04/30/2019 - Legal Analysis

Energy EOs In Depth: New Presidential Permit for Keystone XL and Changes to Presidential Permitting

by Caitlin McCoy

This is part of a series analyzing the April 10th executive orders on energy infrastructure. See the links at the bottom of this page for the related pieces.

The President recently issued a new presidential permit for the Keystone XL pipeline. The pipeline is to carry crude oil from the tar sands in Canada through Montana, South Dakota, and Nebraska where it will connect with the existing Keystone pipeline system that runs to refineries in Illinois and Texas. The permit authorizes the construction and operation of 1.2 miles of the pipeline and facilities associated with the pipeline in Montana across the international border with Canada.

The following week, on April 10, the President issued Executive Order 13867 on the Issuance of Permits with Respect to Facilities and Land Transportation Crossings at the International Boundaries of the United States. The Executive Order changes the process for issuing presidential permits for facilities that cross international boundaries.

I will recap some of the history of this presidential permitting authority, the permitting history for the Keystone XL pipeline, and relevant litigation to explain the significance of the new presidential permit for Keystone XL and E.O. 13867 for future projects.

History of Presidential Permitting Authority and Relevant Executive Orders

The President has the authority to grant permits for projects that cross international borders based on the President’s inherent foreign affairs power, found in Art. II of the U.S. Constitution. The President can delegate some or all of this permitting authority to an agency. Presidents signed and issued permits for these types of facilities all the way through the 1960s when President Johnson decided to change the process.

President Lyndon Johnson delegated presidential transboundary permitting authority to the Department of State in 1968 when he issued Executive Order 11423. It recognized that executive permission is required for construction projects on the U.S. border, including “…pipelines, conveyer belts, and similar facilities for the exportation or importation of petroleum and petroleum products…to or from a foreign country.” The order delegated the process of reviewing applications and issuing or denying permits to the State Department.

President George W. Bush revised this permitting process when he issued Executive Order 13337 on April 30, 2004 “…to expedite reviews of permits as necessary to accelerate the completion of energy production and transmission projects…while maintaining safety, public health, and environmental protections….” The order also designates the State Department as the agency responsible for consulting with federal government officials, federal, state and local agencies, and foreign governments to obtain information needed to determine whether to issue a permit.

Executive Order 13337 made the Department of State ultimately responsible for the final decision to issue the permit “…if the Secretary of State finds that issuance of a permit to the applicant would serve the national interest….” By allowing the State Department to issue the permit, the permitting decision arguably became a final agency action, subject to judicial review under the Administrative Procedure Act (APA) and required to comply with statutes like the National Environmental Policy Act (NEPA) and Endangered Species Act (ESA). This is significant because the Supreme Court has ruled that the President is not an agency for purposes of the APA, meaning presidential decisions are unreviewable under the APA, and do not need to comply with NEPA, ESA, or other statutes.[1]

However, President Bush did leave a role for himself in the permitting process outlined in E.O. 13337. The order stated that in the event of a disagreement between the Secretary of State and the head of another agency or department that has consulted on the permit review “…the Secretary of State shall consult with any such requesting official and, if necessary, shall refer the application, together with statements of the views of any official involved, to the President for consideration and a final decision.”[2] By reserving final decision-making authority to himself in the case of a dispute, the President retained some control over the issuance of the permit. The U.S. District Court for the District of Columbia found this mechanism to be a crucial factor in the 2009 case Natural Resources Defense Council v. Department of State, which challenged the State Department’s issuance of a permit for the Keystone XL pipeline due to lack of compliance with NEPA.

In its decision, the D.C. District Court ruled that even though President did not require that he give final approval for a permits to be issued, the fact that he retained authority to resolve inter-agency disputes meant that he had not completely delegated authority to the State Department and it was acting according to his authority. Thus, the court found that State “stands in the President’s shoes by exercising the President’s inherent discretionary power under the Constitution to issue cross-border permits.”[3]

The court continued, “No permit can issue without, at the very least, the President’s acquiescence, and the President’s acquiescence is itself an exercise of discretion that constitutes unreviewable presidential action. Therefore, to challenge the issuance of a presidential permit, whether by the President himself or by the State Department as the President’s delegee, is to challenge a presidential act, which is not reviewable under the APA.” The court concluded that the issuance of a permit through this process was a presidential action, not an agency action, so the State Department did not need to comply with NEPA or the ESA and the permit could not be challenged under the APA.

