EPA Critiques State Department EIS on Keystone XL Pipeline

WASHINGTON. DC

APR 22, 2013

ASSISTANT ADMINISTRATOR FOR ENFORCEMENT AND COMPLIANCE ASSURANCE





Mr. Jose W. Fernandez
Assistant Secretary Economic, Energy and Business Affairs
U.S. Department of State
Washington, DC 20520

Dr. Kerri-Arm Jones
Assistant Secretary Oceans and International Environmental and Scientific Affairs
U.S. Department of State
Washington, DC 20520

Dear Mr. Fernandez and Dr. Jones:

In accordance with our authorities under the National Environmental Policy Act (NEPA) and Section 309 of the Clean Air Act, EPA has reviewed the Department of State's draft Supplemental Environmental Impact Statement (DSEIS) for a Presidential Permit application by TransCanada Keystone Pipeline, LP (TransCanada) to construct and operate the Keystone XL Project (Project). This DSEIS builds on the Department of State's August 201 1 Final EIS, and includes information regarding a new proposed route in Nebraska.

NEPA serves an important role in the decision making process for federal actions that may have environmental effects. Through the NEPA process, federal agencies disclose and analyze the potential impacts ofa proposed action and reasonable alternatives, as well as measures that could mitigate any potential harmful effects. NEPA brings transparency to the federal decision making process, requiring that other federal, state, tribal and local agencies, as well as citizens, are given a meaningful opportunity to provide comments, helping to ensure federal decisions are better informed.
EPA believes this DSEIS strengthens the analysis presented to date in the NEPA process. While we appreciate this effort, we also have several recommendations for improving the analysis and considering additional mitigation as you move forward to complete the NEPA process.

Greenhouse Gas Emissions

We commend the Department of State's efforts to estimate the lifecycle greenhouse gas (GHG) emissions associated with oil sands development and the proposed Project, to analyze the effect ofthe Project on Canadian oil sands production and to ,consider measures to reduce GHG emissions. As recognized by the DSEIS, oil sands erude is significantly more GHG intensive than other crudes, and therefore has potentially large climate impacts. The DSEIS reports that lifecycle GHG emissions from oil sands crude could be 81% greater than emissions from the average crude refmed in the U.S. in 2005 on a well-to-tank basis, and 17% greater on a well-to-wheels basis.

The market analysis and the conclusion that oil sands crude will find a way to market: with or without the Project is the central finding that supports the DSEIS's conclusions regarding the Project's potential GHG emissions impacts. Because the market analysis is so central to this key conclusion, we think it is important that it be as complete and accurate as possible. We note that the discussion in the DSEIS regarding energy markets, while informative, is not based on an updated energy-economic modeling effort. The DSEIS includes a discussion of rail logistics and the potential growth ofrail as a transport option, however we recommend that the Final EIS provide a more careful review ofthe market analysis and rail transport options. This analysis should include further investigation ofrail capacity and costs, recognizing the potential for mu,ch higher per barrel rail shipment costs than presented in the DSEIS. This analysis should consider how the level and pace of oil sands crude production might be affected by higher transportation costs and the potential for congestion impacts to slow rail transport of crude.

In its discussion of practicable options for mitigating GHG emissions, the DSEIS outlines ongoing efforts by the government ofAlberta to reduce the GHG emissions associated with development ofoil sands crude in Alberta. EPA recommends that the Final EIS complement this discussion with an exploration ofspecific ways that the U.S. might work with Canada to promote further efforts to reduce GHG emissions associated with the production ofoil sands crude, including a joint focus on carbon capture and storage projects and research, as well as ways to improve energy efficiency associated with extraction technologies. With regard to the estimated GHG emissions from construction and operation of the proposed Project -primarily emissions associated with electrical generation for the pumping stations -we recommend that the Department of State explore specific commitments that TransCanada might make to implement the mitigation measures recommended in the DSEIS. This would complement the significant efforts already made to reduce the risk ofspills and ensure community safety. Specifically, we recommend a focus on pumping station energy efficiency and use of renewable energy, as well as investment in other carbon mitigation options.

Pipeline Safety

We have learned from the 2010 En bridge spill of oil sands crude in Michigan that spills of diluted bitumen (dilbit) may require different response actions or equipment from response actions for conventional oil spills. These spills can also have different impacts than spills ofconventional oil. We recommend that these differences be more fully adldressed in the Final EIS, especially as they relate to the fate and transport ofthe oil and the remediation that will be required. The Enbridge spill involved a 30-inch diameter pipeline, smaller than the 36-inch diameter pipeline for proposed Project, and 20,000 barrels ofoil sands crude were released. In that spill, oil sands crude sank to the bottom of the Kalamazoo River, mixing with the river bottom's sediment and organic matter, making the oil difficult to find and recover. After almost three years of recovery >efforts, EPA recently determined that dredging of bottom sediments will be required to protect public health and welfare and the environment. This determination was based in large part on demonstrations that the oil sands crude associated with the Enbridge spill will not appreciably biodegrade.

