TransCanada on Wednesday accused President Obama in a federal lawsuit of exceeding his constitutional authority when rejecting the Keystone XL pipeline and, in a separate challenge, said the White House violated a historic trade agreement, igniting an election-year battle over a project that most considered dead — at least until the next president takes office in one year.
The company, which proposed the project nearly a decade ago, is seeking $15 billion in damages from the U.S. for the “loss of value” of assets related to Keystone.
“In its decision, the U.S. State Department acknowledged the denial was not based on the merits of the project,” TransCanada said in a statement. “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 company argues that Mr. Obama “intruded on Congress’s power to regulate interstate and international commerce” and blatantly disregarded the will of the legislative branch. Congress last year passed a bill approving Keystone, but the president vetoed it.
In a separate legal action, the Canadian company filed a challenge under the North American Free Trade Agreement saying the president’s decision was “arbitrary and unjustified” and violated a portion of the landmark trade deal.
The White House referred all questions about the legal action to the State Department.
“We have just seen the announcement. We do not comment on pending litigation,” a State Department representative said Wednesday night.
The pipeline, which would connect to existing infrastructure in the U.S. and transport more than 800,000 barrels of Canadian oil each day from Alberta to refineries on the Gulf Coast, was under federal review for seven years before the president announced his decision in November.
The painfully long process divided the president’s allies. Environmentalists urged him to squash Keystone, and powerful labor unions pushed the administration to green-light the project and create tens of thousands of jobs in the process.
In the end, Mr. Obama sided with environmental activists.
Even though the State Department concluded that Keystone would not significantly increase North American greenhouse gas emissions, the president said it was important to send a signal to the rest of the world that the U.S. was ready to lead the fight against global warming.
“Frankly, approving this project would’ve undercut that global leadership. And that’s the biggest risk we face — not acting,” the president said in November. “Today, we’re continuing to lead by example. America is going to hold ourselves to the same high standards to which we hold the rest of the world.”
TransCanada’s lawsuit is the latest in a long line of legal headaches for the White House. The president also is facing legal challenges to pieces of his climate change agenda, his executive action halting deportations for many illegal immigrants and other policies.
In two months, new Canadian Prime Minister Justin Trudeau will visit the White House for a state dinner. Keystone long has been a bone of contention between the two countries, and former Canadian Prime Minister Stephen Harper had been a vocal critic of Mr. Obama’s handling of the project.
The latest legal fight over the pipeline is unique in the sense that most observers considered the project dead. But Wednesday’s news ensures that the project will be at the forefront during Mr. Obama’s final 12 months in office.
“TransCanada’s legal actions challenge the foundation of the U.S. administration’s decision to deny a presidential border crossing permit for the project,” TransCanada said in a statement.
Opponents of Keystone say TransCanada is engaging in a greed.
“Keystone XL is dead and nothing about this legal maneuvering changes that. But, TransCanada ought to be ashamed of trying to extract billions in U.S. taxpayer dollars to boost its profits after being stopped in its tracks from building a dirty, dangerous tar sands pipeline in our backyards,” Michael Brune, executive director of the powerful environmental activist group the Sierra Club, said in a statement. “In TransCanada’s world, if it cannot profit off of harming our health, climate, and environment, then it will demand our tax dollars.”
Supporters of the project long have maintained that Keystone was unfairly targeted and, for political reasons, was turned into a test of whether the president was serious about combating climate change.
Killing Keystone on grounds of global warming, critics say, entirely disregards the economic benefits of the project. State Department research shows that the pipeline would create more than 40,000 jobs.
“The demonization of the Keystone XL pipeline remains a powerful cautionary tale of the dangers of energy policy driven by ideology rather than economic reality and has a chilling effect on expansion efforts for our nation’s energy infrastructure,” American Petroleum Institute President and CEO Jack Gerard said during a speech this week.
Wednesday’s action by TransCanada also brings NAFTA and its Chapter 11 provisions into the spotlight.
Those provisions offer investors from NAFTA countries recourse if they believe they have been subjected to unfair discrimination.
In its filing, TransCanada said the administration has approved numerous other pipeline projects and wrongly singled out Keystone.
“By delaying the processing of Keystone’s application for the Keystone XL pipeline, and applying new and arbitrary criteria in deciding to deny the application, the United States discriminated against, and significantly damaged, the disputing investors,” TransCanada said in explaining why it is seeking $15 billion in damages from the U.S. government.