IF YOU BUILD IT: THE KEYSTONE XL PIPELINE AND SMALL BUSINESS JOB GROWTH HEARING BEFORE THE SUBCOMMITTEE ON AGRICULTURE, ENERGY AND TRADE OF THE COMMITTEE ON SMALL BUSINESS UNITED STATES HOUSE OF REPRESENTATIVES ONE HUNDRED THIRTEENTH CONGRESS FIRST SESSION HEARING HELD MAY 16, 2013 Small Business Committee Document Number 113–018 Available via the GPO Website: www.fdsys.gov U.S. GOVERNMENT PRINTING OFFICE 81–198 WASHINGTON : 2013 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Mar 15 2010 10:31 Jun 11, 2013 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 C:\USERS\DSTEWARD\DOCUMENTS\113018 DEBBIE SBREP-219 with DISTILLER Congress.#13 HOUSE COMMITTEE ON SMALL BUSINESS SAM GRAVES, Missouri, Chairman STEVE CHABOT, Ohio STEVE KING, Iowa MIKE COFFMAN, Colorado BLAINE LUETKEMER, Missour MICK MULVANEY, South Carolina SCOTT TIPTON, Colorado JAIME HERRERA BEUTLER, Washington RICHARD HANNA, New York TIM HUELSKAMP, Kansas DAVID SCHWEIKERT, Arizona KERRY BENTIVOLIO, Michigan CHRIS COLLINS, New York TOM RICE, South Carolina NYDIA VELA´ ZQUEZ, New York, Ranking Member KURT SCHRADER, Oregon YVETTE CLARKE, New York JUDY CHU, California JANICE HAHN, California DONALD PAYNE, JR., New Jersey GRACE MENG, New York BRAD SCHNEIDER, Illinois RON BARBER, Arizona ANN McLANE KUSTER, New Hampshire PATRICK MURPHY, Florida LORI SALLEY, Staff Director PAUL SASS, Deputy Staff Director BARRY PINELES, Chief Counsel MICHAEL DAY, Minority Staff Director (II) VerDate Mar 15 2010 10:31 Jun 11, 2013 Jkt 000000 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 C:\USERS\DSTEWARD\DOCUMENTS\113018 DEBBIE SBREP-219 with DISTILLER C O N T E N T S OPENING STATEMENTS Page Hon. Scott Tipton ..................................................................................................... 1 Hon. Patrick Murphy ............................................................................................... 2 WITNESSES Mr. Brent Booker, Secretary Treasurer, Building and Construction Trades Department, AFL-CIO, Washington, DC ........................................................... 4 Mr. Peter Bowe, President and CEO, Ellicott Dredges, Baltimore, MD, testi- fying on behalf of the National Association of Manufacturers ......................... 6 Mr. Mat Brainerd, President, Brainerd Chemical Company, Tulsa, OK, testi- fying on behalf of the National Association of Chemical Distributors ............. 8 Dr. Christopher R. Knittel, William Barton Rogers, Professor of Energy Eco- nomics, Sloan School of Management, Massachusetts Institute of Tech- nology, Cambridge, MA ....................................................................................... 10 APPENDIX Prepared Statements: Mr. Brent Booker, Secretary Treasurer, Building and Construction Trades Department, AFL-CIO, Washington, DC ....................................... 22 Mr. Peter Bowe, President and CEO, Ellicott Dredges, Baltimore, MD, testifying on behalf of the National Association of Manufacturers .......... 30 Mr. Mat Brainerd, President, Brainerd Chemical Company, Tulsa, OK, testifying on behalf of the National Association of Chemical Distribu- tors ................................................................................................................. 38 Dr. Christopher R. Knittel, William Barton Rogers, Professor of Energy Economics, Sloan School of Management, Massachusetts Institute of Technology, Cambridge, MA ........................................................................ 42 Questions for the Record: None. Answers for the Record: None. Additional Material for the Record: Dennis Daugaard, Governor, State of South Dakota .................................... 47 Ports-to-Plains Alliance .................................................................................... 49 (III) VerDate Mar 15 2010 10:31 Jun 11, 2013 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 0486 C:\USERS\DSTEWARD\DOCUMENTS\113018 DEBBIE SBREP-219 with DISTILLER VerDate Mar 15 2010 10:31 Jun 11, 2013 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 0486 C:\USERS\DSTEWARD\DOCUMENTS\113018 DEBBIE SBREP-219 with DISTILLER IF YOU BUILD IT: KEYSTONE XL PIPELINE AND SMALL BUSINESS JOB GROWTH THURSDAY, MAY 16, 2013 HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, SUBCOMMITTEE ON AGRICULTURE, ENERGY AND TRADE, Washington, DC. The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 2360, Rayburn House Office Building. Hon. Scott Tipton [chairman of the subcommittee] presiding. Present: Representatives Tipton, Graves, Luetkemeyer, Huelskamp, and Murphy. Chairman TIPTON. Good morning. Our hearing will come to order. I would like to thank all of you for taking the time to be able to be here as we examine the