We recommend that the Final EIS more clearly acknowledge that in the event of a spill to water, it is possible that large portions of dilbit will sink and that submerged oil significantly changes spill response and impacts. We also re·commend that the Final EIS include means to address the additional risks of releases that may be greater for spills of dilbit than other crudes. For example, in the Enbridge spill, the local health department issued voluntary evacuation notices based on the level ofbenzene measured in the air. Given these concerns, it is important to ensure that the future response and remediation plans will protect communities from impacts due to spills. 

The DSEIS also outlines specific measures that the Department of State would require: TransCanada to undertake to prevent and detect oil discharges. The measures include commissioning an independent engineering analysis to review TransCanada's risk assessment ofthe potential impacts from oil discharges to surface and groundwater resources, as well as TransCanada's current proposals for placing mainline valves along the pipeline route and installing leak detection equipment.  The DSEIS also notes that the Department ofState will obtain concurrence from both EPA and PHMSA on both the scope ofthe engineering analysis and decisions regarding the need for any additional mitigation measures. We recommend that the Department ofState provide an opportunity for public review and comment on the scope of the analysis, and opportunity for public comment on a draft ofthe analysis when it is completed. We also recommend that the Final ElS consider requiring TransCanada to establish a network of sentinel or monitoring wells along the length ofthe pipeline, especially in sensitive or ecologically important areas, as well as where water supply wells are located and at stream crossings to provide a practical means for early detection of leaks that are below the proposed detection limit.

In addition to prevention measures, we agree with the DSEIS's suggestion that additio1nal mitigation measures regarding preparedness to reduce the impacts ofa spill may be appropriate (DSEIS, p. 4.13-79). For example, we recommend including the following measures as permit conditions:    

Requiring that the emergency response plan, as well as contingency plans address submerged oil, as well as floating oil, including in a cold weather response;

Requiring pre-positioned response assets, including equipment that can address submerged oil;

Requiring spill drills and exercises that include strategies and equipment deployment to address floating and submerged oil; and

Requiring that emergency response and oil spill response plans be reviewed by EPA.

The DSEIS also recognizes that dissolved components of the dilbit that may be transp.:>rted through the pipeline, such as benzene, polycyclic aromatic hydrocarbons (P AHs), and heavy metals, could be slowly released back to the water column for many years after a release and could cause long-term chronic toxicological impacts to organisms in both the benthic and pelagic portions ofthe aquatic environment. We recommend that the Final EIS more clearly recognize that this characteristic ofdilbit is different from the fate and transport ofoil contaminants associated with conventional crude oil and refined product spills from pipelines. For that reason we recommend that as a permit condition TransCanada be required to develop a plan for long tenn sampling/monitoring in the event ofan oil discharge to assess and monitor these impacts as part ofthe spill response plan. In addition, we recommend that the permit require TransCanada to provide detailed Material Safety Data Sheets and information about the diluent: and the source crude oil to support response preparations and address safety concerns in advance ofany spills.

Alternative Pipeline Routes

CEQ regulations implementing NEPA require the consideration of project alternatives The DSEIS has been significantly improved by considering more alternative routes, including an alternative that would avoid crossing the Sand Hills Region in Nebraska, reducing impacts to this fragile ecosystem. Another significant issue in the consideration ofalternative routes for this Project has been the potential for impacts to the Ogallala Aquifer in the event ofa spill. The alternative route in Nebraska has avoided most ofthe impacts to the Sand Hills Region, but still crosses the Ogallala Aquifer. The alternative laid out in the DSEIS that would avoid the Ogallala Aquifer is the I-90 Corridor Alternative, which largely follows the path of existing pipelines. The I-90 Corridor Alternative would significantly reduce the length ofpipeline crossing the Northern High Plains Aquifer system, which includes the Ogallala formation, and would further reduce the pot1ential for adverse impacts to critical groundwater resources.

We are concerned, however, that the DSE1S does not provide a detailed analysis ofthe Keystone Corridor Alternative routes, which would parallel the existing Keystone Pipeline and likely further reduce potential environmental impacts to groundwater resources. By determining that these routes are not reasonable, the DSEIS does not provide an analysis oftheir potential impacts sufficient to enable a meaningful comparison to the proposed route and other alternatives. The Keystone Corridor Alternatives were determined not to be reasonable alternatives primarily on the basis that these routes are longer than the proposed Project's route, and that additional pipeline miles would be needed to connect to Bakken Market Link project, which would allow the proposed Project to also transport crude from North Dakota and Montana. As we have indicated in the past, we believe these alternative routes could further reduce risks to groundwater resources. We recommend that the Final EIS either provide more detailed information as to why these alternatives were not considered reasonable or analyze these alternatives in more detail.

