A House GOP bill expected to pass easily today forcing a decision within 60 days on the controversial Keystone XL oil pipeline would instead force a rejection of the project's federal permit bid, according to the Obama administration.

The State Department's warning against congressional fast-tracking of the XL link, now under an environmental review extended last month until 2013, comes as Republicans ramp up a campaign to promote the pipeline by linking it to a payroll tax extension that ranks among the White House's biggest end-of-year goals.

Describing its assessment of the $7 billion pipeline as a "rigorous, thorough, and transparent process that must run its course," State advised that its recent announcement of a new inquiry into alternate Keystone XL routes through Nebraska was crafted to ensure compliance with the National Environmental Policy Act (NEPA).

"Should Congress impose an arbitrary deadline for the permit decision, its actions would not only compromise the process, it would prohibit the department from acting consistently with" NEPA, a State spokesman added. "In the absence of properly completing the process, the department would be unable to make a determination to issue a permit for this project."

The 1,700-mile XL line would nearly double U.S. import capacity of Canadian oil sands crude, shipping up to 800,000 barrels per day of the emissions-intensive fuel to Gulf Coast refineries. The high-stakes lobbying battle over the project pits green groups that hope to slow oil sands development, citing the environmental and safety risks, against industry groups that view the Canadian resource as a job-creation engine that replaces Middle Eastern crude imports with a geopolitically stable alternative.

The company behind Keystone XL, Alberta-based TransCanada Corp., has yet to indicate that the Obama administration's delay in considering its three-year-long bid for a permit to cross the border is enough to derail the project. On the contrary, TransCanada last month agreed to reroute the XL line around Nebraska's ecologically sensitive Sandhills region to overcome bipartisan resistance to the pipeline in the Cornhusker State (E&E Daily, Nov. 15).

But Republicans' pursuit of quick approval for the project hinges on more political concerns: namely, a desire to extract a victory on what they see as a Keystone XL delay driven by pro-environmentalist sentiment within the administration. Tying their party's hotly sought pipeline approval to a payroll tax and unemployment insurance benefit extension desired by the White House, then, appears a natural choice for the House GOP.

While 47 conservative House Democrats voted alongside Republicans in July to fast-track the pipeline, the GOP's payroll-tax strategy is running into a wall of skepticism from centrist Democratic senators who otherwise support the pipeline.

Sen. Ben Nelson (D-Neb.) late yesterday affirmed that he continues to oppose the House measure, saying that "there is not a need for it." Sen. Jon Tester (D-Mont.) told reporters that while he remains a backer of the XL line, "my understanding is that the administration came out and said that wasn't enough time to make a decision."