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TransCanada sues US over $8bn Keystone permit denial

TransCanada has filed a lawsuit against the US Government to reverse President Barack Obama’s rejection of the $8bn Keystone XL pipeline that was planned to connect the Western Canadian Sedimentary Basin in Alberta to US refineries.

The lawsuit filed in a federal court in Houston, Texas, described the rejection of the company’s permit to construct the pipeline as ‘unconstitutional’.

In a separate action under the North American Free Trade Agreement (NAFTA), TransCanada said the denial of the Presidential Permit was arbitrary and unjustified.

The company will also be seeking to recover more than $15bn in costs and damages caused by the US Administration’s alleged breach of its NAFTA obligations.

TransCanada claimed that Obama’s decision to deny construction of the pipeline exceeded his power under the US Constitution.

As a result of the permit denial, the company said it is reviewing C$4.3bn ($3.1bn) carrying value invested in the project and related assets.

Furthermore, the company proposes to stop capitalising interest on the project effective 6 November 2015, when it was rejected by the president.

The company said that the US State Department previously concluded that the Keystone XL would not significantly increase global greenhouse gas (GHG) emissions.

The NAFTA claim states that TransCanada can expect its application to be granted as it met the same criteria applied by the US State Department at the time of approving applications to construct other cross-border pipelines similar to Keystone.

Both houses of Congress passed a bipartisan bill in early 2015 approving the construction of Keystone XL, which was later vetoed by the president.

While rejecting the project, Obama said that it would go against US’s leadership in climate change and would not provide meaningful contribution to the country’s economy and energy security.

Keystone XL would have been a 1,897km pipeline from Alberta to Nebraska and was designed to carry 830,000 barrels of crude oil per day.

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