Keystone XL owner TC Energy is seeking $ 15 billion from the United States for costs to discontinue the pipeline

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TC Energy Inc. has filed a formal arbitration request under NAFTA rules, demanding $ 15 billion in compensation from the US government for the money it spent trying to develop the suspended Keystone XL pipeline.

The company said in a statement late Monday that it has officially submitted paperwork under part of NAFTA’s rules that allow companies to seek compensation for lost investments. The case goes on under NAFTA rules and not new ones made under its successor, the Canada-US-Mexico Agreement (CUSMA), because it is a hereditary case, and NAFTA was the trading book when it started, said Erin LeBlanc, lecturer at Smith School of Business in Kingston, Ont.

“This is the largest claim for a Canadian organization against the US government of $ 15 billion,” she said, referring to the figure that Bloomberg first reported on how much in damages the company is seeking.

US President Joe Biden symbolically killed the pipeline on its first day in office earlier this year, the culmination of a multi-year saga under three US presidents to build a pipeline to take 900,000 barrels a day of crude oil from Alberta to refineries on the US Gulf Coast.

The pipeline was proposed during the Obama administration, which eventually rejected the application for environmental reasons. President Trump then revived the project, before Biden crushed it again.

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Jason Kenney had some strong words for US leaders regarding the cancellation of the Keystone XL pipeline when TC Energy filed a formal request for arbitration under NAFTA rules and demanded $ 15 billion in compensation from the US government. 1:26

Although TC Energy is trying to compensate for the money they spent trying to develop the project, they have no intention of reviving the pipeline.

“As a public company, TC Energy has a responsibility to our shareholders to seek redress for the losses incurred due to the revocation of the license, which resulted in the project being terminated,” the company wrote in a press release.

Long odds

LeBlanc said she believes the case has huge consequences.

“Governments on both sides will look at it because of the amount, but other companies will look at how it is handled.”

And she also thinks that TC Energy has some “valid statements” in the matter. The pipeline, which is abruptly discontinued, “amounts to indirect expropriation without compensation. Their investment was reduced to a value of zero with a stroke of the pen.”

TC can also credibly claim that it is pointed out by the decision, she said. “It was not a policy change that affected a lot of other organizations.”

The Keystone XL pipeline would have expanded an existing pipeline to move nearly one million barrels of oil per day.

Facts may be on their side, but trade lawyer Mark Warner says the company has a steep uphill climb to victory because of history.

“The United States has never lost a single case taken under NAFTA Chapter 11,” he said in an interview. “It is not to say that it is impossible, but the cases that have been successful have tended to succeed against Canada and Mexico.”

Politics was a factor in the project being suspended, and Warner says politics could prove to be TC’s best chance of claiming a profit on the issue, if the US government decides it wants to settle for dollars on the dollar for political reasons. to avoid a long, drawn-out struggle.

“They have deep pockets and they can wait out the other party, and they’ve had a pretty good result of winning,” Warner said. “There’s always a possibility that the Biden administration says ‘We do not want to fight this,’ but I think that’s unlikely to happen.”

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