On February 24th, President Obama vetoed legislation that would have authorized construction of the Keystone XL Pipeline as it “conflicts with established executive branch procedures and cuts short thorough consideration of issues that could bear on our national interest.” It is still possible that President Obama will approve construction of the highly controversial pipeline. In fact, a number of outcomes for the executive review are still possible and a district court judge in York County, Nebraska, just granted local landowners a preliminary injunction against TransCanada’s use of eminent domain for the proposed pipeline in a move that further complicates the future of the pipeline.
One potential outcome is starting to attract a bit of attention; if President Obama were to deny the pipeline, TransCanada, or the Canadian government themselves could challenge the decision under the North American Free Trade Agreement (NAFTA). Former Canadian Prime Minister Brian Mulroney, in April 2014, said that a major tenet of NAFTA is that “the U.S. was guaranteed unfettered supply in exchange for unfettered access by Canadian exporters to its market.” While neither TransCanada nor the Canadian government have expressed a desire to move forward with such a challenge, bringing a case under NAFTA has been discussed as a last resort option. The fact that U.S. taxpayers might foot the bill for any fines levied could be enough to further intensify an already divisive political debate.