Pipeline on Jobs

    In data it submitted to the State Department in its 
application for a permit for the full Keystone XL pipeline, 
TransCanada predicted ``a peak workforce of approximately 3,500 
to 4,200 construction personnel.''\34\ The draft SEIS finds 
that the project would produce an estimated 3,900 one-year 
construction jobs over a period of one to two years. The 
economic activity induced by construction is estimated to 
potentially support an additional 38,200 one-year jobs during 
that period. Ongoing operation of the project is estimated to 
generate 35 permanent and 15 temporary jobs.\35\
---------------------------------------------------------------------------
    \34\TransCanada Keystone Pipeline, LP, Keystone XL Project 
Environmental Report, 2-42 (Nov. 2008).
    \35\Id. at ES-13 to ES-14.
---------------------------------------------------------------------------
    Industry has been citing much higher numbers in its 
advocacy for the pipeline's approval. 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.\36\ This figure, which is five 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.\37\ It also was an estimate for 
the full project, while the current application covers only the 
shorter northern portion. In addition, a Perryman Group study 
commissioned by TransCanada predicted the full 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.\38\ 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).\39\ 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.''\40\ The Washington Post Fact Checker 
also cast doubt on exaggerated claims that Keystone XL would 
create ``tens of thousands'' of jobs.\41\
---------------------------------------------------------------------------
    \36\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).
    \37\See, e.g., Keystone Pipeline debate heats up, Washington Post, 
(Nov. 5, 2011).
    \38\The Perryman Group, The Impact of Developing the Keystone XL 
Pipeline Project on Business Activity in the US (Jun. 2010).
    \39\Cornell University Global Labor Institute, Pipe Dreams? Jobs 
Gained, Jobs Lost by the Construction of Keystone XL, 17-21 (Sept. 
2011).
    \40\Id. at 2.
    \41\Keystone pipeline jobs claims: a bipartisan fumble, Washington 
Post (Dec. 14, 2011).
---------------------------------------------------------------------------

                  Keystone XL Pipeline and Gas Prices

    Some supporters of the Keystone XL continue to suggest that 
the pipeline would somehow reduce gas prices, despite the lack 
of any evidence supporting that view.\42\ Oil is a global 
commodity and, absent unique regional market conditions, prices 
are generally set by the world market. In a May 2012 report, 
the Congressional Budget Office (CBO) concluded that 
``disruptions in the supply of oil anywhere in the world 
rapidly result in higher oil prices worldwide.''\43\ These 
price spikes are not prevented or mitigated by either higher 
levels of domestic oil production nor guaranteed supplies of 
imports. CBO examined gasoline prices in Canada, the United 
States, and Japan between 1999 and 2011. CBO found that 
gasoline prices in those countries rose and fell in tandem with 
the world market, even though Japan produced almost no oil, 
Canada was a net oil exporter, and the United States produced 
less than half of its oil.\44\ More domestic supply did not 
protect Canadian consumers from price shocks.\45\ It appears 
highly unlikely that addition of the northern portion of the 
Keystone XL pipeline would have any discernable effect on world 
oil prices.
---------------------------------------------------------------------------
    \42\See, e.g., this Committee Report at 2.
    \43\Congressional Budget Office, Energy Security in the United 
States at 6 (May 2012).
    \44\Id. at 6, 8.
    \45\Id. at 8.
---------------------------------------------------------------------------
    But if Keystone XL were to have any effect at all on gas 
prices, it would be expected to increase, rather than lower, 
gasoline prices in the Midwest. Operation of the Keystone XL 
pipeline is widely expected to raise crude oil prices in the 
Midwest by diverting supply from refineries in the Midwest to 
refineries on the Gulf Coast. In its application for the 
Keystone XL pipeline, TransCanada told the Canadian government 
that the Midwest market is ``oversupplied,'' resulting in 
``price discounting'' for Canadian heavy crude oil.\46\ 
TransCanada concluded that a pipeline to the Gulf Coast will 
benefit all heavy crude producers in Western Canada ``by 
increasing the price they receive for their crude.''\47\ 
TransCanada also provided an independent analysis predicting 
that the Keystone XL pipeline would increase prices by $6.55 
per barrel of crude oil in the Midwest and $3 per barrel 
everywhere else.\48\ By 2013, this will generate between $2 
billion and $3.9 billion in additional revenue for Canadian oil 
companies.\49\
---------------------------------------------------------------------------
    \46\TransCanada Keystone Pipeline Group Ltd., Keystone XL Pipeline 
Section 52 Application, Section 3: Supply and Markets at 7.
    \47\Id.
    \48\Purvin & Gertz, Inc., Western Canadian Crude Supply and 
Markets, Prepared for TransCanada Keystone Pipeline Group Ltd. (Feb. 
12, 2009) at 27-28.
    \49\Id. at 29. See also, Philip Verleger, If gas prices go up 
further, blame Canada, Minnesota Star-Tribune (Mar. 13, 2011).
---------------------------------------------------------------------------

