Ottawa urged to back U.S., not TC Energy, in $15B lawsuit over demise of Keystone XL

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A progressive public policy think tank is urging the federal government to side against oil and gas transmission giant TC Energy in its ongoing dispute with the United States over the ill-fated Keystone XL project.

The Calgary-based company is seeking to recoup US$15 billion in lost revenue from the on-again, off-again cross-border pipeline expansion, which President Joe Biden killed off for good in 2021 on his first day as commander-in-chief.The lawsuit is based on the investor-state dispute rules in the now-expired NAFTA, as well as that deal's successor, the U.S.-Mexico-Canada Agreement, which included a three-year extension of those rules for so-called "legacy" investors.

Rather, it argues, the case represents an important chance for both governments to defend their ability to pursue climate-friendly public policy without being forced to "unjustly" enrich impacted investors. At the moment, it's about jurisdiction: TC Energy wants to apply the now-defunct investor-state dispute settlement mechanism in NAFTA, which expired in 2020, since the project traces its lineage as far back as 2008.

The U.S., however, is arguing that the grace period was not intended as a "sunset clause" for NAFTA disputes, but "an orderly way to resolve prior disputes" that were left outstanding after the deal's expiration. There is more at stake than just TC Energy's eye-popping damages claim, the report says: An early dismissal of the suit would mitigate the ongoing cost of the global energy transition, not just for the U.S. but the rest of the planet.

 

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