Enviros wield TransCanada challenge against trade deal

Source: Geof Koss, E&E reporter • Posted: Sunday, January 10, 2016

Environmentalists are seizing on TransCanada Corp.’s twin legal challenges against President Obama’s rejection of the Keystone XL pipeline to oppose the Trans-Pacific Partnership trade deal pending before Congress.

The company, which is hoping to build the pipeline from Alberta into the United States to largely carry oil sands crude, accused the White House of flouting the Constitution and international norms. And many supporters of the project in Congress are rallying to its side.

But green groups wasted no time yesterday in linking TransCanada’s legal fight — which includes a federal lawsuit challenging the constitutionality of Obama’s decision, as well as its notice of intent to file a claim seeking more than $15 billion in damages under the North American Free Trade Agreement — to the so-called TPP deal (Greenwire, Jan. 6).

“TransCanada’s use of the NAFTA investment tribunal is why TPP, written with the same provision, is a bad idea,” wrote William Snape, senior counsel to the Center for Biological Diversity, in an email.

“We don’t need foreign fossil fuel companies suing the United States in ‘world court’ for the president, federal agencies or state governments seeking to lawfully keep dirty KXL oil in the ground,” Snape said.

Environmentalists have long criticized investment provisions of trade deals that allow companies to challenge government policies, and the inclusion of such avenues in TPP is among the laundry list of complaints that green groups laid out against the deal when negotiators released it in November (Greenwire, Nov. 5, 2015).

Sierra Club Executive Director Michael Brune echoed the point yesterday. “These destructive provisions that wrongly empower corporations to attack our safeguards show exactly why NAFTA was wrong and why the dangerous and far-reaching Trans-Pacific Partnership is worse and must be stopped in its tracks,” Brune said in a statement.

TransCanada’s actions are unlikely to help the White House muster Democratic support for TPP, which must be approved by Congress later this year to take effect. House Democrats have already expressed a host of reservations about the deal (E&E Daily, Nov. 18, 2015).

Rep. Raúl Grijalva (D-Ariz.) said yesterday that TransCanada’s legal steps were arrogant and disappointing, and undermined U.S. sovereignty.

“This is a domestic decision,” he told E&E Daily last night. “The United States can speak for itself, and we need to protect that.”

Grijalva also accused TransCanada of interjecting itself into the 2016 presidential campaign and said he hopes Canadian Prime Minister Justin Trudeau “will tell them to back off.”

Trudeau has expressed support for KXL but has also been unwilling to mount a significant lobbying effort for the project, unlike his predecessor.

Nevada Republican Rep. Mark Amodei was sympathetic to TransCanada, which waited years for Obama’s rejection of the infamous pipeline last November.

“I hope they win,” he told E&E Daily.

The company explained in a release: “The NAFTA claim asserts that TransCanada had every reason to expect its application would be granted as the application met the same criteria the U.S. State Department applied when approving applications to construct other similar cross-border pipelines.”

South Dakota regulators recently approved a permit renewal for KXL to cross the state. Project supporters hope a new administration or Congress will make it a reality.

Constitutional question

While a NAFTA challenge has long been considered a likely option for TransCanada, the separate lawsuit filed in federal court in Houston yesterday accuses the Obama administration of infringing on Congress’ constitutional authority to regulate interstate commerce.

“Congress unquestionably has the power, under the Constitution’s foreign commerce clause and domestic commerce clause, to determine whether a pipeline of this type should be developed,” says the company’s complaint.

“In addressing oil pipeline development generally, facilitating cross-border trade in petroleum products, and authorizing the Keystone XL Pipeline directly, Congress has already exercised those powers in a manner incompatible with any assertion that the President can unilaterally prohibit development of the Keystone XL Pipeline,” the document says.

While Congress has advanced legislation related to oil pipelines and cross-border infrastructure, including legislation approving KXL, none of the measures have become law. The president vetoed the approval measure.

White House authority over cross-border pipelines stems from an executive order issued by President Lyndon Johnson, and later clarified by President George W. Bush.

A handful of federal courts have entertained — and rejected — challenges to the process laid out in the executive order, citing presidential authority under the Constitution to conduct foreign policy.

“As these cases show, courts that have analyzed the President’s exercise of permitting authority as articulated in Executive Order 13337 have held that it is a legitimate exercise of the President’s constitutional authority, and therefore does not require legislative authorization,” the Congressional Research Service noted in a 2012 report.

However, in at least one of the cases, the court accepted the president’s authority to permit cross-border pipeline based partly on the fact that Congress has “not attempted to exercise any exclusive authority over the permitting process” (E&ENews PM, Nov. 6, 2015).

Environmentalists, still gleeful over Obama’s rejection of KXL, sounded a confident, even sarcastic, tone yesterday that the litigation will prove fruitless.

“Thank you, TransCanada,” said Oil Change International Executive Director Stephen Kretzmann in a statement. “We were just discussing how to explain the danger the TPP poses to the environment, and this is the perfect example. We’re also really happy to use this opportunity to explain again why KXL and all tar sands infrastructure is a disaster for the climate. We’ll use really small words this time. We promise.”

Reporter Hannah Hess contributed.