(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
To contact the editors responsible for this story:
Jon Morgan at
Steve Geimann