April 1, 2019
President Donald Trump issued a new permit for TransCanada Corp.’s controversial Keystone XL pipeline, circumventing a court ruling that blocked a previous authorization by his State Department.
The move aims to undercut legal challenges to the $8 billion project, including a November ruling by a Montana-based district judge that faulted the State Department’s previous environmental analysis, according to a person familiar with the matter. It could pave the way for beginning some preliminary work, according to Clearview Energy Partners.
“It looks like the intent is to wipe the slate clean and replace the previous presidential permit with this new one,” Height Securities LLC analyst Katie Bays told Bloomberg News. Keystone XL doesn’t need the changes to the supplemental environmental impact statement, “because Trump invalidated that whole process and issued this new president permit.”
The pipeline, proposed more than a decade ago, would carry crude from Canada’s oil sands to the U.S. Midwest. Trump’s State Department approved the project in 2017 after President Barack Obama denied TransCanada a permit on grounds its oil would contribute to global warning.
It’s good news for Canada’s energy producers after delays to planned expansions of the Trans Mountain pipeline and Enbridge Inc.’s Line 3. The lack of pipelines is partially blamed for a slowdown in oil sands investment and the partial pullback of some international oil companies including Royal Dutch Shell Plc.
Unlike the earlier State Department permit, which was issued after a deep environmental analysis required under the National Environmental Policy Act, the new presidential permit is not directly tied to any such review. And the NEPA statute that generally compels environmental study of energy projects and major agency actions does not apply to the president.
Pipeline developers are generally required to receive presidential permits for border-crossing facilities. The State Department has been tasked with vetting permit applications for oil pipelines since 1968, when an executive order put the agency in charge.
But Trump still retains the authority to issue presidential permits himself, said the person, who asked for anonymity to discuss internal deliberations. And because Trump’s permit is not subject to environmental review requirements in federal law, it effectively restarts the process and undercuts the Montana lawsuit.
TransCanada, which is yet to make a final investment decision on the project, applauded the White House’s action.
“President Trump has been clear that he wants to create jobs and advance U.S. energy security and the Keystone XL pipeline does both of those things,” Russ Girling, president and chief executive officer, said in a statement.