The Canadian company behind the Keystone XL pipeline filed two legal challenges against President Barack Obama on Wednesday, contending he violated NAFTA and the U.S. Constitution when he rejected the project in November.
[by Elena Schor| January 6, 2016 |Politico]
The legal challenges are unlikely to undo the rejection by Obama, but they may yet revive the lengthy political battle over the controversial Canada-to-Texas pipeline that shook up the oil industry and helped the White House cement its environmental legacy.
TransCanada Corp.'s filing of a federal lawsuit and legal notification that it planned to seek more than $15 billion in damages under NAFTA were hardly unexpected, and State Department officials had been keenly aware of the legal threats during their seven-year-plus review of Keystone.
But the company's decision still stands to stress Obama's relations with his northern neighbor as he prepares a state dinner for Canadian Prime Minister Justin Trudeau, who was elected just weeks before the president rejected Keystone as incompatible with the fight against climate change.
In its legal filing stating its intent to sue under NAFTA, TransCanada slams Obama's Keystone rejection as "perverse."
As "the political controversy built to a fever pitch" thanks to environmental activists who had mobilized against Keystone, TransCanada wrote in the NAFTA filing, the Obama administration justified its denial "by saying that the pipeline was perceived to be bad for the environment, and the administration had to appease those in the international community who held that (false) belief."
Under NAFTA, disputes between companies and foreign governments must go before an international tribunal with the power to award monetary damages — but not reverse the pipeline's rejection. A win by TransCanada would mark the first U.S. loss in the international dispute system used under NAFTA, which has come under fire from Sen. Elizabeth Warren (D-Mass.) and other liberal critics of free-trade deals.
The Canadian pipeline giant's separate U.S. lawsuit, filed in Texas federal court, challenges Obama's authority to reject the pipeline as unconstitutional, contending the move was designed to increase "his influence in foreign affairs" rather than being directly related to the infrastructure project.
A White House spokesman referred questions on the legal challenges to the State Department, which said it would not comment on pending litigation.
Environmentalists who saw their movement gain significant political clout during the Keystone fight dismissed TransCanada's attempt to seek damages.
Bill McKibben, co-founder of climate activist group 350.org, said by email that the NAFTA challenge "is going to remind Americans how much of our sovereignty these treaties give away."
"The idea that a company should be able to force the president to let it run a pipe 1,500 miles across the center of the country is, simply, absurd," he added. "But the oil industry is so used to always winning that I fear this kind of tantrum is predictable."
Bold Nebraska founder Jane Kleeb, whose advocacy group led the anti-pipeline movement in the state, said that "this desperate attempt by TransCanada is a move to show their shareholders they have a viable project when they have hit a dead end."
John Podesta, chairman of Hillary Clinton's presidential campaign and a former senior Obama climate adviser, told POLITICO that "I'm quite confident that [the Obama administration] can prevail in court."
He added that Clinton, if elected, "will continue to defend the president's actions" if litigation stretches into the next administration.
"That's why the stakes are so high in this election," said Podesta, who put the debate over the pipeline in the broader context of Clinton's defense of Obama's climate legacy.
The Republican presidential candidates have largely supported building the pipeline and are opposed to Obama's climate agenda.