An XL Mistake?: Several Issues Regarding the Recent Keystone XL Pipeline Final Supplemental Environmental Impact Statement

Patrick F. Carroll

INTRODUCTION

The United States Department of State just released its Final Supplemental Environmental Impact Statement (“FSEIS”) for the Keystone XL Pipeline project on January 31, 2014.  The pipeline is proposed to span eight hundred seventy-five miles from Morgan, Montana to Steele City, Nebraska, with the capacity to deliver up to eight hundred thirty thousand barrels of crude oil each day.[1]  Of this capacity, about eighty-eight percent will originate from the Western Canadian Sedimentary Basin (“WCSB”), which produces “heavy” crude oil, or “oil sands,”[2] while the remaining amount will originate from “light” crude oil deposits in North Dakota and Montana.[3]  To cross the Canadian border at Montana, the project requires a presidential permit,[4] which will be granted if the State Department finds the project “serve[s] the national interests.”[5]

 

The FSEIS examined a different route than was reviewed in the first Final Environmental Impact Statement (“FEIS”).[6]  The contemplated project now avoids what the Nebraska Department of Environmental Quality identified as an “environmentally sensitive area,” the Sand Hills region, and does not include a southern portion connecting Oklahoma to the Gulf Coast.[7]  However, the oil is still intended to reach Gulf Coast refineries, but by route of existing pipelines.[8]  In part, the rationale for removing the southern portion was because TransCanada Keystone Pipeline, LP (“Keystone”) deemed it to be of “independent economic utility,” and since it did not cross an international boundary, this lower portion did not require a presidential permit.[9]

Dividing projects into segments to lessen the apparent magnitude of their environmental impacts, or to gain traction in a multiphase project with the hope that the sunk costs of the first project will help propel a more dangerous project with the forward momentum it needs for an easier review, relate to a problem known as “segmentation.”[10]  Some courts will use what is known as an “independent utility test” to determine if “each . . . project[] would have taken place with or without the other[s] and thus had independent utility.”[11]  While it cannot be said that the “segmentation” rationale was a motivating factor in separating the two pipeline facilities, it certainly could have been a strategic consideration.  However, the new route for the upper portion of the pipeline does avoid other regions similar to the Sand Hills area as well as wellhead protection areas for two municipalities.[12]

The State Department determined the construction of the pipeline will not “significantly affect the rate of extraction in oil sands areas.”[13]  It also concluded that while domestic production of light crude in the Montana and North Dakota region has been on the rise, the Gulf Coast refineries desire an increased supply of the heavy crude because that is the type of crude for which their processes are best suited to utilize.[14]  The completed project would retain a permanent fifty foot right-of-way for which Keystone would have access, but farmers may still farm and perform “other limited activities.”[15]  The U.S. component of the project is anticipated to cost about $3.3 billion.[16]

 

THE ENVIRONMENTAL IMPACT ANALYSIS

The FSEIS first evaluated how the pipeline project could contribute to, and be affected by, climate change through the emission of greenhouse gases (“GHGs”).[17]  The FSEIS considered the emissions from construction, finding the project would emit 0.24 million metric tons of carbon dioxide equivalent (“MMTCO2e”) per year through fuel consumption, land clearing, and electricity use.[18]  In operation, the pipeline is projected to emit 1.44 MMTCO2e per year stemming from fuel use, electricity for pump stations, and rogue methane emissions.[19]  As a means for comparison, this is approximately equivalent to the emissions from three hundred thousand passenger cars, or seventy-one thousand nine hundred twenty-eight homes.[20]

 

The FSEIS also analyzed the lifecycle emissions from extracting, processing, refining, transporting, and consuming the oil sands crude, and included emissions expected from co-products generated during these stages.[21]  The lifecycle GHGs of the oil sand crude was compared to the projected GHGs from the lifecycles of four reference crudes that would be replaced by the project’s fuel sources in some amount.[22]  The comparison indicated that depending on the fuel replaced, assuming the full use of the eight hundred thirty thousand barrels per day capacity as WCSB oil sands crude, lifecycle GHGs would increase by 1.3 to 27.4 MMTCO2e annually.[23]  The FSEIS discounted this finding because its market analysis indicated that approval or denial of the pipeline was unlikely to significantly affect the rate of extraction in oil sand or the demand in heavy crude in U.S. refineries.[24]  This was a very important assumption and could very well be flawed in its premise.  While it may be true that U.S. refineries will still desire heavy crude at a constant or even at an increasing rate, regardless of whether this pipeline is constructed, it is also very likely that this project will make this fuel source a more attractive option for all parties involved.  Even if the current U.S. refineries that the project intends to service are optimized to refine this type of heavy crude,[25] the associated costs of obtaining this fuel are still part of the entire equation.  Increasing the availability of heavy crude oil sands, likely at a decreased price than would otherwise be required if alternative transportation was used, would incentivize these refineries to continue to seek oil sands crude instead of investing in design changes to innovate their systems to be just as efficient at refining cleaner sources of oil.  When the Surface Transportation Board, housed within the U.S. Department of Transportation, approved a railroad’s proposal to construct two hundred eighty miles of new rail and to upgrade six hundred miles of existing rail to reach Wyoming coal mines to offer a shorter and less expensive method to transport coal to power plants, this was challenged in the Eighth Circuit under the National Environmental Policy Act (“NEPA”).[26]  The Eighth Circuit, and even the railroad, did not accept the Board’s proposition that a simpler, shorter route and increased availability at a decreased price would not have the significant effect of making the coal a more attractive option to future entrants into the utilities market when compared to other sources.[27]  In evaluating the sufficiency of the EIS in its review of the direct and indirect effects of the proposed action, the Eighth Circuit held that even though the railroad argued that the extent of the effect was speculative in that it did not know where new plants may be built and how much coal may be used, “the nature of the effect is reasonably foreseeable . . . as it is almost certainly true . . . that the proposed project will increase the long-term demand for coal and any adverse effects of burning coal.”[28]  It is also reasonably foreseeable that the nature of the Keystone project will have a similar effect on the long-term demand and adverse effects of extracting, processing, refining, transporting, and consuming oil sand crude.

