Alberta gears up for another legal battle over Keystone XL after Biden vows to pull permissions

CALGARY — Alberta Premier Jason Kenney said he is prepared to go to court anf file a free-trade lawsuit alongside TC Energy Corp. if Joe Biden becomes president and follows through with his promise to pull permits on the Keystone XL pipeline.

Construction work on the US$14.4-billion Keystone XL pipeline began in April but fresh opposition from the U.S. Democratic presidential nominee could scuttle the long-delayed pipeline once again.

Biden’s election campaign signalled over the weekend that, if the former U.S. vice-president takes the White House this November, he would withdraw presidential permits for the Alberta to U.S. Gulf Coast pipeline Keystone XL.

Kenney said at a news conference Tuesday the province “would use every legal means at our disposal to protect our fiscal and economic interests.”

A spokesman for TC Energy, the Calgary-based pipeline proponent, said in an emailed statement that no other pipeline project “in the history of the industry has been studied more than Keystone XL.

“More than a half-dozen Environmental Impact Studies have been done on Keystone XL over the past 10 years, including the latest U.S. Department of State (Federal Environmental Impact Statement), which was released in December of 2019,” Terry Cunha said.

Legal scholars, however, said that whoever wins the 2020 U.S. presidential election wields tremendous power over the fate of the Keystone XL project, which was approved by a presidential order under U.S. President Donald Trump rather than by Congress. As a result, a future president could theoretically rescind the permit and even force builder TC Energy Corp. to dig up and remove the pipe.

Keystone XL has become a “symbol” of the climate change debate in the United States and announcing opposition to the project is one way for Biden and the Democrats to build support among key liberal voters ahead of the November 2020 election, said Richard Masson, chief commercial officer at oilsands-focused upgrading technology company Fractal Systems Inc. and an executive fellow at the University of Calgary School of Public Policy.

“It’s become shorthand that you’re an environmentalist if you don’t like Keystone XL,” Masson said, adding that he’s not surprised the Biden campaign announced its opposition to the project, but it does raise the known risks facing the pipeline.

“My view would be that the only reason Alberta got involved was because of this risk,” he said.

In late March, Kenney announced a $1.5 billion investment and $6 billion in loan guarantees for the Keystone XL project to ensure TC Energy would begin building the project in April. Kenney said at the time he considers the pipeline to connect the oilsands with U.S. Gulf Coast refineries “critical to our economic future.”

TC Energy says that “during peak levels, we would employ close to 13,000 individuals,” on Keystone XL, including 10,400 in the U.S. and 2,800 in Canada. Handout

The company has since completed the portion of the pipeline that crosses the Canada-U.S. border, a critical stretch that required the presidential permit granted by U.S. President Donald Trump and now threatened by Biden.

The Alberta government’s decision to invest in Keystone XL earlier this year will force any government in Washington, D.C. to confront thousands of workers building the cross-border pipeline when the new presidential term begins next February, Kenney said.

“I think as we hopefully begin to emerge from this pandemic, the public in both the United States and Canada will be increasingly focused on jobs and the economy and that is why this project needs to proceed,” Kenney said, noting the project is being built by “thousands of good blue-collar union members.”

TC Energy’s Cunha said the company wouldn’t forecast exactly how many workers would be in the field building Keystone XL during the November 2020 election but said, “during peak levels, we would employ close to 13,000 individuals,” including 10,400 in the U.S. and 2,800 in Canada.

Cunha did not address Biden campaign’s comments on rescinding permits for Keystone XL, but stated that the project “remains an important North American energy infrastructure project that will spur billions in new private sector investment and create thousands of high-quality jobs in a time of unprecedented economic uncertainty and unemployment.”

The project would ‘spur billions in new private sector investment and create thousands of high-quality jobs in a time of unprecedented economic uncertainty’

TC Energy spokesman

The U.S. Department of Labor’s Bureau of Labor Statistics reported May 8 the country’s unemployment rate jumped from less than five per cent to 14.7 per cent in April, when 20 million lost their jobs.

Biden is unlikely to change his position on Keystone XL between now and, if elected, taking office in February 2021 because he had also proposed some of the toughest measures targeting American oil and gas companies among the field of Democratic nominees, said James Coleman, an energy law professor at Southern Methodist University in Dallas.

Coleman noted that Biden has proposed banning U.S. drilling on federal lands and cancelling existing drilling permits — a very hawkish stance on U.S. energy production’s contribution to carbon emissions.

Under American law, Coleman said, the next U.S. president, whether it’s a second term for Trump or a Biden win, will wield enormous power over the Keystone XL pipeline project.

There’s not really any legal limit on a president’s ability to get rid of a pipeline, even if it’s been built

James Coleman, energy law professor, Southern Methodist University

“There’s not really any legal limit on a president’s ability to get rid of a pipeline, even if it’s been built,” Coleman said, adding that Biden could even force TC Energy to dig up and remove the already-constructed sections of Keystone XL, including the border crossing.

“You need approval for every last piece and the pipeline doesn’t have any benefit to you unless you get the whole thing into service,” Coleman said.

Analysts have previously flagged that TC Energy could face “last-mile risk” in its 10-plus-year effort to build Keystone XL, which would render the entire 830,000-barrels-per-day project useless.

Coleman said TC Energy has the legal option to sue the U.S. government if Biden is elected and pulls the permits for Keystone XL, but an “aggressive” legal argument would face an uphill battle through the courts.

In 2017, TC Energy, then called TransCanada Corp., sued the U.S. government for US$15 billion when former president Barack Obama vetoed the pipeline.

Kenney has said he would continue to advocate for the project to American lawmakers, highlighting Canada’s role in providing energy security to the U.S.. Prime Minister Justin Trudeau made the same commitment on Tuesday. Kenney appointed Rogers Communications vice-president and former Edmonton MP James Rajotte as Alberta’s envoy to Washington, D.C. on April 27 to advocate for energy projects such as Keystone XL.

“It has long been a position of mine that we need to get our resources to new markets safely and securely,” Trudeau said Tuesday morning of Keystone XL.

“We will continue to work with whatever government gets elected in the United States to impress upon them how important Canada is as a secure and reliable source of energy they require even as we move forward to a different future,” he said.

• Email: [email protected] | Twitter: geoffreymorgan

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