4 Ridiculous Reasons Lone Pine Resources Is Suing Canada Over Fracking Moratorium
This week, an electronic copy of a quietly filed lawsuit was unearthed, exposing the fact that oil and gas company Lone Pine Resources is moving forward with a $250-million North American Free Trade Agreement (NAFTA) lawsuit against Canada. Why is Lone Pine suing Canada? For the “arbitrary, capricious, and illegal revocation of the Enterprise’s valuable right to mine for oil and gas under [Quebec’s] Saint Lawrence River.” Lone Pine is suing Canada over Quebec’s timeout on fracking. (I wrote about this when Lone Pine filed its intent-to-sue notice last year.)
It sounds impossible to believe, but it’s true. NAFTA’s chapter on investment gives foreign corporations the right to sue a government over laws and policies that corporations allege reduce their profits or, in Lone Pine’s words, reduce the “expectation of a stable business and legal environment.” When a new policy or regulation is put in place that a corporation doesn’t like, it can bring the government to a private trade tribunal where the case will get heard by three private sector attorneys, behind closed doors, for taxpayer compensation.
Lone Pine is suing the government of Canada for $250 million dollars, claiming that the moratorium on fracking, put in place by Quebec’s provincial government, was a violation of its “right to mine.” As if a quarter of a billion dollars wasn’t enough, Lone Pine is also asking to be paid for the full costs associated with any arbitration proceedings, including all professional and legal fees and disbursements; interest at a rate to be fixed by the tribunal; and – why not? – “further relief as an arbitral tribunal may deem just and appropriate.” This is all so that Lone Pine can be compensated for a policy put in place to protect communities and the environment.
Let’s take a look at what Lone Pine is claiming, specifically, in its notice of arbitration.
1. Lone Pine “submits this arbitration on behalf of the Enterprise…for the arbitrary, capricious, and illegal revocation of the Enterprise’s valuable right to mine for oil and gas under the St. Lawrence River by the Government of Quebec without due process, without compensation, and with no cognizable public purposes.” (I never knew there was a right to mine!)
2. Lone Pine is upset that “suddenly, and without any prior consultation or notice, the Government of Quebec introduced Bill 18 into the Quebec National Assembly on May 12th, 2011 to revoke all permits pertaining to oil and gas resources beneath the St. Lawrence River without a penny of compensation.” (How dare a government do its job!)
3. Lone Pine claims that enacting the legislation constituted an expropriation of its right to mine for oil and gas, which is unlawful because “there no valid public purpose to the moratorium” (umm?) and the Bill was introduced “without any notice or consultation with Lone Pine or the Enterprise,” and was supposedly “rushed through the parliamentary process. . . without any meaningful consultation with Lone Pine.”
4. Finally, Lone Pine claims, the moratorium on fracking violated the provision of NAFTA’s investment chapter that offers investors a “minimum standard of treatment” and “fair and equitable treatment.” To Lone Pine, fair and equitable treatment means that a government can never pass a new law or policy, since it is claiming that “the Act violated Lone Pine’s legitimate expectation of a stable business and legal environment.” (What about my legitimate expectation that my air and water won’t be contaminated?)
If all this isn’t crazy enough, here is the real kicker. Cases like this one are proliferating under free trade agreements and bilateral investment treaties. In fact, Exxon Mobil, Dow Chemical, Chevron, and others have filed more than 500 cases against more than 90 governments. And that pattern is likely to continue. Governments—including the US government—are actively engaged in expanding the very rules that led to this harmful case. Investment rules very similar to the ones in NAFTA are set to be included in the 12-nation Trans-Pacific Partnership trade pact, and may also be included in the U.S.-EU trade pact.
Enough is enough. It’s time that governments stop signing trade and investment pacts that put the rights of corporations above the rights of communities and the environment. My right to clean water, clean air, and a healthy planet for my family and community has to come before Lone Pine’s right to mine and profit. Doesn’t it?
--Ilana Solomon, Director, Sierra Club’s Responsible Trade Program