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 CEO TCPL
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 Obama President USA
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.
Huzzah! Huzzah!
Susan on the Soapbox 
If Canadians had been uninformed about the ISDS clauses in the CETA and TPP trade agreements, this NAFTA Chapter 11 clause has the potential of waking the sleeping bear. What citizens should note is how they were sold down the river by their own governments that happily relinquished their regulatory powers to corporations because they wanted them. These transfers of powers will give corporations unprecedented powers to squeeze out every dollar they can from taxpayers who will, of course, be on the hook to compensate corporations (that only understand one word – MORE) for settlements arrived at by 3 member aribitration tribunals that render their decisions behind closed doors. By the way, these agreements have been set up in a manner where no appeal process is available should the public wish to reverse these decisions. The late Sheldon Wolin gave birth to the term, inverted totalitarianism, and eminment author Chris Hedges has described extensively the consequences in both written and spoken presentations. Perhaps a thanks are in order for the hubris of Russel Girling and his insatiable sense of entitlement and unstoppable appetite to loot taxpayer dollars in a system that has been rigged to advantage a few to prosper at the cost of many. Hedges weekly writings can be found at http://www.truth-out.org/author/itemlist/user/44723
Hedges’ lectures can be found on youtube: https://www.youtube.com/watch?v=ti90g7Zf5FY
Ted, thanks are indeed in order for Russ Girling who has given the anti-TPP crowd in the US a real world example of why the investor-state dispute settlement (ISDS) process is so dangerous. TCPL filed the documentation last week and already the NGOs are all over it.
Debra Steger, a law prof at the University of Ottawa has a lot to say about ISDS. She says it’s based on commercial arbitration (there’s the first fatal flaw) and evolved haphazardly through practice, not design. She underscores the point you made that the 3 man ad hoc arbitration panels are not judges, they’re not bound by precedent and there is no appeal from their decisions. If the purpose of ISDS was to protect corporations investing in countries with shaky court systems that were too easily influenced by the political process why is ISDS a mainstay in treaties involving Canada, the US, and European governments? Could it be that once corporations got the power to override state sovereignty they refuse to give it up?
Thanks for the links. Wolin and Hedges are well worth reading.
Susan, they do not only refuse to give it up, soon they will start discrediting our regular courts with the argument that they were created by people elected and not duly appointed by the most successful people in the country, meaning the very rich.
Very astute Susan but you crossed a boundary when you stated: “except that loon Trump”. Any slight similarity between Mr.Trump and a loon, might be the volume (not the melody) of their vocal challenges to defend a territorial boundary. Our loons are wintering at the coast but I hope you have your ‘ducks-in-a-row’ and a flock of lawyers to build de-fence before the loons arrive the day after ice break-up. Your public relations department will probably recommend a televised apology to loons and enviros.
Carl, you’re right. I did a tremendous disservice to loons but I blame it on The Fly. He’s had it in for loons ever since one wiped out his entire family on his mother’s side. As soon as I find him (he’s buzzing around here somewhere) I’ll get him to make it right. 🙂
“Sweet vindication but highly unlikely given the US hasn’t lost a NAFTA claim to its NAFTA partners once in 22 years.”
I believe that such a perfect record is what is known as a “tell”. Is this why we need the TPP? Because all the other trade deals Canucks have had their sovereignty sold to just didn’t go ‘far enough’? Speaking of which, if the TPP is ratified I have put together a modest proposal for the international business community:
Tired of having to go through all the hard work of actually producing a good or performing a service to accumulate your wealth? Or maybe your company’s ‘worth every penny’ CEO wearies of endlessly consulting with tiresome, democratically elected governments constantly legislating that your profitable but polluting industry be responsible for cleaning up this, and denying it permits to do that?
Well relax, the TPP has your business model covered. Now what were once egregiously irritating and expensive setbacks at the hands of some godforsaken backwater’s dirt-munching, treehugging politician/judge alleging they’re imposing some ridiculous ‘mandate from the masses’ will become TPP levers at your disposal. Populist, democratically imposed rulings against your company’s practices now can be employed to catapult your balance sheet deep into the black later, perhaps even without your labour ever having to turn a shovel! Play your cards right and to make your mark you won’t even need employees at all anymore, save a few connected international lawyers and your own good eye for an opportunity.
