Obama Keystone Veto May Signal Beginning of End for Debate

(Bloomberg) — President Barack Obama’s veto of a

Republican-backed bill to approve the Keystone XL pipeline may

be the beginning of the end for one of the biggest energy fights

of his administration.

Obama rejected the bill because it interfered with a review

being led by the State Department but he hasn’t decided on

whether to approve a permit for the pipeline, White House

spokesman Josh Earnest said Tuesday.

Pipeline supporters in Congress don’t have the super

majority needed to override the veto, although Republicans may

try to attach Keystone to other bills that the president

supports.

Paul Bledsoe, a former White House energy aide under

Democrat Bill Clinton now at the German Marshall Fund, said the

push might be self-defeating.

“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 think

of a more propitious political moment to deny the pipeline.”

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 and

which, if it goes on much longer, could become an issue in the

2016 elections.

Gasoline, Jobs

“After six years of delay and obstruction, the president

is going to have to decide where he stands,” said 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 new 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.

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.

State Department

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.

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.

Carbon Pollution

The 25-page State Department record of decision on the

first Keystone didn’t discuss its impact on the climate.

Instead, it noted 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 is likely to 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.

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 Prices

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.

“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.”

Pipeline Benefits

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 here.

So that leaves the decision on Keystone XL where its 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.

To contact the reporter on this story:

Jim Snyder in Washington at

jsnyder24@bloomberg.net

To contact the editors responsible for this story:

Jon Morgan at

jmorgan97@bloomberg.net

Steve Geimann

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