Administrative Hurdles and the Proposed Keystone XL Pipeline

Especially in an election year, contentious energy issues are a recurring theme in mainstream media. While both Presidential candidates lauded energy independence and America’s ability to source energy domestically through natural gas reserves and renewable energy sources, a related and once prominent motif of American energy security has fallen to the wayside – TransCanada’s Keystone XL Pipeline. A volatile topic just one year ago, it is still on the table and has yet to overcome its largest administrative hurdle and be ultimately approved or denied in Washington, D.C.

The Keystone XL Pipeline, as proposed by TransCanada, has faced emotive arguments from both supportive and opposing sides. The pipeline, a 1,179 mile expansion running from Alberta, Canada to Texas, has highlighted fundamental debates ranging from the environmental externalities of tar sands sourcing to the benefit of American energy independence.[1] However, most perspectives tend to overlook one of the preeminent legal issues facing the pipeline’s implementation – the various administrative rules and regulations that have been and will continue to be alternatively facilitating, frustrating, and supervising the pipeline’s construction and use. International agreements and federal approvals between Canada and the United States govern the project at the broadest level. Provincial rules in Alberta and Saskatchewan, and state laws in Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas further address the portions of the pipeline within their respective jurisdictions. Additionally, and within these already complex legal webs, sovereign aboriginal laws and local laws at the county and city level will come into play. The administrative details and hurdles that stand in the way of the pipeline are monstrous.

In order to construct pipeline facilities across the international border, the Canadian company TransCanada is first and foremost required to obtain a Presidential Permit from the U.S. Department of State.[2] While all large-scale projects are required to clear specific federal procedures, such as those outlined in the National Environmental Policy Act (NEPA), the Presidential Permit uniquely attaches to Keystone XL because of the agreement’s international scope.[3] TransCanada is currently reapplying for this permit, as its first comprehensive application was rejected in early 2012 due a time limit issue; that said, smaller portions in Oklahoma and Texas were approved by President Obama just a few months later in March of 2012.[4] One dominant argument suggests that this partial approval hinged on an absence of delicate environmental issues in these portions, unlike the Nebraska and South Dakota portions of the pipeline which contain environmental concerns relating to the Ogalala Aquifer and the Sand Hills, respectively.[5]

To receive permit approval, the pipeline must be able to withstand U.S. federal environmental standards as per the National Environmental Policy Act (NEPA). NEPA requires a “general review process” of environmental impacts before the pipeline can be approved; the process includes an overall assessment of environmental damages balanced against the utility of the proposed project on a national scale.[6] This incorporates a variety of factors such as public input, scientific tests and economic cost-benefit analyses.[7] While NEPA “allows for environmental analysis – and public or judicial review of that analysis – before the United States commits to major infrastructures,” it “may also be a more powerful tool than alternative sources of law, as it has broader scope than the major pollution control laws” such as can be found at the state and local levels.[8]

However, NEPA’s broad scope is not always perceived as a powerful tool. Many criticize the statute as a purely procedural Act that lacks the teeth to enforce any of its own findings. To some, state regulations will present more difficult obstacles, with more substantive measures and stricter standards. NEPA is thus the first major threshold of administrative regulations which the pipeline must satisfy before it can seek approval under other laws, but it is highly debatable whether NEPA will be an easier or a more difficult hurdle to jump than subsequent state restrictions.[9] While one of the primary and broadest administrative regulations in the process, NEPA is still only one among a multiplicity of obstacles TransCanada must tackle.

Aside from NEPA restrictions as mandated by statute, there remain other federal requirements which must be satisfied before the pipeline may proceed. Further required administrative permits and approvals at the U.S. federal level include (but are not limited to) approvals by the Bureau of Land Management, the Federal Highway Administration, three different U.S. EPA Regions and the U.S. Department of Treasury’s Bureau of Alcohol, Tobacco, and Firearms.[10]

Upon the (pending) approval of the Presidential Permit, and subsequent approvals by subsidiary federal agencies, the pipeline must also maneuver the relatively smaller administrative obstacles inherent to each province, state and locality. For example, a 313-mile portion of the planned Pipeline will cut through nearly half of the state of South Dakota.[11] In March 2009, TransCanada submitted its application to the South Dakota Public Utilities Commission “for a permit under the South Dakota Energy Conversion and Transmission Facilities Act, with respect to the proposed Keystone XL Project.”[12] The application included detailed information on the Pipeline’s environmental impact expectations, above ground facilities, prospective operating pressure of crude oil content, surface disturbance expectations, special construction procedures through the ecologically delicate Sand Hills region, and general procedures for both normal and abnormal operation of the Pipeline.[13] This comprehensive application was reviewed by the Commission, and included public input.[14] The permit was subsequently granted by the Public Utility Commissioners with 50 stipulated conditions on February 18, 2010.[15]

