At least since 2005, there has been talk in Israel about building in E-1 (see map above), the area between Jerusalem and Maaleh Adumim. The advantages would be obvious. Building in E-1 and expanding the city eastward would be a lot less destructive to the environment than building westward. There is much more room to build to the east than to the west. And most importantly, E-1 would serve as a buffer between Judea and Jerusalem, precluding a contiguous 'Palestinian state' that reaches Jerusalem at that point. It is for that final reason that the United States and the 'international community' have opposed Jewish building in E-1. In fact, Israel has built some infrastructure in E-1, but backed off opening a police station there that would have asserted Israeli control.
Now, it's happened again. JPost reports this morning that one of Israel's possible responses to a unilateral declaration of a 'Palestinian' reichlet with UN approval would be construction on E-1. And the Hussein Obama administration is 'urging' (read: threatening) Israel not to do it.
In the meantime, the Europeans have not yet decided how they will vote at the UN on Thursday (yes, this Thursday, the annual day to deprecate Israel and call for a 'Palestinian' reichlet.