White House: Obama won't sign Keystone Pipeline bill

AP with CNBC
White House: Obama won't sign Keystone bill
White House: Obama won't sign Keystone bill

The White House on Tuesday said President Barack Obama would veto Keystone XL pipeline legislation if it passes under the new Republican-led U.S. Congress.

A bill that would have forced Obama's hand on the issue failed to clear Congress in its final days last year. But the Congress that convened Tuesday and new Senate Majority Leader Mitch McConnell has said the pipeline bill will be among the first issues voted on.

White House spokesman Josh Earnest said a "well-established" review by the State Department should not be undermined by legislation.

Read MoreNew GOP Congress, new Keystone pipeline bill

The administration also said the pipeline's route through Nebraska must be resolved.

Earlier this week, the administration said Obama believed the proposed pipeline would have little impact on U.S. gas prices.

The two main sponsors, Sen. Joe Manchin, D-W.Va., and Sen. John Hoeven, R-N.D., said Tuesday morning they had enough votes to overcome a filibuster of the bill but not a presidential veto. The House is expected to vote and pass a bill approving the $5.4 billion project, which was first proposed in 2008, on Friday.

The head of the American Petroleum Institute, Jack Gerrard, said Tuesday after his annual speech on the state of U.S. energy that the president had failed to make a simple decision that would put people to work, but he predicted the pipeline would eventually be approved.

President Barack Obama at the TransCanada Stillwater pipe yard in Cushing, Oklahoma.
Mandel Ngan | AFP | Getty Images

"It doesn't bode well for relationships between the White House and Capitol Hill," Gerrard said of the veto threat.

The bill is identical to one that failed to pass the Senate by a single vote in November, when Democrats were in control and Sen. Mary Landrieu of Louisiana pushed for a vote to save her Senate seat. She lost to Republican Rep. Bill Cassidy, who sponsored the successful House bill approving the pipeline.

But now the odds of passage are much improved with the Republican takeover of the Senate. The bill will also test Republicans' commitment to more open debate. Hoeven and Manchin said they welcomed additions to the bill, which they hoped would increase support.

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In a letter to Democrats from their leadership obtained by the AP, Sen. Chuck Schumer of New York and Sen. Debbie Stabenow of Michigan said the Keystone bill was "the first opportunity to demonstrate that we will be united, energetic, and effective in offering amendments that create a clear contrast with the Republican majority."

Among the ideas suggested in the letter were measures to prohibit exporting the oil abroad, to ensure American iron, steel and other goods were used in the pipeline's construction and to match every job created by the pipeline with an investment in clean energy.

In recent months, Obama has been increasingly critical of the project, and has resisted prior efforts to fast-track the process. At his year-end news conference, Obama said the pipeline would benefit Canadian oil companies but would not be a huge benefit to American consumers, who are already seeing low prices at the pump thanks to oil prices, which on Monday dipped to a nearly six-year low and were sharply down again Tuesday.

In addition, the outcome of a Nebraska lawsuit over the pipeline's route through that state is still pending. Another challenge to the pipeline is being waged by a South Dakota tribe over renewal of an application for a permit.

The project by Calgary-based TransCanada would move tar sands oil from Canada 1,179 miles south to Gulf Coast refineries. Supporters say it would create jobs and ease American dependence on Middle East oil. A government environmental impact statement also predicted that a pipeline would result in less damage to the climate than moving the same oil by rail.

Critics argue that the drilling itself is environmentally harmful, and said much of the Canadian crude would be exported with little or no impact on America's drive to reduce oil imports, which have already been greatly reduced because of record U.S. oil production.