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Wednesday, January 4, 2012

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

In 2008, Canadian pipeline company TransCanada 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 on the U.S. Gulf Coast. 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 plans to build a short additional pipeline so that oil from the Bakken formation in Montana and North Dakota can also be carried on Keystone XL. Many Members of Congress have expressed support or opposition to the pipeline due to its potential environmental, energy security, and economic impacts.

As a facility connecting the United States with a foreign country, the pipeline requires a Presidential Permit from the State Department. In granting or denying a permit application, the State Department must determine whether a proposal is in the “national interest.” Such a determination must be arrived at in consultation with other relevant federal agencies and after public input. The determination includes an evaluation of factors including the proposed project’s potential to affect the environment, economy, energy security, or foreign policy.

Potential environmental impacts of the proposed Keystone XL project were identified and considered in an Environmental Impact Statement (EIS) prepared by the State Department pursuant to the National Environmental Policy Act (NEPA). Publication of the final EIS on August 26, 2011, marked the beginning of a 90-day review period for the national interest determination. According to the State Department, a wide range of public comments both favoring and opposing the pipeline project were received during this period. In particular, the department cited concerns regarding the pipeline’s route through the Sand Hills region of Nebraska, an extensive sand dune formation with highly porous soil and shallow groundwater.

On November 10, 2011, in response to concerns regarding the pipeline route and actions by the Nebraska legislature applicable to pipeline siting, the State Department announced a delay in its national interest determination to gather additional information necessary to assess a new pipeline route avoiding the Sand Hills. On November 14, 2011, TransCanada announced its decision to work with the Nebraska Department of Environmental Quality to identify an acceptable pipeline route around the Sand Hills. The State Department estimates that the preparation of supplemental environmental analysis necessary for a new route alternative may be complete in early 2013.

International pipeline projects like Keystone XL are not subject to the direct authority of Congress. Nonetheless, several legislative proposals seek to impose deadlines on the permit process or require a permit to be issued. The Jobs Through Growth Act (H.R. 3400) would require the President to issue a final order granting or denying the Presidential Permit for the Keystone XL pipeline within 30 days of enactment. The North American Energy Security Act (S. 1932), the American Energy Security Act (H.R. 3537), and the Middle Class Tax Relief and Job Creation Act of 2011 (H.R. 3630) would require the Secretary of State to issue a permit for the project within 60 days of enactment, unless the President publicly determines the project to be not in the national interest. The North American Energy Access Act (H.R. 3548) would transfer the permitting authority over the Keystone XL pipeline project from the State Department to the Federal Energy Regulatory Commission (FERC), and would require the commission to issue a permit for the project within 30 days of enactment.

Date of Report: December 12, 2011
Number of Pages: 27
Order Number: R41668
Price: $29.95

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