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					    Stateline
      Midwest                                           THe MIDwesTeRN OffICe Of THe COuNCIL Of sTATe GOVeRNMeNTs
                                                                                                                                                                                             Vo l. 2 0 , No. 1 2 • D e ce mbe r 2 0 1 1




INSIDE
CSG Midwest Issue Briefs 2
                                                                    Decisions on oil pipeline
                                                                    run through Midwest
• States strengthening review of increases
in health care premiums
• State export-promotion programs
getting a boost
• Change in federal law could lead to horse
processing facilities opening again
• State, provincial lawmakers raise concerns                        Nebraska special session shows role for states in
about impact of “Buy American” proposal
                                                                    project that aims to boost U.S. use of Canadian oil
Around the Region 4
Fiscal data show states being squeezed;
                                                                    by Ilene Grossman (igrossman@csg.org)
policies on health care for retired legislators




                                                                    T
                                                                          ransCanada has faced many hurdles
Question of the Month 5                                                   in its multi-year effort to get a new         The Keystone XL pipeline project: A time line of the
What are the similarities and differences in
states’ graduated driver’s license laws?
                                                                          1,700-mile oil pipeline built.                application and approval process
                                                                        But this fall, the energy infrastructure          September 2008 — TransCanada application to build pipeline received by u.s. state
Feature Story 6                                                     company ran up against perhaps its stiffest          Department, which publishes a notice of intent to prepare environmental impact statement, meets with
Federal legislation would strip Great Lakes                         opposition yet — from concerned residents            communities/tribes along the route and consults with other federal agencies.
states of authority on ballast water permitting                     and lawmakers in the state of Nebraska.
                                                                                                                          April 2010 — Draft environmental impact statement issued, followed by public meetings and
                                                                        “Every Nebraskan has an opinion about            comment period.
Profile 8                                                           two things right now,” state Sen. Ken Haar
Kansas Rep. Paul Davis                                              said in advance of a special legislative session        April 2011 — supplemental draft environmental impact statement issued, followed by
                                                                                                                         comment period.
                                                                    called by the governor in November, “Big
FirstPerson 9                                                                                                                  August 2011 — final environmental impact statement concludes that the Keystone XL
                                                                    Red football and the Keystone pipeline.”
Kansas Sen. Tim Owens on his state’s                                                                                     pipeline would not cause any significant impact to resources along the pipeline route.
new law to prevent drunk driving                                        Public outcry over the Keystone XL
                                                                    pipeline being routed through the Sandhills,          September 2011 — Review period begins with public meetings in states and consultations
CSG News & Events 10                                                an ecologically sensitive area of the state that     with at least eight federal agencies.
• CSG policy academies foster collaboration,                        also contains areas of shallow groundwater,           November 2011 — Nebraska unicameral Legislature holds special session due to concerns
learning among state legislators                                    had been building for months.                        about pipeline being routed through sandhills and Ogallala Aquifer.
• Donna Brazile, Rich Galen and P.J. O’Rourke to be                     That outcry ultimately resulted in a
featured speakers at 2012 MLC Annual Meeting                                                                              November 2011 — TransCanada agrees to work with the state of Nebraska on developing an
                                                                    special legislative session in November, new
                                                                                                                         alternative route for the pipeline.
Capitol Clips 12                                                    laws that will beef up Nebraska’s oversight
                                                                    of future oil-pipeline projects, and an agree-        November 2011 — Citing the need to explore alternative routes for the pipeline, the u.s.
• Caught on tape: Illinois legislature OKs use                                                                           state Department announces that a final decision will be delayed until at least the first quarter of
of speed cameras near parks and schools                             ment to reroute the proposed pipeline away
                                                                                                                         2013. Previously, an announcement on whether to grant a presidential permit for Keystone XL had
• Fracking legislation: Differing proposals                         from the Ogallala Aquifer, a critical resource       been expected by the end of 2011.
emerge on use of oil and recovery process                           for irrigation and drinking water.
