THURSDAY, JUNE 30, 2016
After having filed suit against the U.S. government in January, the company behind the controversial Keystone XL oil pipeline is now formally seeking $15 billion in damages in response to the project’s rejection.
TransCanada Corporation claims unfair treatment in the prolonged consideration of its permit application, Bloomberg Bureau of National Affairs reported.
Originally filed in September 2008, the application to permit cross-border construction was ultimately rejected by President Barack Obama on Nov. 6, 2015, under grounds that allowing construction would not serve the national interests of the U.S.
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| © TransCanada Corporation. All rights reserved. |
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TransCanada Corporation, based in Calgary, is seeking $15 billion in damages from the United States government, alleging discrimination in its rejection of application to build the cross-border Keystone XL oil pipeline. |
The energy company’s request for formal arbitration, filed Friday (June 24) with the International Centre for Settlement of Investment Disputes, also claims that, as a signatory to the North American Free Trade Agreement, the U.S. government “failed in its commitment to protect Canadian investors and ensure the company was treated in accordance with international law,” according to the Toronto Star.
The Keystone XL pipeline project was intended to carry crude oil from the oil sands in Alberta, Canada, into the U.S. Heartland region, and on to the Gulf of Mexico for distribution. Keystone XL would have carried as much as 830,000 barrels a day and spanned 1,179 miles (1,897 kilometers) from Alberta to Nebraska.
Prolonged, Costly Review Process
Seeking to reverse the late-2015 rejection, TransCanada, based in Calgary, filed suit against the U.S. government on Jan. 6 in the U.S. District Court for the Southern District of Texas. It made the move to request arbitration for compensation, it said, after negotiations to resolve the dispute in April failed.
According to the pipeline owner, federal officials could have made an immediate decision on the application; instead, they prolonged the review process under the premise of collecting more information that played no role in the final decision.
Rather, the rejection was purely a political move, it alleges, to make the government appear to be taking a strong case on climate change—despite the fact that its own investigations found the pipeline would not have a significant impact on greenhouse gas emissions.
“For political reasons, however, the State Department delayed its decision for seven years, with full knowledge that TransCanada was continuing to invest billions of dollars in the pipeline project in the legitimate but ultimately false belief—a belief that had been based on the Administration's assurance—that the Administration would decide Keystone's application based on the merits,” the request noted.
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| By Brylie Oxley / CC BY-SA 3.0 via Wikimedia Commons |
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The pipeline. which was not controversial at the time the application was submitted, became highly politicized and a target of environmental activists, the company claims, adding that the decision was a political move designed to bolster the government's position on climate change. |
The process, as the company understood it, was that the State Department would assess its applications based on a set of “standard and largely technical criteria” and address any environmental concerns related to proposed pipelines by requiring “specific construction and environmental mitigation measures or enhancements to the design of the pipeline.”
Instead, the pipeline. which was not controversial at the time the application was submitted, became highly politicized and a target of environmental activists. “It was the Administration’s own negligent delays that allowed the application to become a political symbol,” the filing noted.
Good Faith Expenditures
To recover what it says are costs and damages related to their preparations during the seven-year review period, TransCanada is asking for $15 billion plus interest plus arbitration and legal fees.
“As with any pipeline of this type, construction of the Keystone XL Pipeline could not begin until after a substantial amount of advance work had been completed, and it was critical to begin that work while the application for the Presidential Permit was pending, the complaint read.
“Throughout the more than seven-year delay, Claimants and Claimants’ U.S. enterprises had no choice but to continue making capital expenditures, and investing in land easements, pipe, materials, equipment, etc. so that it would be in a position to start construction as soon as possible after the permit was granted. These investments were undertaken with the State Department’s knowledge,” it explained.
At the time of its application, TransCanada noted that the stated U.S. policy was—and remains—to “expedite the development of energy production and transmission projects, including oil pipelines.”
Moreover, the company noted, to its knowledge, the government had never before denied an application for cross-border oil pipeline prior to the rejection of Keystone XL.
Arbitration Hearing
TransCanada’s case will be held before a tribunal consisting of three arbitrators, according to the arbitration filing. One arbitrator will be appointed by each of the affected parties, and the third will be selected under agreement of both parties.
According to The Toronto Star, the U.S. has never lost a claim under NAFTA, although experts are reluctant to rely on that winning streak.
Jim Rubin, a partner at law firm Dorsey & Whitney in Washington, D.C., told the Star that NAFTA arbitration tribunals are not bound to follow precedents set in past cases such as in a traditional court setting.
Meanwhile, the heads of NAFTA members (Canada, the United States and Mexico) were slated to meet in Ottawa for a North American leaders' Summit Wednesday (June 29). Canada was supposed to host the meeting early last year but canceled the event because of tensions over the Keystone XL pipeline, Reuters said.
Tagged categories: Government; Laws and litigation; Lawsuits; Oil and Gas; Pipeline; Pipelines; President Obama; Program/Project Management
