Keystone XL Tax Cut Rider: Cudgel or Black Eye for GOP?

Thu Dec 22, 2011 9:38am EST

Bungled strategy to fast-track oil sands pipeline likely to give Obama leverage.

By Elizabeth McGowan, InsideClimate News

WASHINGTON—House Republicans keep trying to give President Obama a political black eye by wielding the 36-inch diameter Keystone XL pipeline as a cudgel just before Christmas.

Instead, they could end up severely maiming only themselves if they persist with end-of-year legislative theatrics at what some are referring to as the "Capitol Hill Playhouse" this week.

"It's quite a sandbox, isn't it?" Pat Parenteau, a Vermont Law School professor who specializes in Congress and environmental issues, told InsideClimate News. "I think their strategy has backfired and that they've roped themselves with this political gambit. This idea that you have to keep introducing ideology into every issue, that will be their undoing."

Parenteau is referring to House Republicans' insistence on gumming up a straightforward bill to extend a payroll tax break for 160 million Americans with language that would force Obama to fast-track approval or denial of the $7 billion, hotly contested pipeline.

At first, Senate Majority Leader Harry Reid, D-Nev., vowed such a proposal would be dead on arrival. And the president—carefully parsing his words—promised to reject it. But that resolve lasted only a few days.

On Saturday, Reid and his fellow senators voted 89-10 to continue the set-to-expire payroll tax cut through February. That compromise gained bipartisan support even though it also gave Obama just 60 days to say yes or no to the 1,702-mile pipeline that could wend its way from the oil sands mines of Alberta to refineries along the Gulf Coast of Texas. Senate leaders assumed the House would follow suit, so both chambers could exit for the holiday break and resume negotiations in January.

Remarkably, Tea Party upstarts in the lower chamber responded by blindsiding House Speaker John Boehner, R-Ohio, over the weekend with a classic snatch-defeat-from-the jaws-of-victory move. On Tuesday, they voted 229-193 not to defeat the bill but to rebuff the Senate. That left Boehner desperately trying to lure departed senators back to Washington to hammer out a deal to stretch the payroll tax cut through the end of 2012.

Reid immediately dismissed that plea.

To save face, many Republicans—including Senate Minority Leader Mitch McConnell, R-Ky.—are now encouraging Boehner to call for an up and down vote on the stopgap measure. They are also prodding Reid to appoint senators to a joint conference committee to handle negotiations when they come back from their holiday break.

Unless Reid bends, Parenteau predicts that House Republicans will ease off on the fulminating and posturing when they realize that disgusted voters are siding with the Democrats and the president on a centerpiece of Obama's jobs package.

"I think they are going to swallow and sign it," he said from his office in South Royalton, Vt. "They will capitulate because they're not going to let these taxes rise in this highly charged political climate. They don't want that hung around their necks."

State Department Balks at Rider Squeeze

Pipeline proponents have been itching to use Keystone XL to bash Obama even before he announced last month that his administration would delay a final decision on the project until after the 2012 presidential election. TransCanada and Nebraska are in the midst of designing a reroute through the Cornhusker State that would avoid the fragile Sandhills and irreplaceable Ogallala Aquifer. State Department officials estimate an environmental analysis of the relocation won't be complete until early 2013.

Rep. Lee Terry of Nebraska and Sen. Richard Lugar of Indiana, both Republicans, have been circulating bills to drastically speed up that schedule. Language from those measures was incorporated into the congressional Keystone XL rider that's now in jeopardy.

But State Department officials have made it clear that they would have to reject the pipeline if Congress insists on setting artificial deadlines.

"Should Congress impose an arbitrary deadline for the permit decision," the State Department wrote in mid-December, "the Department would be unable to make a determination to issue a permit for this project."

When the Keystone XL rider was tacked on to the payroll tax measure, some pipeline opponents worried it would bollix up negotiations for the Nebraska reroute. Others, however, viewed it through the same lens as Democratic Sen. Barbara Boxer.

"By insisting on an expedited review of the Keystone pipeline that will not allow for sufficient consideration of public health and safety concerns, Republicans have effectively killed the project," said the Californian who heads up the Senate Environment and Public Works Committee.