 

The FSEIS also found that the project would both contribute to climate change, and be affected by climate change in subsequent years, based on projections of flooding, droughts, expansion and contraction of the soil, and longer, hotter summers.[29]  Some of these effects may increase the risk of a spill, but again this appears to be discounted as the report indicated it believed this risk to be much less than that posed by third-party damage to the pipeline.[30]  Is discounting one risk because of the threat of another risk sound decision-making?  To its credit, the FSEIS did indicate that the project would have procedures “to prevent, detect, and mitigate potential oil spills,” and that it had evaluated potential impacts of such spills on natural resources.[31]  Of the spills reported to the Pipeline and Hazardous Material Safety Administration (“PHMSA”) between 2002 and 2012, 79% were small, less than 2,100 gallons, 17% were medium, between 2,100 and 42,000 gallons, and just 4% were large, greater than 42,000 gallons.[32]

 

Keystone has agreed to additional mitigation measures beyond what is normally required, such as those recommended by the PHMSA as well as numerous others.[33]  Many of these “mitigation” measures are actually methods to reduce the risk of a spill from occurring, and include the implementation of a Spill Prevention, Control, and Countermeasure Plan; a Construction, Mitigation, and Reclamation Plan; and an Emergency Response Plan.[34]  However, NEPA does not mandate a substantive result and is virtually just a procedural mechanism to include environmental considerations into the decision-making process.[35]  This raises a substantial problem to the mitigation of significant impacts on the environment.  Agencies have used the assurance of mitigation proposals to reduce the significance of such impacts, but then later fail to actually impose the mitigation measures during the implementation of the proposed action.[36]  Due to the absence of real substantive force under NEPA, the courts cannot force agencies to fulfill the mitigation guarantees they made in their environmental impact analyses.[37]

 

How convincing then are the promised mitigation measures in this project?  In fact, many of the evaluated environmental impacts of the proposed action are premised on the use of mitigation.[38]  For example, the pipeline will cross about one thousand seventy-three surface waters, including twenty-four miles of mapped floodplains.[39]  It was ascertained that the impacts associated from the surface water crossings include: 1) stream sedimentation; 2) changes in stream channel morphology and stability; 3) temporary reduction in stream flow; and 4) a potential for hazardous material spills.[40]  Keystone agreed to drill under many of these surface waterbodies to alleviate these issues, as well as to install bank protection measures to mitigate erosion.[41] Another instance involves the Endangered Species Act (“ESA”). The project may impact eleven listed threatened or endangered species, one proposed endangered species, and two candidate species under the ESA.[42]  The U.S. Fish and Wildlife Service provided a Biological Opinion, which included conservation measures and compensatory mitigation measures for unavoidable impacts.[43]  In particular, however, the American Burying Beetle’s habitat will be adversely affected even with the imposition of mitigation, causing an incidental taking to occur from the construction or operation of the project.[44]  Still, a monitoring program alongside a Reclamation Performance Bond will assure that any habitat disturbances will be restored, and thus, the Biological Opinion concluded that the project is not expected to jeopardize the continued existence of the species.[45]

 

These are just a couple of the examples of the impacts of this project. Others include damage to terrestrial vegetation, such as “biologically unique landscapes and vegetated communities of conservation concern,” harm to fisheries, habitat fragmentation as well as direct and indirect mortality to wildlife, a total disturbance of about fifteen thousand nine hundred twenty-seven acres of land comprising primarily of agricultural and range lands, reduced productivity of soil resources, wetlands disturbance, air and noise impacts, and possible effects on cultural resources.[46]  Most, if not all, of these impacts have been described with the promise of some mitigation, monitoring, or preventive mechanism to avoid the harm.[47]  It would be laudable if all such protective actions are undertaken and properly implemented, and certainly some are required by other federal, state, or local laws.[48]  However, NEPA itself, through the discussion and consideration of these mitigation measures, cannot compel their use absent some other source of substantive authority.[49]