• Leaving No Child Left Behind: States seeking                          The events in Nebraska were also cited         any new proposal from TransCanada or                   already had on the books.
waivers for new direction in education policy                       by the Obama administration when it an-            other pipeline projects.                                   In Montana, for example, the state’s
• Paperless legislatures: Indiana latest state trying               nounced that a decision on whether to grant           Prior to those measures being passed,               Major Oil Pipeline Siting Act requires
to cut down on use of paper during session
                                                                    the necessary presidential permit for the          Haar says, Nebraska had lacked the kind                that major projects apply for certification
                                                                    project would be delayed until 2013.               of pipeline-siting laws that some states               from the Department of Environmental
    Stateline Midwest is published 12 times a year                      A final decision was originally ex-
                                                                                                                                                                                                         PLeASe TuRN TO PAGe 6
    by the Midwestern Office of                                     pected by the end of 2011. As a result, the
    The Council of State Governments.                               controversy over constructing a pipeline                                                                                          Alberta oil sands
    Annual subscription rate: $60.                                  that would bring oil from Alberta’s oil                                                                                           development, mining
    To order, call 630.925.1922.                                    sands to U.S. refineries and consumers                                                                                            and exploration
                                                                    will continue over the next year.                                                                                                 continues, as does
                                                                                                                                                                                                      the controversy over
                                                                                                                                                                                                      plans to build a
                                                                    More state oversight of pipelines                                                                                                 pipeline that would
                                                                    During Nebraska’s special session,                                                                                                allow much more of
    CSG Midwestern Office Staff                                     TransCanada — the energy infrastructure                                                                                           this oil to be shipped
    Michael H. McCabe, Director                                     company that developed plans for and will                                                                                         to and used in the
    Tim Anderson, Publications Manager                              own the pipeline — agreed to work with                                                                                            U.S. The pipeline
    Cindy Calo Andrews, Assistant Director                          the state of Nebraska on a new route.                                                                                             expansion would go
    Ilene K. Grossman, Assistant Director                                                                                                                                                             through the Midwest.
    Lisa R. Janairo, Senior Policy Analyst                             The Legislature, meanwhile, passed
                                                                                                                                                                                                      (photo: David Webb/
    Laura Kliewer, Senior Policy Analyst                            two bills to improve state oversight over
                                                                                                                                                                                                      Dreamstime.com)
    Gail Meyer, Office Manager
    Laura A. Tomaka, Senior Program Manager
    Kathryn Tormey, Policy Analyst/Assistant Editor
    Kathy Treland, Administrative Coordinator and Meeting Planner
       Cover sTory
         CONTINueD FROM PAGe 1


       Concerns about pipeline lead to new siting laws in Nebraska and rerouting of project
       Quality.                                                                                                                                             as additional jobs for communities along
            In Minnesota, North Dakota and South Dakota,                      Keystone oil pipeline in the Midwest                                          the pipeline route.
       the states’ public utilities commissions have the               From oil sands
       authority to approve or deny applications to construct            in Alberta                                                                         Pipeline through 6 Midwest states
       crude oil pipelines. (South Dakota granted a permit
                                                                                                                                                                         The first presidential permit allowed the
       for Keystone XL in 2010, contingent on TransCanada
                                                                                                                                                                         construction of an oil pipeline from Alberta
       meeting 50 different conditions; the pipeline route
                                                                                                                                                                         to refineries in the Illinois towns of Wood
       did not run through Minnesota and North Dakota.)
                                                                                                                                                                         River and Patoka.
            Nebraska, though, had no such processes in place
                                                                                                                                                                              That pipeline, which runs through six
       — until November.
                                                                                                                                                                         Midwestern states — North Dakota, South
            The new laws approved during the special session
                                                                                                                                                                         Dakota, Nebraska, Missouri and Illinois —
       will establish a siting permit process for the state
                                                                                                                                                                         became operational in 2010. A second phase
       while also authorizing and funding an environmental
                                                                                                                                                                         of the project was up and running in 2011; it
       impact study of TransCanada’s proposed pipeline.