The D.C. District Court focused on “the nature of the President’s authority over agency decisions, not by whether or how the President exercised that authority” to conclude that “[t]he determinative consideration is whether ‘the President’s authority to direct the [agency] in making policy judgements’ is curtailed in anyway or whether the President is ‘required to adhere to the policy decisions’ of the agency.”[4]

The D.C. District Court decision is important because it tells us that the nature of the President’s authority over an agency decision is a key factor for whether the decision is a Presidential action or an agency action. An agency action can be reviewed under the APA and courts can scrutinize whether the agency complied with relevant statutes like NEPA. A presidential action can only be reviewed to determine whether it violates the Constitution. Note that this decision is a federal district court decision, meaning it is only binding within the D.C. District. Other federal courts, both district courts and courts of appeals, can arrive at different determinations, as long as they remain consistent with relevant Supreme Court decisions.

History of Keystone XL Permitting

  • 2008 TransCanada, the company that is seeking to construct and operate the Keystone XL pipeline, first applied for a presidential permit. The State Department conducted a review of the environmental impacts of the proposed pipeline project according to NEPA and ESA.
  • January 2012 President Obama denied this first permit application due to a law that imposed a deadline on consideration of the impacts.
  • May 4, 2012 TransCanada submitted another application.
  • March 1, 2013 The State Department released a draft Environmental Impact Statement for the project.
  • January 2014 The State Department released the Environmental Impact Statement for the project.
  • November 6, 2015 The State Department issues a Record of Decision denying the permit.
  • January 24, 2017 President Trump issued a memorandum inviting TransCanada to apply for a presidential Permit. Also issues new E.O. to expedite environmental reviews for “high priority” infrastructure projects.
  • January 26, 2017 TransCanada re-applies for a permit.
  • March 23, 2017 State Department issues a new Record of Decision granting the permit.
  • March 27, 2017 The Indigenous Environmental Network and Northern Plains Resource Council file suit challenging the new Record of Decision and presidential permit in the U.S. District Court for the District of Montana. Indigenous Envtl. Network v. United States Dep’t of State, Case No. 4:17-cv-00029-BMM
    • The major issue in this case is whether the issuance of the permit is a final agency action that can be challenged under the APA and whether the State Department needed to comply with NEPA and ESA. These are almost the same questions that the D.C. District Court faced in the 2009 case.
    • The State Department had been complying with NEPA and ESA under the Obama administration, but had not updated the information under the Trump administration even after there were changes in the pipeline’s route.
    • The judge ordered the State Department to complete supplemental NEPA work and put an injunction in place that bars construction work from beginning while the case is being reviewed.
  • You can see a more comprehensive timeline that includes litigation and other actions on our tracker page for the Keystone XL pipeline.

New Presidential Permit and Executive Order

On March 29, President Trump issued a new presidential permit for the Keystone XL pipeline project. The new permit authorizes TransCanada to construct, operate, and maintain the pipeline. It cites only Trump’s authority as president and does not mention the State Department. The new permit is focused on the 1.2 miles of the pipeline and related facilities that are on the international border with Canada, but the definition of “facilities” seems to reference the project as a whole.[5] The new presidential permit explicitly “supersedes” the previous presidential permit issued on March 23, 2017 and also revokes it. The new permit was also issued “…notwithstanding Executive Order 13337 of April 30, 2004….”[6]

On April 10, President Trump issued an Executive Order 13867 on the Issuance of Permits with Respect to Facilities and Land Transportation Crossings at the International Boundaries of the United States. This order establishes a new process for issuing future presidential permits for cross-border infrastructure, including pipelines.

