Approve the Keystone XL project and reap the profits
"I want it built, but I want a piece of the profits."
"I want it built, but I want a piece of the profits."
A pipeline to carry oil from the tar sands of Alberta, Canada, to Steele City, Neb., and onward to refineries in Texas has been in the works for a dozen years. President Donald Trump took office saying he wanted to see the project done.
While the Keystone XL Pipeline made headway on Trump's watch, it is far from completed and now faces opposition from President-elect Joe Biden. As Trump leaves office, here's where the project stands.
Out of the 900 miles planned on American soil, a 1.2 mile section is largely completed in Montana at the U.S.-Canada border.
In April 2020, a federal district court judge in Montana said pipeline operator TC Energy needed to do more work to comply with the Endangered Species Act. The judge's order blocked any dredging that would affect about 700 stream crossings along the planned route, effectively putting work on pause.
TC Energy remains committed to the project. This past October, it said it had awarded $1.6 billion in contracts to six American pipeline construction companies.
The Canadian government announced that it will press the Biden administration to allow the project to move forward. The government of Alberta has invested over $1 billion in the project and hopes that the faster work proceeds on its side of the border, the harder it will be to stop it on the American side.
In terms of Trump's promise to get the pipeline built, the small section that has actually been dug leaves the project well short of the goal, and it remains vulnerable to executive and legal opposition.
One key vulnerability is the federal permit that allowed construction at the U.S.-Canada border. Trump granted it through direct presidential action, rather than through a ruling by the State Department.
"As a presidential order, the permit wasn't subject to the need for an environmental review," explained University of Minnesota Law School professor Alexandra Klass. "Biden could either revoke the permit on his own authority, or he could pass the responsibility back to the State Department, where they could deny the permit."
Klass said she would expect TC Energy to take that to court. One argument in the company's favor, she said, is that construction has started in Montana, but there's no guarantee that would carry the day.
We reached out to TC Energy, as well as many of the construction companies that contracted to do the work, and did not hear back.
Anthony Swift with the Natural Resources Defense Fund, a group opposed to the pipeline, said the company moved quickly to award construction contracts, but "those contracts don't allow it to move forward with work if it doesn't have the permit it needs."
In addition to getting the core federal permit allowing any work to proceed, Swift noted, the pipeline faces several other legal challenges in several states.
Pipeline construction has barely begun, and the Biden administration has promised to block it. We rate this a Promise Broken.
White House, Presidential Permit, March 29, 2019
Reuters, Democrat Biden says he would kill Keystone XL pipeline, May 18, 2020
BOE Report, What's in store for Alberta with a Biden presidency?, Nov. 10, 2020
Government of Alberta, Premier Jason Kenney statement, Nov. 7, 2020
Sabin Center for Climate Change Law at Columbia Law School, tNorthern Plains Resource Council v. U.S. Army Corps of Engineers, accessed Jan. 15, 2021
Sierra Club, Canada Pushes Keystone XL Before Biden Takes Office, Nov. 17, 2020
TC Energy, Keystone XL Announces Project Labor Agreement with Four U.S. Unions, Aug. 5, 2020
Yahoo Finance, TC Energy says Keystone XL pipeline fits Biden agenda, Nov. 17, 2020
Rainforest Action Network, Big Banks Face Stark Climate Choices as Tar Sands Pipelines Rammed Through Amidst Escalating Pandemic, Dec. 8, 2020
Interview, Alexandra Klass, professor, University of Minnesota Law School, Jan. 14, 2021
Interview, Anthony Swift, director, Canada Project, Natural Resources Defense Council, Jan. 6, 2021
The pipeline that would carry oil from the tar sands of Alberta, Canada, to Steel City, Neb., has faced legal hurdles at every step. Currently, out of the 900 miles planned on American soil, a 1.2 mile section is largely completed in Montana at the Canada-U.S. border.
While President Donald Trump backs the project, and the State Department issued a permit in 2017, challenges remain.
TC Energy, the company building the pipeline, has struggled to find investors. The government of Alberta made it possible to move forward by investing $1.1 billion and providing $4.2 billion in loan guarantees. In March, TC Energy announced it was starting construction, but the progress was short-lived.
In April 2020, a federal district court judge in Montana said TC Energy needed to do more work to comply with the Endangered Species Act. The judge's order blocked any dredging that would affect about 700 stream crossings along the planned route, effectively putting work on pause.
TC Energy asked the U.S. Supreme Court to put that order on hold while a lower court takes up a full appeal. In a blow to the project, the Supreme Court ruled July 6 that the Keystone XL pipeline must go through the full environmental review process.
