Ag Policy Blog

Keystone XL Lawsuits Further Complicate TPP Politics

By Chris Clayton , DTN Ag Policy Editor

The announcement earlier this week by TransCanada that the company is filing lawsuits against the U.S. over rejection of the Keystone XL pipeline will affect several political debates in the coming year, including the fight over the Trans-Pacific Partnership trade pact.

TransCanada is filing separate litigation in the case. First, the company filed a federal lawsuit in Texas asking the district court to overturn President Obama's rejection of the permit for the Keystone XL pipeline. TransCanada argues the president's decision was unconstitutional and usurped powers held by Congress.

The company also announced it would file a case asking for $15 billion from the United States under a clause in the North American Free Trade Agreement. In the NAFTA argument, TransCanada is using the controversial investor-state dispute settlement provisions in the free-trade agreement to collect damages. The NAFTA case is an arbitration case that will be argued before a three-person panel.

The Houston Chronicle reported on the novelty of the cases. The article quoted an attorney who specializes in cases between countries and corporations. Out of roughly 800 such arbitration cases, attorney Todd Weiler told the paper that TransCanada's $15 billion case is the largest ever against the U.S.

"They are going where few have gone before," Weiler told the Chronicle.

Another attorney told the newspaper that typically companies win such cases when assets are seized or some other egregious situation has occurred.…

Given that TransCanada is willing to slog it out in court for years, the legal case lends support to backers of the pipeline. They can continue to talk about Keystone's jobs, importance to North American energy and trade relations. They can also hope for a party change at the White House next year to turn the equation around.

But the legal fight also gives ammunition to opponents of these large trade agreements such as the Trans-Pacific Partnership as well. The simple fact that a foreign company would demand $15 billion will be brought up again and again as a fear that other companies in the 12-nation TPP would bring similar litigation against the U.S. over environmental laws, food safety or state and local laws regarding areas such as land use or eminent domain.

"Overnight, the TPP would give 9,500 more companies—big multinationals from Japan, in banking, in manufacturing, mining firms from Australia—the right to do this. So this case, hopefully, is like the canary in the coal mine letting us know what we’d be getting into," said Lori Wallach, director of Global Trade Watch for Public Citizen.

TPP already is teetering as at least some Republicans appear as leery of the trade agreement as Democrats do. The trade pact, however, has strong support among most agricultural groups, particularly commodity organizations who expect gains in exports because of the trade deal. Other major business groups such as the U.S. Chamber of Commerce support the deal. Still, they are countered by more than 1,500 various groups that put together a letter to Congress this week calling on lawmakers to block TPP.…

Wallach and others highlight that not only does the TransCanada reflect their fears on TPP, but given that an oil company is suing over a pipeline, the litigation raises questions about the ability to combat climate change. Keystone XL was specifically rejects over issues surrounding climate change.

White House spokesman Josh Earnest was asked Thursday about the litigation. Regarding the investor-state (ISDS) language, Earnest said the White House was confident that the decision regarding Keystone was "entirely consistent with all of our international obligations," including NAFTA.

"The one thing I’ll point out about ISDS is it’s a process that -- ISDS is this dispute resolution process that’s been in place for 50 years, and the United States has never lost a case. And we certainly feel confident in the arguments that we’ll be able to make in this case before the ISDS, as well," Earnest said.

Earnest also dismissed any tie to the TransCanada legal cases and complaints about both the Trans-Pacific Partnership and multi-national corporate influence. He again pointed to the fact the U.S. has never lost an ISDS case.

"So our strong record in that venue actually, I think, is a strong argument for precisely why Congress should approve the Trans-Pacific Partnership," Earnest said.

Follow me on Twitter @ChrisClaytonDTN.


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tom vogel 1/9/2016 | 8:00 AM CST
The longer this TPP is delayed the better. Hopefully Congress will get off their dead hind ends and mothball it. This TPP is not at all about free trade. It is full of pork and poop.