Obama Rejects Keystone XL Pipeline Construction

President sets up key battle with GOP over jobs and the environment.

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The Obama administration announced today that it will not issue a permit allowing for the construction of the Keystone XL oil pipeline that would link oil extracted in Canada to refineries in Texas.

The announcement comes a full month before the president would have faced the congressionally-imposed Feb. 21 deadline to decide if the pipeline serves the national interest—a deadline White House Press Secretary Jay Carney called "purely political."

[Obama Should Rethink His Policies on Natural Gas and Keystone XL.]

"The rushed and arbitrary deadline insisted on by Congressional Republicans prevented a full assessment of the pipeline's impact, especially the health and safety of the American people, as well as our environment," President Obama said in a statement released today. "I'm disappointed that Republicans in Congress forced this decision."

The $7 billion project would involve the construction of a 1,700-mile pipeline to carry oil from Canada to Texas Gulf Coast refineries.

The Keystone XL pipeline has been a source of controversy since its inception, pitting conservatives who claim the project will bring needed jobs against Democrats who feel the project could hurt the environment.

Last year, the government faced a looming shutdown because the president refused to approve legislation that coupled the project with a renewal of the payroll tax cut. Instead, Congress decided to set a Feb. 21 deadline for Obama's decision.

[Chamber Pushes for Keystone Approval, Blasts White House.]

Republican leaders have accused Obama of killing jobs by not approving the project.

"President Obama is about to destroy tens of thousands of American jobs and sell American energy security to the Chinese," House Speaker Rep. John Boehner spokesman Brendan Buck told the L.A. Times.

The Obama administration is worried that the review process of the pipeline has not been completed, specifically in a key area of Nebraska where plans for the pipeline to circumvent a key aquifer have not been finalized.

Some reports indicate that the entire review process could take until 2013 to be completed.

[The Risk of Over-regulating the Energy Industry.]

"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," the Obama statement said. "But it does not change my Administration's commitment to American-made energy that creates jobs and reduces our dependence on oil."