Obama and the KXL-TPP contradiction

An ominously ironic juxtaposition of news stories, for those who are paying attention. First, the apparent good news. President Obama announced Nov. 6 that he's rejected the Keystone XL oil pipeline, after seven years of deliberation on the question. Obama invoked the prospect of leaving the 800,000 barrels a day of Canadian shale oil the pipeline would carry in the ground. "America is now a global leader when it comes to taking serious action to fight climate change," the president said. "And, frankly, approving this project would have undercut that global leadership." (NYT, Nov. 6) But one day earlier, Obama notified Congress of his intent to sign the Trans-Pacific Partnership (TPP), and finally released the text of the heretofore secretive trade deal. The notification starts a 90-day countdown to the next step in the approval process—seeking Congressional authorization. (The Hill, Reuters, Nov. 5)

What is the connection here? That cancellation of the KXL pipeline could be challenged under the Investor-State Dispute Settlement (ISDS) mechanisms in trade deals like the TPP. Pipeline developer TransCanada has already broached a challenge under the ISDS mechanism in NAFTA, as Politico noted back on Feb. 25:

"If the pipeline is actually vetoed on so-called environmental grounds, I think there is a very strong case for a NAFTA challenge," former Canadian ambassador to the U.S. Derek Burney, a senior negotiator on the landmark North American trade deal and its U.S.-Canada predecessor, said in an interview…

Burney and former Canadian Prime Minister Brian Mulroney, whom he served as a top aide, have long described the six-year-long delay in the administration's Keystone decision as stepping on NAFTA's goal of unrestricted energy trade between the U.S. and its northern neighbor.

"That provision in the NAFTA agreement was really something that had been required by the U.S., not by Canada, that trade in energy should be unfettered across the border," recalled Burney, who is on the TransCanada board but said he speaks as an individual on the trade issue.

Pro-Keystone Sen. John Hoeven has said as much too. When asked last month about the possibility of a Keystone-inspired NAFTA complaint, the North Dakota Republican told Canada's CTV that "I think certainly Canada is entitled to move forward with any other type of challenge" if the GOP Congress can’t win the project's approval.

And Global Trade Watch, having reviewed the newly released text of the TPP, tweets that it "doubles US exposure to #ISDS…" The ISDSCorporateAttacks website notes similar cases currently pending. For instance, Swedish energy firm Vattenfall is now suing Germany for $5 billion before the World Bank's International Center for the Settlement of Investment Disputes (ICSID) for supposedly violating terms of Energy Charter Treaty by cancelling planned nuclear reactors in its post-Fukushima decision to phase out atomic power.

But we are also not to dismiss the economic context for Obama's KXL decision, and the possibility that both his nixing the project and the petro-boosters' outrage at this are part of a choreographed spectacle. A successful challenge under an ISDS mechanism could buy enough time for currently depressed oil prices to rise again—"banking" the shale oil in the ground until it is more propitious to exploit, and in a way where everybody saves face. The enviros and the petro-oligarchs alike.

  1. TransCanada to sue US administration over Keystone cancellation

    TransCanada has filed a lawsuit against the Obama administration and plans to file a claim under the North American Free Trade Agreement over the US government's rejection of the company's proposed Keystone XL pipeline. "TransCanada has been unjustly deprived of the value of its multibillion-dollar investment by the US administration's action," said the company in a release. The firm says it will be looking to recover $15 billion US in costs and damages as a result of what it says is a breach of obligations under Chapter 11 of NAFTA.

    "TransCanada asserts the US administration's decision to deny a presidential permit for the Keystone XL pipeline was arbitrary and unjustified," the company said.

    TransCanada says it has also filed a lawsuit in the US Federal Court in Texas asserting that President Barack Obama's decision to deny construction of Keystone XL exceeded his power under the U.S. Constitution. (CBC News, Jan. 8)

  2. Spill on Keystone pipeline in South Dakota

    The Sioux Falls Argus Leader reports that "TransCanada employees are working to pinpoint the source and size of Keystone pipeline spill that took place over the weekend about four miles south of Freeman," SD. This of course is the Keystone I pipeline, that already in poerations. So far, there's been no estimate of how much oil was spilled.

  3. Keystone spill 100 times bigger than first estimated

    The oil spill that shut down a portion of the Keystone 1 pipeline in South Dakota last weekend is almost 100 times bigger than initially estimated, TransCanada admitted April 7. Originally estimated at 187 gallons, or approximately 4.5 barrels, TransCanada now reports that the spill totals 18,600 gallons, or 400 barrels. (EcoWatch, April 9)