TransCanada files $15bn suit over US Keystone pipeline rejection

TransCanada has formally filed a $15 billion suit against the US government for blocking its controversial project for an oil pipeline linking Canada with the Gulf of Mexico, legal documents show.

The company first announced its intention to sue in January, but then sought negotiations toward "an amicable settlement of the dispute" surrounding the Keystone XL pipeline, according to legal documents posted on its website.

Unable to settle, the company formally filed suit late Friday, asserting that denial of a permit to complete the pipeline was "unjustified" under the North American Free Trade Agreement (NAFTA), and that the decision also exceeded US President Barack Obama's constitutional powers.

The suit is based on Chapter 11 of NAFTA -- the 1994 trade pact between the United States, Canada and Mexico -- which aims to protect foreign investors from potential losses.

The Calgary-based company is seeking $15 billion for losses it says it suffered because of the pipeline's rejection.

The decision to block the pipeline, which came seven years after the company first submitted the project, marred US-Canada relations and angered many in the oil industry in both countries.

The pipeline would have carried crude oil from the Alberta tar sands deposits all the way to the US Gulf Coast. The US government's blocking of the 1,179-mile (1,900 kilometer) Alberta-Nebraska section effectively undermined the entire project.

Environmentalists have assailed the project -- and the move to sue -- arguing that the Alberta deposits produce some of the "dirtiest" crude in the world.

In its latest filings, TransCanada argued that the US government's decision was not based on technical analysis, but "was symbolic, and based merely on the desire to make the US appear strong on climate change."

A summit that brings together the leaders of NAFTA's three countries will be held next week in Ottawa.