U.S. challenges TransCanada's claims on Keystone XL

WASHINGTON, Jan. 8 (UPI) -- Under threat from a TransCanada lawsuit, the U.S. government said it was confident the decision made on the Keystone XL oil pipeline was in line with the law.

The pipeline company this week said it filed a lawsuit in a federal court in Houston challenging President Barack Obama's decision on Keystone XL and was reviewing possible additional claims under the North American Free Trade Agreement.

Obama rejected the permit for the pipeline proposed in 2008 largely on environmental grounds. Keystone XL was meant to carry a heavier grade of crude oil from Alberta that some advocacy groups said posed a greater risk than other kinds.

White House spokesman Josh Earnest said Obama agreed with the State Department's review of the pipeline. The State Department was charged with vetting the presidential permit application TransCanada submitted to build the cross-border pipeline.

"That's why we continue to be confident that the administration acted lawfully," he told reporters.

In its record of decision and national interest determination of the pipeline, the U.S. State Department said there were questions about the necessity for additional North American pipeline capacity given uncertainties about the future growth of Canadian oil sands production.

The pipeline became a symbol of the disputes over North American energy policy. In its filing statement, the company said it was "unjustly deprived" of the multibillion-dollar investment by the Obama administration's action, adding the decision may have been politicized.

Skip York, a principal analyst at Wood Mackenzie in Houston, said in response to email questions the lawsuit filed by TransCanada isn't necessarily a surprise, but winning a case against a federal government may be very difficult.

York said there's been a long history of cases where governments are protected from challenges because of the legal principle of sovereign immunity.

"They know the odds of winning are low, but the cost of litigating could be less than having to recomplete the permit process," he said.

The company said its review of trade agreements finds there was a "clear violation" of NAFTA. In terms of presidential authority, the company pointed to a series of congressional efforts to trump the executive office as a sign of the power over the decision.

Earnest countered the United States has "never lost a case" of this kind.

TransCanada said it remains committed to building the project.