U.S. Government Seeks to Dismiss Keystone XL Pipeline Case, While Taxpayers Have Already Spent $250,000 to NAFTA Arbitration Tribunal

The U.S. State Department revealed its initial defense yesterday in the investor-state dispute settlement (ISDS) case brought by TC Energy, a Canadian company that is attacking the Biden administration’s decision to cancel the Keystone XL Pipeline. The State Department requested the $15 billion case be thrown out on jurisdictional grounds, as President Joe Biden revoked the permit for the pipeline on his first day in office, long after the U.S.-Mexico Canada Agreement (USMCA) was in effect and had replaced the more extreme ISDS rules in the original North American Free Trade Agreement (NAFTA).

According to documents released by the arbitration tribunal, the U.S. government has already paid out $250,000 in taxpayer money to cover the initial tribunal members’ fees and expenses and will be expected to advance additional funds to the tribunal as the arbitration progresses.

Melinda St. Louis, director of Public Citizen’s Global Trade Watch, issued the following statement:

“The historic victory by environmental and indigenous activists who mobilized to stop the highly polluting and controversial Keystone XL pipeline should not be undermined by an undemocratic arbitration tribunal built exclusively for multinational corporations. It’s outrageous that U.S. taxpayers have already spent at least $250,000 to cover the initial fees of the tribunal as our government is forced to defend its decision to cancel the pipeline. These fees may grow as the case continues, as will the taxpayer money paid to the State Department lawyers defending the case, who additionally pay the opportunity cost of not being able to work on other matters.

“This goes to show that attempts to create a kinder, gentler form of ISDS will not be sufficient. Even with the significant ISDS improvements in the USMCA, the U.S. is still wasting taxpayer money over a case that should not be happening at all – to say nothing of the unfair attacks Mexico will continue to face once NAFTA ISDS finally ends for the U.S. and Canada. Hopefully U.S. negotiators keep this in mind as they consider updating free trade agreements and pursuing new economic arrangements like the Americas Partnership for Economic Prosperity (APEP), which could be an opportunity to remove ISDS completely from existing trade and investment agreements with countries in the region.”