Oil pipeline company proceeds with $15 billion ISDS claim against US government for environmental regulation

Oil pipeline company proceeds with $15 billion ISDS claim against US government for environmental regulation

September 30, 2022: An international arbitration panel appointed last week will hear the claim of TransCanada Corporation for $15 billion compensation against the US government because it revoked a permit for the Keystone XL pipeline, claiming it would cause environmental damage. The pipeline is opposed by indigenous, farmer and other local communities because the pipeline aimed to transport to the U.S. Gulf Coast up to 830,000 barrels per day of highly corrosive crude oil extracted from tar sands in Alberta, Canada. It would cross more than a thousand rivers, streams, lakes and wetlands across six U.S. states.

The claim was made under Investor-State Dispute Settlement (ISDS) provisions in the North American Free Trade Agreement (NAFTA) and the US-Mexico-Canada Agreement (USMCA). It follows a previous claim made in 2016 by the same company when the Obama administration revoked the licence, which was subsequently restored by the Trump administration, then revoked again by the Biden administration. The pipeline would also create new demand for intensified carbon-intensive tar-sands extraction and processing in a context where the US, Canada and other governments are phasing out fossil fuels to reduce carbon emissions,

The $15 billion claim includes future lost profits and is three times the existing investment in the project. This is another example of fossil fuel companies' strategic use of  ISDS to claim massive amounts of compensation to discourage government regulation which seeks to reduce environmental damage  and carbon emissions.