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NAFTA 2.0 could include provision removing U.S. presidential permitting process for cross-border tar sands pipelines

Prime Minister Justin Trudeau at the CERAWeek energy conference in Houston on Texas, March 9, 2017, where he famously said, “No country would find 173 billion barrels of oil in the ground and leave them there.” Sponsors of the conference included bp, ConocoPhillips, ExxonMobil, Total, Chevron, and Shell.

The renegotiation of the North American Free Trade Agreement (NAFTA) could involve the United States presidential permitting process for cross-border pipelines and hydro-electric transmission lines.

The Financial Post has reported that the Canadian Chamber of Commerce “urged Canada to push the U.S. to end the practice of requiring a presidential permit for pipelines such as TransCanada Corp.’s Keystone XL” in this June 2017 submission to the Trudeau government on the NAFTA talks.

Their submission states, “NAFTA contains extensive provisions ensuring that Canada cannot interfere with energy exports. Articles 603 – 607 detail the specific, and very limited, conditions under which Canada can curtail exports in response to armed conflict, concerns about nuclear proliferation, etc. It is surprising, then, that the United States retains the authority for the President to issue a permit allowing the construction of an energy pipeline or transmission line to cross the international border.”

The Chamber of Commerce then advocates, “Canada should seek a provision of the new NAFTA removing this mischievous requirement for pipelines and transmission lines crossing the Canada/US national border.”

On July 20, The Globe and Mail reported, “The presidential permitting process – established under executive order in 1968 – became mired in controversy in the battle over TransCanada Corp.’s [830,000 barrel per day] Keystone XL pipeline that was turned down by then-president Barack Obama in 2015…”

On a related track, that article adds, “The Republican-dominated House of Representatives approved a bill [on July 19] that would regulate the cross-border permitting of energy infrastructure; the bill must now go to the Senate where the Republicans hold a slim majority. If passed in the Senate and signed by President Trump, the legislation would further the integration of the North American energy market and reduce the opportunity for opponents to block controversial cross-border projects.”

Specifically, “The legislation would take the review of oil pipelines out of the hands of the State Department and put it with the industry-friendly Federal Energy Regulatory Commission (FERC). FERC – and the Department of Energy in the case of transmission lines – would have strict time limits on the review process and would have to approve a project unless it is shown not to be in the public interest, reversing the current onus on proponents to demonstrate their projects are in the national interest in the United States. The reviews would focus narrowly on construction at the border, thereby avoiding any assessment of the impacts of the energy production itself – whether emissions of greenhouse gases from the oil sands, or massive flooding at Canadian hydroelectric sites.”

The Financial Post has also noted, “The country’s foremost energy lobby group [the Canadian Association of Petroleum Producers] is seeking changes that make it easier for oil and gas to flow across borders by relaxing documentation requirements. It argues oil or gas loaded into any pipeline, ship, train or truck within North America should automatically be considered as NAFTA origin. ‘There simply is no back door for crude oil or natural gas into North America’, the group said.”

And Sergio Marchi — a former Liberal minister of international trade, the former chairman of the World Trade Organization’s ruling council, and now the president of the Canadian Electricity Association — says, “As we now enter NAFTA re-negotiations, we should be thinking of how to construct a modern continental energy strategy, which among a set of strategic issues, will include a more practical and streamlined regulatory regime.”

Increasingly, it would appear that by 1) not addressing the harmful Article 605 energy proportionality provision in NAFTA (and reportedly seeking to include Mexico under that provision), 2) seeking ways to lock-in Mexico’s neo-liberal ‘reforms’ of its energy sector, 3) not removing the fossil fuel industry friendly investor-state dispute settlement provision, 4) likely streamlining regulations and rules of origin, 5) and possibly “removing the mischievous requirement” for a presidential permit on cross-border pipelines, that NAFTA 2.0 is a climate crime in the making.

The next round of NAFTA talks will take place in Ottawa September 23-27.