y conocophillips€¦ · the mitchell contractoryard was acquired during december for 2009 pipeline...

yConocoPhillips

TABLE OF CONTENTS

1.0 EXECUTIVE SlTMMARY 32.0 LAND ACQIDSITION STATUS 32.1 Finalization of Route 32.2 Pipe & Contractor Yard Acquisition 32.3 Pipeline ROW Acquisition 42.3.1 2008 Construction 42.3.2 2009 Construction 42.4 Pump Station Acquisition 43.0 NON - ENVIRONMENTAL PERMITTING STATUS .43.1 2008 Construction 43.1.1 County & Township Roads 43.1.2 State Roads 43.1.3 Railroads 43.1.4 Other 43.2 2009 Construction 43.2.1 County & Township Roads 43.2.2 State Roads 43.2.3 Railroads 53.2.4 Other 53.3 Pump Station Construction 54.0 ENVIRONMENTAL PERMITTING STATUS 54.1 2008 Construction 54.1.1 Federal Permits 54.1.2 State Permits 54.2 2009 Construction 54.2.1 Federal Permits 54.2.2 State Permits 65.0 CONSTRUCTION STATUS 65.1 2008 Construction 65.1.1 Pipe Offloading 65.1.2 Pipeline 65.1.3 Pump Station 75.1.4 Environmental Control Activities 75.2 2009 Construction 75.2.1 Pipe Offloading 75.2.2 Pipeline 85.2.3 Pump Station 86.0 EMERGENCY RESPONSE & INTEGRITY MANAGEMENT PLANS STATUS 86.1 Emergency Response Plan 86.2 Integrity Management Plan 87.0 SUMMARY OF MEASURES TO COMPLY WITH SD PUC CONDITION MEASURES 9

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1.0 EXECUTIVE SUMMARY

The project commenced construction in May 2008 with two pipeline spreads in the United States. Spread 1Acommenced construction at the Canada / USA border and worked only in North Dakota. Spread 2Acommenced construction in North Dakota near Valley City and progressed into South Dakota, crossing theState border in August 2008. Spread 2A has completed 39.6 miles in South Dakota, and construction activitiesare currently ongoing in Marshall and Day Counties with the installation of a six (6) mile skip, left out by theMainline crews due to severely wet weather conditions in this area during the fall construction period. Inaddition, four pump stations commenced construction in South Dakota in August 2008, in Beadle, Day, Minorand Hutchinson counties.

Construction for 2009 will commence in January with tree clearing. Mainline pipeline construction willcommence in May, 2009 with eight pipeline spreads in the United States. Construction in South Dakotaincludes Spread 3B, 140.7 miles in Marshall, Clark, Kingsbury, Miner, Hanson, McCook and Hutchinsoncounties, and Spread 4B which includes 33.7 miles in Hutchinson and Yankton counties. Pump stationconstruction at the four South Dakota pump stations will also continue in 2009.

The overall physical completion ofthe project as of December 31,2008 is:

• The overall Keystone project in Canada and the United States is 37 percent complete.

• The project physical completion related to South Dakota is 18 percent.

To date there have been no design changes of a substantive nature.

2.0 LAND ACQillSITION STATUS

2.1 Finalization of Route

There have been no re-routes on Spread 2A South Dakota since October 31, 2008.

The pipeline route for 2009 construction in the remaining South Dakota counties has been selected anddesigned and land acquisition is substantially complete. Minor route deviations that have occurredprimarily due to landowner requests are reflected in Table 1.

Table 1 - Minor Re-Routes - Spread 3 and 4

Begin End DrawingRoute Variation MP MP Number Reason

The route was moved to maintain a distance of10' from power poles from East River ElectricCo-op and to minimize crossing length of 415

423-SD-312.4-312.5-1 312.4 312.5 SD-423-1 Ave.

2.2 Pipe & Contractor Yard Acquisition

As ofDecember 31, 2008, one Contractor yard and nine pipe yards have been leased. The leases range induration from eight months to eighteen months. The yards are located in Aberdeen, Amherst, Conde,Redfield, Iroquois, Roswell, Bridgewater, and yankton.

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The Mitchell contractor yard was acquired during December for 2009 pipeline construction and is locatedthirty miles south ofHuron, South Dakota.

2.3 Pipeline ROW Acquisition

2.3.1 2008 Construction

As ofDecember 31,2008, easements for all tracts were acquired for 2008 construction.

2.3.2 2009 Construction

As ofDecember 31, 2008, easements from 4 landowners (7 tracts) remain to be acquired for 2009construction.

2.4 Pump Station Acquisition

As ofDecember 31,2008, all pump station sites have been purchased and permitted. There are fourpump stations located in South Dakota: one in Day County, one in Beadle County, one in MinerCounty and one in Hutchinson County.

3.0 NON - ENVIRONMENTAL PERMITTING STATUS

3.1 2008 Construction

3.1.1 County & Township Roads

All permits for crossing township and county roads were acquired and haul road agreements are inplace.

3.1.2 State Roads

All permits for crossing state highways were acquired and driveway approach permits were received.

3.1.3 Railroads

Permits for crossing BNSF Railroad were received.

3.1.4 Other

All permits were acquired for 2008 construction on pipe yards and pump stations in South Dakota.


3.2.1 County & Township Roads

Land Agents continue the process of contacting local officials regarding crossing permits. Seven of 9County Road crossing permits and 16 of33 township road crossing permits have been received andare on file.

3.2.2 State Roads

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All road crossing permits (15) have been issued by the South Dakota Department of TransportationDistrict Offices to cross state road rights ofway.

