Fighting for keystone
‘Americans will suffer serious, detrimental consequences’ states threaten lawsuits in bid to revive KXL, alberta assessing options
CALGARY • More than a dozen U.S. states are considering lawsuits against the Biden administration over the cancellation of Keystone XL, saying Americans “will suffer serious, detrimental consequences” as a result.
Since U.S. President Joe Biden signed an executive order revoking cross-border permits for the Us$14.4-billion Keystone XL pipeline on his first day in office, union leaders, Republican and Democrat lawmakers and attorney generals from 14 states have urged the president to reconsider his decision.
The 830,000-barrels-perday Keystone XL pipeline project has been through regulatory and legal hurdles in the U.S. for over a decade as proponent TC Energy Corp. has sought to build a line from Alberta to carry oilsands crude to heavy oil refineries on the U.S. Gulf Coast. Construction was underway in Alberta, Saskatchewan, Montana and South Dakota before Biden’s executive order last month.
U.S. Senator Joe Manchin, a Democrat from West Virginia and current chairman of the powerful Senate Energy and Natural Resources Committee, sent Biden a letter on Tuesday, urging him to reconsider the cancellation of Keystone XL and “take into account the potential impacts of any further action to safety, jobs and energy security.”
“It is of the utmost importance that the United States maintain energy security through strategic relationships with our allies rather than increasing reliance on OPEC nations and Russia. This includes the development of infrastructure, like the Keystone XL and Mountain Valley pipelines, to get this energy to market in the safest and most responsible way,” Manchin wrote.
In a separate letter to Biden, Montana Attorney General Austin Knudsen along with the AGS of 13 other states made the same request while also threatening legal action on the pipeline.
“Your decision will result in devastating damage to many of our states and local communities. Even those states outside the path of the Keystone XL pipeline — indeed all Americans – will suffer serious, detrimental consequences,” Knudsen wrote.
While the letter doesn’t say what legal action the states could pursue, it does indicate the states are considering a lawsuit.
“Please be aware that states are reviewing available legal options to protect our residents and sovereign interests. In the meantime, we urge you to reconsider your decision to impose crippling economic injuries on states, communities, families and workers across the country,” Knudsen wrote.
Last week, u.s. Senator John Thune from South dakokta told a legislative session that scrapping Keystone XL pipeline is nothing more than a symbolic gesture.
“In a nod to the far-left environmental wing of the democrat Party, the President issued a new moratorium on oil and gas leasing on Federal lands and called a halt to the Keystone XL Pipeline, even though we are a long way from significantly reducing or eliminating our need for oil and natural gas.”
Alberta Premier Jason Kenney has said his government is reviewing its options on whether to sue the u.s. government over the cancellation of Keystone XL, in which the province has invested $1.5 billion last year and would provide up to another $6 billion in loan guarantees for the project in March.
“We are monitoring and continuing to talk to American political players about the importance of Canadian energy to the united States,” Kavi bal, spokesperson for Alberta’s energy ministry, said in an emailed statement. he said the province is “reviewing every legal tool at our disposal to defend our financial interests in this project.”
TC energy and the Alberta government may strengthen a potential Chapter 11 free-trade case against the united States by attempting to use diplomatic avenues to get the Keystone XL project re-approved, said Mark Warner, an international trade lawyer and principal at Maaw Law in Toronto.
“There’s no rush. They have time to play out these options,” Warner said, noting the new united States-mexico-canada Agreement allows companies such as TC energy to use the old Chapter 11 complaint process until 2023.
In Chapter 11 processes, complainants need to show that they’ve attempted to pursue other domestic remedies before launching their claims. he said the aggrieved parties also have the ability to sue in u.s. Federal Court.
“They don’t have to file right away, there’s no harm in testing it,” Warner said.
There may be another legal avenue TC energy Corp. and Alberta can pursue in their efforts to revive the project.
Scott Miller, a senior adviser at the Center For Strategic and International Studies in Washington, d.c., said a recent u.s. Supreme Court decision on a program called the deferred Action for Childhood Arrivals (DACA) found former u.s. president donald Trump contravened the Administrative Procedure Act in signing an executive order cancelling DACA. Miller said American legal circles are currently discussing the similarities between the two cases.
“Keystone XL was not just a policy decision to allow a pipeline to cross a border. What came with it were a whole bunch of permits. The policy change had the effect of revoking those permits without due process,” Miller said.
TC energy did not respond to a request for comment Wednesday, and has remained silent on whether it would scrap the project or launch legal action to revive the project. The company previously launched a Chapter 11 NAFTA challenge and a lawsuit in u.s. Federal Court when former u.s. president barack Obama vetoed the project in 2015.
The company’s earnings announcement on Feb. 18 is expected to disclose a large writedown on the value of the project, which has also affected the earnings of oil producers in Calgary.
Prospective shippers on the Keystone XL pipeline were on the hook for hundreds of millions of dollars in contingency payments to TC energy if the Keystone XL pipeline was cancelled.
Athabasca Oil Corp., for instance, disclosed last year it would make us$48 million in contingency payments to TC energy if the project was cancelled, given its commitment to ship 7,200 barrels of oil per day on the Keystone pipeline.
Suncor energy Inc. and Cenovus energy Inc. have disclosed impairment charges related to the cancellation of Keystone XL of $142 million and $100 million, respectively, as those two oil majors reported earnings this month.