03-32051. Finding of No Significant Impact and Summary Environmental Assessment; Valero Logistics LP Pipeline in Webb County, TX

The proposed action is to issue a Presidential Permit to Valero Logistics Operations LP (Valero) to construct, connect, operate and maintain a 85/8 inch outer diameter pipeline to convey liquid petroleum gas (“LPG”) across the border from Webb County, Texas to the United States of Mexico. On behalf of Valero, URS Corporation of Austin, Texas, prepared a draft environmental assessment under the guidance and supervision of the Department of State (the “Department”). The Department placed a notice in the Federal Register (68 FR 44560 (July 29, 2003)) regarding the availability for inspection of Valero's Permit application and the draft environmental assessment.

Numerous Federal and state agencies independently reviewed the draft environmental assessment. They include: the United States Section of the International Boundary and Water Commission, the Department of Transportation, the Department of the Interior, the U.S. Fish and Wildlife Service, the Environmental Protection Agency, the Federal Emergency Management Administration, the U.S. Department of Homeland Security, the Department of Defense, the Department of Commerce, the Council on Environmental Quality, the Texas Railroad Commission, the Texas Historical Commission, the Texas Parks and Wildlife Department, and the Texas Commission on Environmental Quality. Prior to publishing the notice, Valero hosted a public meeting on the behalf of the Department of State, where public input on the project was received. No formal written public comments were submitted on the draft environmental assessment.

Comments received from the Federal and state agencies and the public were either responded to directly, or addressed directly by incorporation into the analysis contained in the draft environmental assessment. In addition to inclusion in the analyses of impacts and risks, comments were used to develop measures to be undertaken by Valero to prevent or mitigate potentially adverse environmental impacts, which were included as commitments.

This summary environmental assessment, comments submitted by the Federal and state agencies and the public, responses to those comments, and the draft environmental assessment, as amended, together constitute the Final Environmental Assessment of the proposed action by the Department.

Summary of the Environmental Assessment

I. The Proposed Project

The Department is charged with the issuance of Presidential Permits for the construction, connection, operation and maintenance of pipelines crossing international boundaries. See Executive Order 11423 of August 16, 1968, 33 FR 11741 (1968), as amended by Executive Order 12847 of May 17, 1993, 58 FR 29511 (1993). Valero Logistics LP (“Valero”) has applied for a Presidential Permit to construct, connect, operate and maintain an 85/8 inch outer diameter pipeline (“the Dos Laredos Pipeline”) at the U.S.-Mexico border. The pipeline will connect the Valero terminal in Laredo, Texas, with a newly-constructed Valero terminal in the state of Tamaulipas, Mexico. The U.S. portion of the project as described in the final Environmental Assessment consists of approximately 10.6 miles of new pipeline from the Valero terminal to a location on the Rio Grande known as “La Bota” in Laredo, approximately 6 miles northwest of downtown Laredo. The Mexican portion consists of approximately 1.5 kilometers of new pipeline from the Rio Grande crossing to the newly constructed Valero Nuevo Laredo terminal.

A significant portion of the route of the Dos Laredos pipeline will utilize existing utility rights of way and cleared fenceline, minimizing the amount of additional environmental impact. The routing has also been designed to avoid, to the maximum extent possible, populated areas of Webb County.

The Dos Laredos pipeline is being designed to transport up to 32,400 barrels (1.36 million gallons) of LPG daily from the U.S. to Mexico. Originally, the pipeline will service Valero's contractual obligation to supply 5,000 barrels a day to MGI Supply Limited, a subsidiary of Pemex-Gas y Petroquimica Basica, with capacity available for future expansion.

II. Alternatives Considered

The Department considered two routing alternatives and one modal alternative to the proposed Dos Laredos Pipeline. These are described in detail in the Final Environmental Assessment and in a summary fashion below.

Alternative 1: The “no action” alternative would involve delivery of LPG to Nuevo Laredo via tanker trucks. There are two possible options for this delivery.

The current delivery system involves trucks carrying LPG from the Three Rivers facility to Eagle Pass (approximately 160 miles), crossing the border at Eagle Pass to Piedras Negras, and offloading at a terminal on the Mexican side of the border. A Mexican fleet then transports the LPG the approximately 120 miles from Piedras Negras to Nuevo Laredo to customers.

