In June 2016, the TransCanada Corporation launched an ISDS case under NAFTA demanding $15 billion in compensation because the corporation's bid to build a pipeline was rejected by the U.S. government. The $15 billion claim is five times more than the $3.1 billion that TransCanada says it already had invested in the pipeline project because the compensation demand includes the future expected profits that TransCanada claims it would have earned had the pipeline been allowed.
Indigenous leaders, farmers, and ranchers in the path of the project stressed that a spill from the pipeline would threaten their lands and livelihoods, citing examples such as the 2010 Enbridge tar sands spill that poured more than 840,000 gallons of tar-sands crude oil into Michigan's Talmadge Creek and Kalamazoo River. Their concerns were bolstered by environmental and health experts who provided evidence during the course of various federal and state reviews of the project about how tar-sands oil development in Alberta, Canada
already has devastated the land and water of Canadian First Nations communities, released toxic chemicals that poisoned and sickened these communities and threatened local species of fish and wildlife.
The decision by the U.S. government not to approve the pipeline project came after tens of thousands of citizens in the states that would be affected and by environmental activists nationwide had worked for six years to demonstrate that the pipeline was not in the national interest and would pose serious health and environmental risks. The process included historic public education efforts and state and federal hearings, environmental reviews, federal litigation and litigation in several state courts, regulatory petitions, and federal and state legislative efforts. The iconic "Cowboy Indian Alliance" of white ranchers and Native Americans united to use the democratic process to stop the pipeline running through their lands represented how the campaign against the Keystone XL pipeline was a truly historic example of democracy in action.
Just two months after the U.S. government's November 2015 decision to reject the pipeline, TransCanada filed notice of intent to start an ISDS case under NAFTA. It simultaneously filed a case in U.S. federal court claiming that the decision to reject the pipeline was unconstitutional because only Congress, not the president, has authority to make such a decision.
In its ISDS notice of arbitration, TransCanada claims that it should be paid $15 billion because the United States has violated four different investor rights provided by NAFTA. First, its claims that the U.S. government has violated the “minimum standard of treatment” that NAFTA requires governments to provide to foreign investors. In making its case under this vague and elastic standard, the corporation
argues that the U.S. government led TransCanada to develop “reasonable expectations” that the Obama administration would approve the pipeline, only to ultimately reject it. The brief points to the widespread U.S. public opposition to the project as evidence that the Obama administration’s rejection of the pipeline was “arbitrary” and thwarted its “expectations.” The company notes that, while in 2010 the U.S. State Department was “inclined” to approve the project, subsequently “politicians and environmental activists ... continued to assert that the pipeline would have dire environmental consequences,” which ultimately led the Obama administration to reject it for "symbolic reasons, not because of the merits."
TransCanada also alleges that disapproval of the project violates the NAFTA investor protection against “indirect expropriation” of investments by government actions tantamount to an expropriation, arguing that the pipeline “substantially deprived” the company of its investment in the project.” TransCanada also claims violations of NAFTA’s “national treatment” standard, claiming that the United States treated the Canadian firm worse than it treated U.S. firms, and of NAFTA’s “most-favored nation” standard, claiming that the United States treated the Canadian firm worse than other international pipeline companies. These latter claims are lodged despite the fact that no other company will be permitted to build the pipeline. The case remains pending.