Alberta to join NAFTA claim over Keystone
CALGARY — The Alberta government intends to join TC Energy Corp. in challenging U.S. President Joe Biden’s cancellation of the Keystone XL pipeline, in what would be the first time a level of government is directly involved in a NAFTA dispute as an investor, according to legal experts.
TC Energy announced July 2 the company filed notice it would seek US$15 billion “in damages that it has suffered as a result of the U.S. government’s breach of its NAFTA obligations.”
The case is being filed as a legacy North American Free Trade Agreement Chapter 11 dispute under the newly renegotiated United States-Mexico-Canada Agreement, “to recover damages resulting from the revocation of the Keystone XL project’s presidential permit.”
In 2020, Alberta Premier Jason Kenney’s provincial government had pledged to invest $1.5 billion in Keystone XL and provide up to $6 billion in loan guarantees for its construction. In total, the project’s cancellation has cost Alberta’s government $1.3 billion so far.
“We’ve been pretty clear that we’ll do whatever it takes to protect the taxpayers’ investment,” Alberta Energy Minister Sonya Savage said in an interview this week. “TC Energy has given their letter of intent. We’ve got lots of time to do that, there’s no limitation that we’re bumping up against.”
TC Energy, then known as TransCanada Corp., previously launched a Chapter 11 claim against the U.S. government when former U.S. president Barack Obama denied Keystone XL a cross-border permit and nixed the pipeline in 2015. At the time, the Calgary-based pipeline company had also launched a NAFTA challenge and filed a $15-billion lawsuit against the U.S. government.
The company withdrew those two suits when former U.S. president Donald Trump signed an executive order approving the pipeline and granting TC Energy a crossborder permit — a move that Biden reversed on his first day in office in January.
Legal experts believe TC Energy’s NAFTA claim will incorporate both Biden’s and Obama’s rejection of Keystone XL and the years the project spent in regulatory processes in its argument the project was not given “fair and equitable treatment,” as required under the free trade agreement.
“I would expect they’ll advance the entire history of Keystone XL,” said Lawrence Herman, a Toronto-based international trade lawyer with Herman Associations and Cassidy, Levy, Kent LLP.
Herman said that, if Alberta does follow through and join TC Energy in its NAFTA challenge, it would mark the first time a government has been involved as an investor in this type of trade case.
“This would create a precedent. There has never been a NAFTA Chapter 11 arbitration where a government has been a party to the case, so this will break new ground,” Herman said. “All of the cases between Canada and the United States have involved only investors challenging actions by government but here you’ve got another government, a subunit of Canada, involved in a dispute proceeding.”
He said these types of cases generally drag on for years and TC Energy’s notice marks only the first step in what is likely to be an expensive, five-year process.
“It will be a long, expensive and challenged by the unlimited resources of the United States government,” Herman said.
It’s unclear however, whether the province of Alberta can make a claim based on the entire history of the project, since the government only became an investor at the beginning of 2020 in an effort to kick start construction on the line.
“You need to make a claim based on how you were treated since you invested,” said James Coleman, a professor at the Dedman School of Law at Southern Methodist University in Dallas.