Keystone Oil Pipeline Deadline Puts Obama In A Pinch Congress gave the White House a tight, 60-day deadline for approving or rejecting the controversial pipeline, which would carry oil from Canada to the Gulf of Mexico. If the president rejects the project, he's likely to be assailed on his commitment to job creation. But approving it raises real legal concerns.

Keystone Oil Pipeline Deadline Puts Obama In A Pinch

Keystone Oil Pipeline Deadline Puts Obama In A Pinch

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TransCanada hoped to build a pipeline under the Niobrara River in north central Nebraska, seen here in October 2010. The pipeline's route has been challenged by environmental advocates. Nati Harnik/AP hide caption

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Nati Harnik/AP

When Congress gave the White House a tight 60-day deadline for approving or rejecting the controversial Keystone project, it seemed like a Christmas gift to TransCanada, the company building the pipeline that would carry oil from Canada all the way to the Gulf of Mexico.

But TransCanada says it didn't ask for this deadline and it doesn't know how to handle this unwanted gift.

"We're heading into uncharted territory," says James Millar, a TransCanada spokesman.

Last year, environmentalists and ranchers in Nebraska succeeded in delaying the Keystone XL pipeline by arguing that it put a huge aquifer at risk. The company is looking for a new route through Nebraska, and it doesn't expect to have it pinned down until next fall.

The unrequested deadline was just the latest consequence of how politicized the Keystone pipeline has become.

"We have essentially become the lightning rod for that broader debate around the consumption of fossil fuels," says Millar.

Environmentalists made Keystone their prime target last year. Their protests helped persuade the president to delay a decision on whether the pipeline is in the national interest.

Environmentalists' biggest concern is that the massive amount of oil that would flow through the pipeline would come from tar sands, and it takes a lot more energy to pull oil out of tar sands than it does to pump a well. That translates into extra greenhouse gas pollution.

'It's Not Just A Pipeline; It's A Lifeline'

In recent weeks, Republicans and some labor unions have turned the project into another kind of litmus test — one that measures the president's commitment to creating new jobs.

David Mallino, a lobbyist for the Laborers International Union of North America, attributes all the controversy around the project to its enormous size.

"Seven billion dollars of private investment don't come along every day; they don't come along every year or every decade," says Mallino.

So what's a president to do, especially when key parts of his political base are on opposite sides of the issue?

People like Mallino are urging the White House to take advantage of the deadline and give the project a quick green light.

"The pipeline itself is essential to putting thousands of our members back to work. It's not just a pipeline; it's a lifeline for those members. This is the right thing to do," says Mallino.

TransCanada Committed For The Long Haul

But many environmentalists and legal scholars say President Obama can't approve it. It would be like granting a building permit when a construction company hasn't chosen a lot yet.

The State Department had warned Republicans that their deadline would make it unable to issue a permit.

"It would be essentially defenseless in a lawsuit if it tried to make a decision having acknowledged that it doesn't have adequate information," says Patrick Parenteau, an environmental law professor at Vermont Law School.

Environmental groups say they would sue if the Obama administration did approve the project.

Some energy experts think the president will reject the project this round but that will not be the end of it, because the Canadian oil is so valuable.

"The sequence of events could easily be: The president rejects this pipeline, we then have a crisis in the Middle East, we suddenly realize we're not having this Canadian oil when we could have, and then people are angry about that," says Amy Myers Jaffe, director of energy research at Rice University's Baker Institute.

A steady flow of Canadian oil through the pipeline would protect the United States from the potential disruptions of oil supply from unstable countries in the Middle East, Jaffe adds.

If the short deadline forces the Obama administration to reject Keystone on legal grounds, TransCanada would probably reapply.

Proposed And Existing TransCanada Pipelines

In 2010, TransCanada completed a major pipeline — the Keystone — which runs from Alberta to Illinois. The company is now planning a second line, called the Keystone XL, that would run from Alberta to Nebraska with an extension from Oklahoma to the refineries on the Gulf Coast. But the company is now faced with the challenge of rerouting the pipeline to avoid ecologically-sensitive land in Nebraska.

Proposed And Existing TransCanada Pipelines

The company says it's committed to the project for the long haul, no matter what political and legal storms it has to weather.