Province would fight Biden over Keystone XL: Kenney

EDMONTON Premier Jason Kenney says he would consider filing a complaint under international trade law if Joe Biden wins the U.S. election and rips up the Keystone XL pipeline permits.

“If that were to happen, obviously we would use every legal means at our disposal to protect our fiscal and economic interests, and I would have to assume that any U.S. administration values the Canada-u.s. trade relationship so much that they would be sensitive to costs of that nature,” Kenney said Tuesday.

Kenney said the Alberta government would look at objecting to the move through various trade agreements such as the USMCA or through the World Trade Organization.

Biden, the presumptive Democratic presidential nominee in November’s U.S. election, issued a statement through his campaign Monday, saying he would halt the project that would carry more than 800,000 barrels of crude from Alberta oilfields to Gulf Coast refineries in the U.S. per day.

Biden was vice-president when former president Barack Obama blocked the project in 2015.

“Stopping Keystone was the right decision then and it’s still the right decision now. In fact, it’s even more important today,” Biden’s policy director Stef Feldman said in a written statement, first reported by Politico on Monday.

“That denial of science ends on Day 1 of a Biden presidency,” she said.

“Biden strongly opposed the Keystone pipeline in the last administration, stood alongside President Obama and Secretary (of State John) Kerry to reject it in 2015, and will proudly stand in the Roosevelt Room again as president and stop it for good by rescinding the Keystone XL pipeline permit.”

Kenney’s UCP government has promised up to $1.5 billion in equity investment in 2020 for the project as well as a maximum of $6 billion, via a loan guarantee in 2021.

Construction has already started and Kenney said the government’s investment “creates a reality to which any administration will have to respond to next year.”

If Biden is elected, Kenney said he wants to take time during the transition to present the work that has been created on the ground.

“I cannot imagine that a U.S. president eight months from now, nine months from now, would require that thousands of miles of pipes be pulled out of the ground by the union workers who are now employed creating that project,” Kenney said.

As for a potential legal route, Kenney said the government has “done extensive legal analysis." The Energy Ministry refused to release that analysis, citing attorney-client privilege.

Greg Anderson, a political science professor at the University of Alberta who focuses on international trade, doubts Alberta has much of a route to force the U.S. president’s hand if need be.

In 2016, Calgary’s TC Energy — then known as Transcanada Corp. — filed a complaint under the old North American Free Trade Agreement’s (NAFTA) Chapter 11 which established a mechanism for the settlement of investor-state disputes. That complaint was withdrawn a year later after President Donald Trump indicated he would approve the plan.

Now that the United States Mexico Canada Agreement (USMCA) has been ratified by all three countries to replace NAFTA, Anderson doesn’t see a way the old complaint could be resurrected. As for a new complaint, Chapter 11 no longer exists.

“Under the old NAFTA, one of the big complaints about it was that it gave private firms this tool, this legal mechanism, where they could essentially challenge state sovereignty, could challenge the state’s right to legislate or regulate in the public interest,” Anderson said.

The new deal has more of a focus on sovereignty, and there is no longer an arbiter who can decide who is right or wrong and make binding orders.

“It’s essentially diplomacy where the two national governments can get together and try to sort out any disputes that are arising on investment matters,” Anderson said. “So that requires Ottawa and Washington to get their heads together and essentially work out a diplomatic solution."

The World Trade Organization also emphasizes sovereignty, Anderson said.

“If the United States wants to rip up those permits, there’s nothing in the WTO that can force the reinstating of anything,” he said.

Instead, if the WTO rules that one country is in violation of the agreement, the offended country is allowed to withdraw concessions of the equivalent amount that it has lost, such as through tariffs.

Meanwhile, in a statement, Opposition Leader Rachel Notley said “Keystone XL is an incredibly important project to our oil and gas sector, and province as a whole” but called on the government to be clearer about the $7.5 billion it has promised for the project.

“We agree that it is important to keep making the case to American lawmakers about the need for the pipeline while taking real action to improve our environmental record in this sector,” Notley said. “But it is also time for the UCP to finally come clean and release the details of this deal, so Albertans can evaluate the risk for themselves.”

Kenney said the loan guarantees do not get triggered until the 2021 construction season following the U.S. election and inauguration.

“Those $6 billion in loan guarantees are not at risk and we and the operators, TC Energy, will be able to make an assessment of the state of play in late January of next year,” he said.

— With files from The Canadian Press