Congress cannot accelerate Keystone decision: State Department

WASHINGTON Mon Dec 12, 2011 7:59pm EST

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WASHINGTON (Reuters) - The U.S. State Department warned on Monday that a plan by congressional Republicans to fast track the Canada-to-Texas Keystone XL pipeline decision would violate environmental laws and force it to withhold approval.

"Should Congress impose an arbitrary deadline for the permit decision ... the department would be unable to make a determination to issue a permit for this project," the State Department said in a statement.

Republicans in the House of Representatives have said they plan to include approval of the TransCanada Corp's Keystone XL in a payroll tax cut bill, raising the political stakes on the issue.

President Barack Obama has warned he would veto any bill that linked quick approval of the Keystone pipeline to extending a tax cut for American workers that is due to expire on December 31.

Both Republicans and Democrats want to pass an extension of the payroll tax cut in the next two weeks, but they are divided on how best to do it.

The Keystone measure helped Republican leaders secure support for their bill, but it still needs to pass the Democratic-led Senate, where some lawmakers have already urged Majority Leader Harry Reid to reject it.

Approval of the pipeline, which would carry 700,000 barrels per day of crude oil from Canada's tar sands, now rests with the State Department. The Republican measure seeks to take the decision out of Obama's hands and accelerate approval in part to create U.S. jobs.

Obama directed the State Department last month to conduct an additional environmental review of the $7 billion pipeline. That would punt the decision on whether to approve the project until after next year's presidential election.

The State Department underscored it had long-standing authority to supervise permitting for cross-border pipelines and had led a "a rigorous, thorough and transparent process" that must run its course.

A short-cut pushed through by Congress "would not only compromise the process, it would prohibit the department from acting consistently with National Environmental Policy Act requirements by not allowing sufficient time for the development of this information," it said.

Environmentalists say the pipeline would threaten Nebraska's Sand Hills region and lead to higher greenhouse gas emissions, and had threatened to hold back on campaigning for Obama in the election.

The State Department is now obtaining additional information on possible alternate routes that avoid the Sand Hills in Nebraska, and believes this review could be completed in time for a decision to be made in first quarter 2013, it said.

(Reporting By Andrew Quinn; editing by Christopher Wilson)

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