Last Tuesday, the White House said that President Barack Obama would veto congressional legislation approving construction of the Keystone XL pipeline. But just three days later, on January 9, the Republican-controlled House of Representatives defied President Obama’s veto threat and voted 266-153 to pass H.R. 3, a bill to circumvent the presidential permitting process and approve the Keystone XL pipeline (28 Democrats broke party ranks to join Republicans in H.R. 3’s passage). The Senate, which also has a Republican majority, is currently considering similar legislation.
The vote in the House of Representatives came just hours after Nebraska’s Supreme Court approved the 1,700-mile pipeline’s route through the state, removing one of the last hurdles for President Obama to settle the fate of the project. The Keystone XL pipeline, which has been the subject of intense political debate since it was proposed in 2008, would transport up to 830,000 barrels per day (“bpd”) of crude tar sands oil from Alberta, Canada, to three delivery points in Oklahoma and Texas. Because the pipeline crosses international boundaries, the pipeline is subject to the presidential permitting process, which requires the Department of State (“DOS” or “State Department”) to make a final determination on whether granting the permit is in the “national interest.”
The presidential permitting authority has been a contentious issue throughout the review of the proposed Keystone XL pipeline, with many accusing the Obama administration of engaging in delay tactics. However, presidential authority to approve trans-border facilities dates back centuries. In the late 1800s, President Ulysses S. Grant issued the first presidential permit for cross-border communications, permitting telegraph cables to be constructed between the United States and Canada. The Presidential permitting authority with respect to oil pipelines is derived from Executive Order 11423. This Executive Order, which was signed by President Lyndon Johnson in 1968, explicitly delegated to the executive branch the permitting authority for “pipelines, conveyor belts, and similar facilities for the exportation or importation of petroleum, petroleum products, coal, or other fuels to or from a foreign country.” President Johnson’s order was expounded upon in 2004, when Republican President George W. Bush issued Executive Order 13337 clarifying the procedure for the issuance of presidential permits.
Pursuant to Executive Order 13337, the DOS is tasked with reviewing applications for proposed projects that would cross and international border with the United States in consultation with other federal agencies. If the process proceeds smoothly (i.e. there is no interagency dispute), the DOS will make a final determination on whether granting the permit is in the “national interest,” taking into account economic, energy security, foreign policy, and other relevant issues. In the event that another agency head “disagrees with the Secretary’s proposed determination,” Paragraph (i) of Executive Order 13337 provides that the President retains the authority to make a final decision granting or denying the permit. The President has never performed the tie-breaking function contemplated by Paragraph (i), however.
Given what we know about Executive Orders, it should be clear that the President’s authority to issue presidential permits is rather tenuous. Executive orders, while they are entitled to the full force and effect of law, are tenuous by their very nature. An Executive Order can be altered or countermanded by an order issued by a later president, a law passed by Congress can supersede it, or a court ruling can declare the order unconstitutional. Ronald Reagan’s first Executive Order, for example, which eliminated price controls on oil products, countermanded Jimmy Carter’s Executive Order implementing such regulations. While it is unlikely that a future president would issue an Executive Order eliminating presidential permitting, thereby reducing the power of the executive, it is increasingly likely that Congress will take action and restrict, or completely eliminate, the president’s authority in this arena. In fact, that is precisely what H.R. 3, and its companion bill in the Senate, would do.
Given the certainty of a presidential veto, it is unlikely that Congress’ efforts to bypass the White House will ultimately succeed. But it is difficult to blame congressional Republicans for wanting to force the issue on Keystone XL. I have long been skeptical that the battle over Keystone XL was the right battle for environmentalists. The focus on Keystone XL seems like a misallocation of the environmental movements resources. And as the Congressional Research Service has acknowledged, “neither issuance of a Presidential Permit nor increased oil sands development would preclude the implementation of energy/climate policies that would support less carbon intensive fuels or energy efficiency improvements.”
But the bigger problem here, however, is that the Keystone XL decision has become an overtly political issue. The approval or denial of a construction project should be about facts, not politics. However, it’s virtually impossible to have any meaningful debate about Keystone XL without provoking a knee-jerk reaction from individuals on the opposite side of the political spectrum. Given the amount and complexity of the environmental problems facing humanity, stopping Keystone XL certainly will not prevent catastrophic climate change and save the planet. But don’t tell an environmentalist that. Likewise, the Keystone XL project will likely raise the price of oil consumed in the U.S., not lower it, and a significant portion of the economic impact will be felt outside the U.S. (the project will only create about 35 permanent jobs). But don’t tell a Republican that.