The new Executive Order revokes Executive Orders 11423 and 13337, discussed above, and sets out a new process for reviewing transboundary permit applications. The State Department is still responsible for managing the process, but it has no authority to make a final decision to issue a permit. Instead, the State Department must collect necessary information and documents to allow the President to make a final decision on whether to issue a permit and must do so within 60 days of receiving an application for a presidential permit.

After consultation with the heads of other agencies, states, tribal officials, local government officials, and/or foreign governments, the State Department advises the President on whether issuing the permit would serve the foreign policy interests of the United States. The Secretary of State is to provide the President with this opinion and reasons supporting it in writing. Then, the President decides whether to issue the permit: “Any decision to issue, deny, or amend a permit under this section shall be made solely by the President.”[7] This new process with the president as a the sole, final decisionmaker is set up so that there is no way to argue that the issuance of a permit is a final agency action, subject to judicial review under the APA and required to comply with statutes like NEPA.

Although this new executive order applies to transboundary projects like the Keystone XL pipeline, it does not affect Keystone XL project itself because the President granted it a new permit about a week earlier. The fact that Executive Orders 11423 and 13337 were still in effect when the new presidential permit was issued is not consequential because even under those orders, the president has always had the authority to take the permitting decision away from the State Department and issue or deny the permit on his own.

Recent Litigation Developments

These latest developments raise some legal questions which will be explored in litigation. There are two cases to watch:

On April 5, the Indigenous Environmental Network and North Coast Rivers Alliance filed a lawsuit challenging the new presidential permit for the Keystone XL pipeline. The complaint argues in part that President Trump does not have authority over the relevant 1.2 miles of land for the permit at the U.S.-Canada border because it is under the authority of the Bureau of Land Management and Congress has directed BLM to manage that land. The complaint also alleges that the President is improperly seeking to grant permission for the entire pipeline based on the definition of “facilities” in the order. The petitioners argue that the last portion of the facilities definition is an attempt to go beyond the 1.2 miles at the border and permit the entire 875-mile pipeline.

On April 8, TransCanada filed a motion to dismiss the case challenging the March 2017 presidential permit in the U.S. Court of Appeals for the Ninth Circuit. TransCanada argues that the case is based on a previous permit and it is no longer valid (in legal terminology, moot) now that there is a new presidential permit. TransCanada is asking the court to dismiss the case against it and the State Department and lift the injunction on construction activities that went into place on November 8, 2018.

You can follow the developments in these two cases on our tracker page for the Keystone XL pipeline.

For more information on the energy EOs:

 

[1] Franklin v. Massachusetts, 505 U.S. 788, 800 (1992) (“The President is not explicitly excluded from the APA’s purview, but he is not explicitly included, either. Out of respect for the separation of powers and the unique constitutional position of the President, we find that textual silence is not enough to subject the President to the provisions of the APA. We would require an express statement by Congress before assuming it intended the President’s performance of his statutory duties to be reviewed for abuse of discretion. As the APA does not expressly allow review of the President’s actions, we must presume that his actions are not subject to its requirements. Although the President’s actions may still be reviewed for constitutionality, we hold that they are not reviewable for abuse of discretion under the APA.”).

[2] Executive Order 13337, Sec. 1 (h)(i) (April 30, 2004).

[3] Nat. Res. Def. Council, Inc. v. U.S. Dep’t of State, 658 F. Supp. 2d 105, 111 (D.D.C. 2009).

[4] Id. (quoting Franklin v. Massachusetts).

[5] “The term ‘Facilities,’ as used in this permit, means the portion in the United States of the international pipeline project associated with the permittee’s application for a Presidential permit filed on May 4, 2012, and resubmitted on January 26, 2017, and any land, structures, installations, or equipment appurtenant thereto.” Presidential Permit Authorizing Transcanada Keystone Pipeline, L.P., to Construct, Connect, Operate, and Maintain Pipeline Facilities at the International Boundary Between the United States and Canada (March 29, 2019) (emphasis supplied).

[6] Id.

[7] Executive Order 13867, Sec. 2(i) (April 10, 2019).