Proposed Keystone XL Pipeline: Legal Issues
Adam Vann
Legislative Attorney
Kristina Alexander
Legislative Attorney
Vanessa K. Burrows
Legislative Attorney
Kenneth R. Thomas
Legislative Attorney
January 23, 2012
Congressional Research Service
7-5700
www.crs.gov
R42124
CRS Report for Congress
Pr
epared for Members and Committees of Congress
Proposed Keystone XL Pipeline: Legal Issues
Summary
In 2008, TransCanada Corp. applied for a presidential permit from the State Department to
construct and operate an oil pipeline across the U.S.-Canada border in a project known as
Keystone XL. The Keystone XL pipeline would transport oil produced from oil sands in Alberta,
Canada, to Gulf Coast refineries. The permit application was subjected to review by the State
Department pursuant to executive branch authority over cross-border pipeline facilities as
articulated in Executive Order 13337.
After several phases of review, on November 10, 2011, the State Department announced that it
would seek additional information about alternative pipeline routes before it could move forward
with a national interest determination. In response, several pieces of legislation were introduced,
including Title V of the Temporary Payroll Tax Cut Continuation Act of 2011. Title V dictated
that President must grant the Keystone XL pipeline permit within 60 days of the law’s enactment,
unless the President determined that the pipeline is not in the national interest. If the President did
not make a national interest determination and took no action to grant the permit, then the law
provided that the permit “shall be in effect by operation of law.” The Temporary Payroll Tax Cut
Continuation Act of 2011 (P.L. 112-78), including Title V addressing the Keystone XL permit,
was enacted on December 23, 2011.
Pursuant to the requirements of Title V, on January 18, 2012, the State Department recommended
that “the presidential permit for the proposed Keystone XL pipeline be denied and, that at this
time, the TransCanada Keystone XL Pipeline be determined not to serve the national interest.”
The same day, the President stated his determination that the Keystone XL pipeline project
“would not serve the national interest.”
New legislative activity with respect to the permitting of border-crossing facilities, a subject
previously handled exclusively by the executive branch, has triggered inquiries as to whether this
raises constitutional issues related to the jurisdiction of the two branches over such facilities.
Additionally, as states have begun to contemplate taking action with respect to the pipeline siting,
some have questioned whether state siting of a pipeline is preempted by federal law. Others argue
that states dictating the route of the pipeline violates the dormant Commerce Clause of the
Constitution which, among other things, prohibits one state from acting to protect its own
interests to the detriment of other states.
This report reviews those legal issues. First, it suggests that legislation related to cross-border
facility permitting is unlikely to raise significant constitutional questions, despite the fact that
such permits have traditionally been handled by the executive branch alone pursuant to its
constitutional “foreign affairs” authority. Next, it observes generally that state oversight of
pipeline siting decisions does not appear to violate existing federal law or the Constitution.
Finally, the report suggests that State Department’s implementation of the existing authority to
issue presidential permits appears to allow for judicial review of its National Environmental
Policy Act determinations.
A companion report from CRS focusing on policy issues associated with the proposal, CRS
Report R41668, Keystone XL Pipeline Project: Key Issues, by Paul W. Parfomak et al., is also
available.
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Proposed Keystone XL Pipeline: Legal Issues
Contents
Background...................................................................................................................................... 1
Authority to Issue Permits for Border Crossing Facilities: Balancing Executive and
Legislative Roles .......................................................................................................................... 4
Source of Presidential Authority to Regulate Foreign Commerce ............................................ 4
Source of Executive/State Department Permitting Authority.................................................... 4
Source of Congressional Authority to Regulate Foreign Commerce ........................................ 6
Reconciling the Executive and Legislative Roles Related to Foreign Commerce and
Border Crossing Facilities ...................................................................................................... 7
Executive Branch Deference to Congress on Cross-Border Facilities................................ 7
Congressional Action Related to Foreign Commerce ....................................................... 10
Judicial Interpretations of the Executive and Legislative Authorities to Regulate
Foreign Commerce......................................................................................................... 10
Summary ........................................................................................................................... 12
Constitutional Concerns Related to Potential Action by States ..................................................... 12
The Dormant Commerce Clause ............................................................................................. 13
Legal Background ............................................................................................................. 13
State Authority for Energy Facility Siting......................................................................... 14
Application of the Dormant Commerce Clause to State Action Related to
Oil Pipeline Siting.......................................................................................................... 14
Federal Preemption of State Pipeline Legislation ................................................................... 17
Background ....................................................................................................................... 17
How Preemption Is Evaluated........................................................................................... 17
Conflict Preemption of State Action Related to the
Proposed Keystone XL Pipeline..................................................................................... 22
Field Preemption of State Action Related to the Proposed Keystone XL Pipeline ........... 24
Judicial Review of the NEPA Process for Permitting Under Executive Order 13337................... 24
Executive Order 13337............................................................................................................ 24
Keystone XL NEPA Background ............................................................................................ 25
State Department NEPA Regulations ................................................................................ 25
Judicial Review ....................................................................................................................... 25
District Court Holdings Related to Executive Order 13337.............................................. 26
Contacts
Author Contact Information........................................................................................................... 29
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Background
In September 2008, TransCanada Corp. (a Canadian company) applied to the U.S. Department of
State for a permit to cross the U.S.-Canada international border with the Keystone XL pipeline
project.1 If constructed, the pipeline would carry crude oil produced from the oil sands region of
Alberta, Canada, to U.S. Gulf Coast refineries. The U.S. portion of the Keystone XL pipeline
project, as proposed, would pass through Montana, South Dakota, Nebraska, Oklahoma, and
Texas. The pipeline would consist of approximately 1,380 miles of 36-inch-diameter pipe and
have the capacity to transport 830,000 barrels per day of crude oil to the United States. The
pipeline would deliver up to roughly 200,000 barrels per day to an existing oil terminal in
Oklahoma, with the remainder sent further to points in Texas.2
In most instances, decisions about the siting of oil pipelines, even interstate oil pipelines like the
proposed Keystone XL pipeline, are made by state governments if the state governments choose
to exercise a pipeline siting authority.3 The federal government generally does not regulate the
siting of oil pipelines, although it does oversee oil pipeline safety4 and pricing issues.5 However,
the construction, connection, operation, and maintenance of a pipeline that connects the United
States with a foreign country requires the permission of the U.S. Department of State, conveyed
through a presidential permit.6 Accordingly, the proposed Keystone XL pipeline would require a
permit. Executive Order 13337 delegates to the Secretary of State the President’s authority to
issue such a permit upon a determination that the project is in the national interest.7
Prior to making the national interest determination, the State Department conducts a review under
the National Environmental Policy Act (NEPA).8 For Keystone XL, a draft environmental impact
statement (EIS) was issued April 16, 2010,9 but the Environmental Protection Agency (EPA)
found the draft was inadequate.10 A supplemental draft was available in April 2011,11 and again
1 This is an abbreviated discussion of the physical characteristics of the proposed Keystone XL pipeline for the
purposes of introducing the legal issues related to the pipeline. More information is available at CRS Report R41668,
Keystone XL Pipeline Project: Key Issues, by Paul W. Parfomak, et al.
2 U.S. Department of State, Supplemental Draft Environmental Impact Statement for the Keystone XL Oil Pipeline
Project, p. 1-4 (April 15, 2011).
3 See, e.g., S.D. Codified Laws §49-41B-4.1 (requiring a state permit and the approval of the state legislature prior to
construction of a “trans-state” transmission facility, defined to include pipelines).
4 Pipeline safety is governed by the federal Office of Pipeline Safety, an agency within the Department of
Transportation, which exercises authority pursuant to the Hazardous Liquid Pipeline Safety Act of 1979, as amended
(49 U.S.C. §60101 et seq.).
5 The Federal Energy Regulatory Commission (FERC) regulates oil pipeline rates pursuant to the authority transferred
to it by Title XVIII of the National Energy Policy Act of 1992 (P.L. 102-486, 42 U.S.C. §7172 note).
6 The State Department was delegated authority to issue a permit for cross-boundary pipelines by the President under
Executive Order 11423 of 1968, as revised in 2004 by Executive Order 13337.
7 Exec. Order No. 13337, §1(g), Issuance of Permits With Respect to Certain Energy-Related Facilities and Land
Transportation Crossings on the International Boundaries of the United States, 69 Federal Register 25299 (May 5,
2004).
8 42 U.S.C. §§4321 et seq. This report assumes some familiarity with the NEPA process. To learn details about that
process, see CRS Report RS20621, Overview of National Environmental Policy Act (NEPA) Requirements, by Kristina
Alexander, or see the discussion of NEPA in CRS Report R41668, Keystone XL Pipeline Project: Key Issues, by Paul
W. Parfomak et al.
9 75 Fed. Reg. 20653 (April 20, 2010).
10 Letter from Assistant Administrator, U.S. Environmental Protection Agency, to Assistant Secretary of State, U.S.
(continued...)
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EPA found flaws.12 A final EIS was announced in August of that year.13 Under NEPA practice, the
final EIS would be reviewed by EPA and other interested agencies prior to issuance of a record of
decision.14 However, a proposed route change through Nebraska put those final actions on hold.
On November 10, 2011, the State Department announced a decision to seek additional
information about alternative pipeline routes before it could move forward with a national interest
determination. Specifically, concerns regarding potential environmental impacts of constructing
and operating the pipeline along the proposed route through the Sand Hills region of Nebraska led
the State Department to decide that an assessment of potential alternative routes that would avoid
that area was necessary.
On December 23, 2011, Congress passed and the President signed into law the Temporary Payroll
Tax Cut Continuation Act of 2011. Title V of the act addressed the Keystone XL presidential
permitting process.15 Under that provision, the President was required to grant the Keystone XL
pipeline permit within 60 days of the law’s enactment, unless the President determined that the
pipeline was not in the national interest.16 If the President did not make a national interest
determination and took no action to grant the permit, then the law provided that the permit “shall
be in effect by operation of law.”17 Title V of the act appears to be the first legislative foray into
the permitting of the border crossing facilities as contemplated in Executive Orders 11423 and
13337.
As required by Title V of the act, on January 18, 2012, the State Department recommended that
“the presidential permit for the proposed Keystone XL pipeline be denied and, that at this time,
the TransCanada Keystone XL Pipeline be determined not to serve the national interest.”18 The
State Department asserted that its recommendation “was predicated on the fact that the
Department does not have sufficient time to obtain the information necessary to assess whether
the project, in its current state, is in the national interest.”19 The State Department press release
also indicated that the 60-day time period provided for the in the act “is insufficient” for a
determination as to whether the pipeline is in the national interest.20 The State Department said
(...continued)
Department of State (July 16, 2010) (“we think that the Draft EIS does not provide the scope or detail of analysis
necessary to fully inform decision makers and the public, and recommend that additional information and analysis be
provided”), available at http://yosemite.epa.gov/oeca/webeis.nsf/%28PDFView%29/20100126/$file/20100126.PDF.