3.2.3 Railroads

Applications were filed with the BNSF railroad for cased crossings on October 6, 2008. BNSF isprocessing the applications. DM&E Railroad issued Keystone a license to cross their railroad trackson November 25, 2008.

3.2.4 Other

All pipe yard sites have been acquired and required permits received from local governmental entities.Required permits for valve sites are being applied for or have been received.

3.3 Pump Stations

All permits required for pump station construction have been received.

4.0 ENVIRONMENTAL PERMITTING STATUS

The Keystone Project has applied for and received all required federal and state environmental permits forwork in South Dakota.


As work continued in South Dakota for the 2008/09 construction season, Keystone made notifications tostate and federal regulatory agencies as required. Environmental inspectors continued to evaluateconstruction activities throughout the project to ensure continued compliance with permits and regulatorycommitments.

Refer to Appendix A for the table of the Summary of Consultations with the South Dakota Department ofEnvironmental and Natural Resources (Table 2).

4.1.1 Federal Permits

Keystone has applied for and received all necessary federal environmental permits for construction inSouth Dakota. These permits were provided to the South Dakota PUC in a previous filing.

4.1.2 State Permits

Keystone has applied for and received all necessary state environmental permits for construction inSouth Dakota. These permits were provided to the South Dakota PUC in a previous filing.


4.2.1 Federal Permits

Permits received for 2008 construction cover the current scope of activities for 2009.

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4.2.2 State Permits

Permits received for 2008 construction cover the current scope of activities for 2009. Some changesto the locations of water withdrawal and discharge points may require permit modifications oradditional permits. These will be sent to the Commission during the reporting period these changesare identified, and approvals are obtained from the appropriate authorities.

5.0 CONSTRUCTION STATUS


5.1.1 Pipe Omoading

Pipe yards have been constructed in Redfield, Iroquois, Roswell, Bridgewater, and yankton (North) inSouth Dakota. Heavy wall pipe for road crossing and river crossings has been stockpiled in Redfield,Iroquois, Roswell, Bridgewater and yankton (North) pipe yards. Heavy wall pipe was transportedfrom Huron Rail Siding to the yankton (South) pipe yard located in Nebraska for the HorizontalDrilling of the Missouri River just east ofthe township ofYankton, South Dakota.

5.1.2 Pipeline

Spread 2A initiated construction just north ofValley City in Barnes County, North Dakota on May 19,2008, working southerly towards Marshall and Day Counties, South Dakota. On October 5, 2008,right of way clearing and grading crews reached the south end ofthe spread and subsequent crews(through lower in and backfill) finalized operations on November 15, 2008. In addition, theinstallation of the Missouri River HDD at yankton was initiated on October 12,2008 and completedon November 12,2008.

Construction crews' status for Spread 2A as of December 31, 2008 is as follows:

Construction Activity Miles in South Percent CompleteDakota in South Dakota

Clearing 45.6 100Grading 45.6 100Stringing 45.6 100Bending 39.6 87Welding 39.6 87Tie-Ins 36.2 80Cleanup 0 0

Hydro-testing, clean-up, and valve installation on Spread 2A, will be completed in the Summer of2009.

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5.1.3 Pump Station

Pump Station civil construction has commenced at the four pump stations in South Dakota: Ferney,Carpenter, Roswell and Freeman.

• PS-20 - Ferney Pump Station, Day County -Rough grade is completed and foundationconstruction has commenced. All foundation work is scheduled for completion by the end ofFebruary 2009. Shop fabrication of cable tray supports will be complete at the end of January2009 and field installation will immediately begin.

• PS-2l - Carpenter Pump Station, Beadle County - Rough grade is completed and foundationconstruction has commenced. All foundation work is scheduled for completion by midFebruary 2009. The site access road is approximately 50% complete and work will resume inthe spring. The substation utility provider has installed the transformer, power poles andfencing around the substation.

• PS-22 - Roswell Pump Station, Miner County - Site civil work is partially complete and allpiles have been driven. No further site work is scheduled until Spring 2009.

• PS-23 - Freeman Pump Station, Hutchinson County - All piles have been driven and the asbuilt surveys have been completed. The electric utility has partially completed the substation.The substation transformer has been set in place and the fence installation partially complete.No further site work is anticipated until Spring 2009.

5.1.4 Environmental Control Activities

Environmental control activities continued in South Dakota during this reporting period in parallelwith the construction activities.

Erosion control measures were installed during initial soil disturbing activities and will be maintainedthroughout construction. The environmental inspection team documented the installation andmaintenance of these erosion and sediment control measures, as well as Keystone's compliance withpermit and regulatory requirements. Keystone has been actively working to minimize impacts tosensitive stream and wetland crossings and other resource areas during construction of the project inSouth Dakota.

Regular monitoring of erosion and sediment control structures continued until the soils were frozen.This regular erosion and sediment control monitoring will begin again once soils thaw, and willcontinue as appropriate until the ROW is stabilized.


5.2.1 Pipe Offioading

Pipe is currently being railed into Huron and Worthing, South Dakota grain mill sites. Pipe is beingtrucked and stockpiled into Roswell, Bridgewater, and yankton (North and South) pipe yards. Pipeoffloading is scheduled to be complete by end ofApril 2009. Approximately 30 miles ofpipe is beingstockpiled at each ofthe pipe yards. An additional 30 miles ofpipe will be railed into the Worthing,South Dakota rail siding and trucked to the yankton (South), Nebraska pipe yard for storage.

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5.2.2 Pipeline

Construction activities will continue through QI 2009 in Marshall and Day Counties with theinstallation of a six (6) mile skip, left out by the mainline crews due to severely wet weatherconditions in this area during the fall construction period. Construction activities for the six (6) mileskip (ditching, welding, lowering, backfill and tie-ins) are scheduled to commence January 5, 2009.

