For those keeping track at home, TransCanada, the company behind the proposed Keystone XL tar sands pipeline, has now missed its target for committing to building the project by more than two months. Meanwhile, in federal court, the government and TransCanada faced another loss in their attempt to withhold important information from the record in NRDC’s and its coalition partners’ challenge to the Trump administration’s granting of a cross-border permit for the pipeline. And while economic factors increase the financial risks of building Keystone XL, the baseline environmental threats it poses to our land, water, and climate remain as pressing as ever.
The last time TransCanada spoke to investors—in its fourth quarter earnings call wrapping up 2017—there was some speculation that its long-awaited “final investment decision” regarding Keystone XL would also be announced. That didn’t happen. Instead, the company listed ongoing challenges and even hinted that it’s not that happy (“The Company will look to continue to secure additional long-term contracted volumes.”) with the soft shipper interest shown during the company’s protracted open season. This leaves the project in a bizarre sort of limbo: many of its permits are undergoing legal challenges and the company has not actually committed to building anything.
That news, or lack thereof, was followed closely by another loss for TransCanada and the U.S. government in federal court. In the case brought by NRDC and several other environmental organizations, the judge ruled that the State Department must either provide missing documents relevant to the issuance of a cross-border permit in March 2017, or must draw up a privilege log for documents not shared (which briefly describes the content of each withheld document). The government must make these disclosures this spring.
This is great news for environmental plaintiffs and the public. As noted by NRDC attorney, Jackie Prange, “The public deserves to know what evidence the Trump administration relied on to approve the pipeline,” especially because the same foundational analysis—2014’s environmental impact statement—was used to reverse the Obama administration’s previous denial.
This decision reaffirms the view that TransCanada faces serious barriers in its attempt to build Keystone XL. I’ve attempted to summarize the hurdles Keystone XL faces in other posts. In addition, a briefing note for analysts and investors led by Greenpeace provides even further depth on this issue. In short, while there is a growing list of factors, the following three could all significantly disrupt the project’s timing moving forward:
- Federal Litigation: Hearings on the merits of the environmental plaintiffs’ case will take place on May 24. A ruling in favor of plaintiffs (and against the government and TransCanada) could lead to revocation of the pipeline’s cross-border permit.
- Nebraska Litigation: Briefing is ongoing in the suit brought by landowners against the Public Service Commission’s Nebraska route permit issuance. This suit is expected to take more than a year to resolve and could lead to revocation of the pipeline's route permit in Nebraska.
- Prospective Litigation: Numerous landowners along Keystone XL’s route through Nebraska have not agreed to grant the company easements over their property. Because of this, TransCanada will need to rely on eminent domain if it ever reaches the construction phase of the project. This group of landowners has vowed to challenge any use of eminent domain in state court, a process that is likely to take significant time and could lead to as-yet-unaccounted-for delays.
And this is not to mention the plethora of economic factors—ranging from shipper interest to climate policy to oil prices to investor pullbacks in Alberta—that create meaningful obstacles to Keystone XL ever being built. As the world faces a rapidly warming climate, building this project, which relies on increased production of one of the world’s highest carbon oils, should never happen. Instead, we should be ratcheting up our ambition to accelerate the global transition to cleaner, renewable sources of energy that do not devastate ecosystems and lock us into the use of high-carbon fuels.