OIL AND GAS:

Obama rejects pipeline, blames Republicans

President Obama blamed Republicans today for teeing up a rejection of the Keystone XL oil pipeline that he called "not a judgment on the merits," setting off a political conflagration likely to rage until Election Day.

House Republicans pounced on the president's denial of a permit for the $7 billion link between the Canadian oil sands and Gulf Coast refineries, promising to make the White House pay for nixing a project they tout as an economic boon. But the GOP's legislative route to overriding Obama remains unclear, leaving the impact of the denial to settle in the court of public opinion as Democrats and greens vow to counter oil industry efforts to turn Keystone XL into an election-year flash point.

"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 in a statement.

His remarks emerged at the same minute as State announced that it "does not have sufficient time" to gauge whether the 1,700-mile XL link's still-undetermined route through Nebraska would pass environmental muster. In pointing a finger at the Republicans who insisted on a 60-day deadline for a final ruling on the pipeline as part of last month's payroll tax-cut deal, Obama stepped into a fierce fight over the pipeline that will continue a week from today in a House Energy and Commerce Committee hearing on his administration's decision.

"We can't wait any longer -- and the American people should not have to keep waiting for jobs and energy security," Chairman Fred Upton (R-Mich.) said in a statement on the hearing, to which Secretary of State Hillary Rodham Clinton is an invited witness.

Upton closed with a vow to keep the pipeline alive through legislative means: "If President Obama cannot say yes to jobs, Congress will."

Republicans made no secret of their desire to advance Keystone XL, which would nearly double U.S. import capacity for Canadian oil sands crude if approved, even if Obama followed through with an expected rejection of the project (Greenwire, Jan. 12). Upton's top lieutenant on the Energy and Commerce Committee, Rep. Ed Whitfield (R-Ky.), said members and staff are meeting this hour to determine which legislative options the GOP would take to beat back the presidential decision.

"All options are on the table," Speaker John Boehner (R-Ohio) told reporters, adding "there are legislative vehicles that will be moving" to which a fast-tracking of the pipeline could be attached.

Rep. Lee Terry (R-Neb.), sponsor of a bill that would empower the Federal Energy Regulatory Commission to approve the XL line, said his party would meet again Tuesday to discuss its next steps and predicted that legislation could advance within weeks. Of next week's hearing with State officials, he added, "Maybe they'll give us some opening we hadn't thought of, inadvertently."

Most Democrats rallied behind Obama's denial, echoing environmentalists' predictions that the Feb. 21 deadline pushed by Republicans into the payroll tax-cut bill would backfire by ensuring a rejection of Keystone XL.

"There is no way in that time frame the president could do anything else," House Minority Leader Nancy Pelosi (D-Calif.) told reporters. "If Republicans cared so much about the Keystone pipeline, they wouldn't have narrowed the president's options the way they did."

'Political consequences'

Environmentalists flocked to praise Obama and Clinton for denying the pipeline, lambasted by their camp as a spur for continued U.S. consumption of emissions-intensive Canadian oil sands crude. Even as the pipeline's sponsor, Alberta-based TransCanada Corp., vowed to reapply for a federal permit for Keystone XL, greens promised to re-emerge with campaigns to defeat it (see related story).

"Today is a great day for putting the American people before polluter profits," League of Conservation Voters President Gene Karpinski said in a statement.

The American Petroleum Institute (API) already has begun running TV ads blasting Obama and his party for delaying the pipeline, which first came before State in 2008 and was punted until after the election in November following an outcry over the XL link's effect on the ecologically sensitive Nebraska Sandhills.

API President Jack Gerard promised that the oil industry would continue to put Democrats on the spot over the pipeline, declining to rule out a potential legal challenge to the administration's denial in addition to his group's political activity.

"There are political consequences to this decision," Gerard told reporters. "Some may come in the ongoing relationship between Congress and the administration."

Democrats appeared ready to face those consequences, raising the prospects for continued gridlock on energy issues should the GOP resist even small-scale attempts to advance legislation to protest Obama's denial.

"Despite intense and misleading oil industry lobbying, Americans understand that what's good for the oil industry is not necessarily good for the American people," the Energy and Commerce panel's top Democrat, Rep. Henry Waxman of California, said in a statement.

Several red-state Democrats gave the GOP early fodder for political pressure campaigns by criticizing the president's decision, including longtime Keystone XL backers Sens. Jon Tester of Montana and Mark Begich of Alaska as well as Reps. Jason Altmire of Pennsylvania and Gene Green of Texas.

"I don't agree with it, but it still gives us an opening so we can actually get the pipeline built," Green said.

He added, "We'll have to see if we need to go back to do the environmental impact studies on the whole route, or if we can just do it on the rerouting, which would be a slam-dunk."

Obama cites Clinton

The payroll tax-cut deal signed into law by Obama requires the submission of a report explaining the reasons for his denial within 15 days, and the president today tapped Clinton to submit that document. In addition, the politically popular former first lady also received credit for recommending a rejection of Keystone XL based on lack of time to evaluate a Nebraska route.

"The Secretary of State has recommended that the application be denied," Obama said in his statement. "And after reviewing the State Department's report, I agree."

Obama also pre-emptively defended his administration against GOP criticism that a denial of Keystone XL would undercut his commitment to domestic energy development, promising to pursue opportunities for a shorter pipeline that connects the oil sands transportation hub of Cushing, Okla., with the Gulf Coast.

"Under my administration, domestic oil and natural gas production is up, while imports of foreign oil are down," Obama added in his statement. "In the months ahead, we will continue to look for new ways to partner with the oil and gas industry to increase our energy security ... even as we set higher efficiency standards for cars and trucks and invest in alternatives like biofuels and natural gas."

Reporters Mike Soraghan and Phil Taylor contributed.

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