MEMORANDUM TO: FR: RE: DT: Speaker Mike Flood Matthew J.

Boever, Legal Counsel to the Speaker Oil Pipeline Siting Act in REQ 03498 October 19, 2011

Questions: 1. Is the proposed Oil Pipeline Siting Act (“the Act”) preempted by the Pipeline Safety Act, 42 U.S.C. §§ 60101-60137? The Pipeline Safety Act (“PSA”) The PSA, enacted in 1994, combined and recodified without substantive change two existing pipeline safety statutes: the Natural Gas Pipeline Safety Act of 1968 (“NGPSA”) and the Hazardous Liquids Pipeline Safety Act of 1979 (“HLPSA”). See Pub.L. No. 103-272 (1994); see generally Randy J. Sutton, Annotation, Validity, Construction, and Application of Pipeline Safety Act, 49 U.S.C.A. §§ 60101 et. seq ., and Other Acts Subsumed Therein, 186 A.L.R. Fed. 361 (2003). The PSA’s purpose is to “provide adequate protection against risks to life and property posed by pipeline transportation and pipeline facilities.” 49 U.S.C. § 60102(a)(1). The PSA directs the Secretary of the Department of Transportation (“DOT”) to “prescribe minimum safety standards,” which “may apply to the design, installation, inspection, emergency plans and procedures, testing, construction, extension, operation, replacement, and maintenance of pipeline facilities.” Id. § 60102(a)(2). The federal government establishes these minimum pipeline safety standards under the U.S. Code of Federal Regulations (“CFR”), Title 49 “Transportation”, Parts 190-199.1 The Office of Pipeline Safety (“OPS”), within the DOT, Pipeline and Hazardous Materials Safety Administration (“PHMSA”), has overall regulatory responsibility for hazardous liquid pipelines under its jurisdiction in the United States. OPS regulates, inspects, and enforces both intrastate and interstate liquid pipeline safety requirements in Nebraska. As acknowledged on its website, OPS is “the Federal safety authority for ensuring the safe, reliable, and environmentally sound operation of the Nation’s pipeline transportation system.”2
E.g., internal design pressure (49 CFR § 195.106), external pressure (49 C.F.R. § 195.108), external loads (49 C.F.R. § 195.110), welding of supports and braces (49 C.F.R. § 195.208), bending of pipe (49 C.F.R. § 195.212), cover over buried pipeline (49 C.F.R. § 195.248), and crossing of railroads and highways (49 C.F.R. § 195.256). 2 http://phmsa.dot.gov/pipeline, last accessed 10/17/11. “The Department of Transportation has regulatory authority…over approximately 155,000 miles of hazardous liquid pipelines (mainly gasoline and fuel oil) managed by 190 hazardous liquid operators. The law…authorizes the Department to regulate hazardous liquid pipelines for safety purposes and environmental protection. Pipeline safety provisions provide a regulatory framework for promoting pipeline safety through exclusive Federal authority for regulation of interstate pipelines and facilities. States may impose additional standards for intrastate pipelines and facilities as long as such standards are compatible with the minimum Federal standards.” 104th Congress (1995-1996), House Report 104-110, Part 1
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Among other directives, the PSA requires the OPS to describe areas that are unusually sensitive to environmental damage (“USAs”) in the event of a hazardous liquid pipeline release and to establish a method for identifying hazardous liquid pipelines located in those areas. The goal is to provide added protection to these particularly sensitive areas.3 Once USAs are identified and located, pipeline operators will conduct risk assessments to determine if a release from a particular pipeline segment can impact an USA.4 The risk assessments will include consultations, when necessary, with Federal and state agencies responsible for protecting threatened and endangered species, depleted marine mammals, or critical drinking water resources. Segments of pipeline where a release could impact an USA will be subject to additional prevention, mitigation, and response measures.5 Significantly, the PSA contains an express preemption provision: “A State authority may not adopt or continue in force safety standards for interstate pipeline facilities or interstate pipeline transportation.” 