Keystone Pipeline Fight Awaits Congress’ Return

By Matt Cover | January 4, 2012 | 12:02 AM EST

Route of proposed Keystone XL pipeline (Image: TransCanada Web site)

( – The political tussle over whether the Obama administration will allow a Canadian oil company to build a pipeline through the Midwestern U.S. will come to a head soon after Congress returns from its winter recess on January 17.

In a bid to force the administration’s hand on the issue, House Republicans included a provision in the two-month payroll tax holiday, passed December 22, giving President Obama 60 days to decide whether or not the project should proceed.

The Keystone XL pipeline would bring oil from the Alberta oil sand pits in Canada to refineries along the American Gulf Coast, stretching over 1,600 miles and creating anywhere from 6,000 to 20,000 jobs.

The administration announced in November that it would delay approval of the project until after the 2012 elections, to allow the State Department – which must approve the project because it crosses an international boundary – to complete an environmental review.

The original path of the pipeline would have taken it through the sensitive Sandhills area of Nebraska, prompting last-minute opposition from elected officials in that state, including its Republican governor. Environmental groups also oppose the pipeline, fearing the possibility of an oil spill resulting from a leak or rupture.

Obama now has approximately 60 days to make a decision on the project. The administration is no happy about the deadline, issuing a veiled threat that it might veto the project.

“In the absence of properly completing the process, the [State] Department would be unable to make a determination to issue a permit for this project,” the State Department said in a December 12 statement issued in anticipation of the GOP rider.

The White House echoed that opinion at a December 19 press briefing, saying the State Department would not be able to approve the project in 60 days.

“It would be very difficult, as I understand it, for the State Department to say that that review had been responsibly achieved in 60 days,” White House Spokesman Jay Carney said at the time.

If the State Department cannot complete its review, it will not be able to approve the project and may be forced to cancel it.

The project splits the Democratic base, pitting unions who favor it for its job creation potential against environmentalists who oppose it because it continues America’s reliance on oil and over fears that it might cause an environmental disaster.

Obama had sought to put off the decision until 2013, to avoid making a decision that would inevitably anger one of these two key parts of his base in a tough election year. However, House Speaker John Boehner (R-Ohio) insisted that the 60-days deadline be included in the payroll tax extension Obama demanded.

Obama had called on Boehner repeatedly to pass the two-month tax holiday, despite the Speaker’s demand that Democrats negotiate a 12-month extension. The Senate said that it did not have enough time to negotiate a 12-month deal before the current payroll tax exemption had been set to expire December 31, thus making the two-month tax holiday necessary.

As payment for accepting the deal, Boehner insisted that Senate Democrats pass and Obama sign a bill including the Keystone provision, thus forcing the president’s hand on a major economic decision he had sought to avoid.