The owner of the Keystone XL pipeline is suing the U.S. government as payback for canceling a permit for the project. The claim, which comes under a provision in the United States–Mexico–Canada Agreement, shows the need to rewrite trade law to prioritize people and the planet over polluting companies.
The Keystone XL, which would have shipped 800,000 barrels of oil a day from Canada to the U.S, was the locus of a major climate justice battle. It would have been built through Indigenous-controlled territory, violating 19th-century treaties that affirmed their sovereign status; put communities in danger from land and water pollution from oil spills; and spewed out tens of millions of tons of greenhouse gases.
“This pipeline would have come with such tremendous costs and expenses to health, to land, to water, which of course would be costs … to everyday people,” Joye Braun, a member of the Cheyenne River Sioux and an organizer with Indigenous Environmental Network, said.
Back in January, the Biden administration pulled a necessary permit for the pipeline, which was being developed by TC Energy. Then last month, in a shocking move, TC Energy terminated the project. But on Friday, the developer announced it will seek more than $15 billion from the Biden administration in damages. Those damages would come out of taxpayer money, experts say.
“If you just do the math, that amounts to about $100 out of every U.S. taxpayer’s pocket,” Ben Beachy, director of the Sierra Club’s Living Economy Program, said.
On Friday, TC Energy filed a notice of intent to file a suit with the State Department, indicating its belief that pulling the permit breached the federal government’s trade obligations, and that the company—poor baby—“suffered as a result.”
“They injured our land and threatened our water, so if anything, I think that they still owe us, not the other way around,” said Braun. “They built illegally on our territory, so you have to ask, who should owe who?”
TC Energy’s claim falls under a cartoonishly evil part of the 1994 North American Free Trade Agreement (NAFTA). Known as the investor-state dispute settlement provision, it essentially allows companies to sue governments for alleged discriminatory treatment.
Though NAFTA was replaced by the United States–Mexico–Canada Agreement last year, the new pact allows companies to continue using the investor-state dispute settlement provision until July 2023. In a recorded sting operation by Greenpeace UK released last week, top ExxonMobil lobbyist Dan Easley claimed responsibility for that clause.
Corporations have launched over 700 of these cases under NAFTA, and since 2010, more than a quarter have targeted regulations affecting oil and gas extraction, mining, or fossil fuel power generation, Beachy explained. “This is a favorite cudgel corporate polluters to try to derail the transition to a clean energy economy.”
It’s not the first time the pipeline company has used NAFTA to call for damages from the government. Back in 2016, after former President Barack Obama rejected the project, TC Energy, then known as TransCanada, filed a similar claim, which also asked for $15 billion. It used it as leverage to push former President Donald Trump to grant them the permit that Biden later revoked.
In the new claim, TC Energy says the damages would help it to “recover economic damages” it lost due to the project’s cancellation. It doesn’t say exactly how it came to the $15 billion figure, but Beachy says that the last claim was full of fishy math.
“You’d have to have made some enormous logical leaps to get to the audacious claim that the United States government owes this pipeline company billions of dollars in profits that it could have made if that pipeline were allowed to go forward,” he said. “The vast majority of that $15 billion dollars was not about actually incurred costs, but rather hypothetical profits that Trans Canada’s lawyers hoped the company would have made if they were allowed to move the project forward.”
Once TC Energy formally launches its case, a panel of three unelected corporate lawyers—one appointed by the corporation, one by the state, and a third who is usually chosen by agreement—will decide if it is legitimate. If they move it forward, that same body will then decide who wins. There will be a mandatory period when governments can submit their comments, yet this international arbitration tribunal is under no obligation to hear them out. A democratic process, it is not.
Whether or not the panel rejects the claim, the fact that it could even be filed in the first plate points to the need to completely restructure trade law to put society and the planet above oil and gas interests.
“TC Energy bringing a claim under the investor-state dispute settlement is an indictment of our broken trade system, written by and for corporations,” said Collin Rees, a campaigner with Oil Change U.S. “Until the system is radically transformed to work for people, not big polluters, we’ll continue to see giant firms try to steal money from the American public to line the pockets of greedy executives.”