Compounding the problem is the presidential permitting process itself, which, according to federal courts, is virtually immune from judicial oversight and review. In general, the approval process for environmental projects is governed by the National Environmental Policy Act (“NEPA”). NEPA requires that Federal Government agencies
include, in every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment, a detailed statement by the responsible official on – (i) the environmental impact of the proposed action, (ii) any adverse environmental affects which cannot be avoided should the proposal be implemented, (iii) alternatives to the proposed action, (iv) the relationship between local short-term uses of man’s environment and the maintenance and enhancement of long-term productivity, and (v) any irreversible and irretrievable commitments of resources which would be involved in the proposed action should it be implemented.
Typically, agency decisions are reviewable by the judiciary under the Administrative Procedure Act (“APA”). The APA dictates that a court shall “hold unlawful and set aside agency action, findings, and conclusions found to be arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Or, alternatively, a court “must uphold agency action unless it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.”
With respect to presidential permitting, however, federal courts have immunized the executive branch from such review. The Supreme Court first addressed whether the President is an “agency” for purposes of APA review in Franklin v. Massachusetts (505 U.S. 788 (1992)). Franklin involved a complicated statutory process in which Massachusetts was to transfer one of its Congressional seats to the State of Washington because of the results of the 1990 Census. The Secretary of Commerce was tasked with determining state enumerations and reporting the results to the President of the United States. After receiving the results, the President was to transmit to Congress a statement showing: (1) the whole number of persons in each State; and (2) the number of Representatives to which each state would be entitled by the method of equal proportions. Massachusetts challenged the action by the Secretary of Commerce, arguing that its decision to count overseas military personnel as state residents was arbitrary under the APA.
In a plurality opinion, four Justices found that the President’s report to Congress was ultimately unreviewable because the President is not an “agency.” The Court stated: “The President is not explicitly excluded from the APA’s purview, but he is not explicitly included either. Out of respect for the separation of powers and the unique constitutional position of the President, we find that textual silence is not enough to subject the President to the provisions of the APA.”
There have only been three federal decisions relating to substantially similar trans-boundary pipelines in the United States. Two of which, Sisseton v. U.S. Dep’t of State (659 F. Supp. 2d 1071 (2009)) and NRDC v. U.S. Dep’t of State (658 F. Supp. 2d 105 (2009)), applied Franlkin and held that because Congress had failed to create a federal regulatory scheme for the construction of oil pipelines and had delegated that authority to the states, the President had sole authority to allow pipeline border crossings pursuant to E.O. 13337. And because the APA applies to agencies and not to Presidential actions, that decision is unreviewable. At a minimum, the court in NRDC stated, the President must “acquiesce” to the State Department’s final decision, which makes the process sufficiently “Presidential.”
In the third case, Sierra Club v. Clinton (689 F. Supp. 2d 1147), the United States District Court for the District of Minnesota applied the APA to the presidential permitting process challenged there, but only because the State Department had voluntarily conducted an Environmental Impact Statement (“EIS”). The court noted that DOS had conceded that issuing the pipeline permit would constitute a “major federal action” under NEPA, had taken on the role of “lead agency,” and had exercised its authority to prepare and issue the EIS. Therefore, the court reviewed the EIS for its sufficiency under the APA.
Taken together, under Franklin, Sisseton, NRDC, and Sierra Club, the result of a legal challenge to a Presidential Permit is that either (1) the decision to issue a Presidential Permit and the associated EIS is wholly unreviewable, or (2) only the final EIS is reviewable. Such a situation leaves open the possibility that compliance with NEPA is not required, raising serious questions as to whether the Presidential Permitting process provides adequate protection of the environment of the type contemplated by NEPA. Of equal concern, however, is that the lack of judicial review allows for a situation in which the Presidential permitting decision is driven entirely by political motives, rather than by a transparent, careful, and informed decision-making process. If the State Department’s decision to grant the Presidential Permit is not reviewable because the President retains contingent authority, the decision is shielded from scrutiny and there is no adequate remedy for any alleged violations.
Environmental review should not be optional or dependent upon the individual policy of the President. At the same time, the Presidential Permitting process should not present the President with the opportunity to play politics. One way or another, Mr. President, it’s time to make a decision.