Bloomberg News

Keystone Delay Helps Obama Rekindle Environmentalist Support

November 17, 2011

Nov. 11 (Bloomberg) -- Delaying a decision on TransCanada Corp.’s Keystone XL oil pipeline will help President Barack Obama repair frayed relations with environmentalists as he runs for re-election.

A State Department official said politics played no role in its announcement yesterday that it will study alternate routes for the $7 billion pipeline, delaying a decision on approving it until after the 2012 election.

That wasn’t the assessment of pipeline supporters such as Republican House Speaker John Boehner, who called the move an effort to “avoid upsetting the president’s political base.” Obama’s environmentalist allies, who welcomed the action, agreed.

“There is a political component,” Erich Pica, president of Friends of the Earth in Washington, said in an interview. “You’re seeing more and more Obama donors or potential Obama donors from the environment community publicly saying they weren’t going to give him money. What this decision means is that the president is paying attention and listening.”

The 1,661-mile (2,673-kilometer) pipeline would deliver 700,000 barrels a day of crude from Alberta’s oil sands to the Gulf of Mexico by crossing Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas.

The delay responds to concerns among Nebraska citizens, state officials and some members of Congress that TransCanada’s proposed route across that state’s Sandhills area risks the Ogallala aquifer, the drinking-water source for 1.5 million people.

Department’s Comment

“The White House did not have anything to do with this decision,” Kerri-Ann Jones, assistant secretary of State for oceans and international environmental and scientific affairs, told reporters on a conference call yesterday when asked if politics affected the decision. “They did not direct us to make this decision.”

The State Department, with jurisdiction over the pipeline because it crosses an international border, said in a statement the study “could be completed as early as the first quarter of 2013.”

“Because this permit decision could affect the health and safety of the American people as well as the environment, and because a number of concerns have been raised through a public process, we should take the time to ensure that all questions are properly addressed and all the potential impacts are properly understood,” Obama said yesterday in a statement.

Russ Girling, chief executive officer of Calgary-based TransCanada, said previously that rerouting delays might kill the project. Yesterday, he said the company remains “confident Keystone XL will ultimately be approved.”

‘Too Important’

“This project is too important to the U.S. economy, the Canadian economy and the national interest of the United States for it not to proceed,” Girling said in a statement.

Boehner’s comments, in an e-mailed statement, were echoed by Thomas Donohue, president and chief executive officer of the U.S. Chamber of Commerce, the nation’s largest business lobbying group.

“This is clearly a political decision, and everyone knows it,” Donohue said in an e-mailed statement. “Unfortunately, it will immediately cost more than 20,000 Americans an opportunity to get a job working on the pipeline and hundreds of thousands more jobs in the future.”

Politically, a pre-election decision for or against the pipeline was a losing proposition for Obama, according to James Manley, a former spokesman for Senate Majority Leader Harry Reid, a Nevada Democrat.

‘Guaranteed to Upset’

While Obama’s union supporters said the project would create thousands of jobs, his environmental backers said it would damage delicate terrain, risk water supplies and add to greenhouse gas emissions.

“He’s guaranteed to upset labor and/or environmentalists,” Manley said yesterday in an interview.

Environmental groups have praised Obama for winning tougher environmental standards for cars and trucks and providing $90 billion in loan guarantees for energy efficiency and the development of renewable power sources.

They have criticized his failure to win cap-and-trade legislation limiting carbon emissions, his renewal of offshore drilling in the Gulf of Mexico after last year’s BP Plc oil spill and his decision in September to overrule stricter smog standards sought by the Environmental Protection Agency.

Susie Tompkins Buell, a co-founder of the Esprit clothing company who has raised and contributed at least $20 million to Democratic candidates and kindred causes over the last 10 years, was waiting on the Keystone decision before donating to the Obama campaign. She said she is now likely to contribute even though she had hoped for outright rejection of the pipeline.

Obama ‘Stalling’

“I do want to see him step up, I don’t want to see him run from this,” she said in an interview. “I think he’s stalling for more information, and I think this will avoid a problem for him before the election.”

Daniel Kammen, a professor of energy at the University of California, Berkeley who worked as an energy adviser to Obama’s 2008 campaign, said there will be “no protest-free route” for the pipeline.

“If the decision is to punt this down the road and have a new assessment of the route, I think that may be convenient short-term politics,” Kammen said. “The real issue isn’t the route. It’s what’s in the pipeline.”

That wasn’t the view of the governor of Nebraska, where the state legislature has been meeting in special session to consider legislation that would force a change in TransCanada’s route through the state.

“We’re very excited here in Nebraska that our voices have been heard,” Governor Dave Heineman, a Republican, said in an interview. “And I want to emphasize most Nebraskans, including myself, we support the pipeline, but we’re opposed to the route.”

The legislature will evaluate on Nov. 14 whether to continue meeting or postpone consideration of pipeline legislation until its regular session in January, Heineman said.

--With assistance from Jim Snyder, David Lerman and Katarzyna Klimasinska in Washington and Bradley Olson in Lincoln, Nebraska. Editors: Larry Liebert, Jim Rubin.

To contact the reporters on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net; Kate Andersen Brower in Washington at kandersen7@bloomberg.net

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net


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