An EPA letter that was once a mere blip on the radar for the Keystone XL oil pipeline may now be the last federal regulatory obstacle facing the controversial project.

Seven months ago, EPA scientist Jane Watson wrote to the U.S. Army Corps of Engineers urging a more thorough review of the pipeline’s water crossings. TransCanada had applied to the Corps for a blanket nationwide permit, the kind granted to projects with minimal impacts on waterways.

But Watson identified 61 crossings in southern Texas alone that weren’t eligible for these general permits.

Watson’s letter, sent on Nov. 8, attracted little attention. The Army Corps’ role was minor compared to the State Department, the agency that was then in charge of the pipeline review, and the Corps didn’t respond to the letter.

But everything changed after the Obama administration denied the pipeline permit in January. TransCanada split the project in two, and the Army Corps is now the main agency in charge of the southern segment (dubbed the Gulf Coast Project), which would help relieve the glut of oil in Cushing, Okla. by shipping it to refineries and ports along the Texas Gulf Coast.

Approval from the Army Corps is virtually all that stands between TransCanada and pipeline construction.

“Obviously the critical permits are the water crossings,” company spokesman Shawn Howard told InsideClimate News. He added that the company may also need some minor permits at the local level.

TransCanada hopes to start building in late summer, and President Obama has said he supports the project. At a press briefing on Monday, White House Press Secretary Jay Carney told reporters that the administration “has approved the various permits that needed to be approved at the federal level, [and] the President has urged that that process be expedited.”

But the Army Corps told InsideClimate News on Wednesday that the agency has not approved TransCanada’s application.

“I don’t know what Mr. Carney … was speaking to, but it wasn’t about us,” Army Corps spokeswoman Martha Cenkci wrote in an email.

The White House press office didn’t respond to a request for clarification.

TransCanada reapplied for the Corps’ nationwide permit last month. The permitting process offers no opportunity for public comment, and that has angered some Texas residents who own property along the route. Pipeline opponents say Watson’s letter proves that the project requires a more rigorous and transparent review.

Cenkci said her agency could not comment on the letter. “EPA wrote the letter, therefore it is within their area to address what they meant, and what their stance is now,” she wrote in an email. The current pipeline “does not require review by EPA because of the minor impacts of the proposal on [waterways] within the Corps’ authority.”

Dr. Watson did not respond to requests for comment. The EPA press office directed all pipeline inquiries to the Army Corps.

The EPA letter concerns the original Keystone XL application to the State Department, which has been withdrawn, said Vicki Dixon, regulatory program manager for the Corps’ Southwestern Division. “We will not be replying to that letter.”

The Army Corps has not released the Gulf Coast Project route or TransCanada’s application paperwork. When InsideClimate News asked if the pipeline would still cross the 61 waterways mentioned in the EPA letter, Cenkci wrote that the Corps is “not comparing the differences between the [Gulf Coast Project] and any previous pipeline proposals, because previous proposals are no longer under review.”

When InsideClimate News posed the same question to TransCanada, Howard said the pipeline route hasn’t changed—the Gulf Coast Project will follow the same path as the southern segment of the original Keystone XL.

The three Army Corps district offices overseeing the pipeline—Tulsa, Okla., Fort Worth and Galveston, Tex.—each have up to 45 days to respond to TransCanada’s application. Galveston and Tulsa received the complete applications on May 11 and 14, respectively. The Ft. Worth office is still collecting the paperwork.

If the Corps doesn’t respond after 45 days, the pipeline will be automatically approved. But Cenkci said the Corps will document its decision and give TransCanada a definitive answer within the 45-day deadline.

Route Crosses 651 Texas Waterways

According to the original Keystone XL application, the pipeline will cross 651 waterways in Texas alone. Because the Army Corps has jurisdiction over “waters of the U.S.”—a technical term that includes rivers, streams, wetlands and the surrounding habitat—TransCanada needs permission from the Corps before it can start building.

Under the Clean Water Act, the Corps can grant Nationwide Permits for construction projects that would have minimal impacts on waterways. These general permits help speed up the review process— instead of applying for a permit for each water crossing, companies can group multiple crossings under the same Nationwide Permit.

TransCanada wants a Nationwide Permit 12 for all its water crossings in Texas and Oklahoma. Nationwide Permit 12s are given to utility projects that meet certain criteria: specifically, each crossing can leave no more than half an acre of permanent impact on the waterway.

But it’s unclear what counts as a “permanent” impact.

Construction impacts can include habitat destruction and disturbance of the riverbed during trenching, said Jim Murphy, senior counsel at the National Wildlife Federation. “My instinct would be to argue that any longtime change in hydrology, structure, habitat, or function of the [waterway] would be a permanent impact. My guess is [TransCanada] would probably argue something narrower.”

Howard, the TransCanada spokesman, said the decision lies with the Army Corps, and that TransCanada will respond to any questions or additional requests for information from the Corps.

Howard said the company will use horizontal drilling—a less invasive construction technique—for one of the wetlands mentioned in the EPA letter. He did not know if similar mitigation measures are planned for the remaining 60 waterways of concern.

Cenkci, the Army Corps spokeswoman, said that any waterway areas “restored to pre-construction contours and elevations after construction” will not count towards the half-acre permanent impact limit.

“Each district engineer has discretionary authority to determine if a project meets the requirements of the Nationwide Permit,” said Dixon, the Corps regulatory program manager. “If the engineer doesn’t find that it meets the requirements, they can require that applicant apply under individual [water crossing] permits.”

Initially, she added, “it appears that TransCanada will meet the terms and conditions of the Nationwide Permit” in the Galveston district. “But we are still evaluating that.”

Local Residents Feel Left Out

Local residents say they have been stonewalled in their attempt to gather information about TransCanada’s application.

“We carry the primary burden, yet we have been left with feeling invisible and feeling like lab rats on our own property,” said Texas landowner David Daniel during a teleconference last week.

Daniel opposes the pipeline, which would run through the middle of his property near Winnsboro, Texas. The Corps has “locked us out of public comment and our request for transparency has been denied,” he said.

Although the public can comment on the content and criteria of Nationwide Permits, there is no public process for the individual project applications. The Army Corps updates the Nationwide Permits every five years. The last revision concluded in March 2012, and TransCanada didn’t begin filing its permit application until April.

If the permit is denied, TransCanada will have to apply for individual water-crossing permits.

Murphy of the National Wildlife Federation said that process is much more rigorous, with the EPA and U.S. Fish and Wildlife Service playing a larger role. Application documents would be made public and there would be a public comment process. “It would be a project with a lot more sunshine.”

Rita Beving, an environmental consultant with the East Texas Sub-Regional Planning Commission—a coalition of three municipalities—believes there may be additional waterways that don’t meet the Nationwide Permit criteria.

The EPA letter mentioned 61 water crossings of concern out of 101 in the Army Corps Galveston district, she said. “Surely, if that’s the case in Galveston…then what about the other [500 or so] crossings? I question what kind of evaluation was done from Cushing down to the Galveston district by the Fort Worth and Tulsa offices…. It doesn’t pass the smell test.”

Dixon from the Army Corps said each district office will conduct its own evaluation of TransCanada’s application, and approval from any one district office wouldn’t preclude or guarantee authorization from the other offices.

Lisa Song is a reporter for InsideClimate News, a nonpartisan, nonprofit news gathering organization.

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