President Biden Faces Constitutional Challenges to Revocation of Keystone XL Permit

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During his first hours in the Oval Office, President Biden issued Executive Order 13990, entitled “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.” Section 6 of the Order revoked TransCanada Keystone Pipeline, L.P.’s March 2019 permit to construct and operate cross-border pipeline facilities at the U.S.-Canada border in Montana. This March, however, Attorneys General from 21 states[1] filed a lawsuit[2] in the Southern District of Texas against President Biden and several Cabinet members[3] alleging that the President’s Order violates the U.S. Constitution.

 

Background

The Keystone Pipeline is a system of petroleum pipelines designed to transport crude oil from fields in Alberta, Canada and ultimately terminating at refineries on the U.S Gulf Coast. The Keystone XL project, first proposed by TC Energy Corporation in 2008, is the fourth phase of the Keystone Pipeline project intended to create a shorter path between terminals in Nebraska and Alberta, Canada. Critical to the success of this project is TC’s attainment of a Presidential Permit allowing the company to construct a pipeline that crosses the border between the U.S. and Canada near Morgan, Montana.

2015 aerial photograph. Google Earth, earth.google.com/web/. Pipeline locations derived from Keystone XL, https://www.keystonexl.com/maps/.

Since TC’s first 2008 cross-border permit application, the Keystone XL project faced numerous legal and regulatory hurdles. As of 2011, after three years of review, the State Department had not approved TC’s application for a cross-border permit. Then, in December 2011, Congress passed an Act[4] requiring the President to issue the permit within 60 days, unless the President found that doing so would not serve the national interest. A failure to make such a finding would grant the permit by operation of law. In response, President Obama issued a formal statement[5] recommending the permit be denied, denouncing “the rushed and arbitrary deadline” of this law which “prevented a full assessment of the pipeline’s impact, especially the health and safety of the American people, as well as our environment.”[6] The State Department denied the permit within days of President Obama’s recommendation.

A few months later, in May 2012, TC renewed its application, and again, the project underwent more than three years of review. In November 2015, President Obama announced that the cross-border permit would again be denied, asserting the project would have a negative impact on the country’s efforts to combat climate change and an insignificant impact on the economy, U.S. energy security, and oil prices.[7]

When President Trump took office in January 2017, he promptly issued a Presidential Memorandum formally inviting TC to again re-submit its application.[8] This time, the permit was approved within two months, on March 23, 2017.[9] But, in November 2018, a federal district court enjoined the permit, holding that the State Department failed to adequately consider relevant information as required by the Administrative Procedure Act (APA) and National Environmental Policy Act (NEPA).[10] The State Department and TC were enjoined from engaging in any activity in furtherance of construction or operation of the pipeline facilities until the State Department completed a supplement to its Environmental Impact Statement.

In March 2019, President Trump again issued the cross-border permit.[11] Significantly, Article 1 of the 2019 permit states that “[t]his permit may be terminated, revoked, or amended at any time at the sole discretion of the President of the United States . . . with or without advice provided by any executive department or agency.”[12] The portion of the Keystone XL that crosses the U.S.-Canada border was substantially completed before the end of 2020. But on January 20, 2021, President Biden revoked the permit via Executive Order 13990.

As demonstrated by the shifting treatments between the different Presidential administrations, the Keystone XL pipeline has become a highly politicized project. Proponents of the project point to its potential economic and energy security benefits as reasons for its approval. In contrast, opponents of the project criticize the project’s potential environmental risks and impact on efforts to combat climate change.

The Lawsuit

Within two months of Biden’s Order, on March 17, 2021, 21 states (the “States”) filed a lawsuit in the Southern District of Texas, alleging President Biden’s Order violates the Constitution.[13] First, the States allege that the Order violates the Constitution’s Separation of Powers doctrine. The States argue that the decision to provide or withhold permission to construct and operate an oil pipeline across the international border with Canada is a regulation of international commerce, and the Congressional power to regulate foreign commerce is “exclusive and plenary.”[14] Therefore, the President did not have the authority to revoke the cross-border permit, even in the absence of any mandate from Congress on the issue. The States further argue that the clause found in President Trump’s 2019 permit, giving the President the “sole discretion” to revoke the permit, is invalid because there is no principle of law “that allows the President to arrogate power to himself through some sort of pseudo-contract with a private party.”

Next, the States allege that President Biden may not unilaterally revoke the permit because Congress expressly granted it by operation of law in the 2011 Act. The Act directs the President to either (a) grant the permit or (b) issue reports to various congressional committees within 60 days that the Keystone XL pipeline would not serve the national interest. A failure to do either would grant the permit by operation of law. The States allege that then-President Obama failed to grant the permit or report why the pipeline did not serve the national interest within the prescribed time period. Therefore, the States argue, the permit is effective and cannot be revoked by any powers granted to the President.

Finally, seemingly in anticipation of the administration’s defenses to these claims, the States allege that “[t]o the extent that the President or Cabinet Defendants point to a general authority to regulate the environment or conduct foreign relations actually conferred on them by Congress, such a theory runs afoul of the non-delegation doctrine.” The States argue that whether, and to what extent, the transport of fossil fuels should be restricted on the grounds of environmental impact is a strictly legislative decision that Congress may not transfer to the Executive Branch. Therefore, President Biden had no authority to revoke the permit.

As of this writing, the President and Cabinet members have not filed a response to the lawsuit. President Biden pledged on the campaign trail to address climate change, and this lawsuit is one of many challenges Biden will likely face as he attempts to steer the country toward new forms of energy production. The outcome of this case could have a significant impact on his strategy going forward.

[1] The states are Alabama, Arizona, Arkansas, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Texas, Utah, West Virginia, and Wyoming.

[2] Texas, et al. v. Biden, et al., Case No. 3:21-cv-00065, District Court for the Southern District of Texas.

[3] In addition to President Biden, the Complaint names the Secretary of the Departments of State, Homeland Security, Interior, Energy, and Transportation, the U.S. Attorney General, and the Acting Administrator of the EPA.

[4] Pub. L. No. 112-78, 125 Stat. 1280, § 501.

[5] https://obamawhitehouse.archives.gov/the-press-office/2012/01/18/statement-president-keystone-xl-pipeline

[6] Id.

[7] https://obamawhitehouse.archives.gov/the-press-office/2015/11/06/statement-president-keystone-xl-pipeline

[8] https://www.govinfo.gov/content/pkg/FR-2017-01-30/pdf/2017-02035.pdf

[9] https://www.federalregister.gov/documents/2017/04/04/2017-06646/notice-of-issuance-of-a-presidential-permit-to-transcanada-keystone-pipeline-lp

[10] Indigenous Environmental Network v. United States Dep’t of State, 347 F. Supp. 3d 561 (D. Mont. November 8, 2018)

[11] https://www.govinfo.gov/content/pkg/FR-2019-04-03/pdf/2019-06654.pdf

[12] Id.

[13] The complaint additionally alleges violations of the APA against the cabinet defendants and that the revocation was arbitrary and capricious. Discussion of these issues is omitted here.

[14] Bd. of Trs. Of Univ. of Ill. v. United States, 89 U.S. 48, 56 (1933).

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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