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South Dakota Public Utilities Commission
Frequently Asked Questions about the TransCanada Keystone Pipelines

Feb. 11, 2011

This document addresses questions about two crude oil pipeline projects in South Dakota. The projects, constructed by TransCanada, include the Keystone Pipeline in operation in eastern South Dakota and the Keystone XL Pipeline, proposed to be constructed in western South Dakota.

PUC INVOLVEMENT

What is the role of the PUC in the construction of the Keystone and Keystone XL crude oil pipelines?
The South Dakota Energy Conversion and Transmission Facilities Act gives the PUC authority to grant, deny, or grant with conditions a permit to construct the crude oil pipelines in South Dakota. See SDCL Chapter 49-41B and ARSD 20:10:22

Has the PUC granted the application for the pipelines?
The PUC granted the permit for the TransCanada Keystone Pipeline with 57 conditions on April 25, 2008. These conditions are listed as Exhibit A (1,636 KB) beginning on page 32 of the Final Decision and Order. 

The commission granted the permit for the Keystone XL Pipeline on March 12, 2010, with 50 conditions. Parties to the docket requested certain conditions be reconsidered, and as such, the commission approved an amended final decision and order on June 29, 2010. The conditions can be found as Exhibit A (2,212 KB) beginning on page 25 of the Amended Final Order.

TransCanada Keystone Pipeline has applied to the U.S. Department of State for a Presidential Permit authorizing the construction, operation, and maintenance of their proposed Keystone XL Pipeline project.

What does the PUC consider when making the decision to grant or deny a siting permit?
State law provides the PUC's responsibility to determine whether to grant, deny or grant with terms, conditions or modifications a permit for the construction of a transmission facility, such as the crude oil pipeline being constructed by TransCanada. The PUC does not have authority over the actual route of the pipeline. A permit to construct a pipeline may be granted if the PUC determines the pipeline will produce minimal adverse effects on the environment and upon the citizens of South Dakota. State law further describes that the applicant, Keystone, must prove the project will comply with laws and rules; pose no threat of serious injury to the environment or current or future inhabitants; not substantially impair the health, safety or welfare of inhabitants; and not interfere with the orderly development of the region. See SDCL 49-41B-22 for the details of these four elements of proof the applicant must meet.

When was the last time the PUC considered a pipeline route through South Dakota?
The most recent pipelines of significant size the PUC considered have been the TransCanada Keystone XL crude oil pipeline in 2010, the TransCanada Keystone crude oil pipeline in 2008, South Dakota Intrastate Pipeline natural gas pipeline in 1993, and Northern Border Pipeline Company natural gas pipeline in 1982.

When did work on the Keystone Pipeline begin in South Dakota?
Construction on the pipeline in eastern South Dakota began in July 2008. In April 2010, the pipeline began transporting oil in South Dakota. The pipeline was fully operational in June 2010. See construction progress reports.

Construction has not yet begun on the Keystone XL Pipeline. The company reports it anticipates beginning construction in late 2011.

What are the lengths of each of the Keystone Pipelines and what counties do each cross?
The entire length of the Keystone pipeline is 2,148 miles; approximately 220 miles of it crosses South Dakota through portions of Marshall, Day, Clark, Beadle, Kingsbury, Miner, Hanson, McCook, Hutchinson and Yankton counties.

Keystone XL is proposed to stretch 1,980 miles, from Alberta, Canada, to the U.S. Gulf Coast in Texas. The South Dakota portion of the project will be approximately 314 miles in length and will extend from Montana to Nebraska, crossing the South Dakota counties of Harding, Butte, Perkins, Meade, Pennington, Haakon, Jones, Lyman and Tripp.

