Keystone XL and NAFTA.

• Author: Bowal, Peter

No Party may directly or indirectly nationalize or expropriate an investment of an investor of another Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment ("expropriation"), except:

(a) for a public purpose; (b) on a non-discriminatory basis; (c) in accordance with due process of law and [Minimum Standard of Treatment]; and (d) on payment of compensation NAFTA, Investments, Art. 1110 Introduction

In 2008 TransCanada Corporation filed its first application for a Presidential Permit with the U.S. Department of State to build the $8 billion Keystone XL project, a 1,179-mile (1,897 km), 36-inch diameter crude oil pipeline beginning in Hardisty, Alberta and extending south to Steele City, Nebraska. It will have the capacity to transport 830,000 barrels of oil per day and create 9,000 American jobs.

This column is not about a judicial decision. Instead, it describes the legal and political background to the failed TransCanada Keystone XL pipeline approval process in the context of a NAFTA claim.

The Need for a Presidential Permit

There is already a pipeline from Hardisty to Steele City, but this proposed Keystone XL line is much shorter (more direct) and would have a larger-diameter pipe. The four other phases of the Keystone pipeline project on U.S. soil to refineries and American markets have been completed.

A Presidential Permit is required for pipelines crossing into the U.S. After receiving extensive input and an Environmental Impact Statement (EIS), the Secretary of State makes a National Interest Determination (NID) regarding the Permit. In this case, the EIS identified environmental concerns in the Sand Hills of Nebraska.

Presidential Permit Denied

TransCanada was willing to change the route. The Permit was denied anyway.

The company re-applied for the Presidential Permit in 2012. The new EIS was released in January 2014 but the NID was delayed. Congress introduced a bill to approve the pipeline. And on January 29, 2015 the U.S. Senate passed the Keystone XL Pipeline Act by close to a 2 to 1 margin. On February 11, 2015 the House of Representatives also passed the legislation with the same margin.

The American Constitution authorizes the U.S. President to send a bills back to Congress. The bill will then not become law unless two thirds of the House of Representatives and two thirds of the Senate both vote to override the President's veto. The Keystone XL Pipeline Act was vetoed by...