Oles Morrison Rinker & Baker LLP*

On 6 November 2015, President Barack Obama stood before a row of microphones, flanked by his vice president (Joe Biden) and Secretary of State (John Kerry). In a short 10-minute announcement, the President reported that his State Department had decided to reject the TransCanada application for a “Presidential permit” that would have allowed construction of the Keystone XL crude oil pipeline. The President added: “I agree with that decision.” Capping an application process that dated back to the fall of 2008, this decision was welcomed by environmental activists but scorned by labour leaders who expected the project to create tens of thousands of jobs. For environmentalists, the Keystone XL pipeline had become a symbol for the accelerated development of fossil fuels in North America, and the multi-year review process is both a colourful tale of political manoeuvring and an intriguing window into America’s constitutional separation of powers.

The US Congress has never enacted a federal regulatory scheme to govern construction of oil pipelines. This vacuum was partially filled in 1968, when President Lyndon Johnson issued Executive Order 11423, authorising the US State Department to review all applications for new pipelines crossing a US border. Such applications would thereafter require a “Presidential permit.”2 This executive order was justified as a delegation of the President’s constitutional powers to regulate foreign affairs.