Hydro-testing, clean-up, and valve installation on Spread 2A, will be completed in the Summer of2009.

5.2.3 Pump Station

Pump Station civil construction is ongoing at the four pump stations in South Dakota: Ferney,Carpenter, Roswell and Freeman.

• PS-20 - Ferney Pump Station, Day County -All foundation work is scheduled for completion atthe end ofFebruary 2009. Fabrication of cable tray supports will be complete at the end ofJanuary 2009 and field installation will immediately begin. Shop fabrication of pipe and fittingspools will start in February 2009.

• PS-21 - Carpenter Pump Station, Beadle County - Foundation construction will continue in2009. All foundation work is scheduled for completion by mid-February 2009. Work on theaccess road will resume in Spring 2009. Shop fabrication of pipe and fitting spools will start inFebruary 2009.

• PS-22 - Roswell Pump Station, Miner County - Site work will continue in Spring 2009. Restriking of the piles will continue and should be completed on January 25, 2009. No further sitework is currently scheduled until Sprint, 2009. Shop fabrication ofpipe and fitting spools willstart in February 2009.

• PS-23 - Freeman Pump Station, Hutchinson County - Site fill will begin in Spring 2009. Theelectric utility will continue substation work in January, 2009. Shop fabrication ofpipe andfitting spools will start in February 2009.

6.0 EMERGENCY RESPONSE & INTEGRITY MANAGEMENT PLANS STATUS

6.1 Emergency Response Plan

The Emergency Response Program is progressing on schedule. The program has five broad components:the plan itself, equipment and resources, training, change management and public official awareness. Allthe program components are progressing on a parallel path.

The Emergency Response Plan has been filed with PHMSA. The ERP was approved by PHMSA onJanuary 22, 2009. Emergency response equipment has been procured and training plans and publicofficial visitation programs will commence shortly.

6.2 Integrity Management Plan

A review of the existing Integrity Management Plan (IMP) documentation for TransCanada United Statesnatural gas assets has been completed to determine which areas of the plan can be utilized for Keystone.While the Keystone Pipeline will have unique integrity management characteristics as a liquid pipeline,

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integrity management philosophies common to natural gas and crude oil pipelines will be included in theKeystone IMP. Development ofthe document is ongoing.

7.0 SUMMARY OF OTHER MEASURES TO COMPLY WITH SD PUC CONDITION MEASURES

Refer to Appendix B for the Status ofImplementation of South Dakota PUC conditions (Table 3).

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APPENDIX A

Table 2: Summary of consultations with the South Dakota Department ofEnvironmental and NaturalResources

Date of Agency I Purpose of Results of Consultation Follow-upContact Individual Consultation Required

4/4/08 SDDENR Response to input Problem locations and FurtherMark Rath from Mr. Rath on alternatives will be reviewed by discussion on

potential temporary Keystone hydrostatic engineer; withdrawalwater use locations acceptable locations will be locations

permitted4111108 SDDENR Email transmittal of Permits received

Genny McMath temp use/tempdischarge permits

6/5/08 SDDENR Obtain contact (SD Contact name - Leslie Petersen ContactMark Rath GF&P) for approval Petersen to

ofuse of water at discuss use ofFordham Dam water

6/5/08 SDDENR Discuss approval of Information should be submittedMark Rath small volume water to Rath and permit can be issued

use for negative same day in most casesbuoyancy

6/11108 SDDENR Update on court SD DENR evaluating ruling - Contact in midStacy Splitstoesser ruling vacating oil no decision on requirements or July for update

and gas exemption schedule yeton constructionstorm waterpermitting

8/4/08 SD Dept. of Game, Request on Information provided on data to Letter to beFish and Parks procedure for be submitted in letter requesting draftedLeslie Petersen obtaining approval approval for withdrawal

to withdraw waterfrom Fordham Damfor hydrostatictesting

9/5/08 SDDENR Determine Previous application (with Application willMark Rath procedure for updated timeframe) can be re- be drafted

renewing temporary submittedwater permits

9/11108 SDDENR Update on court SD DENR evaluating ruling - Contact inStacy Splitstoesser ruling vacating oil no decision on requirements or fourth quarter

and gas exemption schedule yet for updateon constructionstorm waterpermitting

10/20/08 SDDENR Discuss a stream If Keystone follows the RequestMark Rath crossing at MP 252 guidelines set forth in the BA concurrence

relative to the regarding water uptake for from USFWSpresence of Topeka temporary use then the DENR that Topeka

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Shiner as identified will be satisfied with shiner survey ison the temporary compliance. not needed atuse permit this location.

10/20/08 SDDENR Discuss renewal of Re-submit applications from Re-submittal ofMark Rath temp water use 2008 applications

permits for 200910/29/08 USFWS SD Field Email requesting Received concurrence from

Office concurrence from USFWS on 10/30/08Natalie Gates & USFWSthatCharlene Bessken Topeka shiner

survey is notneeded at streamcrossing at MP 252

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APPENDIXB

Table 3: Status of implementation of South Dakota PUC conditions

NO. CONDITION

1 Keystone shall comply with all applicable laws and regulations in itsconstruction and operation of the Project. These laws andregulations include, but are not necessarily limited to: the federalHazardous Liquid Pipeline Safety Act of 1979 and Pipeline SafetyImprovement Act of 2002, as amended by the Pipeline Inspection,Protection, Enforcement, and Safety Act of 2006, and the variousother pipeline safety statutes currently codified at 49 U.S.C. §60101 et seq. (collectively, the "PSA"); the regulations of the UnitedStates Department of Transportation implementing the PSA,particularly 49 C.F.R Parts 194 and 195; temporary permits for useof pUblic water for construction, testing or drilling purposes, SDCL46-5-40.1 and ARSD 74:02:01 :32 through 74:02:01 :34.02 andtemporary discharges to waters of the state, SDCL 34A-2-36 andARSD Chapters 74:52:01 through 74:52:11, specifically, ARSD §74:52:02:46 and the General Permit issued there under coveringtemporary discharges of water from construction dewatering andhydrostatic testing.

