HOUSTON (AP/WTNH) — The Canadian company that proposed the Keystone XL oil pipeline filed a lawsuit over the U.S. government’s rejection of the project and announced it plans to file a second legal challenge that will seek more than $15 billion in damages.
TransCanada filed a federal lawsuit Wednesday in Houston alleging President Barack Obama‘s decision in November to kill the pipeline exceeded his power under the U.S. Constitution.
The company also announced the same day that it will submit a separate petition seeking the billions in damages, alleging the U.S. breached its obligations under the North American Free Trade Agreement.
In November, Obama quashed the pipeline, declaring it would have undercut U.S. efforts to clinch a global climate change deal at the center of his environmental legacy. The president said he agreed with a State Department conclusion that Keystone wouldn’t advance U.S. national interests.
“TransCanada has been unjustly deprived of the value of its multi-billion dollar investment by the U.S. Administration’s action,” TransCanada said in a statement. “As the administration candidly admitted, its decision was not based on the merits of the project. Rather, the denial was a symbolic gesture based on speculation about the (false) perceptions of the international community regarding the administration’s leadership on climate change.”
In its lawsuit, TransCanada alleges Obama’s decision exceeded his powers as president and infringed upon Congress’ power under the Constitution to regulate interstate and international commerce.
The White House and the State Department both declined to comment on the lawsuit or the NAFTA challenge.
The lawsuit does not seek any monetary damages but asks for a ruling that the denial of the pipeline permit was without legal merit and that the federal government officials named in the lawsuit not be allowed to enforce Obama’s decision to not proceed with the pipeline. Named as defendants in the lawsuit are: Secretary of State John Kerry; U.S. Attorney General Loretta Lynch; Homeland Security Secretary Jeh Johnson; and Secretary of the Department of Interior Sally Jewell.
TransCanada said it plans to submit a separate petition that alleges the U.S. breached four articles under NAFTA — which governs trade between the U.S., Canada and Mexico — that provide financial protections for all Canadian investors.
“The denial was based on politics, not the merits of the application,” attorneys for TransCanada said in a notice they filed with the State Department on Wednesday that the company will submit a claim of arbitration under NAFTA and ask for more than $15 billion in damages.
TransCanada first applied for Keystone permits in September 2008 — shortly before Obama was elected. As envisioned, Keystone would snake from Canada’s tar sands through Montana, South Dakota and Nebraska, then connect with existing pipelines to carry more than 800,000 barrels of crude oil a day to specialized refineries along the Texas Gulf Coast.
Most pipelines wait roughly a year and a half for permits to cross the U.S. border, but Keystone’s review dragged on more than five times as long as average, according to an Associated Press analysis.
Republicans, Canadian politicians and the energy industry argued the pipeline would create thousands of jobs and inject billions into the economy. But Democrats and environmental groups latched onto Keystone as just the type of project that must be phased out if the world is to seriously combat climate change.
On Thursday afternoon, Congresswoman Rosa DeLauro (D-3 Conn.) issued the following statement on the proposed legal challenge:
News that a multinational corporation is using a free trade agreement to yet again challenge American domestic policy is troubling, but not surprising. After seven years of debate and analysis, the Obama Administration made the right decision to not pursue the Keystone XL pipeline. However, this decision is now under threat by a trade agreement that could impose massive fines on our country. By seeking more than $15 billion in damages, TransCanada is using our trade policy to undo decisions made by our democratically elected president.
For decades, we have seen the negative effects that NAFTA has had on our country. From lost jobs, to reduced wages, the trade agreement has been a disaster for the American people. The lawsuit by TransCanada is the latest in a string of unintended and harmful consequences of a bad trade agreement and these problems will only multiply under the proposed Trans-Pacific Partnership, a free trade agreement being considered by the United States. Another recent example is the repeal of country of origin labeling by Congress after the World Trade Organization levied more than $1 billion in sanctions on the U.S. for labeling meat.
“The Trans-Pacific Partnership would effectively double the number of corporations that would be eligible to bring challenges to our domestic laws and policies. Thousands of powerful corporate interests in foreign countries, from Japan to Australia, would be empowered with rights that are not available to American-based companies, threatening domestic policies ranging from environmental regulations, to consumer protection laws. Congress must reject the Trans-Pacific Partnership. There’s simply too much at stake for the American people.”