What should Canada and the world learn from the Keystone XL Project?

Author: Xing Lijuan

TC Energy Corporation (“TC”), the Canadian investor for the Keystone XL Project (“KXL”), announced on July 2, 2021 that it had filed a Notice of Intent to initiate a legacy North American Free Trade Agreement (“NAFTA”) claim under the United States-Mexico-Canada Agreement (“USMCA”) to recover economic damages at more than USD 15 billion resulting from the revocation of the KXL’s Presidential Permit.1 Environmentalists applauding that revocation may describe those alleged damages as inevitable expenses for pursuing environmental justice; whereas I would characterize them as unnecessary costs incurred by the antiquated dependence on individual sovereignties to address transboundary environmental issues.

Both the Trump Administration that issued the permit and the Biden Administration that revoked the same have vouched for the environmental credibility of its own decision. Rather than identifying which of the two inverse decisions is environmentally justifiable, what should truly concern environmentalists is the fact that the domestic systems have failed to prevent the enforcement of the opposite one.

Being a transboundary project, the KXL was launched based on two permits made separately and independently by the US and Canadian governments, and was then terminated by a revocation executed unilaterally by the US side based on unchanged facts. Presume that the revocation is justifiable. This can naturally lead to an inference that both the US and Canadian domestic systems have been ineffective to block a project that impairs the environment severely. Likewise, an opposite presumption that the permits are defensible can fortify a hypothesis that the US system has failed to protect a well-founded project from political attacks disguised as environmental justice.

No matter whether the KXL was wrongfully launched or wrongfully terminated, remedies at the domestic level (e.g., lawsuits against Trump’s or Biden’s decision before the US courts) as well as at the regional level (e.g., TC’s NAFTA claim under the USMCA) can be resorted to only after a wrongful decision has been taken and even impairments have been caused. Economic damages claimed by TC are by no means the only kind of impairments that a wrongful sovereign action will induce. Environmental harms, ecological destruction, land loss, judicial resources expended, diplomatic crises provoked, and political distrust are also typical costs that follow, some of which can never be fully recovered even though remedial measures.

The hardship that the Canadian complainant has to cope with emerged not incidentally but inevitably, given that its genesis is not a small probability occurrence, but the inherent incompetency of a sovereignty to address transboundary/global environmental concerns. That incompetency – which is featured by constant stress and frequent failure that a sovereignty needs to manage in aligning its economic, political, social, and diplomatic goals with its environmental commitments – becomes increasingly conspicuous where global concerted actions in the environmental arena keep upgrading from abstract ideologies and general norms to specific decisions and precise moves.

The KXL has amply demonstrated the weakness of a sovereignty to tackle both domestic and foreign affairs that bear international environmental significance, and has clarified the need for a global mechanism to deal with the same. Conferred with authority to evaluate and decide on behalf of individual sovereignties regarding transnational affairs, such an urgently needed global mechanism would be able to overcome the perceived defects of sovereign systems in pursuing environmental justice, by employing an impairments-prevented (not impairments-remedied) approach and delivering decisions free of narrow national bias, intervention, and instability.

  1. See https://www.tcenergy.com/announcements/2021-07-02-tc-energy-commences-nafta-claim-following-revocation-of-keystone-xl-presidential-permit/.