Nowadays this is where the big money lies: in proposing grossly environmentally/financially destructive start-ups that you have no real intention of ever bringing to fruition (see, you have a conscience after all! Who knew?). Simply go through the start-up motions, make all the initial calls and then, pocket the right politicians, and once the purposefully loathsome plan runs up against the inevitable brick wall of public outrage, as intended, you proceed to make your case before your fine group of friends at the opaque, unaccountable TPP tribunal, who have been handpicked to ‘hear you out’. True, they are answerable to no other beings on the planet, perhaps excepting those who worship Mammon; but then that’s just like you! Note: it behooves you to bear in mind their support when you take your turn on the judges’ side of the table.
So does it matter that three quarters or more of the affected nation’s population don’t want you to open up shop in their country? Does it matter that they have had widely popular legal checks in place for decades in order to balance industry with sustainability and responsibility? Heck no! In fact, so long as someone representing them signed an international trade agreement sometime somewhere at some point, the more the people of the targeted nation are against your repulsive idea the better because in turn that means that in all likelihood there will be vast reams of regulations and legalities making it ever so difficult for your company to turn an unmitigated profit at the expense of everyone and everything else.
So let it be 100 percent of the hoi poloi against you! Be bold: design your business plan to target the destruction of a sensitive ecosystem of some endangered frou-frou that is protected by their precious constitution. Or you could simply fashion a proposal that targets the health and welfare of the citizenry itself. In fact, the more outrageously horrific the damage to be caused by your ruse the better. It may seem counter-intuitive, but greater public resistance will actually serve to increase your bottom line thanks to your colleagues at the TPP’s unelected, unaccountable, and otherwise inscrutable tribunals.
How? Because, darn it, you could have made that money, if only that population of self interested plebeians had allowed you to externalize enough of the costs for you to easily extract the wealth you so richly deserve. Really, it’s their own fault for electing representatives that refuse to recognize just how far beyond regulation you really are, and for such insolent transgressions you and your TPP tribunal friends are entitled to hold their entire economy hostage until the selfish population pays you whatever amount it is you feel they owe you.
You can’t lose, but you can’t win if you don’t play.
Don’t believe me my skeevy-hearted, avaricious little friend? Such opportunities sound too good to be true to such a high personage as yourself in possession of an indubitably superior business acumen? Well, quit being so cynical; get off your spotty behind and start pretending like you’re actually trying to do something. If it doesn’t pay out the first time, fine; try and try again. Indeed, if your team is slick enough all you will ever really risk is the legal fees, and the return on a single tribunal ruling in your favour could cover such costs for a lifetime of litigation. Heck, who knows? You may even end up goading some of your more usefully ignorant, or otherwise pocketed, ‘authorities having jurisdiction’ into accepting the unacceptable, so allowing you to proceed with your unconscionable but immensely profitable enterprise; it’s win-win!
All kidding aside, here is the simple reason Canucks will get the short end of the ‘free’ trade schtick, every time: Canada is just another debtor nation to have abrogated its sovereignty to foreign banquing interests, and the creditors want it written in stone so their milk-cow doesn’t get any funny ideas about taking it back.
GoinFawr: This is perfect!
We have huge challenges in getting rid of these trade treaties, corporations obviously love them for the reasons you’ve cleverly described above. The CBA law magazine says there are over 3000 trade treaties containing ISDS clauses, that’s before TPP is implemented and expands the reach of ISDS to cover 12 nations, 800 million people and 40% of global GDP. Not only do corporations benefit from ISDS, but lawyers all over the world are making money hand over fist either representing companies filing claims or sitting on the arbitration panel. Interestingly the standard “conflict of interest” rules don’t apply in ISDS hearings and a lawyer can represent a company one week and sit on a panel and arbitrate a claim that company made the next week. Unbelievable.
TCPL retained Sidley Austin, a large US law firm, to represent them. Sidley is the 13th highest grossing law firm in the world. It has gross revenues of $1.75 billion. The profits per partner last year were $1,990,000. This case will be a nice boost to their bottom line.
Unbelievable indeed. But please don’t think I am automatically against all trade deals, treaties, mutually beneficial international agreements, or even international trade in general, I am most certainly not. I’m just against the onerous, sovereignty eviscerating deals that have been negotiated in secret, in bad faith, and from a weak position by people who are, in my opinion, the very same treasonous swine that have spent decades deliberately placing Canucks in the losers seat at the table in exchange for post-political-career bribes.
