EPA Smacks State Department Again: Oil Sands Pipeline Analysis ‘Insufficient’

State Department also draws fire for scheduling public meetings to take place only after it issues its final environmental review

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WASHINGTON—EPA authorities are still far from satisfied with the State Department’s ongoing environmental review of a controversial 1,702-mile pipeline that would pump diluted bitumen from Alberta, Canada’s tar sands mines to Gulf Coast oil refineries.

The department’s second effort not only falls short by failing to fully address safety and oil spill risks along a less-than-satisfactory route of the proposed $7 billion Keystone XL pipeline, but it also misses the mark on calculating lifecycle greenhouse gas emissions, potential damage to wetlands and migratory birds, and the dangers to at-risk communities along the six-state route, according to an Environmental Protection Agency document released Tuesday.

EPA gave the State Department its lowest grade of “inadequate” back in July 2010 when Secretary of State Hillary Clinton’s team issued its first draft of the environmental review on Keystone XL. That harsh dressing-down forced the department to collect more data before completing a revamped draft in mid-April.

But evidently the State Department still hasn’t done enough homework.

Even though EPA bumped up its grade on this second attempt from “inadequate” to “insufficient information,” the agency noted that it has “identified significant environmental impacts that must be avoided … to provide adequate protection to the environment.”

“While the (supplemental draft environmental impact statement) has made progress in responding to EPA’s comments on the (draft EIS) and providing information necessary for making an informed decision, EPA believes additional analysis is necessary to fully respond to our earlier comments and to ensure a full evaluation of the potential impacts of proposed Project, and to identify potential means to mitigate those impacts,” Cynthia Giles, EPA assistant administrator for enforcement and compliance assurance wrote in a nine-page memo.

With two drafts completed, the State Department is now tasked with writing what is supposed to be its final environmental review of the Keystone XL.

Giles noted in firm yet polite language that the EPA will be tracking the department’s progress to be sure it directly addresses her agency’s concerns.

“We look forward to continuing to work with you to strengthen the environmental analysis of this project and to provide any assistance you may need to prepare the Final EIS,” Giles wrote. “In addition, we will be carefully reviewing the Final EIS to determine if it fully reflects our agreements and that measures to mitigate adverse environmental impacts are fully evaluated.”

Will New Meetings Matter?

Landowners joined environmental justice and conservation organizations in lauding EPA for being so forthright Tuesday morning with a detailed laundry list of concerns about the petroleum pipeline Alberta-based TransCanada wants to construct through the nation’s midsection.

But those same watchdogs are fired up at the State Department’s announcement Monday that it will schedule public meetings concerning Keystone XL within 30 days after it issues a final environmental review of the pipeline. They are annoyed because that timing means their feedback won’t be considered as the final document is crafted.

The comment period for second draft of the environmental review ended Monday.

A new round of meetings will be scheduled in the nation’s capital as well as in five of the half dozen affected states—Montana, South Dakota, Nebraska, Oklahoma and Texas. Kansas is the only state not included on the list.

“There’s no legal requirement for them to respond to comments made at those meetings,” Friends of the Earth tar sands specialist Alex Moore told SolveClimate News in an interview. “The strength of the National Environmental Policy Act is that the State Department is required to take public comment. Now the State Department is trying to create a separate process and that’s not going to make people with concerns happy.”

Pipeline opponents had lobbied for the comment period to be extended beyond June 6.

“These meetings will give the public an opportunity to voice their views on economic, energy security, environmental and safety issues, in addition to any other issues the public thinks should be taken into account in determining whether granting or denying the Presidential Permit would be in the national interest,” State Department officials wrote in a news release.

Johanns Requests Sandhills Meeting

In a Wednesday letter to Clinton, Nebraska Sen. Mike Johanns demanded that the meeting in the Cornhusker State take place in the midst of the ecologically sensitive sandhills landscape.

“(State) Department officials should wade ankle-deep in the water of the aquifer and feel the soft composition of the sandhills to get an idea of what will be required to dig a trench and bury a pipeline in such a sensitive environment,” the Republican stated upon releasing his letter. “Holding a meeting 100 miles outside the sandhills won’t cut it; the State Department needs to understand the fragile nature of the proposed route and ensure affected Nebraska landowners have easy access to the meeting.”

