Obama rejects Keystone pipeline, blames Republicans for ‘arbitrary’ deadline

President Obama on Wednesday rejected the proposed Keystone XL oil sands pipeline, escalating an explosive election-year fight with congressional Republicans.

Obama blamed Republicans for forcing his hand, saying GOP provisions in December’s payroll tax cut extension deal that required a decision on the project by Feb. 21 left too little time for a project review by the State Department.

Obama stressed that the decision was not based on the “merits” of the plan but instead the forced timeline.

ADVERTISEMENT
“As the State Department made clear last month, the rushed and arbitrary deadline insisted on by congressional Republicans prevented a full assessment of the pipeline’s impact, especially the health and safety of the American people, as well as our environment,” Obama said in a prepared statement Wednesday.

“As a result, the secretary of State has recommended that the application be denied. And after reviewing the State Department’s report, I agree,” Obama added.

Republicans, led by Mitt Romney, the front-runner for the GOP’s presidential nomination, bashed the decision to nix the Alberta-to-Texas pipeline, which Romney said would cost U.S. jobs. 

“If Americans want to understand why unemployment in the United States has been stuck above 8 percent for the longest stretch since the Great Depression, decisions like this one are the place to begin,” Romney said.

For Obama, who late last year sought to push off a decision on the pipeline until after the 2012 election, the rejection poses both political risks and possible benefits.

Obama made the decision a week ahead of his Jan. 24 State of the Union address, which allows the White House to roll out his 2012 themes without the closely watched decision looming over the high-profile address.

The president has made several moves to shore up his base, and the decision electrified Obama’s environmental movement backers, who have now chalked up major wins with the Keystone rejection and the recent EPA rule to cut power plant emissions of mercury and other toxics.

The denial will likely go a long way toward improving rocky relations with environmental groups that reached their nadir last September when Obama scuttled tougher EPA smog regulations.

“Most politicians today buckle to the kind of threats made recently by oil lobbyists, but President Obama is doing the right thing by standing up for the families who are fighting to protect their clean water from the Keystone export pipeline,” said National Wildlife Federation President Larry Schweiger.

Still, Obama’s decision could make him more vulnerable to criticisms that his policies are disrupting the private sector and costing the economy jobs, especially if the economy worsens.

Republicans vowed to pursue legislation that would force or effectively force approval of the pipeline.

“This is not the end of the fight. Republicans in Congress will continue to push this because it is good for our country, it is good for the economy and it’s good for the American people,” House Speaker John Boehner (R-Ohio) said.

Major business groups cried foul.

On a call with reporters earlier Wednesday, American Petroleum Institute President Jack Gerard slammed the decision, accusing the White House of caving to “extreme” environmental-movement opponents of the project.

He vowed to work with lawmakers to try and force approval, and also suggested the powerful industry trade group could take legal action in an attempt to reverse the denial.

“We will consider all of our legislative and legal options,” Gerard said, repeating his recent warning that Obama will face political “consequences” for rejecting the project, which the group is spending heavily to promote.


A number of unions also backed Keystone. But Obama moved to shore up labor’s support with that key constituency two weeks ago by using his recess-appointment powers to fill open positions on the National Labor Relations Board.

Obama, in his statement, sought to limit the political fallout from the decision by emphasizing that while Keystone has been rejected, he supports policies to boost supplies of oil and gas and other American energy sources.

“In the months ahead, we will continue to look for new ways to partner with the oil-and-gas industry to increase our energy security — including the potential development of an oil pipeline from Cushing, Okla., to the Gulf of Mexico — even as we set higher efficiency standards for cars and trucks and invest in alternatives like biofuels and natural gas,” the president said.

“And we will do so in a way that benefits American workers and businesses without risking the health and safety of the American people and the environment,” he added.

The State Department said Wednesday that TransCanada was free to reapply. TransCanada said in a statement that it planned to do so.

The company, which first applied for a permit in 2008, said it expected an expedited review from the State Department, which has spent years reviewing its prior plan.

A senior State Department official told reporters Wednesday afternoon that while the department has authority to use information from the prior review, she could not promise an expedited process.

“If TransCanada comes in with a new application, it will trigger a completely new review process. We cannot state that anything will be expedited at this time,” said Kerri-Ann Jones, the assistant secretary of State for Oceans and International Environmental and Scientific Affairs.

Republicans, for their part, are weighing their options to revive TransCanada’s current plan.

One plan that has been floated by Sen. John Hoeven (R-N.D.) would put a final decision on the project in the hands of Congress.

Rep. Lee Terry (R-Neb.) late last year circulated a separate plan that would place responsibility for the decision with the independent Federal Energy Regulatory Commission, but restrict FERC’s discretion to reject a permit.

GOP bills to force approval of the pipeline are highly unlikely to become law. But they will be a political rallying point for Republicans, who plan to press Obama on Keystone through Election Day.

The Keystone battle has also caused tensions between the United States and Canada. Canadian Prime Minister Stephen Harper, a vocal supporter of the pipeline, expressed his frustration with the decision during a phone call with Obama on Wednesday.

“Prime Minister Harper expressed his profound disappointment with the news,” Harper’s office said in a statement. “He indicated to President Obama that he hoped that this project would continue, given the significant contribution it would make to jobs and economic growth both in Canada and the United States of America.”

—This story was posted at 3:30 p.m. and updated at 8:26 p.m.