Susan is right – this is perfect but here is the problem – People like you and all of us that agree with you, will be mashed potatoes with a sign – ‘Not Good for Consumption’.
Before you get mashed you will be stoned by democratic journalists that will tag you as a ‘leftwing terrorist’. At this moment I am just wondering when they will start taking us in? The laws are already in place.
Thank you very much carlos and susan,
Carlos I don’t think it’s the democratic journalists you need to worry about, it’s the entrenched partisan bureaucrats wielding inscrutable powers that are far, far more dangerous to your continued well-being.
So let the bought and paid for hacks quack their duckspeak! Labels sIide off truth like wet off of a waterfowl’s back; and, besides, Canada isn’t Saudi Arabia yet, so if we’re reasonably careful we can always count on keeping our minds and our heads; though I can personally attest that you will lose some hair to decades of bi-annual audits/reassessments from rev.Can, but that is another story (I mean, write ONE signed letter to an ombudsman…)
Goinfawr: “ONE signed letter to an ombudsman…” We’re in SO much trouble!
PS Thanks for the James Brown sanity break.
The interesting fact about all of this is that our politicians know this and they have no excuses of interpretation of the law and they still vote for these agreements. Without being directly involved, I have known for years that this is pathetic. Many people wrote about this issue since NAFTA was signed and somehow even the prime ministers approve it, I can only reach a conclusion – they are all in for the taking. Prime Minister Jean Chretien is a lawyer and he was the one who approved NAFTA. Prime Minister Harper has signed them as fast as possible and he has no issues whatsoever with the TPP.
I just cannot understand it – to me this is madness.
What is most unfortunate is that Justin Trudeau will also sign the TPP. Just wait.
Soon we will have Mr.Girling firing the Prime Minister.
What a disgrace this all is. What will it take to turn this garbage around? Talk about radicalization!!!!! I am in.
Carlos I saw a clip on Youtube where Paul Martin addresses the issue of the loss of sovereignty. He says it’s difficult to accept that the European Union and the US can tell us that our laws and regulations are wrong, but he asks, what are we going to do when China has a financial meltdown and it affects the people in Idaho or here. He says in today’s world countries have a responsibility to their neighbours. All this sounds wonderfully altruistic but it glosses over the fact that it’s not countries who are telling Canada its laws are wrong, it’s corporations. Countries are not passing these trade pacts to ensure that countries will watch out for their neighbours, they’re passing them to ensure that corporations can go about their business anywhere in the world unfettered by local laws.
Susan – Paul Martin is just like the rest of them. Somehow he came out with this extreme interest on the Native issue but I personally think it is all showmanship. They were in government for 12 years and did very little for the Natives and even less to protect us from corporate power advance. He sounds like Hillary Clinton trying to be on the side of the people of the US. She is just a big wall Street representative and that is what she will do when she gets there, the rest is just fireworks.
Yes you are right Susan – it is the corporations who are imposing whatever they want and need, countries do not have that power anymore.
Thanks for this (I did not even know this had happened). I am a little confused about the criticisms that Obama’s decision was “political” as a grounds for suing. Does this really mean that NAFTA is structured so baldly to override democratic processes — I mean could they actually win with that argument? That is to say, the American electorate opposes Keystone. The American president makes a decision that is in accord with that opposition. TCPL has a case?
I”m not asking this question rhetorically, and I am not looking for sardonic replies (“of course NAFTA runs everything, democracy is dead”) (though they might be quite right). I really would like to know — what is TCPL’s argument? Can someone link to a good analysis?
Yes Kathleen you are right. Any company can now sue a government even if against the will of the people. Even better – they do not use or trust our courts. The trade agreements create their own tribunals with people that are not even judges. Yes it is quite unreal but we (government) keep signing these agreements under that, by now, very well known excuse for their incompetence – ‘We have no choice’. We are at the last stage of this very aggressive cancer type called ‘GREED’. Until everything is owned by corporate interests, including our kids, the madness will not stop. I call it Corporate Communism. They adopted the same processes Stalin used when he created his Mafia and called it Communism.