Due to the international nature of Keystone XL, the State Department team is tasked with reviewing TransCanada’s request for a so-called presidential permit required to cross the U.S.-Canadian border. Clinton is expected to issue a thumbs-up or thumbs-down before December. The Canadian National Energy Board approved its portion of the project in March 2010.

TransCanada already operates phase one of the project, simply called Keystone. Last June, that two-years-in-the making pipeline began carrying heavy crude oil from Alberta’s tar sands to its southern terminus in Cushing, Okla., and its eastern terminus in Patoka, Ill.

Last October, Johanns asked the State Department to pursue a shorter and more easterly route that would keep Keystone XL out of the sandhills and away from the Ogallala Aquifer, which supplies 78 percent of the water supply and 83 percent of the water for irrigation in Nebraska.

Watchdogs Want Obama to Intervene

After issuing its final environmental review of Keystone XL, U.S. regulations require the State Department to undergo a 90-day review to determine if the pipeline is in the “national interest.”

Despite the environmental hoops the State Department seems to have to jump through, watchdogs still fear authorities are intent on giving the green light to Keystone XL in the name of energy security and in response to pressure from oil interests.

If that happens, rules under the National Environmental Policy Act (NEPA) allow other Cabinet secretaries to challenge that decision. That would put the pipeline ball in the president’s court.

In addition to EPA, other “cooperating agencies” on the Keystone XL review team include the Departments of Energy and Transportation.

The White House Council on Environmental Quality (CEQ), which coordinates NEPA, is responsible for ensuring that the State Department’s environmental impact statement is executed correctly, National Wildlife Federation senior vice president Jeremy Symons said in a teleconference about Keystone XL with reporters Tuesday.

“So, ultimately the buck stops with the president on this,” emphasized Symons, who said earlier he was alarmed the president wasn’t already intervening in what he called a broken process. “I certainly believe President Obama needs to get more involved with this process because the State Department isn’t handling it appropriately.”

Other anti-pipeline advocates agree.

“An agency like EPA has some muscle behind it,” Moore said in an interview. “EPA can object and this decision will fall on President Obama’s desk. I don’t know if he wants to anger a bunch of environmentalists before he is going up for re-election.”

Enough Time for Final Review?

Although the State Department seems assured that an end-of-the-year deadline is feasible, advocates question that timing.

For instance, they are puzzled how department officials can carry out the in-depth research necessary to respond to EPA’s most recent queries when it took them about nine months to move from the first iteration of an environmental review to the second.

“I don’t know what to expect,” Moore said, adding that it’s jarring that the core risks of Keystone XL haven’t been studied while an administration is in place that prides itself on scientific study from all angles before reaching any decision. “If your priority is ramming this through, then it’s potentially possible for the State Department to keep a timeline of making a decision by the end of the year. Maybe they’re looking at rushing it through over the summer and hoping nobody calls them on it.”

With its Keystone XL proposal, pipeline giant TransCanada has proposed building and operating infrastructure designed to pump up to 900,000 barrels of heavy crude daily.

It has the potential to double—or perhaps triple—the amount of diluted bitumen flowing to this country from its northern neighbor, though critics say it likely won’t be needed until 2025 or 2030. Between 2000 and 2010, U.S. imports of diluted bitumen grew five-fold from 100,000 to 500,000 barrels per day. That number could balloon to 1.5 million barrels per day by 2019.

“It is not self-evident that the addition of an 830,000 barrels-per-day capacity pipeline from Canada to refineries in the Gulf Coast will have no effect on emissions from refineries in that area,” the EPA wrote in response to the State Department’s conclusion that the pipeline would not disproportionately affect minorities and low-income residents living near refineries.

Giles encouraged department officials to meet with residents of Port Arthur to discover first-hand how air pollutants affect Texans already burdened with multiple sources of emissions.

