Obama Keystone Decision Coming In Next Couple Months, Mary Fallin Says

By Roberta Rampton

WASHINGTON, Feb 24 (Reuters) - U.S. President Barack Obama told governors at a White House meeting on Monday he expects a decision on whether to allow the Keystone XL crude oil pipeline from Canada in the next couple of months, Oklahoma Governor Mary Fallin told reporters.

Fallin, a Republican who strongly supports the pipeline, said she asked Obama whether he would use his executive powers to approve the pipeline, which has been under government review since 2008.

"He did come back and say that he anticipates an answer one way or the other in a couple months," Fallin said after the governors met with Obama.

Opponents of the project say TransCanada Corp's pipeline would exacerbate climate change by supporting carbon-intensive development of Canada's oil sands crude. Supporters in Congress and the energy industry say Keystone would improve U.S. energy security and create thousands of construction jobs.

The decision puts Obama in a difficult political spot ahead of the 2014 midterm elections, where Democratic control of the U.S. Senate is at stake.

If he approves the project, he risks alienating core Democratic supporters. But denying it will anger labor unions, and could hurt Democratic incumbents in several tight races.

Some have speculated Obama could wait until after the November elections to decide, although his comments to Fallin would suggest an earlier ruling.

White House spokesman Jay Carney declined to say whether Obama gave Fallin an estimated timeline, and noted the State Department is gathering comments from other government agencies and the public on the $5.4 billion project.

"I don't have a readout and won't have a readout of that conversation," Carney told reporters at a briefing after the governors met Obama.

The agencies have until the end of April to comment on whether the pipeline is in the national interest.

Then Secretary of State John Kerry will make a recommendation to Obama on whether the project is in the national interest. Obama has indicated he will make the ultimate decision.

MEANWHILE IN NEBRASKA

Analysts have said a surprise Nebraska court ruling last week also could give Obama a reason to pause his administration's deliberations on the pipeline project.

The court ruled that a law that let Governor Dave Heineman allow the Keystone XL project to pass through his state was invalid.

That may mean a small agency called the Nebraska Public Service Commission has to review the pipeline's route through the state, which could take several months.

But TransCanada said on Monday it was confident that the issue would soon be resolved.

Nebraska's state's attorney general immediately appealed the court decision on behalf of Heineman immediately after the court ruled. That appeal puts a hold on the lower court's ruling until a final judgment by a higher court, TransCanada said, based on its discussions with the state.

Company spokesman James Millar said TransCanada believes the route approved by Heineman remains valid during the appeal.

"We have dealt with many issues related to this project in the past and are confident we can overcome this latest hurdle," Millar said in a statement.