KEYSTONE XL:

Supporters of pipeline -- including industry -- lukewarm to GOP gambit linking project to debt

The Keystone XL pipeline has again become one of the hottest topics in Washington, D.C. -- this time in a way that demonstrates how its broad appeal can lead different blocs of its supporters to pursue conflicting strategies.

For House Republicans, tying the looming debt ceiling to approval of the pipeline carries obvious political appeal: It bolsters their message that President Obama is blocking job creation through excessive regulation and would force vulnerable Democrats into a tough vote less than nine months before Election Day.

But the companies hoping to build the 1,200-mile conduit, supply parts for it or send their fuel through it face a much different calculus. Industry stakeholders -- as well as some of the project's most supportive lawmakers -- would prefer to let the Obama administration finish its work, at least through the end of a 90-day interagency consultation period launched by today's formal publication of a State Department environmental review.

The logic behind that thinking is twofold, according to sources granted anonymity to discuss internal industry strategy sessions. First, pipeline proponents fear a repeat of the last time Congress tried to force Obama's hand on Keystone XL with a rider attached to payroll tax-cut legislation in 2011 that provided political cover for its rejection and forced TransCanada to reapply for a permit to cross the border. Second, they feel momentum is on their side following the State Department's final determination that the project's impacts would be manageable.

"The timing of when it came out -- I don't know if it was purposeful or accidental, but it probably took ... attaching it to debt ceiling off the table for us," Rep. Lee Terry (R-Neb.), one of KXL's most ardent backers, told reporters yesterday.

House Energy and Commerce Chairman Fred Upton (R-Mich.), however, offered a different interpretation of the State Department's findings and said he would welcome a debt limit rider targeting Keystone XL.

"With the report that came out last week, my sense is there are even more members who, before, might have given the president the benefit of the doubt -- but not anymore," Upton told E&E Daily yesterday. "So if another vote is forced, it'll be more of a landslide, particularly where [Obama's] standing is now."

Republican leaders are still mulling their options.

House Speaker John Boehner (R-Ohio) yesterday said his conference had not yet decided what concession to seek on the debt ceiling, although he highlighted the need for Keystone XL's approval and suggested that it was a possibility to be included (Greenwire, Feb. 4). Leadership aides said the decision of what to add to the legislation came down to KXL's approval or the elimination of "risk corridors" in the health care reform law that Republicans view as an insurance company bailout.

One aide suggested there may be resistance among Republicans who fear eliminating the health care provision would have negative economic consequences, while the party is unanimous in its support for Keystone XL. Still others privately acknowledge that the party has little leverage to demand any concessions and will ultimately have to settle for a "clean" debt limit increase.

Another key motivator is the political havoc that would be created by forcing some vulnerable Democrats to choose whether to back Obama's insistence that seeking any policy negotiations in conjunction with the debt limit amounts to economic hostage taking or to stand by their previously stated support for the pipeline.

A possible House GOP debt limit marriage for the pipeline also risks playing into the hands of environmentalists eager for new organizing tools to rally the Democratic base against KXL. Greens are poised to exert considerable pressure on Senate Democrats who supported a nonbinding pro-pipeline resolution last year in order to demonstrate that stripping presidential authority over the project remains short of a 60-vote upper-chamber margin (Greenwire, March 25, 2013).

"I would probably prefer a clean Keystone [bill] and a clean debt ceiling [bill]," said Arkansas Sen. Mark Pryor, one of the upper chamber's most endangered Democrats facing re-election. "My guess is when you start mixing those two, you start running into a lot of political quagmires, in the Senate especially."

Pryor cast a nonbinding vote in favor of Keystone last spring but said he would have to evaluate the particulars of any debt ceiling bill that would force the pipeline's construction before deciding how to vote this year.

Sen. Mary Landrieu (D-La.), the soon-to-be chairwoman of the Energy and Natural Resources Committee and a leading Keystone supporter, said her main focus was maintaining unity among the broad bipartisan, bicameral coalition that has emerged in favor of the project. But she did not completely rule out voting for a debt ceiling bill that would include Keystone XL language.

"I am staying open to do whatever needs to be done to help get this pipeline built, and we'll leave it at that," she told reporters following a pro-Keystone XL news conference on Capitol Hill yesterday.

Landrieu appeared at the news conference alongside Pryor, Rep. John Barrow (D-Ga.) and labor leaders supporting the pipeline, as well as Republicans and industry officials. Sen. Mark Begich (D-Alaska), who also is up for re-election this fall, sent out a news release yesterday afternoon noting that he had met with Canadian Environment Minister Leona Aglukkaq to discuss Keystone XL and other issues.

That Democratic support helped advocates advance a goal to "depoliticize" the project and "make it seem inevitable," according to a source familiar with the industry's lobbying strategy. Multiple sources close to the oil industry and GOP lawmakers expect House Republicans will not include language to approve Keystone XL because doing so would undercut that message.

For its part, TransCanada is staying above the political fray, stressing its attention to the ongoing regulatory review process and touting its argument that the pipeline would be broadly beneficial and is widely supported.

"This pipeline has been on the public agenda for more than five years and we are now in the final stage of the regulatory review for our Presidential Permit application," Shawn Howard, a TransCanada spokesman, said in an emailed statement. "That is what we are focused on."

Meanwhile, environmentalists are airing their own complaints about how the State Department finalized its report -- and whom agency officials told before the findings were public. Friends of the Earth, the Sierra Club and Oil Change International yesterday announced they were filing a Freedom of Information Act request for any records of communication between State Department officials and executives at the American Petroleum Institute, TransCanada or the Alberta or Canadian government prior to the release of the environmental analysis, pointing to press reports the green groups say show pipeline supporters were tipped off about the review.

Reporter Elana Schor contributed.

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