President Obama denies Keystone XL application

January 20, 2012

On January 18, 2012, the U.S. State Department recommended to President Obama that the Presidential Permit for TransCanada Corp.’s Keystone XL pipeline be denied. President Obama concurred with this recommendation, which according to a State Department spokesperson was “predicated on the fact that the Department does not have sufficient time to obtain the information necessary to assess whether the project, in its current state, is in the national interest”.

The State Department’s reference to the time constraint refers to the Temporary Payroll Tax Cut Continuation Act of 2011 (“Act“), passed by Congress and signed by President Obama on December 23, 2011.  Subsection 501(a) of the Act provided that the President had 60 days from the enactment of the Act to issue a Presidential Permit for the Keystone XL pipeline. Under Subsection 501(b), the President did not have to issue the Presidential Permit if he determined that Keystone XL was not in the national interest. 

Had the Presidential Permit been granted under Subsection 501(a), Subsection 501(d) would have required the Permit to provide for a reconsideration of the route of Keystone XL within the State of Nebraska, and to provide a review period for the new route. Keystone XL’s route through Nebraska has been a controversial issue due to its location relative to the heavily-utilized Ogallala aquifer. 

On November 14, 2011, TransCanada entered an agreement with the State of Nebraska to amend Keystone XL’s route to bypass the Sandhills region that sits atop the Ogallala aquifer. That development followed the State Department’s ruling that required TransCanada to examine new routes, and President Obama’s announcement indicating that his decision would be delayed until after the 2012 Presidential elections.

Following President Obama's announcement, TransCanada stated that it intended to re-apply for a Presidential Permit and expected the new application to be processed in an expedited manner.

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