Keystone XL: Company seeks damages over pipeline’s cancellation

The company behind a multibillion-dollar oil pipeline nixed earlier this year by US President Joe Biden’s administration has filed a claim under the North American Free Trade Agreement (NAFTA) to recover economic damages caused by the project’s cancellation.

In a statement late on Monday, TC Energy Corporation said it filed a request for arbitration under a NAFTA provision that “allows companies to seek compensation for lost investment”, in relation to the Keystone XL pipeline.

“We will not comment further and will follow the process as set out,” the company said.

TC Energy said in June that it had terminated the Keystone XL project “after a comprehensive review of its options” and in consultation with its partner, the government of Alberta, an oil-rich province in western Canada.

The move came after the Biden administration in January revoked the presidential permit for the project, which had drawn years of opposition from Indigenous communities, environmentalists and landowners along the proposed route who argued it would accelerate the climate crisis.

The 1,947km (1,210-mile) pipeline would have shipped 830,000 barrels of oil per day from Alberta to the US state of Nebraska.

Former US President Barack Obama vetoed the project in 2015, saying it was not economically viable for the country, but Donald Trump in 2017 signed an executive order allowing it to proceed. Trump signed another presidential order in 2019 in an attempt to speed up construction.

But Biden had promised to cancel the project should he win last year’s US elections, saying he had “been against Keystone from the beginning”.

The pipeline has been a major point of contention between the US and Canada, as Prime Minister Justin Trudeau’s government had supported its construction. Trudeau expressed “disappointment” this year when Keystone was cancelled.

Right-wing Alberta Premier Jason Kenney, a top proponent of the pipeline whose government invested 1.5 billion Canadian dollars ($1.1bn) in the project last year, also had urged Biden to reconsider his position.

But Indigenous advocates said the project’s cancellation was “vindication” after years of efforts.

Matthew Campbell, a staff lawyer at the Native American Rights Fund, which has represented Indigenous groups in lawsuits against the project, said in January that the move recognised “that the tribes will be heavily impacted by the pipeline and so it should not be approved”.

Keystone XL is not the only cross-border pipeline project to cause tensions between the US and Canada in recent years.

Last month, the Trudeau government invoked a 1977 treaty with the US to trigger bilateral negotiations over Enbridge Inc’s Line 5 pipeline, which ships 540,000 barrels per day of crude and refined products from Superior, Wisconsin, to Sarnia, Ontario.

The US state of Michigan ordered Enbridge – a company based in Calgary, Alberta – to shut it down due to worries a leak could develop in a section running beneath the Straits of Mackinac in the Great Lakes.

Enbridge ignored Michigan’s order, however, and the sides are embroiled in a legal battle, while Ottawa has been pushing its counterparts in Washington to intervene.

On November 9, the White House said it was not contemplating shutting down Line 5.

“We expect that both the US and Canada will engage constructively in those negotiations,” White House spokesperson Karine Jean-Pierre told reporters, referring to the 1977 treaty talks.

She said those discussions should not be viewed as an indicator that the US government was considering shutting down the pipeline. “That is something that we’re not going to do,” Jean-Pierre said.