Republicans look for alternatives after Keystone XL rejected

 By Jim Snyder

Congressional Republicans who tried to force President Barack Obama’s hand on the Keystone XL pipeline now want to take away his authority on the issue altogether, extending a debate with the administration over jobs and the environment.

Obama on Jan. 18 rejected TransCanada Corp.’s proposed $7 billion pipeline, saying the 60-day congressionally imposed deadline didn’t allow sufficient time to weigh the risks. The Calgary-based company said it would accept the administration’s invitation to reapply for a route around the environmentally sensitive Sand Hills region in Nebraska.

While TransCanada considers its options, congressional Republicans are looking for other ways to push through approval of the pipeline. The House Energy and Commerce Committee may consider legislation as early as next week that would require the Federal Energy Regulatory Commission, a panel that regulates electricity and natural gas markets, to issue a permit for the pipeline within 30 days of receiving a new application.

Payroll Tax

“Since the president cannot find a way to say yes to jobs, we plan to move forward on legislation that takes this decision out of the president’s hands,” Charlotte Baker, spokeswoman for the House committee, said in an e-mail.

Representative Fred Upton of Michigan, the Republican chairman of the committee, said today that Keystone may still be issue in the House-Senate conference on the payroll tax cut extension.

“That is within the scope of the conference,” he said in an interview.

In the Senate, Republicans led by John Hoeven of North Dakota are drafting a bill giving Congress the power to approve the pipeline, overriding the president’s authority over cross- border projects.

“The intention appears to be to keep this issue alive as a point of politics,” said Anthony Swift, an energy analyst at the Natural Resources Defense Council, which opposes the Keystone pipeline.

Passage Unlikely

The Republicans’ efforts on Keystone are unlikely to clear Congress, said Christine Tezak, senior policy analyst with Robert W. Baird & Co., in a note to clients.

She said the firm was “skeptical a big legislative change would pass.”

Even if Congress did pass such legislation, Obama could simply ignore the directive, citing his authority over international projects, Pat Parenteau, a professor at Vermont Law School, said in an interview.

“The president gets an edge in these kinds of foreign relations issues,” he said. “I don’t know that Congress has any Constitutional authority” to circumvent that power, he said.

Ryan Bernstein, an aide to Hoeven, said the senator’s bill relies on Congress’s authority under the Constitution to regulate commerce with foreign countries.

‘Keep Issue Alive’

The New York-based NRDC and other environmental groups hailed Obama’s move. Opponents of the pipeline argued that producing oil from tar sands in Canada would result in more greenhouse gas emissions than would conventional oil drilling.

Transporting the oil along the proposed Keystone route through Nebraska’s permeable Sand Hills risked polluting the Ogallala aquifer, a drinking water source for 1.5 million people, environmentalists said.

The Republican effort to expedite the pipeline’s approval “appears to be to keep this issue alive as a point of politics,” said Anthony Swift, an energy analyst at the NRDC.

Some labor groups backed the pipeline as a job creator. The State Department, in a report to Congress, said the project would create between 5,000 to 6,000 construction jobs during the two years needed to build the pipeline.

The House energy committee’s energy and power subcommittee plans to hold a hearing on the pipeline Jan. 25. Kerri-Ann Jones, assistant secretary of State for oceans and international environment and scientific affairs, will testify on behalf of the State Department, Baker said.

FERC Approval Sought

Jones will appear in place of Secretary of State Hillary Clinton, who was invited to testify. Upton said today that governors of states along the pipeline route will also be invited.

One focus of the hearing will be legislation introduced by Representative Lee Terry, a Nebraska Republican, requiring FERC to approve a permit within 30 days, once Nebraska Governor Dave Heineman submits an application for the new route.

Jon Wellinghoff, FERC’s chairman, declined to comment on the legislation.

Bernstein said Hoeven’s bill would allow construction to start immediately on the project except in Nebraska. Work there could begin after the governor approved that section of the pipeline that would cross over the state.

“We need jobs and we need a secure, stable supply of energy,” he said in an interview. Bernstein said senators were considering other legislation to push Keystone forward, including a version of Terry’s House bill.

All-U.S. Route

TransCanada also is seeking to advance the project. Alex Pourbaix, TransCanada’s president of energy and oil pipelines, said the company is considering an all-U.S. route that would start in Montana, which wouldn’t require State Department approval. The company would then apply later for permission to connect the pipe to the Canadian oil sands.

John Stephenson, who helps manage $2.7 billion for First Asset Management Inc. in Toronto, said he thought the pipeline would be approved after the November election.

Even if their bills don’t reach the president’s desk, Republicans can benefit if gasoline prices rise this summer by pointing out the president’s opposition to a project that would carry as much as 700,000 barrels of crude a day, said Mike McKenna, an oil industry lobbyist and president of MWR Strategies Inc. in Washington.

“The one thing about which everyone agrees is that we need to keep talking about KXL and educating people about KXL,” McKenna said in an e-mail, referring to Keystone XL.

Terry’s bill is H.R. 3548.

Bloomberg News


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