TC Energy Files $15B Compensation Claim for Keystone XL Cancellation

Calgary-based pipeliner TC Energy is looking for more than US$15 billion in damages after U.S. President Joe Biden pulled the plug on the 900,000-barrel-per-day Keystone XL pipeline on his first day in office in January.

The arbitration request Monday “formally opened one of the largest trade appeals ever against the U.S.,” Bloomberg reports. The legal claim is based on a controversial investor-state dispute settlement (ISDS) mechanism under the North American Free Trade Agreement that allows companies to challenge government policy decisions.

Though then-U.S. president Barack Obama had cancelled the project in 2016 on evidence that it would accelerate the climate emergency, Donald Trump rescinded the cancellation after he blundered his way into the Oval Office a year later. That history now has TC claiming in its arbitration filing that “the U.S. decision to revoke the permit was unfair and inequitable”. It blames the U.S. government for putting it through a 13-year “regulatory roller coaster”.

TC Energy has no plans to revive Keystone XL, even if it wins the arbitration, said Richard Prior, the company’s senior vice president for liquids pipelines. It’s aiming to recover the investment it says it lost on the project.

“We’re not doing this for symbolic or political purposes. This is a business decision,” Prior told Bloomberg. “We had all the permits and requirements in place to start construction on the line, and did so, and we worked with federal and state regulators in both countries for a very long period of time. This is just about recovering that destroyed value of investment.”

While successful ISDS claims are relatively rare, Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, said TC Energy has an “extremely strong case”, after Biden cancelled Keystone on his first day in office rather than putting it through yet another round of regulatory review.

“TC has a great legal case going in,” he told Bloomberg. “This was well out of the norm of customary government behaviour.”