[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

AMERICAN JOBS NOW: A LEGISLATIVE HEARING ON
H.R. 3548, THE NORTH AMERICAN ENERGY ACCESS ACT
=======================================================================

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY AND POWER

OF THE

COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

JANUARY 25, FEBRUARY 3, 2012

__________

Serial No. 112-108

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
__________

U.S. GOVERNMENT PRINTING OFFICE
76-343 PDF WASHINGTON : 2012
______________________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing Office, http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). E-mail, gpo@custhelp.com.

COMMITTEE ON ENERGY AND COMMERCE

FRED UPTON, Michigan
Chairman

JOE BARTON, Texas HENRY A. WAXMAN, California
Chairman Emeritus Ranking Member
CLIFF STEARNS, Florida JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania EDOLPHUS TOWNS, New York
MARY BONO MACK, California FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska ANNA G. ESHOO, California
MIKE ROGERS, Michigan ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina GENE GREEN, Texas
Vice Chairman DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma LOIS CAPPS, California
TIM MURPHY, Pennsylvania MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California JAY INSLEE, Washington
CHARLES F. BASS, New Hampshire TAMMY BALDWIN, Wisconsin
PHIL GINGREY, Georgia MIKE ROSS, Arkansas
STEVE SCALISE, Louisiana JIM MATHESON, Utah
ROBERT E. LATTA, Ohio G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington JOHN BARROW, Georgia
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin
BILL CASSIDY, Louisiana Islands
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

7_____

Subcommittee on Energy and Power

ED WHITFIELD, Kentucky
Chairman
JOHN SULLIVAN, Oklahoma BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois JAY INSLEE, Washington
GREG WALDEN, Oregon JIM MATHESON, Utah
LEE TERRY, Nebraska KATHY CASTOR, Florida
MICHAEL C. BURGESS, Texas JOHN D. DINGELL, Michigan
BRIAN P. BILBRAY, California EDWARD J. MARKEY, Massachusetts
STEVE SCALISE, Louisiana ELIOT L. ENGEL, New York
CATHY McMORRIS RODGERS, Washington GENE GREEN, Texas
PETE OLSON, Texas LOIS CAPPS, California
DAVID B. McKINLEY, West Virginia MICHAEL F. DOYLE, Pennsylvania
CORY GARDNER, Colorado CHARLES A. GONZALEZ, Texas
MIKE POMPEO, Kansas HENRY A. WAXMAN, California (ex
H. MORGAN GRIFFITH, Virginia officio)
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

(ii)
C O N T E N T S

----------

JANUARY 25, 2012

Page
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 1
Prepared statement........................................... 3
Hon. Lee Terry, a Representative in Congress from the State of
Nebraska, opening statement.................................... 10
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 10
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 12
Prepared statement........................................... 14
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 15

Witnesses

Kerri-Ann Jones, Assistant Secretary of State, Bureau of Oceans
and International Environmental and Scientific Affairs......... 17
Prepared statement........................................... 19
Answers to submitted questions............................... 67
Jeff C. Wright, Director, Office of Energy Projects, Federal
Energy Regulatory Commission................................... 25
Prepared statement........................................... 27

Submitted Material

H.R. 3548, A Bill to facilitate United States access to North
American oil resources, and for other purposes................. 5
Application for Intervenor Status, dated May 19, 2009, Hearing
Order No. OH-1-2009, of the National Energy Board, Canada,
submitted by Mr. Waxman........................................ 40
Media notes on Keystone XL Pipeline, dated March 15, 2011, and
April 15, 2011, Department of State, submitted by Mr. Terry.... 55

FEBRUARY 3, 2012

Page
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 93
Prepared statement........................................... 95
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 96
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 96
Hon. Joe Barton, a Representative in Congress from the State of
Texas, opening statement....................................... 97
Hon. Lee Terry, a Representative in Congress from the State of
Nebraska, opening statement.................................... 98
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 99

Witnesses

Margaret Gaffney-Smith, Chief, Regulatory Program, Army Corps of
Engineers...................................................... 101
Prepared statement........................................... 103
Mike Pool, Deputy Director, Bureau of Land Management, Department
of the Interior................................................ 111
Prepared statement........................................... 113
Steven M. Anderson, Brigadier General (Retired), United States
Army........................................................... 142
Prepared statement........................................... 145
Randall F. Thompson, Nebraska rancher............................ 147
Prepared statement........................................... 149

Submitted Material

Memo, dated June 22, 2011, from Carmine Difiglio, Deputy
Assistant Secretary for Policy Analysis, Office of Policy and
International Affairs, Department of Energy, to Keith J. Benes,
Attorney-Advisor, Department of State, submitted by Mr. Terry.. 126
Article, dated February 1, 2012, ``Obama's Enemies List,'' by
Theodore B. Olson in the Wall Street Journal, submitted by Mr.
Pompeo......................................................... 151
Article, dated December 31, 2011, ``Mike Klink: Keystone XL
pipeline not safe,'' by Mike Klink in the Lincoln Journal Star,
submitted by Mr. Waxman........................................ 156
Letter, dated February 1, 2012, from Mike Klink of Auburn,
Indiana, to Mr. Waxman, submitted by Mr. Waxman................ .158

AMERICAN JOBS NOW: A LEGISLATIVE HEARING ON H.R. 3548, THE NORTH
AMERICAN ENERGY ACCESS ACT--DAY 1

----------

WEDNESDAY, JANUARY 25, 2012

House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 8:05 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Ed
Whitfield (chairman of the subcommittee) presiding.
Members present: Representatives Whitfield, Sullivan,
Shimkus, Walden, Terry, Burgess, Bilbray, Scalise, Olson,
McKinley, Gardner, Pompeo, Griffith, Barton, Kinzinger, Upton
(ex officio), Rush, Inslee, Markey, Green, Doyle, Gonzalez, and
Waxman (ex officio).
Staff present: Charlotte Baker, Press Secretary; Caroline
Basile, Staff Assistant; Mike Bloomquist, Deputy General
Counsel; Anita Bradley, Senior Policy Advisor to Chairman
Emeritus; Maryam Brown, Chief Counsel, Energy and Power;
Allison Busbee, Legislative Clerk; Patrick Currier, Counsel,
Energy and Power; Garrett Golding, Professional Staff Member,
Energy; Cory Hicks, Policy Coordinator, Energy and Power; Peter
Kielty, Senior Legislative Analyst; Heidi King, Chief
Economist; Ben Lieberman, Counsel, Energy and Power; Dave
McCarthy, Chief Counsel, Environment and Economy; Mary Neumayr,
Senior Energy Counsel; Katie Novaria, Legislative Clerk; Phil
Barnett, Democratic Staff Director; Greg Dotson, Democratic
Energy and Environment Staff Director; Caitlin Haberman,
Democratic Policy Analyst; Elizabeth Letter, Democratic
Assistant Press Secretary; and Alexandra Teitz, Democrat Senior
Counsel, Environment and Energy.

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

Mr. Whitfield. I would like to call this meeting to order
this morning, and the subject of this hearing is ``American
Jobs Now,'' and we are going to be considering H.R. 3548, the
North American Energy Access Act.
I would also like to welcome those members of the referee
training class. I didn't realize you all were going to be with
us this morning but we are delighted you are here on the second
row, and I hope you will enjoy the hearing as well.
Today's hearing gives us the opportunity to learn why the
Obama administration denied a permit to build the Keystone
pipeline from Canada though parts of the United States. How
could the Obama administration when presented with the chance
to create thousands of jobs and at the same time significantly
reduce our dependence on oil from the Middle East say ``no'' to
the American people?
Today we will examine how such a harmful decision was made
and explore opportunities to reverse that decision. While the
administration struggles to find a rational reason to reject
the construction of Keystone pipeline, we are going to look for
ways to build the Keystone pipeline.
This is a project that would cost about $7 billion to
build. There would not be any government money involved in this
project. It is all being supplied by private industry, and it
would immediately put at least 20,000 people to work. That
certainly sounds like the national interest to me.
If our President decides that sending three aircraft
carrier strike groups to the Strait of Hormuz to defend the
free flow of oil, if he thinks that is in the national
interest, then one would also think a pipeline from Canada that
would help us be less dependent on Middle Eastern oil would
also serve the national interest.
The President's own State Department determined that the
pipeline would have no significant impact on the environment.
The President said it himself. His rejection of the Keystone
pipeline is not based on its merits. He said that, which makes
us belief that the decision to reject the pipeline was solely a
political decision to help him be reelected.
[The prepared statement of Mr. Whitfield follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

[H.R. 3548 follows:]
[GRAPHICS NOT AVAIALBE IN TIFF FORMAT]

Mr. Whitfield. At this time, I would like to yield the
remainder of my time to Mr. Terry.

OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEBRASKA

Mr. Terry. Thank you, Mr. Chairman, for holding this
hearing on this bill.
A couple of points with the couple of minutes I have. This
is what the State Department has by way of environmental
studies on the Keystone route. As you can see, it is very
voluminous and it is difficult to understand why this would
just be discarded, and we will get into some of the points
later during questioning.
I want to go off my regular script and just express my
displeasure that the State Department decided or objected to
our Nebraska witness that could help put in context the
Nebraska exemption and what Nebraska is doing. The State
Department objected because they don't sit on the same panel as
a State witness, so the head of our Nebraska Department of
Environmental Quality is not worthy enough to sit there, and
because of time constraints, his ability to answer our
questions had to be deleted from this panel and frankly, I am
disturbed by that.
But we are going to get into the false excuse of using the
State of Nebraska as the reason--reading your testimony--as the
reason for the denial. In fact, the bill was written so you
wouldn't have to make that decision, and we will get into those
statements. I yield back.
Mr. Whitfield. I thank the gentleman for yielding back.
I might say also that last night the President in his State
of the Union address talked about the importance of
infrastructure for America to remain competitive.
Mr. Rush. I am really going to have to say that regular
order isn't in order, and the 5 minutes is up, so we should
proceed because the regular order is up. Your time is up, Mr.
Chairman.
Mr. Whitfield. Well, I think when you said that, there was
still 30 seconds left.
Mr. Rush. I looked at it and it was----
Mr. Whitfield. We will enforce the 5-minute rule and
recognize the gentleman for 5 minutes.

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS

Mr. Rush. Thank you, Mr. Chairman. Thank you for
recognizing me.
Mr. Chairman, I am also delighted to see the referees
there. This is a good opportunity for them to exercise their
craft because I expect there to be a big battle to take place
this morning at this morning's hearing, because, Mr. Chairman,
today we are holding yet another hearing on the Keystone XL
pipeline as a follow-up to the last hearing, the last markup
and the former we had where the majority attempted to force the
Obama administration to hastily make a decision on the Keystone
XL pipeline. Let me remind you, the majority first tried to
move legislation that required the administration to forego its
legal obligations and its due diligence and come out with a
favorable decision for Keystone XL by November 1 of last year,
and the majority's reckless and irresponsible view if the
American public was left unprotected because the administration
did not have the time needed to conduct a thorough review, I
want to repeat, a thorough review and oversight of this
project. For my Republican colleagues, as long as industry got
what it wanted, then that was the most important role of this
Congress.
After that tactic failed, the majority held hostage the
payroll tax cut extension, which would benefit millions of
middle-class working families, in order to attach a rider that
attempted to force President Obama to come out in favor of
Keystone XL within 60 days of the bill's enactment, and we all
know how well that strategy worked out.
Again, the majority said too bad if ordinary Americans
might have been negatively impacted by a lack of Federal
oversight, and who cares if the Republican governor and
legislators Nebraska have yet to even identify a new route for
the pipeline. As was the theme all last year, my Republican
colleagues continue to push this false notion that if you would
just roll back government oversight and protections for average
Americans and allow industry to do what it wants without
restriction, and unfettered, then somehow miraculously, jobs
will be created and millions of out-of-work Americans will be
gainfully employed. After all, Mr. Chairman, we saw how well
this well-defined philosophy worked during the Bush years with
the collapse of our total financial institutions and our
economy.
Mr. Chairman, it is ironic that 25 Energy and Power
Subcommittee and joint hearings, the nine bills that originated
from this subcommittee that went through the House last year,
the only piece of legislation that actually became law was the
Pipeline Safety Reauthorization bill, which expanded regulation
in order to address public safety. In fact, the pipeline safety
bill enjoyed unanimous support from this committee and so it
would appear that my Republican colleagues are not always
opposed to Federal regulation and oversight, especially when
their districts are directly affected.
So Mr. Chairman, today we are here on another proverbial
fishing expedition by the majority party, again to try to
sidestep Federal regulations and oversight in order to help
industry get what they want and the American public be damned
in the process. I am not sure if the majority's goal is simply
to show TransCanada that they are working feverishly on their
behalf for more campaign contributions, even when they know
that the underlying legislation would never, ever become law--
--
Mr. Terry. Mr. Chairman----
Mr. Rush [continuing]. Or they are trying to keep this
issue----
Mr. Terry [continuing]. I think the gentleman's time has
expired and I want his words taken down.
Mr. Rush [continuing]. With the millions of dollars that
the----
Mr. Terry. I move that his words be stricken.
Mr. Rush [continuing]. American Petroleum Institute is
pouring into commercials supporting Keystone XL.
Mr. Whitfield. The gentleman's time is expired.
Mr. Rush. And I yield back the balance of my time.
Mr. Whitfield. Recognize the gentleman from Nebraska.
Mr. Terry. The gentleman made an accusation saying that we
are tied to campaign contributions. A, that is wrong, but that
is against our rules. His words need to be taken down.
Mr. Whitfield. We will have the clerk review the
transcript, and then we will proceed at that time, and I will
remind everyone that we do not need to be making accusations
about what people are and are not doing as far as legal
campaign finance laws and whatever.
At this time I would like to recognize the gentleman from
Michigan for 5 minutes, Mr. Upton, the chairman of the full
committee.

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN

Mr. Upton. Well, thank you, Mr. Chairman. I notice we have
a number of referees in that second row. Welcome to the big
house. I note that you have got red flags, and of course, that
is not a yellow flag, that is a red flag. A red flag usually
means it is a review of the play. We look forward to having a
review of the play. In fact, that vote did pass in this
committee and on the House Floor by a two-to-one margin, and we
are looking to have the ruling on the field confirmed again and
perhaps again and again.
It is not often that Congress can take a single step that
will simultaneously help reduce the future price at the gas
pump, strengthen the Nation's energy security, and create
literally tens of thousands of jobs. And it is certainly not
often that we can accomplish all of these important goals at
absolutely no cost to the taxpayer. But this is exactly what
approving the Keystone XL pipeline expansion project would do
and why I support this legislation, H.R. 3548, the North
American Energy Access Act.
Keystone is a shovel-ready project whose construction would
create badly needed jobs. Once completed, it would allow more
oil from our ally Canada to come to the United States, taking
the place of imports from far less friendly producers. The oil
would go to refiners in the Midwest and the Gulf Coast,
increasing the supply of American-made gas and preserving
domestic refining jobs. The pipeline would also provide an
outlet for the growing supplies of domestic oil produced in the
Bakken formation in North Dakota and Montana, relieving a
potential bottleneck there. And every penny of the $7 billion
project will be paid for by the private sector.
Given the many benefits of Keystone, it is no surprise that
so many Americans consider this decision to be a no-brainer,
especially since the environmental impacts of the project have
been extensively studied for years and found to be minimal.
Last July, the House passed a bill requiring the State
Department to make the long-overdue decision on Keystone by
November 1st. It was certainly bipartisan, 47 Democrats joining
nearly all the Republicans in supporting the reasonable
measure. The bill probably would have garnered even more votes
if not for the administration's repeated assurances that it is
going to make a decision before the end of 2011, and that a
legislated deadline was not necessary.
But sadly, as the end of the year approached, the
administration reversed position and postponed its decision
until 2013 at the earliest. In response, Congress gave the
President a second chance to do the right thing by providing
him yet another 60 days to approve Keystone as part of the
payroll tax bill, but last week he decided to reject the
proposal after only 26 days. You see, 60 days wasn't enough.
Make no mistake, time is of the essence. Not only are
unemployed Americans anxiously looking for jobs, not only is
Iran threatening the Strait of Hormuz, not only is the price at
the pump headed towards perhaps 5 bucks in the next couple of
months, but the Canadian government is understandably growing
impatient with the endless red tape and delays coming from
Washington. Canada is rapidly increasing its oil production,
and if the United States foolishly refuses to be a customer for
these new supplies, Canada will build a pipeline not to the
south but to the Pacific coast and the oil will be exported to
China, where they are waving their hands because they want it
there.
That is why we are again offering an opportunity to approve
Keystone. I believe that this approach, this legislation giving
the decision-making authority to the FERC, the Federal Energy
Regulatory Commission, is a good one. I look forward to moving
it through the committee, and I would yield to anyone on our
side that would like time, and if not, will yield back the
remainder of my time.
[The prepared statement of Mr. Upton follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Mr. Whitfield. The gentleman yields back the balance of his
time.
At this time I recognize the gentleman from California for
5 minutes, Mr. Waxman.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA

Mr. Waxman. Thank you, Mr. Chairman.
Today, we once again consider legislation to approve the
Keystone XL tar sands pipeline.
This legislation exempts one pet project from every Federal
and State permitting requirement. Yes, one project would be
exempted from every review. Now is that a way to approve an
important and controversial pipeline? I hardly think that is
the case.
The fact is that the legislation we are considering today
is an earmark that benefits just one project. You remember the
Republicans saying they were against earmarks? Well, not when
it helps their friends. And the arguments for the project just
don't stand up to scrutiny. This tar sands pipeline won't boost
our energy independence or lower gas prices or create the
inflated jobs being promised.
Why have the Republicans introduced bill after bill to
short-circuit the permitting process on Keystone XL? They say
it will make the country more energy independent. That is a
myth. Oil prices are set by the global markets. This pipeline
will have no impact on our vulnerability to price spikes or
Iranian brinksmanship.
In fact, Keystone won't even reduce our imports. It will
simply allow Canadian oil companies to use the United States as
a conduit for shipping their tar sands overseas to China.
Now, I know they say if they don't get this pipeline, they
are going to go to the West Coast. Well, that is a problem,
because there are First Nations in Canada that don't want this
pipeline going in that direction, and it is not so clear they
can get the approval to do that.
The Republicans say it will cut gasoline prices. But the
opposite will happen. Canadian oil that is now being refined in
the Midwest and suppressing prices in that market will be
diverted to the Gulf Coast for export, costing consumers in the
Midwest billions of dollars.
The Republicans say they support the pipeline because it
will create tens of thousands of jobs, but that is not right
either. According to TransCanada, the company seeking to build
the Keystone XL pipeline, the project will have ``a peak
workforce of approximately 3,500 to 4,200 construction
personnel.'' Some labor groups have recently described the
GOP's antics on Keystone as the ``politics-as-usual strategy of
a do-nothing Republican Congress.''
If the Republicans were seriously and actually concerned
about jobs, they would work with the President passing his jobs
bill. They have no solution to the jobs crisis. The jobs
crisis, they say, must be responded to by tearing away
regulations to protect public health and safety. We will have
more jobs if we let billionaires keep more money and it will
trickle down to more jobs. And then they say this one project
will provide the jobs we need. It is amazing to me. The fact
is, the legislation we are considering today is one that is
hard to understand.
This committee has an obligation to understand who benefits
from this legislation. Last year, news organizations reported
that one company, Koch Industries, would be one of the ``big
winners'' if this pipeline were constructed.
We asked Koch whether this was true and were told that they
have no interest whatsoever in the pipeline. But then we
learned that they have told the Canadian government that they
have a ``direct and substantial interest.'' Something does not
add up.
To understand this situation better, Mr. Rush and I
requested that we invite the Koch brothers or the Koch
Industries to come here and testify. The chairman hasn't even
responded to our letter. We therefore, Mr. Chairman, are
invoking the minority's rights under rule XI of the House rules
to have a minority day of hearings. It is important that we
hear from Koch and other stakeholders.
I think this pipeline is a bad idea. It ignores the
concerns of the----
Mr. Whitfield. The gentleman's time is expired.
I would also tell the gentleman, we will certainly accept
the letter and we will follow the rules, but we are not going
to be subpoenaing the Koch brothers, and we are not asking the
Koch brothers to appear because the Koch brothers have nothing
to do with this project.
Mr. Waxman. Well, how does----
Mr. Whitfield. At this time I would like to----
Mr. Waxman. Point of order, Mr. Chairman. You made a
statement where you were not recognized for the time. You cut
me off in the middle of a sentence. I would like to know the
substantiation for your----
Mr. Whitfield. Your time was up, Mr. Waxman.
Now, we are going to recess this hearing for 10 minutes,
and then we are going to come back.
Mr. Waxman. Are you calling the Koch brothers during the
recess?
Mr. Whitfield. Let me tell you something. If you want to
talk about that, let us talk about the millions of dollars that
the Obama administration gave companies like Solyndra, to
people like George Kaiser, who is out there bundling money for
the President.
Mr. Waxman. Point of order, Mr. Chairman.
Mr. Whitfield. Would you like for us to----
Mr. Waxman. Point of order, Mr. Chairman.
Mr. Whitfield. Would you like for us to subpoena him, too?
Mr. Waxman. Why are you interrupting members and then you
take unlimited time for yourself?
Mr. Whitfield. I am responding to your questions, your
allegations. I am the chairman and I am telling you right now,
we are going to recess for 10 minutes.
[Recess.]
Mr. Whitfield. I call the hearing back to order, and at
this time we will hear the testimony of our two witnesses, and
I would like to welcome both of you to this hearing today.
First of all, we have the Honorable Kerri-Ann Jones, who is
the Assistant Secretary of State, Bureau of Oceans and
International Environmental and Scientific Affairs, and we also
have Mr. Jeffery Wright, who is the Director, Office of Energy
Projects at the Federal Energy Regulatory Commission.
So once again, I welcome you all to the hearing. Each one
of you will be recognized for 5 minutes, and then we will have
questions for you at that time.
So Ms. Jones, I will recognize you for your 5 minutes.

STATEMENTS OF HON. KERRI-ANN JONES, ASSISTANT SECRETARY OF
STATE, BUREAU OF OCEANS AND INTERNATIONAL ENVIRONMENTAL AND
SCIENTIFIC AFFAIRS; AND JEFF C. WRIGHT, DIRECTOR, OFFICE OF
ENERGY PROJECTS, FEDERAL ENERGY REGULATORY COMMISSION

STATEMENT OF KERRI-ANN JONES

Ms. Jones. Thank you, Mr. Chairman, and good morning,
Chairman Whitfield, Ranking Member Rush and other members of
the Subcommittee on Energy and Power. I appreciate the
opportunity to appear before you today.
The U.S. Department of State received the application for
Keystone XL pipeline project in September 2008. We undertook a
thorough, rigorous and transparent process to determine whether
issuance of a Presidential Permit for this pipeline was in the
national interest.
In December, Congress passed the Temporary Payroll Tax Cut
Continuation Act of 2011, which required a determination by the
President within 60 days of whether the Keystone XL proposal
project would serve the national interest. On January 18, 2012,
the Department of State recommended to the President that the
application for a Presidential Permit be denied due to
insufficient time to conduct the necessary analysis. The
President accepted our recommendation and determined that the
Keystone XL pipeline project, as presented and analyzed at that
time, would not serve the national interest.
I would like to provide some further details about this
process and also comment briefly on the administration's view
of H.R. 3548.
On April 30, 2004, President Bush issued Executive Order
13337, which designated and empowered the Department of State
to receive the applications for Presidential Permits for all
oil infrastructure projects that cross a United States border.
The Executive Order indicates that the permit should be granted
based on whether it is in the national interest. The
Department's national interest determination factors include
numerous issues including energy security, foreign policy,
economic effects, health, safety and environmental
considerations including climate change as well as any other
factor the Department believes is relevant to the national
interest. To make an informed decision, the Department is
directed in the Executive Order to request additional
information as needed from the applicant.
In order to analyze the potential environmental impacts of
the project as required by the Executive Order, the Department
determined that it would prepare an Environmental Impact
Statement, or EIS, consistent with NEPA, the National
Environmental Policy Act of 1969. We also carried out processes
mandated by the National Historic Preservation Act of 1966 and
the Endangered Species Act. Following NEPA requirements, we
engaged in a robust public outreach effort including meetings
along the proposed pipeline route.
On August 26, 2011, we issued the final EIS. Following its
issuance, we began an interagency review period for the
national interest determination and we conducted an additional
public comment period that closed on October 9, 2011. We held
meetings along the pipeline route including in the Sand Hills.
These meetings were passionate with strong opinions and
rationale on both sides. In Nebraska, we heard concerns about
the fragile and unique Sand Hills of Nebraska. We heard about
their important to the Nation and to the people of Nebraska.
Indeed, the people of Nebraska felt so strongly about this
issue that their legislators met in special session to draft a
law to ensure the Sand Hills would be protected. That is why we
paused the process in November 2011, and based on experience
with pipelines of similar length, we estimated that it would
take until early 2013 to complete our assessment.
In December 2011, as we were cooperating with Nebraska's
Department of Environmental Quality, the Temporary Payroll Tax
Cut Continuation Act was enacted into law. We knew that 60 days
was not enough time to complete the work and the analysis
needed relevant to the national interest determination. We
decided based not on the merits but on the inadequate time
period and incomplete review to recommend that the President
deny the permit.
This now brings me to H.R. 3548. The proposed legislation
imposes narrow time constraints and creates automatic mandates
that prevent an informed decision. We also feel the legislation
raises serious questions about existing legal authorities and
appears to override foreign policy and national security
considerations implicated by a cross-border permit, which are
properly assessed by the State Department.
Mr. Chairman, internationally we remain fully engaged with
all our key partners and suppliers including Canada as we work
on issues of energy security and diplomacy. As we do this, the
State Department remains committed to carrying out its
responsibilities under the Executive Order with diligence and
fairness to the applicants but with ultimate concern for the
best interest of the American people.
Thank you again for this opportunity to testify, and I
would be pleased to answer any questions.
[The prepared statement of Ms. Jones follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Whitfield. Thank you, Ms. Jones.
Mr. Wright, you are recognized for 5 minutes.

