TransCanada legal challenges over Keystone pipeline face long odds

Thu Jan 7, 2016 5:51pm EST
 
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By Ayesha Rascoe

WASHINGTON Jan 7 (Reuters) - TransCanada Corp faces a rocky legal path as it seeks to overturn President Barack Obama's denial of its Keystone XL pipeline or at least recoup some of its lost investment in the multibillion dollar project.

The Canadian company filed a lawsuit in federal court in Texas on Wednesday, asking the court to declare the White House decision unlawful. Separately, TransCanada announced its intent to issue a claim under the North American Free Trade Agreement (NAFTA) for $15 billion in damages.

Both cases face an uphill battle, but international trade lawyers say the high-profile U.S. political battle over the pipeline may help TransCanada's claims of unfair treatment under NAFTA.

The trade agreement between Canada, Mexico and the United States allows investors from those countries to seek damages when they feel they have been discriminated against or treated unfairly by one of the other NAFTA member nations.

TransCanada contends that the United States "unjustifiably" discriminated against the Keystone project and had previously approved pipelines from other investors in a shorter amount of time and under different criteria than applied to Keystone.

Under NAFTA, investor-state challenges are decided by a three-person panel composed of private arbitrators chosen by the parties involved in the dispute. The tribunal has no power to alter the White House's decision, but can award damages.

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. It sparked widespread opposition from environmental groups and a tug-of-war over its approval between Republicans and Democrats.

Obama rejected the project in November, seven years after it was first proposed, saying it would undercut the country's global leadership in fighting climate change by promoting the import of carbon-intensive oil sands crude.   Continued...