EPA Cites Potential Water Woes

EPA is the lead federal agency that responds to oil spills in and around inland waters. In its Tuesday critique, EPA calls the State Department on the carpet for neither fully outlining a complete regime of fail-safe leak detection systems nor nailing down the exact makeup of the chemicals companies used to reduce the viscosity of bitumen that shippers consider proprietary information.

On the latter point, Giles wrote, EPA encountered the carcinogenic volatile organic compound benzene when workers attempted to clean up an oil sands spill last July in Michigan that dumped more than 800,000 gallons into the Kalamazoo River. That pipeline is part of the Lakehead system operated by Canadian-based Enbridge Energy Partners. Both conventional oil and tar sands oil—diluted bitumen—are shipped via the Lakehead system that goes from the Canadian border to Minnesota, Wisconsin, Illinois, Indiana, and Michigan.

“Following the spill in Michigan,” she said, “high benzene levels in the air prompted the issuance of voluntary evacuation notices to residents in the area by the local county health department.”

EPA also pointed to two recent leaks on TransCanada’s Keystone pipeline—in North Dakota and Kansas—that prompted DOT’s Pipeline and Hazardous Materials Safety Administration to temporarily shut down the pipeline and order corrective measures before it reopened last weekend. Keystone has experienced 12 spills since it started shipping oil sands from Canada a year ago.

“These events … underscore the comments about the need to carefully consider both the route of the proposed Keystone XL Pipeline and appropriate measures to prevent and detect a spill,” Giles wrote.

In addition, EPA questions why the State Department failed to pay more than cursory attention to pipeline routes that would avoid the Ogallala Aquifer. The potential for spilled oil to contaminate the groundwater there is relatively high because of shallow water-table depths and high permeability of fragile soils.

“We think this limited analysis does not fully meet the objectives of NEPA and CEQ’s NEPA regulations, which provide that agencies rigorously explore and objectively evaluate reasonable alternatives,” Giles wrote. “Recognizing the regional significance of these groundwater resources, we recommend that the State Department re-evaluate the feasibility of these alternative routes and more clearly outline the environmental, technical and economic reasons for not considering other alternative routes in more detail.”

Social Cost of Carbon

In its report, EPA seemingly compliments the State Department for confirming that Canadian tar sands oil is carbon intensive when compared to other heavy crudes, due to increased emissions associated with extracting and refining it.

However, the agency is convinced that the department continues to underestimate the lifecycle greenhouse gas emissions from oil sands. EPA urges the department to address this shortcoming and also include a scenario that quantifies emissions over the expected 50-year lifetime of the Keystone XL pipeline.

In addition, Giles recommends that Clinton’s team incorporate what’s known among federal agencies as “the social cost of carbon” into its measurements of heat-trapping gases. That would include calculating damages to property, agricultural productivity and human health due to floods, drought and other factors attributed to climate change.

EPA also pushes the State Department to consider how to make Keystone XL more sustainable by maximizing energy efficiency and green power. “We recommend that this discussion include a detailed discussion of efforts …by producers, as well as the government of Alberta, to reduce greenhouse gas emissions from oil sands production.”

TransCanada Confident on All Fronts

TransCanada spokesman Terry Cunha told SolveClimate News he is confident that his company has addressed the questions raised by regulators and government agencies since submitting its application for Keystone XL almost three years ago.

He referred to a report released Monday by oil consultants IHS CERA. That document, “The Role of the Canadian Oil Sands in the US Market: Energy Security, Changing Supply Trends and the Keystone XL Pipeline,” confirmed what TransCanada has maintained all along. On a lifecycle basis, the report states, greenhouse gas emissions intensity of the average oil sands import is roughly 6 percent higher than that of the average crude oil consumed in the United States.

“We expect a final regulatory decision by late 2011,” Cunha said. “We are pleased the Department of State has committed it will conclude its review of Keystone XL by the end of the year.”

In the meantime, Moore and other watchdogs will be carefully tracking what transpires between EPA and the State Department.

“With this rating, the EPA is standing up for the people who would be hurt by the Keystone XL pipeline, including Midwest farmers and low-income people around Texas refineries,” Moore said. “All eyes are on Secretary of State Clinton. Will she comply with the law and ensure that these impacts are studied or not?”