11 76 Fed. Reg. 22744 (April 22, 2011).
12 Letter from Assistant Administrator, EPA, to Assistant Secretaries of State, State Department (June 6, 2011)
(“additional analysis is necessary... [including] improv[ing] the analysis of oil spill risks and alternative pipeline
routes”), available at http://environblog.jenner.com/files/here-6.pdf.
13 76 Fed. Reg. 53525 (August 26, 2011).
14 40 C.F.R §1502.19 (circulation of EIS); 40 C.F.R §1505.2 (record of decision).
15 P.L. 112-78.
16 P.L. 112-78, § 501.
17 P.L. 112-78, § 501(b)(3).
18 Press Release, The White House, Office of the Press Secretary, Statement by the President on the Keystone XL
Pipeline (January 18, 2012), http://www.whitehouse.gov/the-press-office/2012/01/18/statement-president-keystone-xl-
pipeline; Media Note, U.S. Department of State, Office of the Spokesperson, Denial of Keystone XL Pipeline
Application (January 18, 2012), http://www.cq.com/pdf/govdoc-4012555.
19 Media Note, U.S. Department of State, Office of the Spokesperson, Denial of Keystone XL Pipeline Application
(January 18, 2012), http://www.cq.com/pdf/govdoc-4012555.
20 Id.
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that “subsequent permit applications” and “applications for similar projects” were not precluded
by the denial of this particular permit application.21 The same day, the President stated his
determination that the Keystone XL pipeline project “would not serve the national interest.”22 He
made this determination, as required by Title V of the act, in a memorandum to the Secretary of
State.23
In addition to Title V of the Temporary Payroll Tax Cut Continuation Act of 2011, several other
pieces of legislation have been introduced in Congress to compel expedited review of the
Keystone XL application. The North American Energy Security Act (S. 1932), the American
Energy Security Act (H.R. 3537), and the Middle Class Tax Relief and Job Creation Act of 2011
(H.R. 3630) also would require the Secretary of State to issue a permit for the project within 60
days of enactment, unless the President publicly determines the project to be not in the national
interest. The January 18, 2012, determination that the project was not in the national interest may
have superseded this proposed legislation. The North American Energy Access Act (H.R. 3548)
would transfer permitting authority over the Keystone XL pipeline project from the State
Department to the Federal Energy Regulatory Commission (FERC), and would require the
commission to issue a permit for the project within 30 days of enactment. Also, other legislation
may be introduced in the near future in response to the January 18, 2012, national interest
determinations of the Secretary of State and the President.
The recent legislative activity appears to represent the first congressional efforts to amend the
established executive branch procedure for the permitting of cross-border pipeline facilities, and
there is some question as to whether this raises constitutional issues related to the jurisdiction of
the two branches over such facilities. Additionally, as states consider taking action with respect to
the pipeline siting, some have questioned whether state siting of a pipeline is preempted by
federal law. Others have argued that states dictating the route of the pipeline violates the dormant
Commerce Clause of the Constitution, which prohibits one state from acting to protect its own
interests to the detriment of other states. Finally, some environmental groups have raised
questions about the adequacy of government review of the proposed pipeline under the National
Environmental Policy Act (NEPA), the routing of the pipeline near key aquifers, and the
emissions caused by the oil production. This report reviews those legal issues, observing
generally that legislation altering the pipeline border crossing approval process appears likely to
be a legitimate exercise of Congress’s constitutional authority to regulate foreign commerce and
that state oversight of pipeline siting decisions does not appear to violate existing federal law or
the Constitution. The report also suggests that the State Department’s implementation of its
authority to issue presidential permits appears to allow for judicial review of its NEPA
determinations. A companion report from CRS focusing on policy issues associated with the
proposal, CRS Report R41668, Keystone XL Pipeline Project: Key Issues, by Paul W. Parfomak
et al., is also available.
21 Id.
22 Memorandum from President Barack Obama to the Secretary of State on Implementing Provisions of the Temporary
Payroll Tax Cut Continuation Act of 2011 Relating to the Keystone XL Pipeline Permit, http://www.whitehouse.gov/
the-press-office/2012/01/18/presidential-memorandum-implementing-provisions-temporary-payroll-tax-cu.
23 Id.
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Authority to Issue Permits for Border Crossing
Facilities: Balancing Executive and Legislative Roles
Source of Presidential Authority to Regulate Foreign Commerce
The Constitution does not expressly accord the President any authority to regulate foreign
commerce. However, the President’s recognized authority in the area of foreign affairs permits
him to take action in matters of foreign commerce such as border crossing facilities, as discussed
below. There has been some judicial recognition of the President’s ability to exercise authority
over matters implicating foreign commerce, even in the absence of an express delegation of
authority by Congress,24 but the Supreme Court has not definitively opined on the circumstances
in which any such authority may be exercised.
Source of Executive/State Department Permitting Authority
The executive branch exercises permitting authority over the construction and operation of
“pipelines, conveyor belts, and similar facilities for the exportation or importation of petroleum,
petroleum products” and other products pursuant to a series of executive orders. This authority
has been vested in the U.S. State Department since the promulgation of Executive Order 11423 in
1968.25 Executive Order 13337 amended this authority and the procedures associated with the
review, but did not substantially alter the exercise of authority or the delegation to the Secretary
of State in Executive Order 11423.26
Executive Order 11423 provided that, except with respect to cross-border permits for electric
energy facilities, natural gas facilities, and submarine facilities,
The Secretary of State is hereby designated and empowered to receive all applications for
permits for the construction, connection, operation, or maintenance, at the borders of the
United States, of: (i) pipelines, conveyor belts, and similar facilities for the exportation or
importation of petroleum, petroleum products, coal, minerals, or other products to or from a
foreign country; (ii) facilities for the exportation or importation of water or sewage to or
from a foreign country; (iii) monorails, aerial cable cars, aerial tramways and similar
facilities for the transportation of persons or things, or both, to or from a foreign country; and
(iv) bridges, to the extent that congressional authorization is not required.27
24 See United States v. Guy W. Capps, Inc., 204 F.2d 655 (4th Cir. 1953), affirmed on other grounds by 348 U.S. 296
(1955) (“We think that whatever the power of the executive with respect to making executive trade agreements
regulating foreign commerce in the absence of action by Congress, it is clear that the executive may not through
entering into such an agreement avoid complying with a regulation prescribed by Congress. Imports from a foreign
country are foreign commerce subject to regulation, so far as this country is concerned, by Congress alone.”).
25 Exec. Order No. 11423, Providing for the performance of certain functions heretofore performed by the President
with respect to certain facilities constructed and maintained on the borders of the United States, 33 Fed. Reg. 11741
(August 16, 1968).
26 Exec. Order No.13337, Issuance of Permits With Respect to Certain Energy-Related Facilities and Land
Transportation Crossings on the International Boundaries of the United States, 69 Fed. Reg. 25299 (May 5, 2004).
27 Exec. Order No. 11423, 33 Fed. Reg. at 11741.
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Executive Order 13337 designates and empowers the Secretary of State to “receive all
applications for Presidential permits, as referred to in Executive Order 11423, as amended, 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.”28 Executive Order 13337 further provides that after consideration of
the application and comments received thereon: “[I]f the Secretary of State finds that issuance of
a permit to the applicant would serve the national interest, the Secretary shall prepare a permit, in
such form and with such terms and conditions as the national interest may in the Secretary’s
judgment require, and shall notify the officials required to be consulted ... that a permit be
issued.”29 Thus, the Secretary of State is directed by the President to authorize all border crossing
facilities that the Secretary has determined would “serve the national interest.”
However, the source of the executive branch’s permitting authority is not explicitly stated within
the executive orders. Powers exercised by the executive branch are authorized by legislation or
are inherent presidential powers based in the Constitution. Executive Order 11423 does not
reference any statute or constitutional provision as the source of its authority, although it does
state that “the proper conduct of foreign relations of the United States requires that executive
permission be obtained for the construction and maintenance” of border crossing facilities.30
Executive Order 13337 refers only to the “Constitution and the Laws of the United States of
America, including Section 301 of title 3, United States Code.”31 However, 3 U.S.C. Section 301
simply provides that the President is empowered to delegate authority to the head of any
department or agency of the executive branch.
Federal courts have addressed the legitimacy of this permitting authority. In Sisseton-Wahpeton
Oyate v. U.S. Department of State, the plaintiff Tribes asked the court to suspend or revoke a
presidential permit issued under Executive Order 13337 for the TransCanada Keystone Pipeline.32
The plaintiffs claimed that the issuance of the national interest determination and the border
crossing permit for the project violated NEPA and the Administrative Procedure Act (APA). The
U.S. District Court for the District of South Dakota determined that even if the plaintiffs’ injury
could be redressed, “the President would be free to disregard the court’s judgment,” as the case
concerned the President’s “inherent constitutional authority to conduct foreign policy,” as
opposed to statutory authority granted to the President by Congress.33 The court further found that
even if the Tribes had standing, the issuance of the presidential permit was a presidential action,
not an agency action subject to judicial review under APA.34
The court stated that the authority to regulate the cross-border pipeline lies with either Congress
or the President.35 The court found that “Congress has failed to create a federal regulatory scheme
for the construction of oil pipelines, and has delegated this authority to the states. Therefore, the
28 Exec. Order No. 13337, 69 Fed. Reg. at 25299.
29 Id. at 25230.
30 33 Fed. Reg. at 11741.
31 69 Fed. Reg. at 25299.
32 659 F. Supp. 2d 1071, 1078 (D.S.D. 2009). This Keystone pipeline project preceded the Keystone XL pipeline.
33 Id. at 1078, 1078 n.5.
34 Id. at 1081-82.
35 Id. at 1081.
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President has the sole authority to allow oil pipeline border crossings under his inherent
constitutional authority to conduct foreign affairs.”36
In Sierra Club v. Clinton,37 the plaintiff Sierra Club challenged the Secretary of State’s 2009
decision to issue a permit authorizing a pipeline from Alberta, Canada, to Superior, Wisconsin.
The plaintiff claimed that issuance of the permit was unconstitutional because the President had
no authority to issue the permits referenced in Executive Order 13337.38 The defendant responded
that the authority to issue permits for these border-crossing facilities “does not derive from a
delegation of congressional authority ... but rather from the President’s constitutional authority
over foreign affairs and his authority as Commander in Chief.”39 The U.S. District Court for the
District of Minnesota agreed, noting that the defendant’s assertion regarding the source of the
President’s authority has been “well recognized” in a series of Attorney General opinions, as well
as a 2009 judicial opinion.40 The court also noted that these permits had been issued many times
before and that “Congress has not attempted to exercise any exclusive authority over the
permitting process. Congress’s inaction suggests that Congress has accepted the authority of the
President to issue cross-border permits.”41 Based on the historical recognition of the President’s
authority to issue those permits and Congress’s implied approval through inaction, the court
found the permit requirement for border facilities constitutional.
