Obama rejects Keystone pipeline

Nati Harnik/AP

In a decision that quickly re-ignited a fierce energy debate, the Obama administration on Wednesday rejected the controversial Keystone XL pipeline because the 60-day deadline imposed by Republicans did not allow adequate time to review an alternate route through an ecologically sensitive area in Nebraska. Deputy Secretary of State William Burns made the announcement on President Obama's behalf on the project that would carry oil from Canada's carbon-heavy tar sands to refineries on the Gulf Coast.

TransCanada, the company seeking to build the $7 billion, 1,700-mile pipeline, will be able to reapply with a new route avoiding an ecologically sensitive area of Nebraska, sources told National Journal. Put more simply, the Obama administration hit back at Republicans by saying no because of their forcing him to decide on the project in just 60 days. Republicans in Congress and on the campaign trail promptly painted the decision as a rejection of thousands of American jobs purely for political reasons.

A spokesman for House Speaker John Boehner, R-Ohio, decried the news. "President Obama is about to destroy tens of thousands of American jobs and sell American energy security to the Chinese," said Brendan Buck. "The president won't stand up to his political base even to create American jobs. This is not the end of this fight." Texas Gov. Rick Perry also jumped on it. "The president's focused more on the next election than on the next generation." The White House has been trying to thread a needle between two segments of the Democratic base split over the pipeline: labor unions that support the project for the jobs it would bring, and environmentalists who oppose it for the adverse impacts that development of tar-sands oil could have on the environment. The administration's decision was not a big surprise. White House spokesman Jay Carney and other senior officials have repeatedly said that the Republicans' 60-day deadline, which was included in the payroll-tax deal Obama signed into law last month, did not give the administration enough time to appropriately review the project plans.

The State Department announced last fall that it would postpone a decision on the permit while an alternate route was developed to avoid Nebraska's Ogallala Aquifer, which supplies water to millions of people. The timing of the announcement was more surprising, since the administration had until Feb. 21 to decide. But a Wednesday announcement does make some political and economic sense. It allows Obama to go on offense before Thursday's debate between Republican presidential candidates in South Carolina and before his own State of the Union address next Tuesday. It also comes before public anger could grow if gasoline prices continue their upward climb in the weeks ahead.

"This is the last day to own this issue on their terms," said Kevin Book, managing director at ClearView Energy Partners, a Washington-based energy consulting firm. "The administration gets to explain their choice before it gets explained for them."

Now the administration - and Obama's reelection campaign - will seek to do damage control with Republican attacks. It must also submit within 15 days a report to Congress detailing why it rejected the permit. But the issue will not be dropped by congressional Republicans. GOP leaders in both chambers are already mulling other legislation that could take the decision on the pipeline completely out of Obama's hands. They have also said any such maneuver could likely be included in the longer term payroll-tax deal Congress has indicated it will pass by the end of February.

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