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Biden Move to Nix Keystone XL Puts Other Pipelines in Bull’s-Eye

Jan. 22, 2021, 11:00 AM

President Joe Biden’s decision to ax the Keystone XL pipeline on his first day in office has tribes and environmentalists eyeing other projects for the chopping block.

They’re targeting oil and natural gas conduits that are already tangled in legal and permitting fights, including Enbridge Inc.'s Line 3 replacement in Minnesota.

“I’m hopeful about it,” said Line 3 opponent Andy Pearson, an organizer for the environmental group MN350. “For consistency, you need to do both. You need to stop them both. Otherwise the same oil that would flow through Keystone XL will flow through Line 3.”

Others that could land in the new administration’s crosshairs are Energy Transfer LP’s Dakota Access, Enbridge’s Line 5 replacement in Michigan, and Equitrans Midstream Corp.'s Mountain Valley pipeline in West Virginia and Virginia.

The critical question is whether Keystone XL’s fate was a one-off symbolic move by the new president—or a sign of things to come. Height LLC energy analyst Josh Price said Biden’s decision “definitely spooked some investors,” but he thinks it was a “stand-alone move” to follow through on a campaign pledge.

Others aren’t so sure.

“One way to look at this is, this is kind of an easy decision to make to show your environmental bona fides,” Southern Methodist University energy law professor James Coleman said. “But there’s another way: that it’s the new normal.”

Dakota Access

The Dakota Access pipeline is perhaps the only project as widely known and debated as Keystone XL. One big difference: It’s already in service, shipping oil from North Dakota to Illinois since 2017.

Still, the Biden administration could throw hurdles in its path. A federal court last year scrapped the pipeline’s easement across the Missouri River and ordered it to halt operations. The shutdown was averted, but the easement remains void, meaning Dakota Access is technically encroaching on federal land. The Trump administration declined to bring any enforcement action against the company, but Biden officials could.

The Standing Rock Sioux and other tribes sent a letter this week urging Biden to take action on Dakota Access within the first 10 days of his presidency.

The project is also facing risks in the courtroom, with a federal district judge considering whether to issue a new shutdown order, and an appeals court weighing a related case.

Energy Transfer declined to comment for this story, saying “we do not comment on issues related to legal matters.”

Line 3

Enbridge’s Line 3 expansion and replacement pipeline is facing legal challenges that advocates hope the Biden administration will use as a lever to block construction.

Enbridge is working to replace the existing Line 3 with a new, larger-diameter pipe that would follow the same path on some sections, but cut a new path on others. It’s attracted opposition from American Indian tribes along its route and environmentalists concerned about the climate impacts of the Canadian oil sands that feed the pipeline.

The Red Lake Band of Chippewa Indians and other opponents sued the federal government last month for permitting crossings of wetlands and waterways. Pearson, the MN350 organizer, said the Biden administration should follow up on its Keystone XL move by revoking Line 3 permits and conducting an in-depth environmental review.

Enbridge spokesman Michael Barnes said the project went through a “thorough and exhaustive, science-based public process.”

Line 5

Enbridge’s Line 5 and a planned replacement segment beneath the Great Lakes may also face political risk if the new administration decides to get involved. Enbridge is locked in a legal battle with Michigan Gov. Gretchen Whitmer (D), who last year ordered Line 5 to shut down.

Environmental Law & Policy Center senior attorney Margrethe Kearney said she hopes Biden’s Justice Department will join the case on Whitmer’s side, to rebut Enbridge’s argument that the governor’s move was unconstitutional.

“That would be very powerful,” Kearney said.

Barnes, the spokesman, sought to differentiate the company’s pipeline replacement projects from the Keystone XL, which was never built.

“There is no impact on Enbridge’s Line 3 Replacement or Line 5 Tunnel projects,” he said of Biden’s decision to scrap Keystone XL’s permit. “Enbridge’s projects modernize existing energy infrastructure.”

Mountain Valley

Environmentalists say the Mountain Valley natural gas pipeline should face the same fate as Keystone XL. The West Virginia-to-Virginia conduit, which is under construction, has been mired in legal problems for years and still needs some federal permits to move forward.

Price, the analyst, said the Biden administration likely won’t allow the Equitrans project to use a streamlined wetlands permitting process, instead forcing it to pursue a more time-consuming permit application.

But an outright denial or blockade of the pipeline is unlikely, he said. That’s in part because as a domestic natural gas project, Mountain Valley doesn’t raise as many political red flags as a pipeline moving energy-intensive Canadian oil sands, he said.

Mountain Valley is embracing that angle, touting the cleaner-burning quality of natural gas compared to other fossil fuels.

“We all understand the criticality of transitioning to a lower-carbon energy economy, but we must also recognize that our country is not ready to make a 100% shift to renewables today,” Equitrans spokeswoman Natalie Cox said.

To contact the reporter on this story: Ellen M. Gilmer in Washington at egilmer@bloomberglaw.com

To contact the editor responsible for this story: Anna Yukhananov at ayukhananov@bloombergindustry.com

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