Within a few hours last week, momentum in the US Congress shifted in favor of House Republicans' attempt to accelerate the controversial Keystone XL pipeline. But just as quickly, the deal appeared doomed as the same House leaders rejected the Senate's solution: a bill containing a two-month payroll tax cut extension and the sweetener for the TransCanada project.
House of Representatives Speaker John Boehner, Republican-Ohio, asked his party Monday to reject the Senate version during a vote expected late that evening.
White House Press Secretary Jay Carney fired back that House members should worry about returning to their districts just as payroll tax cuts expire January 1.
"I don't think this is too much of a long shot to say that 25 Republicans in the House might break ranks and say, 'You know what? I don't want to go home and explain to my constituents why I voted to raise taxes on them,'" Carney told reporters Monday.
The provision for speeding Keystone's review remains uncertain, and the implications for TransCanada do not clear up even if the legislation passes.
The measure would give the Obama administration 60 days to act on the pipeline application. The State Department has said it needs until the first quarter of 2013 to reach a conclusion, and two months does not allow sufficient time to satisfy all environmental laws.
Gene Sperling, President Barack Obama's top economic adviser, hammered the point on CNN's "State of the Union" television program on Sunday.
"The experts at the State Department who are authorized for our government to make that very serious and complex review made clear before this legislation was even voted on that if they were only given 60 days to look at the alternative routes in Nebraska... that it would make it almost certainly impossible for them to extend that permit," Sperling said.
Many observers have taken the statements to mean that the White House would reject the project if Congress approves the 60-day deadline.
Lou Pugliaresi, president of the Washington-based Energy Policy Research Foundation, is in that camp, but he suspects the administration would deny the application with a caveat.
"If you reject it, would they stop all environmental work on it?" Pugliaresi wondered, answering his own question that he predicts they would not. He said the White House could decline the application pending the completion of environmental studies.
Neither Sperling nor State spokeswoman Victoria Nuland went so far as to threaten to deny the permit if given a deadline. Rather, they said the department would not be able to make a decision. Taken literally, that might open a route to approval for TransCanada, as Congress' legislation speeding the project says the permit would go into effect if the White House takes no action in 60 days.
When asked whether the permit could proceed without the State Department's explicit endorsement, Nuland said Friday she was not "prepared to speak to the legality and constitutionality of what the Congress is appearing to try to legislate here." She reiterated that the department needs time for "jumping through all the hoops" held in front of it, including the late Nebraska route change.
"We want to do that right," she told reporters. "We want to get the appropriate environmental impact study before we can make a national interest determination. ... We've made those views clear to Congress, and again, I can't speak to exactly what the force of law is."
TransCanada spokesman Terry Cunha would not comment on whether the company sees the White House's no-action route to approval as a possibility.
"I won't speculate, but our focus is and continues to be on the approval of this project which we feel is in the best interest of the US," he said Monday.
Cunha added that the bill attempted to "establish a middle ground that provides for the concerns regarding the route in Nebraska to be fully addressed while avoiding unnecessary construction delays in the other states that the Keystone XL pipeline crosses."
But a report issued by FBR Capital Markets on Monday called that outcome unlikely. Even if Congress fast-tracks the application and if the White House issues the permit within two months, the process would likely spawn litigation over the application of environmental laws. The analysts called lawsuits that have the power to delay the project further "inevitable."
