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Monday, January 30, 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 ultimately 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. TransCanada plans to build a pipeline spur so that oil from the Bakken formation in Montana and North Dakota can also be carried on Keystone XL.

As a facility connecting the United States with a foreign country, the pipeline requires a Presidential Permit from the State Department. In evaluating such a permit application, after consultation with other relevant federal agencies and public input, the department must determine whether a proposal is in the “national interest.” This determination considers the project’s potential effects on the environment, economy, energy security, foreign policy, and other factors. Pursuant to the National Environmental Policy Act, the State Department considered potential environmental impacts of the proposed Keystone XL project in a final Environmental Impact Statement (EIS) issued on August 26, 2011. A wide range of public comments both for and against the pipeline were received during a subsequent 90-day review period. The State Department noted, in particular, concerns about 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 related actions by the Nebraska legislature, the State Department announced a delay until 2013 of a national interest determination to gather additional information needed to assess a new pipeline route avoiding the Sand Hills. The Temporary Payroll Tax Cut Continuation Act of 2011(P.L. 112-78), enacted on December 23, 2011, included provisions requiring the Secretary of State to issue a permit for the project within 60 days, unless the President determined the project not to be in the national interest. The act allowed for future changes to the Nebraska route if approved by the Governor of Nebraska. On January 18, 2012, the State Department, with the President’s consent, denied the Keystone XL permit, citing insufficient time under the 60-day deadline to obtain all the necessary information to assess the reconfigured project. TransCanada has stated that it will reapply for a Presidential Permit after a new proposed route through Nebraska is determined. In keeping with an agreement reached between TransCanada and Nebraska before the State Department’s announcement, the company expects to establish the new route by October 2012. If the permit application process starts anew, a new draft EIS potentially could build upon the August 2011 final EIS, incorporating necessary analysis associated with a new Nebraska route.

International pipeline projects like Keystone XL are not subject to the direct authority of Congress. Nonetheless, several legislative proposals have sought to influence or alter the permit process for Keystone XL. Several bills, like P.L. 112-78, would have required the President to issue a final order granting or denying the Presidential Permit for the Keystone XL pipeline by a specific deadline (S. 1932, H.R. 3400, H.R. 3537, and H.R. 3630). These provisions have been mooted by the State Department’s denial of the permit. The North American Energy Access Act (H.R. 3548) would transfer 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. Attempting to change the State Department’s role in issuing cross-border infrastructure permits may be problematic, however, raising questions about the President’s executive authority.

Date of Report: January 19, 2012
Number of Pages:
Order Number: R41
Price: $29.95

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