                                                                                                                                                                         extends the pipeline to storage and distribu-
            “From the beginning, I sought a process similar to
                                                                                                                                                                         tion facilities in Oklahoma.
       what neighboring states have to determine the route of
                                                                                  To re neries in                                                                             The goal of an additional pipeline expan-
       oil pipelines,” says Nebraska Sen. Annette Dubas, who
                                                                              Oklahoma and Texas                                                                         sion — the Keystone XL project — is to create
       helped push for the special session and served as the
                                                                                                                                                                         a new route carrying oil from Alberta’s oil
       sponsor of the Major Oil Pipeline Siting Act, LB 1.                         Existing Keystone pipeline                                                            sands to Port Arthur, Texas. It would dramati-
            Under this new law, the Nebraska Public Service
                                                                                                                                                                         cally increase the amount of oil that could be
       Commission has the authority to evaluate and approve                       Proposed Keystone XL expansion*                                                        shipped to and used in the U.S.
       applications to site major oil pipelines in the state. The
                                                                      * TransCanada has agreed to work with the state of Nebraska on an                                       The new pipeline would also transport
       applicant will have to pay any costs associated with
                                                                      alternative route that addresses concerns about the proximity of the                               oil produced in Montana, North Dakota and
       public hearings and state investigations.                       proposed Keystone XL project to the Sandhills region and the Ogallala                             South Dakota; according to TransCanada
            LB 1 also sets time lines for the commission to            Aquifer.
                                                                                                                                                                         spokesman Shawn Howard, about 25 percent
       make a decision — seven months upon receipt of the                                 Source: CSG Midwest map (using information from TransCanada)
                                                                                                                                                                         of the oil carried in the pipeline would come
       application, though the commission could extend that
                                                                                                                                                                         from those states.
       time period by another five months for “just cause”               TransCanada officials say they have been surprised                                        In all, the pipeline could transport up to 830,000
       — and requires a company to have an approved ap-             at the level of opposition to the project.                                             barrels of oil a day.
       plication before it is given eminent domain rights.               “Four years ago, we thought it would be embraced                                          Regardless of whether Keystone XL is built,
            This new state law, though, will not apply to any       with great enthusiasm,” Scott Farris, director of
                                                                                                                                                           Canadians will not sit on such a valuable energy
       new rerouting plan for TransCanada’s Keystone XL             government relations for TransCanada, said dur-
                                                                                                                                                           resource. Some Canadian officials, including federal
       project. The Legislature instead crafted a second bill       ing a policy session in October at The Council of
                                                                                                                                                           finance minister Jim Flaherty, have said that Canada
       to deal with that project.                                   State Governments’ National Conference & North
                                                                                                                                                           could also look toward other pipeline options and
            Under LB 4, the state Department of Environmental       American Summit.
       Quality will conduct a $2 million environmental                                                                                                                                  export markets for the oil sands.
                                                                         The first two phases of the
       impact study (paid for by the state) and prepare                                                                                                                                 Flaherty told Bloomberg News
                                                                    pipeline project had already                                Crude oil production
       recommendations to the governor, who will then                                                                                                                                   that one possibility would be
                                                                    been completed without resis-                              in Midwest vs. amount
       notify the federal government whether the state                                                                                                                                  to build a pipeline to British
                                                                    tance, he said, and the proposed                          imported into u.s. from
       approves or disapproves of the new route.                                                                                      Canada (2010)*                                    Columbia for export to Asia.
                                                                    Keystone XL expansion would
                                                                                                                                                                                            As pipeline proponents
                                                                    bring additional jobs and reduce                                                      Thousand
       Long route for pipeline approval                             U.S. dependence on oil from                                     State                barrels per
                                                                                                                                                                               U.S.
