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Tuesday, December 10, 2013

Keystone XL Pipeline Project: Key Issues - R41668

Paul W. Parfomak
Specialist in Energy and Infrastructure Policy

Robert Pirog
Specialist in Energy Economics

Linda Luther
Analyst in Environmental Policy

Adam Vann
Legislative Attorney

TransCanada’s proposed Keystone XL Pipeline would transport oil sands crude from Canada and shale oil produced in North Dakota and Montana to a market hub in Nebraska for further delivery to Gulf Coast refineries. The pipeline would consist of 875 miles of 36-inch pipe with the capacity to transport 830,000 barrels per day. Because it would cross the Canadian-U.S. border, construction of Keystone XL requires a Presidential Permit from the State Department. A decision to issue or deny a Presidential Permit is based on a determination that a project would serve the national interest, considering potential impacts on the environment, the economy, energy security, foreign policy, and other factors. Environmental impacts are evaluated and documented in an Environmental Impact Statement (EIS) under the National Environmental Policy Act (NEPA).

TransCanada originally applied for a Presidential Permit for the Keystone XL Pipeline in 2008. The initial proposal included a southern segment from Oklahoma to the Gulf Coast. A key issue that arose during the permit review was concern over environmental impacts in the Sand Hills region of Nebraska. This concern led the Nebraska legislature to enact new state pipeline siting requirements that would alter the pipeline route through Nebraska. In January 2012, the State Department concluded that it would not have sufficient information to evaluate an altered pipeline route before a deadline imposed by Congress and denied the permit. The southern segment of the original Keystone XL proposal, now called the Gulf Coast Project, was subsequently separated from the original proposal because it did not require a Presidential Permit. It has been approved by the relevant states and is currently under construction.

In May 2012, TransCanada reapplied to the State Department for a Presidential Permit to build the northern, cross-border segment of Keystone XL. The new permit application initiated a new NEPA process. The governor of Nebraska approved a new route through the state avoiding the Sand Hills on January 22, 2013. On March 6, 2013, notice was published in the Federal Register that the State Department draft EIS for the reconfigured Keystone XL Project was available for public comment. The department is in the process of addressing these comments as it prepares a final EIS. When the final EIS is issued, a 90-day public review period for the national interest determination begins. The department has not stated when it plans to complete this process.

Development of Keystone XL has been controversial. Proponents base their arguments primarily on increasing the diversity of the U.S. petroleum supply and economic benefits, especially jobs. Pipeline opposition stems in part from concern regarding the greenhouse gas emissions associated with the development of Canadian oil sands, continued U.S. dependency on fossil fuels, and the risk of a potential release of heavy crude.

In light of the State Department’s denial of the 2008 permit application, some in Congress seek other means to support development of the pipeline. The Energy Production and Project Delivery Act of 2013 (S. 17) would eliminate the Presidential Permit requirement for the reconfigured Keystone XL Project. The Keystone for a Secure Tomorrow Act (H.R. 334) and a Senate bill to approve the Keystone XL Project (S. 582) would directly approve Keystone XL under the authority of Congress to regulate foreign commerce. The Northern Route Approval Act (H.R. 3) would eliminate the Presidential Permit requirement for Keystone XL, among other provisions. The Senate passed an amendment to the Fiscal 2014 Senate Budget Resolution (S.Con.Res. 8) that would provide for the approval and construction of the Keystone XL Project (S.Amdt. 494). The North American Energy Infrastructure Act (H.R. 3301) would transfer permit authority for oil pipelines from the State Department to the Department of Commerce and would make other changes to the pipeline permitting process.

Date of Report: December 2, 2013
Number of Pages: 43
Order Number: R41668
Price: $29.95

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