A second delivery routing could occur after Valero constructs a new LPG terminal to the west of Nuevo Laredo (the planned terminus of the Dos Laredos Pipeline). In this case, tanker trucks would carry LPG approximately 120 miles from Three Rivers to Laredo, cross the border to Nuevo Laredo at the World Trade Bridge, and proceed to the terminal location, where again it would be offloaded for pickup by local service vehicles.

While these “no action” alternatives would avoid the minor or temporary noise and air quality impacts associated with the construction of the pipeline, truck transport is not a preferred alternative. An average of 24 tanker trucks carrying LPG to travel from Three Rivers across the border per day would be needed to meet Valero's contractual obligations. This would result in (i) exhaust emissions of nitrogen oxides (NO_X), carbon dioxide (CO₂), sulfur dioxide (SO₂), volatile organic compounds (VOC), and particulate matter (PM) that exceed that of pipeline transport; (ii) extra loads on busy highways and road bridges, (iii) transportation-related environmental degradation, such as noise impacts and water contamination related to operation of a tanker truck fleet, including fueling and maintenance, (iv) a continuing safety risk, including increased exposure to emissions, spills, and accidents during truck loading and unloading operations, and (v) a long-term commitment to moving these hazardous liquids through more heavily populated transportation corridors in Webb County, rather than through pipeline rights-of-way which have been situated in a way which minimizes potential impacts to existing and currently planned communities.

If, as expected over time, population growth in Northern Mexico creates additional demand for cross-border shipments of LPG, the need for additional truck transport would result in greater impacts to the transportation infrastructure, public safety, and air quality. The added travel from tanker trucks, assuming the shorter round trip directly between Three Rivers and Nuevo Laredo (as compared to the current round trip between Three Rivers to Nuevo Laredo through Eagle Pass/Piedras Negras) would produce a substantially higher regional diesel exhaust burden, resulting in emission of 63 tons per year of NO_X, 30 tons per year of CO₂, 11 tons per year of PM, 8 tons per year of VOC, and 2 tons per year of SO₂.

Alternatives 2 and 3: Alternatives 2 and 3 considered for the project involved pipeline routings that roughly parallel the proposed route, to the north and south. The existing fencelines/utility corridors, and desire of local landowners not to have large tracts divided by a newly established pipeline corridor, limited the number of possible alternatives. Both routings would have also involved the laying of a new 85/8 inch diameter pipeline.

The northern alternative was viewed as not preferred because it required approximately 3 additional miles of pipeline, while not providing substantial relief from any of the impacts documented for the proposed pipeline route.

The southern alternative was also viewed as not preferred. While it required roughly the same pipeline distance as the proposal, it passed through industrial corridors along Killen Industrial Road and Mines Road prior to crossing the river. The existing development within these corridors would have made right-of-way much more difficult to obtain, in light of the City of Laredo's existing ordinance requiring a 25-foot setback between any pipeline and a structure. This ordinance makes siting much more practicable in an undeveloped corridor such as that found along the proposed route.

In addition, neither alternative routing provided avoidance or mitigation of any of the unavoidable impacts attributable to the selected corridor. For these reasons, the Department concluded that these alternate routes were not preferred alternatives.

III. Summary of the Assessment of the Potential Environmental Impacts Resulting From the Proposed Action

A. Impacts of Construction and Normal Operation of the Pipeline

The Final Environmental Assessment contains detailed information on the environmental effects of the Dos Laredos Pipeline and the alternatives outlined above. In particular, the Final Environmental Assessment analyzed the impacts of construction and normal operation of the pipeline on air and sound quality, topography, water resources, soils, mineral resources, biological resources, land use, transportation, socioeconomic resources, and recreation and cultural resources. Based on the detailed environmental assessment and information developed by the Department and other federal and state agencies in the process of reviewing the draft environmental assessment, the Department concluded the following:

i. Environmental Concerns: There will be no impacts to or on, inter alia, geology and topography, groundwaters, the Heritage status of the Rio Grande, wetlands, mineral resources, and recreation resources. There will be insignificant, minor or temporary impacts to or on, inter alia, noise, surface waters, soils, and protected biological resources. Finally, there will be net benefits to air quality through the elimination of exhaust emissions of CO₂, NO_X, VOC_s, SO_X, and particulate matter that are generated when tankers move fuel across the border. Alternative 1, transporting product by tanker truck in the future will continue these emissions. Alternatives 2 and 3, the routing alternatives, are not judged to represent any major difference in impacts to environmental concerns than the preferred route, although by virtue of being 30% longer Alternative 2 (the northern routing) would result in incrementally higher construction-related impacts.