49 U.S.C.A. § 60104(c). What kinds of state laws are preempted? An 8th Circuit case is instructive: Kinley Corp. v. Iowa Utilities Board, 999 F.2d 354 (8th Cir. 1993). The 8th Circuit in Kinley Corp. v. Iowa Utilities Board In Kinley, the plaintiff owned and operated an interstate hazardous liquid pipeline extending 13 miles from an Amoco terminal facility located near Council Bluffs to Offutt Air Force Base. The pipeline was 4 inches in diameter and transported aviation jet fuel. The Iowa Utilities Board (“IUB”) denied plaintiff’s application for a state pipeline permit. Plaintiff filed a motion to dismiss on the ground that the IUB lacked jurisdiction over the pipeline because the HLPSA (now the PSA) preempted Iowa Code ch. 479. Iowa Code ch. 479 established “a comprehensive state program supervising the intrastate and interstate transportation by pipeline of solid, liquid or gaseous substances, with the exception of water and interstate natural gas, in order to protect the safety and welfare of the public.” Id. at 356. Section 479.12 authorized the IUB to grant a permit “as to location and route as determined by it to be just and proper.” Section 479.6 required the application to include a “legal description of the route of said proposed line or lines, together with a map thereof” as well as “[t]he possible use of alternative routes.” The IUB acknowledged that the safety provisions of Chapter 479 were preempted by the HLPSA. Nevertheless, it argued that the non-safety provisions, specifically the financial responsibility provisions designed to protect the state’s farmland and topsoil from damage due to

(emphasis added). Available at http://www.gpo.gov/fdsys/pkg/CRPT-104hrpt110/pdf/CRPT-104hrpt110-pt1.pdf, last checked 10/17/11. PHMSA has adopted comprehensive regulations governing virtually all aspects of the operation and maintenance of interstate pipelines and related facilities. See 49 C.F.R. Subchapter D (§§ 190.1 et seq.). 3 http://www.phmsa.dot.gov/pipeline/initiatives/usa, last accessed 10/17/11. 4 Id. Examples of USAs include the water intake for a community water system, a migratory waterbird concentration area, or an area containing an imperiled, threatened, or endangered species or imperiled ecological community where the species is considered to be one of the most viable, highest quality, or in the best condition. (49 C.F.R. § 195.6) 5 Id. “[I]n December 2000, the DOT promulgated new regulations that, for the first time, required liquid pipeline companies to identify where their pipelines could affect “high consequence areas” and required inspections in those areas. For liquid pipelines, high consequence areas include not only areas of high population but also commercial waterways and other areas that are ‘unusually sensitive.’” 44 Nat. Resources J. 243, 253 (Winter 2004)

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construction, operation and maintenance of pipelines and to guarantee payment of property and environmental damages, were not preempted. The 8th Circuit disagreed. Id. at 357. The court observed that preemption traditionally comes in four “flavors”: (1) “express preemption,” resulting from an express Congressional directive ousting state law; (2) “implied preemption,” resulting from an inference that Congress intended to oust state law in order to achieve its objective; (3) “conflict preemption,” resulting from the operation of the Supremacy Clause when federal and state law actually conflict, even when Congress says nothing about it; and (4) “field preemption,” resulting from a determination that Congress intended to remove an entire area from state regulatory authority. Id. at 358. (citations omitted). The Kinley court noted that its case involved express preemption and looked no further than the express statutory language cited above: “The HLPSA [now PSA] contains the following express preemption provision: ‘No State agency may adopt or continue in force any safety standards applicable to interstate pipeline facilities or the transportation of hazardous liquids associated with such facilities.’” (emphasis in original). “Congress has expressly stated its intent to preempt the states from regulating in the area of safety in connection with interstate hazardous liquid pipelines. For this reason, the state cannot regulate in this area and Chapter 479 is invalid to the extent it purports to do so.” Id. Giving additional weight to the express preemption provision, the court noted “that the legislative history of the HLPSA, especially when considered with the Natural Gas Pipeline Safety Act (NGPSA), 49 U.S.C.App. §§ 1671-1686, further demonstrates Congress’s intent to preempt state safety regulation of interstate hazardous liquid pipelines.” In 1979, at the same time the NGPSA was amended to cover liquified natural gas, Congress also enacted the HLPSA. The HLPSA