14 State AGs Say Keystone Cancellation Delivers ‘Crippling Economic Injuries,’ Threaten Legal Action

A depot used to store pipes for Transcanada Corp's planned Keystone XL oil pipeline in Gascoyne, N.D., on Jan. 25, 2017. Terray Sylvester/Reuters

Fourteen Republican attorneys general are urging President Joe Biden to reconsider his decision to cancel a permit for the construction of the Keystone XL crude oil pipeline, alleging severe economic harm and threatening to take legal action.

“We write with alarm regarding your unilateral and rushed decision to revoke the 2019 Presidential Permit” for the pipeline, the officials wrote in a Feb. 9 letter (pdf), initiated by Montana Attorney General Austin Knudsen.

Calling cancellation of the pipeline a decision “to impose crippling economic injuries on states, communities, families, and workers across the country,” the attorneys general urged Biden to reconsider, while warning that they are “reviewing available legal options.”

In the letter, Knudsen denounced Biden’s decision to pull the permit as “a symbolic act of virtue signaling” that would do little to accomplish its stated objective of protecting Americans and the domestic economy from harmful climate impacts.

“The real-world costs are devastating,” Knudsen wrote. “Nationally, your decision will eliminate thousands of well-paying jobs, many of them union jobs.”

Keystone XL pipeline facilities in Hardisty, Alberta, in a file photo. The now-canceled pipeline would have carried oil-sands crude to the U.S. Gulf Coast from Hardisty. The Canadian Press/Jeff McIntosh

The State Department determined in 2014 (pdf) that the Keystone XL pipeline project would support a total of 42,100 jobs and create roughly 3,900 direct jobs in Montana, South Dakota, Nebraska, and Kansas over what was expected to be one or two years of construction.

After the pipeline entered service, operations would require around 50 employees in the United States, including 35 permanent employees and 15 temporary contractors, the State Department found.

While construction of Keystone XL would contribute roughly $3.4 billion to U.S. gross domestic product, according to a National Regulatory Research Institute review of State Department estimates (pdf), the pipeline would also offer tax revenues for local and state governments. Property taxes resulting from the project would generate roughly $55.6 million in Montana, South Dakota, and Nebraska.

Knudsen argued that axing the pipeline would deprive counties and states of future tax revenue.

“Montana will lose the benefits of future easements and leases, and several local counties will lose their single-biggest property taxpayer. The loss of Keystone XL’s economic activity and tax revenues are especially devastating as five of the six impacted counties are designated high-poverty areas,” Knudsen wrote.

In canceling the permit, Biden said the pipeline would do little to benefit the country’s energy security and economy, while approving it would undermine the administration’s efforts to combat climate change.

“In 2015, following an exhaustive review, the Department of State and the President determined that approving the proposed Keystone XL pipeline would not serve the U.S. national interest,” Biden wrote in his Jan. 20 executive order.

“That analysis, in addition to concluding that the significance of the proposed pipeline for our energy security and economy is limited, stressed that the United States must prioritize the development of a clean energy economy, which will, in turn, create good jobs,” he wrote.

“The analysis further concluded that approval of the proposed pipeline 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,” he wrote. “The world must be put on a sustainable climate pathway to protect Americans and the domestic economy from harmful climate impacts.”

Knudsen contended in the letter that Biden didn’t explain “how killing the Keystone XL pipeline project directly advances the goals of ‘protect[ing] Americans and the domestic economy from harmful climate impacts,’” nor does his decision “actually cure any of the climate ills” that the president referenced.

“Observers are thus left with only one reasonable supposition: it is a symbolic act of virtue signaling to special interests and the international community.”

The Keystone XL pipeline was first proposed in 2008 but reached a snag under the Obama administration. Former President Donald Trump revived the project and was a strong proponent.

The cancellation of the Keystone construction permit has also drawn heavy criticism from industry groups and Republican lawmakers.