Federal Court Deals Major Blow to Keystone XL Pipeline

Late last week, a federal district court in Montana blocked construction on the Keystone XL pipeline. The decision in Indigenous Environmental Network, et al. v. U.S. Department of State is a significant victory for the environment and a major blow to the ultimate completion of the controversial pipeline.

The case centered on the Trump administration’s 2017 decision to reverse the State Department’s initial rejection of the pipeline project, issued in 2015. The court noted that the environmental impact statement prepared by the Trump State Department in support of the reversal is deficient in its analysis of future oil prices and the need for the project, the cumulative impact of Keystone with the Alberta Clipper pipeline, the need to finish analysis of cultural impacts along the route, and the need for updated oil spill information. The court also concluded that the Trump administration failed to provide adequate reasons for the reversal, a violation of the Administrative Procedure Act (APA).

Though much of the court order is based on the administration's failure to provide adequate information on and analysis of the environmental impacts of the proposed pipeline (and attendant issues of endangered species protection), the issues that are germane to much of the court’s ruling cannot be corrected by merely supplying more information. In particular, the new reality of oil prices undercuts the need for the project. If, in fact, the State Department adequately considered the new reality of oil pricing and demand, it would be hard-pressed to assert that its decision to suddenly change course and allow construction of the pipeline wasn’t arbitrary and capricious.

Moreover, the Trump administration’s order reversing the permit doesn’t provide a reasoned analysis of why the change is necessary. When the Obama administration considered TransCanada's permit application for the Keystone XL pipeline, it undertook in-depth studies, impact analyses, and detailed scrutiny of all aspects of the proposed project, a seven-year process. Ultimately, because of the role of the United States in climate change leadership (among other reasons), it decided not to permit the Keystone XL pipeline.

In the 2017 Trump decision reversing the Obama administration, the State Department merely noted that there has been a change in U.S. climate policy, but it didn’t go into details about why U.S. leadership was no longer important with regard to climate issues or how they reached the conclusion that the pipeline would not have a measurable effect on worldwide greenhouse gas emissions. Indeed, instead of including its own careful analysis and sound, rational reasoning backed by science and expert judgments, Team Trump hastily moved to green-light the pipeline. President Trump issued a presidential memo directing the State Department to reconsider the decision just four days after his inauguration, and thereafter, there was never any doubt about which way State’s ultimate decision would go.

The Trump administration's willful and selective ignorance on all things climate change may make officials and agencies think that they don't have to answer questions related to climate other than to note that the United States has abdicated its international leadership role, but that's not good enough under the APA. Ignoring the climate and environmental impacts of the Keystone XL pipeline won't make them magically disappear, and no amount of rhetorical knot-twisting can discount evidence of potentially major climate impacts.

While the Trump administration may look to other legal theories to approve the pipeline, it's unclear (and unlikely) that the State Department will be able to meet the APA's requirement for a reasoned decision about the necessity of the pipeline given the realities of oil prices and the climate impacts that may result from the build-out of the pipeline. Without an economic justification and poor environmental prognoses, a decision on that basis would likely be arbitrary and capricious.