Keystone XL Bill Heads to Obama as Practical Payoffs Wane

(Bloomberg) — Congressional Republicans achieved an

elusive legislative goal Wednesday, sending a bill to approve

the Keystone XL pipeline to President Barack Obama.

Yet after three years of effort, the victory is somewhat

hollow as falling oil prices and an improving job market

conspire to weaken any practical or political payoffs.

The U.S. House passed the measure 270-152, with 29

Democrats joining all but one Republican to support the bill.

Obama has vowed to veto the measure and Wednesday’s vote was

short of the two-thirds super majority needed to override the

president’s rejection. The Senate passed the bill last month.

Obama said he opposes the bill because it would circumvent

his administration’s review of the $8 billion pipeline.

“This allegedly important policy issue has become almost

nothing but politics, save for those who build and operate it,

on both sides,” said Burdett Loomis, a political science

professor at the University of Kansas who tracks energy issues.

“It’s policy significance comes close to nil, especially in our

current oil environment.”

TransCanada Corp., a Calgary-based pipeline company,

applied to build Keystone XL in September 2008. While a southern

section is up and running, the northern leg needs a presidential

permit because it crosses the U.S.-Canada border.

Federal Review

The project, in limbo during a State Department review, has

galvanized environmental advocates and led to massive rallies

around the White House urging Obama to reject the pipeline as a

threat to the climate.

Supporters say it will create thousands of jobs and improve

U.S. energy security.

“We continue to urge the president to reconsider his veto

threat, support the will of the people and prove that Washington

can govern and enact meaningful energy policy,” Jack Gerard,

president and chief executive officer of the American Petroleum

Institute, a Washington lobbying group whose members include

ExxonMobil Corp., said in a statement.

Representative Fred Upton of Michigan, chairman of the

House Energy and Commerce Committee, said during debate that he

hoped Obama would reconsider his expected veto on this bill.

“Let’s deal with the issue,” Upton said. “And let’s get

it done.”

11th Vote

The House vote was the chamber’s 11th on Keystone

legislation in four years, and the second this year. House

lawmakers had to take up the bill again after the Senate, which

is now also led by Republicans, amended an earlier version.

House Speaker John Boehner is planning a signing ceremony

on Friday, said Michael Steel, his spokesman. Republican Senator

Orrin Hatch of Utah, as president pro tempore, will also sign.

How soon the bill will be sent to the White House hadn’t been

decided as of Wednesday, Steel said.

The Constitution provides 10 days, excluding Sundays, for a

president to sign a bill. A veto occurs when a president returns

the unsigned legislation within 10 days to the chamber in which

it originated, typically with a message explaining why.

While Obama pledged to veto the Keystone bill on process

grounds, he hasn’t indicated what his decision will be on the

project itself.

He must choose between angering his allies in the

environmental movement or the Canadian government, which is

looking to Keystone to support oil sands producers in Alberta.

‘Radical’ Environmentalists

Representative Joe Barton, a Texas Republican and a member

of the energy committee, backed the vote on Keystone.

“It’s good public policy,” even if Obama is going to

reject the bill, Barton said in a phone interview before the

vote. “It shows how rigidly he’s in the clutches of radical

environmental groups that he keeps opposing it.”

The dynamics of the debate have shifted considerably since

July 2011 when the House first voted to advance Keystone.

Back then, oil traded about $100 a barrel and Obama faced a

tough re-election in an economy yet to fully shake the effects

of a deep recession.

Now oil is half that cost, about $50 a barrel, and Obama is

two years into his second term. Unemployment fell to 5.7 percent

in January from 9.1 percent in July 2011.

Polls show Americans supporting the pipeline outnumber

those who oppose it, though the political payoff for Republicans

in backing it probably is small.

Public Support

A Washington Post/ABC News poll last month found 34 percent

of respondents wanted the pipeline built now, while 61 percent

said the review should continue. A Wall Street Journal/NBC News

poll found 41 percent favored the project.

More than a third — 37 percent — said they didn’t know

enough to have an opinion.

Obama has said he won’t approve the project if he believes

it would “significantly exacerbate the problem of carbon


He also criticized Republican arguments that the pipeline

would provide much economic benefits to Americans, arguing the

oil would likely be sold overseas after reaching refiners in the


Republicans have once before advanced to Obama’s desk

legislation on Keystone.

Late in 2011, when the Keystone review was in its third

year, as part of a broader tax bill they set a 60-day deadline

for Obama to make a decision. In January 2012, he rejected the

project saying the administration couldn’t adequately weigh its

merits by the Congress-imposed deadline.

He also encouraged TransCanada to reapply, which it did in

splitting the project and shifting a route further east in

Nebraska in an effort to resolve concerns about Keystone’s

potential threat to a sensitive habitat.

To contact the reporters on this story:

Jim Snyder in Washington at;

Billy House in Washington at

To contact the editors responsible for this story:

Jodi Schneider at;

Jon Morgan at

Steve Geimann, Jon Morgan

About BloombergNEF

BloombergNEF (BNEF) is a strategic research provider covering global commodity markets and the disruptive technologies driving the transition to a low-carbon economy. Our expert coverage assesses pathways for the power, transport, industry, buildings and agriculture sectors to adapt to the energy transition. We help commodity trading, corporate strategy, finance and policy professionals navigate change and generate opportunities.
Sign up for our free monthly newsletter →

Want to learn how we help our clients put it all together? Contact us