ii. Transportation and Land Use: In consultation with the U.S. Fish and Wildlife Service, certain crossings will be re-aligned or will be directionally drilled to protect riparian bands that may be used by migratory threatened and endangered species. The Dos Laredos Pipeline does not conflict with existing land use plans for Laredo or Webb County. By utilizing existing fenceline and utility line corridors, the pipeline avoids splitting parcels and thereby complicating future development, and minimizes new impacts. Following consultation with local environmental groups, the alignment of the pipeline in the area south and west of FM 1472 was adjusted to minimize impacts to trees adjoining Sombretillo Creek and also to provide (via the maintained right of way) a buffer to keep development away from the creek. When compared with the “no action alternative” of continued truck transport, the pipeline represents a net positive benefit to local transportation by removing additional truck traffic from roadways. There are no major transportation issue related differences in impacts between the preferred routing and the two alternatives evaluated.

iii. Homeland Security: Compared to the “no action” alternative, there will be net benefits to homeland security because the pipeline will reduce the truck traffic volume at border crossings. There are no homeland security related differences in impacts between the preferred routing and the two alternatives evaluated.

iv. Irreversible and Irretrievable Commitments of Resources: There is a small increase in the commitment of land resources which are dedicated to transporting LPG due to the establishment of the new pipeline ROW, as compared to the “no action” alternative. The preferred alignment is advantageous compared to the two alternatives because Alternative 2 would increase the length of the pipeline (and therefore the commitment of land) by approximately 30%, while not changing the land uses which would be affected, and Alternative 3 while not increasing the length of the pipeline, would require adding new restrictions to land use in an already developed light-industrial corridor.

The operation of the pipeline will greatly reduce the energy requirements for transporting LPG from Three Rivers to Nuevo Laredo in comparison with the “no action” alternative. The selection of the preferred alignment will not affect energy requirements for LPG transport to any notable degree when compared with the 2 alternative alignments.

v. Cumulative Effects: There are no cumulative impacts to the Nuevo Laredo-Laredo airshed due to consumption of LPG in Mexico, since this supply represents LPG which is already being delivered to Mexico via truck, and the pipeline will only represent a change in delivery system.

A more detailed analysis of each of these factors is provided in the Environmental Assessment, as amended, which addresses issues raised by Federal and state agencies and the public.

B. Impacts Due to Corrosion of the Pipeline or Damage From an Outside Agent

The Final Environmental Assessment also contains detailed assessment of the potential environmental effects of the Dos Laredos Pipeline arising from pipeline integrity issues. A release of LPG from the pipeline, though improbable, would have very different impacts from those associated with construction and normal operation.

i. Human Health and Safety Concerns: Potential human health and safety impacts that may result from a release of hazardous liquids include fire or explosion from LPG, and short-term exposure to hazardous vapors resulting from an LPG release.

The potential risks to human health and safety are most concentrated in areas where the pipeline is close to residences, businesses, or transportation corridors. Only two small portions of the Dos Laredos Pipeline will be located in areas where a pipeline accident could result in risk to nearby residences and businesses: (1) At the northern end where it exits the Valero Laredo Terminal and runs along I-35; and (2) near the midpoint of the line where it crosses FM 1472 (Mines Road). A large portion of the pipeline is located in areas where no development is likely in the near future.

Any mode of transporting hazardous liquids shares these potential safety impacts. The probability of accidents resulting in fire or explosion for pipelines on a product-mile basis is 35 times lower than that of tanker transport, and the probability of deaths resulting from hazardous liquids transport in pipelines is 87 times lower than transport by tanker trucks on a product-mile basis. For these reasons, the U.S. Department of Transportation considers pipeline transport to be the safest transportation for hazardous liquids.