As these cases show, courts that have analyzed the President’s exercise of permitting authority as
articulated in Executive Order 13337 have held that it is a legitimate exercise of the President’s
constitutional authority, and therefore does not require legislative authorization.
Source of Congressional Authority to Regulate Foreign Commerce
Article I, Section 8 of the Constitution authorizes Congress to “regulate Commerce with foreign
Nations.” Whereas any independent presidential authority in matters affecting foreign commerce
derives from the President’s more general foreign affairs authority, Congress’s power over foreign
commerce is plainly enumerated by the Constitution, suggesting that its authority in this field is
preeminent. In a review of the origins of the Constitution’s Foreign Commerce Clause, the former
Special Counsel of the Department of Justice’s Office of Legal Counsel emphasized the
placement of the foreign commerce power with Congress, stating that
the power to regulate foreign commerce at the national level was to be vested in Congress.
… The debate at the Philadelphia Convention over whether a bare majority or a
supermajority of each House was required to enact foreign commerce regulations
demonstrates that the Framers intended such regulation to be made by a legislative body,
rather than an executive or judicial one.42
36 Id.
37 689 F. Supp. 2d 1147 (D. Minn. 2010).
38 Id. at 1162.
39 Id.
40 Id. at 1163 (citing 38 U.S. Att’y Gen. 163 (1935); 30 U.S. Op. Att’y Gen. 217 (1913); 24 U.S. Op. Att’y Gen. 100
(1902); 22 Op. Att’y Gen. 408 (1899); and Natural Resources Defense Council (NRDC) v. U.S. Department of State,
658 F. Supp. 2d 105, 109 (D.D.C. 2009)).
41 Id.
42 Robert J. Delahunt, Federalism Beyond the Water’s Edge: State Procurement Sanctions and Foreign Affairs, 37
(continued...)
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Reconciling the Executive and Legislative Roles Related to
Foreign Commerce and Border Crossing Facilities
Each of the three branches of the federal government has opined on the nature of the executive
and legislative powers related to matters related to foreign affairs and foreign commerce, in many
cases addressing border crossing facilities specifically.
Executive Branch Deference to Congress on Cross-Border Facilities
Until recently, Presidents have indicated that executive permission for cables, pipelines, and other
border crossing facilities may be granted or refused only to the extent that Congress has not acted
to institute terms and conditions on such facilities. For example, in 1869, President Grant resisted
the landing of a transatlantic cable from France for which the French government had granted a
monopoly.43 President Grant recounted his unwillingness to act “[i]n the absence of legislation by
Congress,” but stated that he dropped his resistance to the cable once the monopolistic condition
was removed.44 Letters indicate that he understood that Congress could impose “limitations and
conditions” upon the laying of cables within U.S. waters.45 He then proposed legislation to
Congress with conditions “for the protection of the public” from monopolies with the right to
operate cable telegrams.46 He also indicated that “unless Congress otherwise direct[ed],” he
would not oppose the landing of any other cable that complied with the conditions he had
outlined and presented to Congress.
As another example, in 1897, President McKinley declined to act on request for an application
from a French company to the State Department, requesting permission to land a supplementary
cable under the “same terms and conditions as those which were imposed by the President in
1879 when the original cable was landed.”47 The State Department’s letter to the French
Ambassador stated that the President did “not regard himself as clothed, in the absence of
legislative enactment, with the requisite authority to take any action upon the application.”48
President McKinley’s position stemmed from the congressional introduction of a bill to grant the
President “express authority to authorize the landing of submarine cable … subject to conditions
therein specified,” which “failed to become law.”49
A series of Attorney General opinions dating back to the 19th century also suggest that the
executive branch has taken an expansive view of Congress’s authority in the area of cross-border
commercial activity. These Attorney General opinions conditioned the President’s authority to
prohibit or permit cross-border cables, telegraphs, and electrical power on the absence of
congressional action. The Department of Justice has cited these Attorney General opinions as
(...continued)
STAN. J. INT’L L. 1, 25 (2001).
4322 Op. Att’y Gen. 13 (1898).
44 Id. (citing Senate Doc. 122, at 70).
45 Id. (citing Senate Doc. 122, at 70).
46 Id.
47 Id.
48 Id. (reciting from a May 11, 1897 letter from the State Department).
49 Id. (reciting from a May 11, 1897 letter from the State Department).
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“indicat[ing] that the President or his delegates for over a century have exercised the inherent
executive authority to issue such permits without action by Congress.”50 These opinions assert
that the President may permit or prohibit the landing of a foreign cable, subject to legislation by
Congress; recognize that cross-border cables are “instrument[s] of commerce”; and indicate that
the President’s power to act in the absence of legislation on point derives from his “power to
prohibit [the landing of a foreign cable] should he deem it an encroachment on our rights or
prejudicial to our interests.”51
The first of these Attorney General opinions, dating to 1898, formed the basis for future Attorney
General opinions on submarine cables, wireless telegraphy, and gas pipelines. The Solicitor
General, acting as the Attorney General, addressed the Secretary of State’s questions as to “the
power of the President, in the absence of legislative enactment, to control the landing of foreign
telegraphic cables.”52 The acting Attorney General reviewed presidential actions and related
communications regarding the landing of submarine cables dating back to the landing of the first
foreign cable from Cuba to Florida in 1867.53 The first cable to the United States landed “under
the supposed authority” of a 1866 congressional act granting a monopoly to one company, but
reserving to Congress “the power to alter and determine the rates.”54 However, Congress had not
always enacted legislation imposing terms and conditions on subsequent cables that came to the
shores of the United States. Presidents in the latter half of the 19th century granted permission for
the landing of several cables, while indicating that the executive branch’s permission in such
matters was “subject to future action by Congress.”55
In this 1898 opinion, the Attorney General stated that the President was charged with the
“preservation of our territorial integrity and the protection of our foreign interests.”56 The
Attorney General found that the President’s ability to act was not limited to enforcing particular
congressional acts, but that he was under oath to “preserve, protect, and defend the
Constitution.”57 The opinion relied on the President’s position as “head of the diplomatic service”
and Commander-in-Chief to find that the President could impose conditions upon foreign cables,
in absence of congressional legislation, and either prevent or permit the landing of such cables
“on conditions which will protect the interests of this Government and its citizens.”58
Subsequent Attorney General opinions reached a similar conclusion. For example, 19th century
legislation directed that the United States not direct any “franchises, or concessions of any kind
whatever” in Cuba while the United States occupied the island.59 In an 1899 opinion, the Attorney
General indicated that the executive branch had regulated the matter of cables, “revocable either
50 Memorandum in Support of Defendant’s Motion to Dismiss Plaintiff’s First Amended Complaint, at 12 (October 20,
2008), Natural Resources Defense Council, Inc. v. United States Department of State, 658 F. Supp. 2d 105 (D.D.C.
2009) (No. 08-CV-01363).
51 Foreign Cables, 22 Op. Att’y Gen. 13 (January 18, 1898).
52 Id.
53 Id.
54 Id. (citing Forty-ninth Congress, second session, Senate Doc. 122, at 63).
55 Id. (citing Senate Doc. 122, at 76).
56 Id.
57 Id.
58 Id.
59 Cuba-Cables, 22 Op. Att’y Gen. 408 (1899).
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at the will of the President or by subsequent legislation by Congress.”60 The general in charge of
U.S. forces in Cuba had forbidden “grants and concessions of franchises” in Cuba, unless the
Secretary of War approved.61 Although the Attorney General did not “concede that Congress, by
legislative act, has the power to restrain or control the proper exercise of the powers of the
Commander in Chief of the Army and Navy of the United States, occupying, … a foreign
territory,” the Attorney General found that the expressed congressional will conformed to the
executive branch’s previous policies and was “entitled to the respect of the Executive
Departments, and ought to be followed.”62 The Attorney General thus advised the Secretary of
War “that it would be inexpedient … to grant permission to the applicant in this case to land its
cable upon the soil of Cuba.”63
Similarly, a 1913 Attorney General opinion interpreting a 1910 treaty between the United States
and Great Britain concerning the diversion of water from the Niagara River for power purposes,
as well as a statute on a similar subject, suggests that both the President and Congress have
authority to regulate such international commercial transactions.64 The opinion found that it was
the President’s “duty to interfere with any diversion within the State of New York of the waters of
the Niagara River … for power purposes, exceeding a daily maximum” established in the treaty.65
The Attorney General said that the treaty’s stipulation that “the United States may authorize and
permit” the diversion of waters up to a daily maximum “clearly places the subject, in the absence
of legislation by Congress to the contrary, under [the President’s] supervision.”66
The opinion also responded to the President’s question as to whether he had “any authority to
control the importation into [the United States] from Canada of electric current generated by
water power from the Niagara River.”67 The Attorney General opined that, due to the lapse of a
statute regarding electricity transmission from Canada, the President was “free to control the
matter under [his] plenary power to prevent any physical connection (not authorized by Congress)
between any foreign country and the United States.”68 The opinion recognized the executive
branch’s power as being “subject, of course, to affirmative control by Congress” to prohibit or
permit the importation of electrical power into the United States from Canada.69 The Attorney
General also concluded that “in the absence of legislation by Congress,” the President could
subject the importation of Canadian electrical power “to such conditions as to [him] may seem
good.”70
Finally, it should be noted that Executive Order 11423, discussed earlier in this report, delegated
authority to the Secretary of State to receive all applications for permits for cross border facilities
including pipelines, cable cars, bridges, and similar facilities only “to the extent that
60 Id.
61 Id.
62 Id.
63 Id.
64 Diversion of Water from Niagara River, 30 Op. Att’y Gen. 217 (1913).
65 Id.
66 Id.
67 Id.
68 Id.
69 Id.
70 Id.
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congressional authorization is not required.”71 However, Executive Order 13337 omitted the
qualification “to the extent that congressional authorization is not required,” when amending the
section in Executive Order 11423 that empowered the Secretary to receive all such applications.72
Congressional Action Related to Foreign Commerce
A history of legislation related to border crossing facilities further suggests that congressional
action related to permitting of pipeline border crossings is a legitimate exercise of Congress’s
authority to regulate foreign commerce. Examples of congressional legislation “regarding certain
types of border crossing facilities,” include the Submarine Cable Landing Licensing Act of 1921
and the International Bridge Act of 1972.73 Additionally, Congress has passed several statutes
relating specifically to petroleum or pipelines, and some of these require the President to make
particular findings, such as that certain exports are in the national interest: the Export
Administration Act of 1979,74 the Mineral Leasing Act of 1920,75 the Naval Petroleum Reserve
Production Act of 1976,76 the Outer Continental Shelf Lands Act Amendments of 1978,77 the
Energy Policy and Conservation Act,78 and the Comprehensive Anti-Apartheid Act of 1986.79
Judicial Interpretations of the Executive and Legislative Authorities to
Regulate Foreign Commerce
The Supreme Court’s pronouncements on the foreign commerce clause recognize the expansive
scope of this enumerated congressional power.80 The Court has said that this power is “exclusive
71 Exec. Order No. 11423, 33 Fed. Reg. 11741 (August 16, 1968).
72 See Exec. Order No. 13337, § 2(a), 69 Fed. Reg. 25299, 25300-01 (May 5, 2004).
73 P.L. 67-8; P.L. 92-434. See Memorandum in Support of Defendant’s Motion to Dismiss Plaintiff’s First Amended
Complaint, at 13 n.5 (October 20, 2008), Natural Resources Defense Council, Inc. v. United States Department of
State, 658 F. Supp. 2d 105 (D.D.C. 2009) (No. 08-CV-01363).