2 Keystone shall obtain and shall thereafter comply with allapplicable federal, state and local permits, including but not limitedto: Presidential Permit from the United States Department of State,Executive Order 11423 of August 16, 1968 (33 Fed. Reg. 11741)and Executive Order 13337 of April 30, 2004 (69 Fed. Reg. 25229),for the construction, connection, operation, or maintenance, at theborder of the United States, of facilities for the exportation orimportation of petroleum, petroleum products, coal, or other fuels toor from a foreign country; Clean Water Act § 404 and Rivers andHarbors Act Section 10 Permits; Special Permit issued by thePipeline and Hazardous Materials Safety Administration;Temporary Water Use Permit, General Permit for TemporaryDischarges and federal, state and local highway and roadencroachment permits. Any of such permits not previously filed withthe Commission shall be filed with the Commission upon theirissuance.

3 Keystone shall comply with and implement the Recommendationsset forth in the Final Environmental Impact Statement issued bythe United States Department of State on January 11, 2008.

4 The permit granted by this Order shall not be transferable withoutthe approval of the Commission pursuant to SDCL 49-418-29.

5 Keystone shall undertake and complete all of the actions that it andits affiliated entities committed to undertake and complete in itsApplication and in its testimony before the Commission at thehearing.

6 The most recent and accurate depiction of the Project route andfacility locations is found in hearing Exhibits A and C, 2 Sept 06, tothe Application, Ex TC IA and 1C, as modified by the valve andpump station relocations described in Ex TC 1C, 5 March 07, RiskAssessment, "6 Overview Valve and Pump Station Relocation(Overview of the Valve and Pump Station Relocation RationaleMarch 2007)" and "7 Facility Relocation 070328 (Valve and Pump

STATUS OF OTHER MEASURESREQUIRED BY CONDITIONS

Ongoing, inclUding monitoring ofcompliance during the work.

Initially, Keystone has obtainedapplicable permits as discussed inthis report. All permits currentlyissued to Keystone have been filedwith the Commission.Permits received in the fourthquarter have been submitted to thestate.

Ongoing, including monitoring ofcompliance during the work.

Not Applicable at this time.


All material deviations to the finalpre-construction route for 2008were submitted to the Commissionfor approval.

Notifications to affectedlandowners, utilities, and local

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NO.

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8

CONDITION

Station Relocation Rationale Keystone Pipeline Project March 22,2007)" and the route variation maps introduced into evidence atthe hearing. Ex TC 9 and TC 10. The testimony of Keystone'switness, Buster Gray, indicated that the land acquisition andprecise route finalization process was on-going at the time of thehearing. Keystone shall notify the Commission and all affectedlandowners, utilities and local governmental units as soon aspracticable if material deviations are proposed to the route. Atsuch time as Keystone has finalized the pre-construction route,Keystone shall file maps with the Commission depicting the finalpre-construction route. If material deviations from this route mustbe made during construction, Keystone shall advise theCommission and all affected landowners, utilities and localgovernmental units prior to making such changes and afford theCommission the opportunity to review and approve suchmodifications. At the conclusion of construction, Keystone shall filedetail maps with the Commission depicting the final as-builtlocation of the Project facilities.Keystone shall provide a public liaison officer, approved by theCommission, to facilitate the exchange of information betweenKeystone, including its contractors, and landowners, localcommunities and residents and to promptly resolve complaintsand problems that may develop for landowners, local communitiesand residents as a result of the Project. Keystone shall file with theCommission its proposed pUblic liaison officer's credentials forapproval by the Commission prior to the commencement ofconstruction. The public liaison officer shall be afforded immediateaccess to Keystone's on-site project manager, its executive projectmanager and to contractors' on- site managers and shall beavailable at all times to the Commission's Staff via mobile phoneto respond to complaints and concerns communicated to the Staffby concerned landowners and others. Keystone shall alsoimplement and keep an up-dated web site covering the planningand implementation of construction and commencement ofoperations in this state as an informational medium for the public.As soon as the Keystone's public liaison officer has beenappointed and approved, Keystone shall provide contactinformation for him/her to all landowners crossed by the Projectand to law enforcement agencies and local governments in thevicinity of the Project. The public liaison officer's contactinformation shall be provided to landowners in each subsequentwritten communication with them.

Until construction of the Project is completed, Keystone shall submitquarterly progress reports to the Commission that summarize thestatus of land acquisition and route finalization, the status ofconstruction, the status of environmental control activities, includingpermitting status and Emergency Response Plan and IntegrityManagement Plan development, the implementation of the othermeasures required by these conditions, and the overall percent ofphysical completion of the project and design changes of asubstantive nature. Each report shall include a summary ofconsultations with the South Dakota Department of Environmentand Natural Resources and other agencies concerning the issuanceof permits. The reports shall list dates, names, and the results of


governmental units were alsocompleted.

Deviations during 2008 constructionhave been filed.

Deviations to the 2009 constructionroute will be filed as required.Please refer to Table 1 in Section2.1 above.

Completed.

Notification to landowners andpublic officials will be repeated priorto May 2009.

December 31 Quarterly Reportsubmitted herewith.

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NO.

