Rejecting Pipeline Proposal, Obama Blames Congress
President Obama on Wednesday rejected, for now, the proposed Keystone XL oil pipeline, saying the $7 billion project could not be adequately reviewed within the 60-day deadline set by Congress. While the president’s action does not preclude later approval of the project, it sets up a baldly partisan fight over energy, jobs and regulation that will most likely persist through the November election
By JOHN M. BRODER and DAN FROSCH | The New York Times | January 18, 2012
House Republican leaders — Jeb Hensarling, Eric Cantor and Speaker John A. Boehner — said the decision would cost thousands of jobs. Stephen Crowley/The New York Times
The president said his hand had been forced by Republicans in Congress, who inserted a provision in the temporary payroll tax cut bill passed in December giving the administration only until Feb. 21 to decide the fate of the 1,700-mile pipeline, which would stretch from oil sands formations in Alberta to refineries on the Gulf Coast.
The State Department, which has authority over the project because it crosses an international border, said there was not enough time to draw a new route for the pipeline and assess the potential environmental harm to sensitive grasslands and aquifers along its path. The agency recommended that the permit be denied, and Mr. Obama concurred.
“As the State Department made clear last month,” the president said in a statement, “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.”
Mr. Obama said that his action was not a final judgment on the merits of the project, which the administration had been on a slow track to approving.
“I’m disappointed that Republicans in Congress forced this decision, but it does not change my administration’s commitment to American-made energy that creates jobs and reduces our dependence on oil,” he said.
He added that he would work with the oil industry to increase domestic production and perhaps build additional pipelines within the United States.
The trans-border pipeline has become a political flashpoint, with proponents saying it will create thousands of jobs and help wean the nation off of Middle Eastern oil, while opponents charge that it furthers dependence on dirty fuels, contributes to global warming and threatens ecological disaster.
Canada’s prime minister, Stephen Harper, who has been a strong advocate of the pipeline, told Mr. Obama in a telephone conversation on Wednesday that he was profoundly disappointed in the decision.
The White House spokesman, Jay Carney, at a briefing with reporters on Wednesday before the State Department released its announcement, was sharply critical of the Republican-sponsored legislation that he said had forced a decision before the project could be fully studied and might have unwittingly delayed it.
Brendan Buck, the spokesman for Speaker John A. Boehner said: “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. This is not the end of this fight.”
The Republican presidential candidates have already made clear that they intend to use the Keystone issue to portray the Obama administration as an enemy of business that is doing the bidding of extreme environmentalists. The pipeline issue has also become part of a broader narrative that the Republican candidates are trying to develop about Mr. Obama, one that argues that his administration is vastly expanding regulation in ways that prevent private industries from expanding and hiring.
Mitt Romney, a former Massachusetts governor, criticized the decision in a statement.
“President Obama’s decision to reject the Keystone XL crude oil pipeline is as shocking as it is revealing,” Mr. Romney said. “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.
“By declaring that the Keystone pipeline is not in the ‘national interest,’ the president demonstrates a lack of seriousness about bringing down unemployment, restoring economic growth and achieving energy independence.”
On the stump and in debates, the Republican candidates have been using the possibility that Mr. Obama would block the pipeline construction as a reliable applause line about what they view as overregulation that is strangling the economic recovery.
At an event in Ottumwa, Iowa, on Dec. 31, Rick Santorum mocked the idea that the pipeline posed the threat of environmental damage, noting that there were already many other pipelines in the area it would go through. “This is just, again, pandering to radical environmentalists who don’t want energy production, who don’t want us to burn more carbon,” Mr. Santorum said.
TransCanada, the company proposing to build the pipeline, said that it would quickly apply for a new permit to build along a similar route.
“While we are disappointed, TransCanada remains fully committed to the construction of Keystone XL,” said Russ K. Girling, the company’s chief executive. “Plans are already under way on a number of fronts to largely maintain the construction schedule of the project. We will reapply for a presidential permit and expect a new application would be processed in an expedited manner to allow for an in-service date of late 2014.”
Kerri-Ann Jones, the assistant secretary of state for oceans and international environmental and scientific affairs, said Wednesday that any new application filed by TransCanada would trigger an entirely fresh review process, no matter how similar the pipeline route, and that the process could not be “expedited” as TransCanada hoped.
The American Petroleum Institute, the industry’s main lobbying group, has begun a multimillion-dollar lobbying and advertising campaign promoting the pipeline.
Jack N. Gerard, the group’s president, was unusually harsh in his remarks on Mr. Obama’s decision.
“How can you say you are for jobs and reject the largest shovel-ready project in America today?” Mr. Gerard said at an energy forum on Wednesday afternoon. “Mr. President, what are you thinking?”
The pipeline extension was designed to increase Canadian oil exports to the United States by 700,000 barrels a day, or about 4 percent of current United States demand. By connecting the oil sands to refineries on the Gulf Coast, it would provide new supplies to big East Coast markets. The pipeline, at least theoretically, could also increase exports of refined gasoline and diesel for export, especially to Mexico.
Canada has the world’s second-largest proven oil reserves after Saudi Arabia, with 170 billion out of its 174 billion barrels residing in oil sands in the West, according to the Canadian government.
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