Long but not impossible odds that TC Energy recovers Keystone XL damages

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TC Energy faces long odds and a multiyear fight to recover economic damages from President Joe Biden’s cancellation of the Keystone XL oil pipeline.

The Canadian energy company said on July 2 it had filed a notice of intent with the State Department to bring a legacy claim under the North American Free Trade Agreement. TC Energy said it would seek to recover more than $15 billion “in damages it has suffered as a result of the U.S. Government’s breach of its NAFTA obligations.”

KEYSTONE XL DEVELOPER TO PULL THE PLUG ON PIPELINE

TC Energy pulled the plug in June on the 1,200-mile pipeline that would have delivered crude from Canada’s Alberta oil sands to refineries in the Gulf Coast. Biden, in a day-one climate change executive order, had revoked a key presidential permit for the project, drawing intense backlash from Republicans and energy companies.

The Keystone XL pipeline’s history has been fraught over the last decade as the project became a political football.

Former President Barack Obama initially rejected the pipeline under pressure from climate activists. Then former President Donald Trump revived the project, allowing TC Energy to begin some construction, though court challenges continued to stall the pipeline after that.

With Biden’s cancellation of the pipeline, the project is dead, but TC Energy is now seeking to recoup some of its investment. Energy and trade attorneys say it’s tough to know at this point what the outcome might be but say TC Energy faces tough, but not impossible, odds of success.

“There is a chance there would be a ruling in favor of TC Energy, and I think that would be a reasonable indictment of the inconsistencies of U.S. pipeline policy,” said James Coleman, a law professor at Southern Methodist University.

The Biden administration itself has been inconsistent in its pipeline policy, canceling Keystone XL but allowing the Dakota Access pipeline to continue operating. In addition, the Biden administration has defended Enbridge’s contentious Line 3 oil pipeline expansion while saying it would further scrutinize the company’s equally hard-fought Line 5 oil pipeline.

TC Energy’s notice of intent is just the first step in a lengthy, often expensive process to resolve claims under the trade agreement.

“These take a long time to reach the final conclusion. I’m expecting that this will likely last for several years,” said Lawrence Herman, a Toronto-based attorney with Herman & Associates.

Herman said TC Energy’s notice of intent, which hasn’t yet been made public, will only offer the bare bones of their arguments. Both TC Energy and the State Department declined to share the notice with the Washington Examiner, though the State Department confirmed its receipt.

The next step is a notice of arbitration, which will lay out, in detail, TC Energy’s legal claims, and then the United States will respond. There aren’t hard deadlines for those filings, as in court cases, so it could be a year or more before the parameters of the battle are set.

For example, TC Energy has made this type of claim before, against the Obama administration in January 2016. Those claims became moot when Trump approved the pipeline in March 2017, but in that time, TC Energy’s case hadn’t yet moved toward arbitration.

TC Energy could also face an uphill battle from the start. No company or investor has ever won a NAFTA claim against the U.S. before.

Even so, TC Energy can leverage the whole history of the Keystone XL pipeline dispute to its advantage. That includes “multiple statements from Obama that he would approve [the pipeline] if it were U.S. oil, but he wasn’t going to because it was Canadian oil,” Coleman said.

Herman said TC Energy is likely to argue Keystone XL’s cancellation “contravened the obligation of the United States to guarantee fair and equitable treatment” to foreign investors under NAFTA.

Nonetheless, TC Energy could face a challenge in its arguments given the clear opposition Biden and most of the Democratic presidential candidates had to the Keystone XL pipeline, Coleman said. He added that the Trump administration’s permit also cautioned that it could be revoked at any time.

The Biden administration could face a similar claim from the provincial government of Alberta, which also invested in the Keystone XL pipeline.

“We’ve been pretty clear that we’ll do whatever it takes to protect the taxpayers’ investment,” Alberta Energy Minister Sonya Savage told the Financial Post recently. “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.”

Energy and trade attorneys said Alberta filing a claim would be precedent-setting, as no government has ever done so but likely wouldn’t change the landscape much for TC Energy.

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Thus far, the Biden administration hasn’t publicly addressed TC Energy’s claim.

“We do not comment on potential dispute settlement proceedings,” a State Department spokesperson told the Washington Examiner.

“Canada is a key U.S. partner in energy as well as in efforts to address climate change and protect the environment. We look forward to working with Canada to meet these challenges together,” the spokesperson added.

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Tags: News, Energy and Environment, Oil, Keystone XL, Canada, Trade, NAFTA, Biden Administration

Original Author: Abby Smith

Original Location: Long but not impossible odds that TC Energy recovers Keystone XL damages

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