Canada's TC Energy Files $15 Billion Damage Claim Against U.S. Government

"Pipeline Construction Cancellation Decision Violates Nafta"
Likely to Affect Lawsuit by US State Government Coalition

[Image source=AP Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Canadian energy company TransCanada (TC) Energy has reportedly submitted a letter of intent to the U.S. Department of State claiming $15 billion (approximately 17 trillion KRW) in damages. TC Energy stated that it is seeking compensation for the suspension of the U.S.-Canada pipeline construction project, which has been underway since 2008, by the Joe Biden administration, arguing that this suspension violates the North American Free Trade Agreement (NAFTA). The claim is expected to influence a coalition lawsuit by U.S. state governments opposing the pipeline project’s halt, potentially escalating the controversy further.

According to CNN and other foreign media on the 4th (local time), the U.S. Department of State announced that it received a letter of intent for damages amounting to $15 billion from TC Energy on the 2nd. TC Energy stated, "We are claiming damages for losses incurred due to the suspension of the U.S.-Canada pipeline construction project, the 'Keystone XL Project,' ordered by the U.S. government," adding, "This is a violation of the NAFTA agreement, and we have submitted a letter of intent to the Office of the Legal Adviser at the U.S. Department of State to seek compensation."

Earlier, on the 10th of last month, TC Energy announced the official suspension of the Keystone XL Project, which connects the Canadian province of Alberta to the U.S. Gulf of Texas, a project ongoing since 2008, and declared its intention to claim damages from the U.S. government. This raised concerns that it could lead to a diplomatic dispute between the U.S. and Canada.

The project had made rapid progress during the previous Donald Trump administration but was ultimately halted after President Biden took office and ordered a stop to construction due to strong opposition from environmental groups within the U.S. According to CNBC, the construction costs invested so far are estimated at about $8 billion, with sunk costs expected to reach $1.3 billion.

This compensation claim is also expected to impact the coalition lawsuit by 23 U.S. states that invested in the project. Since March, these states have been engaged in litigation arguing that it is unconstitutional for the president and federal government to regulate trade between foreign countries and states or to unilaterally cancel projects passed by Congress.

This content was produced with the assistance of AI translation services.