Bloomberg News

Republicans Vow to Continue Push for Keystone XL Oil Pipeline

March 09, 2012

Senate Republicans vowed to try again to speed up approval of TransCanada Corp. (TRP)’s Keystone XL oil pipeline after falling four votes short of rounding up enough Democratic support to expedite the project.

The Democrat-led U.S. Senate yesterday narrowly rejected a Republican amendment to a transportation funding bill that would have fast-tracked the project. The measure, which received 56 votes in favor, failed because Senate rules require 60 votes to include the amendment.

Obama lobbied wavering Senate Democrats on the pipeline proposal before the vote. He urged them to reject the amendment, which would have overturned his decision to deny a permit for the pipeline until more environmental reviews are complete.

“If another vehicle pops up, expect a try to put it on there,” Mike McKenna, an oil industry lobbyist and president of MWR Strategies Inc. in Washington, said in an e-mail. “Especially since a bunch of the Democrats are clearly caught in a bad position on it.”

Obama denied the U.S. State Department permit for the 1,661-mile (2,673-kilometer) pipeline from Hardisty, Alberta, to the U.S. Gulf Coast in January. An amendment by Senator John Hoeven, a North Dakota Republican, would have authorized construction of the project and deemed it in compliance with environmental regulations.

Republicans will seek “other opportunities” to push the Keystone pipeline, Hoeven said. “We’re very close to the 60” votes needed to pass the Senate, he told reporters in Washington after the vote.

Energy Prices

Republicans, including presidential contenders Mitt Romney and Newt Gingrich, said Obama’s denial of Keystone would cost U.S. construction jobs and lead to higher energy prices. They criticized the move as a sacrifice of jobs and energy supplies to please the president’s political allies.

Environmental groups and some labor unions that have supported Obama in the past oppose the pipeline. Obama called wavering Senate Democrats, including members from Midwestern states where the pipeline would create construction jobs, to lobby against the Hoeven amendment, according to a Democratic aide.

The “vote was a temporary victory and there’s no guarantee that it holds for the long run,” Bill McKibben, founder of the environmental group 350.org, said in an e-mail.

Other Republican measures to expand offshore drilling and delay for years new pollution standards for boilers used in paper plants and refineries also failed yesterday. A proposal by Democrats to bar export of Canadian crude carried by Keystone XL lost with 65 votes in opposition.

The amendments were offered during debate on a transportation spending bill.

Construction Jobs

“It was very strong work by President Obama himself, making personal calls to Democrats,” Senator Richard Lugar, an Indiana Republican, told reporters after the vote. “He understood that a majority of the American public and a majority at least of the Senate are strongly in favor of this project.”

The pipeline project would create about 20,000 temporary construction jobs, according to TransCanada. The number of employees needed to operate and maintain the pipeline may be as few as 20, according to the U.S. State Department, or as many as a few hundred, according to TransCanada.

Senator Ron Wyden, an Oregon Democrat, had proposed barring export of refined products derived from crude carried by the pipeline unless the president issued a waiver. The measure would have also required that, to the extent possible, iron and steel needed to build the pipeline be American-made.

Transportation Bill

Senators reached a deal this week to allow a final vote on a two-year, $109 billion transportation plan sponsored by Senator Barbara Boxer, a California Democrat. The Senate will resume debate on the full bill next week. The House passed legislation forcing Keystone pipeline approval and opening new areas to offshore drilling last month.

Republican amendments taken up yesterday included expanding offshore drilling, proposed by Senator David Vitter of Louisiana. Vitter’s amendment, which would have opened areas of the Atlantic, Pacific and Gulf of Mexico off the Florida coast for oil and natural gas exploration, failed by a vote of 46 to 52, with 60 needed to approve.

Maine Republican Senator Susan Collins pushed for a measure that would halt pending environmental-pollution standards for boilers used in paper plants and refineries, and delay implementing new rules for at least five years. With 60 votes needed, it lost by a vote of 52 to 46.

Pollution Rules

The EPA’s efforts to cut pollution from boilers have been opposed by paper processors such as International Paper Co. (IP) and Weyerhaeuser Co. (WY), as well as refiners, manufacturers and some universities and hospitals. The rule, which may be finalized in the coming months, will cost $1.5 billion a year, making it one of the most expensive proposed by the EPA.

EPA administrator Lisa Jackson had gone to “substantial lengths” to address companies’ concerns that they wouldn’t have enough time to meet the new air pollution requirements, Wyden said. Boxer said the rules would ensure Americans breathe cleaner air.

“The Senate chose public health, clean air and clean energy over the polluter agenda pushed by Republican leaders,” Scott Slesinger, legislative director at the New York-based Natural Resources Defense Council, said in a statement. “These are major victories that should clear the way for the transportation bill that should never have been weighed down by these unrelated issues.”

To contact the reporters on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net; Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net; Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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