STATEMENT OF JEFF C. WRIGHT

Mr. Wright. Thank you. Chairman Whitfield, Ranking Member
Rush and members of the subcommittee, my name is Jeff Wright
and I am the Director of the Office of Energy Projects at the
Federal Energy Regulatory Commission, and I appreciate the
opportunity to appear before you today. The Office of Energy
Projects is responsible for, among other things, the
certification of interstate natural gas pipelines pursuant to
the National Gas Act.
H.R. 3548, the North American Energy Access Act, addresses
the Keystone XL pipeline project. I have no position on the
proposed bill, but should Congress direct the Commission to act
on an application for the project, the Office of Energy
Projects as the Commission's infrastructure review branch would
likely take a primary role in advising the Commission on the
matter. Therefore, I will offer comments on the proposed bill
with the goal of seeking to ensure that if Congress gives this
responsibility to the Commission, the legislation should
provide clear and effective procedures for conducting this
review.
Before commenting on specific sections, I do note that the
authorization provided by the bill would differ substantially
from the Natural Gas Act in that the proposed act does not make
any explicit provision for procedures such as public notice,
public comment, issuance of an order supporting a Commission
decision, rehearing or judicial review in conjunction with the
Commission's consideration of an application.
I now turn to specific provisions of the act. Section 3(a)
of the bill would require the Commission to approve the project
within 30 days of receipt of an application, and if the
Commission has not acted on the application within these 30
days, the application is deemed approved. The 30-day deadline
would not permit construction of an adequate record of allow
for meaningful public comment in arriving at a decision. In
fact, section 3 could be read as giving the Commission no
discretion in the issuance of the permit.
The section also states that the permit is to be
implemented in accordance with the terms of the final
Environmental Impact Statement. However, it is not clear
whether the Commission or any other entity would have authority
to ensure and enforce compliance with the measures required by
that document.
Section 3(b)(1) allows for the applicant or permit holder
to propose a modification of the route or other terms of the
final Environmental Impact Statement and for the Commission to
authorize such a modification. The bill, however, does not
articulate a standard or a process for such a decision. Section
3(b)(2) of the bill states that the Commission will enter into
a memorandum of understanding with the State of Nebraska for an
effective and timely review under the National Environmental
Policy Act of any route modification of the project in the
State of Nebraska. Upon approval of the modification by the
Governor of Nebraska, the Commission will have 30 days to
finish its review and to approve the modification, and Section
3(b)(3) provides that if the Commission has not acted within 30
days, a modification shall be deemed approved.
The proposed process here is unclear. The bill appears to
contemplate that such entity, either the Commission or the
State, will issue a NEPA document regarding a Nebraska
modification after which the Governor of Nebraska will have the
opportunity to approve the proposal. The Commission then would
have 30 days to complete consideration of and approve such
modification. This section could be read to mean that the
Commission has no discretion but to approve a Nebraska
modification, and further, this section does not appear to
provide a process for public notice and comment, opportunity
for hearing or rehearing.
Section 4 of the proposed legislation states that a permit
issued under this act shall be the sole legal authority
required to construct and operate the pipeline except for the
safety oversight of the Department of Transportation's Pipeline
and Hazardous Materials Safety Administration and the
Commission's existing rate and tariff authority. The language
makes it unclear whether such permits from other Federal
agencies would still be required. Further, while the Department
of State is responsible for issuing the Presidential Permit
that authorizes the border crossing facilities, individual
States or subdivisions thereof, depending on State law, have
authority to site oil pipelines within their jurisdiction. This
proposed legislation could be construed as providing that
Federal jurisdiction supplants local authority.
This concludes my testimony, and I will be happy to answer
any questions you may have.
[The prepared statement of Mr. Wright follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Whitfield. Thank you very much, Mr. Wright.
I will recognize myself for 5 minutes of questions. Ms.
Jones, on October 15, 2010, Secretary of State Clinton said she
was inclined to approve the Keystone pipeline permit. On
October 31, 2011, White House Press Secretary Jay Carney stated
the fact is that this is a decision that will be made by the
State Department, and the very next day, President Obama said
the decision would rest with him. But in the President's
announcement last week to reject the pipeline's permit, he said
he had accepted the State Department's recommendation to do so.
So my question would be, were you involved in the decision
made at the State Department and did you recommend to the
President that he reject this permit?
Ms. Jones. Thank you, Mr. Chairman. The recommendation that
went to the President was a State Department recommendation,
and it came from my bureau and other bureaus. It came through
the deputy and through the Secretary to the President.
Mr. Whitfield. So your bureau recommended that the----
Ms. Jones. Yes, sir.
Mr. Whitfield [continuing]. Permit be denied?
Ms. Jones. Yes, sir.
Mr. Whitfield. And what other bureaus at the State
Department were involved in that decision making?
Ms. Jones. The other bureau that is involved is the Bureau
of Economic Affairs. The State Department looks at this
pipeline across all of the issues that are involved so there
are multiple bureaus involved in all of the meetings and
discussions that we have. We also have some energy expertise,
and we also have of course the regional bureau which handles
matters with Canada.
Mr. Whitfield. Now, I think Mr. Walden over there has a
copy of the impact statement, which is quite voluminous, but
isn't it true that the State Department's draft Environmental
Impact Statement concluded that the Keystone pipeline would
have limited adverse environmental impact?
Ms. Jones. Mr. Chairman, what the statement said was, it
suggested that there would be little adverse impact to most
resources. It then went on to say that was the case if the
applicant followed all of the State and local rules and all of
the mitigation procedures that were outlined. It then went on
to say there were three or four areas that were of concern
where there could be impact: called out spills a possibility,
called out cultural resources related to Native Americans,
called out wetlands and some other areas where trees and shrubs
would not be put back after the pipeline was put in. The
Environmental Impact Statement is very long. The summary is
just a page, but there are many other pieces throughout the
document.
Mr. Whitfield. Isn't it true that the State Department's
own Environmental Impact Statement included review of an
alternative not to build the pipeline at all and didn't the
Environmental Impact Statement conclude that building the
pipeline along the preferred route was better environmentally
than no pipeline at all?
Ms. Jones. In the Environmental Impact Statement, we looked
at many alternative routes and we analyzed those, and we looked
at routes that avoided the Sand Hills. We looked at routes that
took short little jogs and made different changes. The
Environmental Impact Statement did not identify any of those
alternative routes as more preferable to the proposed route at
that time based on the different environmental considerations
that the different routes had as well as economic and some
technical issues.
But Mr. Chairman, the denial of this permit is related not
to all of these pieces but to the timeline that we had in that
we did not have a complete route to look at at this point.
Mr. Whitfield. Well, Ms. Jones, reading directly from the
Federal Environmental Impact Statement, it says, ``As a result
of these considerations, the Department of State does not
regard the no action alternative, that is, not to build the
pipeline, we do not regard that alternative to be preferable to
the proposed project.'' So this language in here is very clear
that as opposed to not doing anything, the State Department
concluded it was preferable to build the pipeline. So we found
ourselves confused about how all of a sudden the State
Department and the President reverse themselves on this. After
all, this was a study that went on for 40 months or so.
My time is expired. At this time I would like to recognize
the gentleman from Illinois, Mr. Rush, for 5 minutes.
Mr. Rush. Thank you, Mr. Chairman.
Ms. Jones, most people would agree that haste makes waste.
So my question is, why did the State Department recommend that
the President deny the Keystone XL pipeline application?
Ms. Jones. We recommended the denial because we felt we did
not have the time to get the information that was needed on the
alternative routes in Nebraska, and with not getting that
information, we would also be unable to look at the other
factors, economic, socioeconomic factors, environmental factors
as well as foreign policy and energy security. We did not have
the time to do that, and that is why we recommended denial. It
was not based on the merits of the project.
Mr. Rush. Well, maybe you can further explain this. Why was
the ``full assessment'' not completed by the arbitrary deadline
set forth by the Republican bill and what additional issues did
the State Department not have time to consider?
Ms. Jones. In November when we identified that there was
the need for additional information and in-depth analysis on
alternative routes that would avoid the ecologically unique
area, the Sand Hills in Nebraska, we recognized that there are
many pieces to that information, and the first piece we don't
have yet is to just identify what some of those alternative
routes may be. So we don't even have a complete route for this
pipeline, which goes through the whole central part of the
country. That is one thing we don't have.
We also don't have the level of detail. If we were to have
a route, we would then have to get into the level of detail
regarding all of the different kinds of information--the
topography, the number of bodies of water crossed, if it
crossed any aquifers. Then we would also have to look at if
there were any endangered species issues, and of course, we
would have to interact with the communities along that new
route to hear their concerns and to understand what any issues
might be there. So that overall process would take several
months and the estimate that we put out there was supported by
both the applicant and the State of Nebraska when we talked to
them about this. So this is the process that we had defined and
worked with partners, both the applicant and the State of
Nebraska, to understand what would be needed to get the
information that we thought we needed to make a decision that
would be very well informed.
Mr. Rush. Do you think then that it would have been
irresponsible, reckless and potentially harmful to the American
public had you tried to grant permits within these artificial
deadlines as established by the Republicans in this situation?
Ms. Jones. Well, I think it would have been irresponsible
because we didn't have defined a significant portion of a major
pipeline that would be a major piece of infrastructure that
would affect our country for many years. So I think having that
information was an important piece, and that is what we based
our first decision on November 10th and this most recent
decision is based on the fact that we did not have the time to
get the information we think we needed.
Mr. Rush. In all of your experience in your particular role
and your capacity at the State Department, have you ever had
any similar instances whereby Congress enacted some artificial
deadline that did not allow you the time to thoroughly and
completely perform your responsibilities to the American
public?
Ms. Jones. Not that I can recall, Congressman.
Mr. Rush. Thank you, Mr. Chairman. I yield back.
Mr. Whitfield. Thank you, Mr. Rush.
At this time I would like to recognize the gentleman from
Texas, Mr. Barton, for 5 minutes.
Mr. Barton. Thank you, Mr. Chairman.
I need to make a disclosure before I ask my questions. My
Congressional district in Texas, if it were a State, at one
time would have been the fifth largest energy-producing State
in the country. I have producing oil wells, producing natural
gas wells. I have producing coal mines. I have coal-fired power
plants. I have gas-fired power plants. I have oil pipelines. I
have natural gas pipelines. I have water pipelines existing
that are in use, and some that are not in use but are still
underground. I have big pipelines and little pipelines. So I
think I know a little bit about this subject.
I have listened with interest to the gentlelady from the
State Department's explanation, and I will say that she puts
the best face possible on a terrible decision that her
department has made. One of the things that you just said,
Madam Secretary, was that there were socioeconomic factors that
had to be considered. Where is that in the law, especially the
State Department, socioeconomic factors?
Ms. Jones. Congressman, the----
Mr. Barton. No, is it in the law? I don't need a long,
dodge answer. Is there a statute under law that says the State
Department has to consider socioeconomic factors, yes or no?
Ms. Jones. It is in the Executive Order.
Mr. Barton. Oh, it is in the Executive Order. That is not a
law.
Ms. Jones. It is in NEPA as well, sir.
Mr. Barton. I see. Well, I would like you to provide it, if
that is the case.
Is it a socioeconomic factor that a project might bring
thousands of high-paying jobs to a region? Is that a
socioeconomic factor?
Ms. Jones. Yes, it is.
Mr. Barton. Is it a socioeconomic factor that a project
might bring much-needed energy to the mid-continent and the
lower Southwest and southeastern States? Is that a
socioeconomic factor?
Ms. Jones. Yes, it is.
Mr. Barton. OK. And were those considered?
Ms. Jones. Absolutely.
Mr. Barton. Absolutely? So----
Ms. Jones. The decision at this time was not based on those
factors.
Mr. Barton. So those socioeconomic factors might be the
reason that until the radical environmentalists begin to
protest and petition against it that when the Secretary of
State was asked out in California the status of the
application, she indicated that she was inclined or the State
Department was inclined to approve it? Is that a fair
statement?
Ms. Jones. We considered--we were considering all of those
factors that you mentioned, Congressman, but we were unable to
complete that analysis because of the deadline that was put
forward.
Mr. Barton. What is the statutory deadline in the law for
consideration? Isn't it 180 days after receipt of the
application?
Ms. Jones. I am not sure, sir.
Mr. Barton. OK. I know it is not 4 years, OK? I am not
going to swear it is 180 days but I think it is 180 days.
Ms. Jones. My understanding is that in previous cases where
we have reviewed pipelines, it has taken 2 years or so. So I
don't know what the statutory timeline is.
Mr. Barton. Well, there are three phases of a pipeline. You
have the construction phase, you have the operation phase, and
unfortunately, on occasion, you can have a catastrophic
accident once it is in operation. Were there concerns about the
construction of the pipeline? What I am trying to get at is,
the primary concern of the State Department. Is it the
construction phase concern, is it an operation phase concern or
is it a concern about some sort of a catastrophic event that
would spill oil out into the environment?
Ms. Jones. Our concern at this point, sir, was that we did
not have time to do the analysis. All of the dimensions of the
issue that you are talking about, we had been studying.
Certainly the spills, certainly the issues around construction
and operation, but the reason the decision was taken was
because we did not have the time----
Mr. Barton. But we fought and won World War II in less time
than it has taken so far to evaluate this project. I mean, with
all due respect, it is an insult to the American people to say
that you need more time. There are 10 other agencies that
reviewed this project, and correct me if I am wrong, but my
understanding is that the Corps of Engineers approved it, the
Department of Agriculture approved it, the Energy Department
approved it, the Department of Interior approved it, the
Department of Transportation approved it, the Environmental
Protection Agency, believe it or not, approved it, the Defense
Department approved it, the Justice Department approved it, the
Homeland Security Department approved it, and the Department of
Commerce approved it. Only the State Department, which I
believe by law is required to look at the international
implications, since it is TransCanada, only the State
Department did not approve it.
Mr. Whitfield. The gentleman's time is expired.
Mr. Barton. With that, I yield back, Mr. Chairman.
Mr. Whitfield. At this time I would like to recognize the
gentleman from California, Mr. Waxman, for 5 minutes.
Mr. Waxman. Thank you very much, Mr. Chairman.
When we first held a hearing on this subject a year ago,
there were press reports that Koch Industries would be one of
the ``big winners'' if this pipeline was constructed, and we
asked Koch Industries whether this was true.
Mr. Sullivan. Will the gentleman yield?
Mr. Waxman. No.
And we were told----
Mr. Sullivan. Will the gentleman yield?
Mr. Waxman [continuing]. That they had no interest
whatsoever in the pipeline, but then we learned that they have
told the Canadian government they have a direct and substantial
interest. Something doesn't add up, and I have before me a
document. This is the application for intervenor status in
Canada, and this is an application from a company called Flint
Hills Resources Canada of Flint Hills, which is a subsidiary of
Koch Industries, and they said, ``What is your specific
interest in this proceeding?'' They said, ``Flint Hills
Resources of Canada is among Canada's largest crude oil
purchasers, shippers and exporters, coordinating supply for its
refinery in Pine Bend, Minnesota. Consequently, Flint Hills has
a direct and substantial interest in the application.''
Mr. Chairman, I would like this document to be made part of
the record.
Mr. Whitfield. Without objection.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Waxman. This document raises the issue that the
statement that Koch Industries was not involved is inaccurate
because they are involved and they claim to intervene in Canada
because they are involved, and that is why I think we need to
get more information.
Now, the Keystone XL tar sands pipeline poses substantial
risks for Americans. This would pump tar sands almost 2,000
miles across the middle of America from Canada to the Gulf of
Mexico. Even if the pipeline is rerouted around Nebraska, the
Sand Hills, it will almost certainly still go through the
Ogallala Aquifer, endangering water supplies for 2 million
Americans, their farms and their businesses. The State
Department's analysis indicates that shifting to tar sands oil
from crude oil would increase carbon pollution and that
increase could be substantial.
Now, these are risks. They are real and they are serious.
The benefits for oil companies are also real. They will finally
be able to export tar sands to Asia. Port Arthur is even a tax-
free trade zone. But the benefits for Americans are a lot less
clear.
Dr. Jones, how many jobs would the pipeline generate,
according to the State Department's analysis?
Ms. Jones. Economic analysis and economic consideration is
part of the review we have been doing that was cut short with
the deadline we faced, but in the final Environmental Impact
Statement, we approximated based on the number of work crews
that would be used to build the pipeline at 5,000 to 6,000
construction jobs would be needed per year.
Mr. Waxman. Per year. For how many years?
Ms. Jones. For 2 years.
Mr. Waxman. Well, the oil industry has been saying this
would create 20,000 or even 100,000 jobs. They haven't provided
any information to us supporting those claims or challenging
your estimate. Have they submitted information to you
challenging your estimate?
Ms. Jones. Congressman, we have seen many different
estimates on the number of jobs that would be created with this
pipeline, and the job creation issue is a very complicated
issue because----
Mr. Waxman. Have the oil companies challenged your data and
your claim?
Ms. Jones. Well, we have had a lot of challenges coming
from a lot of different directions but that is the number that
we have gotten through the----
Mr. Waxman. Let me get back to my time because as soon as
my time is up, that gavel is going to be smashed.
The Washington Post claimed that this project will create
tens of thousands of jobs. This was called a Two Pinocchio
challenge when this statement was made. The economy is
recovering. We need millions of new jobs to reduce unemployment
and get the economy moving again. The President proposed an
American jobs bill. Instead of doing that legislation, we are
considering legislation to ram through one pipeline. I think
that is a pitiful excuse for a jobs policy.
I want to ask you about the review, Dr. Jones. Assuming
that TransCanada reapplies for a permit and the State
Department is still the relevant agency, you will need to
assess the application in light of a new route. Will you commit
to examine other questions about addressing U.S. carbon
emissions and climate change when you look at this question?
Ms. Jones. Congressman, should a new application be
submitted, it would be reviewed without prejudice and we would
look at all of the different aspects of the project, and as you
mentioned, certainly greenhouse gases as well as the economic
considerations and other broader environmental issues, foreign
policy, everything would be considered, and we would just do
that in all fairness and transparency as we have tried to do
with this process, and it would be a new application.
Mr. Waxman. Thank you.
Thank you, Mr. Chairman, for your generosity on the time.
Mr. Whitfield. At this time I would like to recognize the
gentleman from Oklahoma, Mr. Sullivan, for 5 minutes.
Mr. Sullivan. Thank you, Mr. Chairman, and I would like to
yield 1 minute of my time to my friend from Kansas, Mr. Pompeo.
Mr. Pompeo. Thank you.
You know, I have sat here for a year and watched folks on
the left obsess about one of my constituents, Koch Industries.
But today we reached a new place. We reached a place where they
have now asked a private company to come talk about whether
they happen to benefit from a particular permit application.
This makes no sense to me. We are supposed to do good policy.
We are not supposed to decide whether a particular company
benefits or not. I can't understand why whether Koch Industries
benefits or not would be relevant to our decision. We should
decide if this is in the American national interest.
I would not for a moment suggest that we should bring
Warren Buffett in to testify about whether his company and his
rail interest would benefit from this permit application. I
have read that he would be greatly benefited if we do not get
that permit approved. I cannot believe that anyone on this
committee would have their decision on whether or not to vote
for this piece of legislation turn on whether Koch Industries
or any other private company benefited or was harmed by this.
This is not what we are supposed to be doing.
The Constitution tells us we are supposed to do good public
policy and we should not be making decisions based on whether
one company or another benefits.
I yield back.
Mr. Whitfield. Mr. Pompeo, Mr. Sullivan didn't want you to
go over 1 minute.
Mr. Sullivan. Well, thank you, Mr. Pompeo. Thank you, Mr.
Chairman.
Mr. Pompeo. Thank you, Mr. Sullivan.
Mr. Sullivan. Thank you, Ms. Jones, for being here today.
And it has taken, you know, 3 years, no decision, and my
constituents are wondering about this, and I know the
government is kind of slow, but when do you think you could
make a decision? Do you think 10 years from now? Do we need to
reapply, or when do you think you can make a decision?
Ms. Jones. Congressman, when we made the decision in
November that we needed additional information, we put an
estimate out there that it would take until probably the first
quarter of 2013, but at this time we recommended the denial
because we didn't have the time to do that.
Mr. Sullivan. Well, these other departments seem to have
approved. We heard from Mr. Barton about that. Why are they so
nimble and you are so slow?
Ms. Jones. Congressman, I didn't have a chance to respond
to Congressman Barton's comments, but we did not finish the
national interest determination of consultations with other
agencies so I was not clear as to what kind of approval that
was referring to because we didn't finish the process.
Mr. Sullivan. OK. Ms. Jones, on January 11th, Secretary of
State Hillary Clinton made remarks calling Iran's Strait of
Hormuz threats ``provocative and dangerous.'' She also called
the strait ``the lifeline that moves oil and gas around the
world.'' According to the Department of Energy, about 15.5
million barrels of oil a day, or a sixth of the global
consumption, passes through the Strait of Hormuz between Iran
and Oman at the mouth of the Persian Gulf. The fact is that
crude oil futures have risen 7.4 percent since December 16th on
increasing concern that Iran, OPEC's second largest producer,
would close the passage in the face of pressure from the U.S.
and European governments to abandon a suspected nuclear weapon
program.
In light of these national and energy security threats from
Iran, why has it taken 3 years for the State Department to
review the Keystone XL pipeline? And do you agree that it is in
our national interest for the United States to be more energy-
independent from regimes such as Iran that want to harm our way
of life, impose energy security threats, and would you agree
that fluctuating oil prices demonstrate how our economic and
national security is threatened by reliance on unstable sources
of oil? And Ms. Jones, as you noted earlier, Secretary of State
Hillary Clinton is concerned about Iran's provocative actions
in the Strait of Hormuz. Does the State Department share the
same concerns with our good friend and neighbor, Canada? Yes or
no on the Canada thing.
Ms. Jones. Yes, we share a commitment with Canada to work
towards energy security. It is one of the areas that is part of
our very strong bilateral relationship. And as you point out,
the whole issue of energy independence and energy security is a
very important national priority and it was and is one of the
considerations when pipelines are being reviewed.
We did not have the opportunity to complete that review. We
did not have a complete route for this pipeline. That is the
reason why we took the action, made the recommendation that we
did last week. It is only partially defined, this pipeline at
this point.
Mr. Sullivan. Well, Ms. Jones, Keystone XL pipeline is a
game changer for energy security. The pipeline when fully
completed could transport nearly 1.3 million barrels of oil per
day from Alberta and North Dakota to refineries in the Midwest
and Gulf Coast. I believe it is in our national interest to
move forward with this pipeline, and the State Department's 3-
year delay in considering this pipeline is a national travesty
and I wish it would have happened a lot sooner.
Thank you, and I yield back.
Mr. Whitfield. At this time I recognize the gentleman from
Texas, Mr. Gonzalez, for 5 minutes.
Mr. Gonzalez. Thank you very much, Mr. Chairman, and good
morning to the witnesses.
First, in full disclosure, I support the building of the
pipeline, and I also believe that given the proper timelines to
look at all factors that eventually this application will be
approved with recommendations. It is a matter of time, and I
will agree that time is of the essence and that we need to move
forthwith, however, not to rush it. We can still do this
properly and address all the concerns that have been mentioned
by the two witnesses.
I believe that it will lead to energy security. It is my
understanding if we do this, if we do this, the total
production out of Canada and the United States will exceed the
production of Saudi Arabia. That to me is energy security. I
also believe it will result in more jobs in America just merely
on the construction side. I also believe that it will lead to
more jobs as a result of the United States being an exporter of
fuel.
Now, the only problem I have is the representation that is
consistently made by members of this committee and on the floor
that this is going to inure to the benefit of the American
consumer in lower gasoline prices. That is not going to happen,
and the sooner they acknowledge that it is a world market and
the leading export for the United States last year, according
to a story that appeared in the Associated Press on the last
day of last year, was fuel. Fuel. And there are tremendous
implications for the United States as a result of that. But as
a result of world market forces and selling it to the highest
bidder means that the American public is not going to be paying
less for fuel, and we need to continue to emphasize alternative
means and fuels and hybrids and more efficiency and
conservation.
The only real reservation I have is that we are placing all
our eggs in one basket, and it may be the Keystone pipeline,
and it is a distraction from pursuing more responsible energy
policies that truly will lead to energy independence in this
country but in a way that is safe and is cleaner, more
efficient and cheaper to the American people. But this is part
of it. I do believe that it is part of it.
Now, Dr. Jones, there has not been made any final
determination on the application, and is it clear from your
testimony that the reason it has not been approved is that you
have not been given sufficient time?
Ms. Jones. Yes, sir, that is the reason.
Mr. Gonzalez. Mr. Wright, let me ask you, now, you are not
new to your job. I asked my staff to look into your background.
I think you have been with FERC since the inception of the
department that you worked with.
Mr. Wright. In 1979, I began at FERC.
Mr. Gonzalez. Since 1979. And your testimony today that
what we are attempting to do or the proposition to basically
circumvent or introduce a new process at this point in time
would not be workable in its present form. Is that correct?
Mr. Wright. Well, my testimony is based upon my experience
with the siting of natural gas pipelines under the Natural Gas
Act. Given the strictures of the Natural Gas Act and my
experience with gas pipelines trying to extrapolate to oil
pipelines, it doesn't appear that would be enough time, as I
mentioned, for procedures to be followed with public notice,
public comment, time allowed to do an appropriate study under
the National Environmental Policy Act.
Mr. Gonzalez. Well, this is not the first time that
Congress is unhappy with basically one department or one
agency, and we try to transfer it to another, and the other
agency or department is telling us it is still not going to
work with the wording and the process that we are proposing. So
I am hoping that we are listening. I hope that we can all be on
one page. Understand that if we do this properly and correctly,
it will be beneficial to the people of the United States of
America in every respect, but let us just give it the time that
is necessary.
And with that, I yield back. Thank you, Mr. Chairman.
Mr. Whitfield. At this time I recognize the gentleman from
Illinois, Mr. Shimkus, for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman. So many questions, so
little time. Thanks for you all coming.
Last night, the President used a great phrase that was
really coined by Republicans a couple years ago, which is, we
need an all-of-the-above energy strategy. In fact, I was
sitting with my friend on the other side of the aisle and I
looked at him and he goes, yes, he should have credited you,
Shimkus, for that phrase. All of the above means all of the
above--nuclear, solar, wind, natural gas, crude oil, energy
security. So we applaud him for that statement based upon that
definition.
I want to continue to frame this debate. This is not a
partisan debate by Members of the House of Representatives.
When the first Keystone bill passed, 47 Democrats joined us in
that piece of legislation. I think the vote was 279 to 147.
This not also a debate against business versus labor because we
had right at the same table you are at a strong group of
friends from organized labor from the laborers to the operating
engineers all supporting this, and why? They support it for job
creation.
Last night in the Speaker's box, we had the owner and
manufacturer of pipe. He has already built 600 miles of pipe
from Arkansas, which is not part of your job calculations of
job creation if you are just considering people who are putting
the pipe in the ground. You fail to mention the people who
built the pipe and the coke and the coal that goes into
steelmaking nor do you consider the people who created the
electric generators for the pumping stations. So that is where
it is easy to say 20,000 jobs because, you know, we built
pipelines. And you know how many people it takes for a mile
pipe. So just multiply that by 1,700, 1,660, I think is the
mileage. So it doesn't take a rocket scientist to figure out
the job creation statistics and that is why organized labor,
who is usually not real friendly to the Republican side, joined
us, joined 47 Members on the Democrat side and was very, very
supportive of this piece of legislation. So just on the record.
Another issue, in the Speaker's box, I had two refinery
managers from close to my current district, and it will be in
my new Congressional district, Ray Brooks from the Marathon oil
refinery in Robinson, Illinois, hundreds of jobs, and they are
already using oil sands right now from the Keystone pipeline.
So we have done research on moving oil crude, oil sands crude,
through pipelines. We are already doing it. Also in attendance
was Mr. Jay Churchill, the manager of the ConocoPhillips
Company in Wood River. The ConocoPhillips refinery for the past
3 years had a $2 billion expansion to be able to refine and
crack this new crude oil. Thousands of members of organized
labor were on the ground during the worst economic times. That
is why I am proud to continue to talk about the brown economy.
You talk about energy security growing our country and what
my friend Mr. Gonzalez said is absolutely correct. The brown
economy creates more, better, high-paying jobs with great
benefits and it doesn't get the credit that it deserves.
For Ms. Jones, because I guess I should ask a question. Did
you know that in the Wall Street Journal January 4th that the
Athabasca Oil Sand Company sold 40 percent of their oil sands
interest? Do you know to which country?
Ms. Jones. No, sir, I do not.
Mr. Shimkus. China. Do you know why?
Ms. Jones. No.
Mr. Shimkus. Because they will now have the controlling
interest in that oil field so they can do what? Develop it.
In political speak, what does profoundly disappointment
mean in State Department international relations speak? What
does profoundly disappointment mean?
Ms. Jones. Sir, it usually means exactly what it says.
Mr. Shimkus. They are ticked off, I hear. In State
Department language, they are very angry.
Ms. Jones. That one.
Mr. Shimkus. I think the Chinese are profoundly pleased.
The Canadians, our allies, are profoundly disappointed, and I
yield back my time.
Mr. Whitfield. At this time I would like to recognize the
gentleman from Texas, Mr. Green, for 5 minutes.
Mr. Green. Thank you, Mr. Chairman, and I am glad to know
my colleague from Illinois is now going to represent two
refineries. I have still got three more up on you, so----
Mr. Shimkus. I am going to work for more. I am going to
work for more.
Mr. Green. And I am also glad you are all for the above
because I know you traditionally come from a coal area. I
welcome you to the natural gas and oil caucus.
Mr. Chairman, I realize this hearing's primary focus is on
H.R. 3548, the North American Energy Access Act. I am a strong
supporter of the Keystone pipeline and have been from the
beginning. We need this product, and I think by stopping
Keystone pipeline from being built, we are preventing the
future production of the Canadian oil sands and mitigated all
air quality concerns associated with its production.
Environment and safety concerns need to be dealt with, but
without this product, we will continue to feed monies into
countries that hate us for everything we stand for.
Having said that, I don't think we should be rewriting a
longstanding process for one pipeline, which is why I do not
support this bill and particularly the approach to last week's
decision, but I do have some questions about the process and I
will use my time to address it.
Ms. Jones, the Executive Branch exercises permitting
authority over the construction and operation of pipelines,
etc. for petroleum literally since the Executive Order in 1968.
Is that correct? And the Executive Order from President Bush
13337 amended that authority but did not substantially alter
the exercise of that authority with the delegation to the
Secretary of State. Is that correct?
Ms. Jones. That is correct.
Mr. Green. Ms. Jones, how many permits have been issued
under this order since 1968 for pipelines crossing
international boundaries?
Ms. Jones. I know of three.
Mr. Green. I am sorry?
Ms. Jones. I know of three at this point. I am not sure if
that is accurate.
Mr. Green. OK. I guess because I have a district in Texas
and most of our pipelines would come from Mexico instead of
Canada, but it seems like there would be a number of them that
crossed international borders between Mexico and the United
States and, of course, Canada.
What is the average time that these permits have taken? And
it is my understanding that other pipelines of a similar nature
have been granted permits between 18 and 24 months.
Ms. Jones. That is right. It has been about 2 years or so.
Mr. Green. OK. And I know the State Department issued a
favorable Environmental Impact Statement in August on the
pipeline, and then you held several public hearings as a part
of the interagency review. And by the way, I appreciate the
State Department a couple years ago granting my request for a
hearing in eastern Harris County east of Houston--actually, it
was in Congressman Poe's district but it was right across the
street from mine--where we could have our constituents talk
about it.
You held those hearings, and when you announced in November
that you were delaying decision, you pointed to concerns raised
by Nebraskans about the pipeline going through Sand Hills. My
question centers on the language included in the payroll tax
extension that allowed for TransCanada to continue on the
alternative route through Nebraska. I understand the
President's frustration at having to decide in a 60-day time
frame, but given the favorable EIS, the 57 special safety
conditions agreed upon by the operator and the language
allowing for the Nebraska issue to be dealt with, why were you
not able to make the decision in 60 days? Because the average
time was 18 to 24 months for previous pipelines, and this has
been well over 3 years now. Why wasn't 60 days enough time?
Ms. Jones. Congressman, we felt we did not have the
information we needed, particularly related to alternative
routes in Nebraska, and since we did not have that and we
didn't have all of the other related information that would go
along with that route, and that is a significant portion of the
pipeline. So it was an arbitrary timeline and we knew it would
take more time for us to do the analysis.
Mr. Green. Well, granted, it was arbitrary but again,
previous permits have taken 18 to 24 months. Now, this is a
longer pipeline than others. I know the original Keystone
pipeline that goes into Congressman Shimkus's district and
Indiana is much shorter, but it just seems like 3-1/2 years is
plenty of time, and to give someone 60 days and say OK, you
have done all these environmental studies, you need to make a
decision, even though the pipeline, I have to admit, my
colleague from Nebraska, Mr. Terry, may have a different
opinion, but there are pipelines crossing Sand Hills right
here. Did the EIS find that out?
Ms. Jones. No, sir. We didn't see any oil pipelines
crossing the Sand Hills.
Mr. Green. OK. There are six pipelines, and I am not sure
whether they are natural gas or what product they have, but
there are already six pipelines, and I understand this pipeline
route would be in that easement that is already being used by
other products, and so that is the frustration.
And Mr. Chairman, I know I am almost--in fact, I am out of
time. I don't know if we are going to have a second round or