established federal safety regulation over the transportation of hazardous liquids by pipeline and defined “hazardous liquid” to include petroleum and petroleum products, 49 U.S.C.App. §§ 2001(2)(A), 2002( l ). In enacting the HLPSA, Congress intended to “establish a statutory framework similar to the NGPSA to regulate transportation of hazardous liquids by pipeline.” S.Rep. No. 182, 96th Cong., 1st Sess., reprinted in 1979 U.S.C.C.A.N. 1971, 1975. Id. One of the arguments IUB made was that the Iowa statutes were valid because they were “gap-filling state regulation.” IUB argued “that because transportation of a hazardous liquid through pipelines that operate at a stress level of 20% or less of the specified minimum yield strength of the line pipe are exempt from federal safety and accident reporting requirements, 49 C.F.R. § 195.1(b)(3) (1992), Chapter 479 permissibly fills this gap in the federal regulatory scheme.” The court disagreed, stating: The decision of the Department of Transportation to exempt certain pipelines from federal regulation does not necessarily mean that the state can step in and

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impose its own regulations. A federal decision to forego regulation in a given area may imply an authoritative federal determination that the area is best left unregulated, and in that event would have as much pre-emptive force as a decision to regulate. Here, Congress granted exclusive authority to regulate the safety of construction and operation of interstate hazardous liquid pipelines to the Secretary of the Department of Transportation. This Congressional grant of exclusive federal regulatory authority precludes state decision-making in this area altogether and leaves no regulatory room for the state to either establish its own safety standards or supplement the federal safety standards. Id. at 359. (citations omitted). Thus, the 8th Circuit in Kinley held that the PSA preempts the entire domain of pipeline safety. Other courts have reached similar determinations: “The language of the PSA clearly expresses the intent of Congress to fully occupy the field of oil and gas operations and interstate pipeline safety so that any state law that touches upon the area, even consistent state law, is preempted.” People ex rel. Sneddon v. Torch Energy Services, Inc., 102 Cal. App. 4th 181, 187 (2002). Safety in the PSA and Safety in the Act The question remains: what is the preempted domain of “safety”? Or, as one federal court has put it: “how close-or how attenuated-a link to safety will cause a state or local law to fall within the reach of the PSA’s express preemption”? Texas Midstream Gas Services, L.L.C. v. City of Grand Prairie, 2008 WL 5000038, 7 (2008) (not reported in in F.Supp.2d). The PSA does not include a definition of the term “safety.” 49 U.S.C. § 60101. In such cases, courts will look to the express purpose of the statute to provide “some insight into its meaning.” Texas Midstream Gas Services, L.L.C. at 7. The PSA’s goal can be summed up as follows: to protect against “risks to life and property” posed by pipeline transportation and pipeline facilities. §§ 60102(a)(1), 60101(a)(3). What about the purposes of the Act? It is important to keep in mind that when the Court considers the purpose of a challenged statute, the Court is not bound by the “name, description or characterization given it by the legislature or the courts of the State,” but it “will determine for itself the practical impact of the law.” Gade v. National Solid Wastes, 505 U.S. 88, 106, (1992). What then is the purpose or the practical impact of the Act? It would seem that the primary purpose of the Act is to regulate safety: “The purposes of [the Act] are to: (1) Ensure the health, safety, and welfare of Nebraskans, including protection of ground water and drinking water; (2) Ensure protection of the environmental resources of Nebraska…” The intent of the Act is restated on page three: “It is the intent of the Legislature that the requirements of the Oil Pipeline Siting Act provide adequate protection of the environment from degradation and ensure prevention of unreasonable depletion and degradation of the beneficial uses of Nebraska’s natural resources.” And “heavily weighted by the commission as against the public interest” is the “[r]isk of degradation or depletion of beneficial uses of natural resources.” Pg. 10, ll. 6-7. The main purposes of the Act seem to be almost identical to the purpose of the PSA: to protect against risks to life and property.

