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Obama Rejects Keystone XL Pipeline

The Obama administration Friday (November 6, 2015) rejected a presidential permit for the highly controversial Keystone XL pipeline, the Associated Press reported. President Barack Obama announced his decision on the pipeline Friday morning with Secretary of State John Kerry at the White House. This announcement brings to an end the years long review and debate of the pipeline, which has become a symbol of the partisan rift over fossil fuels in recent years. The project, proposed by Canadian company TransCanada, has seen especially heightened attention in recent months as environmental activists urged Obama to reject the pipeline before global climate talks take place in Paris this month.

TransCanada recently asked the White House to suspend its application for a permit, which many saw as an attempt to avoid Obama’s imminent rejection of the project. The White House said it would not suspend the application, however, and promised Obama would make a decision before the end of his term as president.

The nearly 1,200-mile-long project, which would have transported crude oil from Canada to the Gulf Coast, has been a frequent topic of discussion in the 2016 election cycle. All three Democratic presidential candidates have said they oppose the pipeline, while their Republican counterparts support it and contend it would create thousands of jobs as well as provide energy security.

Trudeau ‘Disappointed’ $8-Billion Pipeline Rejected

Newly installed Canadian Prime Minister Justin Trudeau and President Obama used the rejection to talk about their agreement to step up efforts for join Canada-U.S. cooperation.
“We are disappointed by the decision but respect the right of the United States to make the decision,” Trudeau said in a statement.

“The Canada-U.S. relationship is much bigger than any one project and I look forward to a fresh start with President Obama to strengthen our remarkable ties in a spirit of friendship and cooperation.”

Obama opened his news conference by saying he’d spoken with Trudeau earlier in the day.

The Keystone XL pipeline would have moved as many as 830,000 barrels of oil a day, mostly from Canada’s oil sands to Steele City, Neb., where it would have connected with existing pipelines to Gulf Coast refineries. Up to 100,000 barrels of that oil would have come from North Dakota’s booming oil fields. If completed, the pipeline system would have spanned 1,700 miles and would have crossed six U.S. states.

A Symbol as Much as a Project

But Keystone became a symbol as much as a project, proving an unexpected rallying point for environmental activists, who portrayed it as epitomizing the U.S.’s reliance on fossil fuels. That prompted a backlash from conservatives, who said critics were opposing a valuable, job-creating project.

In recent months, activists on both sides speculated that Mr. Obama, caught in the middle, might simply decline to make a decision. Friday’s move suggests the president ultimately decided a formal rejection could be a key part of his environmental legacy that also includes new rules on carbon emissions, fracking and water protection, which are being challenged in the courts.

TransCanada first applied for a permit with the State Department, which reviews cross-border pipeline projects, in September 2008. The Calgary, Alberta-based company faced multiple setbacks in Washington and in Nebraska, where opposition from landowners and environmentalists delayed the permitting process.

Earlier this week, TransCanada asked the State Department to suspend its permit application while Nebraska completed a state review. That could have provided the Obama administration with an escape hatch to run out the clock and delay a decision until after the next president takes office in 2017.

But White House officials made clear this week that Mr. Obama planned to act on the project and had no intention of handing this decision off to his successor, and the State Department formally rejected the company’s bid to suspend its application.

The president has said the U.S. should be a leader in the fight against climate change, and the Keystone rejection could make a pointed statement as his administration pursues international cooperation on the issue. The decision comes as the administration works to complete a global climate agreement in Paris next month.

No Surprise But Disappointing

In the U.S., TransCanada’s recent efforts to slow the review process reignited the political debate about the pipeline, with some Democrats renewing calls for the president to kill Keystone and put an end to what had become a years-long saga.

TransCanada had already spent at least $2.5 billion on the project, which was projected to cost at least $10 billion due to delays and increased permitting costs. That total was more than twice the company’s earlier estimate.

But TransCanada lost a staunch ally when Canada’s longtime ruling party was defeated in federal elections last month, prompting the ouster of Prime Minister Stephen Harper, who once called Keystone a “no-brainer.” His successor, Justin Trudeau, has signaled support for Keystone as well but wasn’t expected to make it a signal issue in U.S.-Canadian relations.

Congressional Republicans could keep pushing the issue on Capitol Hill. Sen. John Hoeven (R., N.D.) has said Republicans likely will seek to attach language approving the pipeline to legislation that Congress must pass, such as a spending bill.

Mr. Hoeven said Friday the administration’s denial of the project wasn’t surprising but was disappointing.

“It [is] ironic that after delaying construction for more than seven years—postponing the jobs, revenues and other benefits that would result from the project—the president now finds it pressing to make a decision just as the company is asking for a pause to resolve any concerns,” he said in a statement. “Clearly, the administration is making a political decision when it comes to Keystone, rather than following the legal and regulatory process.”

Republican lawmakers and industry trade groups have touted the project as a prototype for job creation and energy security. The House has passed legislation approving the pipeline more than 10 times since 2011, while the Senate has voted on the issue at least five times and passed it once. Congress passed legislation approving the pipeline earlier this year, but Mr. Obama vetoed it, citing the State Department’s ongoing review.

Environmental groups and some congressional Democrats have said approving the project would enable production of a particularly carbon-heavy kind of oil and that it would contradict Mr. Obama’s stated commitment to cutting carbon emissions. Some landowners and Native American tribes along the route in South Dakota and Nebraska also oppose the project because of the environmental risks that transporting oil brings.

Rallying Point for Fight Against Climate Change

Keystone had become a rallying point for environmental activists seeking to raise the profile of the fight against climate change, a development that surprised many in the Obama administration and put added pressure on the president to act. The politics of Keystone appeared to paralyze the Obama administration for a time, with officials reluctant to create a furor by either approving or rejecting the project, after decades in which pipeline approvals were routine.

But Mr. Obama became increasingly critical of the pipeline during his second term, eventually leaving little doubt that the project would be rejected.
Many current and former Obama administration officials have said privately over the years that the pipeline’s practical importance had been exaggerated. Other components of the administration’s regulatory agenda are expected to do more to reduce greenhouse-gas emissions, but pipeline opponents had framed Keystone as a bellwether for the president’s commitment to addressing climate change, arguing that green-lighting the project would undermine his environmental legacy.

As the years wore on, Mr. Obama’s mindset on the project shifted, people close to him say. The symbolism of Keystone became important in itself, separate from whether it would have a substantive impact on climate change. A State Department report in early 2014 suggested it would not.