TransCanada Receives Presidential Permit to Construct Keystone XL Pipeline

King & Spalding

On March 24, the Trump Administration granted a Presidential permit to TransCanada, which gives the company authority to “construct, connect, operate, and maintain pipeline facilities” for the Keystone XL Pipeline. The Presidential permit is a significant step that brings the pipeline closer to construction. The project’s proposed route, however, must still obtain regulatory approval from Nebraska, where the pipeline faces opposition from environmental groups and some landowners.

As previously reported, the Keystone XL Pipeline is a proposed 1,179-mile pipeline that would extend from Alberta to Nebraska to connect with U.S. existing pipelines to transport crude oil reserves from Canada to the United States. In the years following TransCanada’s first application for a Presidential permit in 2008, the pipeline became a controversial subject at the forefront of debates at the state, national, and international levels on energy security, the environment, job creation, economic growth, and other topics. After several years of government agency review of the proposed pipeline and multiple bills regarding the pipeline’s approval in Congress, President Obama announced his decision on November 6, 2015 to deny TransCanada’s permit application. President Obama agreed with the State Department’s conclusion that “the Keystone XL Pipeline would not serve the national interest of the United States.” In February 2016, TransCanada challenged President Obama’s decision by filing a claim under the North American Free Trade Agreement (NAFTA) and a law suit in U.S. District Court.

On January 24, and consistent with statements he made during his presidential campaign, President Trump issued a Presidential Memorandum Regarding Construction of the Keystone XL Pipeline that invited TransCanada to “promptly re-submit its application to the Department of State for a Presidential permit[.]” He instructed the Secretary of State to “reach a final permitting determination, including a final decision as to any conditions on issuance of the permit that are necessary or appropriate to serve the national interest, within 60 days of TransCanada’s submission of the permit application.” TransCanada submitted a proposal to receive a Presidential permit for the pipeline on January 26.

Under Secretary of State for Political Affairs Thomas A. Shannon, Jr. issued the Presidential permit to TransCanada on March 24. Under Secretary Shannon found that issuing the Presidential permit “would serve the national interest,” and he made this determination after considering “a range of factors, including but not limited to foreign policy; energy security; environmental, cultural, and economic impacts; and compliance with applicable law and policy.” Also on March 24, TransCanada’s NAFTA challenge – which TransCanada had suspended in February – was discontinued.

In spite of this significant achievement for the pipeline, the pipeline route through Nebraska must still be approved by the Nebraska Public Service Commission. TransCanada filed its application for route approval on February 16, and the decision is expected in September. Given that the proposed pipeline route through Nebraska has already been the source of multiple law suits, environmental groups and some owners of property near the proposed route likely will attempt to prevent the pipeline from moving forward.



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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