Keystone XL company seeks $15 billion from US after gov’t rejects its pipeline

TransCanada, a Canadian pipeline company, has asked an international arbitration panel to award it $15 billion because President Obama rejected the company’s plan to build the Keystone XL pipeline, an 1179 mile pipeline for transporting oil extracted from tar sands in Alberta, Canada to US Gulf Coast refineries.

The arbitration procedures that TransCanada is using were established by the North Atlantic Free Trade Agreement (NAFTA) signed in 1994.

Because of NAFTA, companies like TransCanada may be owed lost earnings and damages if a foreign country takes action to protect its environment, its workforce, or its consumers that infringe on a company’s future profits.

Similar language is in the final version of the Trans Pacific Partnership (TPP) agreement pending approval in the US Congress.

“The idea that after all those many, many, many millions of Americans and Canadians participated in this fight (to stop the Keystone XL pipeline), it could somehow be negated by three guys sitting in a room that nobody’s ever heard of and nobody ever voted for, is all the proof that anyone would ever need as to why these kinds of arrangements like NAFTA are something we should be wary of to a huge degree,” said Bill McKibben, founder of, an environmental group urging action to stop climate change.

A posting on the United Steelworkers (USW) Oil Workers Facebook page had a similar message: “This is what happens when you negotiate these bad trade deals,” said the posting.

Back in 2009, USW warned what might happen if Keystone XL were allowed to proceed.

At the time, TransCanada was seeking a permit from the US Transportation Department to operate its proposed pipeline at a higher pressure than US safety regulations permitted.

USW pointed out that TransCanada was proposing to use thin steel pipe in its pipeline, which would transport highly corrosive sand tar bitumen. Doing so would increase the risk of “leaks, ruptures, and spills,” stated the letter.

USW also pointed out that TransCanada in other pipeline projects purchased pipe from abroad and would likely do so for the Keystone XL project.

Purchasing pipe abroad, wrote USW, “might reduce cost somewhat but would also reduce the ability of the company to control quality.”

USW subsequently said that it could support the Keystone XL pipeline if there could be assurances that the pipe used was manufactured in the US.

The AFL-CIO endorsed the pipeline, but several unions notably the Communications Workers of America, National Nurses United, SEIU, the Transport Workers Union, and the Amalgamated Transit Union joined with environmental activists to create a grassroots movement to oppose the Keystone XL pipeline.

The participation of the many eventually triumphed over the private interests of the few when President Obama rejected the pipeline because of its threat to the environment and safety.

Recently a leak at another pipeline owned by TransCanada showed that these concerns were warranted.

US News reported in April that 17,000 gallons of oil had leaked from a segment of TransCanada pipeline in South Dakota. The pipeline carried sand tar oil and was similar to the Keystone XL pipeline that was rejected.

The company failed to detect the leak, which was discovered by a passerby.

After the leaked was discovered, TransCanada reported that only 187 gallons has leaked, but that proved to be untrue.

Since 2010 when this pipeline began operating, it has recorded 35 leaks, including a leak of 21,000 gallons of oil in North Dakota.

Despite the risk that Keystone XL and similar pipelines present to the environment, TransCanada thinks that its own interest and those of its shareholders should come first.

And it’s quite possible that the arbitration panel where its complaint will be heard could agree.

According to Bloomberg, TransCanada “has a legitimate argument” because Obama’s decision was based on political considerations rather than the business merits of the project.

“I’m betting for TransCanada on this one and certainly hoping they win the case,” said Rob Merrifield a former Canadian member of parliament to Bloomberg.

Opponents of the pipeline had another take on the arbitration case.

“This outrageous lawsuit by a money-hungry transnational corporation displays not only the depravity of the NAFTA provision that allows it, but also the depravity of imposing deadly tar sands oil upon the people of North America and the rest of the world,” said Bill Snape, senior counsel with the Center for Biological Diversity.

“TransCanada filed this lawsuit as a bullying tactic,” said Jill Kleeb, president of Bold Alliance. “Now TransCanada is trying to bully the American taxpayers and President Obama and any future president that they should not dare to mess with big oil.”

If TransCanada wins and TPP is ratified, then its fair to expect that many more corporations will looking to overturn actions by the government that they don’t like.



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