PUC on Keystone Pipeline: Approved... with 57 Conditions

The PUC has just approved the permit for the TransCanada Keystone pipeline. It's not all bad: Commissioners Hanson, Kolbeck, and Johnson approved the permit with 57 conditions that do take some good steps toward holding TransCanada accountable for protecting our natural resources and our landowners. Among the highlights:

--$15 million in bonds required to cover road damage and repair (see Condition #31 below)
--Indemnification of landowners for any damage or injury TransCanada may incur on landowners' property (see Condition #57)
--special recognition of risk to the Middle James aquifer in northern Marshall County (see Condition #43)

Kolbeck issues a strong statement criticizing TransCanada for distortions of fact in the hearings and efforts to intimidate landowners criticizing certain interveners -- who remain unnamed -- for distortions of fact and trying to use fear to block this project. He says the gravest concerns about the pipeline were aroused by "gross misstatements of fact." Kolbeck does say that he disapproves of some of TransCanada's dealings with landowners, but, he says, easements and land dealings aren't the PUC's purview. [An alert listener notes that I got Kolbeck's statement wrong the first time. That's what I get for trying to blog while minding a two year old! Go to approx. 1:33:00 in the audio file to hear Kolbeck's comments for yourself, followed by Johnson's and Hanson's.]

Johnson cites three key facts in the record:

1. Pipelines are safe and getting safer, with spills decreasing 58% in last five years and fusion-bonded epoxy now being used to prevent leaks.
2. Spills usually small; median spill size in US is 3 barrels.
3. State DENR experienced inn dealing with spills, finds no permanent environmental damage due to previous spills.

Johnson notes that many wanted PUC to go further, but Johnson says PUC would have had to ignore the law to score political points, only to see its excessive measures overturned by the courts. Johnson feels TransCanada/Keystone has met its burden under law.

Johnson also notes that past disasters haven't paralyzed us, but have helped us learn to build better systems that "make everybody's life a little better." That's what's happened in the pipeline industry, and the evidence proves it, says Johnson.

Hanson recognizes this ruling sets a precedent for future pipelines. With the Elk Point refinery on the horizon, he sees more pipelines coming, and we need to get this ruling right.

Hanson notes that, while a lot of concerns were brought to the PUC about TransCanada's efforts to use eminent domain, the PUC has no legal authority over eminent domain. That's for the courts this spring.

Audio of the TransCanada portion of today's hearing is archived here, along with audio of the press briefing given after the hearing.

Below are my notes from the webcast, plus a list of the 57 conditions. I didn't get all the details down; you'll want to keep an eye out for the trasncript on the PUC website. That document will become an important document in South Dakota's economic and environmental future.
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Notes:
PUC Chair Gary Hanson cites 21 hours of public meetings, plus evidentiary hearings and extensive process, emphasizes this hearing is about whether TransCanada has met the statutory obligations.

Motion: approve subject to conditions approved today; hold action in abeyance pending finalization of conditions.

Hanson says PUC has not discussed this outside of the public meetings, trying very hard to obey open meetings laws. Each member independently wrote up items they thought were important enough to warrant being conditions, sent those items independently for counsel John Smith to draft proposals. Final draft before them today is composite of prior drafts and separate commissioner input.

57 conditions in this draft -- Hanson intends to read each paragraph aloud at this meeting, open for discussion.

First two: technical in nature, complicated, but significant.

Item #1: Keystone shall comply w. all applicable laws and regulations in construction and operation.

Item #2: Keystone shall obtain and comply with all applicable permits.

Item #3: Keystone shall comply with and implement recommendations of US Dept. State 2008.01.08 environmental impact statement.

Item #4: PUC permit not transferable without PUC approval.

Item #5: Keystone shall carry out all actions promised in application and testimony.
--Hearing transcripts as public records will be available "forever" or until obsolete, on website and/or elsewhere, says counsel Smith, in response to questions.

Reporting and Relationships:

Item #6: Establishes the formal description of the proposed route and project as particular documents on record in PUC files. Keystone must notify all relevant agencies of any deviation from route on record as of this hearing. PUC gets to review and approve any modifications. Keystone must submit complete map at completion.

Item #7: Keystone provides public liaison officer approved by PUC to facilitate communciation between Keystone, landowners, residents, and communities to deal with complaints. PUC approves liaison before project begins. Liaison available at all times by mobile phone. Keystone must also maintain website with regular updates on progress of project. Keystone provides contact info to all landowners and law enforcement agencies in vicinity of project.

Item #8: Keystone submits quarterly progress reports on land acquisition, construction, emergency plan development, design changes, overall fiscal percent of completion. Report lists dates, names, results of contacts with all govt agency contacts, documents environmental protection measures. First report due [July 31]* June 30, 2008. Reports continue until project fully operational.
--Kolbeck asks for definition of "fully operational": full capacity? any oil moving? Counsel Smith suggests "once you're pumping product through the pipeline," says language is similar to previous permits, like Big Stone II project.
--*Johnson asks if June 30 better date to square with regular quarters.

