[Senate Report 114-1]
[From the U.S. Government Publishing Office]
Calendar No. 2
114th Congress } { Report
SENATE
1st Session } { 114-1
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KEYSTONE XL PIPELINE
_______
January 12, 2015.--Ordered to be printed
_______
Ms. Murkowski, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany S. 147]
The Committee on Energy and Natural Resources, having
considered the same, reports favorably an original bill (S.
147) to approve the Keystone XL Pipeline, and recommends that
the bill do pass.
PURPOSE
The purpose of this measure is to approve the Keystone XL
pipeline.
BACKGROUND AND NEED
Although the Federal Government does not regulate the
siting of oil pipelines within the United States, the President
has, for more than a century, asserted authority to approve
energy and telecommunication facilities that cross
international borders pursuant to the President's
constitutional authority over foreign affairs. See Sierra Club
v. Clinton, 689 F. Supp. 2d 1147, 1163 (D. Minn. 2010). In
1968, President Johnson delegated his authority to issue or
deny applications for Presidential permits for cross-border oil
pipelines to the Secretary of State, based upon the Secretary's
determination of whether issuance of the permit would serve the
national interest. Executive Order 11423, 33 Fed. Reg. 11741
(Aug. 16, 1968). President George W. Bush affirmed President
Johnson's delegation to the Secretary of State in 2004.
Executive Order 13337, 69 Fed. Reg. 25299 (May 5, 2004).
TransCanada Keystone Pipeline, LP, (``TransCanada''), a
Canadian company, proposes to build and operate an oil
pipeline, known as the ``Keystone XL pipeline,'' to transport
heavy crude oil across the border between Saskatchewan, Canada,
and Montana. This proposed pipeline would connect with a
recently-completed pipeline that currently ends in Nebraska. In
addition, the project will also provide transportation of light
crude oil from the Bakken formation in North Dakota and
Montana. TransCanada already operates another cross-border
pipeline, known simply as the ``Keystone pipeline,'' which runs
from Hardisty, Alberta, crosses the border in North Dakota, and
ends in Patoka, Illinois. It received a Presidential permit in
March 2008 and began operating in June 2010. In the case of the
original Keystone pipeline, the Department of State determined
that the pipeline was in the national interest because it
increased market access to crude oil supplies from ``a stable
and reliable trading partner, Canada, that is in close
proximity to the United States.''
In September 2008, TransCanada applied for a Presidential
permit for the Keystone XL pipeline. This second pipeline would
have the capacity to transport 830,000 barrels of oil per day,
including 730,000 barrels per day from Canada, and 100,000
barrels per day from the Bakken formation of North Dakota and
Montana. It would provide both Canadian and American oil
producers greater access to the large refining center in the
U.S. Gulf Coast.
The Department of State published a final environmental
impact statement on the proposed project in August 2011. In
November 2011, however, the Department determined that
additional information was needed to act on the application.
In December 2011, Congress passed and the President signed
into law the Temporary Payroll Tax Cut Continuation Act.
Section 501 of that Act required the President, acting through
the Secretary of State, to grant the Presidential permit for
the Keystone XL pipeline ``not later than 60 days'' after
December 23, 2011. Public Law 112-78, 501(a), 125 Stat. 1289.
On January 18, 2012, the Secretary of State recommended that
the President deny the permit, ``based on the fact that the
Department does not have sufficient time to obtain the
information necessary to assess whether the project, in its
current state, is in the national interest.'' The President
accepted the Secretary of State's recommendation, stating that
it was ``not a judgment on the merits of the pipeline, but the
arbitrary nature of a deadline that prevented the State
Department from gathering the information necessary to approve
the project. . . .''
In February 2012, TransCanada announced that it would
proceed with the construction of the pipeline from Cushing,
Oklahoma, to the Gulf Coast, for which a Presidential permit
was not required (since it did not cross the border with
Canada). Construction of that portion of the pipeline is now
complete. It began operating in January 2014.
