Keystone XL Review Delayed Again

A final decision on the pipeline may not come until after November's elections.

Business groups are pushing President Obama to approve the cross-border leg of the Keystone XL Pipeline. (National Journal)

The State Department announced Friday afternoon that it's extending its deadline for review of the proposed Keystone XL oil-sands pipeline, a move that could punt a final decision until after the midterm congressional elections.

State said it told federal agencies that they will have more time to weigh in on the proposed northern leg of TransCanada's pipeline, a project that's at the heart of an intense political and lobbying fight.

The department is citing an ongoing Nebraska court battle over the state law used to approve the route through that state as reason to extend its review.

"Agencies need additional time based on the uncertainty created by the ongoing litigation in the Nebraska Supreme Court which could ultimately affect the pipeline route in that state," the State Department said in its announcement Friday.

The move extends what has been the highest-profile environmental battle in years. The delay appears likely to push the final White House decision on the politically explosive project beyond the November elections.

A senior State Department official declined to provide a revised timeline, noting the uncertainties of the legal process.

A court decision that requires a different route through Nebraska could alter the environmental, socioeconomic, and cultural issues that agencies are assessing, the official told reporters on a call.

One environmentalist tracking the court case said a final ruling may not arrive until the beginning of 2015.

"We ... believe that the possibility that Keystone XL's fate won't be decided until after November's midterm elections has increased dramatically," the consulting firm ClearView Energy Partners said in a note Friday.

State's final environmental review, released in late January, had opened a 90-day window for other federal agencies to comment ahead of a final White House decision. It also brought a large number of public comments that State says it's weighing.

"During this time we will review and appropriately consider the unprecedented number of new public comments, approximately 2.5 million, received during the public comment period that closed on March 7, 2014," the department said.

Keystone supporters slammed the latest delay in what has been a five-year-plus review of the pipeline, which would carry crude oil from Alberta's oil sands to Gulf Coast refineries.

"Today's decision by the Administration amounts to nothing short of an indefinite delay of the Keystone Pipeline. This decision is irresponsible, unnecessary and unacceptable," said Sen. Mary Landrieu, D-La., who is locked in a tough reelection fight.

The new delay also drew immediate criticism from Republicans who are pushing for Keystone XL's approval.

Landrieu and Republican Sen. John Hoeven of North Dakota said the delay will fuel their efforts to win a permit for Keystone XL through congressional action. "I will continue to work with my colleagues to approve this important energy project congressionally rather than let the president defeat it with endless delays," Hoeven said in a statement.

An aide to a Democratic senator who opposes the pipeline said the political implications of the delay on the ultimate decision are tough to game out, but believes it may make a rejection more likely.

"Reading the tea leaves on how something like this affects Keystone is about as easy as it is to clean up a tar-sands spill. You could make the case that it is good for the opponents, as it shows the Obama administration's willingness to look at all of the angles to build the best case against it, without endangering those senators who are vulnerable to a rejection decision," the aide said.

"Or you could make the case that this is good for those who want it approved, because they don't want any excuses left to challenge its construction," the source added.

Environmentalists bitterly oppose the pipeline, while oil-industry and business groups and a number of unions are lobbying in favor of it.