9

10

11

12

13

14

15

CONDITION

each contact and the company's progress implementing prescribedconstruction, land restoration, environmental protection, emergencyresponse and integrity management regulations, plans andstandards. The first report shall be due for the period ending June30, 2008. The reports shall be filed within 31 days after the end ofeach quarterly period and shall continue until the project is fullyoperational.Until construction of the Project is completed, Keystone's publicliaison officer shall report quarterly to the Commission on the statusof the Project from his/her independent vantage point. The reportshall detail problems encountered and complaints received. For theperiod of three years following completion of construction,Keystone's public liaison officer shall report to the Commissionannually regarding post-construction landowner and othercomplaints, the status of road repair and reconstruction and landand crop restoration and any problems or issues occurring duringthe course of the year.As soon as practicable following the issuance of the permit,Keystone shall commence a program of contacts with state, countyand municipal emergency response, law enforcement and highway,road and other infrastructure management agencies serving theProject area in order to educate such agencies concerning theplanned construction schedule and the measures that suchagencies should begin taking to prepare for construction impactsand the commencement of project operations.Keystone shall conduct a preconstruction conference prior to thecommencement of construction to ensure that Keystone fullyunderstands the conditions set forth in this order. At a minimum,the conference shall include a Keystone representative, Keystone'sconstruction supervisor and Commission staff.

Once known, Keystone shall inform the Commission of the dateconstruction will commence, report to the Commission on the dateconstruction is started and keep the Commission updated onconstruction activities as provided in Condition 7.

Except as otherwise provided in the conditions of this Order andPermit, Keystone shall comply with all mitigation measures set forthin the Construction Mitigation and Reclamation Plan (CMR) as setforth in Ex TC 1A as modified in the Final EIS Record of Decision.Keystone shall incorporate environmental inspectors into itsConstruction Mitigation and Reclamation Plan and obtain follow-upinformation reports from such inspections upon the completion ofeach construction spread to help ensure compliance with this Orderand Permit and all other applicable laws and rules.During the course of the hearing, Keystone submitted TC 28, aConstruction Agreement it executes with all affected landowners.The Construction Agreement includes a landowner optionregarding trenching and topsoil removal methods. Keystone shallprovide landowners with an explanation regarding these optionsand shall follow the landowner's selected preference as


June 30 Quarterly Public LiaisonReport submitted.

September 30 Quarterly PublicLiaison Report submitted.

December 31 Quarterly PublicLiaison Report submitted.

Completed by correspondence toagencies.

Notification to agencies will berepeated by correspondence priorto May 2009.

Completed on May 9 for 2008pipeline construction.

Completed on July 11 by PumpStations.

Will be conducted prior to 2009pipeline construction.Completed and weekly updates areposted to website for PUC andpublic access. This posting will becontinued once 2009 pipeline isinitiated.Ongoing, including monitoring ofcompliance during the work.

Completed.

Completed for all landowners withvoluntary land acquisition in 2008construction.

This is ongoing for all landowners in2009 construction. As of December

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NO.

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17

18

19

20

21

22

23

CONDITION

documented on the Construction Agreement. At a minimum,however, Keystone shall separate topsoil from subsoil inagricultural areas, including shelter belts in agricultural areas andgrasslands, as provided in Keystone's Construction Mitigation andReclamation Plan. Keystone shall utilize slope breakers to preventerosion at a 2 to 4 percent gradient rather than Keystone'sproposed 2 to 8 percent gradient. Keystone's cleanup andreclamation efforts shall commence immediately following backfilloperations. Except where practicably infeasible, final grading andtopsoil replacement and installation of permanent erosion controlstructures shall be completed in non-residential areas within 20days after backfilling the trench and within 10 days in residentialareas. In the event seasonal or other weather conditions preventcompliance with the time frames, temporary erosion controls shallbe maintained until conditions allow completion of cleanup andreclamation.

Keystone shall cover open-bodied dump trucks carrying sand orsoil while on paved roads and cover open-bodied dump truckscarrying gravel or other materials having the potential to beexpelled onto other vehicles or persons while on all public roads.Herbicides or pesticides shall not be used in or within 100 feet of awater body except as allowed by the landowner and appropriateland management or state aqency.Rock excavation from the trench may be used to backfill the trenchonly to the top of the existing bedrock profile. All other rock shall beconsidered construction debris.Mulch shall be applied on all slopes concurrent with orimmediately after seeding where necessary to stabilize the soilsurface and to reduce wind and water erosion. Keystone shallimplement Staff's recommendations regarding liquid mulch bindersand specifications for mulch use set forth in Staff Exhibit 7.Erosion control matting fabric shall be installed on water bodybanks at the time of final bank re-contouring, unless riprap or otherbank stabilization methods are employed in accordance withfederal, state and local permits and approvals.If trees are to be removed that have commercial or other value toaffected landowners, Keystone shall compensate the landownerfor the fair market value of the trees to be cleared and/or allow thelandowner the right to retain ownership of the felled trees. Theenvironmental inspection in Condition 14 shall include forestedlands.

Unless a wetland is actively cultivated or rotated cropland or unlessnon-cohesive soil conditions require utilization of greater width, thewidth of the construction right-of-way shall be limited to 75 feet orless in standard wetlands.

Unless a wetland is actively cultivated or rotated cropland, extrawork areas shall be located at least 50 feet away from wetlandboundaries except where site-specific conditions render a 50-foot


31, 2008, 254 constructionagreements have been signed and181 are pending.

Regarding slope breakers andcleanup requirements: thesestructures are being installed duringconstruction activities and areongoing including monitoring ofcompliance during construction.

Ongoing, including monitoring ofcompliance during construction.

No herbicides have been used inSouth Dakota during this reportingperiod.Ongoing, including monitoring ofcompliance during construction.



