TransCanada Challenges Denial of Permit for Keystone XL Pipeline

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[author: Clint Long]

As previously reported in the Trade & Manufacturing Alert, on November 6, 2015, President Obama officially rejected TransCanada’s application to build the Keystone XL Pipeline. As proposed, the pipeline would have transported Canadian oil to the United States across nearly 1,200 miles from Alberta to Nebraska. The pipeline was the source of significant debate, including multiple lawsuits and contested efforts in Congress to approve the pipeline, one of which was a bill that Congress passed earlier in 2015 that President Obama vetoed. Supporters and opponents of the pipeline disagree on the benefits of the pipeline and Canadian oil to the United States, the environmental impact of building the pipeline and oil extraction in Canada, the number of jobs that would be created by the pipeline’s construction, and other issues.

More than seven years after TransCanada filed its application to build the pipeline, President Obama’s rejection appeared to end TransCanada’s controversial quest to build the pipeline. On January 6, 2016, however, TransCanada announced that it has challenged President Obama’s rejection by filing a claim under the dispute settlement provisions of the North American Free Trade Agreement (NAFTA) and by filing a lawsuit in U.S. District Court.

TransCanada’s NAFTA claim argues, among other things, that the company’s application “met the same criteria the U.S. State Department applied when approving applications to construct other similar cross-border pipelines - including the existing Keystone pipeline, which was approved in under two years, in contrast with the seven years the Administration took to make a decision on Keystone XL.” Through this claim, TransCanada seeks to “recover more than US$15 billion in costs and damages that it has suffered as a result of the U.S. Administration’s breach of its NAFTA obligations.”

By suing the Obama Administration in U.S. District Court, TransCanada also seeks to demonstrate that “the Administration’s action was contrary to Congress’ power under the U.S. Constitution to regulate interstate and international commerce.” Through its lawsuit, TransCanada seeks “a declaration that the determination [of President Obama] is unlawful and an injunction barring Executive branch efforts to give effect to it.”

Although one may have assumed that the controversy and debate surrounding the pipeline would have ended with President Obama’s rejection of TransCanada’s application in November 2015, TransCanada’s legal actions indicate that the debate surrounding it may survive indefinitely.

Clint Long

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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