not, but I would be glad to submit follow-up questions.
Mr. Whitfield. I doubt that we are because we are going to
be voting on the floor, and then I think there is going to be a
ceremony for Ms. Giffords.
Mr. Green. I would like to, like we always do, if we could
submit questions, because I didn't even get to FERC but to the
State Department.
Mr. Whitfield. At this time I recognize the gentleman from
Oregon, Mr. Walden, for 5 minutes.
Mr. Walden. Thank you very much, Mr. Chairman, and I
welcome our witnesses today. This is interesting. I have been
reading through the FEIS to a certain extent. I know you are
all quite familiar with it.
On November 12, 1973, the United States House of
Representatives under Democrat control took a similar sort of
action in approving the TransAlaska pipeline on a vote of 361
to 14 and 60. They deemed that that pipeline met the standards.
The Senate took it up and approved it on a 49-49 tie, and then
Vice President Spiro Agnew cast the deciding vote, and that
pipeline continued. Now, that was 800 miles of pipeline. It
brought oil out of Prudhoe Bay and it was about that period
that we had the Arab oil embargo. President Nixon at the time
said, you know, we have got to do something about using
America's energy reserves, and at least the pipeline came along
and was deemed approved by Congress.
So this is not an unheard-of act to grant sufficiency. Now,
maybe in the State Department you have not been involved in one
of these. I get that. As somebody that represents a district
that has 55 percent Federal and has watched things over the
years, I believe in the Clinton administration there were
circumstances involving forestry where NEPA was deemed to have
been sufficiently achieved in a cleanup down in Texas after a
windstorm, and I think even in North Dakota, maybe South Dakota
after a fire. It is not unheard of and the Congress has done it
before.
I want to get on the issue of jobs. In your final EIS on
3.10.58, it says that there is $7 billion to construct the
proposed project. We don't have any disagreement on that
number, do we? Seven billion. And then you talk about the
number of jobs, and in the FEIS, it talks about hiring of 5,000
to 6,000 workers over the 3-year construction period. The
related income benefits would be substantial--these are the
words of the FEIS--and the proposed project would generate
$349.4 million in total wages--that is in the FEIS--and if the
maximum construction workforce were 6,000 people, a total of
$419.28 million in wages would be generated.
You also talked about the effect beyond that. These numbers
are only related just to the actual construction of the
pipeline, correct?
Ms. Jones. Yes, sir.
Mr. Walden. And I was trying to find table 2.3.2-1 to get
into the more localized, because the 5,000 to 6,000 jobs aren't
the only jobs related to approval of this construction of the
pipeline, are they?
Ms. Jones. That is right. I didn't get a chance to speak to
the indirect jobs.
Mr. Walden. I am going to give you that chance right now
because I believe--I mean, I have a company--not I, I mean
there is a company in Oregon that is building the pumps for the
XL pipeline. Could you talk to us, tell me what the FEIS says
relative to the total number of jobs both construction direct
and all the indirect jobs associated were the President to
approve this. What is your best estimate?
Ms. Jones. We were in the process of analyzing the indirect
jobs, and there are multiple models that people use for that.
Mr. Walden. Sure.
Ms. Jones. We did not complete that because of the
timeline. We were candid, and we have----
Mr. Walden. It is not in the FEIS, the final Environmental
Impact Statement?
Ms. Jones. We have the direct job numbers in there. We
don't have the indirect. We were looking at that through the
national interest determination and engaging with other
agencies. We have some rough estimates that are similar to what
the applicant is saying in terms of----
Mr. Walden. And what would those be?
Ms. Jones. I think it was approximately 35,000 per year.
Mr. Walden. For how many years?
Ms. Jones. Well, that is another point of discussion. One
timeline was extraordinarily long, and there has been a lot of
confusion about using person-years versus particular jobs. But
we do not----
Mr. Walden. Well, how then in the executive summary of the
FEIS does it say ``operation post project would also result in
long-term to permanent beneficial socioeconomic impacts
including employment and income benefits resulting from long-
term hires and local operating expenditures and increased
property tax revenues. An estimated $140.5 million annual
property tax revenues would be generated by the proposed
project.'' Somebody has done some of that to get to that,
right?
Ms. Jones. Yes. Some of that is in the FEIS but that is
only one piece of the analysis, and we did not finish the rest
of it. We recognize that the economic impact is a very
important consideration but we did not finish that because we
do not have the complete route for this pipeline.
Mr. Walden. My time is expired.
Mr. Whitfield. At this time I would like to recognize the
gentleman from Pennsylvania, Mr. Doyle, for 5 minutes.
Mr. Doyle. Thank you, Mr. Chairman.
Mr. Chairman, I just think the discussion over this
Keystone pipeline, the back and forth has been unfortunate and
it sort of mirrors the discussions we have on energy policy in
general. People talk about the need for us to have an all-of-
the-above strategy but you hear that said a lot but in reality
and in practice, this seems to always be an either-or strategy
on this committee when we have energy debates. If you are for
coal or if you are for oil, then you can't be solar and wind,
and vice versa. And the reality is, we do need to do all of
this if we are going to have energy security in the country,
and we need to pay particular attention to these nascent
technologies in clean energy that are slowly but surely over
time going to start to replace fossil fuels because, as we all
know, fossil fuels aren't an infinite supply. They are a supply
that is going to go down, and something has to take its place.
Now, it is not going to take its place tomorrow. It is not
going to take its place even 5 or 10 years from now. But if we
don't start making investments in clean energy now, we are
going to be in trouble down the road. So we need to do that
also.
But having said that, it is in our interest to develop
domestic supplies in this country and also to continue the
relationship that we have with Canada. This pipeline is a small
piece of that puzzle, and let us not delude ourselves, as Mr.
Gonzalez said, that this is a silver bullet for anything. This
is not going to lower people's gas prices, and this pipeline
will not result in us having to no longer buy oil from OPEC
nations. That is just not accurate and we shouldn't make people
think that that is the case.
You know, there is going to be 800,000 tons of steel pipe
in this project. I wish I could sit here and say that that
steel is coming from the United States of America.
Unfortunately, TransCanada has contracted with an Indian
multinational company, Welspun Corp Limited, and a Russian
company to manufacture the steel pipe for the Keystone XL
pipeline. Now, as someone coming from Pittsburgh where we still
make steel and headquarters of U.S. Steel, I would feel a lot
better about this project too if just one little drop of U.S.
steel was being made in this pipeline. Now, it is unfortunate
that it isn't.
Having said all of that, I think that probably what has
doomed this application more than anything was the politics
that has been played when we passed the Payroll Tax Act to put
in this 60-day clause and put this gun to the President's head
and said you have to make this decision in 60 days, and it is
just pure election-year politicking that has been going on on
this issue. I agree with Mr. Gonzalez that eventually after the
environmental reviews are done with this and we make sure that
we have a route that is environmentally safe and all these
things are checked, that this project should move forward but
not until we do that, and I don't think we are there yet.
This legislation in front of us from a good friend of mine,
Lee Terry, who I have tremendous affection and respect for,
once again imposes this artificial deadline of 30 days and
takes this out of the hands of the State Department to an
agency that does gas pipelines but not oil pipelines. I think
it is a misguided effort.
So with the time I have left, I do want to ask a couple
questions. Secretary Jones, I know we had planned earlier to
have the Nebraska DEQ with us today but for whatever reason Mr.
Linder is not appearing today, but I note in his testimony he
lays out a timeline for his State intended to follow to
establish this new route through Nebraska and complete any
necessary environmental reviews and allow for public comment.
Mr. Linder said in his statement that ``If this were done on an
aggressive schedule, a new route could be approved by October
of 2012 at the earliest.'' Ms. Jones, does the State Department
believe that the 60-day timeline laid out in the payroll tax
bill has allowed for a complete recommendation from the State
of Nebraska on the new route for the pipeline?
Ms. Jones. No, sir, we feel that we do need the time that
Mr. Linder had put out in his estimate. We had talked to both
the Department of Environmental Quality as well as to the
applicant and the estimates of time that came in from all of
them were within the same range.
Mr. Doyle. Thank you. Has the State Department ever
recommended a pipeline be in the national interest without
having the entire proposed route before them? Have you ever
done that before?
Ms. Jones. No, sir.
Mr. Doyle. Was there any indication that the State of
Nebraska would be able to complete a modified route proposal by
February 21, 2011, which was the deadline imposed in the
Payroll Tax Act?
Ms. Jones. No, sir, and that is why we felt we could not go
forward.
Mr. Doyle. Thank you. Did this lack of a complete route
proposal--I see my time is expired. Thank you, Mr. Chairman.
Mr. Whitfield. Now, Mr. Doyle, I am trying to get through
everybody before we have to go vote because we are not going to
be able to come back, so thank you.
Mr. Terry, you are recognized for 5 minutes.
Mr. Terry. Thank you, Mr. Chairman, and I have great
affection and respect for my friend from Pittsburgh. Just to
add some clarification, I think it is about 60 to 65 percent of
the steel in this pipeline is U.S. steel. In fact, Mr. Shimkus
mentioned that. The reason why Mr. Linder isn't here is because
our State Department, Dr. Jones, objected to him being on the
panel because it was beneath them to have a State official. So
that is why he is not here and that his testimony----
Mr. Doyle. Would my friend yield for just one second?
Mr. Terry. Well, I have got a lot of questions. There is an
email chain verifying that. I may have put a little editorial
to it.
Let me just state that I am profoundly disappointed that
the State Department objected to Mr. Linder being on the panel,
and therefore he is not.
Now, for the record, I would like to introduce a media note
from the State Department April 15th saying ``In conclusion,
the U.S. State Department expects to make a decision whether to
grant or deny the permit before the end of 2011.'' Another one
making the same statement of March 15, 2011, an Executive
Office of the Management of Budget from the White House saying
the same thing, that they are working with the State Department
and all entities are working diligently and will have all of
the information they need and will be able to make their
decision by December 31, 2011. I would like to submit those for
the record.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Then the point here is that we are using the State of
Nebraska as the excuse to delay the decision until after the
election. I don't think it is any coincidence that the State
Department and the entities feel like they would be in a
position to make a decision within about 60 days after the
election. I think the point--or they said in the first quarter
of 2013. It certainly flies in the face of all of their
previous statements. And I read a quote from Environment News
Service. I don't have the date handy on it, but it is after the
Nebraska legislature met. ``Kerri-Ann Jones, Assistant
Secretary of State, said, 'I am confident that the Department
and Nebraska authorities would be able to efficiently work
together in preparing any documents necessary to examine the
alternative routes in the State of Nebraska that satisfy the
Federal laws and any State law of Nebraska.''' So they were all
set and ready to go with the State of Nebraska. Now, if Mr.
Linder would have been allowed to participate in this hearing
today but for the objections of the State Department, he would
have said ``On December 1, 2011, we contacted the State
Department to begin to explore the process of entering into an
MOU between two agencies which would outline responsibilities
and define a schedule. We received the first draft of the
agreement from the State Department within the next 2 weeks and
exchanged comments to which what we considered to be an
executable document which we submitted to the State Department
in December 2011. No further progress had been made on that
front.'' I think it is odd or interesting that the State
Department in the middle of December 2011 decided that they
weren't going to work on this project anymore and then come in
here and say they don't have enough time. In the legal field,
there is a doctrine of clean hands. You can't be the one
delaying it and then object to the delays.
May I also submit for the record the actual language of the
bill that was signed into law that created the Nebraska
exemption? Let me wait for just a second on that one, because
as I understand from reading your report to Congress, you were
objecting because not later than 60 days after the enactment of
this act the President acting through the Secretary of State
shall grant the permit under Executive Order 13337 for the
Keystone XL pipeline. You said many times in your testimony and
answers today, Dr. Jones, that it is that 60-day requirement,
the absurdity that--darn. But yet there is Nebraska exemption
in here that specifically said that is carved out and that 60
days for Nebraska doesn't run until all of the reports are done
and certified by the Governor. Darn. I yield back.
Mr. Whitfield. Sorry. We are going to have some votes.
Dr. Burgess, you are recognized for 5 minutes.
Mr. Burgess. Thank you, Mr. Chairman.
Dr. Jones, according to some information that I have,
October 15, 2010, Secretary of State Clinton said she was
inclined to approve Keystone's permit. On October 31, 2011--
that is over a year later--White House Press Secretary Jay
Carney stated, ``The fact is, this is a decision that will be
made by the State Department or is housed within the State
Department.'' The very next day, President Obama said the
decision would rest with him. In the President's announcement
last week to reject the pipeline's permit, he said he had
accepted the State Department's recommendations to do so. So
everything seems to be pointing to you guys at the State
Department. So can you tell the committee who was the one who
made the call, made the decision to reject the Keystone XL
permit?
Ms. Jones. Congressman, based on the act, the Payroll Tax
Cut Act, which had specific language in it regarding what the
President needed to do in a certain time, we, the State
Department, recommended to the President----
Mr. Burgess. Who is ``we''?
Ms. Jones. ``We'' is the Deputy Secretary through the
Secretary to the President.
Mr. Burgess. And the name of that person is?
Ms. Jones. Bill Burns.
Mr. Burgess. Bill Burns was the one who made the decision?
Ms. Jones. No, he recommended to the President that this
decision be taken, and the President decided.
Mr. Burgess. Did the White House exert any influence over
the State Department's recommendation?
Ms. Jones. No, sir.
Mr. Burgess. Mr. Chairman, it seems to me that there is an
individual there that is missing then from this hearing today
that perhaps we should ask if we should be able to submit some
questions to that individual.
You know, we all know and the State Department in
particular knows what is going on in the Strait of Hormuz. I
was in Iraq in August, and although our military presence now
there has wound down, there is still a big State Department
footprint in Iraq, isn't there? In Basra, where I was, there is
in fact one of the largest State Department operations, and the
reason, my understanding, the reason is because that is where
Iraq kind of narrows down going to the Gulf and all the oil
flowing from the southern part of that country will go through
Basra and the four pipelines that go through there, so the
State Department felt they needed to have a large presence
there. I don't get it. Why do we have to have--I mean, there
are jobs there but I would rather have the pipeline through
Texas where, yes, we can be hard to deal with sometimes but we
are not nearly as hard to deal with as people in the Middle
East.
So just food for thought. Let us build this pipeline
where--you know, why make it hard on ourselves. Why make it
hard on our country. We need American jobs. We need American
energy. This seems so straightforward.
Mr. Chairman, I would like to yield, if he wants the time,
to Mr. Pompeo. Are you good? Mr. Terry, did you get to finish
everything you needed to do?
Mr. Terry. Generally.
Mr. Burgess. Generally? I will yield back to you, Mr.
Chairman.
Mr. Whitfield. At this time I recognize the gentleman from
Washington State, Mr. Inslee, for 5 minutes.
Mr. Inslee. Thank you. My understanding is, there is
potential that some of the product that would flow through this
proposed pipeline could be exported. It could be used and
consumed by other countries rather than consumers in the United
States. Under this bill, would the United States government be
able to assess the impact of that export on consumer prices in
the United States at all?
Ms. Jones. Congressman, I assume you mean the bill that is
proposed here?
Mr. Inslee. Yes.
Ms. Jones. I can't answer that question as to how that bill
would approach it. That consideration was one of the
considerations in the national interest determination that we
were in the process of doing when we were given this timeline
and didn't have a route to really analyze and to have an
informed decision.
Mr. Inslee. So I guess the question is, right now, my
understanding is, this product is being used by American
consumers in their gas tanks in their cars. If it goes to the
Gulf and then is exported, other people around the world will
be bidding on it. We will be bidding against them for the
gasoline when we consume it domestically. In other words, there
will be another person who will be bidding on the product in
the export market. I think that has the potential to affect the
price we pay at the pump because now we are competing for the
same product with someone else who might be bidding more, which
then drives up our prices potentially. Now, I don't know the
answer to that question but I just wonder, under this bill,
would the U.S. government assess that as part of this decision-
making process?
Mr. Wright. I would say as part of the NEPA analysis, as
part of the overall national interest analysis, the
socioeconomic impacts, that would probably be something that
would be assessed.
Mr. Inslee. Thank you.
Mr. Whitfield. Does the gentleman yield back his time?
Mr. Inslee. Yes.
Mr. Whitfield. OK. I tell you what, we have a vote on the
floor. We are not going to be able to come back. We have a lot
of people still wanting to ask questions, so I am going to give
everybody 3 minutes in an effort to try to get through
everybody.
So Mr. Bilbray, you are recognized for 3 minutes.
Mr. Bilbray. Thank you very much.
Ms. Jones, what is your experience on these cross-border
issues? How long have you been working on cross-border issues
for the State Department?
Ms. Jones. I have been at the State Department since August
2009.
Mr. Bilbray. OK. Some of us that have more than a passing
interest in cross-border and environmental problems, so let me
just say, this is a 1,700-mile pipeline. We have 2,300,000
miles of pipeline in this country. How much jurisdiction does
the State Department have over that 2 million-plus pipe?
Ms. Jones. The State Department is involved only in permits
that cross international boundaries.
Mr. Bilbray. Just across that line. OK. Then any
environmental impact report or statement obviously looks at the
impact of the no-project option. What is the emissions that
would be created--well, first of all, let me back up. What is
the ability under NAFTA for Canada to bring trucks across the
border?
Ms. Jones. I don't think I can answer that question, sir.
Mr. Bilbray. It is pretty unrestricted, though?
Ms. Jones. Um-hum.
Mr. Bilbray. So the no-project option on a pipeline is to
train or truck it across that area. What is the total emissions
annually if we went to that option rather than using a
pipeline?
Ms. Jones. I couldn't give you that number, but I do know
that in the final Environmental Impact Statement, there was
some analysis done that if the pipeline wasn't built, it was
likely that other modes of transportation would pick up and
continue to move crude.
Mr. Bilbray. And wouldn't consider the fact that not only
would those modes, train and truck, be putting out emissions
but those emissions are diesel emissions, which have been
categorized as a toxic emission above and beyond what dioxin
is. Did they also point out that trains are three times more
dangerous with fatalities than a pipeline and that trucks are,
I think the latest number is 87 times more dangerous than a
pipeline. So my question is this: Did you consider the fact
that the no-project option or the denial or the delay, the
denial would end up having more emissions total that we
reflected by use of truck and train?
Ms. Jones. The denial that was taken last week was based on
the fact that we didn't have the time to do all the analysis
that you are talking about.
Mr. Bilbray. OK. Let me just say this. I am very happy to
see you approve, the President approve a cross-border agreement
with a private company to be able to operate airports across
the border, and the fact is, just because the gentleman who is
financing it is a billionaire from Chicago, I am not going to
attack that agreement, but I would ask, when you did this
agreement at Alta Mesa, did you consider the increased
emissions and the global impact of Mexico's air operations that
would be operating in relationship to this border crossing that
you approved, that the President approved just recently?
Mr. Whitfield. Go ahead and finish.
Ms. Jones. I wasn't involved with that. I can't respond to
that. I could go back and get more from the Department.
Mr. Bilbray. I would appreciate that. Thank you for
approving that project.
Mr. Whitfield. Mr. Scalise, you are recognized for 3
minutes.
Mr. Scalise. Thank you, Mr. Chairman. I appreciate you
having this hearing. I thank the witnesses for coming.
I think what irritates me, what irritates a lot of people
that are concerned about the economy, getting the economy back
on track and creating jobs is that the President made a
political decision to throw away 20,000 American jobs and to
hurt our relationship with Canada, who is a strong, strong
friend, maybe one of the best friends of America in the world.
Canada had been trying to get this project done for over 3
years. Is it true, Ms. Jones, that Canada submitted their
application for this Keystone XL pipeline back in September
2008?
Ms. Jones. TransCanada, the company, submitted it then,
yes.
Mr. Scalise. So, you know, you sit here at the table and
the President said this time and time again, he didn't have
enough time. He has had 40 months. You know, if you look at the
original Keystone pipeline, because this is a separate
Keystone, Keystone XL, the original Keystone pipeline was
approved back in 2008 after less than 2 years of review. It
doesn't take 40 months to review a project like this. And so at
some point in time you have to decide whether you are going to
fish or cut bait, and ultimately, that is what Congress decided
in a bipartisan way. It is not a partisan issue. It is not a
House versus Senate issue. It is one of the few things we
actually came together on and agreed, Republicans and
Democrats, House and Senate, said Mr. President, stop wasting
time, stop delaying this project for political purposes, make a
decision, yes or no, and then unfortunately, he used you all
because you all back in August of last year, you all said this
is something you should do. Hillary Clinton back in 2010, the
quote was, ``We are inclined to do so'' when asked about
approving the Keystone pipeline in 2010. And then you go
through the timeline and then you get to August of last year
where you all came with your report and you basically said this
is something that we should do, we don't see any real problems
with the Keystone pipeline. I will use the exact--``There would
be no significant impacts.'' That was State Department on
Keystone back in August of 2011. And what happened after that?
What happened after that is in November, on November 7, 2011,
radical environmentalists went and had a big rally at the White
House. You know, Darryl Hanna got arrested real famously, a
bunch of radical environmentalists went and said Mr. President,
don't approve the Keystone pipeline. They threatened his
reelection. And gee whiz, coincidentally, 3 days after this
rally by radical environmentalists, the President then reversed
his course and says we are going to push the decision on
Keystone until after the election. He is one who gave the
arbitrary date, not because of environmental reasons, because
of political reasons because he was getting beaten up by
radical environmentalists who didn't want this thing approved
at all so he said I will just kick the can until after the
election and maybe this will go away, and Canada said, we can't
wait that long because China wants the oil, they want to do
something, they want to participate with us. But instead, the
President said no, we don't want the jobs, let China get that
oil, and now of course we go to the statement by the prime
minister of Canada who said they are profoundly disappointed
with this decision. He has hurt our relationships and hurt our
national security with a political decision.
Mr. Whitfield. Mr. Markey, you are recognized for 3
minutes.
Mr. Markey. Thank you.
We have been repeatedly told that we need to get over the
concerns about the pipeline and the environment because the oil
coming through this pipeline would enable us to reduce our
dependence on oil imported from unfriendly Middle Eastern
nations. TransCanada's application for its permit even states
that the proposed pipeline will serve the national interest of
the United States by providing a secure and reliable source of
Canadian crude oil to meet the growing demands by refineries
and markets in the United States. However, some have questioned
these assertions of energy security benefits, citing plans by
Gulf Coast refineries with whom TransCanada has entered into
long-term sales contracts to re-export diesel and other fuels
made from the Keystone crude to Latin America, Europe and
beyond. In fact, nearly all of these refineries where the
Keystone crude will be sent to are located in Port Arthur,
Texas, which is designated as a foreign trade zone. This means
that if these refineries re-exported diesel or other fuel, they
wouldn't even have to pay U.S. taxes on these exports.
Earlier this month, Canadian Prime Minister Stephen Harper
said that when you look at the Iranians threatening to block
the Strait of Hormuz, I think that that just illustrates how
critical it is that supply for the United States to be North
American. But in December when I asked the president of
TransCanada whether he would agree to ensure that the oil and
refined products stay here in this country instead of re-
exporting it, he said no, sitting right at this table. In other
words, if the permit for this pipeline is legislatively
mandated by this bill, the United States may just become the
middleman for shipping products made from some of the dirtiest
crude oil on earth to foreign markets around the world.
Secretary Jones, does the process the administration was
following to determine whether Keystone XL was in the national
interest allow for the consideration of issues like whether the
project would reduce dependence on Middle Eastern oil?
Ms. Jones. Yes, sir, that is one of the considerations when
we look at energy security.
Mr. Markey. Thank you. So if the Republicans hadn't forced
the administration to deny the permit because it wasn't given
enough time to review it, the administration could have issued
a permit that required the Keystone oil and fuels to be sold
only in the United States. Isn't that right?
Ms. Jones. I am not sure of that, sir, what we can restrict
in terms of exports.
Mr. Markey. You could restrict it?
Ms. Jones. No, we would have to study that. I don't think
that we can restrict exports, but that is something we would
continue to study.
Mr. Markey. That could be in the national interest. Is that
correct? To keep the oil here.
Ms. Jones. We would have to study it in regard to export.
Mr. Markey. No, could it be in the national interest,
though, potentially to keep the oil here?
Ms. Jones. It would certainly be a consideration but we
were unable to really study all that.
Mr. Markey. That is right, so we never got a chance to look
at that.
Now, for both Ms. Jones and Mr. Wright, does the Republican
legislation provide FERC with explicit authority to issue a
permit that contains a requirement that the oil or fuels have
to be sold in the United States? Does it contain that
provision?
Mr. Wright. I did not see that explicitly.
Mr. Markey. Do you, Ms. Jones?
Ms. Jones. No, I do not see that there.
Mr. Markey. OK. Well, make no mistake, I think this is a
pipeline----
Mr. Whitfield. The gentleman's time is expired.
Mr. Markey [continuing]. Out of the United States and into
other----
Mr. Whitfield. Mr. Olson, you are recognized for----
Mr. Olson. I thank the chair for the recognition.
Mr. Whitfield. We are going to have to go down to 2 minutes
because we have, like, 4 minutes left on the floor. Three
hundred and twelve people still have not voted, and I want
everyone to get an opportunity to say something. So 2 minutes.
Mr. Olson. I will be quick. I promise. I appreciate the
witnesses' time today.
We all know the benefits of the Keystone XL pipeline:
20,000 jobs, energy from Canada as opposed to Middle Eastern
oil, national security and energy security. And as a former
naval aviator who has flown in the Persian Gulf in what we call
strait transits, right through the Strait of Hormuz, I have
unique perspective on Iran, and we all know that Iran has
threatened to close the straits, stopping 30 percent of the
world's supply of oil from getting to market. Now, I can't
expand upon this enough but that is a very real threat. The
straits are narrow, about 9 miles wide in some places, and they
are shallow. If a vessel would sink, vessels in the middle of
the straits, they would be blocked for months, if not years. In
fact, three of our 11 nuclear-powered aircraft carriers have
been deployed to the region because our Commander in Chief, our
President, sees the threat as real.
The State Department has a history of approving new
pipelines in the interest of national security because of
political tensions. The most recent example is the Alberta
Clipper pipeline in the Midwest part of the United States. This
is another Canadian pipeline. And let me read you a section
from the record of decision for the Alberta Clipper pipeline,
and this is a quote: ``The Department of State has determined
through review of the Alberta Clipper project application that
the Alberta Clipper project would serve the national interest.
In a time of considerable political tensions in other major
oil-producing region countries, by providing additional access
to a proximate, stable, secure supply of crude oil with minimal
transportation requirements from a reliable ally and trading
partner, the United States, which we have free trade agreements
that further augments the security of this energy supply.'' Why
is the situation now different? Yes or no, Ms. Jones, is the
situation now more dire than the situation was when we approved
the Alberta Clipper pipeline? Yes or no.
Ms. Jones. Energy security is still a major priority for
this country and this administration. However, we did not
reject this project on the merits. It was an issue that we did
not have time. Those considerations you raised would be
considered if we had the entire route and if we had the time to
conduct the process that we feel the American people need to
have.
Mr. Whitfield. All right. Time is expired.
Mr. Olson. Ma'am, with all due respect, you changed your
mind in October.
Mr. Whitfield. Mr. McKinley, you are recognized for 2
minutes.
Mr. McKinley. Thank you, Mr. Chairman.
Just some quick questions, and perhaps if you could just
respond, Ms. Jones, in writing to us rather than take time. The
first is, could you submit to us a chronological order of the
process since it began in September of 2008, why in God's name
it would take 3-1/2 years? I just know from the private sector,
firms would be fired for taking that long to go through a
process. Can you get back to us as to whether the railroads in
Montana and North Dakota and Oklahoma, are those captive
railroads? I don't know whether they are not. Do you understand
the term?
Ms. Jones. I think we will have to get an answer back to
you on that.
Mr. McKinley. Sure. I am not expecting you to answer these
things right now. So I am asking for the record if you will get
back to us on that on whether or not these are captive
railroads?
Ms. Jones. Yes, we will.
Mr. McKinley. And can you also respond, please, to the
editorial that was in the Investment and Business Daily back on
November 16th in which the editorial board there is suggesting
that there could be a link between the railroad systems and
this decision, especially given that it is a political
decision. We all know that. Anyone who would postpone this
until after the election is already crying out, this is a
political decision. So since they are linking it to two major
individuals, global figures, I would like your response back to
that or perhaps even the person that made the ultimate decision
to cancel this project. Because it wasn't based on the time
frame. We understand that, and I think the American public is
going to come to understand that. But thank you. If you get
back to us in writing, I would appreciate it. Thank you.
Mr. Whitfield. Mr. Gardner, you are recognized for 2
minutes.
Mr. Gardner. Is job creation the number one national
interest? Yes or no. Is job creation the number one national
interest?
Ms. Jones. Yes.
Mr. Gardner. Does this pipeline create jobs?
Ms. Jones. Yes, but the number is----
Mr. Gardner. Just a yes or no question, and you denied the
pipeline. You recommended not moving forward with the pipeline.
Ms. Jones. We denied it based on the time we were given.
Mr. Gardner. You denied it, and it is your number one
national interest so you acted at odds with the number one
national interest.
Ms. Jones. Sir, we were reviewing the job situation, the
economic issues as part of the review.
Mr. Gardner. I will accept that. You turned it down. That
is fine.
I want to go back to this amount of paper here, the final
Environmental Impact Statement from August 2011. the EIS
identified a particular route as the preferred alternative? Yes
or no.
Ms. Jones. Yes.
Mr. Gardner. And among the other alternatives you
considered, you considered a no-action alternative? Yes or no.
Ms. Jones. Yes.
Mr. Gardner. And the final EIS expressly concluded the
preferred alternative was way better than not building a
pipeline at all? Yes or no.
Ms. Jones. Yes, but there was more to that. These are
simple pieces coming out of the FEIS.
Mr. Gardner. ``As a result of considerations, the
Department of State does not regard the no-action alternative
to be preferable to the proposed project.'' That is from the
final EIS. Thank you.
The reason you concluded that all things considered,
transporting the oil in a state-of-the-art pipeline is better
than shipping it by rail, truck and cargo ships because it is
better than shipping it from the Middle East. Yes or no? Yes.
Thank you. You have to agree with that, it is better to ship
from Canada.
Ms. Jones. Yes, I do. It is part of energy security.
Mr. Gardner. But if we delay this, if the White House
delays it, we run the risk of no pipeline at all. Your delays
run the risk of no pipeline. You said jobs are the number one
national interest, and yet you said to the White House we don't
want to do this.
Ms. Jones. We have to work with the pipeline where we have
the route and we would do a comprehensive----
Mr. Gardner. You have said jobs are the number one national
interest and you have said no to this. These delays risk the
killing of this pipeline, and so you will end up with no
pipeline, which is not the preferred alternative as the
Department of State has already said in their final EIS. So if
you do this, you are going to have none of the jobs. You are
going to kill the job. You are going to have none of the
energy, and China wins.
Mr. Whitfield. Mr. Pompeo, you are recognized for 2
minutes.
Mr. Pompeo. Thank you, Mr. Chairman. I think I can do it in
1 minute.
I have one question. Ms. Jones, are you lacking any
information that you were constrained for time about how this
impacts a particular private company? That is, are you
interested in how this might or might not affect any particular
private company? Is it relevant to your decision at all?
Ms. Jones. No, sir. The issue is, the route through
Nebraska and all of the impacts that possibly could have.
Mr. Pompeo. So testimony about how any private company
would be impacted would be irrelevant to your decision-making
process.
Ms. Jones. Sir, we are looking at the route as we had
explained.
Mr. Pompeo. Thank you.
One last statement. Mr. Waxman suggested that because Koch
Industries had filed as an intervenor before the Canadian
National Energy Board, that that suggested that they must have
a financial interest in this transaction. That is just false.
This notion that they have an interest there has been shredded.
There are many, many intervenors including the Sierra Club of
Canada, who I don't think has a financial interest in the
Keystone XL pipeline, the Alberta Federation of Labor, the
Communication, Energy and Paper Workers of Canada. This is a
silly concept, and I want to make sure the record reflected
that this mere intervenor status makes no indication about
whether any company has an interest in this pipeline at all.
With that, I yield back my time, Mr. Chairman.
Mr. Whitfield. Mr. Griffith, you are recognized for 2
minutes.
Mr. Griffith. Thank you, Mr. Chairman.
You know, I am sitting here kind of curious. The State
Department keeps talking about its studies in Nebraska but
isn't your job supposed to determine what the impact is because
it is international and what the impact is on the international
relationship with our friends in Canada?
Ms. Jones. Because we have the authority for the
permitting----
Mr. Griffith. I understand you have the authority for the
permitting but you got all this done by the agencies that would
normally do that. Isn't your job as the State Department to
focus on the relationships with our foreign friends and not to
be interfering in internal decisions made by other agencies?
Ms. Jones. Our job in this situation is to look at the
entire pipeline for the impact it could have on the country.
Mr. Griffith. So everything these people did was worthless?
Ms. Jones. No, sir. That is important analytical
information.
Mr. Griffith. Well, then, why do you have to redo it all?
Ms. Jones. We don't have the route through Nebraska.
Mr. Griffith. I really believe that this was a political
decision. You are not supposed to comment on that, and I
understand that. But I believe that you had the President in a
political quandary with labor versus radical environmentalists
and he had to delay until after the election. That is what I
believe and that is what I believe the evidence shows. I am not
asking for a comment.
I would say to you, more oil refined in the United States,
particularly when it is coming from a closer supply, means more
jobs in the United States, more profits in the United States,
more taxes paid to the United States and more U.S. supply
available. All of those things I think are good things, and
because you are from the State Department, I would say that we
have damaged our relationship with a good ally and a close
neighbor and friend, and to me, that seems counter to the
purpose of the State Department and all of this would indicate
that everything that you all are doing is counter to the
interest of the United States of America, and I yield back.
Mr. Whitfield. That concludes today's hearing. I want to
thank the two witnesses for being with us today, and the record
will remain open for 10 days for additional documents, and some
questions were submitted to you all and we would appreciate you
all getting that information back to us. Thank you.
[Whereupon, at 10:05 a.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

