Obama administration to reject controversial Keystone pipeline

The Obama administration will reject the Keystone XL pipeline Wednesday afternoon, according to a source closely following the issue.

The State Department is expected to make an announcement at 3 p.m. Wednesday. While the administration is expected to reject TransCanada Corp.’s permit application, it will allow the company to re-apply, according to the source.

ADVERTISEMENT
The White House has long signaled that the administration is unlikely to approve the Alberta-to-Texas pipeline under the timeline required in December’s payroll tax cut extension law, which mandates a decision by Feb. 21.

House and Senate Republicans have signaled in recent days that they will push new legislation to win approval if the White House rejects a permit.

The pipeline is the subject of an intense election-season political fight.

The result of todays announcement will be a massive call for both sides to man your battle stations’ through the Sunday talk shows, said Stephen Brown, a vice president for government affairs with Tesoro, a refining company.

Environmentalists, who have made stopping Keystone a top priority, and many Democrats oppose the proposal due to greenhouse gas emissions from Alberta’s massive oil sands projects and other ecological concerns.

But Republicans are hammering President Obama for failure to approve the project thus far, calling it a missed opportunity to create jobs and improve energy security.

They’re backed by an intense lobbying and public relations campaign by groups including the U.S. Chamber of Commerce and the American Petroleum Institute, and a number of unions — which, like environmentalists, are part of Obama’s political base — are pushing for the project too.

A spokesman for House Speaker John Boehner (R-Ohio) vowed Wednesday that “this is not the end of this fight.”

Republicans have cited proposals to transport oil sands from Alberta to Asian markets via the British Columbia Coast in calling for U.S. approval of Keystone.

“President Obama is about to destroy tens of thousands of American jobs and sell American energy security to the Chinese. The President won’t stand up to his political base even to create American jobs,” Boehner spokesman Brendan Buck said in a statement.

Environmentalists argue that jobs estimates cited by Republicans and industry groups are wildly inflated.

Bill McKibben, the environmentalist who has helped spearhead opposition to the project, cheered the apparent decision to reject the pipeline.

“Assuming that what we're hearing is true, this isn't just the right call, it's the brave call. The knock on Barack Obama from many quarters has been that he's too conciliatory,” said McKibben, head of the climate advocacy group 350.org. “But here, in the face of a naked political threat from Big Oil to exact 'huge political consequences,' he's stood up strong.”

His comment about the "threat" is a reference to recent remarks by the head of the American Petroleum Institute, the powerful industry trade group that recently warned of political “consequences” if Obama nixed Keystone XL.

White House press secretary Jay Carney on Wednesday attacked the GOP-crafted plan as "a purely partlsan effort to score a political point." 

He did not confirm that the pipeline would be rejected, saying he did not want to get ahead of the president or secretary of state. 

"The State Dept made clear that setting an arbitrary deadline would put the State Department in a corner" and would not allow them to review the route "in a proper way," Carney said.

On Tuesday, Carney had argued that State was still reviewing pipeline routes that would avoid an ecologically sensitive region of Nebraska.

“[I]t is a fallacy to suggest that the president should sign into law something when there isn’t even an alternate route identified in Nebraska and when ... there was an attempt to short-circuit the review process in a way that does not allow the kind of careful consideration of all the competing criteria here that needs to be done,” Carney said Tuesday.

The White House last November delayed a final decision until after the 2012 election, citing the need for more review.

But advocates of the project say the years-long State Department analysis has been exhaustive.

They argue the administration could issue a permit for the massive project even as the review of Nebraska-specific issues continues, noting that TransCanada has already reached an agreement with Nebraska state officials to find a way around a sensitive Sand Hills region.

— This story was last updated at 1:14 p.m.