How will local roads be affected by the Keystone projects?
As a condition of the permit granted by the PUC, all roads impacted by construction of the pipelines are required to be repaired to the condition they were in before construction, taking into account normal wear and tear. An indemnity bond is held to ensure this is completed; otherwise counties can call on the bond to fulfill this work. The entire bond required for the first Keystone pipeline is still intact, and has not been utilized by any county. Details of the bonding requirement for Keystone XL can be found under Condition 23 (2,212 KB) on page 32 of the PUC order

What about the land that is displaced by the construction?
After construction is completed, the land is to be returned to pre-construction condition, including separating soil types, re-seeding prior crops or vegetation, and undertaking erosion control measures. Specifics related to the Keystone XL project can be found under Condition 16 (2,212 KB) on page 28 of the PUC order.

What is the role of the PUC in monitoring the operation, maintenance and safety of the pipeline during operation?
The PUC's authority over the Keystone Pipeline is limited to the issuance or denial of a permit to construct the pipeline in South Dakota. Much of the activities surrounding the pipeline that occur during the construction, operation and maintenance of the pipeline are under the jurisdiction of other state and federal agencies.

LEAKS

If a leak occurs after the Keystone Pipelines are in operation, what is the responsibility of the landowner who signed the easement with the company?
Landowners should direct questions about easements and protections to their own attorneys. South Dakota law provides that owners and operators of pipelines are responsible for remediating contamination caused by pipeline leaks and compensating those damaged, with liability also potentially lying with persons whose actions caused the leak (such as those striking the line with construction equipment). See SDCL Chapter 34A-12 and Conditions 48 and 49 (2,212 KB) on page 38 of the PUC order for the Keystone XL Pipeline and Conditions 56 and 57 (1,636 KB) on page 15 of the order for the Keystone Pipeline.

What protection does the PUC provide to South Dakotans, particularly landowners and owners of other infrastructure, if the Keystone Pipelines experience a leak?
Some of the conditions the PUC placed upon the permit for the first Keystone Pipeline (approved in April 2008) and for Keystone XL (approved on reconsideration in June 2010) address disturbed or damaged property and TransCanada's responsibility to repair or pay for certain damages. Additionally, a damaged landowner could seek recourse outside the PUC for any damages to private property that result. All property rights and recourses located in South Dakota Codified Law are applicable in this situation. 

If a leak occurs on a Keystone Pipeline that contaminates an aquifer in South Dakota, what authority does the PUC have over TransCanada?
The PUC's authority over the Keystone Pipeline is limited to the issuance or denial of a permit to construct the pipeline in South Dakota. Much of the activities surrounding the pipeline that occur during the construction, operation and maintenance of the pipeline are under the jurisdiction of other state and federal agencies. The South Dakota Department of Environment and Natural Resources (DENR) has jurisdiction over contamination of ground water resources in South Dakota, including contamination caused by a pipeline. Certain aquifer contamination is also under the jurisdiction of the Environmental Protection Agency and/or the Coast Guard.

How much is the average leak?
Evidence in the Keystone XL hearing stated if a spill were to occur on the Keystone XL pipeline, federal Pipeline and Hazardous Materials Safety Administration (PHMSA) data indicate the spill is likely to be three barrels or less. According to DENR records, four spills have occurred along the first Keystone pipeline in South Dakota. All have occurred at Keystone pumping stations, and were contained and cleaned up on-site. Only Keystone property was affected. The average spill amount was approximately 30 gallons. However, three spills were ten gallons or less. The third was larger; approximately 100 gallons of crude oil were released over an area of 60 feet by 110 feet.  All spills were contained on site and all affected soil and water was removed. Each spill was cleaned up at TransCanada's expense according to DENR requirements.

How long until a leak can be detected?
The time required for detection of a leak varies according to the size of the leak and other factors such as location. Keystone will operate the XL pipeline using a state of the art Supervisory Control and Data Acquisition system with 24/7 monitoring of the SCADA leak detection systems. Keystone will also be required to do fly over visual inspections and other on-the-ground visual inspections on a regular basis in accordance with federal regulations and the permit conditions. Testimony (1,066 KB) from the first Keystone pipeline proceedings describes the leak detection systems in more detail. 

Additionally, all interstate pipelines are subject to federal (PHMSA) regulation. As such, the PUC ordered all required plans, programs, and procedures be prepared and filed with PHMSA before the pipeline was able to be in operation.