Keystone XL: Opportunities for State Regulation - Paul Blackburn, J.D. Blackcreek Environmental Consul3ng - Pipeline Safety Trust
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Keystone XL:
Opportunities for
State Regulation
Paul
Blackburn,
J.D.
Blackcreek
Environmental
Consul3ng
612-‐599-‐5568
paul@paulblackburn.net
1Keystone
Pipeline
“System”
Alberta to Texas
2Federal
Regulatory
“Structure”
• Pipeline
and
Hazardous
Materials
Safety
AdministraDon
(PHMSA)
–
regulates
pipeline
safety
• President/Department
of
State
(DOS)
–
determines
whether
a
border
crossing
is
in
the
“na3onal
interest”
and
its
size
and
loca3on
• The
Federal
Energy
Regulatory
Commission
(FERC)
–
Approves
pipeline
tariffs
(cost
of
using
pipelines)
• Other
agencies
(EPA,
Army
Corps
of
Engineers,
WAPA,
etc.)
–
lesser
roles
3The
Limits
of
PHMSA’s
Authority
• PHMSA
regulates
pipeline
safety
under
the
Pipeline
Safety
Act
(PSA),
but
this
does
not
mean
that
all
regula3on
related
to
“safety”
is
preempted
by
the
PSA
• The
PSA
regulates
pipeline
owners
with
regard
to
pipeline
design,
materials,
fabrica3on,
and
inspec3on
of
the
pipe
itself
• Safety
areas
not
regulated
by
the
PSA
include:
• Emergency
response
(regulated
by
federal
Clean
Water
Act)
• Control
of
new
development
by
adjacent
landowners
• Easement
terminaDon
condiDons
such
as
removal
of
abandoned
pipe
• Liability
standards
to
recover
economic
damages
caused
by
a
spill
• RouDng
to
increase
safety
(untested
in
federal
courts)
4PHMSA
as
a
Building
Inspector
• A
building
inspector
regulates
the
design,
construc3on,
modifica3on
and
use
of
buildings
to
ensure
they
are
built
and
maintained
in
a
safe
condi3on,
and
deals
with
things
such
as
structural
integrity,
proper
use
of
materials,
wiring,
plumbing,
railings,
stairwells,
loca3on
of
exits,
etc.
• Does
a
building
inspector
put
out
fires?
NO,
the
fire
department
does
• Does
a
building
inspector
determine
if
a
building
is
appropriately
located,
used
and
designed
to
integrate
into
neighboring
land
uses?
NO,
the
zoning
department
does
• Does
a
building
inspector
regulate
easements
or
condemn
property?
NO
• Does
a
building
inspector
determine
liability
if
there
is
an
accident?
NO
As
long
as
state
and
local
governments
don’t
try
to
become
“building
inspectors”
of
pipelines,
their
ac3ons
will
not
be
preempted
by
the
PSA
5Limits
of
President’s
Authority
• The
President’s
independent
authority
over
pipelines
comes
from
his
Cons3tu3onal
power
to
manage
“foreign
affairs,”
but
this
power
ends
at
the
borders
• Ma]ers
within
the
borders
of
the
U.S.
are
domes3c
affairs
regulated
by
federal
and
state
statutes
and
local
ordinances
• The
Na3onal
Environmental
Policy
Act
(NEPA)
requires
only
that
federal
agencies
study
environmental
impacts
and
provides
no
separate
legal
authority
to
require
any
changes
in
a
project
– DOS
can’t
order
mi3ga3on
or
land
reclama3on
requirements
– DOS
can’t
change
the
KXL
route,
except
the
loca3on
of
the
border
crossing
– DOS
can’t
change
safety
requirements
– DOS
can’t
protect
groundwater
• Don’t
you
think
it’s
odd
that
the
Department
of
State
is
managing
an
6
environmental
review
process
in
Nebraska?
