UPDATE 1-White House renews veto threat over Keystone

Tue Apr 17, 2012 8:12pm EDT

* Republicans include pipeline in highway funding bill

* Obama previously put pipeline project on hold

By Roberta Rampton

WASHINGTON, April 17 (Reuters) - The White House on Tuesday renewed its threat to veto legislation to fund U.S. transportation projects responsible for millions of jobs if it includes the politically charged Canada-to-Texas Keystone XL oil pipeline.

Republicans in the House of Representatives have included the pipeline in a bill that proposes a 90-day extension of funding for highway, bridge, and transit construction. The House is expected to vote on the legislation on Wednesday.

In a statement on the proposal, presidential advisers said the legislation would circumvent "longstanding and proven process" for determining whether pipelines are in the national interest.

It said mandating the pipeline before a new route was "submitted and assessed" would prompt a recommendation that President Barack Obama veto the long-delayed transportation legislation, said to be crucial for the economy.

Obama earlier this year put a hold on TransCanada's $7 billion project, designed to bring crude oil from Canada and North Dakota to Texas refineries, because he said it needed further environmental review in Nebraska.

Obama does, however, support development of the southern leg of the pipeline that would run from the Cushing, Oklahoma, storage hub to Texas.

House Speaker John Boehner, a Republican, has made Keystone a cornerstone of his election-year jobs agenda. But the measure was part of a larger transportation plan that crumbled in the House this year due to a lack of Republican support.

House Republicans, in their new, scaled-back transportation plan, backed away from controversial provisions in the ill-fated bill to expand oil and gas drilling and use related revenues for road and transit construction. They also dropped an unpopular plan to decouple transit spending from its dedicated funding source.

The House will consider a handful of amendments to the latest proposal on Wednesday. Current highway spending expires in June.

Obama's initial veto threat of the House transportation bill in February covered the energy and transit measures favored by Republican leaders.

Republicans continue to sharply criticize Obama's decision on Keystone XL and again are pushing for the full project, saying it would create jobs and bring more oil to the United States at a time of surging gasoline prices.

In a vote that included some Democratic support, Republicans in the Senate narrowly failed in March to attach the Keystone provision to a two-year, $109 billion transportation bill that was later approved by the chamber.

If the House clears the latest stop-gap funding plan, negotiators from that chamber would join with Senate colleagues to form a conference committee to try to craft a compromise transportation bill.

"I think the House will bring it (Keystone) back and the objective is to get to conference with it," said Senator John Hoeven from North Dakota, a Republican who led the effort in the Senate to approve the pipeline.

Hoeven said he is optimistic the Keystone measure would survive House-Senate conference negotiations because it nearly cleared the Senate.

House Democratic leader Steny Hoyer said Congress must complete a transportation spending bill soon.

"We need to get confidence and stability to the economy to the business community, we need to make sure that we get jobs the highway bill does produce," Hoyer said.