Keystone XL: The Legal Battle Between Environment And Development Continues

OVERVIEW

The Keystone XL project is an ambitious project of the energy company TC Energy (formerly TransCanada), to help in the transportation of Tar Sands Crude from Alberta to refineries in the United States. It is a 1,127km long pipeline system, dedicated to supplying the ever-increasing demands of transportation fuel in the US. The article ‘KEYSTONE XL: THE LEGAL BATTLE BETWEEN ENVIRONMENT AND DEVELOPMENT CONTINUES’, attempts to throw light on the current legal challenge which ails this transnational project, and is, majorly centralized around the debate of Presidential powers vis-à-vis the Congress’.

The article is divided into two portions; the first one tries to discuss the legal framework behind the issuing of Presidential Permits with respect to the Keystone XL pipeline project. While the second part sheds light on the other issues which stand in the way of this project. The author mainly begins by giving a brief intro to the working of the presidential permits earlier granted for the project and how the congress’ affiliation to the project ensured its legitimacy. However, the recent unilateral revocation of the permit has brought in questions of the exact powers of the president when issuing such permits for transnational energy projects.

Since, assuming office the incumbent President Joe Biden, Jr. revoked an earlier Presidential permit issued in March 2019 vide an Executive Order 13990 leading to a halt in operations of the Keystone XL pipeline project. This led to a multi-party federal dispute against the current President and United States’ agencies. According to the author, the latest order of the President has created a tussle between the Congress and President and ‘stems from the overlapping powers of the two bodies’ with respect to regulation of transnational projects. However, the author has not adequately emphasized the nature of the powers in question and which can be easily found in the complaint by Congress, which is the violation of non-delegation doctrine and concerns of inconsistency in due processes of bicameralism and presentment.

International projects like the Keystone XL pipeline project are governed by the Presidential Executive Order 13337 of 2004 wherein under section 2, the Secretary of State has been empowered to receive all applications for Presidential permits for the construction, connection, operation, or maintenance, with Respect to Certain Energy-Related Facilities from a foreign country. However, the order stands challenged as Congress’ assent was not sought before issuing such order for it has exclusive ‘Foreign Commerce’ power provided to it vide Article I, Section 8, Clause 3 of the Constitution, as it contradicts with their control over such matters. This position of the Congress is strengthened by a US Supreme Court in the case of Youngstown Sheet & Tube Co. v. Sawyer where it asserted that “the president’s power, if any, to issue the order must stem either from an act of Congress or from the constitution itself.”

Although however, the bare minimum which is required for the Executive Order to prove its constitutionality may be said to be found in the ‘act of Congress’ and for which on numerous occasions it has acted in the manner which legitimized the presidential permitting process. The author goes to provide a particular instance, that of the Title V of the Temporary Payroll Tax Cut Continuation Act, 2011 wherein Congress had directed the President to grant a permit for the Keystone XL unless it would according to him run contrary to “the public interest”. The issue in the present case according to the Author will be the determination of the extent of Presidential power for the regulation of permits having “substantial effects” on foreign trade and commerce. Also, that if these powers overstep their natural constitutional limits and venture into the domain of Congressional powers.

Discussing the second portion, the article further moves on to discuss the legal challenges relating to the environmental assessment and revocation of the permit. The author cites the denial of the presidential permit in the year 2015 by the Secretary of State declaring it ‘would not serve the national interest’. The said order was challenged by the TransCanada Keystone Pipeline, LP and TC oil Pipeline Operations Inc. on the ground that the president acted in excess of his constitutional powers despite the Environmental Protection Agency’s positive assessment of the project. Although the case was revoked in 2017 when President Trump issued the permit subsequently. Yet again, the question of this constitutional excess has come to the forefront. As the Executive Order gives wide powers to the Secretary of State to accept or reject any applications based on the statutory and other considerations, he deems appropriate. The author argues that the renewed interest of the US Government towards the Paris Agreement may form part of such ‘other considerations.

