Obama administration rejects Keystone pipeline permit

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White House confirms it will reject Keystone pipeline

State Department: Project does not serve national interest

President Obama announced Wednesday that he will deny a permit for the Keystone XL pipeline, blaming Republicans for imposing a "rushed and arbitrary deadline" which he said did not give officials enough time.

GOP lawmakers immediately excoriated the president for the decision. House Speaker John Boehner said Obama is "selling out American jobs for politics," and said Republicans in Congress would continue to push for the pipeline.

The decision does not necessarily kill the project. The State Department said the denial "does not preclude any subsequent permit application" -- and within hours pipeline company TransCanada announced that it would reapply for a permit.

But the decision at least delays the project, one that unions and GOP lawmakers alike said would be a boon for job creation as well as energy security.

"Until this pipeline is constructed, the U.S. will continue to import millions of barrels of conflict oil from the Middle East and Venezuela and other foreign countries," TransCanada said in a statement Wednesday, saying it is "disappointed" by the administration's call. "Thousands of jobs continue to hang in the balance if this project does not go forward."

Obama administration officials and congressional Republicans were pointing the finger squarely at each other over the decision.

The White House claimed Republicans' decision to attach a pipeline provision to the short-term payroll tax cut extension last year scuttled the project -- that provision compelled the Obama administration to make a decision on the pipeline in two months.

Obama, in a written statement, said that deadline "prevented a full assessment of the pipeline's impact."

"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. "I'm disappointed that Republicans in Congress forced this decision, but it does not change my administration's commitment to American-made energy that creates jobs and reduces our dependence on oil."

The State Department made the initial recommendation to Obama on the grounds that there wasn't enough time to review. Obama agreed with that recommendation. According to the White House, Obama called Canadian Prime Minister Stephen Harper to "personally convey" that decision.

But Republicans accused Obama of playing politics and expressed concern that the decision would kill jobs -- 20,000 of them, according to House Republican Leader Eric Cantor.

"The president has showed through his actions that those actions do not match that rhetoric, and by deciding to block the development of the Keystone pipeline, he has essentially decided to block the creation of 20,000 new jobs," Cantor said Wednesday.

The decision reverberated on the 2012 campaign trail, as the Republican presidential candidates joined congressional Republicans in blasting the president.

Newt Gingrich called the decision "stunningly stupid," on the grounds that it kills construction jobs and endangers energy security. He also warned that the decision would compel Canada to sell its oil to China.

"What Obama will have done is kill jobs, weaken American energy security, and driven Canada into the hands of China out of sheer, utter stupidity," he said.

For three years, the State Department has been reviewing the initial proposal to run a pipeline from Canada down to Texas through a sensitive Nebraska aquifer -- authority it has because of the transnational path the route takes. The pipeline had been through several other federal, state and local approvals, but the department backed away from signing off on the plan last year after environmentalists and local lawmakers complained.

Industry workers and Republicans contend the project would create thousands of jobs, and Canada's prime minister has warned if the U.S. can't get on board, the North American nation will look to team with China.

"Unfortunately Prime Minister Harper of Canada just this week said because of the volatile indecisiveness on the part of this president, that they feel they are being held hostage and they will take their energy elsewhere specifically to Asia and China," Jack Gerard, president and CEO of the American Petroleum Institute, told Fox News Radio.

In December, Congress attached to the payroll tax cut a deadline of 60 days for the State Department to determine approval for an alternative route. The language says if Obama rejects the pipeline, Obama must then issue a report to Congress "that provides a justification for determination, including consideration of economic, employment, energy security, foreign policy, trade and environmental factors."

On Tuesday, Obama's own jobs council suggested that it agrees with the pipeline concept. While not specifically mentioning Keystone in a report out Tuesday about improving competitiveness, the council said that when it comes to energy projects in general, the government needs to "expeditiously, though cautiously, move forward on projects that can support hundreds of thousands of jobs."

"We think this all-in energy strategy can create significant economic growths and significant job creation," said Lewis Hay, NextEra Energy CEO and a member of the president's job council.

Obama has noted his environmental concerns when it comes to energy exploration, but insisted Tuesday that a balance could be found.

"I think the recommendations are sound. We see enormous potential in production of traditional fossil fuels," he said without mentioning Keystone.

As oil prices rose Wednesday on fresh signs the U.S. economy was improving, which could lead to stronger demand for gasoline and other energy products, the Natural Resources Defense Council, an environmental group, argued that the pipeline doesn't make the U.S. any more energy secure just because it would get oil from a close neighbor and friend.

Instead of carrying common crude oil, the Keystone XL pipeline would carry thick, toxic bitumen for refining in the Gulf states, effectively transporting pollution from Canada to the United States," reads the NRDC report..

"It is not in the national interest to lock the United States into supporting an expensive and dirty form of oil for many years to come. Also, additional capacity for tar sands oil perpetuates America's addiction to oil, and undermines the clean energy alternatives that would bring genuine energy security," the NRDC report continues.

But Gerard said the president's refusal to approve the pipeline is a "clear abdication of leadership."

Boehner also accused the president of trying to put off a politically difficult decision until after the election.

"This is not good for our country," Boehner said. "The president wants to put this off until it's convenient for him to make a decision."

White House Press Secretary Jay Carney blamed Republicans for putting "in jeopardy" the entire process.

"In a purely partisan effort to score a political point, Republicans in Congress insisted on inserting an extraneous provision within a bill that had nothing to do with pipelines," Carney said, adding that the "arbitrary deadline" made an adequate review "virtually impossible."