Keystone XL’s collapse leaves Alberta seeking payback

Alberta Premier Jason Kenney Image: Government of Alberta

Alberta is considering seeking compensation from the U.S. through an old free-trade rule that’s still in place in light of President Joe Biden’s move to kill the Keystone XL pipeline.

Alberta, which spent C$1.5 billion ($1.2 billion) to help jump start construction of the project, may resort to a North American Free Trade Agreement provision allowing compensation claims for lost investments, Alberta Premier Jason Kenney said.

While Nafta was replaced by the United States-Mexico-Canada Agreement during the Trump administration, the rule remains in place during a phase-out period.

To “retroactively remove regulatory approval on the basis of which an investment was made is, in my view, a slam dunk case of a claim for damages through Nafta under the investor protection provisions,” Kenney said on a Facebook live Tuesday. “We believe we have a very strong case for damages, and we’ll be continuing to work with TC Energy on that.”

Pipes for the Keystone XL pipeline sit stacked in a yard near Oyen on Jan. 26. The project’s demise prompted TC Energy to let go of about 1,000 union workers on both sides of the border.

After the U.S. president’s decision on his first day in office, Kenney said that Alberta would consider legal action and urged Prime Minister Justin Trudeau to impose trade sanctions if the Biden administration didn’t negotiate.

In 2016, TC Energy sought $15 billion in compensation under Nafta after President Barack Obama rejected the project the previous year on environmental grounds, but the case was dropped after President Donald Trump approved the project early in his term.

© 2021 Bloomberg L.P.

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