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Siting not Safety? In defense of the Act, it should be argued that subsection 49 U.S.C.A. § 60104(e) adds that “[t]his chapter does not authorize the Secretary of Transportation to prescribe the location or routing of a pipeline facility.” The May 31, 2011 Congressional Research Service memo emphasized that the federal government does not exercise siting authority over oil pipelines (this would seem to be based on the language in subsection (e) above) and that state laws, if any, establish the primary siting authority for oil pipelines. It should be kept in mind, however, that the Kinley court emphasized that a federal decision to forego regulation in a given area could imply a determination that the area was best left unregulated, which also would have preemptive force. Thus, if the Court were to decide that the Act was not expressly preempted, it could still decide that the Act would be preempted by “implied preemption.” Supporters of the Act might also point to an unreported Minnesota state appellate court case concerning Minnesota’s “siting law,” Enbridge Energy, Ltd. Partnership v. Dyrdal, 2009 WL 2226488 (2009). In Enbridge, the pipeline operator argued, citing to 49 U.S.C. § 60104(c), that obtaining approval from the state was preempted by the Hazardous Liquid Pipeline Safety Act (HLPSA). The Enbridge court cited Kinley and stated that it is true state laws regulating pipeline safety will be preempted. But it differentiated Minnesota’s statute: Minn.Stat. § 216B.243 does not purport to regulate pipeline safety or even contain the word “safety.” Furthermore, Minn.Stat. § 216G.02, subd. 3(a) prohibits the MPUC from setting standards for pipelines: “The rules apply only to the route of pipelines and may not set safety standards for the construction of pipelines.” As a result, [the pipeline operator’s] argument that the requirement for a certificate is preempted by federal law regulating pipeline safety is without merit. Id. at 4. Unlike Minnesota’s statutory scheme, the Act does contain the word “safety.” In fact, “safety” is a primary purpose. The Act, a court might conclude, sets safety standards by reference to certain environmentally sensitive areas, some of which are already described in federal law and regulations. Severability of Unconstitutional Provisions If a court finds, like it did in Kinley, that the regulations in the Act “are so related to federal safety regulations that they are [expressly] preempted by the HLPSA with respect to interstate hazardous liquid pipelines,” it could find that other non-safety-related provisions in the Act (such as the environmental and damage remedies provisions in Kinley), “are not severable from the preempted…provisions and thus are preempted as well.” Kinley Corp. v. Iowa Utilities Bd., Utilities Div., Dept. of Commerce, 999 F.2d 354, 360 (C.A.8 (Iowa),1993) Questions regarding severability of state statutes are controlled by state law. Id. at 359. Under Nebraska law, an unconstitutional portion of a statute “may be severed if (1) absent the unconstitutional portion, a workable statutory scheme remains; (2) the valid portions of the statute can be enforced independently; (3) the invalid portion was not an inducement to the passage of the statute; and (4) severing the invalid portion will not do violence to the intent of the Legislature.” State ex rel. Stenberg v. Moore, 249 Neb. 589, 595, 544 N.W.2d 344, 349.

