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Keystone XL: a cross-border oil pipeline between Canada and the United States of America

Keystone XL: a cross-border oil pipeline between Canada and the United States of America

On 8 November 2018, the US District Court (Montana) ordered the DOS and TransCanada to stop building the Keystone pipeline.

Keystone XL (‘Keystone’) is a proposed oil pipeline running from Canada into the United States of America. In 2015, U.S. President Obama halted the completion of the pipeline, based on a so-called (supplemental) environmental impact statement (‘(S)EIS’), drawn up in 2014, that relied on climate change risks. In 2017, U.S. President Trump allowed the completion of the pipeline in a Presidential Permit, based on a Record of Decision (‘ROD’) and a National Interest Determination (‘NID’), drawn up by the U.S. Department of State.

A number of plaintiffs, Indigenous Environmental Network and North Coast River Alliance, and Northern Plains Resource Council, et al. brought an action against the United States Department of State and other governmental agencies. The plaintiffs alleged that the defendants had violated the Administrative Procedure Act (‘APA’), the National Environmental Policy Act (‘NEPA’), and the Endangered Species Act (‘ESA’), when issuing the Presidential Permit to allow the defendant-intervenor TransCanada Keystone Pipeline, LP (‘TransCanada’) to complete Keystone XL. The plaintiffs as well as the defendants and TransCanada filed motions for summary judgment. In its decision of 8 November 2018, the United States District Court for the District of Montana enjoined the defendants and TransCanada, by way of injunctive relief, from engaging in the further construction of Keystone, until the Department of State and the other governmental agencies have completed a new and updated SEIS that complied with the APA and NEPA. In the opinion of the court, in the absence of a new and updated SEIS, the 2017 Presidential Permit was flawed.

'Hold unlawful and set aside'

The United States District Court for the District of Montana considered, in general terms, that ‘The APA instructs a reviewing court to “hold unlawful and set aside” agency action deemed “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” […].’ The court applied this standard to its review of the defendant’s referral of NEPA (and ESA). As for NEPA, the court considered that courts ‘must ensure that the agency has taken a “hard look” at the environmental consequences of its decision.’

The United States District Court for the District of Montana considered that ‘NEPA serves as the “basic national charter for protection of the environment.” […]. NEPA requires federal agencies to prepare a “detailed statement” for any “major Federal actions significantly affecting the quality of the human environment.” […].’ The statement required under NEPA is the EIS or – where necessary – a SEIS. The court noted that ‘Courts afford agencies “considerable discretion to define the purpose and need of a project.” […].’ The court, in addition to this, considered:

‘For TransCanada, “the primary purpose of (Keystone) is to provide the infrastructure to transport Western Canadian Sedimentary Basin (“WCSB”) crude oil from the Canadian border, to existing pipeline facilities near Steele City, Nebraska, for onward delivery to Cushing, Oklahoma, and the Texas Gulf Coast area.” […].’, and ‘The Department needed to consider Keystone’s application and whether it would serve the national interest. […].’

The court concluded on this point:‘No error exists in the Department’s purpose and need statement. The Department possesses broad discretion to define the purpose of its actions. The Department may consider private interests as part of its purpose and need. […].’; and ‘The Department adequately examined proposed alternatives and reasonably excluded those that did not meet the Project’s purpose and need. The factors that the Secretary deemed relevant to the national interest included the following: “foreign policy; energy security; environmental, cultural, and economic impacts; and compliance with applicable law and policy.” […].’

Climate Impact

However, as the court noted, the defendants had failed to consider the climate impact of Keystone in relation to other pipelines, in particular the so-called Alberta Clipper pipeline. The court, on this matter, considered: ‘The Department thus failed to paint a full picture of emissions for these connected actions, and, therefore, ignored its duty to take a “hard look.” […].’

Also, the court considered that ‘The 2014 SEIS identified 397 cultural resources that may be affected by the Project. […]. The 2014 SEIS states, however, that “(a)s of December 2013, approximately 1,038 acres remained unsurveyed and are the subject of ongoing field studies.” […]. The Department offered no supplemental information on the unsurveyed acres before it issued the 2017 permit. The Department describes the surveys as “ongoing.” […] The Department contends, therefore, that it will work to identify cultural resources and mitigate harm to them throughout the process. This explanation proves outdated.’, and ‘The major [oil] spills that occurred between 2014 and 2017 qualify as significant. The Department would have evaluated the spills in the 2014 SEIS had the information been available. Further, the risk of spills likely would affect Keystone’s potential impact on other areas of the ROD’s analysis, including risks to water and wildlife. These new spills and the information provided by them warrant an update.’

Reasoned explanation

Maybe the most interesting point raised by the United States District Court for the District of Montana is the following: ‘The Department’s 2017 conclusory analysis that climate-related impacts from Keystone subsequently would prove inconsequential and its corresponding reliance on this conclusion as a centerpiece of its policy change required the Department to provide a “reasoned explanation.” […]. The Department instead simply discarded prior factual findings related to climate change to support its course reversal.’

The decision of the United States District Court for the District of Montana (Great Falls Division, B. Morris, District Court Judge) of 8 November 2018 (Indigenous Environmental Network and North Coast River Alliance, and Northern Plains Resource Council, et al. (plaintiffs) v. United States Department of State, et al. (defendants), and Transcanada Keystone Pipeline, LP and Transcanada Corporation (defendant-intervenors)) can be found at: climatecasechart.com.

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