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 TranCanada's lawsuit in a federal court in Houston, Texas, called
rejection of its permit to build the pipeline unconstitutional. In a
separate action under the North American Free Trade Agreement
(NAFTA), the company said the pipeline permit denial was "arbitrary
and unjustified."
The company's U.S. lawsuit does not seek monetary damages but wants
the permit denial invalidated and seeks a ruling that no future
president can block construction. Its request for $15 billion under
NAFTA reflects its desire to recover its investment in the pipeline.
Defendants in the Houston lawsuit are U.S. Secretary of State John
Kerry, Attorney General Loretta Lynch, U.S. Homeland Security
Secretary Jeh Johnson and Sally Jewell, Secretary of the Department
of Interior.
Obama, who is not named as a defendant, rejected the cross-border
crude oil pipeline last November, seven years after it was first
proposed, saying it would not make a meaningful long-term
contribution to the U.S. economy.
 The Keystone XL was designed to link existing pipeline networks in
Canada and the United States to bring crude from Alberta and North
Dakota to refineries in Illinois and, eventually, the Gulf of Mexico
coast.
All the Democratic U.S. presidential candidates, including front
runner Hillary Clinton, oppose the pipeline while most Republican
candidates are in favor.
Senator John Hoeven, a Republican from oil-producing North Dakota,
said Keystone's rejection had cost Americans jobs and now also put
taxpayers "on the hook for potentially billions of dollars in fines
and legal costs."
In filing the NAFTA claim, TransCanada said it "had every reason to
expect its application would be granted" as it had met the same
criteria the U.S. State Department used when approving other similar
cross-border pipelines.
Chapter 11 of the NAFTA trade agreement between Canada, Mexico and
the United States gives investors the right to make claims against
governments.
Unlike Canada and Mexico, the United States has never lost a Chapter
11 NAFTA case. The NAFTA tribunal process, which cannot reverse the
president's decision, would likely be lengthy and expensive.
TransCanada said it was "prepared for a lengthy process that could
take several years."
James Rubin, an environmental regulatory lawyer with Dorsey &
Whitney, said Keystone’s federal court suit would be "challenging.”
He noted that courts have considered cross-border pipeline decisions
before and have generally found they fall within the president’s
discretion.
The White House referred requests for comment to the U.S. State
Department. A State Department spokesperson said it would not
comment on pending litigation.
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In Ottawa, a spokesman for the Canadian foreign ministry said the
government "has no role in this dispute."
Since October, Canada has been run by Prime Minister Justin
Trudeau's Liberals, who backed the pipeline but has said the
Canada-U.S. relationship is “much bigger than any one project.”
TransCanada said it will also take an after-tax write down of C$2.5
billion ($1.78 billion) to C$2.9 billion in the fourth quarter after
the permit denial.
The project ran into opposition from environmental groups, and
blocking it became a litmus test of the green movement's ability to
hinder fossil fuel extraction in Canada's oil sands.
"The suit is a reminder that we shouldn’t be signing new trade
agreements like the Trans Pacific Partnership that allow
corporations to sue governments that try and keep fossil fuels in
the ground," said Jason Kowalski, policy director of environmental
group 350.org which opposed the pipeline.
TransCanada called the rejection "a symbolic gesture" aimed at
burnishing the Obama administration's leadership on climate change
in the eyes of the international community.
TransCanada is also developing the Energy East pipeline, designed to
move 1.1 million barrels per day of western crude to Canada's East
Coast. That project too faces opposition from environmentalists
trying to halt industry expansion.
TransCanada shares closed down 1.6 percent at $31.70 on the New York
Stock Exchange on Wednesday. After hours, the stock price stayed
steady after the legal actions were announced.
($1 = 1.4075 Canadian dollars)
(Additional reporting by Roberta Rampton in Washington, David
Ljunggren in Ottawa, Euan Rocha in Toronto, Anthony Lin in New York;
Writing by Amran Abocar; Editing by David Gregorio, Toni Reinhold)
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