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KXL fight goes legal; TC Energy seeks US$15 billion in damages
Gary Park for Petroleum News
The Alberta government is mulling over whether to join TC Energy in a US$15 billion trade action against President Joe Biden’s decision to terminate the Keystone XL pipeline.
TC Energy said it aims to recover the damages it “has suffered as a result of the U.S. government’s breach of its (North American Free Trade Agreement) obligations.”
The case has been filed under a NAFTA carryover to the recently negotiated United States-Mexico-Canada Agreement.
Alberta Energy Minister Sonya Savage said her government is still mulling its options to recover C$1.3 billion it invested in KXL.
The government of Premier Jason Kenney had also offered to provide up to C$6 billion in loan guarantees, though there is no indication TC Energy made any use of that money.
“We’ve been pretty clear that we’ll do whatever it takes to protect the taxpayers’ investment,” said Savage.
“TC Energy has given their letter of intent. We’ve got lots of time to do that.”
Changes slim A veteran U.S. trade lawyer said the chances of TC Energy (which booked a C$2.2 billion first-quarter impairment charge related to the suspension of KXL construction) or Alberta getting their money back are slim.
Mark Warner, a principal at the Toronto-based law firm of MAAW, which specializes in regulatory and international law, said no case ever succeeded against the U.S. under NAFTA’s investor-state dispute settlement system.
He said the onus is on any company outside the U.S. to prove it had been “treated unfairly or differently than any American company would have been in the same situation.”
“This will go on for a long time. The question is how much corporate energy TC Energy wants to devote to fighting this case.”
Line 5 focus Warner said it was his sense that the Canadian government has no desire to join a legal fight over KXL.
He said Prime Minster Justin Trudeau’s strongest energy interest, beyond completion of the Trans Mountain expansion project, is in protecting Enbridge’s improvements to Line 5 and preventing Michigan Gov. Gretchen Whitmer’s efforts to unilaterally shut down the line.
In a meeting with Kenney on July 8, Trudeau said the “concern we all share about Line 5 is real. We are focused on making sure that things don’t get disrupted.”
But he gave no indication whether his government is prepared to submit a case to a binding international arbitration panel.
For now, he said Canada is working through its embassy in Washington, D.C., to deal with the Biden administration on Line 5. “We haven’t taken any possibilities off the table,” he said.
Claim launched, withdrawn earlier TC Energy launched a claim against the U.S. government when former President Barack Obama denied KXL a cross-border permit and nixed the pipeline in 2015.
At that time, TC Energy (then known as TransCanada) launched a NAFTA challenge and filed a US$15 billion lawsuit against the Obama government.
Those two suits were withdrawn when former President Donald Trump issued an executive order approving KXL and granting TC Energy a cross-border permit.
Legal experts believe TC Energy will incorporate its dealings with the Obama and Trump administrations in the latest lawsuit, arguing KXL was not given “fair and equitable treatment” as required under the free trade pact.
- GARY PARK
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