74 P.L. 96-72. This act prohibited the export from the United States or any of its territories or possessions of
domestically produced crude oil transported by pipeline over rights-of-way granted under the Trans-Alaska Pipeline
Authorization Act, P.L. 93-153.
75 P.L. 66-146. This act restricted the export of crude oil transported by pipelines on federal lands, with an exemption
for certain crude oil. This act allowed the export of unexempted oil provided the President made certain findings,
recommended the export, and reported to Congress, and Congress enacted a joint resolution approving such export.
76 P.L. 94-258. This act provided that before certain exports of petroleum could occur, the President must make,
publish, and report to Congress the express finding that they will not diminish the total quantity or quality of petroleum
available to the United States, are in the national interest, and are in accord with the Export Administration Act.
77 P.L. 95-372. This act provided that before certain oil could be exported, the President must make and publish an
express finding that the exports will not increase reliance on imported oil, are in the national interest, and are in accord
with the Export Administration Act.
78 P.L. 94-163. This act required the President to issue a rule prohibiting the export of crude oil produced in the United
States, except that he may exempt from the prohibition crude oil exports that he determines to be consistent with the
national interest and with statutory policies regarding the availability of domestic supplies.
79 P.L. 99-440. This act prohibited exports of crude oil and refined petroleum products to South Africa, and the
prohibition was lifted by Executive Order 12769, which was allowed under the act.
80 See, e.g., Buttfield v. Stranahan, 192 U.S. 470, 492-93 (1904)(“The power to regulate commerce with foreign nations
is expressly conferred upon Congress, and being an enumerated power is complete in itself, acknowledging no
limitations other than those prescribed in the Constitution. Lottery Case, 188 U.S. 321, 353-356; Leisy v. Hardin, 135
U.S. 100, 108.”); Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434, 449 n.13 (1979) (citing Buttfield for the
proposition that Congress’s power over foreign commerce is “exclusive and absolute”); California Bankers Ass’n v.
Shultz, 416 U.S. 21 (1974).
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and plenary.”81 In the seminal 1824 Commerce Clause case Gibbons v. Ogden, the Supreme Court
said the words of the Commerce Clause “comprehend every species of commercial intercourse
between the United States and foreign nations. No sort of trade can be carried on between this
country and any other, to which this power does not extend.”82 As of 2006, the Supreme Court
had “never struck down an act of Congress as exceeding its powers to regulate foreign
commerce.”83
In addition, although there is no precedent that directly addresses Congress’s power to legislate
pipeline border crossings, language found in multiple judicial opinions further suggests that the
executive authority to regulate such facilities may be amended by legislation. As noted above in
Sierra Club v. Clinton,84 the plaintiff challenged the Secretary of State’s 2009 decision to issue a
permit authorizing a pipeline from Canada to Wisconsin. The reviewing federal district court
found that the authority to issue permits for these border-crossing facilities “does not derive from
a delegation of congressional authority ... but rather from the President’s constitutional authority
over foreign affairs and his authority as Commander in Chief.”85 In reaching its conclusion, the
court noted that “despite the fact that cross-border permits for pipelines have been issued by
Presidents in the past, Congress has not attempted to exercise any exclusive authority over the
permitting process. Congress’s inaction suggests that Congress has accepted the authority of the
President to issue cross-border permits.”86 This seems to suggest a recognition by the court that
the cross-border permitting process is not the exclusive province of the executive branch and that
Congress may legislate in this area if it is so inclined.
Similarly, in Sisseton-Wahpeton Oyate v. U.S. Department of State,87 the reviewing federal district
court engaged in a discussion of the nature of the authority being exercised by the President in
granting cross-border permits. The court noted that
In this case, the proposed pipeline crosses international borders. Under the federal
Constitution, then, the authority to regulate such a project vests in either the legislative or
executive branch of government. Congress has failed to create a federal regulatory scheme
for the construction of oil pipelines, and has delegated this authority to the states. Therefore,
the President has the sole authority to allow oil pipeline border crossings under his inherent
constitutional authority to conduct foreign affairs.88
As with the Attorney General opinions discussed above, the court’s language suggests that
Congress possesses the constitutional authority to legislate border crossing facilities, which
suggests that Congress also can legislate to amend the role of the executive branch with respect to
such facilities.
81 Board of Trustees of University of Illinois v. United States, 289 U.S. 48, 56 (1933). The Court stated that “[a]s an
exclusive power, its exercise may not be limited, qualified or impeded to any extent by state action.” Id. at 56-57. The
Court also stated that “[i]n international relations and with respect to foreign intercourse and trade the people of the
United States act through a single government with unified and adequate national power.” Id. at 59.
82 22 U.S. 1, 193-94 (1824).
83 United States v. Clark, 435 F.3d 1100, 1113 (9th Cir. 2006), cert. denied, 549 U.S. 1343 (2007).
84 689 F. Supp. 2d 1147 (D. Minn. 2010). This case is discussed in greater detail above at p. 5-6.
85 Id. at 1162.
86 Id. at 1163.
87 659 F. Supp. 2d 1071 (D. S.D. 2009).
88 Id. at 1081 (emphasis added).
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Summary
As the discussion above demonstrates, all three branches of the federal government have
historically taken an expansive view of the nature of Congress’s authority to regulate foreign
commerce, even in the absence of existing legislation in the area. Although the Temporary Payroll
Tax Cut Continuation Act of 2011 appears to be the first legislation enacted on the subject of
cross border pipeline permitting, the absence of previous legislation related to the permitting of
cross border facilities does not mean that Congress lacks the constitutional authority to take
action on these matters.
The executive branch also possesses some ability to act in the area of border crossing permitting,
derived from the power to conduct foreign affairs under Article II of the Constitution. The
executive’s ability to act in this area, however, is informed by the previous lack of federal
legislation in this area. The absence of legislation up to this point may have “enable[d], if not
invite[d], measures on independent presidential responsibility” in which the President has acted in
the “absence of either a congressional grant or denial of authority.”89 However, if Congress chose
to assert its authority in the area of border crossing facilities, this would likely be considered
within its constitutionally enumerated authority to regulate foreign commerce.90 Congress may
consider legislation to overturn the domestic effect of legal action denying a permit for a border
crossing facility for the Keystone XL pipeline. It could also potentially establish criteria for the
issuance of any cross border permits, and potentially require the issuance of permits to entities
which fulfill such criteria.
Constitutional Concerns Related to Potential Action
by States
As noted earlier, the federal government’s role in siting the Keystone XL pipeline limited to the
border crossing facility, although its environmental review considered impacts of the entire
project pursuant to NEPA. However, some state and local government officials voiced concern
regarding the pipeline’s proposed route through areas perceived to present safety or
environmental issues. At least one state, Nebraska, took action in November 2011, adopting two
laws that (1) carve out a role for the state in siting “major oil pipelines” that run through the
state,91 and (2) directing collaboration with the State Department on a supplemental
environmental statement for the proposed pipeline.92
Debate over the legislation in Nebraska gave rise to two constitutional concerns that some feel
may limit the extent to which states may legislate and regulate interstate oil pipelines generally,
and the proposed Keystone XL pipeline in particular. First, some have expressed concern that a
89 Youngstown Sheet and Tube Co. v. Sawyer, 343 U.S. 579, 637 (1952) (Jackson, J. concurring).
90 See United States v. Morrison, 529 U.S. 598, 607 (2000) (“Due respect for the decisions of a coordinate branch of
Government demands that we invalidate a congressional enactment only upon a plain showing that Congress exceeded
its constitutional bounds.”).
91 Neb. Laws LB1 (November 22, 2011), available at http://nebraskalegislature.gov/FloorDocs/Current/PDF/Final/
LB1_S1.pdf.
92 Neb. Laws. LB4 (November 22, 2011), available at http://nebraskalegislature.gov/FloorDocs/Current/PDF/Final/
LB4_S1.pdf.
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state action may place too great of a burden on interstate commerce, in violation of a doctrine
known as the dormant Commerce Clause. Second, some have wondered whether state legislation
or regulation of interstate pipelines is preempted by federal legislation related to interstate
pipeline safety.
The Dormant Commerce Clause
Legal Background
The Constitution provides that Congress shall have the power to regulate commerce with foreign
nations and among the various states.93 This power has been cited as the constitutional basis for a
significant portion of the laws passed by Congress over the last 50 years, and it currently
represents one of the broadest bases for the exercise of congressional authority. Although the
Constitution does not explicitly provide that this federal power displaces the power of states to
regulate interstate commerce, the courts have long found that such restrictions are an inherent part
of the federal authority.94
State interference with trade was widespread before the ratification of the Constitution and a
source of much dispute, so one goal of granting Congress the power to regulate interstate
commerce was to limit such practices.95 It was not clear at first to what extent states retained
authority over such commerce. However, the doctrine of a dormant Commerce Clause was soon
recognized by the courts as a limit on state legislation, even in the absence of congressional
regulation.96 Dormant is used to describe this right because it is not an express provision in the
Constitution.
Although the meaning and application of the dormant Commerce Clause has varied over time, the
modern standard, as applied to state regulatory actions, contains two basic inquiries. First is the
question of whether a state regulation discriminates against other states on its face or in effect,
showing an intent to benefit in-state economic interests at the expense of out-of-state interests. If
that is the case, then no further analysis is required,97 and the law will generally be struck down.98
Second, if a law is non-discriminatory, but still has some impact on interstate commerce, the court
will evaluate the law using a balancing test to find whether there is a legitimate public purpose.99
93 U.S. Const., Art. I, §8, cl. 3.
94 See generally, Johnny Killian, George Costello & Kenneth Thomas, Constitution of the United States of America:
Analysis and Interpretation 223-227 (2002).
95 Id. at 221-222.
96 Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1 (1824); Wilson v. Black-Bird Creek Marsh Co., 27 U.S. (2 Pet.) 245 (1829);
Cooley v. Board of Wardens of Port of Philadelphia, 53 U.S. (12 How.) 299 (1851).
97 “When a state statute clearly discriminates against interstate commerce, it will be struck down ... unless the
discrimination is demonstrably justified by a valid factor unrelated to economic protectionism.” Wyoming v.
Oklahoma, 502 U.S. 437, 454 (1992) quoting City of Philadelphia v. New Jersey, 437 U.S. 617, 624 (1978)). See
Maine v. Taylor, 477 U.S. 131 (1986) (upholding state ban on importation of out-of-state baitfish based on possible
presence of parasites and nonnative species in baitfish shipments).
