Home / TransCanada’s Keystone XL lawsuit is just the beginning of corporate pushback against government pandering to environmentalists

TransCanada’s Keystone XL lawsuit is just the beginning of corporate pushback against government pandering to environmentalists

The Cowboy and Indian Alliance marches with rock icon Neil Young, center, and actress and environmentalist Daryl Hannah, second from right, to the National Museum of the American Indian in Washington, D.C., U.S., on Saturday, April 26, 2014. In its NAFTA claim, TransCanada says the rejection of Keystone XL was symbolic and based on the desire to make the U.S. appear strong on climate change, not on the merits of the project.

TransCanada Corp.’s US$15-billion appeal of President Barack Obama’s rejection of the Keystone XL pipeline raises an important question: Who pays for social licence?

TransCanada Corp launches US$15-billion lawsuit against U.S. government for rejecting Keystone XL

Matthew Sherwood for National Post

TransCanada Corp. said Wednesday it intends to file a challenge under the North American Free Trade Agreement (NAFTA) seeking US$15-billion in damages from the United States government over President Barack Obama’s denial of the Keystone XL pipeline.

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So far, the cost of accommodating the new political priority has been borne by private entities and their shareholders, who despite their efforts to accommodate and meet higher and costly regulatory requirements, are increasingly stuck with worthless or challenged energy projects.

On Wednesday, Calgary-based TransCanada became the first Canadian company to say ‘enough.’

It put in motion a pair of lawsuits – one under the North American Free Trade Agreement (NAFTA), the other in a Texas court — to recoup the real and lost opportunity cost of Obama’s Nov. 6 rejection of KXL, and to challenge whether he even had the constitutional authority to kill it.

The US$8-billion project’s rejection, the company argues, was arbitrary, unjustified and aimed at pleasing environmental advocates.

It could be just the beginning of corporate pushback.

Canada’s new Liberal government pulled a fast one on Enbridge Inc. over its proposed Northern Gateway pipeline, when it took steps to formalize a ban on tankers in northern British Columbia, effectively making the project to export Alberta oil to Asia worthless. The announcement came after the company and its shippers had already spent $500 million on regulatory expenses, after the project was improved to meet higher expectations, and after it was approved by regulators and by the former Conservative government’s cabinet.

In addition, the federal Liberals want to reform environmental reviews of other pipelines, even though the review of Kinder Morgan’s TransMountain pipeline expansion has been under way for more than two years, at a cost more than $300 million, and TransCanada’s proposed Energy East pipeline expects billions in additional costs to accommodate route changes and higher environmental standards.

Alberta’s NDP government made big promises to establish itself as a global climate change leader, while sweeping under the rug the cost of stranding energy assets, many of them already approved or planned under previous rules. The list goes on.


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