April 22 (Bloomberg) -- President Barack Obama faces growing pressure from Democratic donors to reject the Keystone XL pipeline amid signs that the project is headed for approval.
Donors and party activists are seeking to influence Obama through personal pleas and by pumping money into elections. Their goal: to demonstrate that turning down TransCanada Corp.’s petition to build the $5.3 billion pipeline to carry tar-sands oil from Canada to U.S. refineries can be a political winner.
“The way we can make a difference on this is to show that there’s public support for our position,” said Tom Steyer, the founder of hedge fund Farallon Capital Management LLC and a Keystone foe who has pledged to spend millions on elections such as this month’s Democratic Senate primary in Massachusetts.
That’s an increasingly hard case to make. The American people overwhelmingly favor the project, the oil industry, U.S. Chamber of Commerce and the Canadians are lobbying hard for it, and a State Department review found the pipeline would have a negligible effect on climate change.
Still, should Obama sign off on the pipeline, he would risk blowback from many supporters he’s counting on to help finance next year’s congressional races. That’s led some administration allies to suggest that the president may back the project while either modifying it or offering new measures to reduce carbon pollution in a bid to mollify environmental activists.
The White House is playing down the decision, arguing to both supporters and critics that Keystone’s impact on the environment and the economy will be less than activists argue.
“There have been thousands of miles of pipelines that have been built while President Obama has been in office, and I think the point is that it hasn’t necessarily had a significant impact one way or the other on addressing climate change,” White House spokesman Josh Earnest said last month.
Earnest told reporters the administration’s new fuel-economy standards, which will double vehicle mileage by 2025, will have far greater consequences in curbing oil demand than Keystone would in promoting it.
Daniel J. Weiss, director of climate strategy at the Center for American Progress, a Washington policy institute with ties to the administration, said Keystone opponents are pessimistic because the White House has offered no signals that it will turn down the permit.
To assuage critics, he said, the administration can approve the project with modifications that would offset increased emissions. Or, more likely, he said, the officials can “aggressively reduce other sources of carbon pollution before they approve the pipeline.”
Keystone’s critics have accelerated their efforts since the State Department’s March 1 draft assessment said the pipeline won’t heighten the risk of global warming. They dismiss that analysis and say Keystone is pivotal to showing whether Obama will fulfill an inaugural address vow to tackle global warming.
“President Obama has to pass this test,” said Susie Tompkins Buell, who founded clothing maker Esprit and is part of a group of some 100 donors, activists and clean-energy executives gearing up to pressure the White House. “But his plate is full; this isn’t a priority for the public, and it doesn’t seem to be with him, either.”
Buell donated more than $300,000 to Democratic candidates and groups supporting the party in the last election, according to the Center for Responsive Politics.
Steyer, who hosted Obama at his California home on April 3 in a fundraiser for Democratic congressional candidates, declined to discuss his conversation with the president that night.
“The one thing he’s said publicly and privately is that he hasn’t made the decision,” said Steyer, whose net worth is at least $1 billion, according to the Bloomberg Billionaires Index.
White House press secretary Jay Carney has parried questions about Obama’s thinking in recent weeks by saying the review is being conducted by the State Department, because the pipeline crosses an international border.
Environmental activists say they expect Obama, not Secretary of State John Kerry, to have the final word. A group of Democratic lawmakers who oppose the pipeline met this month with Heather Zichal, the president’s climate-change adviser.
Longtime policymakers in Washington say the State Department’s analysis, public opinion and the importance to ally Canada make it likely Obama will back the project.
“I’ve always ultimately felt that Keystone would be approved, perhaps in some slightly altered form,” said Byron Dorgan, a Democrat and former North Dakota senator who supports the pipeline.
The administration’s “statements do not suggest that as a matter of substance it would be good energy policy” to reject the proposed 875-mile (1,408 kilometer) U.S. portion of the pipeline, said Michael Levi, a Council on Foreign Relations fellow in New York and author of the book “The Power Surge.”
Two-thirds of Americans favor building the pipeline, which would run from Alberta to the U.S. Gulf of Mexico, according to a Pew Research Center survey last month. While support for the pipeline was strongest among Republicans, 54 percent of Democrats also back it.
Democratic senators up for re-election in 2014 from oil-dependent states such as Alaska, Louisiana and Montana all voted in favor of a budget amendment supporting the pipeline. The House of Representatives is pushing a measure to allow Keystone’s construction without approval by the administration.
