Republicans in Congress who adopted the pipeline as their jobs and development issue du jour have pledged to do whatever it takes to keep the project on track.
"It's clear that TransCanada has invested a lot of financial and political capital, and they are not going to back down lightly," said Carroll Muffett, a spokesperson for the Center for International Environmental Law.
Environmentalists, labor leaders and Republicans in Congress have also spent a lot of time and political energy on the pipeline, and depending on whom you talk to, Obama's decision makes him either a climate hero or a job killer.
"Make no mistake - this is a brave decision," said Bill McKibben, an author and anti-pipeline protest organizer, in a statement to supporters.
"If we don't work with Canada on this, then China will," said an "outraged" Rep. Fred Upton (R-Michigan), chairman of the House Energy and Commerce Committee.
House Republicans to Push Keystone Forward
Upton's committee invited Secretary of State Hillary Clinton to explain the decision before Congress after the three-year review officially came to a close. Clinton declined, and Kerri-Ann Jones, assistant secretary of state for oceans and international environment and scientific affairs, will testify next week instead.
Upton and his GOP allies plan on pushing a bill crafted by Republican Rep. Lee Terry of Nebraska, one of the western states along the proposed pipeline route where the pipeline became a hot-button issue for locals. Lee's bill seeks to expedite the next permitting process by putting it in the hands of the industry-friendly and quasi-independent Federal Energy Regulatory Commission (FERC). The State Department ran the recent permitting process because the pipeline crosses an international border.
Spokespeople for Representative Terry and the energy committee did not respond to inquiries from Truthout.
Republicans on the committee continue to echo TransCanada's questionable claim that construction of the $7 billion, 1,700 mile pipeline would directly create 20,000 jobs, but recent reports, including the State Department's own findings, put the actual number between 2,500 and 6,000 temporary construction positions.
In the face of all this rhetoric, President Obama has said he has yet to take a side, and told the press and Canada's disappointed Prime Minister Stephen Harper that the decision had nothing to do with the actual "merits" of the project. Obama seems to have politically straddled the issue and managed to appease environmentalists in his voter base while blaming the rejection decision on Republicans in Congress.
House Republicans attached a provision on the controversial payroll tax cut extension bill, which passed last minute in December, requiring Obama to decide on the pipeline permit within 60 days. The Obama administration had already said it needed another year to evaluate the potential impacts of the pipeline, a decision made after climate activists organized sit-ins and a massive protest at the White House, so Obama simply blamed the rejection on the GOP's "arbitrary" deadline.
"I'm disappointed that Republicans in Congress forced this decision, but it does not change my administration's commitment to American-made energy that creates jobs and reduces our dependence on oil," Obama said in a statement.
Obama, of course, has not been unfriendly to the oil industry. In his statement on the decision, Obama said his administration is looking at another proposed pipeline in the Midwest. Last month, his administration made available 21 million acres - an area about the size of South Carolina - of offshore drilling sites in the Gulf of Mexico, according to the Interior Department. The lease auction attracted more than $337 million in high bids from oil companies.
So where does Obama actually stand? It appears his position has remained unchanged: concerns raised about potential impacts of the pipeline demanded the review be extended until 2013, but pesky Republicans forced him to act early.
Obama's decision to effectively delay the decision on the pipeline until 2013 is seen by some observers as a strategic move in the lead up to his re-election campaign, where some believe the issue could divide his voter base. Several labor groups do support the pipeline, while young protesters at anti-pipeline rallies told Truthout that the president could not count on the same youth vote he got in 2008 if he approved the project.
But some pipeline opponents don't think the move was pure politics.
Ask a Nebraskan
"Republicans made this a political issue when they attached it to the payroll tax credit, so accusing the president of making this a political issue is incredibly ironic to say the least," said Malinda Frevert, news director for Bold Nebraska, an advocacy group that has aggressively opposed the pipeline and helped organize citizen activists.
"This was not a political decision," said Frevert. "This was a smart decision to stand up to Big Oil and Republicans who put an arbitrary deadline on this issue."
Whatever the reason for the administration's denial of TransCanada's permit application, the energy giant's statement that it will re-apply - issued swiftly on the heels of the State Department announcement - raises questions about how opponents will wage the next stage of their fight.
The pipeline debate touches on related but frequently politically polarizing issues - environment, jobs and energy security - but Frevert thinks they are overly entangled in the heated national dialogue.
"Nebraskans have been watching this issue for the last two years, but at a national level, this is fairly new, so trying to get all this information out is difficult," she said.
Frevert speculated that an effective opposition campaign this time around might have a stronger educational component. While TransCanada's claims of the project's job creation potential have been widely challenged as inflated, Frevert went further and said the pipeline's impact "could be a net loss of jobs."
"There's a huge potential for Nebraskan jobs to be lost if there's a leak," said Frevert, who stressed that the state's agriculture-based economy could suffer if farm- or ranchland was contaminated.
The State Department's original environmental statement on the project details 14 oil spills that have occurred on the existing Keystone pipeline system since 2010, including a 21,000-gallon spill that occurred after a fitting failed at a pump station in Ludden, North Dakota. Most of the oil was contained in the station area, but 210 gallons spilled across adjacent land.
Bold Nebraska's executive director, Jane Kleeb, is optimistic that the next environmental impact assessment will be "very transparent."
"The bad apples are gone," said Kleeb, noting that both the consulting firm and State Department officials whose involvement in the first environmental assessment posed a conflict of interest will not have a role in the next decision.
The original review was marred by controversy and scandal, prompting the State Department's inspector general to begin investigating potential conflicts of interest. Last year, a Freedom of Information Act request by environmental groups revealed that a former Hillary Clinton campaign aide was working as a lobbyist for TransCanada. Cardno Entrix, a massive contracting firm and TransCanada client, was hired to prepare much of the original environmental assessment.
Kleeb said Bold Nebraska will actively oppose the pipeline regardless of where the new route is sited. The state-level group's involvement with a hot-button national issue may be part of what the director of a global energy consulting firm told a Canadian news outlet is a shifting dynamic in US energy policy: "The big take-away message for me from this whole experience is the importance of the states in the energy policy debate. Whether it's the Nebraska Keystone XL issues or the fracking (hydraulic fracturing) issue, the states are really driving a lot of energy policy these days ... I think that the Obama administration - absent the problems in Nebraska - might have played this very differently."
Unless TransCanada drops the project or lawmakers take the review out of the State Department's hands, the Obama administration could take another stab at reviewing the pipeline permit. If the current drama is any indicator, the Keystone XL pipeline will continue to be a political headache for the Obama administration.
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