Reid: GOP taking pipeline hostage in tax fight

Senate Majority Leader Harry Reid (D-Nev.) on Tuesday said Republicans are holding the Keystone XL pipeline hostage in the fight over extending payroll tax cuts. 

Reid cited the State Department's new warning that forcing a federal permit decision within 60 days could leave the department no choice but to reject the project, which State is currently planning to review into 2013.

“In effect, as some have said, what they are trying to do is kill the hostage,” Reid said on the Senate floor Tuesday. “The hostage is the Keystone pipeline. And if they push this through, it is bound and doomed to failure.”

The House is slated to vote on payroll tax cut legislation Tuesday afternoon that includes the Keystone provision, and across the Capitol, Senate GOP leaders are pushing hard for the Keystone provision as well.

Republican lawmakers and aides are pushing back against State’s claims about the effect of the GOP plan to expedite a decision on TransCanada Corp.’s proposed Alberta-to-Texas pipeline. They say State's warning is based on an inaccurate reading of their legislation. (E2 has much more on that here.

Senate Minority Leader Mitch McConnell (R-Ky.), casting Keystone as the "biggest shovel-ready project in America," bashed Democratic leaders for opposing the Keystone measure, casting the Obama administration's delay of a permit decision until after the 2012 election as a blatantly political maneuver.

“Evidently the president doesn’t want this project approved before his election next November because a small faction of very liberal voters he’s counting on to help him get reelected don’t like the pipeline,” McConnell said on the Senate floor Tuesday.

Reid, however, has called the House payroll plan that includes Keystone dead on arrival in the Senate, and Obama has also threatened to veto the measure (though his aides aren’t explicitly using the word “veto”).

“They’re wasting time catering to the Tea Party folks over there when they should be working with us on a bipartisan package that can pass both houses,” Reid said.

The pipeline is playing a major role in the partisan tussle over legislation to extend the payroll tax cut. Republicans, joined by business groups and some conservative Democrats, call it a major way to enhance energy security and create jobs.

But environmentalists, backed by a separate group of Democrats, bitterly oppose the project over greenhouse gas emissions from Alberta’s oil sands and the potential for spills.

---