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Washington, D.C. – Developers of Keystone XL Pipeline are pursuing to obtain $15 billion in recovery for the revocation of the pipeline’s building permit. President Biden has cancelled the permit for the border-crossing project after construction had already begun.
TC Energy Corp. & TC Pipelines of Calgary, Alberta opened one of the largest trade appeals against the United States, requesting for Keystone XL to be in the front of the international arbitration panel. The legal claim is being held under the provisions of the North American Free Trade Agreement which permits foreign companies to object policy decisions of the U.S.
TC Energy has stated the country’s decision to rescind the permit was “unfair and inequitable”. The company blamed the U.S. for its 13-year controversial debate and uncertainty regarding Keystone XL.
The pipeline would have transported about 900,000 barrels of Canadian crude to refineries in America. Initially rejected by President Barack Obama, the project was then later revisited by President Donald Trump who revived the proposed project. On President Biden’s first day of office, the pipeline was rejected once more.
Arbitration is still allowed in some legacy investments despite the new U.S.-Mexico-Canada Agreement which replaced NAFTA’s use of investor-state dispute settlement programs.
After Biden revoked the permit, TC Energy halted and terminated construction on Keystone XL. The company has no intention to resume construction regardless of the trade case’s end result. The case has been filed for the purpose of recovering the investment TC Energy has lost during its time pursuing the pipeline.
The company’s senior vice president, Richard Prior, claimed that the case is not for symbolic or political purposes but merely for business. Prior stated that TC Energy had all the needed permits and requirements ready to begin construction and that they have worked with both federal and state regulators in the U.S. and Canada. The case therefore is to recover for the destroyed value and time of investment.
TC Energy asserts that the U.S. violated its obligations under NAFTA saying that the company agreed to abandon a previous NAFTA arbitration claim after the Trump administration promised “its third application would be fairly considered by the United States”. TC Energy is additionally reviewing earlier arguments during the Obama administration’s dismissal of Keystone XL in 2015.
The dispute is said to go before an arbitration panel of three members. One will likely be selected by TC Energy while the second will be appointed by the U.S. and the third appointed by mutual agreement among both parties. The court has the authorization to award damages for a company’s lost profits and costs.
Typically, investor-state dispute settlement claims by corporations against the U.S. are rare and the U.S. is known to win them. But companies have been successful in similar international disputes. Earlier this year, Germany agreed to pay US$2.9 billion to Sweden’s Vattenfall AB as part of a compensation package which resolved a 10 yearlong brawl over Germany’s decision to remove nuclear power. President Biden’s decision to revoke the permit on his first day in office without a round of government analysis gives TC Energy an extremely strong cause under NAFTA regarding arbitrary discrimination.
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