TransCanada Commences Legal Actions on Keystone XL Denial

Further, as a result of the permit denial, TransCanada is reviewing the approximate $4.3 billion ($3.1 billion U.S.) carrying value invested in the project and related assets, and expects that an estimated $2.5 to $2.9 billion after-tax write-down will be recorded in the company’s fourth-quarter results. TransCanada said its legal actions challenge the foundation of the U.S. administration’s decision to deny a Presidential border crossing permit for the project. In its decision, the U.S. Department of State acknowledged the denial was not based on the merits of the project. Rather, it was a symbolic gesture based on speculation about the perceptions of the international community regarding the Obama administration’s leadership on climate change and the president’s assertion of unprecedented, independent powers.

The State Department concluded Keystone XL would not significantly increase global greenhouse gas (GHG) emissions and that, in fact, alternative methods of oil transportation were more GHG intensive. Through the NAFTA claim, TransCanada will be seeking to recover more than $15 billion (U.S.) in costs and damages that it has suffered as a result of the administration’s breach of its NAFTA obligations. The NAFTA claim asserts that TransCanada had every reason to expect its application would be granted as it met the same criteria the State Department applied when approving applications to construct other similar cross-border pipelines—including the existing Keystone pipeline, which was approved in less than two years. This is in contrast with the seven years the Obama administration took to make a decision on Keystone XL. The Keystone pipeline system has now safely transported more than 1.1 billion barrels of Canadian and U.S. oil through Canada and the United States.

In the separate federal court filing, TransCanada asserts the administration’s action was contrary to Congress’ power under the U.S. Constitution to regulate interstate and international commerce. While the president has traditionally granted permits on narrow, established grounds, any such power does not exist when Congress has acted to the contrary or when the decision is based on the unprecedented and symbolic grounds that were the foundation of the denial in the Keystone XL case. In early 2015, both houses of Congress passed a bipartisan bill approving the construction of Keystone XL, which Obama later vetoed.