President Trump ordered one of his top economic advisers to threaten a pipeline company that he would “terminate” a project if they didn’t drop what he described as a “$14 billion” lawsuit against the United States, the president told a crowd on Tuesday night.
Trump, in a speech at a fundraiser in Washington, said the directive was given to National Economic Council Director Gary Cohn, a former president of Goldman Sachs, though he didn’t specify which company was being told to drop their lawsuit. Trump said the company did drop the lawsuit, adding “Isn’t that easier?”
“Being president gives you great power,” Trump said.
Cohn has emerged as one of Trump’s top advisers, with an expanding portfolio that includes virtually all economic and jobs-related issues. Trump has personally threatened several companies since winning the election, telling Boeing and Lockheed Martin for example that he might block some of their contracts, but this is the first time he’s revealed ordering a top adviser to deliver such a message.
In June, TransCanada, the Canadian firm that has tried to develop the Keystone XL pipeline since 2008, filed a $15 billion claim against the United States, alleging the Obama administration’s refusal to allow the construction of the pipeline was “based on an arbitrary political calculation.”
The claim alleged that blocking the pipeline deal was a violation of the North American Free Trade Agreement, and the case was filed in the International Center for the Settlement of Investment Disputes.
On Jan. 24, in one of his first acts as president, Trump signed an executive order that “invites” TransCanada to resubmit its application for building the Keystone XL pipeline. This was seen as a way to clear the way for the project to proceed, though there were still some procedural hurdles for the company. Trump has said the pipeline would help create American jobs and improve the economy. But climate scientists and environmentalists had opposed the creation of the pipeline, saying the Trump administration was giving a gift to big oil companies at the expense of the environment.
President Obama had blocked the development of Keystone XL, saying the project would contribute to climate change because it would carry tar sands oil, which is especially greenhouse-gas intensive because of the energy used to extract the thick bitumen from the ground. The company had filed its original permit to build the line seven years earlier.
On Feb. 27, TransCanada’s lawsuit against the United States was suspended for one month, “pursuant to the parties' agreement.”
Describing his exchange with Cohn, Trump on Tuesday night recalled saying, “Wait a minute. I’m approving the pipeline and they’re suing us for $14 billion and I’ve already approved it right?’ I said … ‘Go back to them and tell them, if they don’t drop the suit immediately, we are going to terminate the deal.’ ”
In fact, Trump had not actually approved the pipeline deal when he signed the executive order, only cleared the way for the pipeline application to be resubmitted.
Trump had also stated during his first week in office that the pipeline and all new pipelines would have to be built with American steel in American pipes. He reiterated that Tuesday night, saying “I paved the way for the Dakota Access and Keystone XL pipelines and made a requirement that American pipelines be constructed with American steel. … You want to put pipelines under our land? You’re going to make the pipe in this country.”
But TransCanada had purchased the pipe it needed years earlier when it thought the project would be approved; only half came from U.S. pipeline makers and much of the raw steel for that came from abroad. Earlier this month the White House said that the Keystone XL project could move ahead without using U.S.-made steel.
Terry Cunha, a spokesman for Calgary-based TransCanada, said in an email that “As of today, we are continuing to work with the administration on our presidential permit application.” The company's lawyers in the arbitration case did not comment.
A White House spokeswoman declined to comment on Trump’s directive to Cohn or on whether Cohn ever delivered the message to the company. Still, ethics experts said Trump’s message to the company could be seen by other firms as a threat of future retaliation if they don’t do what he wants.
“While demanding litigation be dropped can sometimes be part of a legitimate negotiation, Trump’s bullying, boastful manner here is odious,” said Norman Eisen, who was special counsel to the president for ethics and government reform in the Obama administration. “It also sends a dangerous message: He is prepared to retaliate against those who exercise their legal rights in court.”