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Lawsuit Announced Over Keystone Cancellation

Wednesday, March 24, 2021

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Last week, attorneys general from 21 states announced a lawsuit to overturn President Joe Biden’s cancellation of the Keystone XL oil pipeline.

Biden had revoked the permit for the $8 billion project upon taking office on Jan. 20 in his Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.

Ceasing Construction

In taking the first step to dismantle former President Donald Trump’s climate and environmental rollbacks, Biden announced in January that a presidential permit required for the Keystone XL pipeline would be revoked.

On the same day, Biden also rejoined the nation with the Paris Climate Agreement, banned new oil and gas drilling leases in the Arctic National Wildlife Refuge and ordered a review of more than 100 policies including on vehicle fuel economy standards and limiting pollution from the fossil fuel sector.

Without the presidential permit, the project is unable to cross the U.S.-Canadian border, ultimately forcing construction on the project to cease. Following the Executive Order, Canadian pipeline company TC Energy Corp. announced that they had suspended all work on the project, which meant the layoff of thousands of union workers.

In wake of the cancellation, TC Energy reported that it was “disappointed” and planned to review Biden’s decision, assess its implication and consider other options. However, Kristen van de Biezenbos, a law professor at the University of Calgary in Alberta, believes the company prevailing against the President through litigation is unlikely, as court challenges or investor provisions of trade agreements could take years to resolve and would likely fail in restore the presidential permit necessary for the pipeline to continue.

Aligned with van de Biezenbos’ statement, Sandy Fielden, Director of Oil Research at Morningstar Inc., told Bloomberg Green that the cancelation of Keystone XL wouldn’t affect the supply of Canadian oil in the short run as the country has other plans to expand another pipeline using existing infrastructure.

Regardless of these positive outlooks, TC Energy wasn’t the only one to express feelings of disappointment, Canadian Prime Minister Justin Trudeau also issued a statement saying, “While we welcome the President's commitment to fight climate change, we are disappointed but acknowledge the President’s decision to fulfill his election campaign promise on Keystone XL.”

The premier of Alberta, Jason Kenney, also vowed in a statement that he would pursue legal action and demanded that Trudeau too, bring trade sanctions against the U.S., as the project is inherently different to the one rejected in 2015. In additional reports by the New York Times, Canada exports roughly 80% of its oil to the U.S., with most of it coming from Alberta’s oil sands. The sector alone provides about 140,000 jobs and makes up about 20% of the province’s budget.

Current Lawsuit

Led by Ken Paxton of Texas and Austin Knudsen of Montana, in addition to attorneys general from the other 19 states accuse Biden of overstepping his authority in revoking the presidential permit required for the Keystone pipeline project.

The suit argues that because the pipeline is slated to run through multiple U.S. states, it is Congress who should have a final say over whether the infrastructure is built and that Biden doesn’t have the unilateral authority to change energy policies previously set by the U.S. government.

“The Executive's unilateral decision to revoke the Keystone XL permit is contrary to the constitutional structure to which the states agreed at the time of ratification,” the states said in the lawsuit. “The Executive's decision also encroaches upon the states' abilities to steward and control the lands within their borders.”

According to reports, last month, Joe Manchin, Head of the U.S. Senate Energy Committee, urged Biden to reverse his opposition, arguing that the project provides union jobs and is safer than transporting the oil via trucks and trains.

The White House did not immediately respond to a request for comment by CBC News.

The lawsuit was filed in the U.S. District Court in Texas.

Keystone XL Pipeline History

In 2011, the $5.2 billion pipeline began flowing crude oil through seven U.S. states, where it was envisioned to eventually work in tandem with the $8 billion Keystone XL Pipeline. The Keystone Pipeline as a whole is reported to handle up to 830,000 barrels of crude oil daily. Additionally, TC Energy had touted that the project would enhance North American energy security and planned to support 40,000 jobs in the U.S.

In 2017, former president Trump’s administration reversed his predecessor’s decision on the construction of the Keystone XL pipeline, allowing the 1,178-mile oil pipeline to move forward again. Keystone XL, a project of TransCanada, is part of the larger Keystone system and plans to transport oil from Hardisty, Alberta, in the western Canadian oil sands, to Steele City, Nebraska.

In April 2018, TransCanada revealed that approximately 9,700 barrels of oil spilled on farmland in Marshall County, South Dakota, on Nov. 16, 2017—considerably more than the 5,000 barrels the company originally estimated were lost.

Preliminary reports indicated that the leak may have come because of damage to either the pipeline itself or its protective coating, caused during construction 10 years ago. The Aberdeen News noted that if the current estimate is correct, that spill is the seventh largest in the U.S. since 2010.

By July, officials confirmed at least one section of the pipeline north of Britton, South Dakota, was being dug up for inspection. A year later, a federal report indicated that improper coatings were likely used on the pipeline. The Pipeline and Hazardous Material Safety Administration issued a notice of probable violation to pipeline owner TC Oil Operations, also known as TC Energy, in mid-June.

Another incident occurred in November 2019, causing over 380,000 gallons of oil to leak from the Keystone Pipeline, a total amounting to 9,120 barrels of crude oil. Sections of Keystone pipeline were shut down in response to the leak, which impacted a wetland area and, at the time, an estimated 2,500 square yards of land. TC Energy, formerly known as TransCanada, said that air quality, wildlife and environment monitoring was being conducted.

