U.S. Supreme Court deals blow to Keystone XL pipeline project

The Keystone XL pipeline — which the Alberta government has backed to the tune of billions as a crucial project to help get oilsands' crude to Gulf Coast refineries — has been handed another setback by the U.S. Supreme Court.

Calgary-based TC Energy says it's not giving up on Keystone, which had $1.5 billion investment by Alberta

On Monday, the U.S. Supreme Court handed another setback to the Keystone XL pipeline, which would move crude oil from Alberta to refineries on the U.S. Gulf Coast. (Al Nash/Bureau of Land Management/The Associated Press)

The Keystone XL pipeline — which the Alberta government has backed to the tune of billions as a crucial project to help get oilsands' crude to Gulf Coast refineries — has been handed another setback by the U.S. Supreme Court, which on Monday kept in place a lower court ruling that blocked a key environmental permit.

Calgary-based TC Energy needs the permit to continue building the long-disputed pipeline across U.S. rivers and streams.

Without it, the project that has been heavily promoted by U.S. President Donald Trump faces more delays just as work on it had finally begun this year following years of courtroom battles. Democratic candidate Joe Biden has said he would cancel the permit if elected. 

TC Energy spokesperson Terry Cunha said the company is not giving up on Keystone.

However, he said the company will have to delay large portions of work on the 1,947-kilometre project.

It's meant to carry 830,000 barrels (132 million litres) of crude oil per day from Hardisty, Alta., to Steele City, Neb., where it will connect with TC Energy's existing facilities and eventually reach refineries on the Gulf Coast.

The company started construction last week on the section of the line in Alberta, with Premier Jason Kenney there to celebrate. That work will continue while the company wages its court fight in the U.S., Cunha said.

The Alberta government has bet on the project moving forward and has invested $1.5 billion, while also putting forward a $6-billion loan guarantee. Kenney said at the time of the investment that there was too much risk, scaring away private investors from the $8-billion project.

A spokesperson for Alberta Energy Minister Sonya Savage said while the government is disappointed with the decision, they feel the project still has "significant momentum."

"As the project winds its way through multiple courts, we're confident TC Energy will continue to overcome roadblocks and setbacks like they have in the past and successfully complete this project," Kavi Bal said in a statement.

He said the the cross-border section of pipeline has been completed, adding that Keystone XL is one of the most thoroughly-studied infrastructure projects in American history.

Monday's Supreme Court order also put on hold an earlier court ruling out of Montana as it pertains to other oil and gas pipelines across the U.S.

That's a sliver of good news for an industry that just suffered two other blows — Sunday's cancellation of the $8 billion US Atlantic Coast gas pipeline in the southeast and a Monday ruling that shut down the Dakota Access oil pipeline in North Dakota.

April ruling threatens dozens of projects

In the Keystone case, an April ruling from U.S. District Judge Brian Morris in Montana had threatened to delay not just Keystone but more than 70 pipeline projects across the U.S., and add as much as $2 billion US in costs, according to industry representatives.

Morris agreed with environmentalists who contended a U.S. Army Corps of Engineers construction permit program was allowing companies to skirt responsibility for damage done to water bodies.

But the Trump administration and industry attorneys argued the permit, in place since the 1970s, was functioning properly when it was cancelled by Morris over concerns about endangered species being harmed during pipeline construction.

Monday's one-paragraph order did not provide any rationale for the high court's decision.

The corps suspended the program following Morris's April ruling. Agency officials could not be immediately reached for comment.

Environmental groups call order a victory

An attorney for one of the environmental groups involved in the case called Monday's order a major victory in the fight against Keystone. But he acknowledged the plaintiffs had hoped to hamper oil and gas projects nationwide.

"Our focus was originally on Keystone, so we're very happy the court order ensures it can't move forward under this unlawful permit," said Jared Margolis, an attorney with the Center for Biological Diversity.

Pipeline industry representatives said the order means thousands of workers whose jobs were threatened can continue working. A coalition of 18 states had backed the Trump administration in the case.

West Virginia Attorney General Patrick Morrisey said the Supreme Court's action "ensures that one Montana district court judge doesn't possess the power to drive national policy on such a critical issue."

The order returns the case to the U.S. 9th Circuit Court of Appeals for further consideration.

Keystone rejected twice under Obama

Keystone was proposed in 2008.

It was rejected twice under the Obama administration because of concerns that it could worsen climate change.

Trump revived it and has been an outspoken proponent of the project.

TC Energy's surprise March 31 announcement that it intended to start construction amid a global economic crisis caused by the coronavirus pandemic came after the provincial government in Alberta invested $1.1 billion US to jump-start the work.

The company finished building the first piece of Keystone XL across the U.S. border in late May and started work on labour camps in Montana and South Dakota.

With files from CBC News