The Obama administration rejected the construction of the Keystone XL oil pipeline from Canada to the Gulf of Mexico, saying a congressionally imposed deadline didn't allow enough time to review the project's environmental impact.
President Barack Obama said the decision, which put the pipeline on hold following a review that began in 2008, "is not a judgment on the merits of the pipeline" and criticized next month's deadline as "arbitrary." The administration suggested that the pipeline's builder, TransCanada Corp., could reapply.
The deadline forced the White House to choose between much-needed jobs and environmental concerns, and the decision was blasted by Republicans, energy firms and labor groups.
GOP presidential candidate Mitt Romney said the move "demonstrates a lack of seriousness about bringing down unemployment, restoring economic growth and achieving energy independence." Newt Gingrich called the decision "a stunningly stupid thing to do."
TransCanada CEO Russ Girling said the company "remains fully committed to the construction of Keystone XL." He said, "We will reapply for a presidential permit and expect a new application would be processed in an expedited manner to allow for an in-service date of late 2014."
David Goldwyn, a former State Department envoy for international energy affairs who now heads a consulting firm, said the U.S. could reuse some of the studies and analyses it has already conducted but that the process would take "a minimum of 18 months to two years."
The Obama administration said a fresh request would trigger a new environmental review. The State Department's Kerri-Ann Jones declined to commit on a timeline for completing the review, saying, "It would be a completely new application."
Late last year, Republicans successfully pushed to require a quick decision on Keystone as part of an agreement to extend payroll-tax cuts. Wednesday's rejection hands the GOP a talking point to use against Mr. Obama ahead of the 2012 election, even as it resulted in a setback for the party's policy goal.
The oil-and-gas industry estimates the 1,700-mile pipeline, which would carry oil from Canadian tar sands, would create thousands of jobs. Critics dispute that estimate and say the project would create fewer than 100 permanent jobs.
Republican lawmakers said they would find other ways to get the project under way. Congress is considering a measure to extend the lower payroll-tax rates past February, when they expire. Republicans could attach to that must-pass bill language that deems the pipeline in the national interest.
Administration officials said they had to reject the permit since TransCanada has yet to submit an alternate route for a portion of the pipeline that passes through an environmentally sensitive area. The administration postponed a pipeline decision in November, saying a new route was needed to avoid the Nebraska Sand Hills, which sit atop an aquifer that supplies fresh water. Critics saw that move as political, since it delayed the decision until after the election.
The Keystone move put the White House in the uncomfortable position of choosing between key backers: environmentalists and labor unions. Pipeline critics have raised concerns about spills, carbon emissions and other environmental risks, while labor groups said the project would create jobs. Adding to the stakes: Canada, a key ally, has rallied behind the project because of the jobs and economic boost it may afford.
Alison Redford, the premier of Canada's oil-rich province of Alberta, said she was disappointed in the U.S. government's decision but said she believed the project would eventually be approved.
Environmental groups cheered the decision. "The pipeline was rejected for all the right reasons. President Obama put the health and safety of the American people and our air, lands and water—our national interest—above the interests of the oil industry," said Frances Beinecke, president of the Natural Resources Defense Council.
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