TransCanada Mounts Two-Fold Legal Challenge Over Keystone XL Permit Denial

On Wednesday, January 6, 2016, TransCanada filed a 50-page complaint in the U.S. District Court for the Southern District of Texas, asking the court to declare unlawful the State Department’s November 2015 decision denying a Presidential permit for the Keystone XL Pipeline.  Because the northern segment of the Pipeline was to run from the U.S.-Canadian border to Steele City, Nebraska, TransCanada was required to obtain a Presidential permit before constructing and operating the cross-border portion of the pipeline.

In the complaint, TransCanada argues that the State Department exceeded its constitutional authority and usurped Congressional power to regulate trade and commerce with foreign nations by denying the permit for the Steele City segment of the pipeline. More specifically, TransCanada claims that the permit denial was motivated by the “symbolic role a permit denial would play abroad,” and public perception as to the effect the pipeline may have on greenhouse gas emissions rather than “the traditional regulatory concerns underlying prior Presidential permitting decisions.”  TransCanada further asserts that the permit denial is “incompatible with Congress’s own exercise of its express powers,” and “depart[s] markedly from any established practice to which Congress could have acquiesced.” The lawsuit seeks a judgment declaring the permit denial null and void and enjoining the State Department from taking any action to enforce the denial.

Also on January 6, 2016, TransCanada filed a Notice of Intent to submit a claim to arbitration under Chapter 11 of the North American Free Trade Agreement (NAFTA). In the Notice of Intent, TransCanada asserts that the U.S. breached Articles 1102, 1103, 1105 and 1110 of the NAFTA by “delaying the processing of the application for an extraordinarily long period, denying the application for symbolic reasons rather than the merits of Keystone’s application, and applying new and arbitrary criteria to deny Keystone’s application.”  TransCanada is seeking monetary damages from the United States in excess of $15 billion for the alleged violations.

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