          Analysis of H.R. 3, the Northern Route Approval Act

    H.R. 3 eliminates the President's authority to permit the 
Keystone XL pipeline, effectively mandates approval of the 
pipeline, and effectively waives all other federal permitting 
requirements. It eliminates the final portion of the ongoing 
review process, thereby eliminating any further public 
participation, for a highly controversial project with 
significant long-term effects. Even for many who support 
building the Keystone XL pipeline, H.R. 3 is not viewed as an 
acceptable or appropriate way to move this project forward. The 
Administration needs to finish addressing the numerous and 
complex issues that have been raised regarding this project.
    Supporters of H.R. 3 claim that this bill is necessary to 
expedite construction of the Keystone XL pipeline. But the 
review process for Keystone XL has been appropriate given the 
immense scope and potential effects of the project. The 
President's earlier decision to deny the permit was necessary 
due to the arbitrarily short deadline for an up-or-down 
decision that Congress had set under the Temporary Payroll Tax 
Cut Continuation Act of 2011, which required a decision even 
though there was no final route through Nebraska for the State 
Department to evaluate at that time.
    Rather than allowing the ongoing review process to produce 
a decision based on relevant information and public input, H.R. 
3 would create a legislative earmark granting special treatment 
to a foreign company for a single project.
    In addition to eliminating the requirement for a 
presidential permit, H.R. 3 effectively approves the Keystone 
XL pipeline, deeming all federal requirements met and all 
federal environmental permits issued. It deems the final EIS 
for the initial project from the Canadian border to the Gulf to 
satisfy all requirements of the National Environmental Policy 
Act and the National Historic Preservation Act.\50\ It declares 
by fiat that the project will not adversely modify critical 
habitat of the endangered American burying beetle and deems the 
Secretary of Interior to have issued an opinion to that effect 
under the Endangered Species Act.\51\ It also deems the 
Secretary of Interior to have granted right-of-way permits for 
use of public lands managed by the Bureau of Land Management 
and to have issued a permit under the Migratory Bird Treaty 
Act.\52\ It requires the Secretary of the Army to issue a 
permit for filling wetlands under section 404 of the Clean 
Water Act within 90 days of an application, allows the 
Secretary to waive any statutory or regulatory procedural 
requirement for issuing such a permit as the Secretary 
considers ``desirable,'' deems the permit issued if it is not 
issued within the 90 day period, and bars the Administrator of 
the Environmental Protection Agency from imposing any 
restrictions.\53\
---------------------------------------------------------------------------
    \50\H.R. 3, Sec. 3.
    \51\Id. at Sec. 5.
    \52\Id. at Sec. Sec. 6, 8.
    \53\Id. at, Sec. 7.
---------------------------------------------------------------------------
    In addition, H.R. 3 gives the D.C. Circuit Court of Appeals 
exclusive jurisdiction to review any federal action regarding a 
permit for the pipeline, the constitutionality of the Act, and 
the adequacy of any analysis with respect to any action under 
the Act. It also directs the court to expedite review of any 
such case.\54\ By directing all challenges to the D.C. Circuit 
rather than the local and regional federal courts of 
jurisdiction, H.R. 3 could make it more difficult for concerned 
stakeholders, such as those along the pipeline's route, to 
exercise their right to challenge a federal action that could 
affect their property, health, and livelihoods.
---------------------------------------------------------------------------
    \54\Id. at 4.
---------------------------------------------------------------------------
    The majority suggests that the Trans-Alaska Pipeline 
Authorization Act provides a precedent for H.R. 3, but that Act 
differed in critical ways. Unlike H.R. 3, the Trans-Alaska 
Pipeline Authorization Act did not waive federal environmental 
permitting requirements. Rather, it directed the Secretary of 
Interior and other appropriate Federal officers to issue 
rights-of-way and permits needed to construct the pipeline, and 
to include in those rights-of-way and permits all terms and 
conditions required by the underlying provisions of law that 
would have otherwise applied.\55\ The Act allowed the Secretary 
and other Federal officers to waive only procedural 
requirements, and even those waivers were not required.\56\ In 
addition, the Trans-Alaska Pipeline Authorization Act largely 
prohibited export of the crude oil transported on the 
pipeline.\57\
---------------------------------------------------------------------------
    \55\Pub. L. No. 93-153 203(c) (1973).
    \56\ Id.
    \57\Pub. L. No. 93-153 101 (1973).
---------------------------------------------------------------------------
    For the reasons stated above, we dissent from the views 
contained in the Committee's report.
                                   Henry A. Waxman.

                                  
