Keystone XL Bill Would Strip Agencies’ Power, Officials Say

A Republican-backed bill giving the Federal Energy Regulatory Commission power to approve TransCanada Corp. (TRP)’s Keystone XL pipeline would remove two federal agencies from oversight, officials of the Interior Department and U.S. Army Corps of Engineers said.

The Interior Department is responsible for monitoring construction and maintenance of pipelines on U.S. land, and the legislation makes FERC the “sole federal agency responsible for the project,” Mike Pool, deputy director of Interior’s Bureau of Land Management, said today at a House subcommittee hearing in Washington. The Corps would lose its permitting authority for the pipeline, an official said.

Republicans are pressing to start work on the $7 billion pipeline from Canada to U.S. Gulf Coast refineries, which was delayed by President Barack Obama in November to consider an alternate route. Last year, lawmakers unhappy with Obama’s decision set Feb. 21 to issue a permit. Obama denied the request, citing a lack of time for a review.

Representative Lee Terry, a Nebraska Republican who backs the pipeline, introduced legislation requiring FERC to issue a permit for the 1,661 mile (2,673 kilometer) pipeline within 30 days after receiving the application, provided the project is deemed safe. The House Energy and Commerce Committee plans to vote on the legislation Feb. 7.

‘Enough Time’

The pipeline requires State Department approval because the line would cross an international border. Calgary-based TransCanada submitted its application to the agency in September 2008.

“President Obama has had more than enough time and information” to approve the project, House Energy and Commerce Committee Chairman Fred Upton, a Michigan Republican, said today in a statement. “It’s time for Congress to take this decision out of the president’s hands,” he said.

The bill strips the Corps of Engineers of its role in reviewing and approving pipelines, Margaret Gaffney-Smith, chief of the Corps’ regulatory program, said at the hearing. It also poses jurisdictional and legal issues, officials from the State Department and FERC told the House subcommittee Jan. 25. FERC doesn’t have the authority to site oil pipelines.

Keystone XL advocates, including some labor unions, have said the pipeline will create as many as 20,000 jobs. Opponents say it will endanger Nebraska’s water supplies, and ultimately lead to oil exports.

Export Bar Proposed

House Democrats led by Representative Edward Markey of Massachusetts today introduced a measure that would prevent exports of the crude transported by the pipeline from Alberta to the Gulf Coast.

“Other countries shouldn’t be allowed to bisect our country with a pipeline and then bypass our citizens to send the oil abroad,” Markey said in a statement.

The legislation “gives the pipeline an unprecedented regulatory earmark,” Representative Henry Waxman, a California Democrat who has led opposition, said. It directs FERC to approve the pipeline “even though we don’t yet know what route it will take through the state of Nebraska.”

Koch Industries Inc. of Wichita, Kansas, may benefit from the pipeline’s construction, said Waxman, who criticized Republicans for not inviting company executives or officials from Calgary-based TransCanada to testify.

Berkshire Hathaway Inc. (BRK/A) Chairman and Chief Executive Officer Warren E. Buffett may benefit if the pipeline isn’t built because its Burlington Northern Santa Fe LLC unit may end up hauling the crude by rail, Whitfield said.

Neither Koch nor Buffett were invited to testify because they don’t have a direct financial interest in the pipeline, Whitfield said.

The bill is H.R. 3548.

To contact the reporter on this story: Brian Wingfield in Washington at bwingfield3@bloomberg.net

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

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