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Keystone Veto Signals to Pipeline Foes Obama May Reject Project

Wednesday, 25 February 2015 05:16 AM

President Barack Obama’s veto of the Keystone XL bill is the latest sign to pipeline opponents that he’s prepared to reject a project he said won’t create many jobs or reduce U.S. oil prices.

Obama rejected the Republican-backed bill because it interfered with a review being led by the State Department, though he hasn’t decided whether to approve a permit for the pipeline, White House spokesman Josh Earnest said Tuesday.

Pipeline backers in Congress may seek to attach Keystone to other bills that the president supports. Republicans don’t have the votes to override Obama’s veto, meaning the final decision will rest with the president.

“We have been very encouraged by the president’s increased public skepticism about Keystone over the last few months,” Tiernan Sittenfeld, senior vice president for government affairs at the League of Conservation Voters, an environmental group that opposes Keystone XL, said in an e-mail. “We feel great about where things stand.”

The Republican effort to force the bill over Obama’s objections may also backfire, said Paul Bledsoe, a former White House energy aide under Democrat Bill Clinton now at the German Marshall Fund.


“Increased Republican oil drum-banging on Keystone cannot help but tempt the White House to send the far left into paroxysms of joy,” Bledsoe said. “With cheap oil, a resurgent economy, and 21 months until the next election, it’s hard to think of a more propitious political moment to deny the pipeline.”

There’s another reason for Obama to move quickly on the project: The longer he waits, the more the decision could become an issue in the 2016 election. There’s no deadline for a decision, though both sides have called for an end to a review that’s now in its sixth year.

“After six years of delay and obstruction, the president is going to have to decide where he stands,” said Senator John Barrasso, a Wyoming Republican and a pipeline supporter.

Rhea Suh, president of the Natural Resources Defense Council, praised the veto as she called on Obama “to reject the proposed tar sands pipeline once and for all.”

Obama has challenged the merits of TransCanada Corp.’s proposed $8 billion Canada-to-U.S. crude pipeline, namely assertions that it will lower gasoline prices and create thousands of jobs.

“The president has made it clear in numerous ways and at various times that he does not think much of the KXL project,” said Michael McKenna, a Republican lobbyist and strategist.

Seeking Approval

Greg Rickford, Canada’s minister of natural resources, said the government would continue to push the administration to grant a permit for Keystone.

“It is not a question of if this project will be approved; it is a matter of when,” Rickford said in a statement.

The State Department, which is responsible for recommending whether the $8 billion project is in the nation’s interest, has identified only general issues it is weighing. These include energy security, the environment, cultural issues and foreign relations with Canada.

Jim Murphy, an attorney with the National Wildlife Federation, an environmental group that opposes the pipeline, said the executive order setting up the review doesn’t say if one topic is more important than another.

“There’s no set criteria about what national interest determination means,” Murphy said.

Expanding Pipeline

The 1,179-mile Keystone XL project would actually expand an existing Keystone pipeline system that starts in Hardisty, Alberta, and juts east across Saskatchewan and Manitoba before turning south along the eastern edges of North Dakota, South Dakota and Nebraska.

TransCanada proposed the original line to link the oil sands and U.S. refineries in 2006. It was approved with zero fanfare less than two years later on Feb. 28, 2008, under President George W. Bush.

The 25-page State Department record of decision on the first Keystone didn’t discuss its impact on the climate. Instead, it said the project would increase the U.S.’s diversity of oil supplies and strengthen ties to a “stable and reliable trading partner” in Canada.

Obama will probably use a different set of criteria. In a 2013 speech on climate change at Georgetown University in Washington, he said he wouldn’t approve Keystone XL if the project was found to significantly add to the carbon pollution tied to global warming.

A State Department 11-volume environmental analysis released more than a year ago said it probably wouldn’t, because the oil sands would be developed without the pipeline.

Closer Look

More recently, the Environmental Protection Agency called on the State Department to look closer at a scenario in its review that said Keystone would make more of a difference if oil fell below $75 a barrel. At that price, low-cost transport options like pipelines may play a bigger role in the economics of an oil sands project, the agency said.

Oil slid for a fifth day in New York, the longest losing streak since August. West Texas Intermediate, the U.S. benchmark, fell 0.3 percent to $49.28 a barrel on the New York Mercantile Exchange, the lowest since Feb. 11.

The EPA letter and the administration’s promotion of carbon-dioxide emission rules for power plants and the forging of a bilateral climate deal with China have heartened environmentalists who oppose Keystone XL.

Obama’s Comments

Beyond Obama’s comments on Keystone’s carbon impact, he has also challenged the notion promoted by supporters that Keystone offers big benefits to Americans. It wouldn’t lower their gasoline prices or lead to many permanent jobs, Obama said last year on several occasions.

He also said most of the oil would end up overseas, even though the State Department report concluded it was more likely it would be used in the U.S.

That leaves the decision on Keystone XL where it has been since TransCanada first applied to build it in September 2008.

Historically, presidents haven’t paid much attention to decisions on pipelines like Keystone, said Murphy of the National Wildlife Federation.

“That’s clearly not the case here,” he said.

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President Barack Obama's veto of the Keystone XL bill is the latest sign to pipeline opponents that he's prepared to reject a project he said won't create many jobs or reduce U.S. oil prices.Obama rejected the Republican-backed bill because it interfered with a review being...
obama, keystone, veto, dead
Wednesday, 25 February 2015 05:16 AM
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