Investment Arbitration Reporter has the USMCA Chapter 14/NAFTA Chapter 11 legacy claim Notice of Intent filed by the province of Alberta against the United States in relation to the Biden administration's cancellation of the Keystone XL pipeline. (The notice of intent will probably be available publicly soon, but for now IAReporter is the only place I can access it).
One interesting issue in this case will be that an ISDS claim is being brought by a sub-national government against a national government. I don't have anything to say about that at the moment though.
What did interest me was the allegation that the Biden administration's decision to cancel the pipeline was political. This is from the Notice of Intent:
4. This NAFTA claim is the unfortunate result of numerous factors to be elaborated in the forthcoming arbitration, but the simplest explanation is that it arises from a breakdown in the Canada-U.S. relationship driven by interests of a political rather than principled character. ...
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7. That the 20 January 2021 Revocation of the KXL Presidential Permit may have successfully served short-term political expediency, by providing the appearance of governmental action, is obvious. Equally obvious, however, is the fact that this measure was adopted in a manner contrary to the rule of international law. Virtually the first act of the new Administration was to make the KXL pipeline impossible to complete. It is thus manifest that the new Administration, with President Biden being inaugurated the very morning of the Permit Revocation, provided no formal notice or opportunity to engage in meaningful consultation to either Alberta, APMC or TransCanada Keystone Pipeline, L.P. (“TransCanada LP”), the permit holder in which APMC had so heavily invested. The Revocation cannot be understood as anything other than a rash and arbitrary measure adopted for a political purpose and unmoored from fundamental concepts of due process.
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37. The measure according less favourable treatment to KXL, which was also adopted without any notice or any form of due process – and in a manner that was arbitrary and disproportionate to the alleged policy objective of addressing climate change – has also denied Alberta, APMC and KXL the benefit of fair and equitable treatment as required by NAFTA Article 1105. This is because the measure appears to have been adopted as a matter of political expediency, realized through an act of performative policymaking rather than as the manifestation of a reasoned and proportionate policy agenda. The real reason behind the arbitrary adoption of the measure is reflected in the fact that officials from two prior Administrations, who had previously been tasked with reviewing KXL Permit requests, consistently concluded that granting and maintaining a permit would not contribute detrimentally to climate change.
It's certainly true that the Keystone XL decision came quickly. It only took a few hours after the inauguration for Biden to decide! What kind of analysis was done during the presidential transition that can show this was a reasoned decision?
I'm curious whether the Biden administration will respond with an argument along these lines: "It was actually the Trump administration that was political and arbitrary when it approved the pipeline, and our reversal of its decision was therefore fully compliant with NAFTA obligations. In fact, if we had maintained the Trump administration's policies, that would have been political and arbitrary. Many people in the Biden administration were involved in the original decision to reject the permit during the Obama presidency; we studied this issue carefully throughout the Trump presidency; and during the presidential transition we went over everything thoroughly and came to a reasoned and proportionate conclusion that was ready to be issued on inauguration day."
As to what an investment tribunal will think of that argument, I have no idea! It could depend on what evidence the U.S. presents in support.
