Keystone XL Pipeline Project: Key Issues

Paul W. Parfomak
Specialist in Energy and Infrastructure Policy

Neelesh Nerurkar
Specialist in Energy Policy

Linda Luther
Analyst in Environmental Policy

Adam Vann
Legislative Attorney

Canadian pipeline company TransCanada has filed an application with the U.S. Department of State to build the Keystone XL pipeline, which would transport crude oil from the oil sands region of Alberta, Canada, to refineries in the United States. Keystone XL would have the capacity to transport 830,000 barrels per day, delivering crude oil to the market hub at Cushing, OK, and further to points in Texas. The project is expected to cost more than $7.0 billion, of which at least $5.4 billion would be spent on the U.S. portion. TransCanada is planning to build a short additional pipeline so that oil from the Bakken formation in Montana and North Dakota can also be carried on the Keystone XL pipeline.

As a facility connecting the United States with a foreign country, Keystone XL requires a Presidential Permit from the State Department. Issuance of a permit is dependant upon a finding that the project would serve the national interest. That finding is based, in part, on the environmental impacts of the project as determined in an environmental impact statement (EIS) prepared pursuant to the National Environmental Policy Act (NEPA). A draft EIS issued in April 2010 was rated “inadequate” by the U.S. Environmental Protect Agency (EPA).

To respond to comments from EPA, as well as the public and other agencies, the State Department issued a supplement draft EIS in April 2011. EPA found the supplement draft included insufficient information to determine environmental impacts and recommended additional data and analysis to be included in the final EIS. Once a final EIS is issued, the State Department plans to hold six public hearings to gather additional comments on whether authorization of a Presidential Permit for Keystone XL would be in the national interest. The State Department expects to make that decision before the end of 2011.

Opponents to the Keystone XL pipeline project, primarily environmental groups and affected communities along the route, object to the project principally on the grounds that it supports “dirty” Canadian oil sands development, that a potential spill could pose a risk to groundwater, that alternative pipeline routes avoiding the Ogallala Aquifer have not been fully considered, and that it promotes continued U.S. dependency on fossil fuels. Arguments criticizing the greenhouse gas emissions of oil sands production, generally, are based to some degree on the assumption that limiting pipeline capacity to U.S. markets may limit output from Canada’s oil sands.

Proponents of the Keystone XL pipeline, including Canadian agencies and petroleum industry stakeholders, point to energy security and economic benefits, such as job creation. Some contend that the Keystone XL project would secure growing Canadian oil supplies for the U.S. market, which could offset imports from less dependable foreign sources. They also claim that if oil sands output cannot flow to the United States, infrastructure to export it to Asia will likely develop.

International pipeline projects like Keystone XL are not subject to the direct authority of Congress, but numerous Members of Congress have expressed support for, or opposition to, the pipeline proposal because of its potential environmental, energy security, and economic impacts. Congress may have an oversight role stemming from federal environmental statutes that govern the pipeline’s application review process. The North American-Made Energy Security Act (H.R. 1938) would direct the President to issue a final order granting or denying the Presidential Permit for the Keystone XL pipeline by November 1, 2011. Whatever the State Department’s decision, legal challenges appear likely.


Date of Report: June 29, 2011
Number of Pages: 22
Order Number: R41668
Price: $29.95

Follow us on TWITTER at http://www.twitter.com/alertsPHP or #CRSreports

Document available via e-mail as a pdf file or in paper form.
To order, e-mail Penny Hill Press or call us at 301-253-0881. Provide a Visa, MasterCard, American Express, or Discover card number, expiration date, and name on the card. Indicate whether you want e-mail or postal delivery. Phone orders are preferred and receive priority processing.