Keystone XL Owners Seek $15B Compensation from Biden Admin for Canceling Pipeline
TC Energy Inc demands $15 billion for money already spent developing the canceled pipeline
The owners behind the Keystone XL Pipeline are seeking $15 billion in compensation from the U.S. government after Democrat Joe Biden's administration canceled the project.
TC Energy Inc. is demanding the Biden admin compensates the company for money already spent developing the canceled pipeline.
Following a 13-year dispute lasting three presidential administrations, Biden killed the pipeline earlier this year, citing climate change.
TC Energy filed a claim in one of the largest international trade disputes ever made against the United States, according to a Nov. 22 press release.
The dispute is being watched by corporations and in government on both sides of the U.S.–Canada border.
The Keystone Pipeline, which was still under construction upon its termination, was meant to transport 900,000 barrels a day of crude oil from Alberta to refineries on the U.S. Gulf Coast.
Originally approved during the Bush administration in 2008, it was rejected by former President Barack Obama in 2015 on environmental grounds, according to The Epoch Times.
The pipeline project was then revived by President Donald Trump before its permit was rescinded by Biden on his first day in office.
TC Energy stated that “The U.S. decision to revoke the permit was unfair and inequitable,” saying that it has a public responsibility to its “shareholders to seek recovery of the losses incurred due to the permit revocation,” but that it has no intention of ever reviving the pipeline.
"We’re not doing this for symbolic or political purposes,” said Richard Prior, the company’s senior vice-president for liquids pipelines, in an interview with Bloomberg.
"This is a business decision.
"We had all the permits and requirements in place to start construction on the line, and did so, and we worked with federal and state regulators in both countries for a very long period of time.
"This is just about recovering that destroyed value of investment.”
TC Energy filed its formal arbitration claims under legacy provisions of the North American Free Trade Agreement, which allows foreign companies to challenge U.S. policy decisions and seek compensation for lost investments.
The case is being arbitrated under NAFTA rules instead of the current U.S.–Mexico–Canada Agreement (USMCA), as pipeline construction started when NAFTA trade laws were still in effect.
Unlike the old NAFTA rules that favor TC in this case, the new USMCA trade rules that replaced it limit the use of so-called investor-state dispute settlement systems.
Erin LeBlanc, a lecturer at the Smith School of Business in Kingston, Ontario, told CBC he believes that TC has a “valid claim” in that it has enough of a case to prove that it was singled out solely for political purposes.
"TC has a great legal case going in,” said Gary Hufbauer, a Washington-based senior fellow at the Peterson Institute for International Economics, while speaking to Bloomberg.
"This was well out of the norm of customary government behavior.”
Hufbauer said that NAFTA language barred acts of arbitrary discrimination, as Biden immediately revoked TC’s permit without holding the standard governmental review at the beginning of his term.
However, the United States has had a good track record at beating investor-state dispute settlement claims by corporations.
"The United States has never lost any single case that’s been brought under NAFTA Chapter 11,” said Mark Warner, a trade attorney, in comments to the CBC.
"That’s not to say it’s impossible, but the cases that have succeeded have tended to succeed against Canada and Mexico.”
Warner believes that in the end, the Biden administration may settle for political reasons to avoid a long, protracted fight, but would likely wait TC out, as “they’ve got deep pockets” and that “they’ve had a pretty good track record of winning.”