Todd Tucker of Global Trade Watch explains how President Obama's decision to stop the Canadian-owned Keystone oil pipeline could lead to a NAFTA Chapter 11 claim:
... TransCanada could point to a long string of overtures by the U.S. government that led it to develop "legitimate expectations" (as that is defined under trade law) that it would be able to build the pipeline, going from the private assurances in favor of the pipeline (recently revealed by FOIA documents to Friends of the Earth) and ending in the December 2011 payroll tax cut(which included Keystone-related provisions).
Those "expectations" could be then measured against what could be characterized under the FET standard as an arbitrary decision-making process, as when the Obama administration delayed the pipeline decision in November 2011 until after the presidential election.
TransCanada could point to some domestic pipeline operators that have not confronted similar hurdles as a basis for a National Treatment claim under NAFTA, while they could point to any lost expected future earnings as a basis for an "indirect expropriation" claim.
Perhaps he is right that there are some decent legal arguments that could be made. At the same time, this case makes me think of the following quote about the NAFTA Chapter 11 Loewen case: "[But] if Loewen had won, we might not have a Chapter 11 today, and maybe that's why the tribunal decided the way it did." Sometimes there are considerations that go beyond the legal merits.
