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Permit pulled for TC Energy's Keystone XL; ruling could affect other pipelines

A U.S. federal judge canceled a crucial water-crossing permit for TC Energy Corp.'s Keystone XL pipeline in a decision that could affect other U.S. pipeline construction projects.

The decision came April 15, just a few weeks after the company gave official sanction to the $8 billion project.

The U.S. District Court for the District of Montana vacated the U.S. Army Corps of Engineers' Nationwide Permit 12, which involves a streamlined permitting process for projects it deems will not result in significant impacts to the environment. The court found that the Army Corps' issuance of the permit violated the Endangered Species Act and remanded the permit to the Corps for compliance.

Under the court's ruling, the Army Corps of Engineers is barred from using the process for issuing Nationwide Permit 12 for any pipelines nationwide, including TC Energy's Keystone XL project, until it completes a consultation process and compliance activities.

"We see yesterday's decision as creating incremental schedule and timing risk for other pipeline projects," energy consulting firm ClearView Energy Partners LLC said in an April 16 note.

"Not only has KXL lost its authorization to cross waterbodies pursuant to the NWP 12 program, but the court's vacatur enjoins the Corps from 'authoring any dredge or fill activities under NWP 12 pending completion of the consultation process and compliance with all environmental statutes and regulations,'" ClearView wrote. "Although Judge [Brian] Morris' decision is immediately binding in Montana, we think opponents of other pipelines may seek to brandish Judge Morris' ruling to press for similar outcomes in other states against other projects — and may succeed. Consequently, [Atlantic Coast Pipeline LLC], [Mountain Valley Pipeline LLC], and [Mountain Valley's] Southgate expansion could be at risk to schedule complications arising from new challenges under NWP 12. Other ongoing and planned projects may face similar challenges, too."

The Northern Plains Resource Council and other conservation and landowner groups had filed the lawsuit against the Army Corps, saying it failed to sufficiently examine the impacts of pipelines approved under Nationwide Permit 12 on local waterways, lands, wildlife and communities, the Center for Biological Diversity said in a release.

TC Energy started construction in early April at the Keystone XL pipeline's crossing point at the Canada-U.S. border. A hearing is scheduled for April 16 regarding a potential halt of the ongoing construction due to pending legal challenges.