Biden’s vow to kill pipeline puts Canada on defense

A threat by Joe Biden to cancel the Keystone XL pipeline has a Canadian province gambling that construction of the multi-billion-dollar project will begin before the Democrat has a chance to take control of the White House.

The Biden campaign vowed in a statement on Monday to kill the long-delayed pipeline should the former vice president secure the nomination and go on to win the presidency. Former U.S. President Barack Obama vetoed the pipeline in 2015, a decision that was reversed by President Donald Trump in January 2017. Biden’s announcement elicited concern among boosters of the project in both Canada and the U.S.

But Alberta Premier Jason Kenney, whose government has a billion dollars riding on the success of the pipeline, thinks he can call Biden’s bluff. He just needs construction to ramp up by the end of 2020.

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

Even if Trump were to win reelection, the pipeline is far from a done deal now, more than three years since his election. A slew of legal challenges that are still playing out in court could continue to stymie the project, which could buy time for another Democratic president — or for the Supreme Court — to weigh in on Keystone. And Biden, if elected, could still decide to stop the project even if work does get moving this year.

Construction of the U.S. stretch is on hold while the Trump administration defends its permits in the Ninth Circuit Court of Appeals in California. A district judge in Montana last month ruled in favor of the Sierra Club and other environmental and land use groups that challenged the permits, arguing that the Army Corps of Engineers had not done sufficient environmental review of the pipeline’s planned route.

Regardless of how the appeals court decides, analysts say the case is all but certain to go to the Supreme Court.

Kenney twice noted Tuesday that Biden did not oppose Keystone XL during the Democratic primaries. Still, Biden was said to have told a supporter in 2013 that he opposed the project, an opinion that put him “in the minority” on the issue in the Obama administration. Barack Obama rejected the project in 2015 — shortly after Justin Trudeau became prime minister — after years of back-and-forth over permits.

Although Biden was silent on Keystone, most other Democratic contenders vowed to cancel the project, signaling the party’s leftward shift on pipeline politics.

Kenney likened the investment to Trudeau’s decision to buy a multibillion-dollar pipeline from the oil sands to the British Columbia coast to ensure the Trans Mountain expansion project would continue after the private owner, Kinder Morgan, bowed out in 2018.

“We made the strategic investment exactly because there was obviously political risk,” he said.

The Kenney government’s C$6 billion loan guarantee to backstop TC Energy’s construction-related costs wouldn’t kick in until next year, the premier said, meaning money wouldn’t be at stake should Biden return to the White House and cancel the project.

Kenney didn’t respond to questions about whether Alberta could recoup its equity stake should the project be nixed, or whether he had an obligation to explain in greater detail the financial risks his government took on through its billion-dollar move.

James Coleman, an energy law professor at Southern Methodist University, said Alberta stands to lose its investment if the pipeline isn’t built. TC Energy could bring a claim against the U.S. under NAFTA, he said, though the company would be up against a three-year deadline from when the USMCA enters into force under new limits on investor-state claims between the two countries.

Kenney said the province “would use every legal means at our disposal to protect our fiscal and economic interests,” which could include lodging trade complaints against the U.S.

“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,” said Kenney. “At this point our focus is on continuing to demonstrate the widespread support that exists in the U.S. for this project that represents jobs, growth and energy independence.”

Ben Lefebvre contributed to this report.