TC Energy’s $15B Claim Against U.S. for Biden’s Revocation of Keystone XL Pipeline Permit

Liskow & Lewis

TC Energy Corporation stated that it filed a notice of intent with the U.S. Department of State that it will make a claim against the U.S. under the North American Free Trade Agreement (NAFTA). The claim will be based on President Biden’s January 2021 revocation of TC Energy’s Keystone XL Pipeline permit.

NAFTA allowed for investors to seek arbitration against political states for certain mistreatment. See NAFTA at Chapter 11. That mistreatment could include a nation treating an investor of another nation less favorable than it treats its own investors (national mistreatment), treating an investor of another nation less favorably than an investor of a different nation (most-favored-nation mistreatment), not according an investor equal treatment under international law, or improperly expropriating an investment. See NAFTA at articles 1102, 1103, 1105, & 1110, respectively. But special protections are given to environmental measures taken by a nation that are not arbitrary, unjustifiable, or a “disguised restriction on international trade or investment.” NAFTA at article 1106.6; see also NAFTA at article 1114. Pursuant to NAFTA Article 1119, 90-days notice must be provided before submitting a claim for arbitration, which must include the “relief sought and the approximate amount of damages claimed.” According to TC Energy’s July 2, 2021 news release, it filed a notice of intent seeking $15 billion in damages.

A copy of the notice of intent has been requested from the U.S. Department of State and TC Energy, but The Energy Law Blog has not yet received a response. A similar notice of intent was filed by TC Energy in 2016 when President Obama denied its Keystone XL Pipeline permit. In that notice, TC Energy alleged the administration denied its permit for political reasons instead of the “merits of the application.” 2016 Notice of Intent at p. 3. TC Energy alleged that this denial amounted to a violation of NAFTA articles 1102, 1103, 1105, and 1110 (described above). It is likely that TC Energy’s latest notice of intent makes similar allegations about President Biden’s revocation.

In 2020, during President Trump’s administration, NAFTA was replaced by the U.S.-Mexico-Canada agreement (USMCA). The USMCA greatly limited investor-state actions, but it allows for certain legacy claims to be made under NAFTA—like that of TC Energy’s. A full history of the Keystone XL Pipeline saga is provided in a previous post.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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