AMERICAN JOBS NOW: A LEGISLATIVE HEARING ON H.R. 3548, THE NORTH
AMERICAN ENERGY ACCESS ACT--DAY 2

----------

FRIDAY, FEBRUARY 3, 2012

House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:00 a.m., in
room 2322 of the Rayburn House Office Building, Hon. Ed
Whitfield (chairman of the subcommittee) presiding.
Members present: Representatives Whitfield, Sullivan,
Walden, Terry, Burgess, Bilbray, McMorris Rodgers, Olson,
Pompeo, Griffith, Barton, Rush, Dingell, Markey, Engel, Capps,
Gonzalez, and Waxman (ex officio).
Staff present: Mike Bloomquist, Deputy General Counsel;
Maryam Brown, Chief Counsel, Energy and Power; Allison Busbee,
Legislative Clerk; Garrett Golding, Professional Staff Member,
Energy; Cory Hicks, Policy Coordinator, Energy and Power; Ben
Lieberman, Counsel, Energy and Power; Jeff Baran, Democratic
Senior Counsel; Greg Dotson, Democratic Energy and Environment
Staff Director; Caitlin Haberman, Democratic Policy Analyst;
Angela Kordyak, DOE Detailee; Billie McGrane, Democratic
Assistant Clerk; and Alexandria Teitz, Democratic Senior
Counsel, Environment and Energy.