98 Discriminatory laws motivated by “simple economic protectionism” are subject to a “virtually per se rule of
invalidity,” City of Philadelphia v. New Jersey, 437 U.S. 617 (1978), Dean Milk Co. v. City of Madison, Wisconsin,
340 U.S. 349 (1951), Hunt v. Washington State Apple Advertising Comm., 432 U.S. 333 (1977), which can only be
overcome by a showing that the State has no other means to advance a legitimate local purpose. Maine v. Taylor, 477
U.S. 131 (1986). See also Brown-Forman Distillers v. New York State Liquor Authority, 476 U.S. 573 (1986).
99 The most commonly cited case for this balancing test is Pike v. Bruce Church, Inc, 397 U.S. 137 (1970).
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State public health, environment and safety concerns are generally considered by the courts to
represent a legitimate public purpose.
State Authority for Energy Facility Siting
As a preliminary matter, it should be noted that land use regulation, such as zoning, has
traditionally been considered primarily a state concern. Also, there are many instances of states
taking an important role in regulating the siting of energy facilities and associated rights-of-way.
This includes state statutes governing the siting of oil pipelines within their borders.100 In
addition, siting electricity transmission lines has also historically been the exclusive province of
states regardless of the nature of the facilities and the degree to which the interstate electricity
grid depends upon those facilities. States retain primary authority to make siting decisions even in
areas considered particularly important to the interstate electricity grid.101 Other federal
legislation has recognized the state’s role in making siting decisions with respect to other tools of
interstate commerce like wireless telecommunications facilities102 and interstate highways.103
Of course, federal legislation may reduce the primacy of state authority. For instance, federal law
provides that siting decisions for interstate natural gas pipelines are made by FERC pursuant to
Section 7 of the Natural Gas Act.104 Further, interstate natural gas pipelines still must obey state
and local laws, including zoning ordinances, unless preempted by federal law. Thus, there seems
to be little question that both historical practice and modern regulatory schemes recognize a
significant role for state regulatory actions regarding siting energy facilities and associated rights-
of-way.
Application of the Dormant Commerce Clause to State Action Related to
Oil Pipeline Siting
In order to make a dormant Commerce Clause analysis, the court must have a fully developed
record to allow “a sensitive, case-by-case analysis of purposes and effects.”105 Such a record is
lacking in the Keystone XL case thus far. Without knowing what final action states may take, it is
difficult to speculate which, if any, of those potential actions might present dormant Commerce
Clause concerns. It is possible, however, to outline the factors a court might consider in reviewing
a dormant Commerce Clause challenge to state action related to the pipeline.
The first question that a court would consider in a dormant Commerce Clause challenge would be
whether a particular state regulation or siting decision was discriminatory. So long as the
100 See, e.g., S.D. Codified Laws §49-41B-4.1 (requiring a state permit and the approval of the state legislature prior to
construction of a “trans-state” transmission facility, defined to include pipelines). To CRS’s knowledge, no such statute
has ever been the subject of a legal challenge based on the dormant Commerce Clause.
101 Energy Policy Act of 2005, P.L. 109-58, at §1221.
102 Section 704(a) of the Telecommunications Act of 1996 (47 U.S.C. §332(c)(7)) allows state and local governments to
make decisions regarding the siting of wireless communications facilities, subject to certain limitations, such as
mandating that the local decision must not “prohibit or have the effect of prohibiting the provision of personal wireless
services.”
103 Under the Federal Aid Highway Act (23 U.S.C. §101 et seq.), siting decisions for interstate highways are made
solely by the states.
104 15 U.S.C. §717f(c).
105 W. Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 201 (1994).
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regulatory scheme provided a uniform standard for reviewing siting decisions for energy
transmission it seems unlikely it would be found unconstitutional due to discrimination. In order
to be found discriminatory, it would need to be shown that the intent or effect of the legislation
was to benefit in-state economic interests at the expense of out-of-state interests. For instance,
protectionist legislation which favored in-state companies regarding right-of-way acquisition
might run afoul of this requirement. However, to the extent that the law applies equally to both in-
state and out-of-state pipeline companies, it is not clear that there would be a basis for an
argument that such a law was discriminatory.106
If a law, statute or siting decision was found not to be discriminatory, then a court would move to
a Pike analysis, in which an excessive burden on interstate commerce must be shown. One court
described the Pike analysis as putting the burden on the challenging party to show that a statute
encumbers interstate commerce in a way that “is clearly excessive in relation to the putative local
benefits.”107 Although lower courts have varied in their application of this test,108 it does appear
that states are given significant deference by courts to establish environmental, public health, and
safety standards.
Some have posited that a court might apply a heightened level of scrutiny to any state action
regarding the Keystone XL pipeline on the grounds that the action would regulate “foreign
commerce.” The Supreme Court has held that state action which burdens foreign commerce
should be subjected to a “more rigorous and searching scrutiny.”109 However, this heightened
level of scrutiny has generally been applied to those areas where the state action directly affects
foreign trade or foreign entities, not where it burdens commerce generally. Accordingly, it is
unlikely that any state action related to the siting of the Keystone XL pipeline within its borders
would be seen as a direct regulation of foreign trade. Rather, the action would most likely be seen
as dictating the terms and conditions of the domestic transit of an imported good after it has been
imported.
Next, putative local benefits would be identified and weighed. It does not appear to be difficult to
establish before a court that an oil pipeline siting statute would serve local interests. As discussed
above, courts have considered safety and economic concerns in evaluating similar legislation, and
a court might also consider environmental, aesthetic, or any number of other non-protectionist
concerns.110 The relative weight of the local benefits would depend not only on the benefits
identified by a court, but also on what implementing regulations look like and how a regulatory
scheme is applied in a particular case.
Once a court had established what legitimate state interest was being served, it would then
evaluate the level of burden on interstate commerce that was imposed by the state regulatory
106 For example, an argument has been made that legislation that impacts only pipes in excess of a certain diameter, as
has been proposed in draft legislation in Nebraska, might only affect interstate pipelines. If the law does not
discriminate between in-state and out-of-state ownership, control, or other economic impacts of these pipelines, this
distinction alone would not be grounds for a finding of discriminatory state action in violation of the dormant
Commerce Clause.
107 Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 471 (1981) , quoting Pike, 397 U.S. at 142.
108 See James D. Fox, State Benefits Under the Pike Balancing Test of the Dormant Commerce Clause, 1 Ave Maria L.
Rev. 175 (20030.
109 South-Central Timber Development, Inc. v. Wunnicke, 467 U.S. 82, 100 (1984).
110 Note that the existence of a legitimate state interest would not override an express federal preemption of state
authority. This topic will be treated later in this report.
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activity. In general, it appears unlikely that the passage of an oil siting statute similar to laws in
other states would by itself create an “undue burden on interstate commerce” that would dictate
reversal of the law. Statutes that require state permission prior to construction and operation and
conformity with siting and regulatory requirements as set forth by a state agency during the
review process are not uncommon and appear to be challenged only rarely.111
A state action related to the siting of an oil pipeline could be found to impose a significant burden
on commerce. For example, if the statute requires the owner/operator of a proposed pipeline to
obtain a permit before siting a pipeline in the state, but the regulatory agency tasked with
enforcing the statute refused to permit a proposed pipeline across the state regardless of location,
that refusal arguably may constitute an undue burden on interstate commerce.112 However, even
that decision might not be a per se violation of the dormant Commerce Clause, as a court might
choose to evaluate the burden imposed by the re-routing of the pipeline through other states, or
the burden imposed by using an alternative means of transport of the oil.
Assuming that a state statute or regulatory scheme would not preclude the passage of the
Keystone XL pipeline through the state, it may still impose some administrative burden, and, in
addition, might delay project construction or make the project more expensive. The burden on
commerce is measured by the level of burden, delay, and expense. A court would consider what
costs could be associated with this delay, and how this would affect the overall viability of the
project. As noted, however, the fact that there are costs associated with regulatory burdens does
not appear to have led to significant challenges to oil pipeline siting statutes in the past.
One argument that could be made is that new state requirements for oil pipelines in the Keystone
XL pipeline planning process where none previously existed could add significantly to the cost or
viability of the pipeline. Establishing the economic effect of a delay would depend on factors that
could not be easily established until legislation was passed and siting decisions were made. For
instance, what changes to the Keystone XL planning process would be required because of a
change in siting to the original proposal? What costs associated with the pipeline have already
been expended, and would the value of those expenditures be diminished by failure to begin
construction by a certain date? What financial commitments might expire, and what would be the
costs of new ones? How might delay otherwise raise costs, and would the economic viability of
the project be threatened? What other economic or business considerations would be involved?
One could argue further that a court would need to consider how changed regulations might affect
the burden on commerce. Thus, to the extent that the Keystone XL Pipeline planning process had
accounted for certain regulatory hurdles, the state action might not significantly add to those
regulatory burdens. However, new regulations could mean additional processing. To the extent
that a court found that delays, even if costly, were a necessary component of the state effectuating
legitimate state interests in public health and safety, then a court would be likely to find that the
state’s action was not an unconstitutional burden on interstate commerce.
111 But see Lakehead Pipeline Company v. Illinois Commerce Commission, 696 N.E.2d 345 (Ill. App. 3rd Dist. 1998).
112 Dakota, Minnesota & Eastern Railroad Corp., v. South Dakota, 236 F. Supp. 2d 989, 1018 (S.D.S.D. 2002)(finding
dormant Commerce Clause violation because administrative burdens imposed on a pipeline project would prevent the
pipeline from being built).
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Federal Preemption of State Pipeline Legislation
Background
Before turning to whether and how a state statute might be preempted, it is useful to review the
history and content of federal pipeline safety legislation. The initial federal legislation governing
fossil fuel pipeline safety was the Natural Gas Pipeline Safety Act of 1968.113 This pipeline safety
legislation was amended in 1979 to include liquid fuels,114 and has been since been amended on a
number of occasions, including by the Pipeline Safety Improvement Act of 2002.115 Thus, what is
often referred to as the “Pipeline Safety Act” is actually several statutes enacted over the last fifty
years and codified at 49 U.S.C. Section 60101 et seq. However, for the sake of convenience this
memorandum will refer to the collection of federal legislation codified at 49 U.S.C. Chapters
601-605 as the “Pipeline Safety Act.”
How Preemption Is Evaluated
In addition to the arguments that state action regulating interstate pipelines might run afoul of the
dormant Commerce Clause, several parties have also voiced concerns as to whether certain state
actions related to oil pipelines could be preempted by the federal Pipeline Safety Act. Under the
Supremacy Clause,116 statutes and treaties as well as the constitution itself supersede state laws
that “interfere with, or are contrary to” their dictates.117 In such cases, the federal law is said to
“preempt” the state law. In evaluating Supremacy Clause challenges to state statutes or other state
actions, courts will generally consider three ways that a state action might be preempted. First,
when acting within its constitutional limits, Congress may expressly preempt state law.118 Second,
federal law may preempt state law if the two conflict.119 This type of conflict occurs either when
“compliance with both federal and state regulations is a physical impossibility”120 or if the state
law “stands as an obstacle to the accomplishment and execution of the full purposes and
objectives of Congress.”121 And third, “Congressional intent to preempt state law in a particular
area may be inferred where the scheme of federal regulation is sufficiently comprehensive to
make reasonable the inference that Congress ‘left no room’ for supplementary state regulation.”122
The preemption argument in the case of Keystone XL is based on a concern that potential state
action affecting pipeline siting might be preempted by federal pipeline safety statutes, despite
state intent to protect public safety and the environment.
