(Washington) A progressive public policy think tank is urging the federal government to oppose oil and gas transportation giant TC Energy in its ongoing dispute with the United States over the now aborted Keystone XL project.
The Calgary-based company is seeking to recover US$15 billion in lost revenue from the cross-border pipeline expansion project, which President Joe Biden killed for good in 2021, on his first day as president.
The lawsuit relies on the now-expired NAFTA investor-state dispute settlement, as well as that agreement’s successor, the Canada-United States-Mexico Agreement (CUSMA), which provided for an extension of three years of these rules for previous investments.
A new report released Wednesday by the Canadian Center for Policy Alternatives recommends Ottawa back the US defense: that TC Energy has no legal recourse under North American trade rules, past or present.
“Although the dispute between TC Energy pits a Canadian company against the US state, it does not follow that it is in Canada’s interest for TC Energy to prevail,” the report said.
On the contrary, he argues, the case represents an important opportunity for both governments to defend their ability to pursue climate-friendly public policy without being coerced into “unfairly” enriching the investors involved.
“The Keystone XL case is a clear example of a company seeking compensation for making a risky bet,” wrote lead researcher Stuart Trew and Queen’s University professor Kyla Tienhaara, co-authors of the report.
The bet, they say, was on the 2020 reelection of former President Donald Trump, who championed and resurrected the project in 2017, after it was rejected by the Obama administration two years earlier.
“That bet didn’t work out. »
The dispute is being heard by the International Center for Settlement of Investment Disputes, a Washington-based affiliate of the World Bank, which registers dozens of disputes between investors and states around the world each year.
For now, it’s a matter of jurisdiction: TC Energy wants to apply NAFTA’s now-defunct investor-state dispute settlement mechanism, which expired in 2020, since the project dates back to 2008.
The company hopes to use a three-year grace period for NAFTA disputes that was included in the new CUSMA. According to the report’s tally, about 15 investors, including TC Energy, filed their disputes after NAFTA expired, but before the end of the April 30 grace period.
Five of those cases, including Keystone XL, are based on alleged breaches of NAFTA rules that occurred after the agreement expired – in the case of TC Energy, Mr. Biden’s decision to withdraw the presidential permit in January 2021.
The United States, however, argues that the grace period was not intended to be a “sunset clause” for NAFTA disputes, but “an orderly means of resolving prior disputes” that remained outstanding. after the expiration of the agreement. “The United States contends that if the CUSMA parties had simply wanted to extend NAFTA’s investment rules and investor-state dispute settlement procedures for three years, they would have done so. done through a standard sunset clause,” the report points out.
TC Energy disputes this interpretation, arguing that it has never been issued before and that there is no evidence to suggest that US, Canadian and Mexican negotiators considered anything other than a sunset clause to resolve disputes. .
There’s more at stake than just TC Energy’s claim for damages, the report says: an early dismissal of the lawsuit would mitigate the current cost of the global energy transition, not just for the United States, but for the rest of the planet.
A host of other files inherited from the CUSMA rules are still outstanding and represent compensation claims of more than US$23 billion.
“That’s why Canada’s next step and Mexico’s next step are so important,” the report said.
“A win for TC Energy would send a devastating message to countries around the world, most of which cannot afford to fund the clean energy transition while paying the fossil fuel industry. »