Obama signs payroll tax bill that requires speedy decision on Keystone pipeline

President Obama signed into law a broad payroll tax package Friday afternoon that includes a measure requiring him to make a speedy decision on the Keystone XL pipeline.

The GOP-backed measure requires the administration to make a decision within 60 days on the pipeline, which would carry oil sands crude from Alberta, Canada, to refineries on the Gulf Coast. In order to reject the pipeline, Obama would have to declare that the project is not in the national interest.

While Republicans lobbied aggressively for the provision, administration officials note that the move could backfire. They point to a recent warning by the State Department — the lead agency conducting the federal review of TransCanada Corp.’s proposed project — that the administration will have little choice but to reject the project if officials are forced to make a decision in 60 days.

White House communications director Dan Pfeiffer said on Twitter last week that the Keystone provision “simply shortens the review process in a way that virtually guarantees that the pipeline will NOT be approved.”

Still, the measure will force the administration to weigh in on the pipeline before the 2012 election. Obama last month sought to delay a final verdict on the pipeline until 2013 by calling for review of alternative routes.

Any decision will be politically thorny for Obama, as the project splits his base. Environmental groups and others are vehemently opposed to the project, while a number of major unions support the pipeline.

President Obama made no mention of the Keystone provision Friday during remarks at the White House, instead focusing on the provisions in the package to extend the payroll tax cut for two months — a political victory for Democrats and the White House.

Read more on Obama’s remarks here.

Opponents of the Keystone XL pipeline said Friday that they hoped the measure requiring a speedy decision on the project will ensure its rejection by the administration.

“Our hope is that the president will use the opportunity to deny the permit, and sooner rather than later,” 350.org President Bill McKibben said in a statement. “His administration has made it clear many times over the past few weeks that the demand for quick approval attached to this legislation would result in the rejection of the pipeline.”

As The Hill reported last week, expect an intense lobbying and public-relations battle over the pipeline during the next two months.