113 P.L. 90-481.
114 P.L. 96-129.
115 P.L. 107-355.
116 U.S. Const. Art. VI, cl. 2.
117 Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 211 (1824). See also McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 436
(1819).
118 California Federal Savings and Loan v. Guerra, 479 U.S. 272, 280 (1987), citing Jones v Rath Packing Co., 430 U.S.
519, 525 (1977).
119 Id. at 281.
120 Id., quoting Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-143 (1963).
121 Id., quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941).
122 Id. at 280-281, quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947).
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Express Preemption of State Action Related to the
Proposed Keystone XL Pipeline
Turning first to express preemption, the Pipeline Safety Act contains the following language:
A State authority that has submitted a current certification under section 60105(a) of this title
may adopt additional or more stringent safety standards for intrastate pipeline facilities and
intrastate pipeline transportation only if those standards are compatible with the minimum
standards proscribed under this chapter. A state authority may not adopt or continue in force
safety standards for interstate pipeline facilities or interstate pipeline transportation.123
In order to determine what state action is expressly preempted, it must first be determined what is
meant by “safety standards for interstate pipeline facilities or interstate pipeline transportation.” It
is difficult to draw specific parameters as to what sort of state action would constitute a “safety
standard for interstate pipelines facilities or interstate pipeline transportation” and therefore
would be an area in which any state action would be expressly preempted by the Pipeline Safety
Act. There are at least five sources for guidance on the parameters of the Pipeline Safety Act’s
express preemption: related statutory provisions, the “plain meaning” of the statutory language,
the “industry usage” of the language, the federal agency’s exercise of the statutory authority
granted to it, and interpretations of the language by the federal courts.
Related Statutory Provisions
The Pipeline Safety Act offers an express statement of federal preemption, but also includes a
limitation on the federal exercise of authority pursuant to the act: “[t]his chapter does not
authorize the Secretary of Transportation to prescribe the location or routing of a pipeline
facility.”124 This suggests that so long as the state action can be deemed only to “prescribe the
location or routing of a pipeline facility,” there would likely be no federal preemption.
The difficulty for proposed state actions affecting interstate pipelines arises where decisions
related to location and routing may impact matters related to safety. This analysis should provide
guidance to the state in determining what action can be taken without crossing the line from a
legitimate state action affecting location/routing to a state adoption of “safety standards” that
would be preempted by the Pipeline Safety Act.
Before moving forward with this analysis of what action may avoid being deemed preempted, it
is important to note that the Pipeline Safety Act’s preemption provision prohibits states from
adopting safety standards for both “interstate pipeline facilities” and for “interstate pipeline
transportation.”125 It is not clear what sort of state action might be preempted by a prohibition on
safety standards for “pipeline facilities” and “pipeline transportation,” but it is important that a
state be aware of the existence of this prohibition and note that a court would likely seek to
address this language in any preemption challenge based on 49 U.S.C. Section 60104(c).
123 49 U.S.C. §60104(c) (emphasis added).
124 49 U.S.C. §60104(e)
125 49 U.S.C. §60104(c).
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The Plain Meaning of the Preemption Clause Related to Safety Standards
The primary rule of statutory interpretation is that, in the absence of a statutory definition (as is
the case here), words in statutes are to be given their “plain meaning,” and the plain meaning of
“safety standards” is generally understood to be explicit rules regarding levels of safety that must
be attained.
It is unclear whether the plain meaning or ordinary usage of the phrase “safety standards” would
extend beyond pipeline performance standards to action taken by a state with respect to the siting
of pipelines- an authority that is expressly not preempted by the Pipeline Safety Act- that is done
for the express purpose of protecting public safety.126 If however the state action related to siting
were made for reasons not related to safety, a “plain meaning” reading of the statute would still
suggest that there would be no preemption.
Industry Usage of the Phrase “Safety Standards”
A second rule of statutory interpretation is that some words or phrases may be ascribed the
meaning given to them in the field addressed by the statute. The industry’s perception of what
concepts are (and are not) considered aspects of pipeline “safety” is therefore instructive here.
One such example are the “safety and government-cited standards” for “pipeline operations”
published by the American Petroleum Institute (API).127 Of those standards and
recommendations, only “managing system integrity” seems to relate to the pipeline’s location,
and, on initial review, those standards seem to be concerned only with different standards and
practices that may apply in certain “high consequence” areas, rather than planning or routing
concerns.
The API also has “safety and fire prevention” standards which seem to contemplate emergency
prevention and response rather than external safety issues.128 These industry-sourced standards
may suggest that the industry considers “safety standards” to include only standards that impact
pipeline operations such as avoiding leaks, preparedness and early warning systems, integrity
testing, and related concepts, rather than standards to be contemplated during the planning/routing
process.
PHMSA’s “Safety Standards” Promulgated Pursuant to the Pipeline Safety Act
Another helpful tool in interpreting the meaning of the phrase “safety standards for interstate
pipeline facilities or interstate pipeline transportation” is the extent to which the federal
regulatory agency tasked with implementing those standards has asserted its authority. The
Pipeline and Hazardous Materials Safety Administration (PHMSA) is a division of the U.S.
Department of Transportation tasked with, among other things, the promulgation and enforcement
of regulations issued pursuant to the terms of the Pipeline Safety Act. These regulations can be
126 Presumably safety concerns often are a factor in pipeline siting.
127 The standards are referred to as “government-cited” because the Pipelines and Hazardous Materials Safety
Administration incorporates by reference into its regulations some of these industry standards. The standards are
available at http://publications.api.org/ (registration is required).
128 Id.
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found at 49 C.F.R. Parts 190-195. The regulations are helpful in interpreting the Pipeline Safety
Act because they offer insight into the PHMSA’s perception of its authority under the act.
Multiple substantive matters are addressed in PHMSA’s pipeline safety regulations, which are
issued pursuant to its authority under the Pipeline Safety Act.129 These requirements all appear to
relate to the physical properties of the pipeline and associated facilities, the qualifications of the
personnel employed in the construction, operation and maintenance of the pipelines, or
emergency response requirements.
The regulations seem to recognize the different safety and environmental hazards presented by
the siting of pipelines in different locations. For example, the regulations appear to establish
varying standards for pipelines in rural areas, “unusually sensitive areas,” and other geographical
distinctions. It appears that these distinctions are made in order to establish different physical,
emergency response and other requirements rather than to dictate a policy of siting pipelines
away from these areas. State actors that infringe on this assertion of federal jurisdiction could be
preempted by federal statute.
Thus, it appears that the PHMSA seems to view the extent of its authority over “safety standards
for interstate pipeline facilities or interstate pipeline transportation” to extend to subjects such as
the physical makeup up the pipeline, monitoring requirements, personnel qualifications,
emergency response requirements, and related topics. If this is the extent of the reach of the
Pipeline Safety Act’s jurisdiction with respect to oil pipelines, state action would avoid
preemption so long as it does not affect these aspects of oil pipeline operation.
Federal Jurisprudence Challenging State Action as Preempted by the
Pipeline Safety Act
Finally, jurisprudence in the federal courts can assist in understanding the parameters of the
federal authority to adopt “safety standards for interstate pipeline facilities or interstate pipeline
transportation” and the express limitation on the states to adopt such standards. Although there is
no case law evaluating a challenge to a state statute or regulatory action governing the location of
an interstate pipeline, these cases help to draw the line between a permissible state activity
governing pipeline activities and an impermissible foray into interstate pipeline safety standards
expressly preempted by the Pipeline Safety Act.
In Texas Midstream Gas Services v. City of Grand Prairie,130 a natural gas pipeline operator
sought to enjoin the Grand Prairie City Council from enacting and enforcing a city ordinance
known as “Section 10,” requiring a special permit from the city in order to build a natural gas
compressor station, and mandating that compressor stations comply with certain setback
requirements, security requirements, aesthetic and noise level requirements.131 Parties were also
required to pave means of vehicular access to the facilities in order to obtain a permit.132 In this
instance, the pipeline operator had announced its intentions to build and operate the facility prior
129 See 49 C.F.R. parts 190–195.
130 608 F.3d 200 (3rd Cir. 2010).
131 Id. at 203.
132 Id. at 203-204.
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to the enactment of Section 10 by the Grand Prairie City Council.133 The pipeline operator
claimed, among other things, that Section 10 was preempted by the Pipeline Safety Act. After a
federal district court held that only that portion of Section 10 requiring a security fence was
preempted by the Pipeline Safety Act and rejected the request for injunction regarding
enforcement of the remainder of Section 10, the pipeline operator appealed to the U.S. Court of
Appeals for the Fifth Circuit. That court affirmed the lower court’s decision and rejected the
request for an injunction, thus allowing the city to enforce Section 10 with the exception of the
security fence requirement.134
With respect to the setback requirement, the court noted that
The question is whether the setback requirement is a “safety standard.” It is not. Along with
the other provisions of Section 10, the setback requirement primarily ensures that bulky,
unsightly, noisy compressor stations do not mar neighborhood aesthetics. City Council
records reveal that Grand Prairie’s primary motivation in adopting Section 10 was to
preserve neighborhood visual cohesion, avoiding eyesores or diminished property values.135
The pipeline company claimed that, regardless of the purpose of the enactment, Section 10 had
the effect of regulating fire safety, and thus was preempted by the Pipeline Safety Act.136 The
court rejected this argument, finding that “[a] local rule may incidentally affect safety, so long as
the affect is not ‘direct and substantial.’”137 The court also addressed the scope of the PSHMA
regulations as discussed above. In response to an assertion by the pipeline that Section 10 was
preempted because the PHMSA regulations “address the location of compressor stations,” the
court clarified that “the PSA itself only preempts safety standards,” and that the regulation cited
by the pipeline “touches on compressor station location only as a means of effectuating this
legislative directive. A regulation promulgated by an administrative agency cannot expand the
unambiguously expressed preemptive scope set by Congress.”138 This decision helps illustrate the
type of state or local actions related to pipeline facilities that the courts have held to be preempted
by the Pipeline Safety Act’s assertion of exclusive federal jurisdiction over “safety standards” for
interstate pipeline facilities so long as the state or local action does not have “safety standards”
for the pipeline as its primary intent.