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY

Mr. Whitfield. Committee will come to order. Today's
hearing on American Jobs Now, H.R. 3548, the North American
Energy Access Act, is being held pursuant to Rule XI of the
House Rules at the request of Mr. Rush, Mr. Waxman, and other
members of the minority.
Although we gave opening statements at the first hearing,
pursuant to an agreement between the minority and the majority,
each side this morning will be given 10 minutes for opening
statements, and at this time I would like to recognize myself
for 5 minutes for the purpose of making an opening statement.
Like many people, I was quite disappointed when the
President decided the Keystone Pipeline was not in the national
interest, and the reason that he gave for making that decision
was that there was not enough time to collect and review
information regarding the route through Nebraska. We all are
very much aware, however, that the application for the permit
was filed in September of 2008. That was almost 3 \1/2\ years
ago.
As a matter of fact, as far back as October 2010, in a
speech at the Commonwealth Club of San Francisco, Secretary of
State Hillary Clinton in response to a question said that she
was inclined to approve the permit for the Keystone Pipeline
based on the information she had.
I also want the public to know, and I am sure they are very
much aware of this also, that five major labor unions supported
and still support the building of this pipeline. In an article
entitled, ``Labor Civil War over Keystone XL,'' the author
reported some of President Barack Obama's biggest labor
supporters are fuming over his decision. Unions representing
construction workers that would directly benefit from building
the pipeline, as he said in his article, feel stabbed in the
back by unions that joined environmental groups to kill the
project. Laborers' International Union of North America General
president Terry O'Sullivan said the decision was so repulsive
and disgusting that he was going to pull his union out of the
Blue Green Alliance, a coalition of environmental groups and
labor unions that represented nearly all of the groups that
signed a statement, a joint statement supporting the President.
Mr. O'Sullivan said unions and environmental groups that
have no equity in this work have kicked our members in the
teeth, and anger is an understatement as to how we feel about
it. We will not sit at the table with people that destroy our
members' livelihood.
The labor union supporting the project issued a
particularly forceful statement condemning the decision as
politics at its worst, and Mr. Sean Sweeney, who is the
director of Global Labor Institute at Cornell University, who
did a study about the jobs that this would create, made it very
clear when he said that this decision was really about the
President being reelected. The President's reelection is at
stake, and he said there is certainly more at stake here than a
simple pipeline.
In closing I would simply like to quote from an editorial
in the Chicago Tribune. ``Keystone should be approved. This is
a good project. It will give us energy and give us jobs. You
want stimulus? This is it. This is a $7 billion project to be
done with private dollars. Taxpayer dollars will not be used.
President Obama made a decision that we think is the wrong
decision.''
[The prepared statement of Mr. Whitfield follows:]
[GRAPHIC] [TIFF OMITTED] T6343.054

Mr. Whitfield. And with that, I would--does anyone seek
recognition for a minute and 48 seconds?
No. I will recognize you later.
All right.
Mr. Walden. Sure, Mr. Chairman.
Mr. Whitfield. I yield the balance of my time to you, Mr.
Walden.

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON

Mr. Walden. I thank the gentleman for yielding. I
appreciate his comments. I was just reviewing the testimony by
I believe it is Mr. Pool from the Bureau of Land Management. I
just find it interesting that how much our government rules and
regulations come into play here for so little land. He says in
his testimony the total permanent right of way on BLM-managed
public lands for this Keystone Project would be approximately
50 feet wide and comprise a total of approximately 270 acres.
Now, let that sink in. You think about how minor a role the
Federal Government is playing in terms of this land and yet--
and they have issued their approval is my understanding. Final
biological assessment has been issued and shows no jeopardy
under the Endangered Species Act. The Federal Government BLM at
least, 270 acres, 50 feet wide. We have got horrible
unemployment problem. It is getting a little better, but, you
know, 8.3 percent is nothing to brag about. You got a $7
million potential investment here, private sector funds, that
could create thousands of jobs and new property tax base
payments to local governments throughout that region, and I
just think it is time to get this done.
So I yield back.
Mr. Whitfield. Thank you, Mr. Walden.
At this time I recognize the gentleman from Illinois, Mr.
Rush, for 5 minutes.

OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS

Mr. Rush. Good morning. Thank you, Mr. Chairman, for
holding this important hearing that the minority side requested
in order to hear from some of the important stakeholders who
were not invited to participate in last week's hearing and to
shed light onto some of the ramifications of the legislation
before us, H.R. 3548.
Mr. Chairman, this bill is simply another bite at the apple
in the majority's attempt to backdoor the Obama administration
and green light a project that has not yet been fully vented in
what amount to be an application of the Federal Government's
oversight responsibilities.
In fact, why don't we simply call this bill for what it
really is. Instead of the North American Energy Access Act,
this bill should be renamed the Republicans and Congress Favor
to TransCanada Act. This bill does not make sense. Legally it
doesn't make sense. Sensibly it doesn't make sense because it
shifts the responsibility for a cross-water pipeline from the
State Department to FERC, an agency which has no experience in
signing this type of national project, specifically, or on
pipelines generally. This bill does not make sense frankly, and
it does not make sense morally.
As we heard from the Assistant Secretary of State Kerri-Ann
Jones last week, she--of the Bureau of Oceans and International
Environment and Scientific Affairs, the recommendations for
denying the permit was made simply because there was not
sufficient time for the agencies to complete its due diligence
and perform its legal oversight responsibility, mainly due to
the fact that currently there is not even a proposed route for
the State Department to review. It would have been a gross
negligence and recklessness for the Obama administration to
approve a permit for a pipeline that would cut through the
heart of the country where when the policymakers in those very
states that are mostly affected, like Nebraska, haven't even
identified the most appropriate route for the pipeline to move
through.
While the language the Republicans passed in their initial
efforts to force the administration to come up with a decision
within 60 days of enactment of the Middle Class Payroll Tax
Extension was inconsiderate and irresponsible, I must say that
the language in this new bill, which was transferred in the
decision to a different and completely inexperienced agency,
FERC, and also implying permission to make a decision within 30
days or the project will be automatically approved is even more
irrational and more irresponsible.
Assistant Secretary of State Kerri-Ann Jones stated at last
week's hearing regarding her agency's recommendation, and I
quote, ``That decision was based on the fact that the exact
amount of the pipeline has yet to be identified in 24 areas. As
a result there are unresolved concerns for a full range of
issues including energy security, foreign policy, economic
effects, health, safety, and environmental impacts among other
considerations.''
Ms. Jones went on to say, ``The legislation raises serious
questions about legal authorities, questions of continuing
force of much of the Federal and all of the State and local
environmental and line use management authority over the
pipeline,'' and Mr. Chairman, I want to emphasize this, ``It
overrides foreign policy and national security considerations
implicated by a cross border permit which are properly assessed
by the State Department.''
Mr. Chairman, with such dire warnings of this bill I think
we owe it to the American public to fully explain the
consequences of this legislation to ensure that the public
interests were taken, and with that I yield back the balance of
my time.
Mr. Whitfield. Thank you, Mr. Rush.
At this time I would like to recognize the gentleman from
Texas, Mr. Barton, for the purpose of making an opening
statement, 5 minutes.

OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS

Mr. Barton. I am not--I won't use that much time, Mr.
Chairman, but thank you.
This is a continuing hearing. Everything that can be said
about Keystone has been said, but sometimes it needs to be
repeated. This is an extremely important project for our
Nation's future.
Just in the last month or so we have had a number of
announcements that refineries in the United States, in the
Northeast, and in the Virgin Islands are going to be closed,
several in Pennsylvania, one in the Virgin Islands, I think one
in Ohio. Altogether they are taking about a million barrels of
refinery production off the books, and while the Keystone
Pipeline is not building a new refinery, it is bringing
additional crude oil to the Gulf Coast where we still have
refinery capacity. That crude oil will be used to be refined
into products that then can be transshipped up into the Midwest
and the Northeast.
If you shut down refineries in the Midwest and offshore
that serve that market, and if you don't build Keystone, that
is a double whammy. The absolute certainty is that the prices
will go up, shortages will exist, our economy will suffer.
On the other hand, if we build the Keystone Pipeline, we
are going to have additional crude coming into the United
States, approximately 800,000 barrels a day. It doesn't offset
in totality the closure of these other refinery facilities, but
it will alleviate them, and as my good friend from Oregon, Mr.
Walden, just pointed out, to have to go through the
bureaucratic red tape that this project has gone through for
the reasons it has been subjected to it just doesn't seem to
make good sense in any way. In any way.
So, Mr. Chairman, I look forward to the hearing. There is
another hearing downstairs on the Chemical Facilities Act, so I
will be shuffling back and forth, but I do appreciate you
holding the hearing, and I obviously appreciate being allowed
to speak.
I would like to yield the balance of my time to Mr. Terry
of Nebraska, who has been a strong voice for this project.

OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON

Mr. Terry. Thank you, Mr. Chairman emeritus. Just to
clarify a few points, the State Department issued three
statements over the summer that they would have all of the
information, and they were doing all of the due diligence to
have a decision made by the end of 2011, and we took them at
their word for that, and it turned out to be not true.
I think one of the key points here that has been missed in
the State Department's testimony, in particular in the basis
for their decision, is that they are using Nebraska as the
excuse to deny the permit. The reality is in the legislation
that the President signed specifically exempting Nebraska out
of this, this was going forward on the other parts of the
pipeline in the other states. It carved out a time that--or a
trigger that would review the Nebraska portion, the 30 or 40
miles that the pipeline would be moved based upon when the
governor certified that it was ready. So I am amazed at why
that hasn't been brought out.
Now, I am glad that the Corps of Engineers is here today
because they do play a vital point and in their testimony
raises a valid point that we had already vetted and had planned
to change and that is we want to make it clear that what the
legislation does is remove the Presidential permission part and
gives it to the agency, the Federal agency that actually has
experience in pipelines. We thought that was a rational
approach with this bill.
So I want to let the Corps know that we aren't usurping,
and we will change the language of issuing permits of any
project that crosses the waterway under your jurisdiction.
So we knew there were other permits that they would have to
file and receive once the Presidential authorization was made.
I am disappointed that we invited the Corps of Engineers and
the BLM to our hearing last week, and they denied or refused to
come, but yet when Henry Waxman asks to testify in opposition,
you are here loaded forebear. So that concerns me.
One last point in my 6 seconds is I think the message that
the President's denial of this permit sent the world is that
the far left of the environmental community is now in charge of
our energy and foreign policy.
I yield back.
Mr. Whitfield. At this time I recognize the gentleman from
California, Mr. Waxman, for 5 minutes for the purpose of an
opening statement.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA

Mr. Waxman. Mr. Chairman, today we are holding a
legislative hearing on a bill to mandate approval of
TransCanada tar sands pipeline Keystone XL.
This tar sands pipeline is hugely controversial, and for
good reason. The American people will bear the risks, and Big
Oil will reap the rewards. With this pipeline we get more
carbon pollution, more dangerous oil spills, land seizures by a
foreign country, and higher oil prices in the Midwest.
Big Oil gets the ability to extract more profits from the
Midwest, a conduit for exporting tar sands products to China,
and the green light to exploit the tar sands at maximum speed
regardless of the consequences.
President Obama listened to differing views of American
citizens and made a responsible decision. He would not approve
the pipeline through the ecologically-fragile Sand Hills area
of Nebraska, but the State Department would consider an
alternative route.
Nebraska is taking the time to find a route that is
acceptable, and the President is making sure that he has all
the information he needs to make the right decision.
This bill takes the opposite approach. It gives the
pipeline an unprecedented regulatory earmark. It directs the
Federal Energy Regulatory Commission, directs them to approve
the pipeline, even though we don't yet know what route it will
take through the State of Nebraska. It exempts the pipeline
from the requirement to obtain permits from the Corps of
Engineers before crossing rivers and wetlands. It takes away
the Department of Interior's authority to protect sensitive
public lands.
For a year I have been asking a simple question: Who
benefits from this extraordinary Congressional intervention in
the regulatory process?
Last year Reuters reported that Koch Industries would be
one of the big winners from this earmark, and there is evidence
to support this.
We know that Koch is one of the largest crude oil exporters
in Canada. We know it owns an oil terminal in Hardisty, Canada,
where the pipeline would begin. And we know it has a refinery
in Texas near where the pipeline is going to end.
Last May, I contacted Koch to inquire about the nature of
its interest in the pipeline, and Koch responded that despite
the evidence to the contrary, it had no financial interest in
whether the pipeline was built or not, and I accepted that
answer.
But then I learned that Koch had told the Canadian
government that the company had a ``direct and substantial
interest'' in the pipeline.
I want to know why Koch would tell the U.S. Congress one
thing and the Canadian government the exact opposite. So I
asked Chairman Upton and Chairman Whitfield to invite Koch
Industries to testify today.
Well, they refused, and Koch refused to appear without an
invitation from the chairman.
So we are left with unanswered questions. Why is Koch
Industries being placed in a witness protection program? What
does the company have to hide? And why does the company get
special treatment while the American people get left in the
dark?
I also asked the chairman to invite the operator of the
pipeline, TransCanada. Members on our side want to ask
TransCanada reasonable questions, like what route it plans to
follow in Nebraska.
We also want to know about these claims of jobs. State
Department testified that we would get 5,000 to 6,000 temporary
jobs if this pipeline is approved. These jobs would be around
for 2 years. TransCanada said it is going to be 20,000 jobs, or
over 100,000. Aand where do they get the number 100,000? Well,
that is looking at the lifetime of the pipeline for 100 years.
This is the Republican jobs bill. Twenty-thousand jobs, they
say. Maybe 100,000 jobs and yet the State Department did an
analysis, and there is 5,000 to 6,000 jobs for 2 years.
I regret that Koch and TransCanada are not here today, and
I ask the chairman to refrain from moving this bill until they
are available to testify.
I am glad we have excellent witnesses here today who are
going to give us their views: two departments that are going to
be excluded from giving their usual review of the project--that
might change, I am pleased to hear--and two gentlemen who have
special insight at what this project will mean.
Thank you, Mr. Chairman, for this 7 seconds beyond the
time, and I yield back whatever time I have left.
Mr. Whitfield. Thank you, Mr. Waxman.
Today we have two panels of witnesses. On the first panel
if you--those of you on the first panel would come forward,
that is Ms. Margaret Gaffney-Smith, who is Chief, Regulatory,
for the U.S. Army Corps of Engineers, and Mr. Mike Pool, who is
Deputy Director of Bureau of Land Management, U.S. Department
of the Interior. We appreciate both of you being here with us
this morning, and as you know, we are going to ask each of you
to give a 5-minute opening statement and at the end of that
time then questions will be asked.
I might also point out that we have been told that there
will be five or six votes on the House Floor somewhere around
11:00 or so, but we are going to proceed as long as we can and
then we will vote and then we will come back. So thank you all
for being with us this morning.
At this time, Ms. Gaffney-Smith, I would like to recognize
you for 5 minutes for the purpose of an opening statement, and
be sure and turn your microphone on, and I guess that little
box there on the table, a red light will come on when the 5
minutes is up. So you are now recognized.

STATEMENTS OF MARGARET GAFFNEY-SMITH, CHIEF, REGULATORY
PROGRAM, ARMY CORPS OF ENGINEERS; AND MIKE POOL, DEPUTY
DIRECTOR, BUREAU OF LAND MANAGEMENT, DEPARTMENT OF THE INTERIOR

STATEMENT OF MARGARET GAFFNEY-SMITH

Ms. Gaffney-Smith. Thank you, sir. Chairman Whitfield and
members of the committee, I am Meg Gaffney-Smith, Chief of the
Regulatory Program for the U.S. Army Corps of Engineers. Thank
you for the opportunity to discuss the Corps' regulatory
authority under Section 404 of the Clean Water Act and Section
10 of the Rivers and Harbors Act related to utility line
projects and to discuss our regulatory involvement in the
proposed Keystone XL Pipeline.
Section 10 of the Rivers and Harbors Act requires
authorization from the Corps for the construction of any
structure such as the Keystone Pipeline in, under, or over any
navigable water of the U.S. Section 404 of the Clean Water Act
requires authorization from the Corps for the discharge of
dredged or fill material into waters of the United States.
Utility line projects may require 404 permits for temporary
fills such as access roadways, storage and work areas, as well
as temporary or permanent impacts associated with grading, bank
stabilization, or the cross itself. When discharges of dredged
or fill material are associated with activities of a similar
nature and are expected to cause no more than minimal effects,
individually or cumulatively, they may be authorized by a
general permit.
Activities that do not meet the criteria for a general
permit are typically processed through the Corps' individual
standard permit procedures. When implementing the Corps
Regulatory Program, the Corps is neither an opponent nor a
proponent of any specific project. Our responsibility is to
make fair, objective, and timely decisions that protect the
aquatic environment and are not contrary to the public
interest. The authority to make the final decisions on permit
applications rests with out 38 district commanders.
Nationwide permit 12 is a general permit promulgated under
Section 404(e) of the Clean Water Act that may be used to
authorize utility line construction. The permit authorizes the
discharge of dredged and/or fill material in association with
temporary or permanent activities related to the construction,
repair, maintenance, and removal of utility lines provided the
activity does not result in the loss of greater than one-half
acre of waters, including wetlands, for a single and complete
project.
Under Nationwide Permit 12 there are seven notification
requirements, and if any one of these are triggered, a project
proponent must submit a preconstruction notification request to
the appropriate Corps district office before they begin work in
waters of the United States.
Other statutes impact the ability of the Corps to authorize
activities under a nationwide permit. In accordance with the
nationwide permit rules and the Endangered Species Act, no
activity may be authorized that would be likely to jeopardize
the continued existence of threatened or endangered species or
destroy or adversely modify the critical habitat of such
species. In addition, no activity may be authorized by a
nationwide permit until the requirements of Section 106 of the
National Historic Preservation Act have been fulfilled.
Further, the Corps' nationwide permits do not obviate the need
to obtain other Federal, State, or local permits, approvals, or
authorizations that are required by law.
In September and October, 2011, TransCanada submitted
preconstruction notifications to our Corps districts in
Galveston, Fort Worth, and Tulsa and requested that work in
waters of the U.S. in association with the Keystone XL Pipeline
be verified under Nationwide Permit 12. In November and
December each of the three districts made decisions to exercise
their discretionary authority and suspended Nationwide Permit
12 for all work and discharges of dredge or fill material into
waters of the United States associated with the Keystone XL
Pipeline application. These decisions were made because of
concerns identified by the Department of State that could not
be addressed until a final decision was made on the pending
Presidential permit application.
The President has since determined that based on the State
Department's view that 60 days was an insufficient period to
obtain and assess the necessary information, that the Keystone
XL Pipeline project, as presented and analyzed at that time,
would not serve the national interest. Should circumstances
change in the future, our districts will process any future
requests that are submitted for Department of Army permits in
accordance with the appropriate procedures based on our
statutory authorities and implementing regulations.
If H.R. 3548 is enacted, only the Federal Energy Regulatory
Commission, and not the Corps, would be responsible for issuing
any permit required in conjunction with construction,
operation, and maintenance of the pipeline. At present, only
the Corps has a statutory mandate to review projects like
Keystone XL for the permit under the provisions of Section 10
of the Rivers and Harbors Act and Section 404 of the Clean
Water Act.
However, none of these statutory reviews would be allowed
for this project under the language in Section 4(a) of this
bill, and no Corps permit would be required.
I appreciate the opportunity to be here today, and I would
be happy to answer any questions you may have.
[The prepared statement of Ms. Gaffney-Smith follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Whitfield. Thank you very much, Ms. Gaffney-Smith.
Mr. Pool, you are now recognized for 5 minutes for the
purpose of making an opening statement.