At the start of 2020, TC Energy said it planned to start building "certain pipeline segments in August 2020" in Montana and South Dakota. In Nebraska, it still needs permits to build housing for workers in several remote locations, but in June TC Energy said it planned to start work in one spot in Nebraska where worker camps are not needed.
After the latest ruling, the company said it remained committed to Keystone XL, but it would continue to "evaluate our 2020 U.S. scope."
Presumptive Democratic nominee Joe Biden said he would end the project.
If the XL pipeline wins all of its permits, beats all of the legal challenges and Trump secures a second term, it could be completed by 2023. But with so many factors hanging in the balance, we rate this promise Stalled.
U.S. Supreme Court, Keystone XL pipeline order, July 6, 2020
The Hill, Supreme Court reinstates fast-track pipeline permit except for Keystone XL, July 7, 2020
U.S. District Court - Montana, Construction status report, Jan. 14, 2020
Rapid City Journal, First piece of Keystone XL pipeline finished as company brings labor camp to S.D., May 22, 2020
TC Energy, TC Energy to Build Keystone XL Pipeline, March 31, 2020
U.S. Court of Appeals for the 9th Circuit, Denial of stay, May 28, 2020
Guardian, Major blow to Keystone XL pipeline as judge revokes key permit, April 15, 2020
Bold Nebraska, Appeals Court Upholds Order Blocking Keystone XL Water Crossing Permit, May 28, 2020
NPR, Builder Of Controversial Keystone XL Pipeline Says It's Moving Forward, March 31, 2020
Interview, Anthony Swift, director of Canada Project, National Resources Defense Council, June 23, 2020
At the urging of President Donald Trump, the State Department has issued a presidential permit for TransCanada's Keystone XL, an important step forward for construction of the pipeline and a complete reversal of a decision made under former President Barack Obama.
The State Department permit, issued March 24, is necessary for the pipeline to cross the U.S.-Canadian border. The pipeline would transport more than 800,000 barrels of oil from Western Canada to Nebraska, then connect with an existing pipeline system.
The Obama administration denied pipeline operator TransCanada the State Department permit in 2015, citing environmental concerns. But four days after taking office in January 2017, Trump signed a memorandum inviting TransCanada to re-submit a permit application, as well as encouraging the State Department to expedite its decision.
This step gets Trump closer to fulfilling his promise to build the pipeline, but hurdles remain. The Nebraska Public Service Commission still has to approve the project, and protests from environmental activists and local landowners are expected.
Additionally, Trump said he wants "a piece of the profits," and it is unclear as of yet how Trump or the United States could demand some sort of compensation for building the pipeline.
For now, this promise remains In the Works.
State Department, Issuance of Presidential Permit to TransCanada for Keystone XL Pipeline, March 24, 2017
AP, "Activists seek to intervene in Nebraska Keystone XL review," March 23, 2017
New York Times, "U.S., in Reversal, Issues Permit for Keystone Oil Pipeline," March 24, 2017
During his first week in office, President Donald Trump signed a presidential memorandum advancing the construction of the Keystone XL pipeline, which is a clear reversal of former President Barack Obama's actions.
This order does not guarantee the final permit needed to build oil pipelines like Keystone, but it invites TransCanada, the pipeline operator, to re-submit a permit application for the extension. It also encourages the secretary of state to "take all actions necessary and appropriate to facilitate its expeditious review" within 60 days of a permit being submitted.
Because the pipeline would have crossed the U.S.-Canada border, it required a presidential permit from the State Department, which the Obama administration denied in 2015. It said the project would hinder the United States' ability to be a leader in climate change action.
(That idea, expressed in a 2015 letter from then-Secretary of State John Kerry, has since been taken down from the State Department website.)
The controversial extension to the Keystone pipeline would transport more than 800,000 barrels of oil from Western Canada to Steele City, Neb., and then connect it with an existing southern pipeline system that opened in early 2014.
As Trump signed the Keystone XL measure on Jan. 24, he said it would create a "lot of jobs, 28,000 jobs, great construction jobs".
A 2014 State Department report, which evaluated the project's environmental and economic impact for the country, found, "A total of 42,100 jobs throughout the United States would be supported by construction of the proposed Project."
Most of those jobs would only last during the construction phase, which was expected to take one to two years in 2014. After the construction phase, the State Department report concluded the project would provide for about 35 permanent employees and 15 temporary contractors.
As for the environmental impact, a 2014 State Department report determined the project is "unlikely to significantly impact the rate of extraction in the oil sands."