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Implied Preemption A related issue is whether the Act presents a case of implied preemption. The relationship between the PSA and local zoning laws was discussed recently by a federal district court in Maryland in the preliminary stages of litigation.6 The court decided that the pipeline operator’s claim of implied preemption could go forward: [The County and County Council] argue that the purpose of the PSA is limited to regulating aspects of pipeline safety, and argues [sic] that the PSA expressly circumscribes the domain of pipeline safety by withholding from the Secretary of Transportation authority to prescribe the location or routing of a pipeline facility. [The County and County Council] contend that siting and location decisions for pipeline facilities fall outside the safety umbrella and thus outside the field in which the PSA would have preemptive effect…. [The pipeline operator] does not contest Defendants’ reading of § 60104(e) to preclude the Secretary of Transportation from choosing the location of pipeline facilities, but it disputes that this renders location decisions outside the scope of safety…. At this stage, [the pipeline operator’s] claim of implied preemption will be allowed to proceed. While [the County and County Council] have identified potential roadblocks to [the pipeline operator’s] ultimate success, it would be premature to deny the claim at this stage. Id. Conclusion The Act, if challenged, would almost certainly generate a question of express or implied preemption. The purposes of the Act and the PSA seem to be the same—protect people and the environment. With this backdrop, a party challenging the Act would likely argue that Nebraska is substituting its own determination for the determination of the federal government concerning the safety of pipelines in certain local environments. The PSC in reviewing a pipeline project might very well conclude, based on undisputed facts, that a pipeline project risks degradation of Nebraska’s natural resources. However well-supported the PSC’s decision, though, the issue remains whether the Act and the regulatory scheme it would establish is part of the domain of pipeline safety that is expressly and entirely preempted by the PSA. Considering the “first impression” nature of the issue, it is difficult to say whether the preemption argument would be ultimately successful, but there seems some possibility, based on Kinley or on the rationale advanced by the pipeline operator in Washington Gas Light Co., that the Act would be found to be preempted by federal law.

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Washington Gas Light Co. v. Prince George’s County Council Sitting as Dist. Council, 784 F.Supp.2d 565 (D.Md., 2011).

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2. Does the Act put an impermissible burden on interstate commerce? The Dormant Commerce Clause and the Pike Balancing Test The Constitution grants Congress the authority to “regulate commerce…among the several States[.]” U.S. Const. art. I, § 8, cl. 3. This constitutional clause has an implied requirement—often referred to as the dormant Commerce Clause—that the states not “mandate differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.” Granholm v. Heald, 544 U.S. 460, 472 (2005) (quotation marks and citation omitted). The dormant Commerce Clause “prohibits economic protectionism—that is, regulatory measures designed to benefit in-state economic interests by burdening out-of-state competitors.” Wyoming v. Oklahoma, 502 U.S. 437, 454 (1992), quoting New Energy Co. of Indiana v. Limbach, 486 U.S. 269, 273-74 (1988). A statute implicates the dormant Commerce Clause if it discriminates against interstate commerce either facially, by purpose, or by effect. Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 270 (1984). Under this two-tiered approach, statutes that facially discriminate against out-ofstate entities are “virtually per se invalid.” Or. Waste Sys., Inc. v. Dep’t of Env’t Quality, 511 U.S. 93, 99 (1994). Statutes that “regulate evenhandedly,” however, and burden interstate commerce only indirectly are subject to the balancing test of Pike v. Bruce Church, Inc., 397 U.S. 137 (1970). Under Pike a statute will be upheld if it serves a legitimate local interest and the burden on interstate commerce is not “clearly excessive” in relation to the putative local benefits. Id. at 142. The Act in the (Pike) Balance The present question involves the Act and its state regulation of oil pipelines, specifically the possible regulation of the Keystone XL pipeline project. Pipelines, like railroads and trucking, are instrumentalities of interstate transportation.7 The Act would be subjected to heightened scrutiny as it would implicate foreign commerce: “It is a well-accepted rule that state restrictions burdening foreign commerce are subjected to a more rigorous and searching scrutiny. It is crucial to the efficient execution of the Nation’s foreign policy that the Federal Government…speak with one voice when regulating commercial relations with foreign governments.” South-Central Timber Development, Inc. v. Wunnicke, 467 U.S. 82, 100 (1984) (citations omitted). The court would first consider whether the Act incidentally burdens interstate commerce. “The incidental burdens to which Pike refers are the burdens on interstate commerce that exceed the burdens on intrastate commerce.” National Solid Waste Management Ass’n v. Pine Belt Regional Solid Waste Management Authority, 389 F.3d 491, 502 (2004). In other words, the challenged law must have a “disparate impact on interstate commerce.” Id. (internal quotation marks omitted). Additionally, a statute burdens interstate commerce “when it inhibits the flow of goods interstate.” Allstate Ins. Co. v. Abbott, 495 F.3d 151, 163 (2007).