STATEMENT OF MIKE POOL

Mr. Pool. Thank you, Mr. Chairman, and thank you for
inviting the Department of Interior to this hearing on H.R.
3548, the North American Energy Access Act.
Legislation directs the Federal Energy Regulatory
Commission to approve the Keystone XL Pipeline Project. The
Department has concerns with several provisions of the
legislation.
The proposed $7 billion pipeline project would span more
than 1,700 miles between Hardisty, Alberta, Canada, and
multiple destinations in Oklahoma and Texas. Under Executive
Order 13337, all proposed oil pipeline projects that cross the
U.S. borders require a Presidential permit, including a
determination that the proposed cross-border pipeline is in the
national interest.
The State Department reviews applications for a
Presidential permit and consults with eight other agencies
including the Department of Interior in its review. The State
received an application for Keystone XL Project from
TransCanada Keystone Pipeline in September of 2008. The
proposed 1,700-mile pipeline crosses through eastern Montana
for 228 miles and includes approximately 42 miles of scattered
parcels of Federal land managed by the BLM. The BLM was a
cooperating agency with the State Department as was the U.S.
Fish and Wildlife Service and the National Park Service in the
preparation of an environmental impact statement to address the
environmental effects of the proposed pipeline construction and
operation activities.
The BLM identified pipeline routes across Federal lands in
Montana that would minimize environmental impacts of pipeline
construction. The final EIS was issued on August 26, 2011.
In addition, under the Mineral Leasing Act the BLM is
authorized to issue rights of ways for crude oil pipelines that
cross Federal lands. TransCanada Keystone Pipeline filed rights
of way applications with the BLM in 2008. The Keystone Project
would include a permanent 50-foot right of way along the
scattered 42 miles of BLM-managed lands in Montana and comprise
a total of 270 acres.
Applications were also filed for temporary use permits and
for electrical transmission lines on public lands in Montana to
supply power to the proposed pumping stations. Temporary rights
of ways for construction purposes would comprise of 200
additional acres dispersed on BLM-managed tracts of land and
would be used for a period of 3 years then reclaimed by
Keystone. These permit applications have not been withdrawn.
Their processing is on hold.
The North American Energy Access Act appears to make the
Federal Energy Regulatory Commission the sole Federal agency
responsible for the project. It would also give the commission
sole authority to permit construction, operations, and
maintenance for the pipeline and related facilities. The
legislation is not clear on how these--how the pipeline
construction, operation, and maintenance would be carried out
on Federal lands and what role, if any, the BLM would have with
regard to spills on Federal lands from the pipeline.
This departure from current law would also preclude the BLM
from collecting rents and cost recovery related to the pipeline
and rights of way on Federal lands.
Thank you for the opportunity to testify before the
subcommittee. I am pleased to answer any questions.
[The prepared statement of Mr. Pool follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Whitfield. Mr. Pool, thank you very much, and at this
time I will recognize myself for 5 minutes for questions.
There has been a lot of discussion on the Keystone Pipeline
about the Koch Brothers, and the Koch Brothers have indicated
that they have no financial--direct financial interest in this
pipeline, and for that reason we have never really called them
as a witness. And I might say that we know that the Burlington
Northern Santa Fe Railroad has direct routes right into Canada
and Alberta and that if the pipeline is not built, that maybe
some of that oil will move by rail into the U.S., and, of
course, the owner of that railroad is Warren Buffett of
Berkshire Hathaway.
We have not made any effort to call Warren Buffett to
testify in this hearing because even though his company might
benefit if the pipeline is not built, we do not think he has a
direct financial interest in it, and I really in my view do not
view Warren Buffett and the Koch Brothers any different on this
situation.
So I simply wanted to mention that. I would also say that
the State Department when it issued its final environmental
impact statement in August of 2011 actually made the comment
that it would be better to build this pipeline than to not
build the pipeline. If you were looking at these two options,
it would be better to build it than not to build it.
And so other pipeline projects requiring the Presidential
permit usually take 18 to 24 months to review and approve.
Keystone is now in its 40th month. So when these additional
delays appear to be mounting early in 2011, the U.S. House
passed bipartisan legislation with 47 Democrats voting yes that
simply instructed President Obama to make a final decision one
way or the other on the Presidential permit by November 1,
2011. At the time the White House stated the legislation was
unnecessary because the State Department would be making the
decision by the end of 2011.
But as President Obama's campaign began to warm up for
President, the President's political advisors realized that the
environmental groups would be quite upset if the President said
yes to this pipeline. On the other hand, the labor unions were
going to be quite upset, at least five or six of them, if the
President said no to the pipeline.
So at that time the President instead of making a decision
said that he would wait until after the election to make a
decision. So from our perspective this really was nothing but a
political decision, and since we have had 40 months of detailed
study and analysis on this, we felt like that there was no
reason to delay anymore, because we do need to be less
dependent upon foreign oil. We can bring in this oil from our
friendly neighbor to the north, Canada, and we can create jobs
as well.
So I wanted to just make that comment about the Koch
Brothers and the fact that I don't see that they are in much of
a different position than Warren Buffett is except they are on
different sides of the issue perhaps.
And I yield back the balance of my time, and Mr. Rush, I
will recognize you for 5 minutes for questions.
Mr. Rush. Mr. Chairman, I would just suggest that maybe you
should invite Warren Buffett and the Koch Brothers here. That
would be a dandy old hearing.
Mr. Whitfield. That would.
Mr. Rush. Right.
Mr. Whitfield. We would get a lot of press.
Mr. Rush. Right. I want to ask Mr. Pool regarding the
Bureau of Land Management's current role in--how--I think you
hit on it, but I want you to expound on this. How does this
bill affect the role of your agency? How does this bill affect
the role of your agency?
Mr. Pool. It does raise concerns. The BLM has a long
history of issuing the rights of ways under the Mineral Leasing
Act, approximately 32,000. We have experience, we have the
practitioners in the field that are familiar with the right-of-
way program and the importance of working through NEPA and
taking into account any cultural biological concerns.
So and we have got that experience. We have dealt with
pipelines many times in the past, so the bill the way it is
worded seems to confer all of our responsibility under the
Mineral Leasing Act to FERC, and some of the accelerated
timeframes in the bill it begs the question whether or not if
there is any additional consultation requirements under Section
106 of the National Archeological Protection Act or any
additional consultations that may be required through the Fish
and Wildlife Service if that is possible.
I think the other thing that I think is very important is
the BLM has established relationships in the west. We have many
offices geographically in the west. We are accustomed to
working with county, local governments, State governments. We
work with our Federal counterparts as well. So we have been in
this process for 3 years as it relates to our right of way, the
right away application in Montana, so we have an already-
established relationship with our Federal and State entities as
we work through, you know, this particular project or future
projects.
And I think that helps ensure ourselves and with the
involvement of the Federal agencies that we are fulfilling, you
know, our Congressional mandates.
Mr. Rush. As far as you are concerned does FERC have the
same vast foot front in the west to make similar decisions?
Mr. Pool. Well, I know from a jurisdictional ownership
standpoint they do not. They are a regulatory entity. I mean,
you know, when it comes to transcontinental natural gas line,
FERC usually assumes that lead, and when they are in that role,
we are a cooperating agency.
But it is important to point out that, you know, and the
more recent example being the Ruby Pipeline in the west, they
had the lead, but all our other mandates regarding segments
that cross public lands or other Federal jurisdictions, that
was administered and authorized under the Mineral Leasing Act,
and all other mandates were also required as well.
Mr. Rush. Ms. Gaffney-Smith, the Army Corps of Engineers
has a role in this submitting process and concerning this--so
your responsibilities and some of your activities regarding
this matter. Would you care to expound more on how this bill
will affect your role?
Ms. Gaffney-Smith. Our interpretation and understanding of
the bill as it is currently proposed would eliminate any
opportunity for the Corps of Engineers to process any
applications related to Section 404 of the Clean Water Act or
Section 10 of the Rivers and Harbors Act, and so we would
have--under the current language within the bill, we would have
no authority to regulate the activities in waters that are
under our jurisdiction under those two laws.
Mr. Rush. So this would aggregate your significant
responsibilities and dilute the authority and the experience
the Army Corps of Engineers have built up over centuries?
Ms. Gaffney-Smith. Yes. It would remove all of our
authority and remove any existing experience that we could lend
to the review of the proposal.
Mr. Rush. All right. Can either of you tell the committee
on the provision of this bill which agency or agencies would
then be responsible for enforcing the terms of the
environmental impact statement?
Ms. Gaffney-Smith. From the Corps of Engineers perspective
it looks like the entire responsibility would be provided to
the Federal Energy Regulatory Commission.
Mr. Rush. Do you agree, Mr. Pool?
Mr. Pool. That is the way the bill comes across to us as
well. It is the transfer of authority that we currently have at
BLM in terms of, you know, issuing the rights of ways from the
Mineral Leasing Act, and that would be conferred to FERC.
I think it is also important to point out that in terms of,
you know, BLM's Rights of Way Program, that these are cost
reimbursement programs for--so the work that we perform, the
studies that may be necessary depending on where any pipeline
may be right across public land, industry provides a cost
reimbursable account. So that account would, under this bill
would pretty much, you know, we would not happen anymore. We
would be out of the picture.
Mr. Rush. Thank you, Mr. Chairman.
Mr. Whitfield. At this time I recognize the gentleman from
Oklahoma, Mr. Sullivan, for 5 minutes.
Mr. Sullivan. Thank you, Chairman Whitfield.
During this State of the Union address President Obama
turned his back on the Keystone Pipeline. He actually rejected
the advice of his own Jobs Council who recommended an all-in
approach to energy policy that included expediting energy
projects like pipelines.
Like many Americans I was surprised that the primary reason
the President stated for his denial saying Congress forced his
decision with an arbitrary deadline. If excuses were barrels of
oil, this administration would have filled out strategic
petroleum reserves several times over.
The truth of the matter is the administration had 3 years
to reach a decision on Keystone XL but failed to do so. If more
than 1,100 days is not enough time, then exactly how much time
do you need to secure our energy future, Mr. President?
This begs the question of just who is in control of our
national, Nation's energy agenda. Time and time again we hear
about President Obama's commitment to American-made energy that
creates jobs and reduces our dependence on foreign oil, yet he
rejects a no-brainer like Keystone XL. The truth is he made a
calculated political decision to reject it to keep his anti-
jobs environmental base happy in an election year.
By rejecting the pipeline President Obama turned his back
on American jobs. What logical reason could there be to say no
to 20,000 new private sector jobs and potentially 100,000
indirect jobs while our Nation's unemployment rate remains
above 8 percent? It is in both our economic and national
security interests to use the oil and gas reserves right here
in our own backyard.
Mr. President, why not embrace bolstering our energy supply
with a stable source of oil from Canada and North Dakota
instead of politically tumultuous OPEC nations. Unlike the
trillion-dollar failed stimulus law, the Keystone Project is
privately funded and does not cost the taxpayers one dime. The
Keystone XL Pipeline is a game changer for energy security. The
pipeline when fully complete would transport nearly 1.3 million
barrels of oil per day from Alberta and North Dakota to
refineries in the Midwest and Gulf Coast.
I believe this is in our national interest to move forward
with this pipeline, and the State Department's 3-year delay is
considering--in considering this pipeline is a national
travesty. Three years into the Obama's Presidency he has
severely limited access to both on and offshore oil and gas
reserves, pushed the most expensive environmental regulatory
agenda in history, and sent a half-billion dollars of taxpayer
money to Solyndra, a now-bankrupt solar company.
The fact of the matter is that our country needs all the
energy we can get to continue growing our economy. With gas
prices expected to rise in the coming months, his decision to
reject the Keystone Pipeline means that our energy security is
now in the hands of China, Iran, and other OPEC nations; not a
good choice.
Mr. Chairman, the Keystone Pipeline is the right thing to
do to create jobs and make our Nation more energy secure. I
would like to yield the balance of my time to Congressman Lee
Terry from Nebraska.
Mr. Terry. If the gentleman doesn't mind, can I reject that
since I only have a minute 30 left?
Mr. Sullivan. Yes, you can.
Mr. Terry. But I appreciate that opportunity.
Mr. Sullivan. Yes, sir.
Mr. Whitfield. The gentleman yields back his time.
At this time I will recognize the gentleman from
California, Mr. Waxman, for 5 minutes.
Mr. Waxman. Mr. Chairman, the topic that we are discussing
is the Keystone Pipeline, but I must say the Republicans are
like Keystone cops in the way they have handled this whole
issue. They have been going way out on a limb to get this
pipeline approved, even to the point where a tax cut for middle
class Americans and unemployment benefits and money for
physicians was--a bill was held up to make sure that there was
a provision that gives special treatment to the Keystone
Pipeline.
But these brilliant people put in a provision that said the
President has to decide the issue within a certain period of
time. They forgot to tell him how he had to decide it, and the
President said, ``I want to get all the facts first, and I am
not going to approve it in this timeframe.''
So now they have come up with a bill. This is a remarkable
bill. This bill says--I wish people would read it. This--it
says--this is a--the pipeline in this bill is the Keystone XL
Pipeline. No question about it, and they are exempted from
review except for 30 days, but if the FERC doesn't give them a
permit in 30 days, then they will be deemed approved. They are
not taking any chances now.
And in addition they say that the two other agencies and
all the other agencies that might be involved in reviewing this
bill will no longer have the power to review the bill. So we
have witnesses here from two of the agencies that ordinarily
would review any legislation, not legislation, any application
for something that would go over public lands, over waterways.
Suddenly they are out. They can't review it.
So when we found out, when Mr. Terry found out that was the
case, he just said to us for the first time this morning, oh,
we are not going to do that. We are going to put them back in
the bill.
So the application has to be approved in 30 days, or it is
approved. If they want to make a modification, they can ask for
a review for 30 days, but if it is not approved in 30 days, it
is approved. For this one project.
Now, we wanted to find out what interest the Koch
Industries had. Now, why did we want to find that out? Well,
the Koch Industries is one of the largest crude oil exporters
in Canada. The Koch Industries own the terminal in Canada where
the pipeline would begin. The Koch Industries has a refinery
near where the pipeline would end, and the chairman said they--
he would take their word for it they don't have any interest,
even though there is evidence to the contrary.
But then he throws out a real herring as no one better than
a Keystone cop could do, and his argument, oh, well, wait a
minute. There is another guy who agrees with the Democrats some
of the time, who owns a railroad, and they might put the coal,
tar sands on the railroad. So really what the Democrats are
doing is fronting for another industry. Boy, does that make
sense. You got the crude oil owner with the pipeline and a
refinery, and we should just take their word for they have no
interest, but we should then point the finger at Warren
Buffett's company.
And then what did they do? They say in hearings, well, we
know what is going on. We are attributing the worst possible
motives to the President of the United States. It is all
political. Well, that is quite a statement. How did they get
into the President's head? What the President said is I want to
get information before I approve it, and they said, aha. What
is really going on is the President is trying to take care of
the environmentalists, and he is going to annoy them. They have
got it all written down. They could be on 24-hour news radio.
They have figured it all out without getting more information.
Well, we have two witnesses right now, and before acting we
should get some further information about this special interest
bill. It directs the FERC to deal with the matter, but Ms.
Gaffney-Smith, under the section 404 of the Clean Water Act,
the U.S. Army Corps of Engineers has a permitting process to
ensure that wetlands are protected from discharges of dredge or
fill material.
Now, doesn't this bill take away jurisdiction of your
agency over this pipeline?
Ms. Gaffney-Smith. It appears to do so. Yes.
Mr. Waxman. And Mr. Pool, the--your agency has to do with
wildlife. Tell me what your agency would ordinarily review and
whether you have that ability to review it.
Mr. Pool. Congressman, we--all these type actions we review
them per land-use plans. That is the Congressional mandate
under----
Mr. Waxman. And now are you being taken, is that
jurisdiction being taken away from you?
Mr. Pool. It appears it would, that we would no longer
apply those other Congressional----
Mr. Waxman. We used to have a party in this country called
the Know Nothings, and the people that are pushing this bill
want us to know nothing about this pipeline except what the
proponents want us to know, and if the Koch Brothers are
proponents and are going to benefit, I would like to know about
it, and the American people ought to know about it as well.
My time has expired, and I hope we have another round.
Mr. Whitfield. At this time we will recognize the gentleman
from Oregon, Mr. Walden, for 5 minutes.
Mr. Walden. I thank the gentleman very much.
Mr. Pool, tell me again the agency you are with.
Mr. Pool. Bureau of Land Management.
Mr. Walden. And tell me how many acres are at play and that
you have reviewed as part of the Keystone Pipeline review
process?
Mr. Pool. Congressman, the majority of that acreage is in
Montana.
Mr. Walden. Yes.
Mr. Pool. A little over 42-mile segment and it comprises
given the linear width 50 feet, it comprises about 250 acres
with an additional 900 acres that would be needed probably for
staging during the construction phase.
Mr. Walden. Yes. I was thinking, I was looking for it here
in your testimony. I thought it was actually 270 acres is what
your testimony is but it is the same.
Mr. Pool. Yes.
Mr. Walden. Two fifty, 270. And you have done the
environmental work on that. Right? The review process through
NEPA already?
Mr. Pool. Our segment was reviewed through the NEPA
process. That was led by the State Department, and so the
segment that we are associated with through our mandates was
evaluated, and as a result of the final EIS that came out in
August we did not identify any major constraints to that
segment in terms of authorization.
Mr. Walden. So you have done the full review, you have been
through the EIS, the SEIS, the final environmental impact
statement, and this is all about a 50-foot wide swath that
covers 278. Now, the other land that you talked about, did you
say 900, roughly 900 acres?
Mr. Pool. You know, we issue----
Mr. Walden. Temporary in and out.
Mr. Pool. It is. It is, you know, temporary use for grants
to facilitate staging during the construction phase.
Mr. Walden. And then that would revert back.
Mr. Pool. That is for a 3-year period.
Mr. Walden. OK, and then talk to me about any issues
related to the work that your fine agency did on the biological
opinions related to the Endangered Species Act. Did you find
any threat to threatened or endangered species?
Mr. Pool. I think the initial biological opinion that was
provided indicated there would not likely be a jeopardy to the
existence of threatened or endangered species.
Mr. Walden. Uh-huh.
Mr. Pool. Obviously it was subsequently withdrawn and----
Mr. Walden. But it was an FEIS as well. Right? I mean, it
had gone through the full----
Mr. Pool. That is correct. It was issued after the issuance
of the FEIS.
Mr. Walden. Right. So your agency, your biologists, all the
people that do this work have thoroughly reviewed the Keystone
part that would cross Federal land over which you have
jurisdiction.
Mr. Pool. That is correct.
Mr. Walden. And found no--not--no likely jeopardy of any
threatened or endangered specie, and you are talking about a
total of 270 acres roughly for the full pipeline. Correct? So
the State Department had all that information.
Mr. Pool. Yes, they do.
Mr. Walden. On the public lands.
Mr. Pool. Yes. We were very cooperative to the State
Department, one of many, so----
Mr. Walden. Right.
Mr. Pool [continuing]. That is the area that we were
responsible is where it crosses public land.
Mr. Walden. All right.
Mr. Pool. I think we have got a sliver, about a mile and a
half, in South Dakota, but the majority of that crossing of
public land occurs in Montana.
Mr. Walden. All right. All right. I appreciate that. I
think that is important for the record because we have heard a
lot of spin-up rhetoric here, and I just want to get to the
facts. I went through some of the FEIS in the last hearing we
had, and, you know, we hear about this jobs number. It gets
batted all over, you know. I think we would want private sector
investment, and this is $7 billion, I believe, in shovel ready,
private sector construction jobs, and there are estimates of
20,000.
Now, I think what Mr. Waxman referenced was actually only
the construction jobs during the phase of the construction, but
I know having been a small business owner for more than 2
decades that when you get involved in a big project, it is
not--I mean, we were just in the radio business, but, you know,
if I bought a transmitter, somebody had to build that thing,
and I had to hire an engineer to install it, and I had to go
through a lot of other efforts.
There were a lot of other indirect jobs associated, and I
think that is maybe where the difference of opinion here is on
the jobs. If you only looked at just exactly the, you know,
several thousands of jobs that would be there for 2 years in an
industry that has been devastated over the last 3 years I would
take whatever jobs we could, and if there is no environmental
impact on the Federal lands, and it doesn't appear there would
be.
I think we can make the change Mr. Terry recommended to
deal with the issue that Ms. Gaffney-Smith, if we change this
bill to allow you to continue to have your statutory authority,
that wouldn't be a problem, would it?
Ms. Gaffney-Smith. No. We would evaluate all the crossings
and impacts under the current authority, statutory authorities
in our----
Mr. Walden. And have you done that already?
Ms. Gaffney-Smith. No, we haven't done it. We have only
received preconstruction notifications for certain aspects of
the pipeline.
Mr. Walden. I see. My time has expired. Thank you very
much.
Mr. Whitfield. At this time we will recognize the gentleman
from Texas, Mr. Gonzalez, for 5 minutes.
Mr. Gonzalez. Thank you very much, Mr. Chairman, and
welcome to the witnesses, and we had a witness from FERC that
the way I recall his testimony was, one, they weren't really
equipped to do it, two, the timeline that is being imposed by
this particular bill, 3548, was not realistic. And I believe
what you are providing and what you bring to the equation of
building this pipeline safely is invaluable and essential, and
I don't believe that this bill is the best method of
accomplishing the building out of the Keystone Pipeline, which
I support. I just don't think this is the way to do it.
My greater fear and we are going to have some other
witnesses that may address some other implications, and that is
unrealistic expectations of what this pipeline is going to
provide this country. I am going to do this as briefly as I
can.
First of all, when it comes to price, fuel prices reduces
economic growth at a very, very sensitive time in this country.
High gas prices reduced economic growth in this country in
2012, by 0.5 percent when we know that total growth for the
year we are looking at around 2 percent. So it was substantial.
I do not believe that the Keystone Pipeline would reduce
fuel prices, and that is what we are telling the American
public, and we keep going on. I wish we had a hearing that
would really explore the impact on price, because eventually it
will be our constituents that will be dumbfounded when we
complete the pipeline and they are still paying an
extraordinary amount of money for a gallon of gasoline.
Gasoline supplies are being exported to the highest bidder.
I said this last week. Leading all exports in this country was
fuel last year. So it is a global market. That is what we are
in competition with, and this is from Tom Kloza, Chief Oil
Analyst at Oil Price Information Service, which he said it is a
world market and will go to the highest bidder.
At a Senate hearing the president of Shell back in May of
last year said, simply stated, oil is a global commodity, and
oil companies are price takers, not price makers. That is the
same lesson that is going to be imposed on refiners. It is a
global market.
So who owns all the oil that is coming and is going to be
stored somewhere? Well, that is really curious, and maybe we
can understand global markets and how the prices are arrived
at. This is a story, Dallas Morning News, 15th of May last
year, some 70 percent of contracts for future oil delivery are
now bought by financial speculators, largely big investment
banks, and hedge funds who never take control of the oil. They
just flip the contract for a quick profit. Only about 30
percent of oil contracts are bought by a purchaser that
actually intends to use the oil such as an airline. That is
according to the Commodity Futures Trading Commission which
regulates trade in those contracts.
Michael McMasters, Wall Street investor, testified before
Congress repeatedly that speculators are pushing prices well
beyond what the supply and the demand warrant.
And then I want to end this by--until the early 1990s the
ratio of speculative trades to trades made by commercial users
of oil was tilted heavily towards the users of oil, but from
1991, forward the big financial players such as Goldman Sachs
and J.P. Morgan won exemptions that freed them from limits on
how much they could speculate in future markets.
Now, we have attempted to do something about that, but the
majority party has fought us tooth and nail on this, whether it
is Dodd-Frank or anything else that addresses some sort of a
regulatory scheme that will now allow the play in of futures
and commodities to the detriment of the American consumers.
This is all part of it, but we seem to be ignoring a holistic
approach.
Now what really concerns me is we are going to have a
witness that is going to tell us that this may not be the
answer to national security. Now, I think that it can be
depending on how we use the raw product and the refined product
that we derive from oil. But if, in fact, it is a global
market, the only way you maintain that edge is somehow making
sure that there is available, accessible, and affordable supply
in the United States.
But if you have investors that are charged with the
fiduciary duty of making a good profit for their investors, and
that is the American way, and I have no problem with that, what
do you do? Do you keep it in the domestic market, or do you
export it?
So there is not just about the safety of the pipeline. I
believe that I would rather be dependent on Mexico and Canada
than Saudi Arabia and Venezuela. I mean, there is no doubt
about that. Venezuela. But the problem we have is not a
realistic approach, and I guess that is what really concerns
me, and I am hoping to return for the witnesses that are going
to be touching on some of the subject matter that I just
touched on. I appreciate your testimony today. I think you are
invaluable to this whole equation of building a safe Keystone
Pipeline.
Thank you, Mr. Chairman.
Mr. Whitfield. At this time I recognize the gentleman, Mr.
Terry.
Mr. Terry. Thank you, and I guess I am one that would like
to submit items for the record, so Mr. Chairman, I ask
unanimous consent that I may submit for the record a memorandum
from the U.S. State Department, Mr. Keith Benes, dated June 22,
2011.
And on the issue that my friend from St.--not St. Louis,
San Antonio, a little further south, mentioned, it is on the
record from the State Department's review of this pipeline that
eliminating transportation constraints from Cushing to Houston
would not adversely affect Midwest gasoline consumers. In fact,
it goes on and says that it would help crude prices decline
considering that the transportation is consistent, reliable,
and less expensive.
Let us keep in mind that what we are talking about is
around 700,000 barrels initially going up to a million barrels
that would completely offset the need for us to send tankers to
Venezuela and fill up with their heavy crude and ship it up
here. It defies logic----
Mr. Whitfield. I might just say without objection that----
Mr. Terry. Thank you. I submit that so I will put it up
here.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Terry. But it simply defies logic to me that when you
have a transportation system that the State Department even
testified was safer, the safest means of transport, the most
environmentally safe transport that there be arguments that it
not add to our energy security.
And then secondly on the jobs, you know, it befuddles most
Americans as polling has shown that this President denied the
permit, and the jobs that would be created if you look into the
union hall at the--for the laborers or the IBEW, there is
people sitting on the bench waiting to have their names on the
list to be called that when this starts they go to work. Right
now in Nebraska there is an engineering company that has ceased
doing work because of the denial of this permit on the Nebraska
route.
And, yes, it befuddles me and most of Americans when my
friends on the other side of the aisle say that, geez, 6,000
direct jobs out on the pipeline is not enough for them, and by
the way it is only temporary. Well, I don't know an
infrastructure project that isn't temporary. So evidently we
are against all infrastructure now. It just--it befuddles me
why they would oppose it.
Now, Ms. Gaffney-Smith, I appreciate your testimony here
today and with the help of the State Department you have made
some valid points that we realized and have decided before this
hearing today, even after last week, that we needed to make
sure that we are clear in the fact that the intent of this bill
was the Presidential authority needed to be moved away from the
White House to an agency that had expertise in pipelines to
make a decision on whether it is safety and soundness of the
pipeline versus the politics that seem to have overwhelmed this
issue.
Now, with that making that correction that recognizes that
we aren't usurping the Corps of Engineers' powers, we want you
to make that review. Do you have any objections to this
legislation?
Ms. Gaffney-Smith. I can't speak to legislation where I
haven't seen the actual language, but it would be appropriate,
I think, for us to look at that and see if it, in fact, puts us
back.
Mr. Terry. Can I ask why when we asked the Corps of
Engineers last week why----
Mr. Whitfield. Your microphone.
Mr. Terry. That you didn't want to be here, but you are
here to be an opposing, hostile witness.
Ms. Gaffney-Smith. I am not aware that an official
invitation was provided.
Mr. Terry. Let me ask you, Mr. Pool, in the State of
Nebraska--thank you. I hear it now. In the State of Nebraska
what Federal lands did the original route take? Did the
original route go through an Federal lands?
Mr. Pool. Yes, Congressman. There was a small piece of land
administered by BOR, Bureau of Reclamation, had to do with the
canal area, that we would have----
Mr. Terry. That was South Dakota, wasn't it?
Mr. Pool. No. That is Nebraska.
Mr. Terry. OK.
Mr. Pool. Yes, and so----
Mr. Terry. All right. My time is up. I am sorry. I will
have to get--I will submit that one for the record for you to
get back to me on.
Mr. Pool. I will do.
Mr. Terry. All right.
Mr. Whitfield. At this time I recognize the gentleman from
Michigan, Mr. Dingell, for 5 minutes.
Mr. Dingell. Mr. Chairman, I thank you for your courtesy. I
would like to make a couple quick observations.
In 1970, Scoop Jackson and I wrote the National
Environmental Policy Act. It was to depoliticize the approval
of projects and to see to it that we had the information we
needed when we were going into those kinds of questions. So it
required an environmental impact statement. That can be speeded
up and properly so. But I would caution that if you speed it up
too fast you are going to re-politicize this and make a fine
mess out of the thing and cause no end of trouble and
litigation. So I would beg you not to do this.
I say that parenthetically I want to support this
legislation. I think the Canadians are going to do this whether
we like it or not, and they are either going to build a
pipeline going west or going south, and it is better in my view
that if that pipeline goes anywhere, it goes south to the
United States. It will be a much more dependable source of
energy for the United States.
So I would urge my colleagues not to drive away members
like me by moving too fast on this, because if you do, you will
just simply create a wealth of litigation. The lawyers will
have a fine time, make lots of money, and the business of the
country will be, in fact, delayed by carelessness in this
committee.
Having said that, first question here to Mr. Pool, did the
State Department refer the application to your Department or to
the BLM? Yes or no?
Mr. Pool. Say again, sir.
Mr. Dingell. Did the State Department refer the application
to your Department or to the BLM? Which?
Mr. Pool. The--well, the application that we received was
from the applicant for the segment of public land that was
coming across Montana. It is a right-of-way application.
Mr. Dingell. Now, Ms. Gaffney-Smith, did the State
Department refer the application to the Corps?
Ms. Gaffney-Smith. No. Like the Department of Interior, the
application came from the applicant.
Mr. Dingell. OK. Did BLM provide views on the permit
application? Answer yes or no.
Mr. Pool. Provide what, sir?
Mr. Dingell. Did BLM provide views on the permit
application? Please answer yes or no.
Mr. Pool. We were part of the environmental impact process
that was led by the State Department, and so the mandates that
we have obligations with in terms of issuing a right-away grant
in Montana then we did review the application in the context of
the overall NEPA product.
Mr. Dingell. Now, Ms. Gaffney-Smith, did the Corps provide
views on the permit application?
Ms. Gaffney-Smith. In three Corps districts in Galveston,
Fort Worth, and Tulsa District we received a preconstruction
notification for Nationwide Permit 12. We initiated
coordination with other agencies, and we did provide a response
to the applicant in accordance with our Nationwide Permit rules
based on comments we received from the Department of State.
Mr. Dingell. So your answer is yes?
Ms. Gaffney-Smith. Yes.
Mr. Dingell. Under H.R. 3548 environmental review process
would need to be completed within 30 days. Even though BLM
would no longer be involved in the permit review process under
this bill, is 30 days enough time for BLM to do the necessary
due diligence on submitting its views for the Keystone
Pipeline? Yes or no?
Mr. Pool. Congressman, I would say no, it is not enough
time.
Mr. Dingell. Very good. Ms. Gaffney-Smith, the same
question to you. Is 30 days enough time for the Corps to submit
its views?
Ms. Gaffney-Smith. No, I don't believe so.
Mr. Dingell. Do you believe--this goes to both, yes or no.
Do you believe that FERC has the experience that BLM has to
review a permit of this scope? Please answer yes or no.
Mr. Pool. I don't believe they do.
Mr. Dingell. Thank you. Madam.
Ms. Gaffney-Smith. No, sir.
Mr. Dingell. All right. Now, Ms. Gaffney-Smith, do you
believe that FERC has the experience that the Corps has to
review a permit of this scope? That is practically the same
question as the prior one, but it is a little more subtle. Yes
or no?
Ms. Gaffney-Smith. No.
Mr. Dingell. Now, and I want to thank you and apologize for
the fact that I curtailed you in your time.
Mr. Chairman, we could hurry this process in a way which is
going to create lots of trouble and wind up ultimately with a
delay or veto or profound litigation that could go on for
years. If that occurs, we will then find ourselves in the
splendid position of having to reenter this issue with all of
the politics that goes to it and all the difficulty, or we
could begin moving to try to work this thing out. I would like
to move in that direction. I hope the committee will exceed to
that kind of view, and we can begin working on this in that way
rather than getting ourselves in a splendid fight which will
generate monstrous ill will and create a situation where there
will actually be more delay rather than less.
Thank you, Mr. Chairman.
Mr. Whitfield. Thank you, Mr. Dingell.
We do have votes on the floor, but we do have about 6
minutes left, so Ms. Capps, I believe you were here, so I would
recognize you for a period of 5 minutes.
Mrs. Capps. Thank you, Mr. Chairman, and because I know Mr.
Markey also was here and wants to speak, I am asking Mr.
Markey, do you want some of my time? OK. I will do it.
I come from an area that is energy producing as well, and I
am very impressed with--I have one image in my mind because it
was you, Mr. Pool, when you were in charge of the BLM for the
State of California, and I was newly elected, who escorted me
for the first time to see what we call the Shangri-La of the
West, the Carrizo Plain, eastern portion of San Luis Obispo
County, fragile ecosystem that is remnant of the way the land
was 300 years ago, in which the--all of the vested interests,
the mineral rights, the cattle ranchers, and all of the
stakeholders have found a way to preserve the natural history
under the leadership of the BLM. And also make that an
economically viable area.
Oil and gas industry have all--have their role there, and I
picture this pipeline going through the Carrizo Plain, and I am
very concerned that we take the time that is needed to preserve
in the Midwest what I know from my area to be the possibility
of protecting the land as well as furthering economic interest.
And I see this latest attempt by House Republicans to short-
circuit the review process, and I want to ask you because I
know your expertise, Mr. Pool, and I also have a number of Army
Corps projects in my district as well and have had the pleasure
of working with that agency.
Mr. Pool, would it make sense for the Bureau of Land
Management or the Fish and Wildlife Service to issue permits
for a pipeline with an unknown route, which is what we have
before us today?
Mr. Pool. Congresswoman, I can only speak to the segment in
Montana that we are knowledgeable of that area, and the
application is very precise as to where it will be located.
Mrs. Capps. Right, but now for the further part of it you
have no knowledge exactly where the precise, about the
preciseness. Is that correct?
Mr. Pool. Generally speaking we do on a map. I mean, we see
the whole delineation of the pipeline from north to south, but
if it doesn't fall within public land jurisdiction, then it is
not going to pertain to BLM.
Mrs. Capps. OK. Would you like to respond and then I want
to turn to my colleague?
Ms. Gaffney-Smith. Can you repeat the question, please?
Mrs. Capps. Does it make sense for the--does the Army Corps
of Engineers typically provide permits for pipeline projects
when the route of the pipeline is unknown?
Ms. Gaffney-Smith. No. We only evaluate permits for
applications that have been submitted by project applicants
that have a project.
Mrs. Capps. And I would like to yield the balance of my
time to Mr. Markey.
Mr. Markey. I thank the gentlelady. Under this bill are
there any guarantees that all of the friendly Canadian oil that
is sent through the pipeline will be sold here in the United
States? No. No. So let me get this plan right.
Step one. TransCanada puts the dirtiest oil on the planet
into the brand new pipeline that the Republicans are giving
them.
Step two. TransCanada sends that oil to the Gulf Coast
where they can make billions more than where they currently
sell it in the Midwest.
Step three. Refineries in the Gulf Coast re-export it to
other countries at world oil prices and don't pay any taxes for
doing it.
Step four. Americans get higher gas prices and no increase
in energy security.
And step five. TransCanada and the sheiks in Saudi Arabia
laugh all the way to the bank.
That is pretty much what this bill allows. Make no mistake.
This bill is not about energy security. It is not about jobs.
It is about oil company profits plain and simple. This bill
just turns the United States into a middleman in a multi-
national oil deal between Canada, South America, Europe, or
China.
The Republican slogan last year was ``drill here, drill
now, pay less.'' Now we are letting Canada drill here, ship
here, and re-export so all we have to do is pay more, both in
terms of money at the gas pump and costs to the environment.
Today I along with Mr. Waxman and Congressman Cohen and
Connolly and Welsh will introduce a bill to require that if
this pipeline is permitted, the oil will stay here to benefit
Americans. If we are going to go to the extreme lengths of
legislating the construction of an environmentally-destructive
pipeline to benefit a Canadian company, we should at least be
sure that we in the United States can realize the energy
security and consumer benefits that we have been told the
project will bring. Let us play it straight about the Straits
of Hormuz. Without my bill this pipeline will not do a thing to
enhance the security of our country or of our brave men and
women stationed all over the world for purposes of protecting
our fossil fuel interests.
We need a bill, if it does pass, that guarantees the oil
from this pipeline stays here in the United States. The CEO of
TransCanada sat right there and said he would not support that
legislation. That is all we have to know about our relationship
with this TransCanada company. This oil is to be exported
around the world, not to keep prices lower here in the United
States.
I yield back the balance of my time, Mr. Chairman.
Mr. Whitfield. I might say that of all the U.S. petroleum
products today we are currently exporting less than 5 percent.
At this time----
Mr. Markey. The number one export for the United States in
2011, was oil petroleum products. That was the number one
export of all products in the United States.
Mr. Whitfield. We want to increase our exports and----
Mr. Markey. Not of oil. Not our security.
Mr. Whitfield. All the Members are gone. We still have a
vote on the floor, so I am going to release this panel. Ms.
Gaffney-Smith, thank you for being here. Mr. Pool, thank you
for being here.
We will recess for about I would say 35 or 40 minutes, and
then we will come back, and we will begin with panel two. Thank
you. We are in recess.
[Whereupon, at 11:22 a.m., the subcommittee recessed, to
reconvene at 11:57 a.m. the same day.]
Mr. Whitfield. I will call the hearing back to order, and
before I introduce the witnesses I--as we were finishing up
with the first panel there was a lot of back and forth about
whether or not we were going to release the first panel, and in
consultation with the majority, a decision was made to release
them, but I had already told Mr. Bilbray before he left that he
could come back and ask them questions, and since they are not
here, I am going to recognize Mr. Bilbray for 3 minutes to say
whatever he wanted to say about the Corps of Engineers or
whatever the issue was.
Mr. Bilbray. Thank you, Mr. Chairman, and Mr. Chairman, I
appreciate you giving me the time. It is frustrating that you,
you know, think you have an agreement and I think some of these
questions are important, but I will raise them even with the
Army Corps here because I have got a little experience in 404
permit. I was actually cited or given my Miranda rights for a
potential violation of the 404 permit because I was involved in
damming up sewage coming in from Mexico, and they constituted a
sewage break as possible navigable waters. So it is very near
and dear.
Also, Mr. Chairman, there is a lot of talk here in
Washington, DC, about certain jobs, aggressive job programs by
the Federal Government, and the Tennessee Authority was one of
them that has been cited again and again, and I would like to
point out to everybody that the Tennessee Authority, though it
crossed thousands of so-called navigable waterways, never
received one 404 permit because there was no such thing as a
404 permit there.
So when we talk about all these great job programs as ways
of stimulating the economy that were in the past, we have got
to remember just how much regulatory oversight and regulatory
obstructionism de facto has occurred since then, that there
were things that we have done in the past that would not be
legal to do under today's regulations, and we need to address
that.
The other issue I wanted to raise was the fact that though
it takes a 404 permit to build a--put a pipeline over a
navigable waterway to transport oil, there is no 404 permit
required to transport the same oil by truck over a bridge that
spans a navigable waterway, the same way there is no
requirement for a 404 permit for a train to go across a bridge
that spans a navigable waterway, even though statistically the
risk of having spills caused by truck and train transport into
those navigable waterways is much higher. There is also the
issue of the fact that no one talks about is they look at the
risk of the pipeline but don't look at the no-project option
risk that if you transport the same oil that 1,700 miles, it is
87 times more dangerous to human life that an accident would
occur than with transport by oil.
So as--when we get into these issues, if somebody has
worked in environmental agencies, have had the privilege of
being a regulator, I think the environmental impact of the no-
project option is one that any reasonable person who really
cares about the environment has to understand. And the fact
that the State Department has admitted that the transport of
this oil by alternative sources on the same route or in any
route related to it would be many times more polluting than the
use of a pipeline, I am shocked that the same State Department,
though, cannot quantify how many metric tons a year would be
admitted by going to those other alternative transports, the
truck and the train.
I mean, coming from California and working on the Air
Resources Board we would tell you down to the minute of what it
is because we use good science to make those decisions. The
State Department admits that the air pollution impacts for
transport by the alternatives are higher than the transport of
this pipeline. So I think in all fairness the adverse
environmental impact of the no-project option has not been
given a fair hearing, has not been identified and quantified in
a responsible way. And before you start turning down these
projects, you have got to look at what is going to be the
impact to the environment before you do that.
And let me just close. One of the things I am really
concerned about is that Canada is being treated like we can't
trust Canada with their environment. I think their history on
environmental issues is something that really puts into
question why we approved the many crossings in Mexico and we
are holding up this one to Canada.
And I yield back, Mr. Chairman.
Mr. Whitfield. Thank you, Mr. Bilbray.
At this time I would like to----
Mr. Waxman. Mr. Chairman.
Mr. Whitfield. Yes, sir.
Mr. Waxman. I understand Mr. Engel would like to have his 3
minutes on our side as well----
Mr. Whitfield. Sure.
Mr. Waxman [continuing]. And I hope he can be recognized.
Mr. Whitfield. Absolutely.
Mr. Engel, you are recognized for 3 minutes.
Mr. Waxman. Would the gentleman yield to me?
Mr. Engel. Yes. Yes. I will yield to the----
Mr. Waxman. I want--I thank you for yielding because this
last statement by my colleague from California made no sense to
me. He is criticizing the different alternatives of bringing
these tar sands down from Canada and saying if it is done by
railroad as opposed to a pipeline. The real issue is whether
they are going to do these tar sands at all because if they
can't bring it into the United States, they are not going to
develop those tar sands, and in developing those tar sands,
which is the dirtiest source of coal, they have to spend so
much energy to refine it sufficiently to have it go through a
pipeline and maybe on a train. At some point it is going to
have to be refined, and the energy used to refine it adds to
the greenhouse gases.
So I just want people to understand there is not just a
question of how it is going to be transported. If it is going
to be transported, a pipeline is a way we often use to
transport these things. We have pipelines, by the way. We are
not against pipelines but any pipeline ought to be reviewed by
the appropriate agencies, and the two witnesses we had on the
first panel who are going to be taken out of their opportunity
to review any proposal, and, of course, this bill isn't about
pipelines. It is only about one specific pipeline that is going
to be given a treatment that no other pipeline has had, and
that is--nobody reviews it. If they review it, they have 30
days, and they got to come up with the right conclusion.
That is a special interest bill earmarked for this one
project, and it is really troubling because we have had--we are
going to be adding to the greenhouse gases which not just
affects Canada but the whole world at a time when we ought to
be reducing greenhouse gases. We are going to be committed to
that source of energy where we ought to be looking for other
ways to use less energy and make us more independent. I think
our witnesses on the second panel have more to say about that
issue.
I thank the gentleman for yielding part of his time.
Mr. Engel. I would like to reclaim my time and say, you
know, I have an open mind in general about the whole issue of
Keystone, but I have--I am very concerned about this. Removing
all Federal review of all agencies except FERC and then
mandating that FERC issues the permit to me doesn't sound like
we are really weighing the pros and cons. We are rushing to
make a decision on one side.
The health and safety of the American people is paramount,
and if we are not going to take that seriously, it really
troubles me.
The other thing that troubles me is that I have, you know,
I would feel much more comfortable if I knew that the oil that
was coming down to be refined from Canada to be refined in
Texas went for domestic consumption in the United States. I sat
through hearings that this committee has had, and I am still
not satisfied or convinced that that oil isn't going to get
shipped to China or some other place.
So those are some of the questions that I have about this.
Mr. Waxman. Mr. Chairman, just for the record I misstated.
I said the word coal. I didn't mean coal. I meant oil. This is
the dirtiest source of oil from these tar sands, and that is
what I meant to say.
Mr. Whitfield. I am glad you were not talking about coal.
Mr. Waxman. Yes. We are not. I wouldn't want to take you on
on that issue.
Mr. Whitfield. At this time I would like to introduce the
panel, the second panel. We have with us Retired Brigadier
General Steven Anderson, United States Army. He was originally
from California, and we have Mr. Randall Thompson, who is a
rancher in Nebraska, and we welcome you to the hearing. We
appreciate your being here very much, and at this time, General
Anderson, I will recognize you for your 5-minute opening
statement, and I think the little box on the table there, a red
light will come on when the 5 minutes is up. So you are
recognized for 5 minutes.

