Lawmakers ask Obama to delay Keystone decision

WASHINGTON Wed Oct 26, 2011 7:05pm EDT

A group of demonstrators rally against the controversial Keystone XL oil pipeline outside President Barack Obama's fundraiser at the W Hotel in San Francisco, California October 25, 2011. REUTERS/Stephen Lam

A group of demonstrators rally against the controversial Keystone XL oil pipeline outside President Barack Obama's fundraiser at the W Hotel in San Francisco, California October 25, 2011.

Credit: Reuters/Stephen Lam

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WASHINGTON (Reuters) - Fourteen lawmakers called on President Barack Obama to delay a decision on the Canada-to-Texas Keystone oil sands pipeline, while Obama was interrupted in Denver on Wednesday by a protester opposing TransCanada Corp's project.

Senator Bernie Sanders, an independent who is one of the Senate's most liberal members, and Democratic Representative Steve Cohen were joined by 12 other congressional Democrats in asking for a delay until the State Department investigates alleged conflicts of interest over the project.

During an event with young people in Denver, an activist interrupted Obama's remarks, urging him to reject the project.

"We're looking at it right now, all right?" Obama replied. "No decision's been made and I know your deep concern about it, so we will address it."

Protesters held up a banner reading: "Stop the Keystone Pipeline Project." They were asked to leave.

The 14 lawmakers asked the State Department's inspector general in a letter to investigate whether alleged conflicts of interest had tainted the process for reviewing the pipeline.

The lawmakers expressed concern that Cardno Entrix, a company the State Department hired to conduct environmental impact statements on the Keystone XL line, had financial ties to TransCanada.

"Given the significant economic, environmental, and public health implications of the proposed pipeline, we believe that it is critical that the State Department conduct thorough, unbiased reviews of the project," the lawmakers wrote to State Department Deputy Inspector General Harold Geisel.

TransCanada said it had never had a direct relationship with Cardno Entrix. "The real issue is: does this proposed pipeline meet U.S. regulatory standards to be constructed and operated to deliver oil?" TransCanada spokesman Shawn Howard said. "The rest of this is noise."

The lawmakers' letter came a day after a U.S. official told Reuters the State Department may miss a year-end target to approve the pipeline, risking a further delay to the most important new crude oil conduit in decades.

ENVIRONMENTAL CONCERNS

Liberals and environmentalists have been pushing the Obama administration to reject it because of concern that production of oil sands crude releases large amounts of greenhouse gases.

"This is an important part of the Democratic base, and the president needs to firm up his base," said Steve Cohen, a House Democrat who opposes the project.

Supporters say the pipeline would create thousands of jobs and provide a secure source of oil imports from a close ally.

Three environmental groups sued the U.S. government on Tuesday, challenging claims in a State Department report that the pipeline posed little risk to endangered species because spills on the line were unlikely.

The Republican-controlled House approved a measure in July that would require Obama to speed up the pipeline review. The Democratic-controlled Senate has not passed that legislation.

"It may seem unusual for Congress to have to publicly vote on a bill that simply asks the president to do his job; unfortunately, such action is warranted as the long-delayed Keystone XL pipeline continues to languish and workers continue to wait for the Obama administration to make a decision," Republican Representative Fred Upton, chairman of the House Energy and Commerce Committee, said on Wednesday.

The pipeline, which would cut through six central U.S. states, is also a regional issue. Nebraska's Senators Mike Johanns, a Republican, and Ben Nelson, a Democrat, have called for a rerouting of the line as it would cross the ecologically rich Sand Hills region and a major aquifer in their state.

Senator Max Baucus of Montana, a Democrat, has supported the pipeline for the jobs it would bring.

Pipeline approval has been pending since 2008. The project could face many legal and regulatory hurdles that might delay it.

Some 1,200 pipeline opponents were arrested outside the White House this past summer. More protests are expected there on November 6.

A person answering the telephone at Cardno Entrix's Seattle office said the State Department had forbidden anyone at the company from commenting on the issue and referred queries to department officials.

The State Department did not immediately respond to a request for comment on the letter from the lawmakers.

(Additional reporting by Jeff Mason in Denver, Jeffrey Jones in Calgary and Roberta Rampton in Washington; Editing by Will Dunham and Peter Cooney)

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