With Keystone application resubmitted, judge puts hold on lawsuit

By Patrick C. Miller | January 31, 2017

A federal judge in Texas has put the $15 billion TransCanada Corp. lawsuit against the federal government on hold after the company resubmitted an application to the U.S. Department of State for approval of the Keystone XL Pipeline.

TransCanada’s application was submitted two days after President Donald Trump last week signed a presidential memo intended to expedite state department approval of the Keystone XL Pipeline. At the same time, Trump signed an executive order to expedite environmental reviews and approvals for high-priority infrastructure projects.

Judge Kenneth Hoyt in the Southern District of Texas ruled that Trump’s actions could render the outcome of the lawsuit moot. He plans to reopen the case in May to consider dismissing the case.

In 2015, President Barack Obama vetoed a bipartisan bill passed by Congress approving the 1,179-mile-long pipeline that would have transported Canadian and Bakken crude to Gulf Coast refineries. Following a seven-year review process, Obama then denied a presidential permit for construction of the pipeline.

TransCanada filed a lawsuit in January 2016 against the Department of State, the Department of Justice, the Department of Interior and the Department of Homeland Security alleging that denial of the permit was arbitrary, unjustified and violated the North American Free Trade Agreement. It sought $15 billion based on the initial estimated loss of its investments.

After resubmitting the application, Russ Girling, TransCanada’s president and CEO, said, "This privately funded infrastructure project will help meet America's growing energy needs as well as create tens of thousands of well-paying jobs and generate substantial economic benefit throughout the U.S. and Canada."

The 36-inch, 830,000-barrel-per-day pipeline will transport crude from tar sands in Alberta and up to 100,000 barrels of Bakken crude from North Dakota and Montana, providing market access at Cushing, Oklahoma.

Congressman Kevin Cramer, R-N.D., said he was encouraged by TransCanada’s quick response to Trump’s invitation to resubmit its application.

“With the President’s commitment to reach a final permitting determination within 60 days, a new tone is being sent from the White House on reducing the regulatory burden and getting America back to work,” he said. 

TransCanada said enhanced standards and use of advanced technology will help ensure that the Keystone XL Pipeline will be built and operated safely. The company cited independent Department of State forecasts estimating that the pipeline will contribute approximately $3.4 billion to the U.S. economy.

U.S. Sen. Heidi Heitkamp, D-N.D., who worked to build bipartisan support for the project in Congress, said, “After nearly a decade of delays by the previous administration that culminated in a decision based on politics—not the facts—prioritizing commonsense infrastructure projects like Keystone XL is a positive sign of our country’s renewed commitment to working with Canada toward pragmatic energy solutions that benefit both of our countries.”

Jack Gerard, American Petroleum Council president and CEO, called TransCanada’s action on Keystone XL “an important step forward to building a 21st century energy infrastructure system across our nation.”