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TransCanada Sues Obama Administration Over Keystone XL Rejection

The pipeline company also intends to file a claim under Chapter 11 of the North American Free Trade Agreement, saying the decision to reject the permit for the $8-billion pipeline “was arbitrary and unjustified.”
Flickr Creative Commons

President Barack Obama trampled TransCanada's pipeline dreams, and now the Canadian company is fighting back.

TransCanada announced Wednesday it has started two legal actions in response to the US president's rejection of its permit application in November, weeks before the UN climate talks began in Paris.

The company intends to file a claim under Chapter 11 of the North American Free Trade Agreement, saying the decision to reject the permit for the $8-billion pipeline "was arbitrary and unjustified." The company's second punch is a federal court lawsuit arguing Obama's decision "exceeded his power under the US Constitution."


The lawsuit names Secretary of State John Kerry, US Attorney General Loretta Lynch, Secretary of the Department of Homeland Security Jeh Johnson and Secretary of the Department of Interior Sally Jewell.

In its release, the company insinuated the denial was based on climate change politics combined with a presidential power trip.

"In its decision, the US State Department acknowledged the denial was not based on the merits of the project," the statement reads. "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."

In its conclusion, the State Department said Keystone XL would not significantly contribute to GHG emissions and that alternative ways to transport oil had higher emissions, the company argued.

In his speech announcing the decision, Obama said he agreed with the State Department's conclusion that the pipeline wasn't in the country's best interests, and implied the rejection was a gesture toward taking climate change seriously.

"America is now a global leader when it comes to taking serious action to fight climate change," he said. "And frankly, approving this project would have undercut that global leadership."

Related: What the Death of Keystone XL Means for Canada's Energy East Pipeline

The president argued the jobs created by the pipeline didn't outweigh its environmental concerns, and wouldn't make a "meaningful long-term contribution to our economy."


"So if Congress is serious about wanting to create jobs, this was not the way to do it," he continued. "If they want to do it, what we should be doing is passing a bipartisan infrastructure plan that, in the short term, could create more than 30 times as many jobs per year as the pipeline would, and in the long run would benefit our economy and our workers for decades to come."

Obama's decision dampened not only TransCanada's hopes, but also those of Canada's new prime minister Justin Trudeau, who said in a statement he was "disappointed" but respected "the right of the United States to make the decision."

The plan for Keystone XL was to pump 830,000 barrels of oil each day from Alberta to the Gulf Coast. However the pipeline has been marred with controversy over its carrying of fossil fuels and what that could mean for the world's warming climate.

North of the US border, TransCanada's Energy East project is steaming ahead, and is arguably the favorite pipeline project to be built.

Follow Hilary Beaumont on Twitter: @hilarybeaumont

Photo by Flickr Creative Commons user Credo Action