TC Energy Inc. has filed a formal request for arbitration under NAFTA rules, seeking $15 billion in compensation from the US government for money spent trying to develop the canceled Keystone XL pipeline.
The company said in a statement late Monday that it has officially filed paperwork under a part of NAFTA rules that allows companies to seek compensation for lost investments. The case is proceeding under NAFTA rules, not its successor, the new ones created under the Canada-US-Mexico Agreement (CUSMA), as it is a legacy case, and NAFTA was business law on the books when it began, said Erin LeBlanc, a lecturer at the Smith School of Business in Kingston, Ont.
“This is the largest-ever $15 billion claim for a Canadian organization against the US government,” he said, citing figures previously reported by Businesshala.
US President Joe Biden symbolically killed the pipeline on his first day in office earlier this year, the culmination of a multi-year saga under three US presidents bringing 900,000 barrels of crude oil from Alberta to refineries in the US. To create a pipeline for Gulf Coast.
The pipeline was proposed under the Obama administration, which ultimately rejected the application on environmental grounds. President Trump revived the project, before Biden disbanded it again.
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Although TC Energy is seeking compensation for the money it spent developing the project, it has no intention of reviving the pipeline.
“As a public company, TC Energy has a responsibility to our shareholders to seek recovery of damages caused by permit revocation that resulted in the termination of the project,” the company said in a press release.
LeBlanc said he thinks the case has huge implications.
“Governments on both sides are going to look at it because of the amount, but other companies are going to see how it’s handled.”
And she also thinks that TC Energy has some “valid claims” in the matter. The pipeline being shut down abruptly “amounts to indirect ownership without compensation. His investment was brought down to a value of zero with a flick of a pen.”
He added that the TC can also credibly claim that it was set aside from the decision. “It was not a policy change that affected a bunch of other organizations.”
The facts may be in their favor, but business attorney Mark Warner says the company has an uphill climb to victory because of history.
“The United States has never lost a single case that has been brought under NAFTA Chapter 11,” he said in an interview. “It’s not impossible to say, but the cases that have succeeded are those against Canada and Mexico.”
Politics was a factor in the cancellation of the project, and Warner says that politics could prove to be the TC’s best chance to claim victory if the US government decides it will avoid the political in the long run. Wants to settle for money on the dollar for reasons. Long fight.
“They have deep pockets and can wait outside the other party, and they have a very good track record of winning,” Warner said. “It’s always a possibility that the Biden administration says, ‘We don’t want to fight this,’ but I think that’s not likely to happen.”
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