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“Cases involving airlines, pipelines, communications facilities, and the like [are instrumentalities of interstate transportation], but apparently these instrumentalities are so thoroughly regulated by federal law that challenges to state laws tend to generate preemption cases, not commerce clause cases.” 84 Mich. L. Rev. 1091, 1287 (1986).

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What is an “oil pipeline” for the purposes of the Act? The Act defines “oil pipeline” as “a pipeline which is larger than twenty-five inches in inside diameter and which is constructed either partially or wholly within Nebraska for the transportation of oil.” (p. 3, ll. 12-15). According to Stan Belieu, Staff Petroleum Engineer at the Oil and Gas Conservation Commission, the only pipelines larger than 25 inches in Nebraska are interstate transmission lines.8 The definition of “oil pipeline” thus portends a disparate impact on interstate commerce, a problem that is exacerbated by a lack of findings or a rationale for the differential treatment of pipe larger than 25 inches and pipe 25 inches or less. The Act puts the burden on the applicant/pipeline carrier “to establish that the proposed oil pipeline would serve the public interest.” In determining whether the applicant/pipeline carrier has met its burden, the Act requires the PSC to evaluate several factors, including “[e]vidence regarding the depletion and degradation of beneficial uses of Nebraska’s natural resources, including the list of places in proximity to unusally sensitive ground water areas…” (p. 10, ll. 1-2). This evidence of depletion and degradation in particular is to be “heavily weighted by the [PSC] as against the public interest.” (p. 10, ll. 6-8) (emphasis added). The Act, however, gives no guidance as to how the PSC is to evaluate such evidence of risks. Some direction, then, through rules and regulations, would then be critical. Given the breadth of the term “unusually sensitive groundwater areas” and the “heavily weighted” nature of this evidence, the Act’s regulatory system would seem to produce a disparate impact on interstate commerce and inhibit the flow of oil in interstate pipelines through Nebraska. In other words, interstate petroleum carriers would face substantial hurdles in meeting the public interest standard while all other local oil pipelines 25 inches or less are left unregulated by the State. Kassel and the Use of 65-foot “Doubles” A party seeking to overturn the Act would likely seek to compare the Act to the Iowa law regulating the length of trucks, which the Supreme Court invalidated under the dormant Commerce Clause. See Kassel v. Consol. Freightways Corp. of Del., 450 U.S. 662 (1981). The Iowa law in Kassel restricted the length of tractor-trailers on Iowa highways, prohibiting the use of 65-foot “doubles.” Id. at 665. Every other state in the West and Midwest permitted such vehicles. Id. This required trucking companies to decide whether to use a different type of tractor-trailers on interstate voyages passing through Iowa, detach the trailers of a “double” and drive them separately through Iowa, or avoid Iowa altogether. Id. at 667. The Supreme Court held that this substantial burden on interstate commerce was not justified by the law’s “illusory” safety rationale. Id. at 671.
There are a few major components to pipeline systems, according to PHMSA: “(1) Pipelines that collect products from sources, such as wells on land (gathering lines) or offshore, or from shipping, such as tankers for oil or liquefied natural gas (LNG). These systems move the product to storage, processing (such as treatment for gas or refining of petroleum). (2) Transmission pipelines that transport large quantities of hazardous liquids or natural gas over longer distances; transmission lines deliver natural gas to distant power plants, large industrial customers and to municipalities for further distribution; petroleum transmission lines deliver crude oil to distant refineries or refined products to distant markets, such as airports or to depots where fuel oils and gasoline are loaded into trucks for local delivery. (3) Distribution lines are a part of natural gas systems, and consist of main lines that move gas to industrial customers, down to the smaller service lines that connect to businesses and homes throughout a municipality.” Available at http://www.phmsa.dot.gov, last checked 10/18/11.
