Obama Administration Rejects Keystone XL Pipeline
The Obama Administration has halted, for the moment, a pipeline project that has become a political football.
WASHINGTON — The State Department was expected to announce later Wednesday that it cannot recommend going forward with the proposed Keystone XL oil pipeline within the 60-day deadline set by Congress, putting the politically charged project on hold indefinitely, administration officials said.
The administration has until Feb. 21 to decide the fate of the 1,700-mile pipeline to carry heavy crude oil from formations in Alberta, Canada, to refineries on the Gulf Coast. Officials are expected to announce that they cannot meet that deadline and that they are looking for ways to complete a thorough environmental review before making a final decision on the project.
The action for now means the permit for the pipeline is rejected although the pipeline company will be allowed to submit a new proposal with an altered route. The Obama administration had sought a year’s delay to find a new route for the pipeline. But Republicans in Congress demanded that the administration accelerate the schedule and make a decision by mid-February, and included that provision in the payroll tax bill passed last month.
The State Department is expected to say that routing, environmental and safety concerns raised by the project are too complex to be decided on that abbreviated timetable and is recommending that President Obama reject it for the time being.
The 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 and threatens sensitive lands and water supplies in the Great Plains.
The White House spokesman, Jay Carney, at a briefing with reporters 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.
“In a purely partisan effort to score a political points, Republicans in Congress insisted on inserting an extraneous provision in a bill that had nothing to do with pipelines,” he said. “The State Department has made it clear that setting an arbitrary deadline through this purely political effort would put State Department in a corner and severely hamper their ability to review an alternate route, a new pipeline route, in a proper way.”
Not surprisingly, Republicans are denouncing the move and vowing to continue putting pressure on the Administration to approve the project:
A spokesman for Speaker John A. Boehner’ put out a response, based on news reports of the State Department’s recommendation, reminding everyone that the language in the payroll tax bill stipulates that only the president has authority to block the permit — not the State Department.
“President Obama is about to destroy tens of thousands of American jobs and sell American energy security to the Chinese,” said Brendan Buck, Mr. Boehner’s spokesman. “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 all endorsed the pipeline, saying it will create jobs, and have used it as a cudgel to criticize Mr. Obama. They say that his reluctance to quickly approve the project is harming the economy and forcing Canada to seek other markets for its oil.
“As to the pipeline,” former Gov. Mitt Romney of Massachusetts said at a recent campaign appearance in South Carolina, “how in the world can anyone justify saying to Canada: ‘We don’t want that pipeline coming here. We know it’s important for you to be able to make progress and provide for your own finances. We know that if we stall long enough, you’ll not have the opportunity to bring a pipeline to America. Instead you’ll build a pipeline for China.’ “
I noted back in December that the House Republicans may have made a big mistake in insisting that the temporary extension of the Payroll Tax cut include a provision requiring the Administration to make a decision on the pipeline now rather than waiting until 2013 as had been the plan. State Department officials said at the time that the deadline set by Congress did not provide sufficient time for the studies that are required by law to be completed before a decision can be made. Accordingly, the deadline may have inadvertently created the situation where the Administration had no choice but to veto the proposed route, which pipeline advocates have said they would be willing to reconsider given the objections that have been noted in states along the route even by politicians who favor the pipeline.
Moreover, one pipeline advocate warned that by appearing to back the President into a corner, the House Republicans were basically daring the President to reject the plan:
Some political observers said the effort by Congress to pressure the president into making a quick decision might have backfired. Last week, John Engler, a former Michigan governor who is now head of the Business Roundtable, said “no chief executive likes to be painted into a corner by anybody, whether another nation or a legislative body. There are a couple of ways to react, and one of them is a negative way.” Engler and the Business Roundtable support the pipeline project.
In the press release announcing the decision just this afternoon, the State Department cites a number of factors for the rejection, but states that a revised route could be considered in the future:
Today, the Department of State recommended to President Obama that the presidential permit for the proposed Keystone XL Pipeline be denied and, that at this time, the TransCanada Keystone XL Pipeline be determined not to serve the national interest. The President concurred with the Department’s recommendation, which was predicated on the fact that the Department does not have sufficient time to obtain the information necessary to assess whether the project, in its current state, is in the national interest.
Since 2008, the Department has been conducting a transparent, thorough, and rigorous review of TransCanada’s permit application for the proposed Keystone XL Pipeline project. As a result of this process, particularly given the concentration of concerns regarding the proposed route through the Sand Hills area of Nebraska, on November 10, 2011, the Department announced that it could not make a national interest determination regarding the permit application without additional information. Specifically, the Department called for an assessment of alternative pipeline routes that avoided the uniquely sensitive terrain of the Sand Hills in Nebraska. The Department estimated, based on prior projects of similar length and scope, that it could complete the necessary review to make a decision by the first quarter of 2013. In consultations with the State of Nebraska and TransCanada, they agreed with the estimated timeline.
On December 23, 2011, the Congress passed the Temporary Payroll Tax Cut Continuation Act of 2011 (“the Act”). The Act provides 60 days for the President to determine whether the Keystone XL pipeline is in the national interest – which is insufficient for such a determination.
The Department’s denial of the permit application does not preclude any subsequent permit application or applications for similar projects.
Ironically, this announcement comes on the same day that the President’s own jobs council made some interesting recommendations:
President Obama’s jobs council called Tuesday for an “all-in approach” to energy policy that includes expanded oil-and-gas drilling as well as expediting energy projects like pipelines.
“[W]e should allow more access to oil, natural gas and coal opportunities on federal lands,” states the year-end report released Tuesday by the President’s Council on Jobs and Competitiveness.
The report does not specifically mention the Keystone XL oil pipeline, but it endorses moving forward quickly with projects that “deliver electricity and fuel,” including pipelines.
“The Council recognizes the important safety and environmental concerns surrounding these types of projects, but now more than ever, the jobs and economic and energy security benefits of these energy projects require us to tackle the issues head-on and to expeditiously, though cautiously, move forward on projects that can support hundreds of thousands of jobs,” the report says.
The report retreats slightly from an interim report released in October that addressed the Keystone XL pipeline directly. The interim report appeared to offer cautious support for Keystone, calling on officials to “balance” environmental protections while realizing what it called the benefits of the pipeline.
But Keystone supporters will point out that the year-end report released Tuesday argues that energy projects like pipelines will result in economic and security benefits. It even echoes a common refrain from Republicans and the oil industry: that such energy projects “can support hundreds of thousands of jobs.”
This decision is not the end of the matter by any means. You can expect the House Republicans to try to make this an issue again in the upcoming negotiations over the permanent extension of the Payroll Tax cut as well as by other means. The Republican candidates for President will, no doubt, be united in their opposition to the President’s decision, and this is going to be an issue in the upcoming Presidential race. In reality, nearly all of the concerns that the State Department and pipeline opponents have voiced to this project can be easily addressed, including the question of whether the route of the pipeline itself poses a threat to underground aquifers. There’s no rational reason not to approve it, and I’ve to think that the Canadians are looking at this and just shaking their head in confusion over how stupid we Americans could possibly be to allow something so simple to get caught up in the idiotic world of partisan politics.
My prediction? Regardless of who is elected President in November, this project will be approved sooner rather than later.