 

CONCLUSION

This review of the FSEIS is not intended to be comprehensive.  The Keystone XL pipeline project is a complex, multi-faceted endeavor that involves the consideration of numerous political, legal, and economic issues.  However, this review does intend to shed some light on the possible impacts of the project and some of the legal aspects of the environmental impact analysis process.  While some news commentators have described the outcome of the FSEIS as a sign that the project is “[i]inch[ing] [t]oward [the] [g]reen [l]ight,”[50] President Obama’s approval, it remains to be seen just how significant some of the impacts will be and if the FSEIS put forth an adequate and sufficient discussion of their relevant consequences.  In fact, there is some evidence that the environmental impact predictions of many EISs fail to correctly predict the scope and intensity of the actual harm incurred.[51]  Furthermore, it is yet undetermined whether President Obama believes approving this project is incompatible with the White House’s energy policy, or whether the age-old, and largely flawed, debate between jobs and the environment carries weight in his decision-making.


[1] U.S. Dep’t of State, Bureau of Oceans & Int’l Envtl. & Scientific Affairs, Final Supplemental Environmental Impact Statement for the Keystone XL Project, Executive Summary ES-1 (2014) [hereinafter FSEIS], available at http://keystonepipeline-xl.state.gov/documents/organization/221135.pdf.

[2] Id. at ES-12.

[3] Id. at ES-1.

[4] Id.

[5] Id.; See Exec. Order No. 13337, Issuance of Permits With Respect to Certain Energy-Related Facilities and Land Transportation Crossings on the Inter-national Boundaries of the United States  69 Fed. Reg. 25299, 25300 (Apr. 30, 2004).

[6] FSEIS, supra note 1, at ES-3.

[7] Id.

[8] Id.

[9] Id.

[10] Plater et al., Environmental Law and Policy: Nature, Law, and Society 326 (Vicki Been et al. eds., 4th ed. 2010).

[11] Wilderness Workshop v. U.S. Bureau of Land Mgmt., 531 F.3d 1220, 1229 (10th Cir. 2008) (citing Great Basin Mine Watch v. Hankins, 456 F.3d 955, 969 (9th Cir. 2006)).

[12] FSEIS, supra note 1, at ES-3.

[13] Id. at ES-9.

[14] Id.

[15] Id. at ES-7.

[16] Id. at ES-9.

[17] Id. at ES-14.

[18] Id. at ES-15.

[19] Id.

[20] Id.

[21] Id.

[22] Id.

[23] Id. at ES-15-6.

[24] Id. at ES-16.

[25] Id. at ES-9.

[26] Mid-States Coal. for Progress v. Surface Transp. Bd., 345 F.3d 520, 532 (8th Cir. 2003).

[27] Id. at 549.

[28] Id.

[29] FSEIS, supra note 1, at ES-17.

[30] Id.

[31] Id.

[32] Id. at ES-17-8.

[33] Id. at ES-19.

[34] Id.

[35] Strycker’s Bay Neighborhood Council v. Karlen, 444 U.S. 223, 227 (1980) (“[O]nce an agency has made a decision subject to NEPA’s procedural requirements, the only role for a court is to insure that the agency has considered the environmental consequences.”).

[36] Plater et al., supra note 10, at 327; See Council on Envtl. Quality, Exec. Office of the President, The National Environmental Policy Act: A Study of Its Effectiveness After Twenty-Five Years (1997).

[37] Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 352 (1989) (“There is a fundamental distinction, however, between a requirement that mitigation be discussed in sufficient detail to ensure that environmental consequences have been fairly evaluated, on the one hand, and a substantive requirement that a complete mitigation plan be actually formulated and adopted, on the other.”).

[38] FSEIS, supra note 1, at ES-21-26.

[39] Id. at ES-21.

[40] Id.

[41] Id.

[42] Id. at ES-23.

[43] Id.

[44] Id. at ES-24.

[45] Id.

[46] Id. at ES-22, ES-24-6.

[47] Id. at ES-22, ES-24-6.

[48] Id. at ES-22-6.

[49] See Robertson v. Methow Valley Citizens Council, 490 U.S. 332, 352 (1989).

[50] Ben Geman, Keystone Inches Toward Green Light With Crucial Climate Finding, National Journal (Jan. 31, 2014), http://www.nationaljournal.com/energy/keystone-pipeline-inches-toward-green-light-with-crucial-climate-finding-20140131.

[51] Plater et al., supra note 10, at 346; See Paul J. Culhane et al., Forecasts and Environmental Decisionmaking: The Content and Predictive Accuracy of Environmental Impact Statements 111-12 (1987).

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