White House Expected to Decide Against Allowing Keystone Pipeline, Hoeven Says

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By Ari Natter

Feb. 3 — A White House review of the Keystone pipeline is likely to conclude that TransCanada Corp. shouldn't be allowed to build the $8 billion project, Sen. John Hoeven (R-N.D.) said in an interview.

Hoeven, the author of legislation (S. 1) circumventing the Obama administration review of the Canada-to-Texas project, said if President Barack Obama makes good on his vow to veto the bill, he would also conclude that TransCanada can't build it. The project needs State Department approval because it crosses an international boundary.

“I think if he vetoes the legislation he is likely to turn down the project,” Hoeven said. “I'd be surprised if he vetoes the legislation and then approves the project.”

Hoeven's bill, which would deem the project approved, fell five votes shy of the 67 needed to override a presidential veto last week.

The House will take up the Senate-passed version of the bill next week and pass it, sending the measure to Obama's desk, House Majority Leader Kevin McCarthy (R-Calif.) told reporters earlier Feb. 3. 

‘Cover' for Rejection 

He said comments by the Environmental Protection Agency released Feb. 3 indicating the project would significantly increase greenhouse gas emissions were designed to provide “cover” for the president.

“Until ongoing efforts to reduce greenhouse gas emissions associated with the production of oil sands are more successful and widespread,” developing the crude “represents a significant increase in greenhouse gas emissions,” the EPA said in a letter to the State Department.

“That is the dumbest thing I’ve ever heard,” Sen. Jim Inhofe (R-Okla.), chairman of the Senate Environment and Public Works Committee, told Bloomberg BNA, when asked about the agency's comments. “That whole thing is absurd. There is an assumption that somehow if we don’t complete that [pipeline] they aren’t going to continue in the sands in Alberta, but they are. We know there is already discussion about how to get it across to China. It would do nothing but increase [emissions] if they did that [reject the pipeline].”

Obama Previously Cited Climate Change 

Previously, Obama said he would reject the pipeline if it was found to contribute to climate change.

White House spokesman Josh Earnest declined to answer whether the EPA's letter would influence the administration's decision-making.

“I'm not going to comment on this process, at least the substance of this process, until the State Department has concluded their broader review to determine whether or not this project going forward is in the national interest,” he said during a press briefing Feb. 3.

In a research note, Washington-based consulting firm ClearView Energy Partners also said it would “not rule out a Presidential denial.”

“In light of the other evidence that the Obama Administration appears to be greening up and tightening up on oil and gas during the final two years, we think the State Department’s final decision could be sensitive to the EPA’s argument, notwithstanding long-term expectations of higher crude oil prices,” ClearView said.

To contact the reporter on this story: Ari Natter in Washington at anatter@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com