Obama vetoes Keystone XL bill, but pipeline saga is far from over

President Obama rejected a bill that would approve the controversial Keystone XL pipeline Tuesday, issuing the third veto of his presidency to block a Republican-led effort to accomplish one of the GOP's top priorities.

Republicans lack the votes to override his veto, but the fight over Keystone is far from over – and what happens next is anyone’s guess. That’s because Mr. Obama’s veto did not reject the pipeline outright; rather, it allows the president to retain decisionmaking authority over the $8 billion project, which requires a green light from the State Department because it crosses the US-Canada border.

"[B]ecause this act of Congress conflicts with established executive branch procedures and cuts short thorough consideration of issues that could bear on our national interest -- including our security, safety, and environment -- it has earned my veto," Obama wrote in his message to the Senate. 

The president's final decision on the project’s fate could be weeks or months away. In the meantime, the contentious years-long debate over a pipeline is likely to continue, despite concerns that Keystone XL distracts from more significant, long-term discussions about the future of US energy and the environment.

Republicans accuse Obama of needlessly delaying approval of the project, proposed six years ago by Canadian firm TransCanada. Keystone backers hoped the bill would force Obama’s hand, but the White House promised a veto, saying the legislation circumvents a long-established review process. Obama says he will only approve the 1,179-mile pipeline if it doesn’t exacerbate climate change. The president's promise has pleased environmentalists, who say Keystone – which would carry 830,000 barrels of emissions-heavy oil sands a day – would be an environmental disaster.

So what happens next? Obama has been quiet on the issue, but the State Department is undertaking its final analysis of determining if the pipeline is in the national interest, which could take weeks or months.

There’s incentive for Obama to make a decision sooner rather than later. Keystone could be a nightmare for fellow Democrat Hillary Clinton’s nascent presidential campaign, as Elana Schor writes in Politico, forcing her to reckon with a statement she made, as Secretary of State, that she was “inclined to” approve the project. Environmentalists are pressing Ms. Clinton to stake a position on the issue ahead of 2016, and an Obama decision could alleviate that pressure.

Obama’s environmental legacy could depend on having a Democratic successor like Clinton. Congressional Republicans and GOP 2016 hopefuls are targeting long-term climate policies like his Clean Power Plan to cut US emissions 30 percent from 2005 levels by 2030.

Regardless of the administration’s ultimate decision, though, there are still a few hurdles along the pipeline’s path. TransCanada needs a construction permit to build through South Dakota, for example, and still faces opposition from some Nebraska landowners.

Meanwhile, the messaging battle between industry and environmentalists continues unabated.

Environmentalists are framing Republicans’ Keystone bill as a waste of time. The League of Conservation Voters, an environmental group, commissioned a poll this month indicating 68 percent of voters believe that “Republicans in Congress are wasting time by putting so much focus on the Keystone XL pipeline.”

“LCV commends President Obama for his commitment to veto the bill and for his incredible leadership in fighting climate change,” Tiernan Sittenfeld, LCV’s senior vice president of government affairs, said in a statement on the poll. “We urge him to build on that leadership by rejecting the permit for this dirty and dangerous pipeline once and for all.”

Industry, hoping to expand the country’s constrained transport options for crude oil, and labor unions, hungry for construction jobs, continue to push for Keystone. On Capitol Hill, Republicans and moderate Democrats accuse Obama of dawdling on pipeline approval to appease environmentalists.

“The administration has delayed this important infrastructure project for over six years, despite a series of environmental reviews, all of which conclude that the project will have no significant environmental impact,” Sen. John Hoeven (R) of North Dakota, who introduced the bill in the Senate, said in a statement Monday. “It has been more than enough time to make a fair decision on the merits of the project.”

Congressional Republicans held up a study from consultancy IHS this week to demonstrate most of the tar sands oil Keystone XL is slated to carry would stay in the US. The study found 70 percent of the refined product from Keystone’s oil would be used in the US.

One of the common arguments Democrats have lobbed against the project is that the oil would help Canada get its oil to foreign markets, without much long-term benefit for the US.

“The reality is that the US Gulf Coast is the world’s largest single refining market for heavy crudes such as oil sands, making it unlikely these barrels would be exported offshore,” said Aaron Brady, senior director for IHS Energy, in a statement this week. “And the overwhelming majority of refined products produced in the Gulf are consumed in the United States, regardless of the crude source.”

Ultimately, Keystone XL, with a planned capacity of 830,000 barrels per day, would represent less than ten percent of the roughly 12 million barrels of oil the US produces each day and the roughly 19 million barrels it consumes.