STATEMENTS OF STEVEN M. ANDERSON, BRIGADIER GENERAL (RETIRED),
UNITED STATES ARMY; AND RANDALL F. THOMPSON, NEBRASKA RANCHER

STATEMENT OF STEVEN M. ANDERSON

Mr. Anderson. Thank you, Mr. Chairman. I am Steve Anderson,
a concerned citizen and part owner of a service-disabled-
veteran-owned small business based in Knoxville, Tennessee. I
would like to begin by thanking the subcommittee for this
opportunity as well as thanking my President for the courageous
decision he made to deny the Keystone XL Pipeline.
Frankly, as a political conservative and a long-time
registered Republican, I don't often agree with President
Obama, but on this matter he absolutely got it right. I
strongly oppose the Keystone XL Pipeline because it will
degrade our national security. The critical element is simply
this: The pipeline keeps our great Nation addicted to oil, a
dependence that makes us both strategically and operationally
vulnerable. As a retired general officer with over 31 years of
service, I believe that I am fully qualified to comment on both
of these vulnerabilities.
The pipeline will keep us dependent upon outside sources to
meet most of our energy needs. In reality Keystone only
addresses a symptom of our illness, the source of our oil. It
does nothing to cure the disease itself, which is our
overreliance on oil, and as nations like China and India
continue to demand more oil themselves, competition will
increase and such international tension threatens our security
and stability that we enjoy today.
Additionally, continued carbon-based energy consumption
drives CO2 emissions that will lead to climate
change and increasingly catastrophic weather events. The
potential instability puts us all at risk.
Furthermore, the pipeline keeps us strategically vulnerable
because our economy will remain petrocentric, and many
thousands of companies developing clean energy technologies and
providing renewable energy solutions won't grow capacity and
capability as quickly as America needs. I believe Keystone will
set back the alternative energy industry in this country 20
years.
Now, 2 weeks ago I read that Dubai will invest $2.7 billion
in solar energy next year. Now, Dubai is an emirate surrounded
by the world's largest oil fields. Their economy is 250 times
smaller than ours, yet they are astute enough to see the
consequences of an oil-dependent economy and are willing to
invest now in renewable energy in a big way. Why aren't we? And
because we are not fully committed to developing renewable
energy capabilities, our soldiers in harm's way are
operationally vulnerable, too.
Serving for 15 months as General Petraeus's senior
logistician in Iraq, I struggled with the challenge of
providing 3 million gallons of fuel every day to sustain our
forces. I saw the huge impact of not having any renewable
energy systems and being completely dependent upon oil-based
power generation.
In consideration of the fully burdened cost of fuel in the
combat zone, taxpayers have been spending well over $30 billion
annually for our fuel needs. That is with a B, billion, and now
that Pakistan has cut off our access to Afghanistan it will be
even higher this year. But the dollar cost doesn't concern me
near as much as the human cost.
Over 1,000 American troops have been killed during the wars
in Iraq and Afghanistan executing fuel missions. We should all
be outraged by this loss of life, and to make matters worse,
our oil addiction is empowering our enemy. Our long supply
lines provide thousands of convenient targets, and the revenues
from satiating our oil habit bring the enemy the resources they
use to kill us.
Imagine the benefits to our military if they were fighting
a much less-capable enemy. Imagine leveraging solar, wind, and
geothermal technologies to end the war sooner to save billions
of dollars and soldier lives.
Now, allow me also to comment on the jobs issues associated
with this pipeline. As a former soldier I am extremely
concerned of the high unemployment rates for our vets. Of
course I want more in employment opportunities for my brethren,
but they need jobs with staying power. They need careers.
America is best served by an economic climate that generates
jobs for vets for 100 years, not 100 days, and every job that
the pipeline produces, a clean energy economy could produce a
thousand.
Bottom line, the pipeline feeds an addiction that makes us
less secure and enables our enemies. Now is the time to make
the hard choices and deal with this disease head on and put our
future economic prosperity in the capable hands of middle
America rather than big oil. I stand before you today
absolutely convinced that the national mission and focus that
put a man on the moon 42 years ago can once again prevail.
Stopping this pipeline today will help set the conditions
needed such that our innate American will to win and
entrepreneurial drive will succeed in breaking our terrible
addiction to oil.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Anderson follows:]
[GRAPHICS IS NOT AVAILABLE IN TIFF FORMAT]

Mr. Whitfield. Thank you, General Anderson.
Mr. Thompson, you are recognized for 5 minutes for your
opening statement.

STATEMENT OF RANDALL F. THOMPSON

Mr. Thompson. My name is Randy Thompson. I am from Martell,
Nebraska. I am here as a Nebraska citizen and landowner. I
would like to thank the chairman and the committee for the
opportunity to be here today.
I would like to start my testimony today by thanking
President Obama for making the right decision by denying the
permit for the Keystone XL Pipeline. I am proud to think that
the voices of Nebraskans had an impact on his decision. Those
of us who live and work along the proposed path of this
pipeline applaud him for placing our welfare ahead of the
interests of big oil companies.
As a lifelong Nebraskan I can honestly tell you that I have
never witnessed any project that has stirred the emotions of my
fellow Nebraskans like the Keystone XL has. Contrary to what
you may have heard from some of our elected officials, I can
assure you that the dust has not settled in Nebraska on this
issue.
TransCanada has built a mountain of distrust among the
ordinary citizens of our State and either with their voluntary
agreement to move the pipeline out of the Sandhills we remain
very skeptical. Many Nebraskans, including myself, view
TransCanada as an overly-aggressive company who thought they
could come in and intimidate and bully their way across our
State, and having witnessed TransCanada's actions during the
application process has made us weary of what they would do if
they were empowered by a pre-mature permit. And I fear that an
early permit would place a tremendous amount of pressure on the
State of Nebraska to hurry through its review process.
TransCanada has been granted plenty of free passes and now
they seek yet another. They want their political allies to free
them from the tangled mess that they themselves help to create.
Perhaps it is time for the free passes to come to an end. If
the Keystone XL truly has merit, then it should be able to
withstand a rigorous and comprehensive review that it deserves
and has not gotten.
If this pipeline is built, thousands of us in the
heartlands will have to live and work next to it for the rest
of our lives and probably for the rest of my kids and my
grandkids' lives. It will cross hundreds of our waterways, our
lakes and streams, and it will only get riskier with the
passage of time.
Short circuiting the review process would be an injustice
and, in fact, a gross injustice to all of us that have to live
and work along the proposed path of this pipeline. Many of us
feel that approval of this project would strip us of our
individual property rights. We do not feel that a foreign
corporation has any right to take our land for their private
use and gain, especially when there has been no determination
that this project is in the national interest. We have seen no
evidence that this pipeline is anything other than export
pipeline, providing access to the world oil market for Canadian
tar sands. Outside of providing a few months of temporary
employment for some Americans, it yields few other benefits.
Mr. Terry himself in a speech a week or 2 weeks ago in the
State of Nebraska said there would be no more than 30 permanent
jobs as a result--in the State of Nebraska as a result of the
pipeline project, and we are being asked to risk some of our
greatest national resources and a lot of folks' livelihoods,
and we are going to get 30 permanent jobs.
Completion of the pipeline would actually increase the
price of the oil we are currently importing from Canada. This
is an undisputed fact. I mean, really, does this make any
sense? We help them build the pipeline, and as a result we end
up with higher oil and fuel prices in the Midwest? You know,
why don't we just take the gun out and shoot ourselves in the
foot. That would make more sense to me.
Perhaps it is just my Nebraska logic, but from my
perspective it appears that the United States is getting the
short end of the stick on this deal. Canada and the big oil
companies are reaping all the rewards while Americans are being
left behind to fix the fences.
Thank you very much.
[The prepared statement of Mr. Thompson follows:]
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Mr. Whitfield. Thank you, Mr. Thompson. I appreciate your
opening statement.
I am going to defer my 5 minutes of questions and at this
time recognize Mr. Pompeo of Kansas for his 5 minutes of
questions.
Mr. Pompeo. Great. Thank you, Mr. Chairman. Mr. Chairman, I
begin by asking unanimous consent to enter into the record an
article that appeared in the Wall Street Journal February 4,
written by Ted Olson. Thank you.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Pompeo. You know, I understand that Mr. Waxman doesn't
like this pipeline. He called this hearing. He asked for
witnesses to come, but the incredible political nature of it
became really apparent when he had his chance to ask questions.
He had 5 minutes. I watched the clock. He spent 4 minutes and
31 seconds testifying. So he drug two folks out from the United
States Government, brought them here this morning ostensibly
because he was keenly interested. He thought it was absolutely
critical that this committee hear from them, and he got between
two and two and a half questions, depending on how you count
them. Twenty-nine seconds. * * *

