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[Senate Report 114-1]
[From the U.S. Government Publishing Office]

                                                         Calendar No. 2
114th Congress   }                                       {       Report
                                 SENATE
 1st Session     }                                       {        114-1

======================================================================

 
                          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.

                                  [all]
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