TransCanada Sues to Save Keystone Pipeline

HOUSTON (CN) - President Obama blocked construction of the Keystone XL Pipeline to save face at the Paris climate talks, TransCanada claimed Wednesday in a federal lawsuit challenging Obama's power to veto the project that Congress approved.

TransCanada says it has already spent billions preparing to build the Keystone XL, which would send heavy crude oil through 1,179 miles of pipe from Hardisty, Alberta in western Canada to Steele City, Neb., and connect with a TransCanada pipeline system that extends to terminals in Illinois and refineries on the Gulf Coast.

The lawsuit centers on a permit application TransCanada submitted to the State Department in 2008 to construct a 1.2 mile section over the U.S.-Canada border, without which the project cannot go forward.

The giant pipeline became a rallying point for environmentalists made wary by the Deepwater Horizon oil spill of 2010. They claimed viscous tar sands oil piped in from Alberta brought risk of more disastrous spills and would undermine efforts to wean the United States off fossil fuels in the face of climate change.

The State Department did not share those concerns, TransCanada claims in the 50-page lawsuit, whose defendants are the secretary of state, attorney general, secretary of homeland security, and secretary of the interior.

The State Department did five environmental reviews of the project from 2008 to 2012, each of which determined that "granting a permit to permit construction of the Keystone XL Pipeline would have no material effect on greenhouse gas emissions," TransCanada says in the complaint.

Obama expressed reservations about the Keystone XL's proposed path over aquifers in Nebraska, but TransCanada says it quelled those concerns when it submitted an alternative route that Nebraska approved.

The project has lots of support in Congress, especially among House Republicans, who claim it will create tens of thousands of jobs and strengthen the economy.

"On five separate occasions between 2011 and 2014, the House of Representatives passed bills authorizing the development of the Keystone XL Pipeline," the complaint states.

Republicans in the Senate finally got the Democratic votes they needed in January 2015 and passed a bill approving the project. The House quickly followed suit, but Obama vetoed the Keystone Approval Act the next month, calling it an effort "to circumvent longstanding and proven processes for determining whether or not building and operating a cross-border pipeline serves the national interest."

The knockout blow for Keystone XL came in November when Obama announced that Secretary of State John Kerry had denied TransCanada the border-crossing permit it needs to build the pipeline.

But even in denying the permit, the State Department named three ways the pipeline would benefit the United States: It would increase energy security with a dependable supply of crude oil, support 42,100 jobs during two years of construction, and improve relations with Canada, TransCanada claims, citing the State Department's "Record of Decision and National Interest Determination."

TransCanada says Obama blocked the project for the "purely symbolic" reason that it would undermine his pledge to make the United States a leader in fighting climate change weeks before the United Nations Climate Change Conference in Paris in December.

TransCanada cited records dating back to 1875 to claim that Obama exceeded authority reserved to Congress, including communications from President Ulysses S. Grant in which the Civil War hero indicated that Congress had authority to decide whether to let a French company lay telegraph cables in Virginia.

TransCanada, through two of its Houston-based subsidiaries, asked the court to declare the rejection of the pipeline an unlawful executive action: that the defendants are "without legal authority to prohibit TransCanada from extending the Keystone System into Canada."

The company is represented by Penny Reid with Sidley Austin in Dallas.

The New York Times reported today that TransCanada plans to write down a $1.8 billion to $2 billion loss in the fourth quarter of this fiscal year, for the expense of preparing the pipeline.

The lawsuit does not cite or estimate a demand for damages.

Follow @cam_langford

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit