The Obama administration’s decision to deny the pipeline explicitly acknowledged that building it would benefit the U.S. economy, create jobs, increase energy security, advance relations with Canada, not harm the environment and cause no significant increase in greenhouse-gas production. Expert analysis concluded, and Secretary of State John Kerry admitted, that approving or denying the pipeline would likely not have a significant impact on oil production in Canada (principally because other transport options and markets exist).

Kristine L. Delkus

But environmental activists made rejection of the project a litmus test of the president’s climate-change credentials. The State Department’s official Record of Decision reasoned that permitting the pipeline to proceed would “undermine U.S. climate leadership” because “the understanding of the international community” — contrary to the administration’s own findings—was that the pipeline would increase greenhouse-gas emissions. Permitting construction would “undercut the credibility and influence of the United States” in negotiating with other countries, including at the coming Paris climate conference.

In other words, the pipeline and its benefits were sacrificed to increase the president’s negotiating leverage with other countries.

“The continuing saga of the Keystone XL drama overlaid with a tangle of old and new precedents and conflicting constitutional powers will make TransCanada’s U.S. lawsuit a case to watch . . . Regardless of the outcome, TransCanada’s Keystone XL challenges set the stage for potential blockbuster decisions that will have a lasting impact on energy, constitutional, and trade law.”

There are compelling reasons to think that TransCanada’s claims might prevail. TransCanada contends that the Obama Administration caved to political pressure because it wanted to be seen as a leader on climate change. It therefore allegedly:

• Disregarded its own findings that Keystone did not raise significant health, safety or environmental concerns;

• Unreasonably delayed and arbitrarily denied approval of the project; and

• Discriminated against TransCanada by applying different criteria to Keystone XL than it had to pipeline projects by other US and foreign investors in comparable circumstances.

TransCanada is represented by a top US law firm with a strong record in investment arbitrations. Its Notice of Intent is a well-crafted document that seems designed, among other things, to pre-empt criticism that TransCanada is using NAFTA Chapter 11 to circumvent environmental policy.

“TransCanada has a “very strong case” in arguing that Keystone XL didn’t receive the same standard of review as other pipelines that have been approved . . .”

“It really just reiterates what we’ve said before, which is that KXL should be approved on its merit and it appears the decision that was taken by President Obama was a political decision, not an evidence-based decision on the State Department report . . . It does keep it alive, perhaps on a different timeline.”

“I’ve thought for some time that that this was a politicized issue, and there are good arguments that decisions affecting Keystone were based on political considerations. To the degree that that is so, TransCanada has a viable if not a strong case.”

“It is somewhat surprising that when it comes to pipelines, which we have many of crossing the border, that the president was able to insist on an almost ever-changing series of escalating requirements, substantive requirements that are not reflected in law.”

“When it came to the Keystone XL pipeline perceptions and symbolism trumped facts and reality. That may be acceptable in politics, but it’s unacceptable when using (abusing) constitutional regulatory authority. The federal government can’t just make edicts that one project can go forward while another can’t. It must offer good reasons. Satisfying loud domestic and international political constituencies doesn’t cut it.”