President Has Trump Card

Parenteau doesn't totally agree with Boxer's assessment. But he notes that Obama isn't necessarily boxed in by the 60-day deadline.

"At first, I thought the Republicans were constructing a rope-a-dope strategy, where either way he would alienate a part of his base," he said. Obama would lose union support by killing the pipeline and lose hard-core environmentalists by approving it.

"But now I think he has a trump card to play," Parenteau added.

All Obama would have to do, Parenteau said, is tell Congress that as of today, Keystone XL isn't in the national interest because too many questions about it are still unanswered. The rider gives the president some leeway. Though it forbids further review under the National Environmental Policy Act (NEPA), it doesn't restrict the Obama administration from executing a comprehensive review of the project via some sort of NEPA equivalent.

"Could somebody go to court and challenge him? "Parenteau asked. "Maybe, but I don't think it would go anywhere.

"Basically, Obama would be saying, 'I'm telling you no today but that doesn't mean I'm telling you no forever.'"

They'll Be Back

Even if this attempt to attach the Keystone XL to the payroll tax bill fails, oil sands specialist Susan Casey-Lefkowicz expects cantankerous congressional Republicans to continue pushing Obama into a pre-election Keystone XL decision. It could come in the form of a freestanding bill such as those originally proposed by Lugar and Terry. Or it could be attached to some other bill as a rider.

"I can't predict what's going to happen this time around," said Casey-Lefkowicz, director of the international program for the Natural Resources Defense Council, an advocacy organization. "But I expect the Republicans to come back and force the president's hand on Keystone XL. I'm beginning to think it's a cynical ploy to make trouble and benefit the oil industry."

She pointed out that the Republicans' maneuverings may not be in the best interest of TransCanada, the Alberta-based pipeline giant that is trying to build the Keystone XL. Despite TransCanada's frustration with the slower-than-usual permitting process, which is now in its fourth year, company officials are collaborating with Nebraskans on a less invasive route that might help gain the entire project a green light.

Casey-Lefkowicz thinks this latest interference from Congress could force the Obama administration to reject Keystone XL because the proper permitting process hasn't been followed. That would force TransCanada to apply anew for a permit at a time when public sentiment seems to be mounting against oil sands projects.

"Anymore, Keystone XL has become a scam," she said, referring to the barrage of arguments pipeline proponents offer about jobs, energy security and where the fuel will actually be burned. "And it's being perpetuated upon the American people."

A Full Year of Chicken

Even unions that back the Keystone XL as a source of jobs recognize the absurdity of attaching the pipeline to a bill aimed at giving Americans some financial relief via the payroll tax, unemployment benefits and Medicare reimbursement rates.

These issues should be resolved based on their individual merit and not treated as political chess pieces, said Terry O'Sullivan, general president of LIUNA, the Laborers' International Union of North America.

Jim DiPeso, policy director for the nonprofit Republicans for Environmental Protection, referred to the eleventh-hour Reid-Boehner standoff as a "big, huge game of chicken." As stomach turning as it is, he added, observers can't stop rubbernecking.

"What happened is that John Boehner suddenly had a rebellion on his hands over the weekend," DiPeso said. "Now he's facing the risk of the whole thing blowing up."

If the House fails to extend the payroll tax cut, the Democrats can amplify their argument that the GOP grinds its heels into the middle class.

"These are both highly explosive issues," DiPeso said about Keystone XL and payroll taxes. "Why are we surprised that this highly combustible mixture explodes?"

DiPeso and Parenteau, the Vermont law professor, agree that voters in places where the Tea Party is tepid to non-existent are bone tired of watching legislators churn from one manufactured crisis to another. Debates about the debt ceiling and government funding have turned this into a particularly exhausting year of blame, brinkmanship and last-minute blinking.

With so many Americans mired in the direness of a housing and jobs meltdown, they can't imagine these latest inside-the-Beltway antics playing well with voters.

"An argument about forcing the president to make a decision on some obscure pipeline is not what the average person believes is most important," Parenteau said. "People are just going to say, 'Enough!'"

See Also:  Nebraskans Outraged Over Rep. Lee Terry's Keystone XL 'Fast-Track' Bill Experts Say Lawsuits Likely if TransCanada Moves to Build Part of Keystone XL