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A party challenging the Act may concede that oil pipelines, or the “siting” aspects of pipelines at least, are legitimate subjects of state regulation. The party, however, could still contend that the putative safety, health, and environmental benefits of the Act should be given little weight because they will prove to be illusory in practice, like the “doubles” in Kassel. See Construction Materials Recycling Ass’n Issues and Educ. Fund, Inc. v. Burack, 686 F.Supp.2d 162, 172 (2010). Conclusion The State’s interest in the quality and quantity of its groundwater and other natural resources is clearly a legitimate local interest, but the Act’s Achilles’ heel it may be an “illusory” safety rationale. In one sense, nothing in the Act compels a certain route for oil pipelines in Nebraska. The Act lists several factors by which the PSC is to judge the public interest in an oil pipeline project. It provides opportunities for input from the public and state government agencies, but it does not promise a result that steers the route in any particular direction. In another sense, if the project is already subject to a searching federal review such as one that is NEPA compliant, the state regulatory process envisioned by the Act seems relegated to a reenactment of a process at the federal level. Or, if the proposed state regulatory process ends up with a conclusion different than the federal process, it risks highlighting protectionist or parochial interests in the face of the federal government’s attempt to “speak with one voice when regulating commercial relations with foreign governments.” See South-Central Timber Development, Inc., 467 U.S. at 100. The excessive nature of the burden on interstate commerce comes into focus when a timeline of events is considered. The process begins with an application, but the Act does not specify a deadline for the hearing or hearings on the application. Nine state agencies are required to file a report with the PSC “regarding information within the respective agencies’ area of expertise relating to the impact of the proposed oil pipeline on any area within the respective agencies’ jurisdiction” before the hearing. (These state agencies would presumably have already provided, or would provide, input to a federal agency via a possible parallel NEPA process.9) After the hearing, the PSC can extend, for up to 18 months, the time to reach a decision. Especially when one considers the currently stretched agency resources, the process from application to decision by the PSC could be several years. And this does not include the seemingly necessary PSC rulemaking process, which would require at least eight additional months.10 Such a delay would likely give a party challenging the act ample evidence to argue that the Act and its regulatory system impermissibly burden interstate commerce by raising the costs of construction and delaying, or even preventing, the interstate or international project’s completion. As part of its evidence, the aggrieved party may be able to set forth facts that the Act
Regarding the Keystone XL project, the U.S. Department of State confirmed that Nebraska governmental agencies did weigh in on various local environmental issues concerning the proposed route, including shallow groundwater in the Sandhills area, and that such input was relied upon by the State Department. Meeting of Department of State officials and State Senators, October 17, 2011. 10 October 12, 2011 letter from Mike Hybl, Executive Director of the PSC, to Speaker Flood. (“Should the Commission need to commence a rule and regulation proceeding prior to considering any application filed under the Act, such a proceeding would likely require a minimum of eight (8) months to complete.”)