Item #9: Keystone public liaison officer reports quarterly to PUC during project, annually for three years after completion about land issues, road repair, other issues.

Item #10: Keystone shall commence program of contacts with state, county, and municipal emergency response agencies to let them know when project will start and what they ought to do to be ready to respond to emergencies.
--Kolbeck wants to make clear that financial burden rests with Keystone to do this outreach, wants to add "at its expense" after commence. Johnson says practically, Keystone probably can't bill counties for such service, but says it can't hurt to include this language. Johnson suggests that inserting that phrase just once here might give TransCanada ground to interpret the clauses not including that phrase as saying that they aren't responsible for those expenses. Kolbeck agrees with Johnson, withdraws suggestion.

Item #11: Keystone conducts pre-construction conference with PUC staff to ensure that Keystone fully understands these conditions.

Item #12: Keystone informs PUC on contruction start date and other dates.

Construction:

Item #13: Keystone complies with all mitigation measures set forth in Exhibit TC1A....

Item #14: Keystone shall incorporate environment inspectors in mitigation and reclamation plan to ensure compliance with this permit and all laws and rules.

Item #15: TC28 Construction agreement with all affected landowners includes landowner option regarding trenching and topsoil removal methods: Keystone will provide explanation to landowners and follow landowner preference. At minimum, Keystone will separate topsoil and subsoil, take steps to prevent soil erosion. Measures commence immediately following backfilling within 20 days in non-residential areas, within 10 days in residential areas.

Item #16: Keystone shall cover all open-bodied dump trucks in transport on public roads.

Item #17: No herbicides or pesticides to be used within 100 feet without landowner/state agency approval.

Item #18: Backfill can use rock only to top of bedrock level.

Item #19: Mulch shall be applied to all slopes with seeding to reduce erosion... (see Staff Exhibit 7).

Item #20: Erosion control matting fabric or riprap shall be installed on banks of waterways where pipeline is laid.

Item #21: If trees removed have commercial or other value, Keystone shall compensate landowner at fair market value or allow owner to retain ownership of trees.
Johnson asks if landowner's only recourse to get fair market value is court, doesn't necessarily want folks to have to sue to get value for trees. Small-claims process process probably already in place, Johnson o.k. with wording.

Item #22: Unless wetland actively cultivated or non-cohesive soil conditions require otherwise, width of construction right-of-way limited to 75 feet in wetlands.

Item #23: Unless wetland actively cultivated, extra work areas to be setback at least 50 feet from wetlands.

Item #24: Vegetation clearing limited between extra work areas and right of way.

Item #25: Wetland boundaries and buffers to be clearly marked with signs or flags until construction activities complete.

Item #26: Extra work areas to be at least 50 feet away from water's edge unless nearby land uses prevent. Clearing of vegetation limited to construction right of way.

Item #27: Water boundary areas to be marked clearly with signs or flags.

Item #28: Spoil from minor waterway crossings to be placed at least 10 feet from waterway, with some exceptions depending on streamflow.

Item #29: Vegetaion maintenance to keep riparian strip at least 25 feet wide; permanently replant right of way with native species.

Item #30: Clear cuts through shelterbelts lim'd to 50 feet; 85 feet in wooded areas.

Item #31: Keystone protects roads, coordinates road closures with state and local govts and emergency responders, keep paved and gravel roads in acceptable conditions, repair and restore any deterioration caused by operations to pre-construction condition, use preventative measures, remove excess soil and mud from roadways, obtain and file with PUC $3 million bond in 2008 and $12 million in 2009 to guarantee road maintenance (bonds stay in effect until PUC releases them after completion of contruction and repair).
Commissioners add that Keystone req'd to inform county commissioners of bond.

Item #32: To protect residential property (within 500 feet of project):
--(a) Keystone coordinates work schedules with residents as feasible
--(b) Keystone maintains access to residential areas for all residents as much as possible.
--(c) Keystone shall install reasonable safety fencing at resident request.
--(d) Keystone shall notify residents in advance of expected utility disruption.
--(e) Keystone repairs any residential damage.
--(f) Keystone restores all residential areas to pre-construction condition.
Johnson askes for "at least" added to (f)

Item #33: Keystone coordinates project activities with State Fair committee....

Item #34: Construction must be suspended when weather means construction will cause irreparable damage except as allowed by PUC.
Idea is to prevent making huge ruts in the mud with equipment, big disruption at stream crossings, excessive turbidity from erosion, application of epoxy in excessively wet conditions (mentioned in hearings).

Item #35: Reclamation and cleanup along right of way must be continuous....

Item #36: All pre-existing roads and lanes used must be restored; areas with temporary project roads must be restored to previous condition.
Counsel Smith suggests option allowing local govts to opt to keep any temporary roads; Hanson approves.

