Fracking suit fuels criticism of free-trade deals
OTTAWA — Free-trade critics say a $250-million damage suit triggered by Quebec’s moratorium on fracking is proof Canada needs to be careful in negotiating trade pacts around the world.
The Council of Canadians, the Sierra Club and Quebecbased Eau secours say the suit by Lone Pine Resources Inc. shows that trade deals that include investor-protection clauses are a bad idea because they can prevent governments from passing laws to protect the environment.
The groups are asking Lone Pine to drop the suit before a NAFTA panel. But company president Tim Granger says he’s going ahead unless Quebec lifts its moratorium on fracking for natural gas under the St. Lawrence River.
“As an organization we, in good faith, purchased leases, we paid rentals and then to just have been stymied, that’s not acceptable,” he said in an interview. “What we are asking for is some level of restitution for losses we have incurred and what we could have potentially received if we were allowed to develop those leases.”
The statement of claim filed Sept. 6 says the company “expended millions of dollars and considerable time and resources” on the project. The Quebec government, it says, was “arbitrary” and “capricious” in revoking the rights before an environmental study on the fracking process was completed.
The company estimates 1.9 trillion to 3.3 trillion cubic feet of undiscovered natural gas — the equivalent of about half of Canada’s total annual production — lies trapped in shale in the area covered by the suit.
But the groups say the suit has come to symbolize everything that is wrong with investor-protection clauses in major trade agreements. The Canadian case has attracted even greater scrutiny because Quebec has yet to decide whether fracking—the injection of fluids into the ground at high pressure to fracture shale and release natural gas — can be done safely under the St. Lawrence.
“If a government is not even allowed to take a time out to study the impact without having to compensate a corporation, it puts a tremendous chill on a government’s ability to regulate in the public interest,” said Ilana Solomon, director of the Sierra Club’s trade program in Washington, D.C.
Stuart Trew, a trade campaigner with the Council of Canadians in Ottawa, which has generally been critical of trade deals, says the suit has attracted attention in Europe, Australia and other countries contemplating major trade deals.
Canada should expect more lawsuits if it completes trade deals with the European Union and in the TransPacific Partnership, Trew said, since both are likely to include investor-protection provisions similar to the one in NAFTA. “This Lone Pine case has become kind of the poster child for what’s wrong with giving corporations the right to sue governments when they don’t like certain policies,” he said.
“We have no confidence the government is going to be able to limit cases brought by European countries.”
Even if lawsuits fail, Trew said, such cases serve as an “entirely intentional” chill to governments that want to regulate in the environment and public safety.