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Keystone XL: TransCanada Files $15 Billion Lawsuit Over Pipeline Rejection

TransCanada Corp. has filed a $15 billion lawsuit against the U.S. seeking damages for failed bid to build $8 billion pipeline.
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A day after the South Dakota Public Utilities Commission approved its permit, TransCanada Corp. filed suit against the United States in response to President Barack Obama’s November 2015 rejection of the Keystone XL pipeline proposal, seeking $15 billion in damages.

RELATED: Obama Rejects Keystone XL: 'Does Not Serve National Interest'

TransCanada filed both under the North American Free Trade Agreement (NAFTA) and in federal court in Houston “on the basis that the denial was arbitrary and unjustified,” the company said in a statement on January 6, regarding the NAFTA filing. The federal court filing challenges the constitutionality of Obama’s decision.

“Through the NAFTA claim, TransCanada will be seeking to recover more than US$15 billion in costs and damages that it has suffered as a result of the U.S. Administration's breach of its NAFTA obligations,” the company said. “Furthermore, in the federal court filing, TransCanada asserts the Administration's action was contrary to Congress' power under the U.S. Constitution to regulate interstate and international commerce. While the President has traditionally granted permits on narrow, established grounds, any such power does not exist when Congress has acted to the contrary or when the decision is based on the unprecedented and symbolic grounds that are the foundation of the denial in this case. In early 2015, both houses of Congress passed a bipartisan bill approving the construction of Keystone XL, which the President later vetoed.”

On Tuesday January 5, the South Dakota Public Utilities Commission approved TransCanada’s proposed route through the state. In doing so the commission overrode objections from tribal and other opponents who had argued that the company must begin its application process anew because more than four years had elapsed since the initial approval, and conditions had changed enough to warrant starting from scratch.

One of the conditions on the South Dakota permit is Presidential approval, and there’s a chance that the Keystone XL project could be revived after the 2016 federal election. Indigenous opponents had already signed a petition trying to get TransCanada to “throw in the towel” and withdraw its application in South Dakota, likening the proposal to a zombie and drawing comparisons to the famous Monty Python dead-parrot skit.

RELATED: TransCanada Urged to Throw in the Towel—Literally—on 'Zombie' Keystone XL

Reaction to TransCanada’s lawsuit was swift, with the activist organization Bold Nebraska calling it a “desperate attempt” and a farmer likening the company to a “spoiled kid.”

“The rejection of Keystone XL was justified in order to protect the land, water and property rights of farmers and ranchers,” said Bold Nebraska Director Jane Kleeb in a statement. “This desperate attempt by TransCanada is a move to show their shareholders they have a viable project when they have hit a dead end.”

“TransCanada’s latest action reminds me of a spoiled kid who refuses to take no for an answer,” added Art Tanderup, a Nebraska farmer whose land was along the pipeline’s proposed route. “The President said ‘no,’ and now they are going to sue. A foreign corporation is suing the United States because they were not allowed to push their poison through the heartland with no concern for the land, the water and the people who live here.”

In essence, the company is indeed crying “no fair,” international trade lawyer Cyndee Todgham Cherniak told CBC News.

"It basically says the U.S. has approved other pipelines, and so we are not being treated the same as these other guys who were approved," she said.

Legally the company could have a “pretty strong case,” international trade lawyer Lawrence Herman told CBC News, pointing out that NAFTA requires that all companies within the trade agreement be treated equally, and other pipelines had been approved south of the 49th Parallel during the seven years that the $8 billion Keystone XL languished. "They have the right to claim for compensation based on both sunk costs and future lost profits as a result of the decision.”

The Natural Resources Defense Council (NRDC) called the lawsuit a bullying tactic.

''TransCanada was wrong to try to ram the dirty tar sands pipeline down our throats—and it’s wrong to try to force American taxpayers to pony up for its mistakes,” said NRDC Canada project director Anthony Swift in a statement. “This is about a foreign company trying to undercut safeguards that protect the American people. Its attempt to bully us deserves to be rejected.”