In May 2012, TransCanada filed a new application for a
Presidential permit for the project. The new application
proposed a modified route, which avoids the environmentally
sensitive Sand Hills region in Nebraska and terminates near
Steele City, Nebraska. From Steele City, oil would be
transported through the so-called ``Cushing Extension,'' from
Steele City, Nebraska, to Cushing, Oklahoma, which began
operating in February 2011, and the ``Gulf Coast Project,''
from Cushing, Oklahoma, to Nederland, Texas, which began
operating in January 2014.
On January 31, 2014, the Department of State released a
final supplemental environmental impact statement on the
modified Keystone XL project. Pursuant to Executive Order
13337, the Department is required to solicit the views of the
Departments of Energy, Defense, Transportation, Homeland
Security, Justice, the Interior, and Commerce, and the
Environmental Protection Agency. On April 18, 2014, the
Department of State notified the eight agencies that it would
provide more time for them to submit their views on the
project. It cited both ``the uncertainty created by the ongoing
litigation in the Nebraska Supreme Court which could ultimately
affect the pipeline route in that state,'' and the
``unprecedented number of new public comments, approximately
2.5 million, received during the public comment period that
closed on March 7, 2014,'' for giving the agencies more time.
The State Department stated that it was ``actively continuing''
its work on the permit application, but offered no target date
for bringing its review to a close and making a final decision
on TransCanada's permit application.
The environmental community has expressed concern that
construction of the Keystone XL pipeline would result in
increased oil sands production, which would in turn increase
greenhouse gas emissions in Canada. The State Department found
in its Environmental Impact Statement that approval of the
pipeline would be ``unlikely to significantly impact the rate
of extraction,'' concluding: ``Oil sands production and
investment could slow or accelerate depending on oil price
trends, regulations, and technological developments. . . .''
LEGISLATIVE HISTORY
The Committee ordered S. 2554, legislation to approve the
Keystone XL pipeline, favorably reported as an original bill on
June 18, 2014. Similar legislation (S. 582 and S. 2280) was
introduced by Senator Hoeven on March 18, 2013 (S. 582) and on
May 5, 2014 (S. 2280). S. 582 was cosponsored by 27 Senators,
and S. 2280 was cosponsored by 55 Senators. Both bills were
placed directly on the Calendar pursuant to rule XIV. S. 2280
was considered by the full Senate on November 18, 2014 by a
vote of 59-41 but, having failed to achieve 60 votes in the
affirmative, did not pass.
In addition, similar measures have been incorporated as
part of more comprehensive bills that have been referred to the
Committee on Energy and Natural Resources. See S. 17, Sec. 309
(Mr. Vitter); S. 2170, Sec. 2012 (Mr. Cruz). See also S. Con.
Res. 21 (Ms. Landrieu) (expressing the sense of the Senate that
``completion of the Keystone XL pipeline is in the national
interest of the United States''). Similar legislation (H.R. 3)
was also passed by the House of Representatives on May 22,
2013, by a vote of 241-175, and was placed on the Senate
Legislative Calendar under rule XIV.
COMMITTEE RECOMMENDATION AND TABULATION OF VOTES
The Committee on Energy and Natural Resources, in open
business session on January 8, 2015, by a majority voice vote
of a quorum present, recommends that the Senate pass an
original bill, as described herein.
The roll call vote on reporting the measure was 13 yeas, 9
nays, as follows:
YEAS NAYS
Ms. Murkowski Ms. Cantwell
Mr. Barrasso Mr. Wyden
Mr. Risch Mr. Sanders
Mr. Lee Ms. Stabenow
Mr. Flake Mr. Franken
Mr. Daines Mr. Heinrich
Mr. Manchin Ms. Hirono
Mr. Cassidy Mr. King
Mr. Gardner Ms. Warren
Mr. Portman
Mr. Hoeven
Mr. Alexander
Mrs. Capito*
*Indicates vote by proxy.