                                                                                                                                                                              rank
                                                                                                                                                                                        have noted, too, Canada is a



       T
                                                                    more-hostile parts of the world.                                                           day                      friend, neighbor and stable
             he special session in Nebraska put the state                                                                                                                               democracy — qualities that
             at the center of an international controversy               The first part of the pipeline Illinois                                                25              14
                                                                    project received a permit in less Indiana                                                                           aren’t necessarily true of some
             over the pipeline and the use of oil from the                                                                                                       5              22
                                                                    than two years. (That permit was                                                                                    other countries from which the
       province of Alberta’s oil sands.                                                                                 Kansas                                  111              9      U.S. gets its oil.
           Haar says his constituents have not necessarily          approved by President Bush in
                                                                    2008.) In contrast, TransCanada                     Michigan                                 18             16          “When a nation [like the
       been against tapping into the oil sands or even build-
                                                                    submitted its application for Nebraska                                                        6             21      United States] imports three
       ing a new pipeline through Nebraska. (An existing
                                                                    Keystone XL in September 2008 North Dakota                                                                          times more energy than it pro-
       Keystone pipeline, in fact, already runs through the                                                                                                     310              4
                                                                    and will now have to wait until Ohio                                                                                duces, it makes sense to go
       state). What they didn’t like was the proposed route.                                                                                                     13             18
                                                                    at least 2013 for a final decision                                                                                  next door to borrow a cup of
           But outside of Nebraska, opponents of the                                                                    south Dakota                              4             25
                                                                    on the presidential permit.                                                                                         sugar or borrow a million barrels
       project have been asking another question: Should
                                                                         The Obama administration Midwest total                                                 492            —        of oil a day,” Murray Smith, a
                                  a pipeline transporting oil
                                                                    cited recent developments in Crude oil imported into                                                                former member of the Alberta
                                  from Alberta’s oil sands to                                                                                                 1,929            —
                                                                    Nebraska as the reason for the U.S. from Canada                                                                     legislature who now works in
                                  this country be built at all?
                                                                                                                        * The U.S. Energy Information Administration reports that the
                                                                    delay, but the decision was also Midwest was home to eight of the 31 oil-producing states in                        the private energy sector, told
                                      That question will be
                                                                    expected to be politically diffi- the United States in 2010. The state data and rankings do not                     legislators at the CSG summit.
                                  debated for at least an-
                                  other year even if a new
                                                                                                                        include offshore production. Canada is the leading supplier
                                                                    cult, in part because the decision of crude oil imports to the United States, accounting for 21                         Canada, in fact, already is
                                  route addresses Nebraska’s        split union and environmental percent of the total.                                                                 the leading supplier of U.S. oil
                                  specific concerns about           groups.
                                                                                                                                     Source: U.S. Energy Information Administration     imports (21 percent of the total),
                                  potential contamination of             The Nat iona l Wi ld life                                                                                      with the oil sands accounting for
                                  the Ogallala Aquifer.             Federation, for example, says the proposed expansion                                                                170 billion barrels of Canada’s
                                      Opponents say the             is a “game-changer” that would “lock the U.S. into a                                   176 billion barrels of proven reserves. Another 315
         Sen. Annette Dubas
                                  pipeline will take the U.S.       dependence on this dirty fuel and drive a massive                                      billion barrels could potentially be captured with
                                  on the wrong energy path:         expansion of the tar sands operations in Alberta.”                                     advances in technology and the recovery process.
       a greater use of fossil fuels (the oil sands, in                  Key unions, meanwhile, have hailed the proj-                                              Whether the U.S. decides to use more of that
       particular, have been criticized because of the              ect’s “game-changing economic benefits”: more                                          oil remains to be seen. But as the recent special
       amount of greenhouse gases emitted during the                jobs and state and local tax revenue. TransCanada                                      session in Nebraska shows, any pipeline project
       recovery process) and an abandonment of efforts              has said the expansion would create 20,000 U.S.                                        will likely need the backing of all states along the
       to reduce the country’s carbon footprint.                    jobs in construction and manufacturing, as well                                        proposed route.



6   STATELINE MIDWEST December 2011

				
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