potential economic benefits of con- structing the Keystone XL pipeline and what it would mean for small business job growth. We have an excellent panel with us today to discuss this very important issue and I look forward to hearing all of their thoughts. We hear a lot about ‘‘shovel ready’’ projects, those that can be started immediately, putting Americans to work with good paying jobs while building the infrastructure necessary to be able to help fuel the economy. We also hear a lot about the need to be able to adopt an ‘‘all of the above’’ strategy when it comes to energy devel- opment in our country that utilizes all of the resources and tech- nologies available in North America to supply us with the afford- able energy that we need to be able to grow our economy. Both issues are vitally important to our economic future. The Keystone pipeline can help us reach those goals. It is good for job creation, good for energy security, and as I think we will see here today, good for small businesses. The potential economic benefits of this pipeline to the American economy are tremendous. TransCanada, the company petitioning the administration to be able to build the pipeline, estimates that it would spend approximately $7 billion to construct the full project. The draft supplemental environmental impact study issued by the Department of State earlier this year estimated that the pipeline would create approximately 42,100 direct and indirect jobs. Those are not only construction jobs; those are jobs in lodging, food services, transportation, warehousing, and several other segments of our economy. While individual studies’ findings are not broken down to the im- pact of large versus small businesses, 99.7 percent of all businesses (1) VerDate Mar 15 2010 10:31 Jun 11, 2013 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\USERS\DSTEWARD\DOCUMENTS\113018 DEBBIE SBREP-219 with DISTILLER 2 in the United States are classified as small. TransCanada states it has contracts with more than 50 suppliers across the United States. Therefore, it is not unfounded to presume construction of the pipeline will create thousands of jobs for small businesses. A study by the Energy Policy Research Foundation concluded that the Keystone expansion would provide net economic benefits of $100 million to $600 million annually, in addition to the imme- diate boost in construction employment. Similarly, a 2009 report from the Canadian Energy Research Institute commissioned by the American Petroleum Institute predicts that the Keystone XL pipe- line will add $172 billion to America’s gross domestic product by 2035 and will create an additional 1.8 million person-years of em- ployment in the United States over the next 22 years. Constructing the Keystone XL pipeline will help ensure an abun- dant, nearby, and stable supply of oil which will not only enhance our national security and make us less reliant on foreign oil im- ports from unfriendly nations and regions to this country; it could have the added economic benefit of keeping domestic fuel prices in check which would help ease the financial burden on hard-working American families and small businesses. This Committee has held several hearings on the importance of affordable energy to the via- bility of small businesses. Just as important, according to the project’s environmental impact statement, construction of the Key- stone XL pipeline can accomplish these goals with minimal adverse environmental effects. At a time when we should be focusing on economic growth and energy security, moving forward with this project is simply com- monsense. We have a rare opportunity to create thousands of jobs immediately, many through small businesses, and do so in a re- sponsible way. Let’s build it. Again, I would like to thank all of our witnesses for their partici- pation and their insights. I now recognize the ranking member for his opening statement. Mr. Murphy. Mr. MURPHY. Thank you, Mr. Chairman. And thank you all for being here this morning to discuss such an important topic, and I look forward to hearing all of your testimonies this morning. The 875-mile Keystone pipeline project, which has the potential to transport 830,000 barrels of oil from Canada to refineries in the United States, could have substantial impacts on small businesses and job creation in both the short term and long term. It is also important to address the environmental issues that surround this project proposal. This pipeline project has been a controversial issue that has gen- erated a great deal of discussion and research, and we have a unique opportunity today to clear the misconceptions about the benefits and costs of this large project. In terms of