SECTION-BY-SECTION ANALYSIS
Section 1 provides a short title for the measure.
Section 2(a) authorizes TransCanada to construct, connect,
operate and maintain the Keystone XL pipeline and cross-border
facilities described in the application TransCanada filed on
May 4, 2012, including any subsequent revision to the pipeline
route within the State of Nebraska required or authorized by
the State of Nebraska.
Subsection (b) provides that the Final Supplemental
Environmental Impact Statement on the Keystone XL Project
issued by the Secretary of State in January 2014 shall be
considered to satisfy the National Environmental Policy Act and
any other provision of law that requires Federal agency
consultation or review, including section 7(a) of the
Endangered Species Act of 1973, with respect to the Keystone XL
pipeline and cross-border facilities.
Subsection (c) provides that any Federal permit or
authorization for the Keystone XL pipeline and cross-border
facilities issued before the date of enactment of the measure
shall remain in effect.
Subsection (d) gives the United States Court of Appeals for
the District of Columbia Circuit original and exclusive
jurisdiction, except for review in the Supreme Court of the
United States, for the review of any order or action of a
Federal agency regarding the Keystone XL pipeline and cross-
border facilities and related facilities in the United States
that are approved by the measure (including any order granting
a permit or right-of-way, or any other agency action taken to
construct or complete the project pursuant to Federal law).
Subsection (e) states that nothing in the measure alters
any Federal, State, or local process or condition in effect on
the date of enactment that is necessary to secure access from
an owner of private property to construct the Keystone XL
pipeline and cross-border facilities.
COST AND BUDGETARY CONSIDERATIONS
The following estimate of the costs of this measure has
been provided by the Congressional Budget Office:
Keystone XL Pipeline Approval Act
In May 2012, a private firm submitted an application for a
Presidential permit to construct the proposed Keystone XL
pipeline, which would carry crude oil from Alberta, Canada, to
Steel City, Nebraska. Under current law, the proposed pipeline
requires a Presidential permit because it would cross
international borders. That application is still under review
by the Department of State, which is responsible for issuing
such permits.
This legislation would specify various procedures
pertaining to federal review and permitting of the proposed
Keystone XL pipeline. In particular, the legislation would
specifically authorize the private entity to construct,
connect, operate, and maintain the proposed pipeline and
related cross-border facilities described in the existing
application.
Based on information from affected agencies, CBO estimates
that enacting this legislation would have no significant effect
on federal spending for regulatory activities related to the
proposed pipeline. (Any such regulatory activities are subject
to the availability of appropriated funds.) Enacting the
legislation would not affect direct spending or revenues;
therefore, pay-as-you-go procedures do not apply.
The Keystone XL Pipeline Approval Act 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.
REGULATORY IMPACT EVALUATION
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out the bill.
The bill is not a regulatory measure in the sense of
imposing Government-established standards or significant
economic responsibilities on private individuals and
businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of the bill, as ordered reported.
CONGRESSIONALLY DIRECTED SPENDING
The bill, as reported, does not contain any congressionally
directed spending items, limited tax benefits, or limited
tariff benefits as defined in rule XLIV of the Standing Rules
of the Senate.
EXECUTIVE COMMUNICATIONS
The Committee did not request the views of the
Administration on the measure.
MINORITY VIEWS
Under law existing for more than a century, any company
that wishes to build an oil pipeline across our border with
Canada must first obtain a permit from the President of the
United States. In 1968, President Johnson delegated the
President's authority to issue cross-border permits to the
Secretary of State. In 2004, President George W. Bush
established the current process that the Secretary must follow
in issuing cross-border permits. In the executive order setting
up this process, President Bush explained that it would
``provide a systematic method for evaluating and permitting''
cross-border pipelines, which would ``expedite review'' and
``accelerate the completion'' of cross-border projects, ``while
maintaining safety, public health, and environmental
protections.'' President Bush's executive order requires the
Secretary to find that the issuance of a permit ``would serve
the national interest,'' and it requires the Secretary to
impose ``such terms and conditions as the national interest may
in the Secretary's judgment require.'' The State Department has
previously approved presidential permits for other oil
pipelines that cross the Canadian border using this process,
without the need for legislative intervention.
