Emerging Issues: Transcanada v. Obama Administration – 15 Billion for Cancellation of Keystone XL Pipeline Project

TransCanada Keystone Pipeline, LP and TC Oil Pipeline Operations Inc., subsidiaries of TransCanada Corporation (“TransCanada”), lost their seven-year bid with the United States (U.S.) Government for a permit to complete the $5.4 billion oil pipeline connecting Canada and the U.S. On November 6, 2015, President Obama announced that Secretary of State, John Kerry, through powers under Executive Order 13337, had denied the application for a border crossing permit, prohibiting construction of the Keystone XL Pipeline Project. Following this denial, on January 6, 2016, TransCanada filed a complaint to the District Court of Texas against members of the Obama Administration, requesting a declaration expressing that this decision was unlawful and for an injunction barring future Executive branches to give it effect. In conjunction with the declaratory request, TransCanada also filed a Notice of Intent to initiate a claim under Chapter 11 of the North American Free Trade Agreement (NAFTA) alleging that the Administration breached their duties and the reasons given for the denial were “arbitrary and unjustified” and are asking for $15 billion in damages.