The author concludes the article by classifying the Keystone XL project as one of the most controversial projects in the USA and rightly so. The ongoing on-off response to the project and its proximity to international climate change commitments of the USA has put the whole scenario in a tough spot. Hence, the decisions that may arrive from this case will be instrumental in clarifying the USA’s stance against climate change in the long run.

INTRODUCTION

Keystone XL is a dream project of energy infrastructure company TC Energy (formerly TransCanada) that was initially proposed in the year 2008. The project aims to build a faster-transporting mechanism to transfer Canadian tar sand crude from Alberta to various processing hubs in the middle of the United States. The proposed pipeline aims to provide a shortcut route to achieve the aim [1]. However, since its inception, the project has attracted a lot of controversies due to its alleged detrimental impacts on the environment.

The environmental impacts of the project are wide-ranging. From the destruction of habitat to water pollution, the project is going to leave some permanent damages to the environment. In this regard, one of the most threatening aspects of this project is its impact on climate change. It is believed that the project would alone cause an increase in greenhouse emissions by 24.3 million metric tons CO2 per year. 

Apart from increasing the emission, the project would also result in the removal of the Boreal Forest Carbon sink that holds 22% of the world’s carbon [3]. 

As a result of such wide-ranging impacts on the environment, the project has attracted its fair share of protests [4]. The battle to save the environment has not only been fought on roads but also in courthouses. The legal battle has once again come into the spotlight as the 46th President of the U.S.A. withdrew the earlier granted president permit to the project [5]. The withdrawal now stands challenged in the Southern District of Texas by Attorney Generals of 21 states [6].

LEGAL FRAMEWORK REGULATING OPERATION OF TRANSNATIONAL PIPELINES IN THE U.S.A.

Transnational pipelines like Keystone XL are governed by the Presidential Executive order 13337 [7] that amender the earlier applicable Executive Order 11423 [8]. Section 1 of the former order empowers the secretary of state to receive applications all applications for Presidential permits for the construction, connection, operation, or maintenance, at the borders of the United States, of facilities for the exportation or importation of petroleum, petroleum products, coal, or other fuels to or from a foreign country. Further, Section 2 of the order specifically covers pipelines in this regard. After the receipt of the application, the secretary of state shall request the views of the concerned authorities and such organizations that he deems appropriate. Such concerned authorities and organization shall provide their views and such assistance as is requested by the secretary of state within 90 days of the receipt of the request. NEPA is conducted usually as a part of the process though it is not mandatory. Upon the receipt of assistance and views, the secretary of state shall evaluate if the concerned project is in the national interest. If the answer is positive, he grants the permit, otherwise, the permit stands denied. Whatever the case may be, the information of acceptance or denial of the permit is communicated to the concerned authorities who may disagree with such evaluation. In case of disagreement, the authority may ask the secretary of state to refer the matter to the president for evaluation, who gives the final decision.

Therefore, it is clear that this process of obtaining a presidential permit in the case of tans national oil pipelines derives its legitimacy from Executive order 13337. In this regard, an important matter that needs consideration is whether Executive order 13337 of 2004 constitutional. The ruling of the court in Youngstown Sheet & Tube Co. v. Sawyer guides in this regard. The court noted that “the President’s power, if any, to issue the order must stem either from an act of Congress or from the Constitution itself.”[9] In the case of EO 13337, the President acts under both his explicit constitutional powers as well as power authorized by Congress through implication. Executive Order 13337 and Executive Order 11423 cite the general “executive” control of the President and his authority as the “Commander in Chief,” the “foreign relations” power under the constitution to invoke a basis for the presidential permitting process [10]. As far as the congressional assent goes, the legitimacy stems from the fact that in numerous situations, Congress has acknowledged the legitimacy of the presidential permitting process. For instance, in Title V of the Temporary Payroll Tax Cut Continuation Act of 2011, Congress directed the president to grant a presidential permit for the Keystone XL Pipeline unless he determined that it “would not serve the national interest.”[11] In other words, Congress acknowledged the authority of Executive Order 13337 and passed a measure, signed into law that gave deference to the permitting process. Therefore, Executive Order 13337 tick marks the boxes required to prove its constitutionality.

