Among other executive actions today, President [sic] Trump issued an executive “memorandum” seeking to resurrect the Keystone XL Pipeline planned by TransCanada for Montana, South Dakota and Nebraska. Here is the text of that order:
www.whitehouse.gov/…
He also issued another memorandum regarding construction of pipelines in the United States in which Trump urged the use of USA-produced pipe and components for new and replacement pipeline construction in the United States:
www.whitehouse.gov/...
There are two overwhelming problems here that Trump has not addressed. While Trump’s oral comments said that all of the permits would be renegotiated and subject to additional terms and conditions….that is an empty promise and issuing the KXL permit under present circumstances cannot be in the public interest. And here are the reasons for that:
President Obama took an unreasonable amount of time (7 years) to make a completely political decision to reject TransCanada’s KXL presidential permit application. Presidential permits do not cover entire crude oil pipeline projects, and only address the pipeline segment from the border crossing to the first shutoff valve generally a short distance away. Crude oil permits in the United States are not required to have “full project” permitting authorization for the entire pipeline length and only individual states have authority to issue permits for crude oil pipelines within their specific state jurisdiction areas.
Because TransCanada was not happy with the permit application denial, they initiated two legal actions against the United States:
www.transcanada.com/...
TransCanada sued in Federal District Court in Houston for the right to construct the pipeline without having a presidential permit being issued:
www.keystone-xl.com/...
TransCanada issued an investor- state dispute challenge under the provisions of the North American Free Trade Agreement (NAFTA) seeking an award of $15 billion in damages resulting from the denial of the KXL permit:
www.keystone-xl.com/…
Neither of these actions were settled by the end of the Obama Presidency, with President Obama apparently intending to leave this mess to Hillary Clinton to settle. However, Hillary Clinton will now be able to avoid this mess and President (sic) Trump will have to address it.
However, absolutely nothing in Trump’s memoranda today recognizes that the the United States and TransCanada are still in a shooting war on two distinct legal fronts.
Inviting TransCanada to re-submit its KXL pipeline outside of the forum of the NAFTA challenge and the Houston litigation is dangerous to the interests of the United States since Trump has no commitment or understanding with TransCanada to settle or dismiss the TC NAFTA actions and litigation.
This opens the United States to being held responsible for up to $15 billion in damages in the unresolved NAFTA claim and to an adverse award of costs, damages and attorney fees in the Houston court litigation….even after Trump issuing the presidential permit of a newly submitted KXL permit application.
Allowing TransCanada to get the double dip of having their KXL permit be issued and a NAFTA damage award as well can’t be construed as good deal making and that this issue has not been flagged by the Justice Department illustrates incompetence at the executive level in the Trump administration legal shop.
Trump’s memorandum demanding USA manufactured materials for the KXL pipeline also runs into both practical and NAFTA problems and may just be meaningless window dressing, considered along with his oral comments today.
NAFTA, itself, would prohibit the United States from enacting or imposing a requirement for USA-content in materials used for pipeline construction. As desirable as that may seem to encourage USA manufacturing, such a rule or requirement would be rapidly challenged and create another NAFTA or WTO trade discrimination issue against the United States because it discriminates against non-USA manufactures of pipeline construction materials.
Finally, on a practical basis, most of the pipeline for the Keystone XL Pipeline project has already been purchased and shipped to a site near the planned route at Gascoyne, ND, so TransCanada is unlikely to agree to any conditions requiring them to buy, ship and stockpile different pipe:
In addition, there is no existing law or legal authority to require or allow states who issue pipeline authorization permits to require USA-manufactured content, and no such authority exists for the Presidential Permit portion of such projects as well. Any attempt to invoke such non-authority will be rapidly challenged by foreign pipe manufacturers.
This all means that Trump’s ‘buy USA’ pipeline policy is window dressing and nice sounding PR without any meaning or substance.