* * * * * * *

Mr. Waxman. Mr. Chairman, I want to make a point of order.
I know the rules on the House Floor would not permit the
gentleman to make such a personal attack on Members'
motivations or actions. I am happy to answer it when I get my
turn, but if I answer it and don't have enough time for
questions to these witnesses, he will say I didn't ask them
enough questions. But I think it is inappropriate, and I make a
point of order that the words be stricken.
Mr. Pompeo. Mr. Waxman, I----
Mr. Whitfield. Would the gentleman hold for 1 minute?
Mr. Pompeo. Certainly.
Mr. Waxman. Unless the gentleman wants to withdraw those
comments, and then he can go on with his questions.
Mr. Pompeo. Well, I am happy to withdraw them so that we
can proceed this morning. That is fine. I am happy to withdraw
the comments.
Mr. Waxman. Then I withdraw my point of order.
Mr. Whitfield. The gentleman withdraws----
Mr. Waxman. Appreciate the gentleman----
Mr. Whitfield [continuing]. At his point.
Mr. Waxman [continuing]. Withdrawing his personal
statements.
Mr. Pompeo. Certainly. We have now this standard that is
apparently being applied by folks across the aisle. The folks
across the aisle have this we try and decide whether there is a
personal benefit, whether someone would or would not benefit
from a particular stance. This is a private investment. Seven-
billion-dollar private investment.
But, you know, I watched. I wasn't here, but I watched this
committee last year as we were debating and discussing--it was
a little different. We didn't have hearings like this very
often, but I watched them on the floor debate Obamacare and the
Stimulus Package, and there was no discussion from the left
about who might or might benefit from those takings from the
taxpayer, those enormous government programs. And I just think
it is intellectually desperate, dishonest to now for us to all
have this different standard. We should have a standard about
policy. We ought all to do that and not have a standard that--
where we say, Hey, we are looking to see who benefits or who
does not benefit from a particular piece of legislation.
And with that I yield back my time.
Mr. Whitfield. The gentleman yields back the balance of his
time.
At this time I recognize the gentleman from California for
5 minutes for questions.
Mr. Waxman. Mr. Chairman, before I get to questions I want
to point out that since it has been commented that I am being
political, the chairman of the subcommittee raised the issue of
whether the President is in the full campaign mode trying to
respond to these extremists in the environmental side,
attributing his motives for that, and so this is all
Presidential politics and suggested that perhaps we ought to
look at Mr. Soros who has a train that could take this tar
sands oil down to Texas instead of using a pipeline. Well, my
point was never that----
Mr. Whitfield. Warren Buffett, not Mr. Soros.
Mr. Waxman. Excuse me. The other guy that you don't like,
Mr. Buffett. Mr. Soros, Mr. Buffett. So I consider that an ad
hominem political kind of argument.
But my Republican colleagues and the American Petroleum
Institute make several arguments for building this pipeline.
They say we need the oil, it will lower gas prices, it will
make us more secure as a Nation, but the facts just don't
support these claims.
The Energy Information Agency, which is part of the
Department of Energy, is projecting that what America, that
America's oil consumption is no longer growing. It is no longer
growing, and the reason it is no longer growing is because we
have insisted on more efficient automobiles that have better
fuel mileage. The standards for these model years 2017, through
2025, will further reduce our oil dependence.
So with growth and consumption now in check, I don't think
we have to be stampeded into something like this oil tar sands
deal from Canada. This pipeline will not reduce gas prices. In
fact, last year TransCanada admitted to this subcommittee that
the pipeline will raise crude oil prices in the Midwest. There
is a debate over how much it will raise those prices, but
certainly it won't lower them.
So that leaves the question of national security as a
reason why we need to go along with this pipeline, and we have
General Anderson, could you just briefly state what your
experience, your relevant military experience has been?
Mr. Anderson. Thirty-one years service in the Army. I am a
professional logistician, most recently served in the Pentagon
for 2 years as a chief of logistics operations and readiness in
the Pentagon, and before that I was general David Petraeus's
senior logistics officer at the multinational force in Iraq C-
4.
Mr. Waxman. In your statement you said that you didn't
think this pipeline was in our national security interest. You
said that America's oil dependence threatens our national
security. Is this a controversial view among national security
experts?
Mr. Anderson. I don't think so. Certainly, although I am
not sure if I would call myself a national security expert, I
am an expert in regards to experiencing the operational impacts
of our oil addiction in Iraq and Afghanistan, and I still do
work in Afghanistan. I have spent quite a bit of time over
there with my private interests, and I can tell you that we
haven't changed at all in 10 years over there. We are still
incredibly wasteful and inefficient, and we don't have any of
the renewable energy technologies that I believe we need to
save soldiers' lives.
Mr. Waxman. This is not oil that is coming out of Canada
that is going to be put through a pipeline through the United
States. This is a different kind of oil. It comes from tar
sands, and therefore, can have problems in the pipeline.
The TransCanada has already one pipeline. It has been
around for I think a year and a half, and they have already had
14 spills over the last year and a half. So a lot of people are
concerned about the safety of the pipeline, but that is a
pipeline that is not carrying these--this crude oil tar sands
if I am--if I understand the situation. It is not going to
carry this kind of tar sands, and to get the tar sands ready to
go through any pipeline there has to be such a use of energy to
refine it sufficiently to go through the pipeline that it is
going to cause us more greenhouse gases adding to climate
change problems. Is that the way you see it?
Mr. Anderson. That is exactly the way I see it, sir, and I
think that it is very detrimental to this Nation to continue
the CO2 emissions that we are doing and will no
doubt do with the encouragement of this pipeline because I
believe that it ultimately brings about climate change and
global instability. And when that happens, I think the
likelihood that soldiers like myself will have to fight and die
in order to protect the stability of the world is much more
likely.
Mr. Waxman. The threat of tar sands oil spills from
TransCanada's pipeline is another reason why people oppose it,
and Mr. Michael Klink, who is an engineer and a safety
inspector for TransCanada's first Keystone Pipeline that had
those 14 spills, wrote an op-ed in the Lincoln Journal Star,
which I would like to have put into the record, and he
describes seeing the first Keystone Pipeline constructed with
cheap foreign steel that cracked when workers tried to weld it.
I would like to ask unanimous consent that article be----
[The information follows:]
[GRAPHIC] [TIFF OMITTED] T6343.080

Mr. Waxman. And I also have a letter, this is--in addition
to his op-ed I also have a letter from Mr. Klink that I would
also ask unanimous consent to put in the record.
Mr. Whitfield. Without objection.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Waxman. My time has expired. I want to thank the two
gentlemen, Mr. Thompson and General Anderson, for their
testimony. I think that we ought to hear another side to this
issue, not have it ram-roaded through the Congress, not have it
given special-interest treatment. This is a big decision. We
are going to be living with the consequences for maybe 50 to
100 years, and it is in the wrong direction that it is going to
take our Nation in terms of greenhouse gases, in terms of
carbon emissions, in terms of pipeline safety, in terms of
danger to the people around the pipeline, and the taking of the
property from those people whose property is going to be taken
for this special interest purpose.
I yield back the balance of my time.
Mr. Whitfield. The gentleman from Virginia, Mr. Griffith,
is recognized for 5 minutes.
Mr. Griffith. Thank you, Mr. Chairman, and I do appreciate
you gentlemen taking your time to be with us today. We may
disagree on some of this but do appreciate you all's American
citizen success and your rights under our constitution to speak
to your government and do commend you for being here.
I do have some issues with some of the comments about jobs,
you know. We can always argue over the numbers, but one thing
that I find just really interesting is is that if you accept
the argument that folks are going to--the oil is going to come
in and then the oil is going to go to other countries, and this
is just a pipeline to send the oil somewhere else, if that
argument is accepted, you also have to accept the argument that
before it goes to the other countries, it is going to be
refined in the United States, thus adding value. To do that you
have to add jobs to add that value, and when you add that value
you add strength in our economy and tax dollars.
So I recognize the situation you have, Mr. Thompson, being
personal and the property rights involved, and I have not
personally looked at that, but what I do see is a significant
situation where it has been studied for a long time, and I do
believe that there are jobs that are created by having the
Keystone XL Pipeline, and I think a lot of the opposition, not
necessarily yours but others, are folks who do not feel that we
should continue to use carbon-based energy. I think that the
general falls into that category, and I don't agree with that.
Coming from a coal ridge and a natural ridge area of the
United States, I would be remiss if I didn't tell you that I
think that at least for the foreseeable future we are going to
need to use oil, we are going to need to use coal, we are going
to need to use natural gas. While we should be looking at green
energy sources long term, I certainly wouldn't want to put us
in a situation where our military had to rely on solar panels
in order to provide it with the energy that it needs to move
forward. It is certainly something that we should look at long
term, but I think over the next 20 years we are still going to
need our carbon-based fuels, and with that, Mr. Chairman, I
yield back.
Mr. Whitfield. The gentleman yields back.
At this time I recognize the gentleman from Texas, Mr.
Gonzalez, for 5 minutes.
Mr. Gonzalez. Thank you very much, Mr. Chairman, and I want
to thank the witnesses.
And I am going to agree with my colleague that if you are
exporting fuels and this is a refined product from obviously
what we receive from Canada, exporting is good, balance of
trade, creates jobs and such. The real question then comes as
to how you refine it, and I just want to remind my colleagues
on the other side of the aisle that we attended to make sure
that we did it in a more cleaner fashion and more safe fashion,
and that they opposed this every step of the way.
Now, we were able to get a bill out of the House, but we
have never have been able to conclude that. So I am hoping that
they recognize the necessity of a safe and clean refining
industry in this country in the way that we can accomplish and
meet all of the demands of this country.
Mr. Anderson, is that right?
Mr. Anderson. Yes, sir.
Mr. Gonzalez. Again, thank you for your service, first of
all, and thank you for being here today. Thank you, Mr.
Thompson. It is good to hear from you.
I understand what you are saying, and I am going to agree
with you. This is my fear. I am for the Keystone. I am from
Texas, so you know that I still believe in fossil fuel. The
question is how much longer will we still require a reliable
source of fossil fuel in this country.
I understand that many of the studies that are published
come from the oil companies, and they will tell you that we are
going to have domestic dependence for some years to come and
globally even for a longer period of time. I hear your fear
that my support of Keystone may well simply expand the duration
of the time that we may be still dependent.
My position is we will be importing because we need it, and
I would rather get it from Canada and Mexico than anyone else
for national security purpose, but that does not mean that we
should not continue to aggressively view efficiency and
conservation, renewables and alternatives.
So I agree with you there has to be a healthy balance to be
able to accomplish this. To my colleagues on the other side of
the fence, the problem is that you truly just have almost 100
percent dedication to fossil fuels. As much as I understand
that they have to be part of the fix, I am going to give you a
quote from John Quigley, former Secretary of Pennsylvania
Department of Conservation and Natural Resources, in making
reference to how we explore today for fossil fuels and such.
He says, ``We are burning the furniture to heat the
house.'' And that is the caution. That is the cautionary tale
to all of us. Be realistic about our needs in the future, how
we wean ourselves from the dependency on fossil fuel. Everyone
is going to tell you that exploration, production, and refining
of fossil fuels is a twilight industry, but I am here to tell
you that it is a real long twilight, and we can't afford to be
caught without an adequate supply and be depending on
individuals, countries that we will be in jeopardy and in a
flux for years to come.
So I do agree with you, and I thank you again for your
observation.
Mr. Thompson, I do have a question about you. We hear a lot
of complaining about regulation and such in this country, about
its owners, its overburdened. The greatest exercise of
governmental regulation is eminent domain, and you have made
reference to that. So I want to know have you been approached
by TransCanada to negotiate anything regarding some possible
use of your property?
Mr. Thompson. Absolutely.
Mr. Gonzalez. Can you tell me about that experience?
Mr. Thompson. Yes. We were first notified verbally that
they intended to use eminent domain if we didn't go along with
the offer that they had presented us for the use of our
property. We definitely declined to do--enter into any kind of
agreement with them. So they followed up with a written letter
expressly stating that if we did not accept the terms of the
agreement that they had sent to us, that they--if we did not
accept those terms within 30 days, that they would then
immediately proceed to take our land through eminent domain.
And my problem with that, sir, they were still in the
permitting process at this time, and yet they are threatening
me with eminent domain, and they did this throughout the State
of Nebraska. And I will guarantee you, sir, that many, many of
the easements that landowners signed was due to the fact that
TransCanada told them, threatened them with eminent domain. And
there are not too many ranchers or any other ordinary citizens
that are willing to take on a multibillion-dollar corporation,
as we well know.
Mr. Gonzalez. Well, keep us posted, Mr. Thompson. I would
ask you that.
My time is up.
Mr. Thompson. OK.
Mr. Gonzalez. And I hate cutting you off, but I thank you,
and thank you, General. I yield back.
Mr. Whitfield. I am going to continue to defer all my
questions, and I will recognize the gentleman from California,
Mr. Bilbray, for 5 minutes.
Mr. Bilbray. Thank you very much.
First of all, General Anderson, I appreciate your concerns
about, you know, the global environmental issues. Your concern
about this pipeline and its short-term and long-term impact I
think is very, you know, what we want to talk about.
Do you feel that the construction of the Alaskan Pipeline
in the '70s was detrimental to the national security?
Mr. Anderson. I think at that time that was the right thing
to do. It was a different, much different situation, of course.
Now the world has changed, and greenhouse gases and climate
change and world instability are all these things that are much
more in the forefront than they were 40, 50 years ago when we
contemplated the Alaskan Pipeline.
Mr. Bilbray. General, do you think that the, you know, the
physics of environmental reality and the reality of the
political instability of places like the Middle East have
changed dramatically since we--the Congress voted on that
pipeline?
Mr. Anderson. I am not sure if I understand what you are--
--
Mr. Bilbray. I am just saying, I am saying again do you
believe that the physics of environmental impact, issues like
climate change, issues like emissions, toxic emissions and
everything else, and the situations that have historically been
unstable in the Middle East, do you think that there wasn't,
those issues weren't at least if not perceived weren't reality
at that time also?
Mr. Anderson. No. I don't think that they were as developed
as they are today, as apparent as they are today. I don't think
we knew back then the impact of CO2 emissions.
Mr. Bilbray. We didn't know. That is my point. We might not
have known, but the fact is that it was still there. Wouldn't
you agree?
Mr. Anderson. I would concede you that point. Yes.
Mr. Bilbray. What--do you believe the use and or the
development and expansion of the use of nuclear power is a--
contributing to the national security, or do you think that it
is a detriment to the national security?
Mr. Anderson. I consider nuclear power to be clean energy,
and I support its development.
Mr. Bilbray. And I appreciate you using that because one of
the frustrations I have as somebody who has worked in clean air
is people mix the word renewable as if it is all clean and deny
clean energies across the line, and as you know the number one
purchaser of nuclear reactors in this country is the United
States Government, and I appreciate that.
Do you believe that the mandated use of ethanol aids in the
security of this country and its long-term environmental and
economic and military stability?
Mr. Anderson. Not really. No, I don't really believe that.
Mr. Bilbray. In other words, you go along with those of us
that have addressed in the issue in California that ethanol is
not only a very expensive, non-sustainable option, but it is
also a fluting option with evaporative emissions and related
issues that was not clarified when the mandate occurred here in
Washington.
Mr. Anderson. I would agree with that.
Mr. Bilbray. Even though those of us in California tried to
warn Washington of this environmental and economic impact.
Mr. Anderson. I would agree with that. Of course, I am not
an expert in this field. I am talking about national security.
Mr. Bilbray. I understand that, but we are getting back to
this issue of how energy policy affects it.
Would you agree that giving ethanol all of the benefits or
the overwhelming majority of benefits like tax credits, blender
fuels, and everything else while denying other environmental
options such as algaes, the same packet, is counterproductive
to the stated purpose of a national energy independence?
Mr. Anderson. I would agree with that.
Mr. Bilbray. Well, I want to thank you very much for your
testimony, and I appreciate that we approach the challenges.
I would ask that the record show the general very clear
about the fact that what some people perceived as being
environmental damaging in Washington may not be perceived by
the general or myself of being not only damaging but maybe
absolutely essential for environmental and national security
purposes.
And I appreciate it, General, and I yield back.
Mr. Whitfield. The gentleman yields back.
At this time I recognize the gentleman from Massachusetts,
Mr. Markey, for 5 minutes.
Mr. Markey. The Keystone Pipeline would carry some of the
dirtiest oil in the world right through the middle of our
country. It is a double-barrel threat to the environment,
pumping out millions of tons of the pollutants that cause
global warming, also risking oil spills into our ground water.
We have been repeatedly told that approving this pipeline
would lower gas prices at the pump, even though TransCanada
projects that oil prices and its profits would rise because
they can charge more for Keystone oil in the Gulf than it does
in the Midwest.
We have also been repeatedly told to get over our concerns
because the oil coming through this pipeline would enable us to
reduce our dependence on oil imported from unfriendly Middle
Eastern nations, but it turns out that these energy benefits
may be a complete fiction. Many of the refineries where the
Keystone crude will be sent say they will re-export the refined
fuels. They are also located in Port Arthur, Texas, which is a
designated foreign trade zone. This means that when these
refineries re-export the Keystone oil fuels, they won't even
have to pay U.S. taxes on those exports.
And in December when I asked the president of TransCanada
whether he would agree to ensure that the oil and refined fuels
stay here in the United States instead of being re-exported, he
said, no.
Mr. Anderson, last month Canadian Prime Minister, Stephen
Harper, said that, ``When you look at the Iranians threatening
to block the Straights of Hormuz, I think that just illustrates
how critical it is that supply for the United States be North
American.''
Mr., do you think that this bill to legislate a permit for
the Keystone Pipeline is guaranteed to reduce our dependence on
oil transported through the Straights of Hormuz if we don't
have some provision which ensures that the oil stays here in
the United States?
Mr. Anderson. No. I do not believe that it will guarantee
energy security at all for our Nation.
Mr. Markey. The American Petroleum Institute has cited our
friendly relationship with Canada and polls that find that
Americans would prefer to import more oil from Canada. Under
this bill are there any guarantees that all of the friendly
Canadian oil that is sent through the pipeline will be sold
here in the United States?
Mr. Anderson. No. I am not aware of any guarantees that
that will happen.
Mr. Markey. So what I am hearing you saying then is that
there is a threat because they are extracting the oil from tar,
that there is a greater likelihood of a dangerous warming on
the planet and that the benefits as the pipeline goes through
our country are not certain in terms of the oil staying here in
our country to break our dependence upon imported oil.
And so what is the benefit to the American people out of
such a proposal?
Mr. Anderson. There is no benefit. I believe it is a
detriment to the American people.
Mr. Markey. Again, summarize why is it a detriment?
Mr. Anderson. The detriment because it keeps our addiction
to oil, and our addiction to oil makes us strategically and
operationally vulnerable.
Mr. Markey. OK. Mr. Thompson, the route that TransCanada
originally proposed would have gone through Nebraska's
Sandhills. Even if a new proposed route would avoid the
Sandhills, won't it still go through the Ogallala Aquifer?
Mr. Thompson. We--well, we don't know where they are
proposing a new route, so that is a problem. From that I have
heard and what initial proposals they were talking about it
would still cross the Ogallala Aquifer even though----
Mr. Markey. What is the risk if that happens if there is a
spill?
Mr. Thompson. Absolutely there is a risk if that happens.
Mr. Markey. And what would happen to the water table?
Mr. Thompson. Well, if I could quickly explain that our
water table is so high that the pipeline would actually be
buried or submerged directly in the water in many places.
Mr. Markey. Wow.
Mr. Thompson. And so if any type of leak, it is going to go
into our water supply.
Mr. Markey. Wow and what would the impact of that be?
Mr. Thompson. Well, it could be from small to tremendous. I
mean, you got all kinds of small communities and like myself, I
have livestock watering wells, I have irrigation wells that
would be close to the pipeline. They become contaminated, that
property has become virtually useless.
Mr. Markey. And how do you feel about that in terms of the
impact it could have upon your life and the lives of all the
people in those smaller communities?
Mr. Thompson. Well, you know, to put it bluntly, I am angry
as hell when people want to play political football games with
my livelihood.
Mr. Markey. Well, we agree with you. We want Nebraska, the
University of Nebraska to have a good football team, but we
don't want oil pumping at the football games.
Mr. Thompson. You are absolutely correct.
Mr. Markey. With the people in Nebraska and we can see how
their public health could really be in jeopardy.
Mr. Thompson. I just think, you know, somewhere in this
process we need to take a look at the people of America that
actually are going to be, you know, impacted by this thing. It
is not all about money and this and that. I mean, there is
people's livelihoods at stake here, and I mean thousands of us
and our resources. So that needs to enter the debate somewhere
in the process.
Mr. Markey. Thank you, sir, for being here. Thank you,
General, for being here.
Thank you, Mr. Chairman.
Mr. Whitfield. The gentleman's time has expired.
I will now recognize myself for 5 minutes.
And the first thing I want to do is read from a memorandum
from Carmine Defiglio, who is a Ph.D. deputy assistant
secretary for policy analysis at the U.S. Department of Energy,
and in this memo he specifically talks about the issue that Mr.
Markey raised and that is this oil coming from Canada is going
to be ending up exported out of the U.S. And I am going to read
this verbatim.
He said, ``This memorandum provides data and analysis about
a number of issues. It concludes that refiners in the U.S. will
likely consume additional Canadian oil sands well in excess of
what would be provided by the Keystone XL Pipeline. It also
concludes that exports of Canadian oil sands from Port Arthur
are highly unlikely.''
Now, when you hear this argument that as the President
stated in his decision not to make a decision, he said that one
of the reasons he was not going to make a decision was that he
did not have sufficient information to make a decision, that
Congress did not give him enough time. Well, as I had stated in
my opening statement, this pipeline has now been under study
for 40 months.
In the fall of 2011, a supplemental draft environmental
impact statement was issued by the State Department. After
months of public hearings along the proposed route, the State
Department issued its final environmental impact statement, and
in that final environmental impact statement between two
options, one of not building the pipeline versus, two, building
the pipeline, they indicated that the preferred option was to
build the pipeline as proposed.
Now, a person just on the outside not paying any attention
to this--everyone expected the State Department was going to
make its final decision some time in the fall of 2011, and then
all of sudden now it is they said that they would seek a new
route through the State of Nebraska and undergo another round
of studies that would not be complete until the first quarter
of 2013. And that was the stated reason for President Obama not
making a decision, was that--because of this new route through
Nebraska.
Now, when some of the political leaders in Nebraska
realized their concerns were being used by the President to
stop this project, they had a special session of the
legislature was called, and a new law was passed to give the
Nebraska Department of Environmental Quality the ability to
cite and evaluate a new route for the pipeline within
Nebraska's borders in half the timeframe that the State
Department envisioned.
So taking that development into account, the Keystone
provision that was put into the Temporary Payroll Tax Cut
Extension Act allowed the President to approve the pipeline
while the State of Nebraska completed its environmental review.
The final environmental impact statement that the State
Department issued in August of 2011 was deemed satisfactory of
all National Environmental Policy Act requirements, and no
additional Federal review should be required.
Because the route modification of this long pipeline is, in
Nebraska is not an interstate modification, there really was no
Federal role, and since the rest of the pipeline route outside
of Nebraska and its evaluated environmental impact remained
unchanged, there was really no reason for the White House or
State Department to believe that there is not enough time to
make the decision of the pipeline by February 21.
I simply wanted to talk about that because when people
hear, oh, well, the route has changed and that is why we don't
have enough time, but there was a clear explanation of all of
this, and I think I clearly stated it.
In concluding I would just say that, General Anderson, we
genuinely appreciate you being here. I would also like to thank
you for your support and service to our country, and Mr.
Thompson, we appreciate your being here and speaking up on your
personal views about this issue, and Nebraska is in the Big Ten
now. Right? Or Big 12. Right? OK. So we know they will continue
to do well, and we will keep the record open for 10 days for
any additional material that might want to be submitted, and
with that we will conclude the hearing, and thank you all very
much for your assistance and helping us out.
With that, the hearing is concluded.
[Whereupon, at 12:50 p.m., the subcommittee was adjourned.]