U.S. President Barack Obama says he has denied the permit for the Keystone XL pipeline, blaming Congressional Republicans for forcing an arbitrary deadline on the matter.
"As the State Department made clear last month, the rushed and arbitrary deadline insisted on by Congressional Republicans prevented a full assessment of the pipeline's impact, especially the health and safety of the American people, as well as our environment," Obama said in a written statement Wednesday afternoon.
"This announcement is not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people."
Obama personally called Prime Minister Stephen Harper to deliver the news Wednesday.
Harper said he expressed his "profound disappointment" to Obama and said Canada will be looking to sell its oil to China.
TransCanada says it plans to re-apply to build the pipeline, hoping it will be in service by 2014.
"This outcome is one of the scenarios we anticipated. While we are disappointed, TransCanada remains fully committed to the construction of Keystone XL. Plans are already underway on a number of fronts to largely maintain the construction schedule of the project," Russ Girling, TransCanada's president and chief executive officer, said in a statement.
Alberta Premier Alison Redford said TransCanada's decision to re-apply is "good news" and her province is doing everything it can to help get the pipeline approved.
Minister of Natural Resources Joe Oliver said the decision highlights the need for Canada to diversify its energy markets. He also said the process is still ongoing and he's hopeful it will be approved.
"It's not over and we continue to be cautiously optimistic. I do think at the end of the day there will be pipelines going into the United States," Oliver said on CTV's Power Play.
NDP environment critic Megan Leslie applauded the permit's rejection.
"President Obama listened to Americans, that's what you do in a democracy," she said on Power Play. "But here in Canada we don't see that by this government, it's just about fast tracking, selling our raw material to the quickest bidder."
U.S. politics at play
The White House had been staring down a deadline since late December, when Congress offered 60 days to decide on a permit for the pipeline's proposed route through Nebraska, in exchange for passage of a payroll tax cut bill.
That gave the White House until February 21, but State Department officials had since made it clear that would be too soon to adequately evaluate the project's potential environmental impact in Nebraska.
"This is not the end of this fight," Republican leader of the House, Speaker John Boehner, said immediately after Obama's statement went public.
He said that the president is breaking a promise to create jobs.
Republicans charged that Obama was "creating jobs in China" as the Canadian government would ship its oil there instead of the United States.
The proposed $7-billion project is intended to carry bitumen from oil fields in northern Alberta south through six states to refineries on the U.S. Gulf Coast.
Obama's decision does not kill the project outright. TransCanada can apply for another permit with a different route, in hopes of receiving environmental approval.
Obama said his administration is continuing to work on new ways to strengthen American energy security.
"We will do so in a way that benefits American workers and businesses without risking the health and safety of the American people and the environment," he said.
While its supporters argue the project would create thousands of jobs in addition to fostering North America's domestic energy security, critics counter that the risk to the environment is too great.
TransCanada has said the project could create as many as 20,000 jobs in two years, but its opponents say that number is greatly overstated.
