Keystone XL Pipeline Goes To Court

Posted on April 29, 2016 by Mark Walker

In January TransCanada sued the Obama Administration over its denial of a permit for the Keystone XL pipeline to cross the US-Canada border. In its lawsuit TransCanada asserts that the President exceeded his executive authority and usurped Congress’ constitutional power to regulate commerce.

The lawsuit, filed in federal court in Houston, Texas, comes after TransCanada spent seven years mired in the administrative process. TransCanada’s complaint recounts the key events of those seven years as follows.

In 2008 TransCanada was granted a border crossing permit for Keystone I, so there is already a Keystone pipeline that crosses the US-Canada border in North Dakota. The State Department raised no objections regarding GHG emissions in connection with that permit. In 2009, then Secretary of State Clinton granted a cross-border permit to Enbridge for its Alberta Clipper pipeline, concluding that GHG emissions were not a basis for denying a border crossing permit.

In 2008, seeking to expand capacity, TransCanada applied for a second US-Canada border crossing permit for the Keystone XL project. The permit application covered a 1.2 mile section of pipe that was part of a broader 1,700-mile pipeline project, most of which was to be located in the United States.

Following this application, the State Department issued a series of draft and final environmental impact statements that found minimal GHG impacts. Nevertheless, in November 2011 the State Department announced it could not make a final determination until an alternative route through Nebraska was selected.

In December 2011 Congress passed an act that required the President to grant the permit to TransCanada within 60 days or report to Congress why the President did not believe the pipeline crossing served the national interest. In January 2012 President Obama directed the Secretary of State to deny the permit on the ground that 60 days was insufficient time. Secretary Clinton denied the permit but indicated that a renewed application would be considered. In May 2012 TransCanada submitted a renewed application.

Following this second application the State Department issued another series of EISs which found that the project would not substantially increase GHG emissions. In early 2015, Congress passed the Keystone Pipeline Approval Act, which authorized the Keystone XL project without any further action or approval by the President. President Obama vetoed the Act and Congress was unable to override the veto.

In November 2015, Secretary Kerry denied the renewed application. The Record of Decision found that the pipeline would advance the national interest by providing added energy security and economic benefits, and furthering the United States’ relationship with Canada. The ROD also found that GHG emissions might actually increase without the pipeline because the crude oil would otherwise be transported by rail and tankers. Nevertheless, the Secretary concluded that the pipeline did not serve the national interest because it “would undermine U.S. climate leadership and thereby have an adverse impact on encouraging other States to combat climate change” in advance of the December 2015 Paris climate negotiations.

It is with the backdrop of these events that TransCanada challenged the President’s authority to regulate international pipeline border crossings.

Where does the President derive the authority to regulate international pipeline crossings, and particularly on the basis of the United States’ symbolic leadership role on climate change? The President relies upon Executive Order 13337, under which the President delegated authority to the Secretary of State to deny border crossings that do not “serve the national interest”. But because the Constitution gives Congress the power to regulate commerce, where does the President derive the power to delegate to the Secretary of State in the first place, particularly since Congress has never delegated the authority to regulate such border crossings to the President?

TransCanada’s complaint discusses the various U.S. Supreme Court decisions which address the President’s power to act in areas otherwise reserved to Congress but where Congress has not yet acted. These cases hold that the President does have power to act in such circumstances, but also hold that the President’s authority can be revoked at any time by Congress by simply expressing its contrary will. TransCanada argues that Congress expressed such contrary will when it passed the Keystone Pipeline Approval Act, thereby depriving the President of authority to take further action.

On April 1 the Obama Administration filed a Motion to Dismiss, arguing that the President’s powers over foreign affairs and as Commander-in-Chief provide sufficient independent constitutional authority to regulate pipeline border crossings. In addition, the Administration argues that, because the Keystone Pipeline Approval Act never became law, it provides no basis to challenge the President’s decision. The Natural Resources Defense Council, Friends of the Earth, Texas Environmental Advocacy Services, Community In-Power and Development Association and Center for Biological Diversity recently filed an Amicus Brief.

The outcome of this environmental controversy will depend not on statutory interpretation or common law but on fundamental concepts of separation of powers. The sometimes murky line between Presidential and Congressional authority will be tested here.



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