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The Keystone XL battle could go on all year

Rick Newman
Senior Columnist
The Keystone XL battle could go on all year

Republicans who now control both houses of Congress have promised that seeking approval of the controversial Keystone XL pipeline would be their first order of business in 2015. It might be the first order of business in 2016, too.

The House has already passed legislation that would grant oil firm TransCanada permission to build the 1,200-mile pipeline from Canadian oil fields to Steele City, Neb., where petroleum would be transferred to other pipelines transporting it to the Gulf Coast for shipment throughout the world. Similar legislation has passed key hurdles in the Senate and will probably pass soon, with some Democrats voting for it. A final bill is likely to hit President Obama’s desk within two weeks.

That will only be the beginning of the drama, however, because Obama has pledged to veto such legislation. Assuming he does (and Congress fails to override the veto), the stakes will rise as Republicans craft new tactics to avert or overcome a veto and the White House digs in its heels. “It’s good news for anybody in Washington who works on Keystone,” quips Matt Letourneau, a spokesman for the U.S. Chamber of Commerce’s Institute for 21st Century Energy, which lobbies in favor of the pipeline. “It’s quite possibly going to go on all year.”

Serving "the national interest"

Lost amid the political intrigue is the fact that the Obama administration can approve Keystone XL without any legislation at all — and there remains a small chance it could still do that. The State Department has approval authority because the pipeline would originate in a foreign country, and it must decide whether the pipeline “would serve the national interest” — a standard that obviously entails some subjectivity.

Obama has publicly dismissed some claims of pipeline supporters — by saying that the number of new jobs associated with the pipeline has been exaggerated, for instance, and arguing that while the pipeline would be great for TransCanada, it would do virtually nothing for typical Americans. But he hasn’t said whether he’d approve or deny the TransCanada request.

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The legislation Obama has promised to veto would essentially make the federal review irrelevant and simply declare the pipeline request approved by act of Congress. In that regard, it would transfer approval authority from the executive branch to the legislative, something Obama can oppose on principle -- since it weakens presidnetial power -- without indicating how he feels about the pipeline itself. So while Keystone XL legislation is attracting most of the media attention right now, it's not the last word on the pipeline -- and if you're confused, so are many people who work on this issue routinely.

The federal review has been underway in various forms since 2008 — with many delays — creating the impression the White House is slow-rolling a request it doesn’t support but doesn’t want to reject, either.

“If the administration really wanted to approve this project, they would have done it already,” says Garrett Golding, an energy analyst at The Rapidan Group, a Washington, D.C. consulting firm. “The administration does not want to give an answer on this project.”

Sooner or later, it may have to. The latest delay in the federal review process was a lawsuit challenging the legality of the pipeline that made it to the Nebraska Supreme Court, which ruled earlier this month that the pipeline is legal. Obama has said he was waiting for the outcome of the Nebraska suit before moving forward with the federal process. The next step now is for other federal agencies such as the Department of Energy and the Environmental Protection Agency to make recommendations on the pipeline to the State Department, which will then officially recommend that the government approve or deny the pipeline request. Obama will make the final decision. If handled expeditiously (which won’t necessarily happen), that could all transpire within a couple of months.

The pipeline is controversial not just because it would carry oil that could damage the environment if it spills, but because the oil comes from tar sands and is dirtier than the light, sweet crude typically found in U.S. fields. Since Keystone XL would significantly lower shipment costs for tar sands oil now moving by rail or truck, it would create stronger incentives for drillers to extract it (assuming unexpectedly low oil prices don’t discourage them).

Will he or won't he?

Obama, of course, is a big backer of clean energy who wants stricter limits on the kind of greenhouse gases tar sands emit. “If you look at the president’s statements on Keystone XL, he’s been clear that the threshold issue is going to be climate emissions,” says Anthony Swift of the Natural Resources Defense Council, which opposes the pipeline. “It’s very difficult to imagine the administration doing anything other than rejecting Keystone XL in the next year.”

Backers of the project argue that it's safer to transport oil by pipelines than by rail or truck, and they criticize the drawn-out process the feds are making a foreign company go through to do business in the United States. And those backers aren’t going away after one round of legislation. If Obama vetoes the first Congressional bill on Keystone XL, there are almost certain to be others, unless Obama preempts them with a surprise approval of the pipeline through the federal review.

As the battle escalates, Republican leaders in the House and Senate will probably try to attach Keystone XL legislation to must-pass bills, such as spending or tax legislation. "We think the last hope Keystone has is if it's attached to something the president has to sign," says Golding.That would put Obama in the uncomfortable position of either vetoing important legislation in order to kill Keystone XL -- and risking something as unpopular as another government shutdown — or, perhaps, signing legislation approving Keystone XL on the grounds that other elements of the bill are more important.

Obama has said that in general, he’ll seek compromise with Republicans, and Keystone XL could be an opportunity to prove it. Then again, we could be in more or less the same position a year from now.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.