Compensation is ongoing but issubstantively complete for 2008construction. For 2009 Construction66 land owners are affected. As ofDecember 31, 2008, compensationhas been paid to 60 landownersleaving 6 left to meet with.

Environmental inspectors inspectedthe clearing of trees from the workarea durinq construction.Ongoing, including monitoring ofcompliance during construction.


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NO. CONDITION STATUS OFOTHER MEASURESREQUIRED BY CONDITIONS

setback infeasible.24 Vegetation clearing shall be limited between extra work areas and Vegetation clearing is completed for

the edge of the wetland to the construction right-of way. Spread 2A in South Dakota.Vegetation clearing was limitedbetween the extra work area andthe wetlands.

25 Wetland boundaries and buffers shall be clearly marked in the field Wetland boundaries are marked inwith signs and/or highly visible flagging until construction-related the field with Wetland Boundaryground disturbing activities are complete. signs. These signs are maintained /

replaced on a regular basis by theEnvironmental Inspection team.

26 Extra work areas near water bodies shall be located at least 50 feet Vegetation clearing is completed forfrom the water's edge, except where the adjacent upland consists Spread 2A in South Dakota.of actively cultivated or rotated cropland or other disturbed land or Vegetation clearing was limitedwhere site-specific conditions render a 50-foot setback infeasible. between the extra work area andClearing of vegetation between extra work space areas and the the wetlands.water's edge shall be limited to the construction right-of-way.

EWS areas are set back from thestreams, except in areas wheresite-specific conditions requireworkspace closer than 50 feet fromthe water's edQe.

27 In water body areas, work area boundaries and buffers shall be Work area boundaries were stakedclearly marked in the field with signs and or highly visible flagging in the field by Keystone surveyuntil construction-related ground disturbing activities are complete. crews. Additional signs were

installed by EnvironmentalInspectors to emphasize theboundaries and setbacks.

28 Spoil from minor and intermediate water body crossings and Ongoing, inclUding monitoring ofupland spoil from major waterway crossings shall be placed in the compliance during construction.construction right of way at least 10 feet from the water's edge or inadditional extra work areas, except that in-stream spoil fromstreams greater than 30 feet in width may be temporarily stored in-stream when stream flow conditions warrant such treatment.

29 Vegetation maintenance adjacent to water bodies shall be RoW maintenance activities are notconducted in such manner to allow a riparian strip at least 25 feet underway in South Dakota at thiswide as measured from the water body's mean high water mark to time. Disturbed areas adjacent topermanently re-vegetate with native plant species across the entire waterbodies are being seededconstruction riqht-of way. durinq reclamation activities.

30 The width of the clear cuts through any windbreaks and Ongoing, inclUding monitoring ofshelterbelts shall be limited to 50 feet or less. The width of clear compliance during construction.cuts through extended lengths of wooded areas shall be limited to Keystone has gone back to each85 feet or less. landowner and has asked for

permission to clear a wider pathand in all but 2 instances have beengranted permission.

31 Keystone shall follow all of Staff's recommendations regarding road A Bond of $3 million is in place forprotection and bonding. Such recommendations include: 2008 construction and a bond fora) Keystone shall coordinate road closures with state and local $12 million will be in place prior to

governments and emergency responders. the start of construction in Mayb) Keystone shall implement a regular program of road 2009.

maintenance and repair through the active construction periodto keep paved and qravel roads in an acceptable condition for

16

NO.

32

33

CONDITION

residents and the general pUblic.c) After Construction, Keystone shall repair and restore any

deterioration caused by construction traffic such that the roadsare returned to at least their preconstruction condition.

d) Keystone shall use appropriate preventative measures asneeded to prevent damage to paved roads and to removeexcess soil or mud from such roadways.

e) Pursuant to SDCL 49-418-38, Keystone shall obtain and filewith the Commission a bond in the amount of $3 million in 2008and $12 million in 2009 to ensure that any damage beyondnormal wear to public roads, highways, bridges or other relatedfacilities will be adequately compensated. Such bonds shallname the Commission as oblige in favor of and for the benefitof, such townships, counties, or other governmental entitieswhose property is crossed by the Project. Each bond shallremain in effect until released by the Commission, whichrelease shall not be unreasonably denied following completionof the construction and repair period. Either at the contactmeetings required by Condition 10 or by mail, Keystone shallgive notice of the existence and amount of these bonds to allcounties, townships and other governmental entities whoseproperty is crossed bv the Proiect.

Due to the nature of residential property, Keystone shall implementthe following protections in addition to those set forth in itsConstruction Mitigation and Reclamation Plan in areas where theProject passes within 500 feet of a residence:a. To the extent feasible, Keystone shall coordinate construction

work schedules with affected residential landowners prior tothe start of construction in the area of the residences.

b. Keystone shall maintain access to all residences at all times,except for periods when it is infeasible to do so or except asotherwise agreed between Keystone and the occupant. Suchperiods shall be restricted to the minimum duration possibleand shall be coordinated with affected residential landownersand occupants, to the extent possible

c. Keystone shall install temporary safety fencing, whenreasonably requested by the landowner or occupant, tocontrol access and minimize hazards associated with anopen trench and heavy equipment in a residential area.

d. Keystone shall notify affected residents in advance of anyscheduled disruption of utilities and limit the duration of suchdisruption.

e. Keystone shall repair any damage to property that resultsfrom construction activities.

f. Keystone shall restore all areas disturbed by construction toat least their preconstruction condition.

Keystone shall coordinate project activities with the South DakotaState Fair Administration to make best use of fairresources fortraditional users as well as construction workers.