And Canadian officials are increasingly pressing U.S. policy makers to back the project.
“The challenge we face in the United States is to better inform the American public,” Peter Kent, Canada’s environment minister, said in Washington on April 10, as he decried the “very well-funded anti-Keystone lobby.”
Two former U.S. ambassadors to Canada, Gordon Giffin, who served under President Bill Clinton, and David Wilkins, who served under President George W. Bush, said Obama must weigh the diplomatic considerations as well as the project’s energy and economic benefits.
“This is of extraordinarily strong importance to Canada -- to the Canadian government, the Canadian economy, how Canadians look at us,” said Giffin, a lawyer now advising TransCanada, a Calgary-based company whose stock has risen almost 14 percent in the last year. “It would have serious implications on Canada’s view of the manner in which we deal with our partners.”
Obama rejected TransCanada’s initial permit application in January 2012, inviting the company to reapply with a route that didn’t cross an ecologically sensitive area of Nebraska. He told Republican senators last month he plans to make a decision on the company’s revised application by the end of this year.
The pipeline is designed to carry about 830,000 barrels a day from Alberta and shale rock formations in the U.S. along a route that would traverse six Great Plains states. The administration has previously given approval for the pipeline’s southern leg to relieve an oil glut in Cushing, Oklahoma.
Environmentalists view Keystone as a test of Obama’s sincerity about making climate change a priority in his second term after failing to advance legislation to cap greenhouse gases, which scientists say causes global warming, in his first.
“We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations,” Obama said in his second inaugural address. “That is how we will preserve our planet, commanded to our care by God.”
During the fundraiser at Steyer’s home he offered a more restrained approach: “The politics of this are tough” because of the struggling economy, he said. Democrats must show middle-class voters “we’re working just as hard for them as we are for our environmental agenda,” Obama said.
Much like the fallout from the pipeline itself, the political facts of approval or rejection are far from clear. While Keystone is largely popular, the depth of support isn’t great.
“It has a much stronger emotional reaction for those that oppose it,” said Bill Burton, a former White House adviser who is leading a coalition opposing the pipeline. Burton, who helped raise $65 million for Obama’s re-election, said the campaign he started this month, the “All Risk, No Reward Coalition,” is mostly aimed at Democratic donors and activists.
A report by the League of Conservation Voters, which also opposes Keystone, found that none of the candidates targeted in 2012 for their opposition to the pipeline lost their election.
The Pew survey of 1,501 adults was conducted March 13-17, before an Exxon Mobil Corp. pipeline burst in Arkansas, spewing the same kind of mixed oil sands onto the streets of a sleepy suburban neighborhood.
Carroll Doherty, associate director of the Pew Research Center for the People & the Press, said “things like the Arkansas spill have the potential” to change public opinion. At the same time, Doherty said, public opposition based on a single event can be short-lived, especially when economic concerns are high.
The donors are trying to stoke that opposition.
Betsy Taylor, a climate activist who worked for Obama’s election and then was arrested outside the White House protesting the pipeline, said the group of about 100 Democratic contributors and activists, including Buell, aims to show Obama “if he does the right thing, he is going to get so much love.”
Line in Sand
“People are giving it everything they can,” said Taylor, who is helping to organize the donors. “This is a line-in-the-sand kind of decision.”
Steyer’s NextGen Committee super-PAC has raised $750,000 and spent more than $500,000, according to Federal Election Commission data. Among the races it has targeted is an April 30 Democratic primary for an open U.S. Senate seat in Massachusetts that pits Representative Ed Markey, a Keystone opponent, against Representative Stephen Lynch, who has been supportive.
“We’ve got to step up our game and make our case -- it’s not going to make itself,” said David desJardins, a philanthropist and former Google Inc. software engineer who attended the fundraiser at Steyer’s house.
One former Obama donor has shifted from insider to activist.
Guy Saperstein, a California venture capitalist and onetime president of the Sierra Club Foundation, said while he gave to Obama’s campaign in 2008, he became disillusioned. Rather than attend the fundraiser at Steyer’s house, Saperstein chose to join Keystone protesters camped out nearby.
“The indications I got back from the people who were inside suggested that he was not very persuadable, but you know politics is a funny thing,” Saperstein said. “If people are in the streets, being loud and making the case, things can change.”
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