OMAHA (DTN) -- Fireworks continued on Capitol Hill Wednesday during a House hearing on a proposed bill designed to cut the U.S. State Department out of the Keystone XL pipeline decision-making process, just days after the Obama administration denied a permit to TransCanada for the project.

The North American Energy Access Act offered by Rep. Lee Terry, R-Neb., would instead direct the Federal Energy Regulatory Commission to review and approve Keystone XL's permit.

During public hearings held in Lincoln, Neb., last fall many farmers and ranchers expressed concern that the pipeline could endanger the Ogallala Aquifer, one of the largest freshwater groundwater sources in the country.

The health of the aquifer has been held up as a vital component of agriculture production in the Midwest. Republican lawmakers have pointed to the Keystone XL project as a potential source of new jobs.

However, federal officials testifying before a subcommittee of the House Committee on Energy and Commerce Wednesday said there are serious concerns about the proposed bill.

Jeffrey C. Wright, director of the office of energy projects at the Federal Energy Regulatory Commission, said FERC has "no authority and no experience with the siting of oil pipelines."

Though the agency would carry out the mandates in the bill if it became law, Wright said the bill would not allow for public notice, public comment, issuance of an order to support the commission's decision or for judicial review.

Assistant Secretary of State Kerri-Ann Jones told the subcommittee the proposed bill raises questions about federal authority on such projects.

"The legislation raises serious questions about existing legal authorities, questions the continuing force of much of the federal and all of the state and local environmental and land use management authority over the pipeline," she said in her written testimony, "and overrides foreign policy and national security considerations implicated by a cross border permit, which are properly assessed by the State Department."

DECISION BASED ON DEADLINE

During questioning by the committee, Jones said the Keystone decision was based on the 60-day timeline outlined in the payroll tax cut extension approved by Congress in December, and not on the merits of the application filed with the State Department in September 2008.

"We began a thorough, rigorous and transparent process to determine whether issuance of a presidential permit for this pipeline was in the national interest," Jones said in her written testimony. "Congress passed the Temporary Payroll Tax Cut Continuation Act of 2011, which required a determination by the president within 60 days, of whether the Keystone XL pipeline project would serve the national interest."

The State Department recommended to the president "that the application for a presidential permit be denied, due to insufficient time to conduct the necessary analysis, and the president accepted our recommendation and determined that the Keystone XL pipeline project, as presented and analyzed at that time, would not serve the national interest."

Rep. Bobby L. Rush, D-Ill., said the proposed bill was a Republican attempt to "force the administration" to make a decision on the pipeline.

"The majority held hostage the payroll tax cut extension to force President Obama to make a decision in 60 days," Rush said. "My Republican colleagues continue to push false notions that if we roll back government protections then somehow miraculous jobs will be created."

Republican members of the committee, however, said the timeline concern didn't make sense because the State Department has had the application for more than three years.

HEARING DRAMA

While the hearing Wednesday featured a fiery back and forth between Republicans and Democrats on the committee, largely on the merits of whether the pipeline would promote energy security and create jobs, there was drama leading up to the hearing itself.

Michael J. Linder, director of the Nebraska Department of Environmental Quality was scheduled to testify before the committee and had submitted written testimony.

Jones objected to sitting at the witness table with Linder, however, based on protocol that state department officials don't testify on panels that include officials from non-federal agencies.

Terry told the committee that he was "profoundly disappointed" at the objection.

Linder said in his written testimony that the state believed an alternative route for the project would be made known by the middle of January. On Dec. 1, he said, Nebraska officials contacted the State Department to enter into a memorandum of understanding.

The Nebraska Legislature passed two bills related to the Keystone pipeline during a special session last year.

One of those bills -- LB 4 -- required the NDEQ to work with TransCanada on a new route by delineating the Sandhills area on a map. That was completed by NDEQ on Dec. 29.

"With the map available, we believed that we would see a proposed alternate route report filed with us in early to mid-January," Linder said in his written testimony.

"We received a first draft of the agreement from the State Department within the next two weeks and exchanged comments which led to what we considered to be an executable document which we submitted to the State Department in December 2011. No further progress has been made on that front."

PROJECT MOVING

Terry said press reports throughout 2011 indicated the State Department was moving forward with the project.

In an April 15 press statement, the State Department said it would be ready to grant or deny the permit by the end of 2011. (http://1.usa.gov/…)

"We're using the state of Nebraska as an excuse to delay this until after the election," Terry said. "This certainly flies in the face of previous statements. I think it's interesting that the State Department in the middle of December 2011 said there was a delay, then said it didn't have time."

The State Department said in a Dec. 12, 2011 statement (http://1.usa.gov/…) that it intended to delay the project until 2013, ahead of the president's signing of the payroll tax cut extension Dec. 23.

"The State Department is currently in the process of obtaining additional information regarding alternate routes that avoid the Sandhills in Nebraska," the statement said. "Based on preliminary consultations with the state of Nebraska and the permit applicant, the department believes the review process could be completed in time for a decision to be made in first quarter 2013."

HEARING EXTENSION REQUESTED

Democrats on th committee invoked a House rule in requesting an extension of the hearing, according to a letter (PDF)(http://bit.ly/…) sent to the subcommittee chairman Rep. Ed Whitfield, R-Ky., who denied the request.

In the letter the Democratic committee members wanted to call Koch Industries representatives and other federal agencies to testify.

"We are seeking testimony from Koch to clarify its interests in the pipeline," the letter said. "Last year, a company representative informed the committee that Koch had no interest in the pipeline.

"We have since learned, however, that a Koch subsidiary asserted in a Canadian proceeding that it has a 'direct and substantial interest' in the pipeline and a Koch-founded advocacy group has launched a political campaign to seek its approval."

 

Todd Neeley can be reached at todd.neeley@telventdtn.com

(GH/CZ/SK)

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