The South Dakota Public Utilities Commission, however, is still only one of a variety of state level agencies from whom TransCanada must receive approval. In South Dakota, further permits and approvals are required from the South Dakota Department of Transportation, South Dakota Historical Society, and the South Dakota Department of Environment and Natural Resources, Surface Water Quality Program.[16] Even more approvals, typically relating to construction details, are required from eight different South Dakota counties.[17]

In addition to the federal and state level approvals, smaller jurisdictions hold further discretional approval on the Pipeline’s construction and operation. In Canada, Aboriginal people constitute a strong example of these additional legal requirements: the legal relationship between Aboriginal people and the Canadian federal government is much more robust than that of Native Americans in the U.S., and plays an important role in Canada’s legal matrix. In Canada, the government must undergo a “meaningful consultation” with any Aboriginal group(s) to be affected by the Keystone XL Pipeline, a consultation which “may require the [Canadian government] to accommodate the Aboriginal interest in some way, although the Aboriginal group does not have veto power over the project.”[18] This “duty to consult” arises once the government grants “permission to a project proponent to undertake a project or an aspect thereof,” such as the Canadian government’s approval of the Keystone XL construction project.[19] While this is an issue specifically inherent to the Canadian legal system, it further highlights the administrative complexity in approving, constructing and utilizing the Keystone XL Pipeline.

Ultimately, if the Keystone XL Pipeline is to be completed, it must overcome multiple regulatory and administrative hurdles. Beyond the preliminary approvals cited above, regulation and monitoring will be maintained by many of these agencies throughout the construction and active use of the pipeline. These administrative obstacles present significant challenges, and should not be excluded from a holistic discussion of Keystone XL. Following the recent Presidential election, the pipeline will undoubtedly re-enter the mainstream debate as an issue in the President’s new term. It is unclear whether President Obama will side with many of his environmental constituents and deny approval, or if he will approve the remainder of the pipeline, as he has already approved portions in Oklahoma and Texas. Whether the pipeline is a good or bad decision is a separate, complex and contentious issue. What is clear is that the administrative obstacles have been, and will remain, a truly massive hurdle to the implementation of the Keystone XL Pipeline.

— Alison Toivola is a general member of MJEAL.


The views and opinions expressed in this blog are those of the authors only and do not reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.

[1] Keystone XL Pipeline Project, TransCanada http://www.transcanada.com/keystone.html (last visited Nov. 12, 2012).

[2] TransCanada Keystone, LP, Application to the South Dakota Public Utilities Commission for a Permit for the Keystone XL Pipeline Under the Energy Conversion and Transmission Facility Act, 5, (March 2009), available at http://puc.sd.gov/commission/dockets/hydrocarbonpipeline/2009/hp09-001/application.pdf.

[3] Id.

[4] John M. Broder, U.S. Grants a Keystone Pipeline Permit, N.Y. Times, June 26, 2012, available at http://green.blogs.nytimes.com/2012/06/26/u-s-grants-a-keystone-pipeline-permit/.

[5] Status and Timelines, TransCanada http://www.transcanada.com/5738.html (last visited Nov. 12, 2012).

[6] Lilly Fang, Note, Environmental Review Problems of Cross-Border Projects Under NEPA: Lessons from the Tar Sands Pipelines, 31 Stan. Envtl. L.J. 285, 295 (2012).

[7] National Environmental Policy Act of 1969 § 101, 42 U.S.C. § 4331 (1970).

[8] Lilly Fang, Note, Environmental Review Problems of Cross-Border Projects Under NEPA: Lessons from the Tar Sands Pipelines, 31 Stan. Envtl. L.J. 285, 296 (2012).

[9] Id. at 313.

[10] TransCanada Keystone, LP, Application to the South Dakota Public Utilities Commission for a Permit for the Keystone XL Pipeline Under the Energy Conversion and Transmission Facility Act, 5-7, (March 2009), available at http://puc.sd.gov/commission/dockets/hydrocarbonpipeline/2009/hp09-001/application.pdf.

[11] Id. at 8.

[12] Id. at 1.

[13] Id. at 8-21.

[14] South Dakota Public Utilities Commission, Keystone XL Clears Hurdle In South Dakota, DownstreamToday, February 19, 2010, available at http://www.downstreamtoday.com/news/article.aspx?a_id=21202&AspxAutoDetectCookieSupport=1.

[15] Id.

[16] TransCanada Keystone, LP, Application to the South Dakota Public Utilities Commission for a Permit for the Keystone XL Pipeline Under the Energy Conversion and Transmission Facility Act, 7, (March 2009), available at http://puc.sd.gov/commission/dockets/hydrocarbonpipeline/2009/hp09-001/application.pdf.

[17] Id. at 80.

[18] Zena Charowsky, Article, The Aboriginal Law Duty to Consult: An Introduction for Administrative Tribunals, 74 Sask. L. Rev. 213, 214 (2011).

[19] Id.