The State Department yesterday repeatedly defended its decision to deny a permit for a contentious U.S-Canada oil pipeline, as House Republicans ramped up their attacks against the administration.

The back-and-forth at a hearing of the House Energy and Commerce Committee -- which included spats about oil billionaires David and Charles Koch and the pipeline's job creation potential -- previewed coming rhetorical battles over TransCanada's Keystone XL, which would run 1,700 miles from Alberta to Texas refineries if ever built. Two federal witnesses also said the idea to grant the Federal Energy Regulatory Commission (FERC) authority over the pipeline raised serious legal questions.

"We didn't have the information we needed," said Assistant Secretary of State Kerri-Ann Jones multiple times when hammered by Republicans about why the department needed more than three years to consider the $7 billion project, when oil pipeline decisions typically take two years. She reiterated the department's position that it would have needed until 2013 to consider a reroute of the project in Nebraska to grant a permit, and could not comply with the 60-day order from Congress passed in December.

To that, Rep. Lee Terry (R-Neb.) charged that the State Department was using Nebraska as an "excuse." Other committee Republicans criticized the department for not considering the pipeline's impact on indirect jobs, such as for companies making oil pumps.

Jones said the department was in the middle of an analysis of those indirect jobs, but was not able to finish it because of the arbitrary deadline from Congress. Rough estimates put the indirect number at 35,000 annually, she said. Formally, the department said the project would have created approximately 5,000 to 6,000 "direct" construction jobs for two years.

Obama formally rejected a permit for the pipeline last week, although TransCanada said in an interview that it hopes to begin construction of the U.S. portion of the pipeline before it receives a new permit, with the hope the entire project could still be operational by 2014.

The committee was considering a bill from Terry that would hand permitting authority over Keystone XL to FERC, one of several approaches under consideration by Republicans seeking to reverse the Obama administration's denial of a cross-border permit for Keystone XL.

FERC questions shift in authority

But Jones and FERC official Jeff Wright testified that the process laid out in Terry's bill raised jurisdictional issues, considering that FERC traditionally has authority over interstate natural gas pipelines, but not oil pipelines.

"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," testified Jones.

Similarly, Wright, the director of the office of energy projects at FERC, said the bill's provision requiring the commission to approve the project within 30 days of receipt of an application would not provide adequate time for a review. He also said there were questions about what procedure would be followed with a new FERC process, what federal entity would enforce an environmental impact statement, and whether additional permits from other agencies would be necessary.

"The proposed act does not make any explicit provision for procedures such as public notice, public comment, issuance of an order supporting a commission decision, rehearing, or judicial review in conjunction with the commission's consideration of an application," he said.

Yesterday, Terry said he had not met with TransCanada officials. Committee spokeswoman Charlotte Baker also said that no markup or additional hearings were scheduled for the FERC bill.

But the FERC concept is one of several ideas being weighed by congressional Republicans as a way to undo Obama's decision. This week, Sen. Max Baucus (D-Mont.) indicated that a pro-Keystone XL provision could be part of payroll tax negotiations (E&E Daily, Jan. 25).

With that backdrop, anti-pipeline Democrats went on the attack yesterday. Rep. Henry Waxman (D-Calif.) reinserted the Koch brothers into the debate, holding up a document submitted by Koch Industries subsidiary Flint Hills Resources Canada to the Canadian government in 2009. The document said that the company had a "direct and substantial" interest in Keystone XL, despite claims from Koch Industries that it had no such interest, according to Waxman. "Something doesn't add up," he said.

Rep. Mike Pompeo (R-Kan.) responded that he wouldn't similarly try to call billionaire Warren Buffett to testify about any financial ties to the pipeline. In a statement, Koch Industries official Philip Ellender said that environmental and First Nation groups also sought intervenor status to the Canadian government, meaning that the designation does not automatically mean the company had a financial interest in the project.

"These ongoing politically motivated attacks by Representative Waxman and others are part of an orchestrated campaign to demonize an American company with 50,000 U.S.-based employees," said Ellender, president of government and public affairs at Koch Companies Public Sector LLC.