Another U.S. Court of Appeals decision, Kinley v. Iowa Utilities Board,139 illustrates the sort of
state or local action that the courts have found would be preempted by the Pipeline Safety Act. In
Kinley, the owner/operator of an interstate petroleum product pipeline challenged an Iowa state
statute that established a “comprehensive state program supervising the intrastate and interstate
transportation of solid, liquid or gaseous substances ... in order to protect the safety and welfare of
the public.”140 The state statute, referred to as “Chapter 479” required that such facilities be
permitted by the state.141 The pipeline owner/operator challenged the state’s assertion of
133 Id. at 203.
134 Id. at 212.
135 Id. at 211.
136 Id.
137 Id., quoting English v. Gen. Elec. Co., 496 U.S. 72, 85 (1990).
138 Id., citing Cipollone v. Liggett Group, Inc., 505 U.S. 504. 517 (1992) (emphasis in original).
139 999 F.2d 354 (8th Cir. 1993).
140 Id. at 356.
141 Id.
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jurisdiction over the operations of its interstate pipeline as preempted by the Pipeline Safety Act.
After the district court agreed with the owner that the state’s assertion of jurisdiction over
interstate pipelines under Chapter 479 was preempted, the state appealed to the Eighth Circuit
Court of Appeals. On appeal, the state acknowledged that certain aspects of Chapter 479 that
explicitly dealt with safety were preempted by the Pipeline Safety Act. However, the state argued
that there were certain “non-safety” provisions of Chapter 479, specifically hearing, permit and
inspection provisions as well as financial responsibility requirements designed to protect the
state’s farmland and topsoil from damage due to the construction, operation and maintenance of
the pipelines and to guarantee payment of property and environmental damages, that were not
preempted.142 The court disagreed, finding that the hearing, permit and inspection provisions of
Chapter 479 are “so related to the federal safety regulations that they are preempted” by the
Pipeline Safety Act, and further holding that “environmental and damage remedies provisions are
not severable from the preempted hearing, permit and inspection provisions and thus are
preempted as well.”143 The court thus affirmed the lower court’s opinion and disallowed the
application of Chapter 479 to the interstate pipeline.144
The example of Kinley is instructive to states seeking to regulate interstate pipelines. A state that
is contemplating such action might analyze Iowa’s Chapter 479 to avoid creating law that would,
like Iowa’s Chapter 479, be preempted by the Pipeline Safety Act. It should, however, be noted
that with respect to the “environmental and damage remedies” provisions, the court found that
these provisions were preempted by the Pipeline Safety Act not by virtue of their content but
rather because they could not be severed from other aspects of Chapter 479. As the court noted in
Kinley, the question of severability is not a constitutional question but instead is a matter of state
law.145
Many states have statutes and regulations that govern interstate pipelines subject to the Pipeline
Safety Act that appear not to have been deemed preempted by the Pipeline Safety Act. Although
the lack of a successful preemption challenge does not conclusively demonstrate that the state
statute would survive such a challenge, a state might nevertheless find that such statutes and
regulations provide guidance in avoiding preemption.
Conflict Preemption of State Action Related to the
Proposed Keystone XL Pipeline
If the state action is not expressly preempted, it may be preempted by what is commonly known
as “conflict preemption.” There appear to be two arguments that action regarding the siting of the
proposed Keystone XL pipeline would be preempted by conflict with federal law and would
therefore be unconstitutional. The first is that a siting statute would conflict with the president’s
authority to permit cross-border pipelines. It is difficult to comprehend how a state statute that
142 Id. at 357.
143 Id. at 360.
144 Id. The analysis in the Kinley decision is brief, in part because the court found that many of the issues raised had
already been adjudicated in ANR Pipeline Co. v. Iowa State Commerce Commission, 828 F.2d 465 (8th Cir 1987). In
that case, the U.S. Court of Appeals heard a similar preemption challenge to a previous iteration of Iowa Code Chapter
479 brought by a pipeline company that had been fined by the state due to alleged violations of the law. The more
expansive discussion of the previous iteration of the preempted Iowa law found in that decision may also be instructive
is seeking to avoid state action preempted by the Pipeline Safety Act.
145 Id. at 359.
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addresses the location of a facility within its borders would “conflict” with an exercise of
executive branch authority to authorize cross-border pipelines. There would likely be no
operational conflict, as compliance with both the federal requirement and a state permitting/siting
requirement is not only physically possible but has been achieved by numerous other
international pipeline projects that have obtained presidential permits and also satisfied permitting
and siting requirements of other states.146 It is also not clear whether and how a state
permitting/siting requirement would “stand as an obstacle to the accomplishment and execution
of the full purposes and objectives of Congress.” Although the State Department considered the
environmental impacts of the entire Keystone XL project when conducting its NEPA review, the
State Department’s actual permitting authority extends only to that portion of the facility that
crosses the U.S.-Canada border. According to its own terms, the purpose of the exercise of
executive authority found in Executive Order 13337 is
to expedite reviews of permits as necessary to accelerate the completion of energy
production and transmission projects, and to provide a systematic method for evaluating and
permitting the construction and maintenance of certain border crossings for land
transportation .... that do not require the construction and maintenance of facilities
connecting the United States with a foreign country, while maintaining safety, public health,
and environmental protections.147
Viewed in isolation, some of this language could be interpreted to suggest a generic federal
“purpose and objective” of accelerating completion of energy production and transmission
projects, in which case state legislation which might impede the completion of such projects
could be considered to be in conflict with the stated federal purpose. However, this appears likely
to be too narrow a view of the objective of Executive Order 13337, which appears intended to
expedite the processing of presidential permit applications. It therefore seems unlikely that a court
would construe state action impacting the siting of an oil pipeline within the state’s borders as “an
obstacle to the accomplishment and execution of the full purposes and objectives” of the federal
government as expressed in Executive Order 13337.
A second potential claim of “conflict preemption” would be an assertion that state action conflicts
with the Pipeline Safety Act. It is impossible to draw a conclusion without knowing the nature of
the state’s action. Additionally, it is difficult to articulate an argument that a state statute related to
oil pipeline siting would present either an “operational conflict” with the Pipeline Safety Act or
would be deemed “an obstacle to the accomplishment and execution of the full purposes and
objectives” of the Pipeline Safety Act, which are stated as “to provide adequate protection against
risks to life and property posted by pipeline transportation and pipeline facilities by improving the
regulatory and enforcement authority of the Secretary of Transportation.”148 So long as state
action did not interfere with the accomplishment and execution of these objectives by the federal
government and did not make it impossible for an entity to comply with its actions, the Pipeline
Safety Act, and any regulations issued pursuant to the act, a court would likely not find that the
state’s action was invalidated by “conflict preemption” with the Pipeline Safety Act.
146 See, e.g., the “Alberta Clipper” pipeline project, the border-crossing of which was authorized by the U.S.
Department of State in CITE. Enbridge Pipelines LLC has also obtained permits for the siting of that portion of the
Alberta Clipper facility that is located in the state of North Dakota., pursuant to that state’s statutory and regulatory
requirements.
147 Executive Order 13337—Issuance of Permits With Respect to Certain Energy-Related Facilities and Land
Transportation Crossings on the International Boundaries of the United States, 69 Fed. Reg. 25229 (April 30, 2004).
148 49 U.S.C. §60102(a).
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Field Preemption of State Action Related to the
Proposed Keystone XL Pipeline
The third and final potential preemption of state action is what is commonly known as “field
preemption”; that is, where it is inferred from congressional action that Congress intended to
remove a state’s regulatory authority over an entire subject. However, the Supreme Court has held
that
When Congress has considered the issue of pre-emption and has included in the enacted
legislation a provision explicitly addressing that issue, and when that provision provides a
“reliable indicium of congressional intent with respect to state authority,” “there is no need to
infer congressional intent to pre-empt state laws from the substantive provisions” of the
legislation.149
Because Congress explicitly addressed the issue of preemption in the Pipeline Safety Act at 49
U.S.C. Section 60104, there is no need to explore the notion of “field preemption” with respect to
that legislation.
Judicial Review of the NEPA Process for Permitting
Under Executive Order 13337
The State Department reviews environmental impacts prior to making the national interest
determination. However, the legal necessity of the State Department’s review under NEPA for
projects under Executive Order 13337 is uncertain. Compliance with NEPA in this instance could
mean a project once immune from judicial oversight is subject to court review.
Executive Order 13337
As discussed above, Executive Order 13337 delegates the President’s authority to the State
Department to issue permits for certain energy projects that cross international borders. Executive
Order 13337 requires that the State Department seek the views of certain Agency heads, including
the Secretary of the Interior and the Administrator of the Environmental Protection Agency, prior
to issuing the determination.150 While the introductory language of the order indicates one
purpose of the process is to maintain “environmental protections,” the order does not explicitly
require consideration of environmental impacts. It states only that the permit be in the national
interest. Executive Order 13337 is a modification of Executive Order No. 11423, which predates
NEPA,151 and thus, does not reference a NEPA review to inform the national interest
determination.
149 Cipollone v. Liggett Group, Inc, 505 U.S. 504, 517 (1992), quoting Malone v. White Motor Corp, 435 U.S.497, 505
(1978) and California Federal Savings and Loan Assn v. Guerra, 479 U.S. 272, 282 (1987).
150 Exec. Order No. 13337 §1(b). 69 Fed. Reg. 25299 (May 5, 2004).
151 Executive Order No. 11423 was issued in 1968 (33 Fed. Reg. 11741 (August 20, 1968)), whereas NEPA was
enacted on January 1, 1970.
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Keystone XL NEPA Background
For the Keystone XL project, an environmental impact statement (EIS) was prepared under
NEPA.152 On January 28, 2009, the Department of State announced receipt of the application and
its intent to conduct a NEPA review:
With respect to the application submitted by Keystone, the Department of State has
concluded that the issuance of the Presidential permit would constitute a major Federal
action that may have a significant impact upon the environment within the meaning of the
National Environmental Policy Act (NEPA) of 1969. For this reason, Department of State
intends to prepare an EIS to address reasonably foreseeable impacts from the proposed action
and alternatives.153
State Department NEPA Regulations
The State Department’s announcement was consistent with its regulations. Under 22 C.F.R.
Section 161.7(c), the State Department will prepare an environmental assessment154 for certain
projects, including issuing permits for construction of international pipelines as provided under
Executive Order 11423.155
Pursuant to its regulations, the State Department evaluates the environmental impacts under
NEPA prior to making a national interest determination for a permit. For example, it prepared an
environmental assessment for an oil pipeline that crossed from Alberta, Canada, to Superior,
Wisconsin.156 It also prepared an EIS for the earlier Keystone oil pipeline from Canada.157
Judicial Review
Courts have considered whether any environmental review prepared by the State Department for
projects seeking a permit under Executive Order 13337 is subject to judicial review. Only trial-
level courts have heard the issue, and the decisions in those courts have been split. The U.S.
District Court for the District of Columbia held that there was no judicial review of Executive
Order 13337 actions.158 A year later, the U.S. District Court for the District of Minnesota, which
was not bound by that precedent, held that a State Department NEPA review prepared for a permit
under Executive Order 13337 was a final agency action subject to review by a court.
