Obama Administration Rejects Keystone XL Pipeline, Citing Climate Concerns President says project wouldn’t lower gas prices, improve energy security By Amy Harder And Colleen McCain Nelson
http://www.wsj.com/articles/obama-administration-to-reject-keystone-xl-pipeline-citing-climate-concerns-1446825732
WASHINGTON—The Obama administration’s rejection of the Keystone XL pipeline Friday ends a seven-year saga with a declaration that the project is not in the national interest and would undermine U.S. global leadership in fighting climate change.
The permit denial, which was cheered by environmentalists and lambasted by the energy industry, capped a politically charged review of the oil project that had escalated into a broader debate on climate change, energy and the economy. In the end, the administration’s decision likely will not have much impact on the industry’s operations, and the White House said the rejection was important to bolster the country’s credibility as the U.S. urges other countries to confront climate change.
President Barack Obama, who had signaled deep misgivings about the project as he pursued an expansive agenda aimed at combating climate change, said the pipeline ultimately took on an overinflated role in the country’s political discourse.
“It became a symbol too often used as a campaign cudgel by both parties rather than a serious policy matter,” Mr. Obama said at the White House. “And all of this obscured the fact that this pipeline would neither be a silver bullet for the economy, as was promised by some, nor the express lane to climate disaster proclaimed by others.”
The project would not have lowered gas prices, improved energy security or made a meaningful long-term contribution to the economy, Mr. Obama said.
But Russ Girling, president and chief executive of TransCanada Corp. , the company behind the project, said the State Department’s own reviews presented compelling evidence that Keystone XL would not significantly exacerbate greenhouse-gas emissions.
“Misplaced symbolism was chosen over merit and science. Rhetoric won out over reason,” Mr. Girling said in a statement. “Today’s decision deals a damaging blow to jobs, the economy and the environment on both sides of the border.”
The permit application process, known as the “national interest determination,” was helmed by the State Department, which considered several aspects of how the pipeline would affect the U.S., including its impact on the economy, environment and energy security. Secretary of State John Kerry delivered the final determination to the president Friday morning.
The administration’s decision effectively kills the pipeline, at least for now. A senior State Department official said that for a future administration to reconsider the project, the company would need to begin the permit application process anew. Mr. Girling has said his company was unlikely to abandon the project entirely. But he also told the Journal in an interview last month that TransCanada would consider writing off the $2.4 billion it has already spent on the project and letting it lie fallow if approval appears unlikely soon.
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 crossed six states.
But as the fight over approval unfolded, Keystone became a symbol as much as a project. Environmental activists seized on it as a rallying point, portraying it as epitomizing the U.S.’s reliance on fossil fuels. That prompted a backlash from conservatives, who derided critics as opposing an economically valuable, job-creating project to appease a political interest group.
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 concluded that a formal rejection would 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.
The rejection sends a resonant diplomatic message as the Obama administration works with other countries to complete a sweeping international climate agreement in Paris next month. “America is now a global leader when it comes to taking serious action to fight climate change,” Mr. Obama said. “Frankly, approving this project would have undercut that global leadership.”
While the timing of the denial appeared aimed at strengthening the Obama administration’s hand ahead of the Paris climate talks, a request by TransCanada this week to suspend its permit application also may have added to the sense of urgency in announcing a decision.
The company’s desire to pause the application process could have provided the Obama administration with an escape hatch to 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 it off to his successor.
TransCanada first applied for a permit with the State Department, which reviews cross-border pipeline projects, in September 2008. Since then, the Calgary, Alberta-based company has faced multiple setbacks in Washington and in Nebraska, where opposition from landowners and environmentalists repeatedly delayed the permitting process.
TransCanada lost a staunch ally last month when Canada’s longtime ruling party was defeated in federal elections, prompting the ouster of Prime Minister Stephen Harper, who once called Keystone a “no-brainer.” His successor, Justin Trudeau, had signaled support for Keystone as well, but on Friday he said the Canada-U.S. relationship was much bigger than any one project.
Mr. Trudeau, who was sworn in on Wednesday, said he was “disappointed” with the decision to nix Keystone but looked forward to a “fresh start” with Mr. Obama in rebuilding ties between Ottawa and Washington.
Despite the decision, 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 was disappointing but not surprising. “Clearly, the administration is making a political decision when it comes to Keystone, rather than following the legal and regulatory process,” the senator said in a statement.
Opponents of the project said most of the oil from the pipeline would be exported, an argument that Mr. Obama repeated in public comments over the past year as a reason it would not benefit the U.S. Much of the oil, however, would actually stay in the U.S., according to independent analyses of Keystone.
Reaction to the administration’s decision broke down largely along party lines, with House Speaker Paul Ryan (R., Wis.) calling the rejection “sickening” and Senate Minority Leader Harry Reid (D., Nev) saying that the president had stopped a “harmful project” and further cemented his environmental legacy.
The 2016 presidential candidates lined up along the same partisan fault lines, with Democratic contenders praising the president for tackling climate change and Republican candidates denouncing a move they said would cost thousands of jobs and harm the economy.
A few Democratic lawmakers also criticized the administration’s decision. Sen. Joe Manchin (D., W.V.) said politics, not policy, had spurred the rejection of a project that would have created jobs and limited dependence on foreign oil.
The House has passed legislation approving the pipeline more than 10 times since 2011, while the Senate has voted on such a measure at least five times and passed it once. That bill reached
Mr. Obama’s desk earlier this year but the president 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.
Tom Steyer, a billionaire climate-change activist and vocal Keystone opponent, said the decision did not simply amount to rejecting the pipeline, but signaled an important pivot toward a clean-energy economy.
The Keystone decision is likely to have little immediate impact on the energy industry, analysts said. By expanding existing pipelines and using trains, U.S. refiners have been importing growing amounts of Canadian crude even without Keystone. Canada now far surpasses Saudi Arabia, Mexico and Venezuela as the largest foreign supplier of oil to the U.S., accounting for 43% of all oil imports.
Industry spokesmen nevertheless sharply criticized the decision. “The administration has turned its back on Canada with this decision, and on U.S. energy security as well,” said Jack Gerard, president of the American Petroleum Institute, the leading lobbying group for the energy industry.
A senior State Department official said the pipeline decision would not affect oil production, including production of Canadian oil sands. The official said that denying the Keystone permit could increase the amount of oil shipped by rail, a mode of transportation that most experts think is not as safe as pipelines.
Keystone’s emergence as a flashpoint in the fight against climate change surprised many experts, including 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 not move forward.
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 significant impact on climate change—which a State Department report in early 2014 suggested it would not.
—Lynn Cook, Paul Vieira
and Chester Dawson contributed to this article.
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