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Obama administration expected to reject Keystone XL pipeline permit today

Thousands of demonstrators opposed to the Keystone XL pipeline listen to speakers in Lafayette Park across from the White House in Washington, DC, November 6, 2011. KAREN BLEIER/AFP/Getty Images

Updated 2:29 p.m. Eastern Time

The Obama administration is expected to reject TransCanada's permit for the controversial $7 billion Keystone XL pipeline later Wednesday, a source familiar with the decision told CBS News, adding that a formal announcement is expected from the State Department.

Multiple media outlets have reported that the decision is imminent, citing unnamed sources, but the White House and the State Department have not confirmed an announcement, and a State Department spokesperson said early Wednesday afternoon that "as of 30 seconds before I walked in here my understanding was that a decision had not yet been made."

As part of deal last December extending the payroll tax cut for two months, Congress imposed a Feb. 21 decision on President Obama to issue or reject the permit. Language in the deal mandates that only the president can block the Keystone Pipeline project, and the impact of any State Department announcement is not clear. Shares in TransCanada Corp fell following initial reports about a decision.

While the administration plans to reject a permit for TransCanada to build the pipeline under the current proposal, the company could apply for backing for an alternate route for the planned 1,700 mile underground oil pipeline linking the tar sands fields of northern Alberta to oil refineries on the Texas Gulf Coast. 

While environmentalists have strongly opposed the pipeline, Republicans have pushed hard for it. In response to early reports of the decision, Texas governor and White House hopeful Rick Perry said, "the president's focused more on the next election than on the next generation," saying the decision "sends a horrible message" at a time of rising gas prices.

"President Obama's decision to reject the Keystone XL crude oil pipeline is as shocking as it is revealing," added Mitt Romney, who is also seeking the GOP presidential nomination. "It shows a President who once again has put politics ahead of sound policy.If Americans want to understand why unemployment in the United States has been stuck above 8 percent for the longest stretch since the Great Depression, decisions like this one are the place to begin." 

The Obama administration has long said it would not have enough time to make a final decision under the Congress-imposed deadline, and has accused Republicans of using the issue for political gain. It says that current law prevents it from moving more quickly on permitting with additional environmental reviews necessary.

"It's a fallacy to suggest that the president should sign into law something when there isn't even an alternate route identified in Nebraska" and with the review process incomplete, White House spokesman Jay Carney said Tuesday. He said Congressional Republicans have attempted to "short-circuit the review process in a way that does not allow the kind of careful consideration of all the competing criteria."

Backers of Keystone XL say it will increase America's domestic oil production with the help of a friendly ally and create tens of thousands of jobs in the process. Organized labor has teamed up with the oil industry to back the pipeline, and both have been pressuring the Obama administration for approval.

Critics of the pipeline say it will have a hugely negative impact on the environment and potentially put large portions of the U.S. water supply at risk, including a key aquifer in Nebraska. They also say it will not lower oil prices because the international market will simply adjust supply to account for increased production. 

"Assuming that what we're hearing is true, this isn't just the right call, it's the brave call," said Bill McKibben, one of the leaders of protests against the pipeline. "The knock on Barack Obama from many quarters has been that he's too conciliatory. But here, in the face of a naked political threat from Big Oil to exact 'huge political consequences,' he's stood up strong."

The White House has said that an alternate route away from the aquifer in Nebraska has yet to be identified, and thus a decision about a permit doesn't make sense.

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