Limits
of
FERC
Authority
• FERC
determines
only
the
cost
to
ship
oil
on
a
pipeline
and
the
terms
of
its
commercial
use
• If
this
were
an
interstate
natural
gas
pipeline,
then
FERC
would
determine:
• If
there
is
a
need
for
the
pipeline
• The
pipeline’s
route,
size,
capacity,
and
interconnec3on
to
other
pipelines
• Mi3ga3on
and
reclama3on
requirements
• Compensa3on
for
economic
damages
caused
by
construc3on
• For
natural
gas
pipelines,
FERC
is
a
“one
stop
shop”
(with
a
some
excep3ons)
7Other
Federal
Agencies
• EPA
–
Water
pollu3on
permits
and
regula3on
of
hazardous
materials
used
during
construc3on;
oversees
oil
spill
cleanup
• Army
Corps
of
Engineers
–
dredge,
fill
and
obstruc3on
of
navigable
waters
• Bureau
of
Land
Management/Forest
Service
–
easements
on
certain
federal
public
lands
• Department
of
Interior
–
consulta3on
on
endangered
species
• Department
of
Agriculture
–
various
farmland
conserva3on
programs
• Western
Area
Power
AdministraDon
(WAPA)
–
Interstate
transmission
line
system
engineering
and
management
• Complete
list
in
FEIS
Sec3on
1
810
Amendment
th
• "The
powers
not
delegated
to
the
United
States
by
the
Cons3tu3on,
nor
prohibited
by
it
to
the
states,
are
reserved
to
the
states
respec3vely,
or
to
the
people."
• This
means
that
the
states
have
legal
authority
over
anything
not
assigned
to
the
federal
government
or
specifically
withheld
from
the
states.
Whatever
powers
aren't
claimed
by
the
federal
or
state
governments
are
leiover
for
the
people.
9OpportuniDes
for
State
and
Local
RegulaDon
• Generally,
state
and
local
governments
may
not
regulate
pipeline
safety
• State
and
local
governments
may
regulate:
• Si3ng/Need
–
permits
to
protect
ci3zen
economic
and
environmental
interests
from
adverse
construc3on
and
opera3onal
impacts
• Rou3ng
–
permits
to
determine
the
loca3on
of
a
pipeline
• Emergency
response
planning
and
equipment
requirements
• Eminent
domain
process
and
terms
• Easement
abandonment
• Liability
for
spills
• Regula3on
of
neighboring
land
uses
• Taxa3on
10SiDng/Need
• Some
states
(e.g.,
SD)
don’t
determine
route
but
do
impose
condi3ons
on
pipeline
construc3on
to
protect
the
economic,
environmental
and
aesthe3c
interests
of
ci3zens,
such
as
the
following
SD
examples:
• Appointment
of
a
public
liaison
officer
to
handle
ci3zen
complaints
• Adopts
FEIS
Construc3on
Mi3ga3on
and
Reclama3on
Plan
as
a
requirement
• Detailed
requirements
for
soil
and
vegeta3on
reclama3on
aier
construc3on
• Limita3on
on
construc3on
ac3vi3es
during
wet
soil
condi3ons
• Limita3ons
on
cuts
through
shelterbelts
and
compensa3on
for
loss
of
trees
• Condi3ons
for
construc3on
through
wetlands,
water
bodies
and
riparian
areas
• Detailed
road
protec3on
condi3ons
• Requirement
to
treat
the
High
Plains
Aquifer
as
a
hydrologically
sensi3ve
area
• Limita3ons
on
noise
from
pump
sta3ons
• Detailed
requirements
for
protec3on
of
paleontological
resources
• Requirement
to
repair
or
replace
damaged
property
• No
liability
for
spills
resul3ng
from
normal
farming
prac3ces
and
for
other
than
gross
negligence
or
willful
misconduct
of
a
landowner
or
its
agents
11RouDng
• Some
states
(e.g.,
ND,
MN
and
MT)
have
laws
that
authorize
a
state
to
determine
a
pipeline’s
route
• States
have
full
authority
to
alter
a
route
within
their
borders
for
economic,
aesthe3c
or
environmental
reasons
• For
example,
a
state
or
county
could
require
a
re-‐route
a
pipeline
around
a
memorial
ba]lefield,
a
cemetery,
a
state
wilderness
area,
or
away
from
homes
or
businesses
if
construc3on
would
unduly
harm
business
income
or
property
values
• The
federal
courts
have
not
ruled
on
whether
or
not
a
state
may
consider
safety
when
determining
a
pipeline’s
route,
but
a
strong
legal
argument
can
be
made
that
Congress
prohibited
PHMSA
from
determining
a
pipeline’s
route
as
a
safety
measure
so
that
states
can
use
this
important
regulatory
tool
12Emergency
Response
Planning
• TransCanada’s
emergency
response
plan
is
required
by
the
Federal
Clean
Water
Act
(CWA),
42
U.S.C.
