UPDATE 2-TransCanada sues U.S. over Keystone XL rejection, seeks damages

Wed Jan 6, 2016 6:13pm EST
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(New throughout, adds details and background, government comments and updates share price)

By Nia Williams and Roberta Rampton

CALGARY/WASHINGTON, Alberta Jan 6 (Reuters) - TransCanada Corp sued the U.S government on Wednesday to reverse President Barack Obama's rejection of the Keystone XL pipeline, calling his decision unconstitutional.

TransCanada also sought $15 billion in a separate action under the North American Free Trade Agreement (NAFTA), saying the pipeline permit denial was "arbitrary and unjustified." The company's lawsuit in federal court in Houston does not seek legal damages but wants the permit denial invalidated and seeks a ruling that no future president can block construction.

Obama 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.

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.

"Presumably they have a case that there are damages, as they were led to believe that if they did these things they'd get it across the line, but they weren't able to," said portfolio manager Ryan Bushell at Leon Frazer & Associates in Toronto, whose firm owns more than a million shares in TransCanada.

"I'd imagine that this is more than a PR move and they believe they have a real case."   Continued...