Item #37: Keystone shall prior to an y construction file with PUC list of any private or new access roads required and methods to be used to reclaim those access roads.

Item #38: If winter delays completion of decompaction, topsoil replacement, or seeding, Keystone will prepare and present winterization plan, notify govts.

Operations, Detection, and Response Conditions

Item #39: Keystone shall construct and operate pipeline in accordance with permit and statements it made in hearing.

Item #40: Keystone shall require compliance by shippers with its crude oil specs to minimize potential for internal corrosion.

Item #41: Keystone's obigation for maintenance for right of way continues throughout life of pipeline.

Item #42: Keystone shall continue to evaluate environmental conditions in sensitive areas before construction; Keystone shall seek out local expert knowledge (landowners, GF&P, etc.) for guidance.

Item #43: Northern Marshall County has risk of Middle James aquifer contamination; Keystone must take special measures.

Item #44: Prior to operation, Keystone must file emergency response plan and regular operations plan. If info is filed as confidential, PUC and requesters of info may contest confidentiality.

Item #45: Periodic leak surveys: corridor centered on pipeline and 15 feet in width to be maintained in herbaceous state to allow access.

Item #46: periodic leak surveys in riparian areas: corridor centered on pipeline and 10 feet in width to be maintained in herbaceous state.

Item #47: Detecting leaks or indicators of leaks: TransCanada said tech doesn't exist for reliable remote monitoring; PUC requires that TransCanada report on or before April 1, 2010 on new tech developments in this area.
Hanson asks if we could have further reports in future; counsel Smith says discussions have suggested requiring reporting forever not useful or fair. Hanson concerned TransCanada may not act on future tech after 2010 requirement, wants some assurance that TransCanada will implement. Johnson says PUC dealing here with a siting document, maybe stretching to claim authority over future tech implementation. Hanson recognizes argument, still wants to do something. Johnson unclear on justification for singling out this technology for such PUC action, says fed govt and case law say such a condition is not PUC jurisdiction. [CAH: I'd like to hold TransCanada accountable too, but I think Johnson makes a good legal argument; we might have to leave this one to future regulation by the Legislature.] Johnson asks for compromise, suggests some finite reporting burden, says reporting in perpetuity unprecendented. Hanson says reporting every three years until given date would be o.k. Johnson suggests triennial reports until 2019. Kolbeck comfortable with that, asks if we could add a stipulation that reporting could be continued beyond 2019 at PUC's discretion; Johnson says that's the same as claiming authority to require reporting in perpetuity. Johnson also notes 6000 miles of hydrocarbon pipeline already in state without such tech-reporting requirements. Hanson directs counsel Smith to redraft condition to a triennial reporting requirement at PUC request; Johnson emphasizes need for very narrow wording, no blanket requirement, just one report requirement at a time; Johnson suggests removing the timeframe, leaving it at PUC request; Hanson says he likes the 2010 date; Johnson asks for sunset date, just to make the condition more legally defensible as part of this siting proceeding rather than the establishment of new jurisdiction. Kolbeck concurs, suggests sunset of 2015. Johnson asks if such reports would even do any good: would we understand the tech described? Hanson recommends sunset in 2022; Johnson wants sooner. 2019. Four triennial reports.

Environmental Conditions

Item #48: Except as waived by owner or lessee in writing, noise levels of pump stations and other facilities not to exceed 55 dB standard at nearest occupied residence, business, etc. Noise measurements to be done by independent third-party approved by PUC. If noise levels exceed standards, Keystone will promptly bring facility into compliance and report to PUC to demonstrate noise limits met.
Johnson checks that 55 dB is standard for Groton II and other projects; Counsel Smith says yes.

Item #49: At request of landowner or public water supply system, Keystone shall replace at no cost to landowner or water system any polyethylene pipe near the project. AT least 45 days prior to beginning construction, Keystone shall publish in a local paper a notice advising landowners of this condition.
Johnson notes this doesn't apply to PVC pipe

Item #50: if during contruction Keystone discovers any archeological or other culturally historically important resource, Keystone will stop, report, develop protection plan to salvage, avoid, or protect the resource; must obtain permission for new route before continuing.

Item #51: Keystone shall promptly report presence of any habitat for threatened or endangered species.

Item #52: Keystone shall keep a record of drain tile information throughout project, include drain tile info in emergency plans.

Liability for Damage

Item #53: Keystone shall repair or replace all property removed or damaged during all phases of project, including all fences, gates, irrigation systems, etc. Keystone shall fully compensate for crop, livestock, productivity loss, etc.

Item #54: If Keystone contaminates a well, Keystone pays all costs of finding and installing a water supply of equal or better quality, plus compensate for damages.

Item #55: Any damage from soil disturbance paid for by Keystone

Item #56: No person held repsonsible for a pipeline leak that occurs due to his/her normal farming practices over pipeline.

Item #57: Keystone shall hold landowner harmless for any loss, damage, or injury during project unless caused by gross negligence or deliberate action of landowner.