The American Oil and Gas Reporter - January 2012 - (Page 28)

Congress Closes Year Expedited Keystone Decision Passes By Del Torkelson WASHINGTON–After three stunning reversals of fortune in less than a week, a rider attached to legislation that passed Congress in late December will require a decision from the Obama administration on a presidential permit for TransCanada Corp.’s planned Keystone XL crude oil pipeline. Before the House passed a two-month payroll tax holiday that the Republican majority initially rejected, it appeared likely that the Keystone provision would perish as collateral damage in an unrelated showdown–an ironic outcome considering how several days before Keystone appeared to be a poison pill that would prevent the Senate from passing a payroll tax bill. Although both chambers passed payroll tax legislation in the waning days before Congress’ holiday recess that included a provision that required the U.S. State Department to expedite a Keystone decision within 60 days, the House balked at the Senate’s plan to extend the tax holiday by only two months, according to published reports. House Speaker John Boehner, R-Oh., called for a conference committee to resolve discrepancies between the House and Senate bills, but the fact that the Senate already had adjourned left the House without a negotiating partner. Shortly thereafter, reports say, Boehner conferred with Obama and Senate Majority Leader Harry Reid, D-Nv., and the House acquiesced to the Senate’s two-month extension in exchange for some technical corrections and a House-Senate conference in early 2012. As for why the Senate would pass and the president would sign legislation containing the Keystone amendment after earlier insistence they would not, Independent Petroleum Association of America Vice President of Government Relations Lee Fuller pleads ignorance. “First, Obama was going to veto any bill with the Keystone language,” Fuller recalls. “Then he announced if they put it in he was going to deny the permit, so why include it? But with time, his position has grown increasingly vague.” Back And Forth December began with Senate Democrats discussing a plan that published reports say would have cut the 2012 payroll tax from 6.2 percent to 3.1 percent for employees and employers with payrolls 28 THE AMERICAN OIL & GAS REPORTER smaller than $5 million a year. Media reports also indicated that Reid wanted any such legislation to include a surcharge on incomes above $1 million, a provision that most conventional wisdom presumed would prove dead on arrival in the House. According to press accounts, House Republicans initially expressed skepticism about increasing the deficit, but then found ways to offset the payroll tax cut with measures that included extending the federal pay freeze, government-employee pension reforms, and modest Medicare means thresholds. They also attached a provision that would have required the Obama administration to issue a determination on Keystone XL’s presidential permit within two months. Numerous analysts agree a Keystone ruling poses a challenging political calculus for the president. A permit risks offending the green portion of the Democratic base, but rejecting the pipeline not only would defy polls that show a firm majority of Americans back the project, it also would contradict the wishes of another traditional Democratic constituency. Numerous labor unions have expressed support for Keystone XL, including the Teamsters, AFLCIO, Laborers International Union of North America, and the United Association of Plumbers and Pipefitters, analysts point out. The payroll tax cut’s Keystone language could force the president to decide on the pipeline during an election year instead of keeping the matter at bay until 2013, a scenario rendered likely by the State Department’s Nov. 10 announcement that it would examine pipeline routes that did not traverse Nebraska’s ecologically sensitive Sand Hills region (AOGR, December 2011, pg. 32). Senate Democrats spent much of December indicating to the media the House’s Keystone language was a nonstarter, and the president publicly vowed to veto legislation carrying such a provision. However, that changed on Dec. 17, when the Senate passed a two-month payroll tax cut that dropped the millionaire surcharge but included a Keystone amendment. As the Senate adjourned, press accounts quoted the president as willing to sign the bill. The surprise many Washington observers expressed at the Democrats’ concession grew as the House on Dec. 20 decided against accepting the Senate bill, and instead passed a yearlong payroll tax cut, after which Boehner called for a House/Senate compromise that would re- quire the Democrats’ cooperation. Reid and House Minority Leader Nancy Pelosi, D-Ca., were quoted saying they would not appoint members to a conference committee. A couple days later, the House reversed course, which resuscitated the otherwise dead Keystone provision. Streamline Or Stymie? The legislation provides the Obama administration 60 days to grant a permit unless the president determines Keystone XL does not serve the national interest, a determination that the legislation says he would be required to justify to congressional leadership “including consideration of economic, employment, energy security, foreign policy, trade and environmental factors.” If the president issues no determination after 60 days and TransCanada’s application meets all requirements, the legislation continues, the Keystone permit “shall be in effect by operation of law.” Furthermore, the amendment states that the final environmental impact statement issued by the secretary of state on Aug. 26, 2011, satisfies all requirements associated with the National Environmental Policy Act and the Historic Preservation Act. Similarly, while sections in the bill dealing with the pipeline’s Nebraska portions allow the governor to submit a modified route, failure by the president to act within 10 days on the governor’s proposal also would automatically approve the permit. Fuller says his reading of that language suggests presidential inaction would allow the pipeline to go forward. “It doesn’t give him a yes or no,” he assesses. “He has to stop it on the basis that it is not in the national interest. The bill deems the environmental analysis already undertaken under federal NEPA requirements as complete and acceptable. That makes it harder for the Obama administration to say it is unsatisfied with the environmental analysis.” Nevertheless, in the days leading up to the payroll tax extension passing, some administration staff were quoted as insisting the Keystone provision would force the president to deny a permit on the grounds that 60 days were insufficient to meet NEPA requirements. White House Communications Director Dan Pfeiffer said on Twitter in mid-December that a 60-day review “virtually guarantees that the pipeline will not be approved.” National Economic Council Director Gene Sperling said on television that State Department staff “made clear before this legislation was even voted on that, if

Table of Contents for the Digital Edition of The American Oil and Gas Reporter - January 2012

The American Oil and Gas Reporter - January 2012
Oil & Gas Counts
State Legislative
Industry Digest
Tech Connections
Washington Watch
Federal Legislation
Gulf of Mexico
Resource Plays Providing Wealth of Opportunities
Tight Plays Poised to Transform U.S. Crude Supply
El Paso Project Optimizes Eagle Ford Completion Design
Real-Time Forward Modeling Improves Bakken Horizontals
Cover Story
Financial Firms Expand Oil and Gas Divisions
Multicomponent 3-D Poised for Growth in Shale Plays
Cloud Computing Driving Business Step Changes
Advanced Attributes Improve 3-D Interpretation
3-D Data Improve Knowledge of Shale Heterogeneity
HBUR RSS Solves Granite Wash Drilling Challenges
Technologies Improve Production Consistency in Resource Plays
SaaS Helps Operator Streamline Data Management
Automation Enhances Operations in Challenging Applications
Dispersant Chemistry Combats Plugging in Low-Gravity Oil Wells
New Technologies Optimize Production
Drilling Regs
The Presidential Papers
Energy Education
Shale Gas
New Lits & Products
Computer Currents
Industry Focus
Classified Advertising
Advertisers Index

The American Oil and Gas Reporter - January 2012