TransCanada Pipelines (TCPL) just announced it is going to sue the US government for $15 billion under NAFTA and while they’re at it sue President Obama for exceeding his power under the US Constitution.
Some lawyers say TCPL has a good case, others call this a “Hail Mary” long shot. Ms Soapbox thinks its hubris on steroids and asked The Fly On The Wall to check it out.
NOTE: The Fly is a fictitious insect deployed by Ms Soapbox to eavesdrop on Big Business when it does something spectacularly inane.
The Fly Report
Twelve TCPL directors settle themselves in the board room. They’re about to make a Very Serious Decision: Sue or Don’t Sue.
Russ Girling, CEO, fires up a power point presentation that sets out the facts and recommends a course of action. A phalanx of lawyers stand ready outside the board room in case Mr Girling is asked a question he can’t answer. (This is unlikely because Mr Girling knows everything).
The power point presentation starts with a “How We Got Here” slide.
Mr Girling explains that Keystone XL was delayed for seven years before being rejected by President Obama. He skips through the reasons for delay, preferring not to dwell on TCPL’s refusal to re-route the pipeline in 2008 to avoid the Ogalla aquifer and Sandhills in Nebraska thereby inflaming landowners and environmentalists alike. TCPL relented in 2011 when the Governor of Nebraska asked President Obama to reject the application. Had TCPL re-routed Keystone XL three years earlier it could have avoided becoming a political football in the 2012 Presidential Election.
Mr Girling quickly moves to the “Alternatives” slide. It sets out a number of options including:
- Just let it go already. Focus on Energy East and a myriad of other projects presently in development.
- Wait until after the 2016 Presidential election. If the Republicans take the White House, reapply for a presidential permit. It’s a slam dunk with any GOP president except that loon Trump who will be too busy building a wall between Canada and the US to focus on a cross border pipeline.
- Launch a lawsuit under NAFTA. Demand $15 billion in damages (the lawyers step in to explain how TCPL can claim $15 billion when the cost of the pipeline is only $8 billion and TCPL can re-use some if not all of the pipe piled up on the right of way for Energy East). Use the time between now and the hearing date to try to negotiate a monetary settlement with the US Government.
- Launch a constitutional challenge alleging President Obama exceeded his power under the US Constitution.
- Go whole hog and launch the $15 billion NAFTA claim and the constitutional challenge.
Some directors are stunned; do we really want to sue the US Government and the President of the United States? Others ask a few innocuous questions to show they’re listening. Most nod wisely, they can see where Mr Girling is heading and they’re team players (huzzah huzzah).
Mr Girling turns to the “Potential Outcomes” slide which goes into detail on the NAFTA/Constitutional Challenge scenarios:
- Win the NAFTA claim. Pocket $15 billion or a lesser amount (minus tens of millions in legal fees): Sweet vindication but highly unlikely given the US hasn’t lost a NAFTA claim to its NAFTA partners once in 22 years.
- Win the Federal Court claim that Obama exceeded his constitutional authority: A hollow victory because Obama will be out of office when the decision is rendered but it may serve as a warning to his successor…assuming it’s not Hillary.
- Lose the NAFTA claim and the Constitutional Challenge: A likely outcome, but hey, nothing ventured, nothing gained. Shareholders are out of pocket tens of millions in US dollars for legal fees and the cost of lost productivity for TCPL employees and contractors dedicated to this file, however TCPL might recover something in negotiations with the US government before the hearings begin.
Mr Girling then presents the “Unintended Consequences” slide which sets out two consequences:
- The federal Liberal government’s relationship with US government is damaged. Consequently TCPL’s relationship with the Liberal government will suffer. Who cares? What have the Libs done for us lately?
- NAFTA’S dispute resolution mechanism is like the TPP dispute resolution mechanism and thousands of anti-TPP activists join the landowners and environmentalists in opposing Keystone XL. Pffft! Ignore them. Activists have no power. At this point Mr Girling is reminded that in 2008 he told the directors to ignore the Nebraska landowners and environmentalists and look where that got us. Mr Girling disagrees, saying Keystone XL was killed by Obama politics, not environmentalists. The directors nod wisely, not daring to challenge Mr Girling on that non sequitur.
Mr Girling pauses. He takes the temperature of the Board. Yes, they support the “sue the bastards” option (huzzah huzzah). That takes Mr Girling to the key points on the “Next Steps” slide:
- Reassure shippers still backing Keystone XL that TCPL will move mountains to make crude-by-rail available to tide them over until Keystone XL is approved by the next US President (BTW, the rail hub at Hardisty is now top priority).
- Figure out how to slow down Energy East because there isn’t enough bitumen around to fill both Energy East and Keystone XL.
Any questions? Nope, the Board falls into line just as Mr Girling expected they would.
The Fly concludes Mr Girling suffered a tremendous loss of face when President Obama rejected Keystone XL. He needs to “do something” about it. He’s launched a couple of law suits, the lawyers will get rich and all is well in the land of Big Business.