TransCanada, the Canadian energy giant aspiring to be the leading energy infrastructure company in North American, has filed suit against the Obama administration for rejecting last November the proposed 2,639-mile cross-border oil pipeline to the U.S. Gulf Coast known as Keystone XL.
In a lawsuit filed Wednesday in the U.S. District Court for the Southern District of Texas in Houston, Calgary-based TransCanada Corp. alleged that President Obama exceeded his constitutional power by denying construction of Keystone XL. In addition to the lawsuit, TransCanada filed a notice of intent to initiate a claim Wednesday under Chapter 11 of the North American Free Trade Agreement seeking to recover more than $15 billion in costs and damages it alleges it suffered “from the United States’s breach of its NAFTA obligations.”
The pipeline, which TransCanada first proposed in 2008, would have helped deliver up to 900,000 barrels of crude oil daily from the tar sands of the Canadian province of Alberta through the U.S. Great Plains and to the Gulf Coast.
The law suit has given rise to a mixed reaction from interested Canadian parties: Green Party Leader Elizabeth May said she expects that TransCanada will lose its NAFTA claim if not the lawsuit too. “The larger economic power virtually always wins,” said May, a lawyer by training and the only Green Member of Parliament in Canada’s House of Commons. TransCanada “can huff and puff and complain, but the U.S. made the right decision” in rejecting Keystone XL, May said. Indeed, no Canadian company has so far succeeded in a Chapter 11 claim against the U.S. government. The oil industry, on the other hand, contends Obama's decision to reject Keystone exceeded his constitution authority, since the regulation of domestic commerce lies within the purview of the legislative branch, not the executive.
The case before the Court will likely take years to resolve.