Obama Administration Delays Keystone Until After 2014 Elections

In a belated homage to deceased "Groundhog Day" filmmaker Harold Ramis, the Obama administration once again delayed a decision on the controversial Keystone XL pipeline Friday afternoon.

The latest postponement means that the White House can avoid having to making a politically sensitive decision about the pipeline until after the 2014 midterm elections. But it has further frustrated already exasperated officials in Ottawa, adding a rare bit of tension to the usually placid U.S.-Canada relationship.

The State Department said Friday that it will give other federal agencies additional time to weigh in on the project, meant to bring oil sands from Canada to the U.S. Gulf Coast. Additionally, the State Department said it needs more time to review more than 2.5 million public comments on the pipeline. At the same time, the project is in legal limbo after a Nebraska court ruling earlier this year that invalidated the project’s current route. Keystone XL has been awaiting U.S. government approval since 2008.

The 1,700 mile proposed pipeline is a political flashpoint between the oil industry, which sees it as a vital part of any move to to boost energy ties between the U.S. and Canada, and environmentalists, who see the pipeline as a litmus test for the Obama administration’s stance on climate change. They point out that Canadian oil sands are among the dirtiest kind of crude.

The latest delay triggered a predictable outpouring of outrage from proponents of the pipeline’s construction, including Canadian pipeline builder TransCanada, U.S. lawmakers from both parties, and the oil industry. Environmental groups, meanwhile, seized on the latest delay to argue for a definitive rejection of the project.

"We are extremely disappointed and frustrated with yet another delay," Russ Girling, TransCanada’s president and chief executive, said in a statement.

Sen. Mary Landrieu (D.-La.), the new chair of the Senate Energy Committee, called the decision "irresponsible, unnecessary and unacceptable," and vowed "decisive action" to get the project approved. Sen. Lisa Murkowski (R.-Alaska), the ranking Republican on the energy committee, mincing no words, called the delay a "stunning act of political cowardice."

"This administration’s cavalier attitude toward our historic alliance with Canada, the free flow of commerce with our friends, the development of a North American energy partnership and American jobs is irresponsible and inexcusable," she said in a statement.

Opponents of the pipeline were heartened by the administration’s decision to keep reviewing the project in light of the legal uncertainty in Nebraska. Calling the delay a "huge victory," Rachel Wolf, the spokesperson for one of the leading anti-Keystone coalitions, said that "every day without Keystone XL is a day that we keep high-carbon tar sands in the ground."

Practically speaking, the latest delay will not necessarily derail the project, which requires final approval from the State Department and a definitive thumbs up or down from President Obama. The State Department’s own environmental reviews have consistently found that the environmental impact from the pipeline would be modest. They’ve also found that alternative modes of transporting the oil sands crude — like carrying it on railcars — would be far worse for the environment.

The Nebraska court case provides a "logical rationale" for a delay, since it means that the currently proposed pipeline route is invalid, said Kevin Book, managing director at Clearview Energy Partners, an energy consultancy.

"We continue to believe the White House has paved a road to ‘yes’ and will ultimately approve" the project, but the possibility that final decision will come after the mid-term elections has "increased dramatically," he said.

Still, the delay will further strain the U.S. relationship with Canada. Senior officials in the Canadian government, frustrated with years of delays on Keystone, have sought in recent months to deepen energy ties with Asian countries, especially Japan and China, in order to secure additional customers for Canadian oil and gas.

"We are disappointed that politics continue to delay a decision on Keystone XL," said Jason MacDonald, a spokesman for Canadian Prime Minister Stephen Harper.

Officials at the Canadian Ministries of Foreign Affairs and Natural Resources did not immediately respond to requests for comment.