§
1321(j)(5)
–
not
the
PSA
• The
CWA
only
regulates
spills
into
“waters
of
the
US”
or
spills
that
might
flow
into
these
waters,
so
it
does
not
address
spills
only
onto
land
• §
132
1(o)
says:
“Nothing
in
this
sec3on
shall
be
construed
as
preemp3ng
any
State
or
poli3cal
subdivision
thereof
from
imposing
any
requirement
or
liability
with
respect
to
the
discharge
of
oil
or
hazardous
substance
into
any
waters
within
such
State,
or
with
respect
to
any
removal
ac3vi3es
related
to
such
discharge.”
• Therefore,
state
or
local
governments
may
impose
emergency
spill
response
standards
that
are
be]er
than
federal
standards
• The
State
of
Washington
has
a
par3cularly
strong
program:
Spills
Program
Home
-‐
Washington
State
Department
of
Ecology
13Eminent
Domain
• Interstate
oil
pipelines
must
acquire
easements
through
state
law
• What
a
state
gives
it
can
also
condi3on
• Generally,
state
easement
laws
allow
only
determina3on
of
the
value
of
land
taken,
but
states
may
also
allow
for
broader
economic
damages
and
judicial
determina3on
of
need
or
that
a
taking
has
a
public
benefit
• A
state
may
treat
takings
for
publicly
owned
projects
(roads,
sewers)
differently
from
takings
for
privately
owned
projects
(oil
pipelines)
• States
may
also
impose
sanc3ons
on
companies
that
misuse
right-‐of-‐way
process
(e.g.,
ND)
14Easement
and
Pipeline
Abandonment
• Abandoned
pipelines
hurt
property
values
and
safety
because
they
may
interfere
with
new
construc3on,
impact
drainage,
cause
sinkholes,
and
present
a
hazard
to
vehicles,
farm
equipment
and
livestock
• Federal
pipeline
safety
law
regulates
only
opera3ng
pipelines;
PHMSA’s
opera3on
manual
requires
only
that
a
pipeline
withdrawn
from
service
be:
• Disconnected
from
other
pipelines,
• Purged
of
combus3bles,
and
• Sealed
• Once
these
steps
are
taken,
federal
law
no
longer
regulates
what
happens
to
an
abandoned
pipe
• A
number
of
state
and
local
governments
have
laws
that
regulate
pipeline
abandonment
or
easements,
including
MN
and
MI
and
Santa
Barbara
County,
CA
• Many
states
have
laws
related
to
abandonment
of
u3lity
and
railroad
easements
• Federal
agencies
regulate
pipeline
abandonment
on
federal
property
• Canada
has
established
a
na3onal
financial
mechanism
to
pay
for
remedia3on
of
abandoned
pipelines
15Liability
for
Damages
• The
CWA
states:
“Nothing
in
this
sec3on
shall
affect
or
modify
in
any
way
the
obliga3ons
of
.
.
.
any
owner
or
operator
of
any
onshore
facility
.
.
.
to
any
person
or
agency
under
any
provision
of
law
for
damages
to
any
publicly
owned
or
privately
owned
property
resul3ng
from
a
discharge
of
any
oil
or
hazardous
substance
or
from
the
removal
of
any
such
oil
or
hazardous
substance.”
42
U.S.C.
§
1321(o)(1)
• Therefore,
Nebraska
may
modify
state
law
to
make
recovery
of
damages
for
oil
spills
less
burdensome
for
private
ci3zens
16RegulaDon
of
Neighboring
Land
Uses
• State
and
local
governments
may
limit
the
use
of
land
near
exis3ng
oil
and
gas
pipelines
to
increase
safety,
for
example
by:
• Prohibi3ng
construc3on
of
new
schools,
hospitals,
nursing
homes,
fire
sta3ons,
stadiums,
explosive
factories,
etc.