While the cause of the leak underwent investigation, North Dakota regulators also noted that drinking water supplies went unaffected, and TC Energy reported that the spill had been contained, and that it was using backhoes and vacuum trucks to recover the spilled oil.

The pipeline officially returned to service on Nov. 10, after receiving approval for a repair and restart plan by the U.S. Pipeline and Hazardous Materials Safety Administration.

However, at the end of the same month, North Dakota environmental scientist Bill Suess, the estimated amount of land affected by the oil spill had risen nearly 10 times the original estimate, although the amount of oil leaked remained the same.

During collection, the contaminated soil was stockpiled and taken to a landfill in Sawyer, North Dakota.

By January 2020, TC announced through a status report filing at the U.S. District Court in Montana that the company would kick off pre-construction efforts as early as February.

“This is very good news for Canada as a country,” said Tristan Goodman, President of the Explorers and Producers Association of Canada, which represents small- to mid-sized oil and gas producers. “It’s extremely good for Alberta and Saskatchewan, where a lot of the oil for this is coming from.”

In March, TC announced that it had officially began preliminary work for pipeline construction slated to take place along the border’s crossing into Montana. Groundbreaking for the project was expected to commence in April.

However, on April 15, Morris ruled that the Corps had failed to adequately consider effects on endangered species such as pallid sturgeon, a massive, dinosaur-like fish that lives in rivers the pipeline would cross.

According to the Natural Resources Defense Council, the decision arrived as a result of a lawsuit that challenged the Corps’ failure to adequately analyze the effects of pipelines authorized under Nationwide Permit 12.

In May, although Morris said that he would reconsider the April ruling, announced that it would be upheld, canceling an environmental permit for the project. The ruling also has the potential to cause delays for other oil and natural gas projects as well.

“The need to protect endangered species and critical habitat from harm until the Corps completes programmatic consultation outweighs any disruption or permitting delays that would result from this partial vacatur,” Morris wrote at the time.

While attorney Jared Margolis with the Center for Biological Diversity and other environmentalists were reportedly pleased with the decision, utility officials have announced that they intend to appeal. Among them, TC spokesperson Terry Cunha reported that the company would promptly file with the U.S. Court of Appeals for the Ninth Circuit.

The Corps and TC have been given 60 days from the ruling to send in their appeals.

By the end of that month, TC Energy was reported to have completed construction on the first section of the Keystone XL oil sands pipeline. The section crosses between Montana and Canada and is 1.2-miles-long. However, the company is still working to resolve a recent courtroom setback, threating the entire project’s completion.

According to Erin Loranger, a spokesperson for Montana Gov. Steve Bullock, the state still requires plans to ensure that TC Energy employees can prevent the spread of the novel coronavirus. Currently, South Dakota Gov. Kristi Noem is working with two Native American tribes—the Cheyenne River Sioux Tribes and the Oglala Sioux Tribe—to have coronavirus checkpoints removed from various federal and state highways.

The tribes are reported by the Associated Press to have set the checkpoints up as to prevent the spread of COVID-19 from entering their reservations, as the checkpoints connect to several potential Keystone XL construction sites. Noem has threatened to sue the tribes, should they refuse to remove the checkpoints and has since appealed to the White House to investigate.

Additionally, TC Energy is also awaiting a permit from the Corps to build the pipeline across hundreds of streams, wetlands and other water bodies along its route.

In August, TC Energy signed a project labor agreement with four U.S. labor unions, including the International Union of Operating Engineers, Laborers International Union of North America, the International Brotherhood of Teamsters and the United Association Union Plumbers and Pipefitters. The agreement was expected to create 10,000 construction jobs.

   

Tagged categories: Government; Government contracts; Infrastructure; Lawsuits; NA; North America; Oil and Gas; Ongoing projects; Pipelines; President Biden; Program/Project Management; Project Management

Comment from Mark Taylor, (3/24/2021, 8:56 AM)

I have no idea why this became a political "football". But cancelling Keystone was the wrong thing to do. There are literally dozens of pipe lines that crisscross the country, and Biden and his co-horts treat Keystone like it's the first pipeline ever proposed. Makes no sense at all. I guess all that Canadian oil can go to China. Why is it so difficult to understand why it's important for the US to be energy independent? It's a national security issue. Aren't we tired yet of sending our sons and daughters to fight wars for oil???


Comment from Michael Halliwell, (3/24/2021, 11:15 AM)

Well, when Keystone (not the stalled XL) ages out to less capacity and then closes and the Line 3 and Line 5 replacements get blocked (all three are older pipelines and are in the sunset of their operational lives...heaven forbid they have a major failure before they are shuttered), it will be a lot harder to get that cheap Canadian oil to the US (Western Canadian Select is dirt cheap compared to WTI and with the Canadian dollar....a real steal for the US). In reality, Biden has killed Keystone XL (TC Energy can't / won't float the pipeline for another decade waiting for this to be resolved)...so I guess that oil will need to go into the Trans Mountain Expansion (TMX) and into tankers on Canada's west coast bound for China, India and elsewhere in Asia. It will mean the US will have to continue / increase it's involvement with Iraq, Saudi Arabia, Kuwait, Iran, Nigeria and Venezuela (countries with abysmal human rights and environmental regulations as well as "challenging" political situations) to import oil to meet its needs. Canada's raw materials (oil, gas, lumber, metals ,minerals) have fueled US industries for a long time, but it seems more and more like the US is trying to get out of that situation... that's the US's prerogative, but if Canada diversifies it's trading arrangements, the US will have to compete for those resources in the future.


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