Trudeau pledges to keep up fight for Keystone XL pipeline

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Prime Minister Justin Trudeau says he intends to call Joe Biden shortly after his inauguration to mount another defence of the Keystone XL pipeline in an effort to dissuade the incoming U.S. president from fulfilling a campaign promise to kill the project.

“I look forward to speaking with President Biden in the coming days to talk about this and many other issues that we will work on together,” Mr. Trudeau told reporters Tuesday.

Transition documents for Mr. Biden’s administration indicate that he plans to make rescinding the permit for TC Energy’s Keystone project one of his first measures after being sworn in as president on Wednesday.

There were other signs of where Mr. Biden’s decision is headed. At Senate confirmation hearings Tuesday, Mr. Biden’s secretary of state nominee Antony Blinken faced a question about the project from Republican Senator John Barrasso, who referenced calls from both Mr. Trudeau and Alberta Premier Jason Kenney to keep Keystone XL alive.

Mr. Blinken said it’s Mr. Biden’s choice and “the president-elect has said that he does intend to rescind the permit.”

Mr. Trudeau said Tuesday he realizes Mr. Biden made a campaign promise as “candidate Joe Biden … to cancel this pipeline” but he’s hoping his lobbying can change the new U.S. leader’s mind.

He told reporters his government is communicating the job and energy-security benefits of the project, which would route Canadian oil through Montana, South Dakota and Nebraska on its way to the U.S. Midwest and Gulf Coast, “directly to the highest levels of this [incoming] administration.”

He said Canadian officials in Washington are pressing home this message as well as the fact that Canada under Mr. Trudeau’s leadership “has become a global leader in the fight against climate change and is transforming our economy in positive ways to reduce carbon emissions.”

Mr. Trudeau and Mr. Kenney spoke about Keystone XL for about 30 minutes late Tuesday. A statement from Mr. Kenney’s office said that the Prime Minister agreed with him that rescinding the Keystone XL permit would set a “troubling precedent” while promising to use “all available channels” to press the Biden administration.

One Alberta government official said direct conversations with the incoming administration have been difficult. The Globe and Mail is not identifying the source because they were not authorized to speak publicly on the issue.

Mr. Biden and his cabinet nominees have declined to meet with foreign representatives before taking office, for fear of being accused of breaking the Logan Act, which forbids private citizens from negotiating with foreign governments. Mr. Biden has taken congratulatory calls from foreign leaders but these have not been substantive.

The Alberta official said Canadians had originally believed they would get an opportunity early in the first days of the Biden administration to meet with incoming energy secretary Jennifer Granholm and talk about how the project has evolved since the Obama administration rejected the pipeline in 2015.

Last March, Alberta agreed to contribute US$1.1-billion for an ownership stake in Keystone XL that it planned to sell back to proponent TC Energy Corp. (TRP-T) after commercial operations began. The province also agreed to guarantee US$4.2-billion of debt related to the pipeline.

The death of the project would leave Alberta on the hook for about $1-billion in equity and $400-million in loan guarantees – because of construction commitments made for January and February.

But Mr. Kenney said there would be a solid case under free-trade agreements in North America to seek damages should a presidential veto effectively kill the project.

Canadian regulators approved the 830,000-barrel-a-day Keystone XL project in 2010, but then-U.S. president Barack Obama blocked it in 2015.

TC Energy filed a US$15-billion lawsuit seeking compensation under Chapter 11 of the North American free-trade agreement. The company suspended the lawsuit after then-president Donald Trump signed the construction permit in 2017.

While NAFTA has been replaced by the United States-Mexico-Canada Agreement (USMCA), the former agreement’s Chapter 11 provisions allowing investors to sue the U.S., Canadian or Mexican governments for compensation remain in force for three years after the July 1, 2020, termination of NAFTA.

That means TC Energy could sue the U.S. government for rescinding the permit as long as it files before July 1, 2023.

However, law experts said such a legal action would be difficult and could damage TC Energy’s relations with the incoming Biden administration.

The Canadian government could use Section 31.2 of the USMCA to challenge a rescinding of the permit, which would require the creation of a panel to hear the dispute. But Lawrence Herman, a Toronto-based international trade lawyer, has warned that doing so “would blow apart any semblance of good relations with the U.S. government,” including on climate change. He believes this option is a “total non-starter.”

This week, U.S. unions and a major manufacturing industry trade group also wrote to the Biden transition team to ask that the project be allowed to proceed.

“If this union project is blocked, workers and families will lose a huge opportunity. Renewable energy goals would be set back, 1,000 union jobs would vanish in the cold of winter and in the middle of a pandemic, and the promise of the 10,000 jobs required to build this project would disappear,” said the letter signed by the National Association of Manufacturers and North America’s Building Trades Unions, a labour umbrella group.

The project has evolved since it was blocked by the Obama administration in 2015, the letter said. There are commitments to hiring companies owned by minorities, women and veterans, and making Indigenous communities equity partners. The letter also highlighted the recent pledge by TC Energy – made only this week – for the pipeline project to operate at net-zero emissions.

With a report from Emma Graney

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