Congress has legal clout on Keystone pipeline: study

The Keystone Oil Pipeline is pictured under construction in North Dakota in this undated photograph released on January 18, 2012.

WASHINGTON (Reuters) - The Congress has the constitutional right to legislate permits for cross-border oil pipelines like TransCanada's Keystone XL, according to a new legal analysis released late on Friday.

The study by the nonpartisan Congressional Research Service could give a boost to Republicans drafting legislation to overturn a decision this week by President Barack Obama to put the $7 billion Alberta-to-Texas project on ice.

Historically, U.S. presidents have made executive decisions on pipelines that cross borders. But Congress had the power all along to weigh in on the permits, said the study, done by four legislative attorneys with the CRS.

"If Congress chose to assert its authority in the area of border-crossing facilities, this would likely be considered within its Constitutionally enumerated authority to regulate foreign commerce," the study said.

Republicans in Congress have elevated the Canadian pipeline and the construction jobs it would create into an election-year issue, accusing Obama of caving in to environmental groups. They pushed to include a deadline for a permit approval in a payroll tax cut bill that Obama signed into law in December.

But this week, Obama and the State Department said an environmental review of a portion of the proposed pipeline could not be rushed, closing the door on a quick start to the project.

BACK IN THE DAY

The CRS study examined the history of decisions by presidents on thorny issues involving approval of cross-border projects such as bridges and power lines stretching back to 1869, when President Ulysses Grant ruled on a French transatlantic cable used to send telegrams.

The report also looked at more recent court cases involving oil and gas pipelines crossing the Canada-U.S. border.

While the U.S. president has authority over foreign affairs, the U.S. Constitution gives Congress the power to regulate foreign commerce, the report explains.

Until now, presidents have issued permits by executive order for pipelines, and Congress has stayed out of the matter.

The report did not comment on specific proposals floated by Republicans in the Senate and House of Representatives, but said that "legislation altering the pipeline border crossing approval process appears likely to be a legitimate exercise of Congress's constitutional authority to regulate foreign commerce,"

Legislation on cross-border "facilities" like pipelines "is unlikely to raise significant constitutional questions, despite the fact that such permits have traditional been handled by the executive branch alone," it said.

REPORT 'HELPS THE CONVERSATION'

Any "plan B" drafted by Republicans would still have to clear a very big political hurdle. While legislation could easily pass in the Republican-controlled House, the Democratic-led Senate is another matter.

"Regardless of whether the Republican legislation seeking to rubber-stamp Keystone XL would pass constitional muster, it would still need to pass the Senate and be signed by the president, and that is not going to happen," a Senate Democratic aide said on Friday.

But the CRS report "greatly helps the conversation" among Senate and House Republicans strategizing about how to keep the project alive, said Ryan Bernstein, an energy adviser to Senator John Hoeven of North Dakota, whose office requested the study.

"I think this confirms what we've been saying all along - Congress has the authority to approve the Keystone pipeline," said Bernstein, who is helping Hoeven draft legislation that would see Congress approve the project.

Earlier on Friday, Republicans in the House of Representatives said they were considering using upcoming payroll tax cut or highway construction bills to force quick approval of the pipeline.

Representative Lee Terry, whose home state of Nebraska would host part of the pipeline, has drafted legislation to shift the Keystone decision-making process from the Obama administration to the independent Federal Energy Regulatory Commission, which regulates pipelines in the United States.

The House Energy and Commerce Committee will hold a hearing on Wednesday about Terry's bill and other Keystone measures.

(Editing by Peter Cooney)