U.S. court rejects TC Energy’s request to cancel Keystone XL pipeline

A free trade arbitration tribunal has dismissed a $15 billion lawsuit filed by Canadian company TC Energy against the U.S. government over the cancellation of its Keystone XL pipeline project.

TC Energy, the pipeline operator, had sought compensation through mechanisms under the now-defunct North American Free Trade Agreement (NAFTA).

The complaint was filed in 2021, following President Joe Biden’s decision to cancel the pipeline permit, which came into effect a year after NAFTA was replaced by the United States-Mexico-Canada Agreement (USMCA).

The tribunal determined that it had no jurisdiction to rule on whether the revocation violated NAFTA obligations.

The Keystone XL pipeline, which has faced more than a decade of environmental opposition and regulatory challenges, was intended to carry 830,000 barrels of oil per day from Alberta to the U.S. Midwest.

Following the project’s cancellation, Alberta, Canada’s top oil-producing province, also launched a trade challenge to recover its nearly $950 million investment in the pipeline.

Patrick Keys, Executive Vice President and General Counsel of TC Energy, said: “We are both disappointed and frustrated by the Tribunal’s decision to deny us the right to file a claim under NAFTA.

“This decision is not consistent with our expectations and our view of the clear interpretation of the protections that NAFTA and USMCA were designed to provide. TC Energy was treated unfairly and inequitably in the revocation of the permit, which was politically motivated.”

Last month, TC Energy shareholders approved the decision to spin off its Liquids Pipelines business into a new company, South Bow Corporation.

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