Obama rejects oil pipeline from Canada, triggering loud controversy

WASHINGTON — The Obama administration on Wednesday denied a permit for the Keystone XL oil pipeline from Canada, touching off a torrent of criticism from Republicans — whom the White House blamed for forcing a decision.

President Barack Obama, who was under a 60-day deadline imposed by congressional Republicans, left open the door to approve the 1,661-mile pipeline in the future. He also suggested the possibility of an alternative pipeline that could get Canadian oil sands crude to refineries and ports in Texas.

The company that wants to build Keystone XL, TransCanada Corp., said Wednesday it would apply for a new permit that, if approved, would allow the pipeline to be built by late 2014.

The decision was fraught with political complications for Obama over issues of energy security, jobs and the environment. Environmentalists had made the project a test case on whether the administration was serious about fighting climate change. And though Obama didn't rule out future pipelines, they declared victory.

Business groups, congressional Republicans and the GOP's presidential candidates hammered Obama for rejecting the project, which they said would create jobs.

In a statement, Obama said he was siding with his State Department and denying the permit because of a "rushed and arbitrary deadline" that congressional Republicans attached to a payroll tax-cut extension in December.

"This announcement is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people," Obama said.

Obama said his administration would "continue to look for new ways to partner with the oil and gas industry to increase our energy security," and he said that would include a potential pipeline from Cushing, Okla., to the Texas Coast. An existing Keystone pipeline from the oil sands ends at Cushing; extending it could be an alternative way of getting the oil sands crude to the Gulf Coast.

The administration's decision was a delay, but not necessarily the end of the line, when it comes to linking Canada's oil sands with Texas. The State Department last summer said it found no major environmental problems with the pipeline, but later it changed course because of concerns about the pipeline's route through Nebraska's sensitive Sand Hills region and asked for a review of alternative routes.

TransCanada president Russ Girling said the company would reapply for a permit and "largely maintain the construction schedule of the project." He said a route would be found by October to avoid the Sand Hills.

But he charged that "until this pipeline is constructed," the U.S. will continue to import oil from "foreign countries who do not share democratic values Canadians and Americans are privileged to have. Thousands of jobs continue to hang in the balance if this project does not go forward."

Republicans were even more vehement, accusing Obama of making an election-year decision to bow to environmental activists.

"There's really — there's no other way to put it: The president is selling out American jobs for politics," House Speaker John Boehner said.

White House Press Secretary Jay Carney, who spoke before the administration announced its decision, blamed Republicans for launching a "purely partisan effort to score a political point." He said the State Department had warned that forcing a decision within 60 days "would make it virtually impossible for an adequate review."

He said the concerns under review included environmental effects on air and water quality in Nebraska and a request by Nebraska's governor to consider an alternate route.

"We don't even have an alternate route identified yet, so how could anyone possibly review it thoroughly in the manner that is expected in this process?" he said.

Carney insisted Obama doesn't necessarily oppose the construction of pipelines.

"This president's commitment to expanding domestic oil and gas production is firm," he said.

Environmental groups opposed the Keystone XL pipeline chiefly because of climate change, but also because of the risk of oil spills. Canada's oil sands require more energy to extract and refine the crude, and that means a greater release of greenhouse gases than from refining conventional oil. They also argued that oil sands crude wouldn't improve energy security because it could be exported from Texas ports.

Sierra Club executive director Michael Brune called called the decision a victory for clean air and water and "another downpayment on the administration's plan to move our country beyond oil."

"The knock on Barack Obama from many quarters has been that he's too conciliatory," said author Bill McKibben, who organized protests against the pipeline. "But here, in the face of a naked political threat from Big Oil to extract 'huge political consequences,' he stood up strong."

The comment was a reference to a statement reportedly made earlier this month by American Petroleum Institute president Jack Gerard. On Wednesday, Gerard said that the pipeline was "essential to our nation's energy future."

The American Petroleum Institute said a consultant's study for the oil industry concluded the pipeline would produce about 20,000 U.S. and Canadian jobs in manufacturing equipment and constructing the line over two years. A Cornell University study said that figure was exaggerated.

On the campaign trail, Republican presidential front-runner Mitt Romney said: "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."

Former House Speaker Newt Gingrich, appearing at Bobby's Bar-B-Q in Warrenville, S.C., tossed aside his stump speech and railed against Obama.

"This is a stunningly" he started to say, and someone yelled out, "stupid mistake."

Ginigrich grinned. "This is a stunningly stupid thing to do," he said. He then used the word "stupid' repeatedly for about five minutes, suggesting that the White House thinks it's "governing Mars."

Obama left the door open to future oil sands pipelines.

"We'll be remaining constantly vigilant on that" and oppose any pipelines that would increase production of Canadian crude and open possibilities of exporting it, said Kim Huynh of the environmental group Friends of the Earth.

Still, like other environmental activists, she was happy with the administration's decision. "The climate movement took on Goliath and won," she said.

(David Lightman of the Washington Bureau contributed to this article from South Carolina.)


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