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Supporters say the TransCanada Corp project would create thousands of jobs and reduce U.S. reliance on oil imports from countries that are less U.S.-friendly than Canada. They also point to U.S. government reports about the dangers of moving crude oil by rail as an alternative to the pipeline. In its report, the State Department agreed, saying there is a "greater potential for injuries and fatalities associated with rail transport relative to pipelines."
The 1,179-mile pipeline would travel through the heart of the United States, carrying oil derived from tar sands in Alberta, Canada, to to a hub in Steele City, Neb., where it would connect with existing pipelines to carry more than 800,000 barrels of crude oil a day to refineries in Texas.
Susan Casey-Lefkowitz, the international program director of the Natural Resources Defense Council (NRDC), said that based on the State Department's report, the "Keystone XL should be rejected."
"President Obama now has all the information he needs to reject the pipeline. Piping the dirtiest oil on the planet through the heart of America would endanger our farms, our communities, our fresh water and our climate. That is absolutely not in our national interest," Casey-Lefkowitz, said in a statement.
The final word on Keystone will come from Obama and could take months. A decision in favor of the pipeline could undermine Obama's environmental credentials and anger activists who are some of the Democratic Party's strongest supporters.
Climate change impact
TransCanada Corp's chief executive, Russ Girling, welcomed the favorable review of the company's Keystone XL project on Friday, calling the report a key step for the pipeline.
"We are very pleased with the release and being able to move this next stage of the process," Girling said on a conference call with reporters. "It's been long in getting here, but obviously as a company, we're well prepared to move into this next phase."
In the report, however, the State Department said "elevated effects due to projected climate change could occur to water resources, wetlands, terrestrial vegetation, fisheries and endangered species, and could also contribute to air quality impacts."
"In addition, the statistical risk of a pipeline spill could be increased by secondary effects brought on by climatic change such as increased flooding and drought."
Bill McKibben, founder of 350.org, an environmental advocacy organization focusing on climate change, told reporters in a Friday afternoon press call that the report "makes it clear that blocking Keystone is an important (step) for climate sanity."
"The report concluded that in a scenario where we take climate change seriously and regulate climate pollution, this pipeline will indeed have a 'significant impact' on climate change. So now we'll find out if that's the world Barack Obama and John Kerry want," McKibben said in a release on his group's website.
What happens now?
When pressed by reporters to clarify Obama's position on the issue Friday, White House Press Secretary Jay Carney referred back to a speech given by the president at Georgetown University last year.
In that speech, the president said "allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation's interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution."
"The net effects of the pipeline's impact on our climate will be absolutely critical to determining whether this project is allowed to go forward," Obama said in that speech.
State Department spokeswoman Marie Harf emphasized that the release of the final environmental statement for the pipeline was "not a decision but another step in the process prescribed by the executive order."
The release of the environmental review starts the clock running on another review period, during which eight U.S. federal agencies will have 90 days to comment on whether Keystone XL is in the national interest.
Some agencies, including the Departments of Defense, Commerce and Energy, are expected to focus on the energy security and economic case for the pipeline. But the Environmental Protection Agency and the Department of Interior, which have expressed reservations about the pipeline in public comments, are also among the bureaus that will weigh in.