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Keystone XL: The Pipeline That Won't Die

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Andrew Harrer/Bloomberg via Getty Images

The zombie pipeline lives!

You might think that the Obama administration's decision last month to delay the construction of the $7 billion Keystone XL pipeline pending further review would have put an end to Big Oil's pipeline dreams. After all, the whole approval process, which dragged on for three years, was a textbook example of corrupt energy politics and shoddy science working in the service of Big Oil. The U.S. State Department, which had final say in the pipeline's approval, wisely and deftly put the pipeline on ice for at least a year. 

But you don't kill off Big Oil's pet project that easily.

Last week, Keystone re-emerged as a bargaining chip in end-of-the-year negotiations over extending the payroll tax break for 160 million U.S. workers, which is set to expire Dec. 31.  House Majority leader John Boehner has attached a "project rider" to the tax bill, essentially trying to force Obama – and Senate Democrats – to approve the pipeline as a price for passing the tax-relief bill.  Boehner and House Republicans are playing up the Keystone policy rider as a jobs project, suggesting that the Obama administration failed to approve last month it because the president is beholden to crazy enviros. A vote on the bill could come as early as today.

OK, so we've got an election coming up.  And OK, we all know that Boehner and other Republican leaders are happy to kiss the ass of Big Oil.  But even with those caveats, this is a pretty shameless bit of political brinksmanship.  Let's put aside the fact that the dirty tar sands oil that would be brought down to Gulf refineries by the pipeline would do little if anything to increase America's energy security, or that it would help to cook the climate by ensuring a global market for the carbon-intensive stuff.  I just want to make two key points.

First, the myth of jobs.  A few months ago, Fox News was claiming the pipeline would create 250,000 new jobs.  Sounds good – except those numbers were based on a single study that has been widely discredited. According to the Cornell Labor Institute, the real number of permanent jobs created by the pipeline is likely to be about ... 50.  If you factor in the environmental damages and higher oil prices the pipeline will cause, the project might even lead to a net loss of jobs

Second, the policy rider that Boehner is trying to attach to the tax bill is radically subversive.  The bill would take oversight of the siting and construction of the pipeline out of the hands of the State Department and put it into the hands of the Federal Energy Regulatory Commission, an independent agency that has zero experience siting and approving oil pipelines. (The agency is involved with the construction of intra-state natural gas pipelines, but that is entirely different matter.) In fact, as it stands now, the agency doesn't even have statutory authority to oversee pipes.  "FERC does not have jurisdiction on oil pipelines," Tamara Young-Allen, a spokesperson for the agency, told me when I asked her about it.  "This would be very different from what the agency has done in the past."

Wait, it gets better.  According to Jeremy Symons of the National Wildlife Federation, not only does the bill give oversight of the pipeline to FERC, it actually requires the agency to approve the pipeline within 30 days.  To put it another way, the bill doesn't require the agency to study the pipeline and determine if it is safe, or study the risk of environmental damages in case of a spill. It simply requires the agency to approve the pipeline. "This is not a good way to ensure strong regulatory oversight," says Symons, in a wild understatement.

Yesterday, the State Department took a slap at House Republicans, issuing a statement warning that it would not go along with any plans to fast-track the pipeline permit process -- and that the bill itself may violate environmental laws.

In a rational world, House Republican would get nowhere with this. Even if the House manages to pass a bill with the policy rider attached, it's unlikely to get far in the Senate.  And President Obama has said he will veto any bill with the policy rider attached.  That may be true.  But it would be unwise underestimate the lengths to which House Republicans will go to please Big Oil.  "With end-of-the-year dealmaking going on right now, and both a spending bill and a tax bill up for both grabs, it could emerge anywhere," says Symons.  "The Republican strategy right now is to press the President on everything they can and see what they get."

And if it fails this year, there's always next year. The zombie pipeline will return.

UPDATE (3 p.m.): Before the tax bill was taken up by the House today, the Keystone rider described above, the North American Energy Access Act, was replaced by a different bill introduced by Rep. Denny Rehberg of Montana (it was a companion to a Senate bill introduced by Indiana Senator Dick Lugar).  The chief difference is that the Rehberg-Luger bill does not give citing and permit authority to FERC, and extends the approval period from 30 to 60 days.

UPDATE (10 a.m., December 14): The payroll tax bill, including the Keystone XL provision, was approved by the House last night in a 234-193 vote.  The legislation now moves over to the Senate, where Majority Leader Harry Reid has called the bill DOA. Even if it is, the pipeline provision could yet re-emerge in all of end-of-year deal-making that is going down in Congress right now, so stay tuned.

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