Obama admin warns against GOP attempt to fast-track pipeline

Source: Elana Schor • Posted: Thursday, January 26, 2012

A House GOP plan to greenlight the $7 billion Keystone XL oil pipeline following its rejection by the White House could imperil “existing legal authorities” over the project and force the nation’s independent regulator of gas lines to OK it without public notice or judicial review, two Obama administration officials said today.

The concerns raised by Kerri-Ann Jones, the State Department official who led the review of Keystone XL, and Federal Energy Regulatory Commission energy projects director Jeffrey Wright come as Republicans in both chambers remain in talks over how to advance Rep. Lee Terry’s (R-Neb.) bill giving FERC power over the Canada-to-U.S. oil link. Under often-intense questioning from House Energy and Commerce Committee Republicans, Jones defended State’s decision to recommend a presidential veto of the XL line and slammed Terry’s measure.

“The legislation raises serious questions about existing legal authorities, questions the continuing force of much of the federal and all of the state and local environmental and land-use management authority over the pipeline, and overrides foreign policy and national security considerations” that stem from pipeline operator TransCanada Corp.’s application for a border-crossing permit, said Jones, assistant secretary of State for international environmental affairs.

While FERC does not have a position on the GOP legislation, Wright outlined a series of open questions it sparks that could further complicate the pipeline’s path to construction even if his commission granted approval.

Terry’s bill gives FERC 30 days to consider Keystone XL, which would bring upward of 700,000 barrels per day of emissions-heavy Canadian oil-sands crude to Gulf Coast refineries, and automatically advances the project if the commission fails to act. That deadline, Wright told Energy and Commerce Committee members, would not let FERC generate “an adequate record or allow for meaningful public comment” before ruling and gives the agency “no discretion in the issuance of the permit.”

Those issues did not daunt committee Republicans who hail the XL line as a valuable economic boon that would diminish Middle Eastern oil imports. They have vowed to override President Obama’s week-old denial of a permit to TransCanada.

“Make no mistake, time is of the essence,” Energy and Commerce Chairman Fred Upton (R-Mich.) said in a statement prepared for the hearing. “Not only are unemployed Americans anxiously looking for jobs, not only is Iran threatening the Strait of Hormuz, not only is the price at the pump headed higher, but the Canadian government is understandably growing impatient with the endless red tape and delays coming from Washington.”

Upton and his fellow GOP conferees in bipartisan talks on a long-term payroll tax-cut plan could yet seek to add the Terry bill or similar pro-Keystone XL provisions to that legislation, a goal that appeared more achievable today after Senate Democrats’ top negotiator told E&E Daily that he considered the pipeline on the table (E&E Daily, Jan. 25).

Another top Democrat said today that Obama’s move to blame a GOP-backed 60-day deadline for his denial of Keystone XL did not mean the pipeline would not move forward eventually.

“I happen to believe that the president believes that [Keystone XL] is still very much alive,” House Minority Whip Steny Hoyer (D-Md.) told MSNBC. “Obviously the people who want to build the pipeline think it’s alive.”

 Koch vs. Buffett?

Democrats on the panel already are moving to slow the progress of Terry’s bill through the Energy and Commerce Committee, a strategy aimed at shedding more public light on what they decry as an XL line with little upside to U.S. consumers but guaranteed to benefit oil companies.

Nine panel Democrats today wrote to the Energy and Commerce subpanel chief, Rep. Ed Whitfield (R-Ky.), invoking parliamentary procedure in seeking a second hearing on Keystone XL before the Terry plan is marked up. In doing so, the Democrats raised politically volatile charges about the potential for the pipeline to enrich Koch Industries, the energy conglomerate run by two conservative brothers who became the villains in the White House’s first 2012 campaign ad (E&ENews PM, Jan. 23).

Republicans fired back at contentions from the top Energy and Commerce Democrat, Rep. Henry Waxman of California, that Koch’s subsidiaries could see a profit from Keystone XL’s promised influx of oil-sands crude to the United States.

“If you want to talk that, let’s talk about the millions of dollars that the Obama administration gave companies like Solyndra to people like George Kaiser who’s out there bundling money for the president,” Whitfield said today, referring to the bankrupt solar firm that received a half-billion-dollar loan guarantee from the Energy Department.

Rep. Mike Pompeo (R-Kan.) suggested another Democratic favorite who might appear on a witness list if the president’s party continued to push for testimony from the Koch company. “I would not for a moment suggest that we should get Warren Buffett in here” to testify about the potential upside to his Burlington Northern Santa Fe railroad if Canadian oil-sands crude were shunted to over-land transportation in the absence of the pipeline, Pompeo said.

An GOP spokeswoman for the committee said after the hearing that the focus of the panel’s next examination of Terry’s bill remained unknown but could turn to other economic consequences of the Keystone XL denial — including any Buffett benefit.

Click here to read the Democrats’ letter on Koch Industries.