Market News

 July 11, 2013
The New Projected Midwest Pipeline Not Named Keystone XL

 As the Keystone XL (KXL) pipeline remains in limbo though the federal government, a similar project is beginning to take shape -- and the new project may get approved long before its controversial counterpart.

The Flanagan South pipeline, proposed by Enbridge Energy, would carry oil from Illinois to Oklahoma through Missouri, connecting to a hub in Cushing, Oklahoma. The picture below, courtesy of Midwest Energy News, illustrates its exact 600-mile path; showing how Flanagan South would essentially run parallel to the Spearhead pipeline which began moving crude oil for Enbridge in 2006.

Enbridge Energy is seeking quick and effective legal solutions for the new pipeline. Fortunately for them, Enbridge has the advantage of not needing approval through the State Department. Unlike Keystone XL, the Flanagan South pipeline doesn't cross an international border, giving this pipeline the benefit of not having to be mired in red tape -- at least from that extension of the federal government.

Nationwide Permit 12 Open to Interpretation

Enbridge has filed a shortcut measure known as Nationwide Permit 12, or Nationwide 12, for the Flanagan South projected pipeline. One of the advantages of filing for a Nationwide Permit 12 is it requires no public notification on behalf of the drilling company, which would clearly minimize the level of public protest against the pipeline. In order to qualify for Nationwide 12, the US Army Corps of Engineers must first determine if the project is deemed overly hazardous to nearby wetlands before allowing Enbridge to proceed.

The language of the permit is tricky, however. For example, the law states that the pipeline will qualify for Nationwide 12 if it disturbs less than one-half acre of wetland in a "single and complete project." And since the Flanagan South pipeline crosses nearly 2,000 streams and rivers -- including the Missouri and Mississippi rivers -- it's a virtual certainty that a sum of one-half acre of wetland would be disturbed from the 600-mile project. Based on that information, the Sierra Club believes the Flanagan South pipeline would not qualify for Nationwide Permit 12.

With that said, if the pipeline is approved by the Corps, the Sierra Club says they are reading into the intent of current wetland regulation incorrectly. Within the permit's jurisdiction, the Corps has the authority to characterize every stream as a "single and complete project," meaning they have the legal right to permit the entire 600-mile project if they verify each individual stream 'project' doesn't harm over a half-acre of wetland.

So what may legally occur are many acres of wetland damage across the entire project, spread out at less than a half-acre for each stream, but the Corps could still accept the Nationwide 12 request. Because of this legal interpretation by the Corps, Doug Hayes, staff attorney for the Sierra Club, believes the Nationwide Permit 12 "violates the intent of the Clean Water Act."

On a related note, Nationwide 12 was also attempted by TransCanada in the early stages of the Keystone XL project -- until two lawsuits were filed by the Sierra Club soon after.

As it stands today, the case for Keystone is currently being reviewed by a federal judge in Oklahoma. Meanwhile, Enbridge awaits word from the Army Corps of Engineers for a final ruling -- barring any snags, they expect to begin pipeline installation by August.