In addition, as previously discussed, the Dos Laredos Pipeline will traverse fewer areas where impacts to human health and safety are likely to result from a major accident than the “no-action” alternative, and therefore the pipeline will result in substantially lower risks to human health and safety than the “no action” alternative. Alternative 2, the northern alternative routing, would result in a slightly higher risk due to the longer length of pipeline; while Alternative 3, the southern alternative routing, would result in a higher risk because it would pass through already developed industrial corridors for much of the alignment.

This pipeline project has incorporated many safety features to address health and safety concerns. These are presented as mitigation measures.

ii. Environmental Concerns: The air quality impacts from an accidental product release from the Dos Laredos Pipeline would be short term and would not constitute a significant impact. Groundwater contamination is unlikely to occur from an LPG leak, because the product immediately expands into a gas upon release. Along most of the alignment, release resulting in fire would cause damage to vegetation in the immediate vicinity of the release, but is unlikely to result in widespread fires because of the types and distribution of vegetation. The mesquite and cactus which dominate the uplands sections of the alignment are difficult to burn even during planned fires, usually requiring mechanical preparation of the site and cessation of grazing to build up sufficient fuel, due to the naturally wide spacing and sparse ground cover. A greater fire hazard is present immediately along the Rio Grande where frequent fires occur in bamboo stands, but the pipeline will be directionally drilled to depths greater than the standard 3-foot minimum cover in this area in order to avoid impacts to the riparian band along the river.

iii. Possible Conflicts Between the Dos Laredos Pipeline and the Objectives of Federal, Regional, State and Local Use Plans, Policies and Controls for the Area Concerned: The risks posed by the Dos Laredos Pipeline do not conflict with any local land use plans, policies, or controls.

iv. Probable Adverse Environmental Effects Which Cannot Be Avoided: There will be a long-term increase in health and safety risk in the immediate vicinity of the pipeline due to the nature of the product being transported, which represents a shifting of risk from other portions of the county that would handle substantial truck transport of product under the “No Action” alternative or the alternative alignment scenarios. Any potential impacts would be mitigated by the measures described below, which are proposed to prevent or mitigate potentially adverse environmental impacts and which Valero intends to take.

v. Cumulative Effects: There are two important considerations with respect to the cumulative impacts analysis for the Dos Laredos Pipeline. The first is the cumulative effect of risks to the pipeline, and correspondingly to those living or working near to the pipeline, due to potential accidents on other pipelines in the vicinity. The only major transmission line in the vicinity of the Dos Laredos Pipeline is the Duke Energy Pipeline, which shares a common right-of-way for a 1/4 mile stretch of the proposed alignment just north of FM 1472. The second is the cumulative effect of the increased overall risk to surrounding populations from an industrial accident occurring along the right-of-way that results in the release of LPG from the Dos Laredos pipeline, industrial sources or both.

A study of U.S. DOT databases has not revealed any cases where a below ground pipeline has ruptured due to the effects of another accidental release, fire, or explosion of a nearby buried pipeline. No portions of the Dos Laredos pipeline will be above ground in the vicinity of any exposed portions of the Duke Energy pipeline. Therefore the proximity to the Duke Energy pipeline is not considered a significant cumulative impact.

Over much of the alignment there are no heavy industrial activities, particularly those involving hazardous liquids or gases, that would create a cumulative impact in combination with the Dos Laredos Pipeline. The Valero Laredo terminal at the north end of the alignment is situated in an industrialized area, along the railroad and I-35, and has storage tanks for gasoline. No storage of LPG will take place at this facility at this time. The industrial park along FM 1472 which will border a portion of the alignment appears to be dedicated to warehousing and transportation, and there are no current plans to incorporate any heavy industrial uses in the area. These factors all lead to a no significant cumulative impacts assessment.

C. Environmental Justice/Socio-Economic Concerns

The environmental justice assessment for this project analyzed the impact of the potential human, health, socioeconomic, and environmental effects of the Dos Laredos pipeline on minority and low-income populations. The population of Webb County is heavily minority, with dense population areas of the county around Laredo containing a higher percentages of minorities. To the extent that minority and low-income populations reside in the vicinity of the pipeline, they risk exposure to the insignificant, temporary and/or minor potential human health and environmental effects that are discussed in detail in the Final Environmental Assessment and summarized above. These include temporary, minor construction related noise and threats to human safety due to fire or accidental product release.