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will cause it to default on its commitments to deliver oil to its consumers. Considering that the the Keystone XL project in particular is nearing the end of the federal review process, a multiyear state process would significantly disrupt interstate and foreign commerce, thereby raising significant questions concerning the Act’s constitutionality. Postscript: Damages In Dennis v. Higgins, 498 U.S. 439, 111 S.Ct. 865 (1991), the United States Supreme Court held that the dormant Commerce Clause does more than allocate power between the federal and state governments; the dormant Commerce Clause confers a “right, privilege, or immunity” within the meaning of the Civil Rights Act of 1871 (Section 1983) because it is a substantive restriction on permissible state regulation of interstate commerce. In other words, Dennis found that the dormant Commerce clause is enforceable under § 1983. The Court’s ruling entitled prevailing plaintiffs in such suits to attorney’s fees under the Civil Rights Attorney’s Fees Awards Act of 1976 (Section 1988). In addition, individuals injured by state action that violates the Commerce Clause may sue and obtain injunctive and declaratory relief. 498 U.S. at 447, 111 S.Ct. at 871. The 8th Circuit has followed Dennis in holding that Commerce Clause plaintiffs have a valid cause of action under § 1983. Waste Systems Corp. v. County of Martin, 985 F.2d 1381, 1389 (8th Cir. 1993); Pioneer Military Lending, Inc. v. Manning, 2 F.3d 280, 285 (8th Cir. 1993). Generally, the full range of common-law remedies is available to a plaintiff asserting a § 1983 claim. Compensatory damages would be available, e.g., special damages related to specific pecuniary losses, such as as lost earnings. See generally, Section 1983 Litigation (2nd Ed.) (2008). However, states and state entities have immunity from suit in federal courts under the 11th Amendment. Therefore, a federal court award of § 1983 damages against a state, state agency, or state official sued in an official capacity is barred by the Eleventh Amendment. However, under the doctrine of Ex Parte Young, 209 U.S. 123 (1908), prospective relief is available against a state official in his or her official capacity to prevent future federal constitutional or federal statutory violations, and this relief is not barred by the Eleventh Amendment. The Young doctrine “permits federal courts to enjoin state officials to conform their conduct to requirements of federal law, notwithstanding a direct and substantial effect on the state treasury.” Milliken v. Bradley, 433 U.S. 267, 289 (1977). Basically, it is a fiction to enable federal courts to ensure prospective compliance by the states with federal law. It should be noted that the Eleventh Amendment does not grant immunity when a § 1983 claim for damages is asserted against a state official in his or her personal capacity, even though the claim for relief arose out of the official’s official responsibilities. Hafer v. Melo, 502 U.S. 21, 30-31. The monetary relief awarded on such claim would not be payable out of the state treasury, but would come from the state official’s personal funds, which are not protected by the Eleventh Amendment. Id. State executive officials sued for monetary relief in their personal capacities may be entitled to assert a common-law defense of qualified immunity.11 Qualified immunity protects officials who acted in an objectively reasonable manner. The Supreme Court has described the qualified immunity test as a “fair warning” standard—that is, if the federal law was
Qualified immunity is not applicable to claims for injunctive relief. Behrens v. Pelletier, 516 U.S. 299, 312 (1996).
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clearly established, the official is on notice that a violation of the federal law may lead to personal monetary liability. Under qualified immunity, public officials “are not liable for bad guesses in gray areas; they are liable for transgressing bright lines.” Maciariello v. Sumner, 973 F.2d 295, 298 (1992). 3. What is Executive Order 13337? Under Executive Order 13337,12 the U.S. Department of State is responsible for receiving all applications for presidential permits for the construction of a pipeline crossing a United States international border. With regard to the Keystone XL pipeline in particular, after consultation with eight federal agencies and the public, the Department is charged with making a determination as to whether a permit for the pipeline is in the U.S. national interest. As part of the Presidential Permit review process, the Department has prepared an Environmental Impact Statement (EIS) consistent with the National Environment Policy Act (NEPA). The issuance of a Final EIS is one step in the review process and does not represent a final decision on the permit application. 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.13

Available at http://www.gpo.gov/fdsys/pkg/WCPD-2004-05-10/pdf/WCPD-2004-05-10-Pg723.pdf; last accessed on 10/17/11. 13 U.S. Department of State Fact Sheet, Final Environmental Impact Statement available at http://www.keystonepipeline-xl.state.gov/clientsite/keystonexl.nsf/Fact%20Sheet.pdf?OpenFileResource; last accessed on 10/17/11.

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