The controversial Keystone XL petroleum pipeline once again faces an uncertain future, following a federal court ruling striking down the Trump Administration’s 2017 effort to jump-start the project.

Judge Brian Morris of the U.S. District Court in Montana wrote in a Nov. 8 decision that the U.S. State Department, which has primary jurisdiction over the 1,179-mile cross-border pipeline’s permit decisions, violated the National Environmental Policy Act (NEPA) and the Administrative Procedures Act by failing to provide “a reasoned explanation” to support reversing the agency’s 2015 record of decision that denied construction permits to the project’s developer, Calgary-based TransCanada.

In 2017, following President Trumps directive to approve the pipeline, the State Department issued a Presidential Permit for construction of Keystone XL. Morris noted that while the 2017 and 2015 records of decision tracked each other “nearly word-for-word,” the 2017 version omits the previous document’s section on “Climate Change-Related Foreign Policy Considerations,” as well as the conclusion that “2015 represented a critical time for action on climate change.” The 2017 version asserts only that “there have been numerous developments related to global action to address climate change, including announcements by many countries of their plans to do so,” since the original decision.The State Department, Morris wrote, “simply discarded prior factual findings related to climate change to support its course reversal.” 

“The State Department tried to argue that the Presidential Permit resulted from a change of policy, which the court acknowledged,” says Fred Jauss, a partner at Dorsey & Whitney law firm, and a former attorney at the Federal Energy Regulatory Commission. “But they needed to provide a reason base for why those previous rulings are no longer valid.”

A TransCanada spokesperson told a Canadian news agency the company is reviewing the ruling, but remains committed to the project. TransCanada recently announced it is exploring options such as asset sales and joint ventures to help finance construction of the $8.3 billion project, with an eye toward beginning work next year assuming the legal issues were resolved.

Changes Ignored

The lawsuit, which was brought by multiple environmental groups, made multiple claims about the Keystone XL’s permitting process, many of which Judge Morris rejected. He did, however, fault the State Department for failure to take a required “hard look” at issues such as petroleum market changes over the past four years, effects of cumulative greenhouse gas emissions resulting from both Keystone XL and the Alberta Clipper pipeline and oil spill issues. Also absent was a required survey of potential project impacts on protected cultural resources on more than 1,000 acres of adjacent Native American lands.

Unions whose members stood to gain from Keystone XL's construction questioned the need to further scrutinize a project that that they say has already undergone extensive review.

“We are absolutely in favor of a vigorous permitting process for projects like this so that we ensure the environment is protected and we can build safely,” says Jason George, business manager/financial secretary the International Union of Operating Engineers’ Minneapolis-based Local 49. “However, what we have seen with Keystone XL, and other pipeline projects in our area, is the permitting process and legal system being used as a weapon by anti-development groups to simply stop projects.”

By vacating the 2017 Presidential Permit, Morris’s decision prevents any construction on Keystone XL, pending the State Department’s response to the court’s findings or a likely appeal to the federal Ninth Circuit, which has generally ruled against the Trump Administration in other cases.

Jauss predicts the State Department will pursue both options.

“The State Department has its homework cut out for it to respond to these issues,” Jauss says, noting that the agency’s explanations will have to be thorough. “Otherwise, they’ll be back in front of the same judge with the same problem.”

Nebraska Problems

Keystone XL faces another legal hurdle in Nebraska, where the state supreme court is considering whether the Nebraska Public Service Commission erred last year in approving a 280-mile long corridor for TransCanada’s Keystone XL pipeline. Plaintiffs, which include landowners and environmental groups opposed to the project, argue that because the approved route incorporates a 63-mile detour from TransCanada’s original proposal, the company should be required to submit a new application.

Commissioners who voted for the modified route insisted at the time that no state laws were violated. TransCanada has stated the alternative route also lessens impacts to water wells and the environment, including migratory routes of the endangered whooping crane. A ruling is expected early next year.

Meanwhile, the Dakota Access pipeline—also fast-tracked by Trump’s 2017 directive—is back in court more than a year after its completion. Four Native American tribes are challenging the Corps of Engineers’ recent conclusion that the project’s route beneath the Lake Oahe Reservoir in North Dakota poses no significant environmental threats. The reservoir is the primary drinking water source for the Standing Rock Sioux reservation.

The lawsuit aims to force a full environmental impact study of the pipeline’s easement beneath the Lake Oahe reservoir, something the Corps had planned to do before Trump took office.

In June 2017, as Energy Transfer Partners completed construction of the $3.8 billion, 1,172-mile pipeline, a federal judge found that while the Corps had largely complied with the NEPA approval process in allowing construction to take place beneath the reservoir, the agency failed to “adequately consider the impacts of an oil spill on fishing rights, hunting rights, or environmental justice, or the degree to which the pipeline’s effects are likely to be highly controversial.”

The judge ordered the Corps to review existing environmental analyses, a process that was completed this past August. The agency found that the risk of oil spills was low, and that any such events would be “of limited scope and duration.” The Corps also said no further environmental studies are warranted.