TransCanada launches NAFTA challenge over Keystone pipeline

TransCanada launches NAFTA challenge over Keystone pipeline
On Nov. 6, President Barack Obama said he would not support the Keystone XL project.Photo: Laura Kleinhenz-Docuvitae

Seeking US$15 billion in losses, TransCanada Corporation is taking the U.S. government to court for denying the Keystone XL pipeline project by a presidential permit.

The company announced Jan. 6 it intends to file a claim under Chapter 11 of the North American Free Trade Agreement and that it expects an estimated $2.5 to $2.9 billion after tax write-down will be recorded in the company’s fourth quarter results.

TransCanada has also filed a lawsuit in the U.S. Federal Court in Houston, Texas, asserting that President Barack Obama’s decision to deny construction of Keystone XL exceeded his power under the U.S. Constitution.

TransCanada’s legal actions challenge the foundation of the U.S. administration’s decision to deny a presidential border crossing permit for the project, according to a press release.

“In its decision, the U.S. State Department acknowledged the denial was not based on the merits of the project,” the company said. “Rather, it was a symbolic gesture based on speculation about the perceptions of the international community regarding the administration’s leadership on climate change and the president’s assertion of unprecedented, independent powers.”

The State Department concluded Keystone XL, which would transport bitumen from the oilsands in Alberta to the U.S., would not significantly increase global greenhouse gas (GHG) emissions and that, in fact, alternative methods of oil transportation were more GHG intensive.

In its NAFTA claim, TransCanada asserts that it had every reason to expect its application would be granted since it met the same State Department criteria applied to other approved construction projects, including the existing Keystone pipeline, which has transported 1.1 billion barrels of oil through the United States and Canada. That approval took two years; seven had passed by the time Obama put his foot down.

In the federal lawsuit, TransCanada argues the administration acted in contravention to Congress’ constitutionally guaranteed power to regulate interstate and international commerce. In early 2015, both houses of Congress passed a bipartisan bill approving the construction of Keystone XL, which Obama later vetoed.

“While the president has traditionally granted permits on narrow, established grounds, any such power does not exist when Congress has acted to the contrary or when the decision is based on the unprecedented and symbolic grounds that are the foundation of the denial in this case.”

Brian Jean, the leader of Alberta’s Opposition Wildrose Party, praised TransCanada in a written statement.

“I fully support TransCanada’s pursuit to recover the enormous costs and damages it has faced as a result of a decision that was driven by misguided political pressures instead of facts,” he said. “Premier Rachel Notley has in the past refused to be an advocate for this much-needed pipeline or set the record straight on our environmental record.”

Environmental groups opposed to the project were quick to call the appeal a long shot.

“This won’t actually help build the pipeline, too late for that,” Jason Kowalski, co-founder of Washington-based said. “It’s just a greedy and desperate move by TransCanada to try and salvage some of the money they wasted on this ridiculous boondoggle. The suit is a reminder that we shouldn’t be signing new trade agreements like the Trans Pacific Partnership that allow corporations to sue governments that try and keep fossil fuels in the ground. You can’t transport 800,000 barrels a day of the dirtiest fuel on the planet and not have a climate impact.”

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