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Keystone Deadline Isn’t Enough Time for Review, Carney Says

An effort by Congress to prod President Barack Obama on the Keystone XL oil pipeline gives the administration insufficient time to complete a review that meets environmental laws, White House spokesman Jay Carney said.

Language in a Senate bill extending the U.S. payroll-tax cut sets a 60-day deadline for a permit to be issued by the State Department, and a full review takes longer, Carney said yesterday at a White House news briefing.

“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,” Carney said.

Republicans introduced a bill setting the deadline after the State Department said in November it would delay until 2013 acting on the $7 billion pipeline crossing six U.S. states to study alternative routes. Environmental groups say the project threatens drinking-water supplies and delivers crude from western Canada that worsens climate change.

The language in the payroll-tax measure allows “almost any interpretation” on the fate of TransCanada Corp. (TRP)’s bid for Keystone, according to Michael McKenna, an oil-industry lobbyist and president of MWR Strategies Inc. in Washington.

“The only hard and clear thing is if he determined it is in the national interest, then State has to issue a permit,” McKenna said yesterday in an interview. “The rest of it is like a Rorschach test of what you think about the project.”

House, Senate Spar

The Senate bill extending the tax cut for two months with the pipeline language passed 89-10 on Dec. 17. Continuing the 2 percentage-point tax cut is in jeopardy as leaders of the Senate and House of Representatives disagree over how to proceed before the break expires Dec. 31. The House today rejected the Senate measure on a 229-193 vote.

The pipeline has become a flash point between Republicans in Congress and the Obama administration over jobs and the environment. The 1,661-mile (2,673-kilometer) project, which would carry 700,000 barrels of crude a day from Alberta’s oil sands to U.S. Gulf of Mexico refineries, also has split two Democratic constituencies, labor and environmental advocates.

TransCanada applied for a permit in 2008. Advocates such as U.S. Senator Richard Lugar, an Indiana Republican who sponsored legislation to set a deadline, say it would add jobs and bring oil from a friendly country. TransCanada has said the pipeline will create more than 20,000 U.S. jobs through 2012.

‘Not Credible’

“Saying not getting oil from Canada, which we already do, is not in the national interest is not credible,” Andy Fisher, a spokesman for Lugar, said in an interview. “There’s strong support from unions and a good bit of the president’s coalition for the pipeline.”

The Obama administration delayed the decision in response to concerns from Nebraska citizens, state officials and some members of Congress that TransCanada’s proposed route across the state’s Sandhills area risks the Ogallala aquifer, the drinking- water source for 1.5 million people.

A new route across Nebraska will require a fresh environmental review, according to Susan Casey-Lefkowitz, director of the international program at the Natural Resources Defense Council. The route review “could be completed as early as the first quarter of 2013,” the State Department said.

“State says it cannot make a determination -- meaning that it will have no choice but to reject,” Casey-Lefkowitz said in an interview. “The president has already said that the review is not finished.”

Bush Review

The review process was established in an order signed by President George W. Bush. The part of the review meant to determine whether the project is in the national interest was suspended in November. The State Department is conducting the review because the pipeline crosses an international boundary.

“There are superior statues governing that pipeline and they would still govern even if this goes into law,” Kevin Book, managing director at ClearView Energy Partners LLC, a Washington-based policy analysis firm, said in an interview. “Obama holds all the cards. He doesn’t have to say no. He certainly doesn’t have to say yes.”

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Steve Geimann at sgeimann@bloomberg.net

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