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FACTBOX-Prolonged Keystone XL decision to spill into US election season

Source: Reuters - Fri, 31 Jan 2014 08:00 PM
Author: Reuters
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WASHINGTON, Jan 31 (Reuters) - The Obama administration's tricky final decision on the Keystone XL oil pipeline is several months away, guaranteeing that the project dividing many Democratic voters will be an issue in the midterm elections that could determine control of the U.S. Congress.

The State Department's issuance on Friday of its last environmental review of TransCanada Corp's proposed pipeline puts in motion a few more steps that have to be completed before a final determination is made.

It is not known whether the final decision on the pipeline, which would transport some 830,000 barrels per day from the Canadian oil sands and domestic oil fields to Nebraska, will come before or after the Nov. 4 elections.

While Republican voters mostly support Keystone, the project divides many pro-union Democrats who want construction jobs the pipeline would create, and those who believe the pipeline will increase emissions blamed for climate change

Below are the next steps to come on the pipeline and the Congressional races it could influence:

NEXT STEPS

- National Interest Determination

Now that the State Department has finalized the environmental review, eight federal agencies will have up to 90 days to comment on whether the Keystone XL is in the national interest. The agencies are likely to consider the impact of any decision on national energy security and on relations with Canada.

Much will depend on the Environmental Protection Agency, one of the eight agencies involved, which criticized the State Department's draft environmental review as "insufficient" last April, a month after it was released..

The Department of the Interior also criticized the environmental review saying some of the impacts on wildlife could be permanent.

In the event the agencies do not come to an agreement on the national interest, the issue would be sent to the White House's Council on Environmental Quality, effectively making the final decision entirely that of President Barack Obama.

- Kerry and Obama decisions

Once the comments from the agencies, including the Departments of Defense, Commerce, Energy, Justice, Transportation and Homeland Security are in, Secretary of State John Kerry will make a determination on whether the project is in the national interest. That will be the administration's final decision on the pipeline. An administration official told reporters on Friday that Kerry does not have a particular deadline by which to make his decision.

Kerry is not expected to discuss his decision with Obama before he makes it, a senior administration official told reporters. But Obama is expected to influence the decision. He said during the rollout of his climate plan in June that the project should not be approved if it increases emissions.

- Public comment period

The State Department will hold a public comment period, expected to start on Feb. 5, on whether the pipeline is in the national interest. It is not known how this would affect the timing of the final decision.

- Inspector General Report

Another element that could inject delays, the State Department's inspector general plans to issue a report soon on conflict of interest allegations surrounding the company that did the environmental review, Environmental Resources Management. A previous IG report involving similar allegations with a previous contractor found that there was no undue influence.

KEY MID-TERM RACES

Democrats lead the U.S. Senate by 53 to 45. If the Obama administration waits until after the Nov. 4 mid-term elections to decide, or rejects the pipeline before then, it could hurt Democratic Senators in states where the economy is heavily dependent on energy, such as Mary Landrieu of Louisiana and Mark Begich of Alaska.

It could also influence senate races in states the pipeline would cross and where Democratic senators are leaving office. In South Dakota, Tim Johnson is retiring and in Montana, Max Baucus is nominated to become ambassador to China. (Reporting by Timothy Gardner, editing by Ros Krasny and Sandra Maler)

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