within
a
set
distance
of
large
pipelines
• Prohibi3ng
certain
new
ac3vi3es
in
exis3ng
structures
near
pipelines,
such
as
daycare
centers,
health
clinics,
or
businesses
with
large
number
of
employees
• Requiring
all
new
development
within
a
set
distance
of
a
large
pipeline
to
consult
with
the
pipeline’s
owner
• Requiring
that
no3ce
of
a
large
pipeline
be
included
in
land
transac3on
documents
• The
key
dis3nc3on
here
is
that
the
state
or
local
government
is
not
a]emp3ng
to
regulate
the
pipeline
owner
or
to
change
the
design
or
opera3ons
of
the
pipeline
itself
• The
federal/industry
voluntary
Pipeline
and
Informed
Planning
Alliance
(PIPA)
has
more
informa3on
on
local
op3ons
17Summary
• The
fed’s
role
in
pipeline
regula3on
is
limited
• The
fed’s
primary
role
is
to
be
a
building
inspector
• The
EIS
process
only
studies
impacts
and
cannot
by
itself
require
improvements
• Nebraska
should
protect
its
ci3zens
where
it
can:
– Construc3on
permiqng
– Rou3ng
– Emergency
response
– Eminent
domain
process
– Pipeline
abandonment
– Liability
– Limi3ng
development
near
major
pipelines
• Otherwise,
the
State
government
should
just
admit
that
it
trusts
itself
less
than
a
self-‐interested
mul3na3onal
oil
company
18AddiDonal
Issues
19TaxaDon
According
to
TransCanada’s
FERC
2010
year
end
Form
6
filing
for
the
K1
Pipeline,
it
paid
far
less
per
mile
and
far
less
in
total
in
taxes
in
Nebraska
than
in
other
states
It
is
not
clear
why
TransCanada
appears
to
be
paying
very
low
taxes
in
Nebraska
rela3ve
to
other
states,
but
ci3zens
should
ask
their
elected
officials
to
inves3gate
this
data
20Is
the
KXL
North
Pipeline
Needed
Now?
21Are
the
Industry
Development
Forecasts
Reasonable?
CAPP
High
Growth
Scenarios
2007-‐2011
5000
4500
4000
3500
2006
Average
Syn
&
Dil
Cases
3000
2007
High
Grow
Supply
Case
R²
=
0.97531
2008
High
Growth
Supply
Case
2500
2009
High
Growth
Supply
Case
2000
2010
High
Growth
Supply
Case
2011
High
Growth
Supply
Case
1500
Actual
Supply
Produced
Linear
(Actual
Supply
Produced)
1000
500
0
2001
2005
2007
2008
2009
2011
2015
2017
2018
2019
2021
2025
2002
2003
2004
2006
2010
2012
2013
2014
2016
2020
2022
2023
2024
22Why
Is
Tar
Sands
Development
in
Canada
Not
Faster?
• Very
expensive
operaDons
produces
the
most
expensive
oil
in
the
world
• Marginal
economic
viability
so
faster
growth
happens
only
when
oil
prices
are
high
(but
high
prices
cause
recessions
leading
to
lower
prices
.
.
.)
• Cheaper
imports
from
other
countries
will
be
used
first
• Remote
locaDon
creates
logis3cal
challenges
• Complex
technology
that
doesn’t
always
work
as
well
as
claimed
The
historical
annual
average
increase
in
supply
of
tar
sands
oil
has
been
112,000
bpd
per
year
since
2001,
with
no
indica3on
that
this
average
rate
of
growth
is
increasing.
To
meet
the
industry
forecast
that
jus3fies
KXL,
the
average
yearly
rate
of
increase
would
need
to
be
185,000
bpd
per
year.
23Oil
Field
Price
Comparison
24Is
It
Really
Necessary
to
Burden
Nebraskans
with
the
KXL
Pipeline?
• KXL
was
planned,
designed
and
scheduled
during
the
boom
years
of
2006
to
2008,
before
the
crash.
Everything
has
changed
–
except
TransCanada’s
plans.
• Should
Americans
trust
the
forecasts
of
a
foreign
trade
associa3on
whose
job
it
is
to
boost
its
industry?
25Thank
you
for
your
caring
and
acDon
26
Paul
Blackburn
Blackcreek
Environmental
ConsulDng
PO
Box
17234
Minneapolis,
MN
55417
612-‐599-‐5568
paul@paulblackburn.net
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