Obama, GOP back in tussle over oil pipeline

[January 19, 2012]  WASHINGTON (AP) -- President Barack Obama and Congress are back where they were before Christmas, locked in an election-season tussle over a proposed 1,700-mile oil pipeline from Canada to Texas.

Republicans hope to again force Obama to make a politically risky decision, while he is seeking to put it off until after the November election.

Obama blocked the $7 billion Keystone XL pipeline on Wednesday, at least temporarily, but Republicans immediately signaled their intention to try again to force the issue. Rep. Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee, said he will call Secretary of State Hillary Rodham Clinton, who recommended Obama's rejection, to testify at a hearing as early as next Wednesday, the day after Obama gives his State of the Union address before a joint session of Congress.

"This is not the end of the fight. Republicans in Congress will continue to push this because it's good for our country and it's good for our economy and it's good for the American people," especially those who are out of work, said House Speaker John Boehner, R-Ohio.

Republicans are looking to drive a wedge between Obama and two key Democratic constituencies. Some labor unions support the pipeline as a job creator, while environmentalists fear it could lead to an oil spill disaster.

The plan by Calgary-based TransCanada Corp. would carry tar sands oil from Alberta, Canada, through a 1,700-mile pipeline across six U.S. states to refineries on the Texas Gulf Coast.

Obama was already on record as saying no, for now, until his administration could review an alternate route that avoided environmentally sensitive areas of Nebraska -- a route that still has not been proposed. But in an unrelated tax deal he cut with congressional Republicans, Obama had been boxed into making a decision by Feb. 21.

The deal required that the project would go forward unless Obama declared by that date that it was not in the national interest. The president did just that Wednesday, generating intense reaction from all sides.

"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," Obama said in a written statement. "I'm disappointed that Republicans in Congress forced this decision."

Republicans got out their toughest rhetoric for the occasion.

Newt Gingrich, campaigning for the GOP presidential nomination in South Carolina, called Obama's decision "stunningly stupid," adding, "What Obama has done is kill jobs, weaken American security and drive Canada into the arms of China out of just sheer stupidity."

Republican presidential front-runner Mitt Romney said the decision was "as shocking as it is revealing. It shows a president who once again has put politics ahead of sound policy."

Project supporters say U.S. rejection of the pipeline would not stop one from being built. Canadian Prime Minister Stephen Harper has said Canada is serious about building a pipeline to its West Coast, where oil could be shipped to China and other Asian markets.

TransCanada said it would submit a new application once an alternative route for the pipeline is established. Company chief Russ Girling said if approved, the pipeline could begin operation as soon as 2014. He said TransCanada will continue to work with Nebraska officials to determine the safest route for Keystone XL that avoids the environmentally sensitive Sandhills area, which he said should be completed this fall.

But Assistant Secretary of State Kerri-Ann Jones told reporters that if TransCanada submits a new application for a different pipeline path, it would trigger a new review process.

"We cannot state that anything will be expedited at this time," she said. "We would look to information that is out there to extent we can. It is a new permit application so the process would have to be started over again."

The proposed $7 billion pipeline would pass through Montana, South Dakota, Nebraska, Kansas and Oklahoma en route to Texas.

The pipeline is a dicey proposition for Obama, who enjoyed strong support from both organized labor and environmentalists in his winning 2008 campaign for the White House.

Environmental advocates have made it clear that approval of the pipeline would dampen their enthusiasm for Obama in November. Some liberal donors even threatened to cut off funds to Obama's re-election campaign to protest the project, which opponents say would transport "dirty oil" that requires huge amounts of energy to extract.

But by rejecting the pipeline, Obama risks losing support from organized labor, a key part of the Democratic base, for thwarting thousands of jobs.

"The score is job-killers two, American workers zero," said Terry O'Sullivan, general president of the Laborers' International Union of North America.

O'Sullivan called the decision "politics at its worst" and said, "Blue-collar construction workers across the U.S. will not forget this."

Yet some unions that back Obama oppose the pipeline, including the United Auto Workers, Service Employees International Union and Communications Workers of America.

TransCanada says the pipeline could create as many as 20,000 jobs, a figure opponents say is inflated. A State Department report last summer said the pipeline would create up to 6,000 jobs during construction.

Obama appeared to have skirted what some dubbed the "Keystone conundrum" in November when the State Department announced it was postponing a decision on the pipeline until after this year's election. Officials said they needed extra time to study routes that avoid a 65-mile stretch through the Sandhills area, which supplies water to eight states.

The concerns were serious enough that the state's governor and senators opposed the project unless the pipeline was moved. Any new route would have to be approved by Nebraska environmental officials and the State Department, which has authority because the pipeline would cross an international border.

Obama said his decision does not "change my administration's commitment to American-made energy that creates jobs and reduces our dependence on oil."

To underscore the point, Obama signaled that he would not oppose development of an oil pipeline from Oklahoma to refineries along the Gulf of Mexico. TransCanada already operates a pipeline from Canada to Cushing, Okla. Refineries in Houston and along the Texas Gulf Coast can handle heavy crude such as that extracted from Canadian tar sands -- the type of oil that would flow through the Keystone XL pipeline.

Sen. Kent Conrad, D-N.D., said he doesn't believe the Keystone XL is dead. He said the Obama administration did not have enough time to review the project, given the Republican-imposed timeline.

"I don't believe this is the end of the story," Conrad told The Associated Press. "My personal view is that it should be constructed. It's clear Canada is going to develop this resource, and I believe it is better for our country to have it go here rather than Asian markets."

Bill McKibben, an environmental activist who led opposition to the pipeline, praised Obama's decision to stand up to what he called a "naked political threat from Big Oil."

[Associated Press; By MATTHEW DALY]

Associated Press writers Ben Feller, Dina Cappiello, Laurie Kellman and Sam Hananel in Washington, Shannon McCaffrey in Warrenville, S.C., Ramit Plushnick-Masti in Houston and James MacPherson in Bismarck, N.D., contributed to this story.

Follow Matthew Daly on Twitter: http://twitter.com/MatthewDalyWDC.

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