STATUS OF OTHERMEASURESREQUIRED BY CONDITIONS

Ongoing, inclUding monitoring ofcompliance during construction

The Pipeline Liaison met with fairofficials. They had no concerns forthe 2008 State Fair, which tookplace over Labor Day weekend.There was no conflict with Keystoneactivities as the majority of workwas located in Marshall and Daycounties and based out of

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NO. CONDITION STATUS OF OTHER MEASURESREQUIRED BY CONDITIONS

Aberdeen. There are no concernsfor the 2009 State Fair as it isexpected that the contractor willoperate out of Aberdeen andMitchell, South Dakota. The Liaisonwill contact fair officials in summerof 2009 to verify that there are nonew concerns.

34 Construction must be suspended when weather conditions are such Ongoing, including monitoring ofthat construction activities will cause irreparable damage, unless compliance during construction.adequate protection measures approved by the Commission aretaken. There have been no weather

conditions such that constructionactivities will cause irreparabledamage.

35 Reclamation and clean-up along the right-of-way must be Ongoing, including monitoring ofcontinuous and coordinated with ongoing construction. compliance during construction.

36 All pre-existing roads and lanes used during construction must be Construction activities are on-goingrestored to a condition that will accommodate their previous use, and roads are being maintained asand areas used as temporary roads during construction must be construction occurs. The contractorrestored to their original condition, except as otherwise requested used motor graders and gravelor agreed to by the landowner or any governmental authority trucks to repair and maintain roadhaving jurisdiction over such roadway. conditions following the heavy rains

during the fourth quarter andprepare them for winter. Finalreclamation and repair of roadwayswill take place in the summer of2009 following the activeconstruction of the pipeline.

37 Keystone shall, prior to any construction, file with the Commission Completeda list identifying private and new access roads that will be used orrequired during construction and file a description of methods usedby Keystone to reclaim those access roads.

38 In the event the winter season delays successful completion of de- Keystone prepared a Winterizationcompaction, topsoil replacement or seeding until the following Plan detailing these requirementsspring, Keystone shall prepare and obtain a winterization plan. The and provided this Plan to theCommission and affected landowners and/or governmental units Commission staff.shall be notified.

39 Keystone shall construct and operate the pipeline in the manner Ongoing, including monitoring ofdescribed in the application and at the hearing, including in compliance during construction.Keystone's exhibits, and in accordance with the conditions of thispermit, the PHMSA Special Permit and the conditions of this Order PHMSA has audited Spread 2A inand the construction permit granted herein. South Dakota 5 times since the

move to Aberdeen, South Dakota.Each audit consisted ofapproximately 4 days on site by aPHSMA auditor verifying ourconstruction practices met Federalrequirements.

40 Keystone shall require compliance by its shippers with its crude oil Not Applicable at this time.specifications in order to minimize the potential for internal corrosion

41 Keystone's obligation for reclamation and maintenance of the right- Not Applicable at this time.

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NO. CONDITION

of-way shall continue throuqhout the life of the pipeline.42 In accordance with 49 C.F.R. 195, Keystone shall continue to

evaluate and perform assessment activities regarding highconsequence areas. Prior to Keystone commencing operation, allunusually sensitive areas as defined by 49 CFR 195.6 that mayexist, whether currently marked on DOT's HCA maps or not, shouldbe identified and added to the Emergency Response Plan andIntegrity Management Plan. In its continuing assessment andevaluation of environmentally sensitive and high consequenceareas, Keystone shall seek out and consider local knowledge,including the knowledge of the South Dakota Geological Survey,the Department of Game Fish and Parks and local landowners andqovernmental officials.

43 The evidence in the record demonstrates that in some reaches ofthe Project in northern Marshall County, the Middle James Aquiferis present at or very near ground surface and is not overlain bysufficient impermeable material to isolate it from surficial infiltrationof contaminants. The evidence also demonstrates that this aquiferserves as the water source for at least one significant public watersupply system and several domestic farm wells. Keystone shallidentify the Middle James Aquifer area in Marshall County as ahydrologically sensitive area in its Integrity Management andEmergency Response Plans, except in areas where Keystone candemonstrate that the aquifer is overlain by sufficient unoxidizedglacial till or other impermeable material to isolate it frominfiltration of contaminants in the event of a release from theProject. Keystone shall similarly treat any other surficial aquifers ofwhich it becomes aware during construction and continuing routeevaluation.

44 Prior to putting the Keystone Pipeline into operation, Keystone shallprepare, file with PHMSA and implement an emergency responseplan as required under 49 CFR 194 and a manual of writtenprocedures for conducting normal operations and maintenanceactivities and handling abnormal operations and emergencies asrequired under 49 CFR 195.402. Keystone shall also prepare andimplement a written integrity management program in the mannerand at such time as required under 49 CFR 195.452. At such timeas Keystone files its Emergency Response Plan and IntegrityManagement Plan with PHMSA or any other state or federalagency, it shall also file such documents with the Commission. TheCommission's confidential filing rules found at ARSD 20: 10:01 :41may be invoked by Keystone with respect to such filings to thesame extent as with all other filings at the Commission. Ifinformation is filed as "confidential," any person desiring access tosuch materials or the Commission Staff or the Commission mayinvoke the procedures of ARSD 20:10:01:41 through 20:10:01:43to determine whether such information is entitled to confidentialtreatment and what protective provisions are appropriate for limitedrelease of information found to be entitled to confidential treatment.

45 To facilitate periodic pipeline leak surveys during operation of thefacilities in wetland areas, a corridor centered on the pipeline andup to 15 feet wide shall be maintained in an herbaceous state.Trees within 15 feet of the pipeline greater than 15 feet in heightmay be selectively cut and removed from the permanent riqht-of-

STATUS OFOTHER MEASURESREQUIRED BY CONDITIONS

These factors are being taken intoconsideration in the development ofKeystone's Emergency ResponsePlan and Integrity ManagementPlan.