THE LEGAL BATTLE BETWEEN CONGRESS AND THE PRESIDENT

The legal battle between the Congress and the president stems from the overlapping powers of the two bodies. It is clear that Executive Order 13337 vests certain powers upon the President to regulate transnational projects. Also, Article I Section 8 Clause 3 of the Constitution puts regulation of foreign trade and commerce under the exclusive domain of congress [12]. The overlap occurs because the presidential permitting process of transnational projects has a direct impact on foreign trade and commerce which falls under the exclusive domain of Congress. Historically, the power of Congress in this regard has received a very wide and liberal interpretation. The commerce clause has been interpreted to include an intrastate economic activity that has a “substantial effect” on interstate commerce. For example, in United States v Darby, the court ruled that the power of Congress over interstate commerce is not confined to the regulation of commerce among the states [13].

In the present case, it may be argued that the power of the president to regulate permits has a “substantial effect” on foreign trade and commerce and therefore, the president is overstepping onto the powers of the president in this case. However, what complicates the matter is the legitimacy that congress itself has assigned to the Executive Order. Therefore, a vital issue for consideration before the court will be whether Congress can challenge the legitimacy of an order that it has acknowledged and validated.

OTHER SIGNIFICANT ISSUES IN THE DISPUTE

The secretary of state denied the presidential permit to the Keystone XL extension project in 2015[14]. This was challenged by the TransCanada Keystone Pipeline, LP and TC Oil Pipeline Operations Inc. (TransCanada) in 2016 on the ground that the president has exceeded his constitutional powers in denying the permit when EPA gave a green signal to the project [15]. The suit was subsequently withdrawn in 2017 when President Trump issued the permit on the condition that it can subsequently be withdrawn anytime by the President. Regarding this, the permit was thereafter revoked by the president in 2021 under section 6 of the executive order dated 20.01.2021. Therefore, another important issue for consideration before the court in the Keystone XL revival suit will be whether the secretary of state is bound by the EPA assessment or the views of the concerned authorities with whom the secretary has deliberated. The language of the order throws some light on this issue. It doesn't state that the secretary has to formulate his opinion only based on the views of the concerned authorities. Rather it gives the wide amount of freedom to the secretary in this regard which is not limited to statutory considerations but includes other consideration which he deems appropriate. In the case of the Keystone XL project, such other considerations would have included the state's renewed commitment towards the Paris Agreement which it had withdrawn from earlier [16]. Paris Agreement specifically prohibits the destruction of carbon sinks and lays down the duty upon states to move towards cleaner sources of energy to mitigate climate change [17]. Where some of the leading countries in the world are announcing their embargo on oil extraction, speeding up the production of much more harmful tar sand oil is a step back in the fight against climate change. The project also doesn’t align with the President’s national and international policy through which he aims to put America as the leader in the fight against climate change. Regarding these facts, the secretary seems to be justified in revoking the order.

CONCLUDING REMARKS

The Keystone XL pipeline project is one of the most controversial projects in the USA that is fighting the battle of its survival for over a decade now amidst growing voices of protests. Though circumstances point in favor of the president yet the outcome is yet to materialize. The outcome of the lawsuit has both national as well as international significance. The environmental concerns posed by the project are significant and the outcome of the legal battle will surely have a huge on the environmental policy of the state. Apart from this, the outcome of the case will also have significant constitutional implications for the role and power of the president. Apart from the national significance, the decision on the project has wider international implications as well. The decision on the existence of the project will throw some significant light on the standing and commitment of the U.S.A. towards the climate agenda which it has been juggling for over a decade now. It will also clarify the role of the U.S.A. in the fight against climate change which it projects to be a leader of.