Keystone XL Ruling Returns Climate-Energy Clash to Obama

A Nebraska high court ruling that cleared the route of the Keystone XL oil pipeline returns to Barack Obama one of the most contentious environmental decisions of his presidency.

Obama has no deadline to decide, but he’s under increasing pressure to weigh in on a project now in its sixth year of review. The Republican-led House passed a bill to strip the president of his authority and approve the $8 billion project. The Senate is poised to act on a similar measure next week.

Obama had cited uncertainty over the Nebraska case as a reason to pause his review of TransCanada Corp.’s application to build the line to move Canadian crude to the U.S. coast of the Gulf of Mexico. With that hurdle cleared, both supporters and foes of the project called on Obama to reach a conclusion in their favor. TransCanada shares rose after the ruling.

“It’s time for the president to put an end to this damn thing and let us get back to our lives and raising food for America,” said Randy Thompson, a Nebraska rancher, who was one of the plaintiffs in the case the court ruled on Friday.

Senate Majority Leader Mitch McConnell said in a statement Obama was “out of excuses” and that if the president wouldn’t approve the project, Congress would.

Environmental Issue

The pipeline, which would traverse three states before linking to a pipeline junction in Steele City, Nebraska, that connects to the Texas coast, has become a symbol of the tension between energy development and climate change that some analysts say outstrips its actual relevance to either

Environmental groups like and the Sierra Club have galvanized around opposing the pipeline, drawing thousands of protesters including Hollywood celebrities to the White House. They argue Keystone will worsen climate change by promoting the development of the oil sands, which release more carbon dioxide than does the production of more conventional oil.

On the other side is a Canadian government that is looking to the project to protect a major source of revenue for the country -- the Alberta oil sands. Falling oil prices may make pipelines like Keystone, cheaper transportation options than sending the crude by rail, even more important to producers in the region.

TransCanada, in a post on Twitter, called the Nebraska ruling “great news.” TransCanada rose 1.2 percent to C$55.59 ($46.90) at 1:35 p.m. in Toronto, after earlier climbing as much as 3.4 percent, the biggest intraday gain since Dec. 17.

State Department

The State Department, which had paused its review of the cross-border pipeline in April pending the court’s decision, now will resume its work, said Jen Psaki, a department spokeswoman. Psaki didn’t offer a schedule for completing the review, in which eight agencies will weigh in on the project.

Obama has said he’ll make the final call after the department makes its recommendation. He has threatened to veto the legislation that the House passed by a vote of 266-153 because it interferes with executive authority.

Only 28 House Democrats joined Republicans to support the measure, meaning backers don’t appear to have sufficient support to override a veto in the chamber. Sponsors of the Senate version say they are also a few votes shy of enough to override though are still trying to round them up.

Legal Challenges

Landowners, even as they pressed Obama to reject the project, also held out the possibility that the court ruling, which rests on a technicality, leaves open the possibility of further legal challenges.

At the time Obama suspended the administration’s review, two weeks remained for federal agencies to submit their views to the State Department.

The Nebraska ruling came just as Republicans are set to use their new control of Congress to force approval of the project proposed by TransCanada in 2008.

The Senate, which Republicans now also control, plan to take action on a Keystone bill starting next week. Supporters say the project will create jobs and increase U.S. energy security.

A State Department analysis completed last year said that while Keystone would create several thousand construction jobs during the two years it would take to build, it would create just 50 permanent positions.

It also found that Keystone probably wouldn’t have much impact on global carbon dioxide emissions because the Alberta oil would get to market through other means if Obama rejected it.

‘With Farmers’

“We are confident the president will stand with farmers, ranchers and tribal communities and reject Keystone XL once and for all,” Jane Kleeb, head of Bold Nebraska that opposes Keystone, said after Friday’s court decision.

She also held out the possibility of further legal action. Though four of the seven justices said they would have blocked the pipeline, five were needed to declare the state law unconstitutional.

“Obviously we have a bloody nose this morning, but we are not down for the count,” Kleeb said in a press conference with reporters.

The time it’s taken the administration to decide on the project has raised tensions with Canada, an important U.S. ally that wants the pipeline to help energy producers in Alberta get a higher price for their oil.

Transport Choice

“This now clears the way for the State Department to complete the process,” said Greg Rickford, Canada’s minister of natural resources. “The decision for the Obama administration is between pipelines or less secure means of transporting crude.”

Keystone would carry as much as 830,000 barrels of oil a day, most of it from heavy crude from Alberta’s oil sands, to U.S. Gulf Coast refineries. Oil from the Bakken Shale region of North Dakota also would be carried by the pipeline.

Twice in the past two months Obama raised the hopes of pipeline opponents by offering pointed critiques of the projects’ benefits cited by supporters.

On a trip to Asia in November, he said the crude from Keystone would be bound for markets beyond the U.S. and wouldn’t lower domestic gasoline prices.

“Understand what this project is: It is providing the ability of Canada to pump their oil, send it through our land down to the Gulf where it will be sold everywhere else,” the president said during a visit to Yangon, Myanmar. “It doesn’t have an impact on U.S. gas prices.”

At a year-end news conference Dec. 19, Obama expanded on his comments: “It’s very good for Canadian oil companies, and it’s good for the Canadian oil industry, but it’s not going to be a huge benefit to U.S. consumers. It’s not even going to be a nominal benefit to U.S. consumers.”

Obama rejected the original route in 2012 over objections from Nebraska state officials and landowners. TransCanada split the project in two, building a southern leg, and shifting the northern top further east in the state. Because the northern piece crosses a border, the pipeline requires presidential approval.

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