Community and Environmental Justice Impacts

The DSEIS provides a comprehensive analysis of community demographics, including minority, low-income, and tribal populations, along TransCanada's proposed pipeline route. We are especially appreciative ofthe effort to identify and contact each of the Local Emergency Planning Committees regarding the status oftheir emergency response plans, and to provide that information in the OSEIS. We also commend your recognition that environmental justice communities may be more vulnerable to health impacts from a spill, and appreciate your efforts to consider communities' access to health care, including consideration of "Health Professional Shortage Areas and Medically Underserved Areas" located along the proposed pipeline route.

EPA appreciates TransCanada's commitment to conduct cleanup and restoration and to provide alternative water supplies to affected communities in the event ofan oil discharge affecting not only surface waters, but also groundwater. We recommend that these commitments be clearly documented as proposed permit conditions. We believe this would give important assurances to potentially affected communities of TransCanada's responsibilities in the event of an oil discharge that affects either surface or groundwater resources.

Conclusion

Based on our review, we have rated the DSEIS as E0-2 ("Environmental Objections-Insufficient Information") (see enclosed "Summary ofRating Defmitions and Follow-up Actions").  We look forward to continuing to work with you and to provide assistance as you prepare the Final EIS. We also look forward to working with you as you determine whether approving the proposed project serves the national interest under Executive Order 13337 "Issuance of Permits With Respect to Certain Energy-Related Facilities and Land Transportation Crossings on the International Boundaries of the United States".

Please feel free to contact me or have your staff contact Susan Bromm, Director, Office ofFederal Activities, at (202) 564-5400 if you have any questions or would like to discuss our comments.

Sincerely,

Cynthia Giles

Summary of Rating Definitions and Follow-up Action

Environme:ntal Impact of the Action

LO--Lack of Objections. The EPA r.eview has not identified any potential environmental impacts requiring substantive changes to the proposal. The review may have disclosed opportunities for application ofmitigation measures that could be accomplished with no more than minor changes to the proposal.

EC~Environmental. The EPA review has identified environmental impacts that should be avoided in order to fully protect the environment. Corrective measures may require changes to the preferred alternative or application ofmitigation measures tlhat can reduce the environmental impact. EPA would like to work with the lead agency to reduce these impacts.

EO--Envil'onmental Objections. The EPA r.eyiew has identified significant environmental impacts that must be avoided in order to provide adequate protection for the environment. Corrective measures may require substantial changes to the preferred alternative or consideration ofsome other project alternative (including the no action alternative or a new alternative).  EPA intends to work with the lead agency to reduce these impacts.

EU--Envir'onmentally Unsatisfactory. The EPA r·eview has identified adverse environmental impacts that are ofsufficient magnirude that they are unsatisfact•Oi)' from the standpoint ofpublic health or welfare or environmental quality. EPA intends to work with the lead agency to reduce these impacts. If the potentially unsatisfactory impacts are not corrected at the fin11l EIS stage, this !Proposal will be recommended for referral to the CEQ.

Adequacy of the Impact Statement

Category 1--Adequate. EPA believes the draft ETS adequately sets forth the environmental impact(s) ofthe preferred alternative and those ofthe alternatives reasonably available to the project or action. No further analysis or data collection is necessary, but the reviewer may suggest the addition ofclarifying language or information.

Category 2--lnsufficient Information. The draft EIS does not contain sufficient information for EPA to fully assess environmental impacts that should be avoided in order to fully protect the environment, or the EPA reviewer has identified new reasonably available alternative: that are within tbe spectrum of alternatives analyzed in the draft EIS, which could reduce the environmental impacts ofthe action. The EPA reviewer identified additional information, data, analyses, or discussion should be included in the final EIS. Category 3--Inadequate. EPA does not believe that the draft EIS adequately assesses potentially significant environmental impacts ofthe action, or the EPA reviewer has identified reasonably available alternatives that are outside ofthe spectrum of alternatives analyzed in the draft ElS, which should be analyzed in order to reduce the potentially significant environmental impacts. EPA believes that the identified additional information, data, analyses, or discussions are of such a magnitude that they should have full public review at a draft stage. EPA does not believe that the draft EfS is adequate fN the purposes ofthe NEPA and/or Section 309 review, and thus should be formally revised and made available for public comment in a supplemental or revised draft E1S. On the basis ofthe potential significant impacts involved, this proposal could be a candidate for referral to the CEQ. (EPA)