The purpose of the Keystone XL Pipeline Approval Act is to
exempt a single company, TransCanada Keystone Pipeline, L.P., a
U.S. subsidiary of TransCanada Corporation, a Canadian business
corporation, from the President's permitting authority, with
respect to the proposed Keystone XL pipeline. The pipeline
would transport oil produced from tar sands in Alberta, Canada,
across the border, through Montana, South Dakota, and Nebraska.
In Nebraska, the Keystone XL pipeline would connect with an
existing pipeline that would then transport the oil to Port
Arthur, Texas.
The Committee's bill would circumvent the President's
longstanding permitting authority and bypass the need for the
Secretary of State to determine if the pipeline is in the
national interest. It would do so by simply authorizing
TransCanada to build the pipeline, as a matter of law, without
a presidential permit, without a national interest
determination, and without national interest terms and
conditions. The bill would also foreclose further environmental
review of significant new circumstances or information and it
would limit the ability of citizens directly affected by the
pipeline's course through Montana, South Dakota, and Nebraska
from obtaining judicial review.
The majority contends that the bill is needed because the
review process established by President Bush to ``expedite''
and ``accelerate'' such projects, but still protect public
health, safety, and the environment, is taking too long. They
point to the fact that an earlier application for the Keystone
XL pipeline was filed on September 19, 2008, and argue that the
review has now taken over 6 years. In fact, more than half of
that time was spent on the earlier application, which the State
Department had to deny on January 18, 2012, because a previous,
ill-conceived legislative attempt to force the President to
make a premature decision on the Keystone XL pipeline did not
afford sufficient time to make the national interest
determination.
TransCanada filed its current application less than 3 years
ago, on May 4, 2012. On January 31, 2014, less than a year ago,
the State Department completed a Final Supplemental
Environmental Impact Statement on the project, at which point
it promptly began the agency comment process required by
President Bush's executive order for making the national
interest determination.
The process has been delayed for the understandable reason
that the route of the pipeline through Nebraska had yet to be
settled. TransCanada originally proposed building the pipeline
through the environmentally sensitive Nebraska Sandhills in its
September 2008 application, but subsequently proposed rerouting
the pipeline around the Sandhills in its May 2012 application.
Following the rejection of TransCanada's 2008 application, the
Nebraska Legislature amended Nebraska's pipeline siting law to
permit the Governor, rather than the Public Service Commission,
to approve the route and enable TransCanada to take private
property under Nebraska eminent domain law. The Governor of
Nebraska approved TransCanada's revised route under the 2012
law. Meanwhile, a number of Nebraska landowners challenged the
constitutionality of the law, and on February 14, 2014, a
Nebraska district court judge held that the 2012 law violated
the Nebraska Constitution by divesting the Public Service
Commission of control over the routing decisions for the
Keystone XL pipeline within Nebraska. On January 9, 2015, the
day after the Committee ordered the Keystone XL Pipeline
Approval Act reported, the Supreme Court of Nebraska vacated
the district court's decision and held that the 2012 law ``must
stand by default.'' A majority of the Court, four of its seven
judges, concluded that the law was unconstitutional. The other
three concluded that the landowners who brought the suit lacked
standing and declined to address the constitutional question.
Under the Nebraska Constitution, a supermajority of five judges
must concur to hold a law unconstitutional, so the 2012 siting
law, and with it the Governor's routing decision, ``must stand
by default,'' even though none of the seven judges found it to
be constitutional.
