Keystone NAFTA case a gift to greens in their fight against TPP

By Elana Schor, Politico Pro | June 27, 2016

TransCanada Corp.’s pursuit of $15 billion in damages stemming from rejection of Keystone XL has deepened environmentalists’ commitment to defeating the Trans-Pacific Partnership, adding another hurdle to President Barack Obama’s push to see the pact approved before he leaves office.

The Canadian pipeline company late Friday filed a challenge under NAFTA’s investor-state dispute settlement framework, charging the Obama administration with creating “negligent delays that allowed the application to become a political symbol” for climate activists. But, in an unintended consequence, the company’s ISDS challenge has itself become a potent political symbol for the same environmentalists who helped turn Keystone into a climate albatross for Obama, because TPP would expand use of the ISDS system, which green activists have long decried as a secret opening for fossil-fuel companies to fight for increased access for drilling.

“If people didn’t get why TPP was a bad idea, they did get it once TransCanada filed suit,” co-founder Bill McKibben told reporters Monday. “For that, if nothing else, we have TransCanada to thank.”

TransCanada signaled in January its intention to fight the rejection as a breach of trade obligations, making Friday’s filing unsurprising — but even more emboldening for environmentalists. The reason is because in the five months since TransCanada’s preliminary NAFTA filing, the political landscape has changed — and anti-Keystone activists have found firmer ground among Democrats in their push to tar TPP as bad for the planet. Bernie Sanders’ Democratic primary challenge has spurred Hillary Clinton to take an ever more public stand against the proposed 12-nation deal between the U.S. and Pacific Rim partners.

The presumptive Democratic presidential nominee even used an appearance Monday with Sen. Elizabeth Warren (D-Mass.) in swing-state Ohio, a hotbed of free-trade skepticism, to vow that she would “defend American jobs and American workers by saying ‘no’ to bad trade deals, like the Trans-Pacific Partnership.”

Sierra Club Executive Director Michael Brune described TransCanada’s Keystone challenge as an organizing gift for greens, since it allows them to talk in a more united fashion about their climate- and jobs-focused objections to the trade deal. “Most Democrats have been comfortable talking about one or the other — and increasingly are becoming comfortable talking about both — when they talk about TPP,” he told reporters.

Even so, climate activists have yet to fully imprint their anti-TPP stance upon the Democratic establishment. Clinton’s delegates on the Democratic National Committee’s platform-writing panel voted down a proposal to formally align the party against a Congressional vote on TPP, a policy call that would have poked Obama in the eye on one of his top priorities for the rest of the year.

“The Democratic Party must go on record in opposition to holding a vote on the trade deal during the lame-duck session of Congress and beyond,” Sanders said in a statement.

Bold Alliance founder Jane Kleeb, whose group helped lead the outside-the-Beltway campaign against Keystone, predicted that “a lively debate” would ensue at next month’s Democratic convention in Philadelphia over how strongly to oppose TPP.

“As Democrats, that’s the beauty of our party — we do have strong disagreements over issues like TPP,” Kleeb told reporters. “Like fracking, I think it’s taking some of our candidates time to catch up to where the science is.”

The Keystone NAFTA filing also comes as Obama and Canadian Prime Minister Justin Trudeau prepare to meet with Mexican President Enrique Pena Nieto at the North American Leaders Summit on Wednesday; all three governments want to keep the focus on a new clean energy target, not on Keystone’s heavy-oil sands.

TransCanada did not offer further comment on its NAFTA challenge beyond the filing itself, in which the company argued that the political controversy over Keystone was made possible by the White House. “The politicization which, by the end, had so fixated the administration, was of the administration’s own making, as its delayed decision allowed the controversy over the pipeline to fester and become ever more virulent over the course of seven years.”

The company’s bid for arbitration will be adjudicated by a private tribunal rather than within U.S. courts. NAFTA arbitrators have the power to award damages to the company; though, as the Obama administration has repeatedly pointed out, the U.S. has never lost an ISDS challenge. But arbitrators can’t overrule the president’s rejection of a border-crossing permit for the Canada-to-Texas pipeline.

White House spokesman Eric Schultz said Monday the White House is “confident” in its prospects of prevailing in the challenge to its Keystone denial, which he said was “entirely consistent with all of our domestic and international obligations, including the obligations under NAFTA.”

The U.S. has won 13 of the 17 ISDS cases brought against it over the past 25 years, according to the U.S. Trade Representative; the remaining cases are still under consideration.

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