WASHINGTON, January 25, 2012 -The president may have rejected a permit for TransCanada Corp.’s Keystone XL pipeline that would transport oil from the Alberta oil sands south to refineries in Texas. But House Republicans continue to look for legislative ways to circumvent Obama’s decision and mandate the approval of the 1,700-mile facility.

The House Energy and Commerce subcommittee will hold a hearing today on legislation introduced last month by panel member Lee Terry, a Nebraska Republican, which would turn approval of the cross-border Keystone pipeline from the State Department over to the Federal Energy Regulatory Commission (FREC) and require the commission to act on the pipeline’s permit within 30 days.

The White House originally postponed action on the permit last fall until 2013, citing environmental concerns, particularly in the Sand Hills of Nebraska, a vast network of dunes with a shallow water aquifer. But congressional Republicans included language in December’s payroll tax cut bill that required the president to act on the project within 60 days, or by Feb. 21. In moving ahead to turn down the permit last week, Obama said the “rushed and arbitrary deadline” prevented the State Department from making a “full assessment of the pipeline's impact, especially the health and safety of the American people, as well as our environment.”

Obama invited TransCanada to reapply – an offer accepted by the Calgary-based company, which said it intends to submit an altered route avoiding environmentally sensitive regions.

Still, Republicans cried foul at Obama’s denial of the Keystone permit, arguing that the project had been subjected to appropriate review by all agencies the previous year. While acknowledging environmental issues raised by the proposed pipeline’s course through Nebraska, Republicans said the permit still could have been issued in the short term, subject to some rerouting. Obama, who likely benefits from his decision with his environmental voting base leading up to this year’s elections, said a full review required of rerouting would need until 2013.

Meanwhile, House Speaker John Boehner, R-Ohio, hinted over the weekend that Republicans could tie approval of the pipeline to the next extension of the payroll tax cut, which is set for a vote next month. Republicans are painting Obama’s denial of the presidential permit for the pipeline last week as a “jobs-killer,” saying employment opportunities needed now are at stake. In a report filed with congressional leaders last week, the State Department said 5,000 to 6,000 construction jobs would be created during the two years required to build the project.

Still, it’s uncertain whether GOP House members want a political showdown over the pipeline using the payroll tax cuts – a maneuver considered in December in connection with proposed budget cuts but which fared poorly in public opinion polls.

Meanwhile, the pursuit of a legislative alternative for approval of the pipeline got a boost from a legal analysis by the Congressional Research Service. In a report issued Monday, the CRS says legislation related to cross-border facility permitting is unlikely to raise significant constitutional questions, despite the fact that such permits have traditionally been handled by the executive branch alone pursuant to its constitutional “foreign affairs” authority.

Terry’s bill also allows Nebraska’s governor to sign off on a route for the pipeline through the state within 30 days. The CRS report says state oversight of pipeline siting decisions “does not appear to violate existing federal law or the Constitution.” And in the event litigation is considered, the report suggests that State Department’s use of its authority under the National Environmental Policy Act to hold up the pipeline implementation is subject to judicial review.

Rail shippers would continue to benefit from the delay or rejection of a pipeline, a point not lost on GOP critics who point to Democratic fundraiser Warren Buffett’s significant ownership of railroad stocks. The State Department report said that with modest expansion, railroads could handle all new oil produced in western Canada through 2030.

The question of benefits took an even greater political turn Monday when the ranking member of the House Energy Committee, Rep. Henry Waxman, D-Calif., wrote committee Chairman Fred Upton, R-Mich., asking that a representative of the Koch Industries, an oil refining business, be called upon to testify today or some other time before the Terry bill moves through the committee. Waxman cited press reports indicating that Charles and David Koch, major funders of conservative political candidates and causes, have financial ties to the pipeline and would be “big winners” if the pipeline was approved. Waxman also asked that the Interior Department and Corps of Engineers be allowed to testify.



Original story printed in January 25, 2012 Agri-Pulse Newsletter.

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