152 See Keystone XL report for details on the Keystone NEPA process.
153 74 Fed. Reg. 5019, 5020 (January 28, 2009).
154 Under NEPA, an environmental assessment (EA) is a review to see whether an agency action might result in
significant environmental impacts. If an agency foresees significant impacts, it may prepare an environmental impact
statement (EIS) directly, rather than first preparing an EA.
155 45 Fed. Reg. 59553 (September 10, 1980). The State Department’s NEPA regulations establish categories of action
subject to NEPA and the environmental review procedures applicable to those actions. For actions determined to have a
“significant” effect on the environment, an EIS must be prepared. 22 C.F.R. §161.7(a). An environmental assessment
(EA) may be prepared to make that determination. 22 C.F.R. §161.7(c)(1). An EA is generally not necessary if an
action’s environmental impacts are known to be significant or if the action normally requires an EIS (§161.8(b)).
156 See Sierra Club v. Clinton, 689 F. Supp. 2d 1147 (D. Minn. 2010).
157 See NRDC v. U.S. Department of State, 658 F. Supp. 2d 105 (D.D.C. 2009).
158 NRDC v. U.S. Department of State, 658 F. Supp. 2d 105 (D.D.C. 2009).
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In order to sue the federal government, the government must waive of sovereign immunity. For
federal agency actions, that waiver is typically provided by the Administrative Procedure Act
(APA): “Agency action made reviewable by statute and final agency action for which there is no
other adequate remedy in a court are subject to judicial review.”159 Courts have consistently held
that an EIS is a final agency action subject to review under the APA. However, under accepted
precedent, no NEPA review is required for actions by a President because NEPA applies to
“agencies of the Federal government,”160 and not to presidential actions.161 Thus, although it
seems no NEPA review was required under Executive Order 13337, the State Department’s NEPA
review may be an agency action that is judicially reviewable. By conducting a NEPA review, the
State Department may have opened that evaluation to court scrutiny.
District Court Holdings Related to Executive Order 13337
District courts disagree over whether an EIS would be an agency action under these
circumstances. The district court of D.C. held that it is not, relying on the fact that the Executive
Order is a delegation by the President of a constitutional authority.162 The court in that case
focused on the issuance of the permit and not on the EIS, itself. Since the delegation did not
change the underlying authority for the action, just who issues the permit, according to the D.C.
district court, any activity by the State Department pursuant to that Executive Order is a
presidential action, and not an agency action.163
The U.S. District Court for the District of Minnesota disagreed with the reasoning of the D.C.
district court and found that an EIS by the State Department for a cross-border pipeline permit
was reviewable.164 The court noted the State Department’s Federal Register notice in which it
stated that the pipeline permit was a “major federal action.”165 The court noted that although the
permit pertained to a pipeline crossing an international border, that did not excuse the State
Department from analyzing the environmental impacts of the entire route. More important, the
court held that the fact that the permit for the international crossing was a presidential action did
not “convert the State Department’s preparation of the FEIS into a presidential action.”166
To some extent, the two courts are arguing about two different things: the issuance of the permit,
and the issuance of the EIS. However, only the District of Minnesota separates the two actions,
noting that the issuance of the permit was not before the court,167 and allowing judicial review of
the EIS. Further, evidence appears to support the notion that an EIS is an agency action separate
from the State Department’s issuance of a presidential permit under Executive Order 13337. First,
the State Department, under APA notice and comment rulemaking created a rule stating it would
159 5 U.S.C. §704.
160 42 U.S.C. §4332(2)(C).
161 See Alaska v. Carter, 462 F. Supp. 1155 (D. Alaska 1978); Utah Association of Counties v. Bush, 316 F. Supp. 2d
1172 (D. Utah 2004).
162 NRDC v. State, 658 F. Supp. 2d 105 (D.D.C. 2009).
163 Id. at 109 (D.D.C. 2009).
164 Sierra Club v. Clinton, 689 F. Supp. 2d 1147, 1157 fn3 (D. Minn. 2010) (“the Court respectfully disagrees with
th[at] decision[] insofar as [it] hold[s] that any action taken by the State Department pursuant to an executive order, and
in particular the preparation of an EIS for a major federal action, is not subject to judicial review under the APA”).
165 Id. at 1157.
166 Id. at 1157.
167 The issuance of the permit was not before the court. Id. at 1161.
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prepare an EA for pipelines under that Executive Order.168 If the State Department failed to
complete a NEPA review while that rule was still in effect,169 it could be liable under the APA for
acting contrary to its own regulations. Second, there is no directive in the Executive Order to
perform any type of environmental review. A permit could be issued without any NEPA review,
but occurs because of a State Department regulation requiring an EA, consistent with NEPA.
Thus the NEPA review could be characterized as a congressional delegation of authority by
statute (NEPA) rather than a presidential delegation of authority via Executive Order 13337.
Additionally, the State Department’s description of its process indicates that the national interest
determination is separate from the NEPA review, lending further support to the argument that
there are two actions: “Following the release of the Final EIS, a review period begins to
determine if the proposed project is in the national interest. This broader evaluation of the
application extends beyond environmental impact, taking into account economic, energy security,
foreign policy, and other relevant issues.”170
In reaching its conclusion that issuing a permit under Executive Order 13337 is judicially
untouchable, the D.C. district court reviewed Supreme Court precedent and noted that no decision
is directly on point.171 The Supreme Court has considered presidential actions only in the context
of those authorized by statute.172 In those cases, Franklin v. Massachusetts173 and Dalton v.
Specter,174 the Court reviewed challenges to the sufficiency of agency or commission reports
submitted to the President before he acted. The decisions of the President in each case were held
to be insulated from judicial review because, regardless of the documents’ content, the Court held
the President had ultimate discretion. The reports submitted to the President as part of each
underlying statutory directive did not change the nature of the authority: regardless of the content
of the reports, the decision was still made by the President. In the case of Franklin, the statute did
not require the President to use the data in the report.175 In Dalton, the Court held that despite the
statute’s requirement limiting the President to approving or rejecting the list in its entirety, the
ultimate authority was still presidential: no action was final until the President submitted his
certificate of approval to congress.176
Distinctions between the Supreme Court cases and an EIS for Executive Order 13337 may be
made. In those court cases, the documents given to the President were required by an underlying
168 See 45 Fed. Reg. 59553 (September 10, 1980).
169 The State Department could remove that regulation pursuant to a formal rulemaking procedure and may then not be
bound by NEPA.
170 See, State Department Fact Sheet, p. 2 (August 26, 2011), available at http://www.keystonepipeline-xl.state.gov/
clientsite/keystonexl.nsf?Open.
171 Similarly, the case Utah Ass’n of Counties v. Bush, 316 F. Supp. 2d 1172 (D. Utah, 2004), can be distinguished as
the EIS in that case was prepared in support of an agency recommendation (as opposed to an agency decision) and was
deemed advisory, and not final. Additionally, in Tulare County v. Bush, 185 F. Supp. 2d 18 (D.D.C. 2001), cited by the
court, the challenge was based on a failure to prepare an EIS.
172 As noted above, Executive Order 13337 is derived from constitutional authority.
173 Franklin v. Massachusetts, 505 U.S. 788 (1992). This case challenged the Secretary of Commerce census report
methodology as authorized under 13 U.S.C. §141. The Supreme Court described the process as having three parts.
First, the Secretary of Commerce counts the U.S. population. Second, Commerce reports that total population to the
President. And third, the President transmits a statement to Congress of the number of representatives for each state.
174 Dalton v. Specter, 511 U.S. 462 (1994). This case challenged base closures in which a commission submits
recommended closures to the President who certifies approval of the recommendations to Congress.
175 Franklin, 505 U.S. at 797.
176 Dalton, 511 U.S at 469.
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statute and deemed part of the delegated authority. In cases under Executive Order 13337, there is
no presidential directive suggesting or requiring an environmental review. The EIS was a
discretionary action of the agency based on a statutory requirement that agencies act “to the
fullest extent possible” to review agency actions.177 To make that distinction more clear, if a
Secretary submitted a “view” under Executive Order 13337 Section 1(b)(2) stating it was not in
the national interest to issue the permit, but the State Department issued the permit anyway, under
Supreme Court precedent neither the “view” nor the permit issuance appears to be reviewable.
Under the holdings in Franklin and Dalton, that “view” would not be final and the permit
issuance would be part of the delegated presidential authority because the “view” was advisory
and part of the delegated presidential authority. In contrast, if the EIS finding was in error, well-
established case law would allow challenge of the EIS as “arbitrary and capricious” under the
APA.178 While that might not change the State Department’s determination of the project’s being
in the national interest, it would make the EIS a final agency action reviewable under accepted
legal precedent.
Second, the reports in Franklin and Dalton were found not to be final actions because the
presidential decision still had to be made. Whereas, courts have held repeatedly that a completed
EIS is a final action.179 In fact, in Franklin, the Court noted the ways that the census report was
not an APA agency action: it was “not promulgated to the public in the Federal Register, no
official administrative record is generated, and its effect on reapportionment is felt only after the
President makes the necessary calculations and reports the results to Congress.”180 In contrast,
each of those factors occurs for an Executive Order 13337 NEPA review: it was promulgated to
the public, there is an administrative record, and under Supreme Court precedent, injury under
NEPA occurs when the agency fails to comply with the law.181 Because the State Department
prepared a supplemental EIS to address EPA’s concerns with the draft EIS, the State Department
appears to concede that its EIS was different from the documents at issue in Franklin and Dalton.
The Franklin Court said that until the President acted there was “no determinate agency action to
challenge, since the President, not the Secretary, takes the final action that affects the States.”182
In the case of Keystone XL, while issuing a permit is a final action taken under presidential
authority, the EIS may also be a final action, which is taken under separate statutory authority.
The D.C. court’s holding did not recognize that distinction. Instead, the D.C. court found that the
permit was a presidential action not subject to judicial review. Minnesota found that the EIS was
a final agency action subject to judicial review.
177 42 U.S.C. §4332.
178 Kleppe v. Sierra Club, 427 U.S. 290 (1976).
179 See Ohio Forestry Association v. Sierra Club, 523 U.S. 726, 737 (1998) ( “a person with standing who is injured by
a failure to comply with the NEPA procedure may complain of that failure at the time the failure takes place, for the
claim can never get riper”).
180 Franklin, 505 U.S. at 796.
181 Ohio Forestry Association v. Sierra Club, 523 U.S. 726 (1998).
182 Franklin, 505 U.S. at 799.
Congressional Research Service
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Proposed Keystone XL Pipeline: Legal Issues
Author Contact Information
Adam Vann
Vanessa K. Burrows
Legislative Attorney
Legislative Attorney
avann@crs.loc.gov, 7-6978
vburrows@crs.loc.gov, 7-0831
Kristina Alexander
Kenneth R. Thomas
Legislative Attorney
Legislative Attorney
kalexander@crs.loc.gov, 7-8597
kthomas@crs.loc.gov, 7-5006
Congressional Research Service
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