In May, the Canadian government announced it would buy the controversial Trans Mountain pipeline from Texas-based Kinder Morgan in order to finish the pipeline's expansion project.
But as of this summer, the Canada-backed pipeline faces a new hurdle: With one branch of the pipeline stretching into Washington state, President Donald Trump could veto its sale to the Canadian government as a national security risk.
Pipelines are considered critical infrastructure, and most of the Alberta tar sands oil carried by the Trans Mountain pipeline finishes its underground journey at refineries in Anacortes and Cherry Point, Washington. The pipeline would triple the amount of oil the pipeline currently carries and increasing tanker traffic in British Columbia and Washington’s shared waterways.
An obscure federal committee led by the U.S. Treasury Department has begun a 75-day investigation into whether the proposed sale poses a national security risk.
President Trump holds ultimate veto power over the deal.
The Canadian government and Texas-based energy firm Kinder Morgan agreed to submit to a voluntary review of their deal from the committee, called the Committee on Foreign Investment in the United States, according to an agreement obtained by CBC News. That request for review was sent in around July 3, according to an email from Finance Canada spokesperson Jack Aubrey, who declined to be interviewed. Kinder Morgan and the Treasury Department also turned down interview requests.
It's uncommon for the committee to thwart business deals, but the Trump administration has used it more aggressively than previous administrations, mostly to block Chinese investment in U.S. infrastructure.
"Nothing’s outside the realm of possibility with U.S. policy, but I would be very surprised to see CFIUS turn down this project in its current form," Ohio-based international trade attorney Dan Ujczo said. "Things would have to go way off track between Canada and the U.S. before we see this become a political issue that the Trump administration would use."
University of Washington business economist Debra Glassman said a key element for the pipeline review is how broadly the administration defines national security. "If it was a just a straightforward 'national security in a military sense' review, it would be a much more of a slam dunk," Glassman said.
Or, Trump could use his power over the pipeline as a bargaining chip in trade negotiations with Canada.
But Glassman said guessing what Trump will say or do is difficult.
"In the present context, it would not surprise me if lots of things became bargaining chips," Glassman said.
Kinder Morgan, amid opposition from the British Columbia government, as well as tribes and environmentalists on both sides of the border, halted pipeline construction in April.
Construction on the project is set to resume in August. With pipeline work set to resume soon, the Union of British Columbia Indian Chiefs issued a statement saying they will defend “the ecological security of our territories” and that the pipeline expansion “will never happen” on their tribal nations' lands, which were never ceded to Canada or any other government.
