Texas and Montana are leading a multistate lawsuit against the Biden administration for revoking the Keystone XL (KXL) crude oil pipeline’s 2019 presidential permit, arguing the administration lacks unilateral authority to overturn energy policy set by Congress.

Keystone XL

Upon taking office Jan. 20, President Biden issued an executive order (EO) rescinding the approval granted by President Trump for a critical 1.2-mile section of the pipeline crossing the Canada-Montana border. 

“Since his first day in office, President Biden has made it his mission to undo all the progress of the previous administration, with complete disregard for the constitutional limits on his power,” said Texas Attorney General (AG) Ken Paxton on Wednesday upon announcing the lawsuit. Revoking the KXL permit “is not only unlawful but will also devastate the livelihoods of thousands of workers, their families, and their communities.”

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Biden said when issuing the EO that approval of the KXL “would undermine U.S. climate leadership by undercutting the credibility and influence of the United States in urging other countries to take ambitious climate action.”

However, construction of the section is “effectively complete,” plaintiffs said in the complaint filed Wednesday in the U.S. District Court for the Southern District of Texas.

KXL is the fourth phase of TC Energy Corp.’s existing pipeline system in Canada and the United States. If completed, KXL would have capacity to deliver 830,000 b/d of Alberta oilsands from Hardisty, AB, to Steele City, NE. From there it would link with TC’s existing pipelines to reach refineries along the Gulf Coast. 

The lawsuit argues that the Constitution gives legislators, not the Executive Branch, power to regulate interstate and international commerce. The complaint cites multiple studies showing that “the pipeline would have a negligible impact on the climate but significant impact on the economy and American energy independence.”

Biden also has paused oil and gas leasing on federal property and reentered the United States into the 2015 United Nations climate accord, aka the Paris Agreement. It is part of a larger plan to put the U.S. economy on a path to carbon neutrality by 2050.

Paxton said Wednesday the Democratic administration “continues to tout imaginary green energy jobs, without any recognition that their actions in the real world will make it impossible for hard working Americans to put food on the table.”

Biden and his cabinet have trumpeted the job-creating potential of decarbonizing the energy sector. However, some energy and construction trade groups have expressed skepticism about the quality of jobs in renewable energy versus oil and gas, and dismay at the revocation of the KXL permit.

For example, North America’s Building Trades Unions, a group that endorsed Biden’s candidacy, said it was “deeply disappointed” in the KXL decision, a position also expressed by Canada Prime Minister Justin Trudeau.

‘Empty Virtue Signal’

Montana AG Austin Knudsen joined Paxton in accusing Biden of overreaching with the EO.

“The power to regulate foreign and interstate commerce belongs to Congress — not the president,” Knudsen said. “This is another example of Joe Biden overstepping his constitutional role to the detriment of Montanans. There is not even a perceived environmental benefit to his actions. His attempt to cancel the Keystone XL Pipeline is an empty virtue signal to his wealthy coastal elite donors. It shows Biden’s contempt for rural communities in Montana and other states along the pipeline’s path that would benefit from and support the project.”

Paxton and Knudsen are joined in the lawsuit by AGs from Alabama, Arkansas, Georgia, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Utah and Wyoming.

The plaintiffs argue that the states through which the pipeline would travel stand to miss out on “tens of millions of dollars in tax revenue” from construction and operation of the pipeline, highlighting that the cancellation eliminates about 3,700 construction jobs in Montana alone that would have garnered some $127 million in employment earnings. 

The KXL cancellation, if permanent, “leaves Canadian oil producers, particularly in the prolific Alberta oilsands, with dwindling future pipeline expansion projects to relieve the highly congested pipeline network,” said BTU Analytics’ Erika Coombs, manager of consulting services, in a note last week. “While crude by rail can provide relief, it comes at a higher cost.”

The consultancy expects oilsands production growth to continue over the next five years, “but the pace of that growth may be heavily moderated by the outlook for infrastructure development in Western Canada,” said Coombs.

KXL is not the only crude pipeline facing an uncertain future. 

Enbridge Inc. is battling to prevent Michigan from shuttering its existing 540,000 b/d Line 5 crude oil/natural gas liquids pipeline. In Minnesota, court battles continue over Enbridge’s proposed Line 3 replacement project.

Energy Transfer LP’s Dakota Access Pipeline was dealt a blow in late January as federal judges upheld a previous ruling vacating a crucial federal permit issued to the 1,172-mile pipeline that transports oil from the Bakken Shale to refineries on the Gulf Coast and in the Midwest.