These factors are being taken intoconsideration in the development ofKeystone's Emergency ResponsePlan and Integrity ManagementPlan.

Keystone has filed its EmergencyResponse Plan with PHMSA.PHMSA approved the ERP onJanuary 22, 2009.

Keystone is developing its IntegrityManagement Plan.


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NO.

46

47

48

49

CONDITION

way.To facilitate periodic pipeline leak surveys in riparian areas, acorridor centered on the pipeline and up to 10 feet wide shall bemaintained in an herbaceous state.At the hearing, Keystone's expert witness, Brian Thomas, testifiedthat there do not currently exist any viable and cost effectiveremote sensing or monitoring systems that could either be installedalong the pipeline, particularly at sensitive locations, or employed inaerial and/or ground surveillance activities to detect volatile organiccompounds or other indicators of potential leaks. The Commissionbelieves that such technologies, when available, could increase theeffectiveness of visual surveillance and augment the SCADAsystem and mass balance and other leak detection methods thatKeystone will employ. The Commission accordingly directsKeystone to keep abreast of the latest developments in suchtechnologies and report to the Commission on the status ofinnovation in such pipeline leak detection equipment and methodson or before April 1, 2010, and at such additional times thereafteruntil 2019 as the Commission shall specifically request, but in nocase more frequently than once every three years.Except to the extent waived by the owner or lessee in writing or tothe extent the noise levels already exceed such standard, the noiselevels associated with Keystone's pump station and other noiseproducing facilities will not exceed the L10=55dbA standard at thenearest occupied, existing residence, office, hotel/motel or nonindustrial business not owned by Keystone. The point ofmeasurement will be within 100 feet of the residence or business inthe direction of the pump station facility. Post-constructionoperational noise assessments will be completed by anindependent third-party noise consultant, approved by theCommission, to show compliance with the noise level at eachpump station or other noise-producing facility. The noiseassessments will be performed in accordance with applicableAmerican National Standards Institute standards. The results of theassessments will be filed with the Commission. In the event thenoise level exceeds the limits set forth in this condition at any pumpstation or other noise producing facility, Keystone shall promptlyimplement noise mitigation measures to bring the facility intocompliance with the limits set forth in this condition and shall reportto the Commission concerning the measures taken and the resultsof post-mitigation assessments demonstrating that the noise limitshave been met.

At the request of any landowner or pUblic water supply system thatoffers to provide the necessary access to Keystone over his/herproperty or easement(s) to perform the necessary work, Keystoneshall replace at no cost to such landowner or public water supplysystem, any polyethylene water piping located within 500 feet ofthe Project. Keystone shall not be required to replace that portionof any piping that passes through or under a basement wall orother wall of a home or other structure. At least forty-five (45) daysprior to commencing construction, Keystone shall publish a noticein at least one newspaper of general circulation in each countythrough which the Project will be constructed advising landownersand public water supply systems of this condition.





Completed for 2008. No requestsfrom any landowners at this time.

Publication will be repeated prior toMay 2009

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NO. CONDITION

50 If during construction, Keystone or its agents discover what may bean archaeological resource, cultural resource, paleontologicalresource, historical resource or gravesite, Keystone or its agentsshall immediately cease work at that portion of the site and notifythe Commission and the State Historical Preservation Office. If theSHPO determines a protectable resource is present, Keystoneshall develop a plan that is acceptable to the SHPO to salvage,avoid or protect the archaeological resource. If such a plan willrequire a different route than that approved by the Commission,Keystone shall obtain Commission approval for the new routebefore proceeding with any further construction.

51 Keystone shall promptly report to the Commission the presence inthe permit area of any critical habitat of threatened or endangeredspecies that Keystone becomes aware of and that were notpreviously reported to the Commission.

52 Keystone shall keep a record of drain tile system informationthroughout construction. Location information shall be collectedusing a sub-meter accuracy global positioning system whereavailable or, where not available by accurately documenting thepipeline station numbers of each exposed drain tile. Keystone shallmaintain the drain tile location information and tile specificationsand incorporate it into its Emergency Response and IntegrityManagement Plans where drains might be expected to serve ascontaminant conduits in the event of a release.

53 Keystone shall repair or replace all property removed or damagedduring all pha~es of construction and operation of the proposedtransmission facility, including but not limited to, all fences, gatesand irrigation or drainage systems. Keystone shall compensate theowners for damages or losses that cannot be fully remedied byrepair or replacement, such as lost productivity and crop andlivestock losses.

54 In the event that a person's well is contaminated as a result of thepipeline operation, Keystone shall pay all costs associated withfinding and providing a permanent water supply that is at least ofsimilar quality and quantity; and any other related damagesincluding but not limited to any consequences, medical orotherwise, related to water contamination.

55 Any damage that occurs as a result of soil disturbance on apersons' property shall be paid for by Keystone.

56 No person will be held responsible for a pipeline leak that occurs asa result of his/her normal farming practices over the top of or nearthe pipeline.

57 Keystone shall pay commercially reasonable costs and indemnifyand hold the landowner harmless for any loss, damage, claim oraction resulting from Keystone's use of the easement, except to theextent such loss, damage claim or action results from the grossneqliqence or willful misconduct of the landowner or its agents.





There have been no drain tilecrossings to date.

Ongoing, including monitoring ofcompliance during the work.Repairs to property such as draintile, culverts and irrigation systemsare repaired as they areencountered during constructionprior to trench backfill. The majorityof repairs and damagecompensation will be addressed inconcurrence with clean up andreclamation work. Other issues willbe handled as they arise.Not Applicable at this time.




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