House Republicans are expressing optimism that they can reach a deal with Senate Democrats to move language that would approve the Keystone XL pipeline during talks on a transportation authorization bill.

Rep. John Mica (R-Fla.), the top House member on the transportation bill conference committee, said yesterday there's been "great progress" on the language on the Canada-to-U.S. oil pipeline, thought to be one of the most divisive issues in the conference. The Transportation and Infrastructure Committee chairman clarified that he was optimistic "as far as acceptance into what we may do in a final bill."

Rep. Bill Shuster (R-Pa.), a senior Transportation and Infrastructure panel member, also said yesterday that he has heard the Senate is "more positive" on including the Keystone language, which passed on a short-term extension in the House. A similar amendment in the Senate failed to reach the 60-vote threshold for passage.

House Democrats said they had not heard of such a deal, although Rep. Henry Waxman (D-Calif.) said he knew there were some Democrats who could support it.

"The process is just beginning -- there's reason for optimism because there is a growing sense of inevitability surrounding KXL, and this inevitability is starting to show up in private conversations with in-cycle Democratic senators," said an industry source closely tracking the conference, requesting anonymity in order to candidly assess the talks. "Once that threshold is crossed, the real negotiation is how to structure the deal so that no one looks too compromised in getting to 'yes.'"

Although Max Baucus (D-Mont.) is the only Senate Democrat on the conference who has backed Keystone XL, supporters say that senators have been more receptive on the issue and that they're eyeing 60 eventual votes on the floor. Baucus, however, has said he won't push Keystone XL if it jeopardizes the overall transportation bill (E&E Daily, April 24).

Keystone XL backers see Sen. Tim Johnson (D-S.D.) as another potential defector on the conference committee. The pipeline would run through his state if it is built.

Mica said that after the initial public meeting of the conference committee Tuesday, talks were ongoing at the staff level, and he and Senate Environment and Public Works Chairman Barbara Boxer (D-Calif.) would have a one-on-one meeting next week.

Reporter Elana Schor contributed.