Yes I can read your mind – We are all going crazy. In our reality, Democracy is a term used to define a system that was created by Capitalism (!) and so it changes to accommodate the economic needs. Our Federal Donald Trump has just offered Rachel Notley 1 million dollars for her to resign. He blames her for the recession, soon a possible depression, that the Tories created and left it for others to fix. By the way Harper and his guru Finance Minister did not even admit there was a recession. They did the same in 2008. So the great financially responsible party of this country – the Tories of course – cannot even recognize a recession. The reason is simple, for their supporters there is no such a thing as bad economic times anymore. They do well at all times. Our governments make sure that happens, because God forbid they leave the country to live on their meager funds sitting tax free somewhere else in the world.
http://www.ctvnews.ca/business/she-has-got-to-go-kevin-o-leary-offers-1m-if-notley-resigns-1.2733809
He does understand that the Premier of Alberta doesn’t personally control the global price of oil, right?
I can’t wait for the 1001 versions of Dr. Evil jokes this will spawn (O’Leary is even perfectly bald): ONE… MEELION… DOLLARS
(wish I knew how to insert a gif here!)
Carlos, O’Leary has well and truly lost it. He’s says Notley should be replaced by “a leader who has worked in the energy industry.” Why would having industry experience make a difference? As Kathleen pointed out, the premier (regardless of who he/she is) does not control the global price of oil. The low price of oil is the result of over supply and yet these scions of the energy industry are all madly producing every drop of oil they can find. They refused to support upgrading here in Alberta back in the 1980s, they refuse to diversify, then they flood the market and blame Notley for not cleaning it up. Brilliant.
Kathleen, I’ve attached a link to the U of C Law Blog which provides a good summary of TCPL’s legal arguments and includes a link to TCPL’s Notice of Intent. In the NAFTA case TCPL is arguing that the project should have been approved on its merits, but environmentalists turned the project “into a litmus test for politicians–including President Obama–to prove their environmental credentials” (Notice of Intent, para 1) and Obama denied it for political reasons and this destroyed the value of the investors’ investments and is actionable under NAFTA.
Here’s the link: http://ablawg.ca/2016/01/11/transcanada-sues-u-s-government-for-rejecting-keystone-pipelines/#more-6683
Thank you so much Susan!!!!
The other part — suing about Obama overstepping his constitutional powers — seems far more explicable just because it is straight out of the right-wing fanatic playbook. Though why TCPL should want to nail the flag of the Bundys and the Oregon militia to its masthead is … strategically mystifying.
Kathleen, the Constitutional Challenge is also bizarre. TCPL is arguing that Congress never passed a statute giving Obama the authority to reject cross border pipelines so he exceeded his power when he denied it. This is a double edged sword because it turns out Congress never passed a statute giving US Presidents the authority to approve cross border pipelines either (LBJ and George W Bush approved earlier pipelines by executive order), so if TCPL wins on this point, then LBJ and GWB also exceeded their authority and…what? We rip up all those pipelines? Get the states on the Canada/US border to approve them? Gosh I don’t know but I’m sure the US federal government is going to thank TCPL for opening this can of worms (although as you point out the Bundys will be pleased to see another attack on the power of the US federal government).
Since the federal & provincial governments have banned obscene political donations by corporations, maybe the big spenders like, “greed is good & I love money”, will have come out of the PMO’s closet, and admit in public their devious attempts to influence our politicians or destroy their credibility. It almost sounds like a bribe but corporations never go to jail.
Carl, I think we’re beginning to see them in action already. The Liberals decision to go ahead with the $15B deal to sell light armoured vehicles to the Saudis raises all sorts of questions, but the Liberals are proceeding notwithstanding the human rights concerns because the economic benefit to southern Ontario. Unifor, the union representing 500 workers at the General Dynamics Land Systems plant that makes the LAVs, made no comment other than to refer back to what it said during the election, that it is “committed to standing up for jobs and human rights” and besides “the contract has been signed.” http://www.theglobeandmail.com/news/national/ontario-city-defends-saudi-arms-deal-as-integral-to-regions-economy/article28063630/ And if this wasn’t enough, the Conservatives who made the deal in the first place are pressing the Liberals to disclose details of any assessments the government has made or intends to make regarding the impact this deal on human rights.
Makes you want to pack it in and move to Tahiti.
Yes the Conservatives, who got the deal done without anyone’s knowledge, are now putting pressure on the Liberals. This is something I never dreamed I was going to see. It is worse than third world politics.
Now, to make matters worse we have market Ayatollah Kevin O’Leary wanting to run for the Conservative party leadership. That is when I move for good.
Thank you GoinFawr for the music 🙂