In June of last year, TransCanada, the company behind the Keystone XL pipeline, sued the Obama administration for $15 billion, citing the North American Free Trade Agreement (NAFTA) as justification.
The lawsuit claimed that Obama used “arbitrary and contrived” reasoning to delay the pipeline’s construction for seven years. TransCanada also believed they had cause to expect the pipeline to be approved after Obama rejected the pipeline in November of 2015. The pipeline will be 1,179-miles long from Hardisty, Alberta, to Steele City, Nebraska, when it is finally built.
TransCanada filed their NAFTA claim with the International Centre for Settlement of Investment Disputes, an international institution that helps settle disputes between international investors. TransCanada also filed a suit in Texas constitutional grounds, but without seeking monetary compensation in that case.
Obama cited environmental concerns for cancelling the pipeline. “America is now a global leader when it comes to taking serious action to fight climate change, and frankly, approving this project would have undercut that leadership,” Obama said.
But TransCanada alleged that the environmental concerns were not grounded in real science, and that Obama was merely signaling moral superiority on the world stage.
“None of that technical analysis or legal wrangling was material to the administration’s final decision,” the lawsuit read. “Instead, the rejection was symbolic and based merely on the desire to make the U.S. appear strong on climate change, even though the State Department had itself concluded that denial would have no significant impact on the environment.”
The Keystone XL pipeline occupied years of intense debate. Environmentalists believe that because the crude oil used in such pipelines is extracted from oil sands that it causes about 17% more greenhouse gas to enter the atmosphere than standard crude oil extraction. They also opposed the pipeline because it will cut across the Ogallala Aquifer, one of the world’s biggest deposits of underground fresh water. They fear that the pipeline could break or leak and contaminate the water.
The State Department concluded in January 2015 that the project would create about 42,000 jobs directly as well as indirectly. Of those 3,900 will be construction jobs if it is built in one year. The pipeline will create at least 50 permanent jobs.
Donald Trump ran on reigniting the spark of American industry and eliminating environmental regulations to do so. Naturally then it was expected that he would give the green light on construction of the Keystone XL pipeline if he could, and within a short time he did just that.
Four days after his inauguration, President Trump issued a presidential memo inviting TransCanada to reapply for Keystone permits. Three days later, TransCanada temporarily suspended its lawsuit until March 27. Trump proved to be far more accommodating than Obama had been. Dropping the lawsuit was dependent on the approval of a presidential permit necessary to go ahead with the project.
“Our NAFTA challenge remains suspended as we continue to work with the Administration on our Presidential Permit application,” said TransCanada spokesman Terry Cunha.
“The lawsuit was a response to President Obama’s rejection of the pipeline,” said Simon Lester of Cato Institute’s Center for Trade Policy Studies. “Once President Trump changed policy, and encouraged TransCanada to refile its application, the original basis for the lawsuit no longer existed. Until final approval is granted, however, TransCanada might not want to terminate the proceedings completely.”
On Friday, March 24, President Trump finally gave official approval of the Keystone XL Pipeline. Trump made a public announcement before issuing TransCanada’s permit. “It’s a great day for jobs and energy independence,” Trump said. In his characteristic way of speaking, he called the pipeline “incredible” and “the greatest technology known to man or woman.”
TransCanada CEO Russel Girling said he was “very relieved” to finally receive approval for the pipeline.
Secretary of State Rex Tillerson, former head of ExxonMobil, recused himself from the decision making process.
As soon as Trump issued the permit, the lawsuit was finally and officially dropped, leaving only a harmonious relationship between the administration and TransCanada.
The lawsuit was really just a bargaining chip, a cudgel with which to beat the previous administration. The Trump administration would most likely have issued the permit with or without the lawsuit.
Donald Trump has very different views on global warming and climate change than Barack Obama. In 2012 Trump tweeted that “The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive.”
This administration is going to continue to be much friendlier to industrial projects of all kinds than was the Obama administration, and if necessary it is ready to go to battle against certain environmentalist concerns and pet causes. Although Trump has said again and again he wants clean air and clean water, he is a skeptic of climate change, thinks wind turbine power is a ridiculous eyesore, and wants to put the coal miners back in business.