These risks, however, must be weighed against the benefits that would result from the removal of tanker trucks as the primary mode of LPG transportation. The removal of tanker trucks from roads, particularly border crossings, will increase safety at these highly sensitive locations and route LPG away from more populous areas of town while in transit. Emissions of hazardous air pollutants during LPG transfer operations within the Laredo-Nuevo Laredo airshed will be reduced. It is also worth noting that due to the overall makeup of the Laredo metropolitan area, all of the alternatives for consideration, including the “no-action” alternative of tanker truck transport of LPG, will impact primarily low-income and minority populations. There is no evidence to suggest that minority or low-income populations will experience disproportionate adverse impacts as a result of the construction and operation of the Dos Laredos Pipeline. To the contrary, since most of the Dos Laredos Pipeline is situated away from areas where human health and safety could be adversely impacted, while truck transport necessarily takes place in areas where human health and safety are at risk, the pipeline will result in lower risks to the health and safety of minority and low-income populations than the “no-action” alternative.

IV. Prevention and Mitigation Measures

In order to control risks associated with outside force, damage, corrosion and leaks, Valero has undertaken or intends to undertake the prevention and mitigation measures listed below. Valero has or will:

• Bury the pipeline a minimum of 3 feet below grade.
• Place and maintain prominent warning markers at all crossings and property lines along the pipeline.
• Participate in all applicable one-call notification systems and coordinate with the local emergency planning committee.
• Conduct regular ROW drive-overs or over flights in order to identify potential pipeline encroachments and unauthorized activities.
• Ensure that a Valero representative is physically present anytime there is construction activity within the pipeline right of way.
• Participate in on-going public education initiatives stressing pipeline safety and damage prevention.
• Use factory-applied fusion-bonded epoxy coating on all pipes.
• Use field applied coating on all welded joints.
• Conduct biennial surveys to determine effectiveness of corrosion control.
• Use a certified impressed current cathodic protection system.
• Use a heavy wall pipe in lieu of cased crossings.
• Use high resolution internal inspection tools (i.e., pigs) at least every five years
• X-ray all girth welds completely.
• Use pipe manufactured at an ISO 9000-certified mill;
• Hydro test pipe in place to 125% of its maximum allowable operating pressure for 8 hours.
• Require that material specification, design, and construction meet or exceed all applicable standards and codes established by API, ASME, DOT/OPS, and TRC.
• Perform comprehensive construction and installation inspection.
• Provide continuous 24-hour monitoring of the Dos Laredos Pipeline from a dispatch and control center.
• Use computers to identify significant operational deviations, and to set-off appropriate alarms.
• Monitor remotely the pressure at the Rio Grande River.
• Provide on-going training and performance certification of employees responsible for pipeline operations and maintenance, as required by the Operator Qualification regulation of DOT.
• Maintain a SCADA link via satellite to the Valero control center in San Antonio.
• Establish block valve spacing of less than 7.5 miles through industrial, commercial, or residential areas, as recommended under ASME/ANSI B31.4 standards for transport of LPG.

V. Conclusion: Analysis of the Environmental Assessment Submitted by the Sponsor

On the basis of the Final Environmental Assessment, the Department's independent review of that assessment, information developed during the review of the application and Environmental Assessment, comments received by the Department from Federal and state agencies and the public, and measures that Valero has or is prepared to undertake to mitigate prevent potentially adverse environmental impacts, the Department has concluded that issuance of a Presidential Permit authorizing construction of the proposed Dos Laredos Pipeline would not have a significant impact on the quality of the human environment within the United States. Accordingly, a Finding of No Significant Impact is adopted and an environmental impact statement will not be prepared.

The Final Environmental Assessment addressing this action is on file and may be reviewed by interested parties at the Department of State, 2200 C Street NW., Room 3535, Washington, DC 20520 (Attn: Mr. Pedro Erviti, Tel. [phone]).

Dated: December 19, 2003.

Stephen J. Gallogly,

Director, Office of Energy and Commodity Policy, Bureau of Economic and Business Affairs, Department of State.