3. OIL AND GAS:

GOP emboldened on Keystone XL-payroll tax deal

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Republicans ratcheted up their efforts today to push language speeding up a White House decision on the Keystone XL oil pipeline project onto a compromise extension of payroll tax cuts that could see a public release within hours.

The GOP's growing confidence that it can successfully fast-track the Canada-to-U.S. pipeline decision as part of a payroll tax deal came as Senate Democratic and House Republican leaders remained locked in high-stakes talks over how to finish the last measure awaiting passage before Congress adjourns for the year. Final votes on a deal could begin tomorrow with the Senate set to vote on a House GOP plan that includes the pipeline.

"Frankly, I will not be able to support a package that doesn't include the pipeline," Senate Minority Leader Mitch McConnell (R-Ky.) said today, leading a long chain of fellow Republicans who publicly leaned on Senate Majority Leader Harry Reid (D-Nev.) and the president's aides to strike a deal that included Keystone XL.

The language attached to the House GOP's payroll tax plan mirrors a plan from Sen. Richard Lugar (R-Ind.) that would give the State Department 60 days to end its years-long review of the $7 billion project and either grant or deny a permit. "It is time for Democratic Leader Harry Reid to take the reins off those Senate Democrats willing to stand up for America's workers," Lugar said in a statement.

Several major labor unions support a federal permit for the pipeline, a fact that the GOP and allied industry interests have seized on this week to bill the project as a valuable job creator. Their work seemed to pay off by late afternoon today, as Lugar's language appears on track for inclusion in a final deal if all other outstanding payroll tax issues are resolved, according to a source with knowledge of the talks.

With Republicans growing emboldened that they could prod the Obama administration to reverse course just one month after delaying environmental review of the pipeline -- a move that thrilled greens who hope to see the XL line killed -- the project's friends and foes turned to a close reading of the reaction to the House GOP proposal that the State Department released Monday.

That response from State, which remains at the helm of the decisionmaking process on the pipeline, warned that the Republican proposal would render it "unable to make a determination to issue a permit for this project" (E&E Daily, Dec. 13).

Susan Casey-Lefkowitz, the Natural Resources Defense Council's international program director, is one of many environmentalists interpreting that avowal as a clear statement that the GOP gambit would "force them to reject the pipeline."

But State spokeswoman Victoria Nuland stopped far short of endorsing that interpretation today. "Under the current system, which is that the president makes a national interest determination, and in this case he's delegated it to the State Department ... we have to go through certain hoops before we can issue a permit," Nuland told reporters, adding that the GOP proposal "would appear to legislate a different process."

Some green activists continued hammering away at industry-backed claims of job creation from the pipeline, which run counter to much lower numbers submitted to State. Other greens turned to grassroots lobbying in a bid to beat back the pro-pipeline campaign by Republicans and their aligned groups.

CREDO Action, the political arm of the liberal-leaning mobile phone company, said in a statement that its members had organized 10,000 calls to Senate offices urging a rejection of the Keystone XL language in the House payroll tax bill.

"Look, Republicans are not just going after Keystone XL because they are tools of the oil industry," CREDO Action political director Becky Bond said. "It's because we beat them on Keystone, and they will settle for nothing less than total domination."

Reid's office did not return several requests to comment on the status of the pipeline issue by press time.