In an election-year decision that divided the Democrats’ twin pillars of big labor and environmentalists, the Obama administration Wednesday rejected the proposed route for the Keystone XL oil pipeline that would provide up to 20,000 jobs on a project stretching from Canada to the Texas coast.
The pipeline, which would have been the largest infrastructure project in the country, has been a political nightmare for President Obama, with top business groups, Republican presidential candidates, the Canadian government, unions and even some of Mr. Obama’s fellow Democrats all slamming Wednesday’s rejection.
“This political decision offers hard evidence that creating jobs is not a high priority for this administration,” U.S. Chamber of Commerce head Tom Donohue said. “The president’s decision sends a strong message to the business community and to investors: Keep your money on the sidelines, America is not open for business.”
But environmental groups have long sought to kill the $7 billion, 1,700-mile project, and some of the president’s top campaign donors warned that they would stop giving if Keystone was approved.
The application has been under review by the government for three years, and Mr. Obama unsuccessfully tried to put off a final decision until after the November elections.
Mr. Obama issued a statement Wednesday afternoon saying he agreed with Secretary of State Hillary Rodham Clinton’s decision to reject the project that would carry oil from tar sands in Alberta to refineries on the Gulf Coast, saying the project as proposed “would not serve the national interest.”
The State Department was the lead agency because the project would cross an international border. Officials said that, given a Feb. 21 deadline set by congressional Republicans to decide on the application from Canadian firm TransCanada, they did not have time to evaluate the environmental impact of a revised Keystone route designed to avoid a key regional water source in Nebraska.
Department officials held out the possibility that the pipeline could eventually be built if the company’s revised route passes regulatory muster.
“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,” Mr. 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.”
Canadian Prime Minister Stephen Harper, whose government lobbied strongly for Keystone, expressed what a spokesman described as profound disappointment when Mr. Obama called with his decision. Mr. Harper said Canada would continue to pursue plans to expand oil sales to China and other Asian customers, to reduce the country’s reliance on the U.S. market.
Russ Girling, president and chief executive officer of TransCanada, said the company plans to petition again for State Department approval after the proposed new route for the pipeline completes its regulatory review. If approved, the project could have oil from Canada’s tar shales flowing as soon as 2014, Mr. Girling said.
Republicans, business groups and even some Democrats immediately blasted the administration’s decision as a lost opportunity in a weak economy, and one that ignores America’s need for energy from reliable suppliers. House Speaker John A. Boehner, Ohio Republican, said Mr. Obama was breaking his promise to create jobs, and he vowed to keep pressing for the pipeline.
Mitt Romney, the front-runner for the Republican presidential nomination, called the president’s decision “as shocking as it is revealing.”