WASHINGTON - The Obama administration delayed its decision on the contested Keystone XL pipeline while it studies an alternate route through Nebraska, effectively pushing any action well past the 2012 election and into 2013, according to a State Department announcement Thursday afternoon.
The agency has been reviewing the proposed project since 2008 to determine whether it is in the national interest.
"As a result of this process, particularly given the concentration of concerns regarding the environmental sensitivities of the current proposed route through the Sandhills area of Nebraska, the department has determined it needs to undertake an in-depth assessment of potential alternative routes in Nebraska," the statement said.
The proposed project by a pipeline company in Canada had put President Barack Obama in a political vise, squeezed between demands for secure energy sources and the thousands of jobs the project will bring, and the loud opposition of environmental advocates who have threatened to withhold electoral support next year if he approves it.
The $7 billion pipeline, which would run from Alberta to the Texas Gulf Coast, has generated intense opposition from environmentalists and public officials in Nebraska, who claim that it threatens sensitive lands and underground water supplies along its 1,700-mile route. Critics also say that the heavy oil extracted from sand formations in Canada will add to global warming and extend U.S. dependence on fossil fuels.
The administration had in recent days been exploring ways to put off the decision until after the presidential election, fearing further alienation of environmental and health advocates who consider the pipeline decision a test of the Obama administration's commitment to clean energy and air quality. Environmental groups have expressed sharp disappointment with several recent administration environmental decisions, including the rejection of a tougher new smog standard proposed by the Environmental Protection Agency and a five-year offshore drilling plan that opens new areas in the Arctic and Gulf of Mexico to exploration. The statement said that the Sandhiills region has a high concentration of wetlands of special concern, a sensitive ecosystem and extensive areas of shallow groundwater that could be put at risk in the event of a rupture in the 36-inch diameter pipeline.
The agency said that it expected that the review, including public hearings and a new environmental impact statement, could be completed in the first quarter of 2013.
News of the project's delay was not well received in Canada.
"We continue to believe the Keystone XL pipeline will create thousands of jobs and billions in economic growth on both sides of the border," said Andrew MacDougall, a spokesman for Prime Minister Stephen Harper. "While we are disappointed with the delay, we remain hopeful the project will be decided on its merits and eventually approved. In the meantime, our government will continue to promote Canada, and the oil sands, as a stable, secure, and responsible source of energy for the world."
Larry Schweiger, president the National Wildlife Federation, one of many environmental groups opposed to the pipeline project, was pleased that the environmental considerations his group raised had been heard. "The way I understand it, the process will be altered and altered to make sure all of our concerns are considered," he said.
The State Department's inspector general announced Monday that he was looking into charges of a conflict of interest and improper political influence in the preparation of the project's environmental impact statement. Some have faulted the department for assigning the study to a company with financial ties to TransCanada, the pipeline operator.
Sen. Bernard Sanders, an independent from Vermont who called for the inquiry, welcomed the delay. "I strongly believe that the more the American people learn about this project, the more they will understand that it would be disastrous for our environment and for our economy," he said.
Last week, the State Department's spokeswoman hinted that a target date of Dec. 31 for determining whether the pipeline was in the national interest could slip.
Obama, in an interview with KETV in Omaha last week, said that he, not the State Department, would make the final decision based on "what's best for the American people."
He cited protection of the Nebraska aquifer an the health of Americans as considerations in his decision.
Yet he also said that he would weigh domestic energy needs as a factor. He has been under considerable pressure from the oil and gas industry and their allies in Congress to increase domestic oil production and approve the pipeline to bring oil from a friendly neighbor.
"We need to encourage domestic natural gas and oil production," Obama said in the television interview. "We need to make sure that we have energy security and aren't just relying on Middle East sources. But there's a way of doing that and still making sure that the health and safety of the American people and folks in Nebraska are protected, and that's how I'll be measuring these recommendations when they come to me."
Opponents of the project have organized two large protests outside the White House, including one Sunday in which several thousand protesters encircled the mansion demanding that the president kill the pipeline. Earlier this year more than 1,000 protesters were arrested in large demonstrations across from the White House.