Biden’s Keystone Pipeline Halt Prompts Red States to Sue (1)

Texas and other red states sued the Biden administration for canceling the $8 billion Keystone XL pipeline, stepping up a legal fight over the controversial pipeline that is extending into a third presidential administration.

President Joe Biden lacks unilateral authority to change energy policy set by Congress, according to a complaint filed in a Texas federal court on Wednesday. The suit was filed by Texas Attorney General Ken Paxton and Montana Attorney General Austin Knudsen.

“The executive’s unilateral decision to revoke the Keystone XL permit is contrary to the constitutional structure to which the states agreed at the time of ratification,” the states said. “The executive’s decision also encroaches upon the states’ abilities to steward and control the lands within their borders.”

The states said in the complaint they will lose out on “tens of millions of dollars” in tax revenue from the construction and operation of the Keystone XL, In Montana, South Dakota, and Nebraska, the total estimated property tax from the Keystone XL project in the first full year of operations is approximately $55.6 million, according to the complaint.

Crews work on a right of way for the Keystone XL pipeline near Oyen, Alberta, Canada.

Photographer: Jason Franson/Bloomberg

The pipeline permit, which would connect oil sands in Canada to U.S. refiners, was approved by the Trump administration in 2019 after previously being rejected by President Barack Obama. Biden issued an executive order revoking the Keystone XL pipeline’s cross-border presidential permit as soon as he entered office in January. The Keystone pipeline is backed by the Canadian government, construction and energy industries but opposed by environmentalists, tribes and some landowners.

Attorneys general from 19 states, including Alabama, Missouri, Nebraska, North Dakota, Oklahoma, Ohio, Utah and Wyoming, joined in the Texas and Montana lawsuit.

“The argument that transporting crude oil via pipeline is worse for the environment than by rail or shipment is preposterous and has been disproven numerous times, even by the Obama-Biden State Department,” said Oklahoma Attorney General Mike Hunter. “The Keystone Pipeline also will move the United States closer to energy independence.”

Canadian pipeline giant TC Energy Corp. had sued the Obama administration in a Texas federal court, similarly arguing that Obama’s rejection of the project conflicted with the will of Congress. TC Energy dropped the suit in 2017, without resolution, after Trump granted a presidential permit.

Alberta also threw its weight behind Keystone XL last year, committing $5.3 billion in investment and loans for the project.

“Currently we are examining all options following the executive order, including looking at all avenues – including trade agreements – to recoup our investment if the project,” the Premier of Alberta’s office said in an emailed statement.

If built, the pipeline would stretch some 1,200 miles (1,900 kilometers) from Alberta oil sands to Steele City, Nebraska, to connect with existing infrastructure to move oil to Gulf Coast refineries.

The case is State of Texas v. Biden, 3:21-cv-00065, U.S. District Court, Southern District of Texas (Galveston).

(Updates with background, details from complaint)

--With assistance from Robert Tuttle and Laurel Calkins.

To contact the reporters on this story:
Malathi Nayak in San Francisco at mnayak21@bloomberg.net;
Ellen Gilmer in Arlington at egilmer@bloomberg.net

To contact the editors responsible for this story:
David Glovin at dglovin@bloomberg.net

Peter Blumberg, Joe Schneider

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