Obama rejects Keystone oil pipeline

By msnbc.com staff and wires

Updated at 3:45 p.m. ET

President Barack Obama has?announced his administration's decision?to reject TransCanada Corp's plan to build the Keystone XL Canada-to-Texas crude oil pipeline but the company, or others, could reapply.

Joshua Roberts / Reuters file

Demonstrators carry a giant mock pipeline while calling for the cancellation of the Keystone XL pipeline during a rally in Washington in this November 6, 2011 file photo. Protesters are unhappy about TransCanada Corp's plan to build the massive pipeline to transport crude from Alberta, Canada, to Texas.

The Obama administration will work to make sure that there are no bottlenecks in domestic oil transportation due to its rejection of the Keystone XL pipeline, a source briefed on the matter told Reuters on Wednesday.

Obama laid the responsibility for the rejection of the pipeline on political gamesmanship by Republicans.

"As the State Department made clear last month, the rushed and arbitrary deadline insisted on by Congressional Republicans prevented a full assessment of the pipeline's impact, especially the health and safety of the American people, as well as our environment." Obama said. "As a result, the Secretary of State has recommended that the application be denied.? And after reviewing the State Department's report, I agree."?

TransCanada Corp. shares slid more than 3 percent after reports early Wednesday that rejection was imminent.

Rejection of the pipeline had been expected in Washington after Obama tried to delay the decision until 2013 but Congress forced his hand as part of a popular tax cut measure.

"This announcement is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people, Obama said.?"I'm disappointed that Republicans in Congress forced this decision, but it does not change my Administration's commitment to American-made energy that creates jobs and reduces our dependence on oil."

Republican lawmakers have already begun work on a plan to let Congress circumvent the administration and give the project the go-ahead.

State Department officials said TransCanada will be allowed to apply again for a permit if it identifies a new route for the pipeline through Nebraska. Critics of the pipeline have said a spill along this route could contaminate the aquifer. But a new route would mean substantial delays.

TransCanada's planned 1,700-mile pipeline has become a potent symbol in the battle over of the future of U.S. energy policy.

With environmental groups concerned about carbon emissions from oil sands production, the administration in November delayed a decision on a presidential permit for the project until 2013.

But lawmakers that support the project attached a measure to a tax-cut law passed at the end of last year that set a February deadline for a decision.

The administration has said it needs more time to consider alternative routes for the pipeline, which originally was planned to traverse sensitive habitats and a crucial water source in Nebraska.

House Speaker John Boehner criticizes the White House over its rejection of the Keystone oil pipeline project that many Republicans argue would have created thousands of jobs.

Caught in the middle
The pipeline has placed the Obama administration in the middle of a dispute between two key parts of its voting block: green groups who oppose the pipeline over concerns about climate change and some unions who back the project because of the jobs they believe it would create.

Supporters say the pipeline that would transport 830,000 barrel per day of crude to U.S. Gulf coast refineries would create thousands of jobs and is integral to U.S. energy security.

Environmentalists say the job-creation claims are inflated and warn that the pipeline would lock the nation into the use of carbon-intensive oil sands crude for years. They said their support for Obama's reelection campaign this year depended on his rejection of the pipeline.

The company in November agreed to find a new route away from the Sandhills and Ogallala aquifer in Nebraska.

TransCanada shares tumbled as word circulated of a rejection for the project the company has developed and promoted for more than three years. The stock was down more than 3 percent at C$40.91 on the Toronto Stock Exchange at midday.

Canadian Prime Minister Stephen Harper said this week that Iran's threat to block shipping in the Strait of Hormuz pointed to why Washington should approve the project.?

Source: http://nbcpolitics.msnbc.msn.com/_news/2012/01/18/10181927-obama-set-to-reject-keystone-oil-pipeline

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