TransCanada Files NAFTA Suit Demanding More Than $15 Billion for Keystone XL Rejection

On June 24, foreign oil company TransCanada filed a lawsuit against the U.S. under NAFTA, the North American Free Trade Agreement, arguing that the U.S. rejection of the Keystone XL pipeline violated NAFTA’s broad rights for foreign investors by thwarting the company’s “expectations.” As compensation, TransCanada is demanding more than $15 billion from U.S. taxpayers.

TransCanada’s case will be heard in a private tribunal of three lawyers who are not accountable to any domestic legal system, thanks to NAFTA’s “investor-state” system, which is also included in the proposed Trans-Pacific Partnership (TPP). The controversial TPP would empower thousands of additional corporations, including major polluters, to follow TransCanada’s example and use this private tribunal system to challenge U.S. climate and environmental policies.

TransCanada’s Request for Arbitration follows the Notice of Intent to submit a claim to arbitration that it filed on Jan. 6.

TransCanada’s attempt to make American taxpayers hand over more than $15 billion because the company’s dirty Keystone XL pipeline was rejected shows exactly why NAFTA was wrong and why the even more dangerous and far-reaching Trans-Pacific Partnership must be stopped in its tracks.

The TPP would empower thousands of new firms operating in the U.S, including major polluters, to follow in TransCanada’s footsteps and undermine our critical climate safeguards in private trade tribunals. Today, we have a prime example of how polluter-friendly trade deals threaten our efforts to tackle the climate crisis, spotlighting the need for a new model of trade model that supports rather than undermines climate action. We urge our members of Congress to learn from this historic moment and commit to reject the TPP.

Here’s more information on the TPP:

• Environmental opposition to the TPP is mounting. Earlier in June, more than 450 environmental, landowner, Indigenous rights, and allied organizations sent a letter to Congress warning that pending trade deals like the TPP threaten efforts to keep fossil fuels in the ground.

• Read the Sierra Club’s report on how the TPP would roughly double the number of corporations that could follow TransCanada’s example and challenge U.S. safeguards in private, unaccountable tribunals.

• The corporations that would gain this ability include hundreds of foreign-owned fossil fuel firms, such as the U.S. subsidiaries of BHP Billiton, one of the world’s largest greenhouse gas emitters and one of the U.S.’s largest foreign investors in fracking and offshore drilling.

• The TPP would nearly double the number of foreign fracking firms that could challenge new U.S. fracking restrictions in private tribunals.

• The deal also would enable oil and gas corporations with nearly 1 million acres’ worth of U.S. offshore drilling leases to use this private tribunal system to try to undermine new restrictions on offshore drilling.

• No prior U.S. trade deal has granted such broad rights to corporations with such broad interests in maintaining U.S. fossil fuel dependency.