Simply put, the State Department could not have reasonably
determined whether or not the pipeline is in the national
interest as long as it did not know where the pipeline would
ultimately be sited. Nor was it unreasonable for the State
Department to question the validity of the Governor's approval
of the proposed route, as evidenced by the fact that a majority
of the Nebraska Supreme Court has now concluded the law under
which the route was approved is unconstitutional.
Nor does the Nebraska Supreme Court's decision upholding
the route ``by default'' dispense with the State Department's
responsibility for making the national interest determination
under President Bush's executive order. Although the executive
order does not specify the factors the Department must consider
in determining whether a project would serve the national
interest, the Department has taken the position that the
determination of national interest involves consideration of
``many factors, including energy security; environmental,
cultural, and economic impacts; foreign policy; and compliance
with relevant state and federal regulations.'' Left alone, the
Department will now have to consider and weigh all of these
factors in arriving at its national interest determination.
The Committee bill, however, dispenses with the national
interest determination. The majority simply assumes that the
pipeline is in the national interest because it will create
jobs and provide an additional source of Canadian oil to the
U.S. market. Undoubtedly, some jobs will be created. How many,
in which trades, and how long they will last is disputed. And
undoubtedly, some part of the oil that would flow through the
pipeline would be used in the United States. But how much will
be refined in the United States and how much of it will be
exported, and how much of the refined product will be used in
the United States and how much of the refined product will be
exported are also in dispute. These are questions best left to
the objective analysis of the technical experts in the
Department of State rather than answered by intuition in the
political arena.
Serious questions also remain about the effect the
greenhouse gas emissions associated with the production,
refining, and consumption of oil produced from tar sands will
have on the climate and the environmental consequences of
potential oil spills from the pipeline. The State Department's
Final Supplemental Environmental Impact Statement is, in fact,
favorable to the proposed pipeline on these questions. But it
assumed, based upon the price of oil when it was prepared, that
the oil would be produced whether or not the pipeline is built,
and would be shipped to market by rail or other means, even if
the proposed pipeline is not built. The sharp decrease in the
price of oil since the Final Supplemental Environmental Impact
Statement was released has, of course, undermined that
assumption. Oil prices are now approximately half what they
were during the time period that the State Department was
conducting its oil market analysis. The State Department
observed that a number of conditions, including unexpectedly
low oil prices, could result in the Keystone XL actually
increasing gasoline prices to some Midwestern consumers. These
factors must also be analyzed and weighed by the State
Department in making its national interest determination.
Moreover, if the State Department is able to make its
national interest determination, President Bush's executive
order will require the permit to contain ``such terms and
conditions as the national interest may . . . require.'' Under
this authority, the Secretary may be able to ensure that that
construction of the pipeline does, in fact, generate jobs in
this country, by requiring, for example, that the steel for the
pipeline be made in this country rather than imported from
abroad, or that oil be refined in this country rather than
exported, or that the refined product be used in this country,
to the extent permitted by our international trade agreements.
Or the Secretary may ensure that TransCanada contributes its
fair share to the Oil Spill Liability Trust Fund, from which
tar sands oil is currently exempt. The Committee bill, in stark
contrast, would authorize the pipeline without any national
interest conditions.
Undoubtedly, enactment of the Committee bill and
construction of the Keystone XL pipeline is in TransCanada's
interest. But the proper test is, and should remain, whether it
is in the national interest, not TransCanada's interest. By
circumventing the requirement for a national interest
determination, the Committee bill forecloses the consideration
of the serious, substantive questions directly affecting the
national interest, and it forecloses the Administration's
ability to attach conditions to the permit that would protect
the national interest.
Congress might better serve the national interest by
ensuring that the State Department adheres to the established
decision-making process and engages in reasoned decision-making
rather than by circumventing that process and substituting its
judgment for that of the agency experts.
Maria Cantwell.
CHANGES IN EXISTING LAW
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, the Committee notes that no
changes in existing law are made by the bill as ordered
reported.
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