But that doesn't mean it would be entirely without negative environmental impact, seeing as the same document found that it would generate more greenhouse gases than alternative methods.
In addition to the Keystone XL memorandum, Trump also signed a presidential memorandum reviving the Dakota Access Pipeline project by ordering the Army to "review and approve in an expedited manner" the construction of the pipeline. He also signed an memorandum asking for a federal plan to incentivize U.S.-made pipes for projects.
Trump has taken the first step to move forward with plans to build the Keystone XL extension. The pipeline still needs to be built, and Trump still needs to profit off it once it's built, so we rate this pledge In The Works.
Email interview with Steven Cheung, White House spokesperson, Jan. 24, 2017
PunditFact, "TransCanada CEO says 42,000 Keystone XL pipeline jobs are 'ongoing, enduring'," Nov. 16, 2014
PolitiFact, "3 key Keystone XL questions answered," January 9th, 2015
WhiteHouse.gov, "Presidential Memorandum Regarding Construction of the Keystone XL Pipeline," Jan. 24.
WhiteHouse.gov, "Presidential Memorandum Regarding Construction of the Dakota Access Pipeline," Jan. 24.
WhiteHouse.gov, "Presidential Memorandum Streamlining Permitting and Reducing Regulatory Burdens for Domestic Manufacturing," Jan. 24.
Donald Trump has repeatedly pledged to approve the 1,179-mile Keystone XL oil pipeline project in exchange for a share of the profits.
The controversial extension to the Keystone Pipeline would have transported more than 800,000 barrels of oil from Western Canada to Steele City, Neb., and would have connected with an existing southern portion of the pipeline system that opened in early 2014.
Because the pipeline would have crossed the U.S.-Canada border, it required a presidential permit from the State Department. The Obama administration denied the permit in 2015 and claimed the project would hinder the United States' ability to fight climate change.
Trump has hinted he will move forward with his agenda very soon, a direct contradiction of President Barack Obama's actions.
"You're going to have a decision fairly quickly, and you'll see that," Trump told Fox News on Dec. 11, 2016.
WHY HE'S PROMISING IT
Trump wants the U.S. government to profit off of the pipeline and create jobs.
"I want it built, but I want a piece of the profits," Trump said May 26, 2016, before delivering an energy speech to an oil-industry audience in North Dakota. "That's how we're going to make our country rich again."
According to a 2014 State Department report, the construction of Keystone XL would create 41,200 jobs. After construction, however, the pipeline would only employ about 50 people, primarily for maintenance.
WHAT NEEDS TO HAPPEN
Trump could revive the pipeline project in a number of ways. But first some background. TransCanada, the pipeline operator, filed multiple application permits to build the project extension.
Before the State Department rejected the final permit application from TransCanada, it considered the pipeline's impact on the economy, environment and energy security. After nearly a four-year review, Secretary of State John Kerry and Obama rejected the permit for Keystone XL in 2015 under enormous pressure from environmentalists.
After the plan was rejected, TransCanada Corp. filed a legal claim in the summer of 2016 in an attempt to recoup the costs of Obama's rejection.
So how could Trump change things?
James Coleman, an energy law professor at Southern Methodist University, said that the administration could settle the TransCanada lawsuit by approving Keystone XL. He noted that environmental groups may intervene, but he said it's hard to stop a government from settling.
Trump also could withdraw the executive order that gives the president and State Department authority over cross-border energy projects on his first day in office.
Another option: The State Department could reconsider the evidence that led to the 2015 permit rejection. Coleman said the State Department's initial report was "relatively favorable to the pipeline." For instance, it said that the pipeline would actually reduce world greenhouse gas emissions.
Finally, the last option is to not enforce any laws that prohibit TransCanada from following through with the pipeline.
As for Trump's plan to allow the United States to get a piece of the profits, that's not as clear cut.
Coleman said he didn't think there was any way the president could demand compensation. One option, however, would be to reach an informal arrangement with the company to fund certain projects that are in the public interest.
The cost of the pipeline was around $8 billion in 2015.
WHAT'S STANDING IN HIS WAY
Coleman pointed out a few problems that could arise when Trump makes his decision. First, environmental groups could sue and demand the president stick to the previous decision.
There also is the issue of civil disobedience in the form of protests, much like what's happening with the Dakota Access Pipeline.
The timeline for this promise depends on the route Trump takes to reverse Obama's decision. Rescinding the executive order could be done on Day 1, but other options have no concrete time frame. Once the approval step is completed, the construction phase will begin, which could take around two years.