Down But Not Out? Republicans Vow to Overturn President Obama's Veto of Keystone XL Pipeline Bill

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Following President Obama's veto February 24 of a bill authorizing the start of construction for the Keystone XL Pipeline, congressional Republicans vowed to continue efforts to legislatively mandate the construction of the controversial $8 billion, 1,179-mile crude-oil pipeline. The odds of Congress overriding a presidential veto are long--it's only happened a few times in the last 50 years--and Republican plans to attach a Keystone XL rider to a piece of "must pass" legislation also appear slim, given the struggle at the end of last week to fund the Department of Homeland Security.

The February 24 veto was Obama's third as president. In returning the bill to the Senate, the president wrote: "Through this bill, the United States Congress attempts to circumvent longstanding and proven processes for determining whether or not building and operating a cross-border pipeline serves the national interest. And because this act of Congress conflicts with established executive branch procedures and cuts short thorough consideration of issues that could bear on our national interest--including our security, safety, and environment--it has earned my veto."

Obama's spokesman said the president may still end supporting the pipeline, once the State Department renders its recommendation. "It certainly is possible," spokesman Josh Earnest said. "The president will keep an open mind as the State Department considers the wide range of impacts that this pipeline could have on the country, both positive and negative."

"The president is sadly mistaken if he thinks vetoing this bill will end this fight," House Speaker John Boehner (R-Ohio) and Senate Majority Leader Mitch McConnell (R-Kentucky) wrote last week in an op-ed article in USA Today: "Far from it. We are just getting started."

For Congress to override a presidential veto, a two-thirds majority is required in the House of Representatives and the Senate. Neither house passed the bill with that large a margin, and observers doubt that even a concerted campaign of arm-twisting and horse-trading on Capitol Hill could garner enough votes to override the veto.

The proposed pipeline has been at the center of an intense multi-year fight between Democrats and Republicans. For more on the project, see February 5, 2015, article -Obama and Congress: Two More Years of Gridlock on Energy Issues?; November 20, 2014, article - Senate Kills Keystone XL Bill, But Republicans Promise Redo in January; and May 28, 2014 article - Has the Keystone XL Pipeline Project Become a Zombie?.

The State Department is the federal agency charged with deciding if granting the pipeline a permit would be in the interest of the country. A multi-agency review of the project, that last year produced an 11-volume environmental impact review, concluded that building the pipeline would not materially increase global concentrations of carbon dioxide (CO2). If Keystone XL is not built, the State Department said, producers and pipeline companies will likely find other ways to get the oil sands from Alberta to market--either by rail or by pipeline to Eastern or Western Canada, where it could be exported.

Last month, eight federal agencies completed their analyses of Keystone XL and submitted their findings to the State Department, which will produce a final recommendation for President Obama to consider. There is no specific date by which the State recommendation is to be delivered to the president, and no timetable for him to accept or reject the department's recommendation.

TransCanada Corporation (NYSE:TRP) (Calgary, Alberta), the project's developer, remained "fully committed" to the pipeline despite the president's veto, company President and Chief Executive Russ Girling said in a statement: "The facts show Keystone XL passes the national interest determination test and President Obama's climate test. Without Keystone XL, U.S. refineries are forced to use other methods of transportation to get the oil they need for creating products we all rely on every day. This means higher greenhouse gas (GHG) emissions and relying on methods of transportation that are not as safe or as efficient as pipelines."

"Pipelines are by far the safest and most environmentally sound mode of transporting the millions of barrels of oil Americans use every day," Girling continued, a subtle nod to recent oil train accidents. "The first three phases of Keystone have provided ... broad benefits since 2010, all while safely delivering over 830 million barrels of oil to U.S. refineries."

Keystone XL would transport up to 830,000 barrels of crude oil per day (BBL/d) from Hardisty, Alberta, to Steele City, Nebraska, where it would connect to other pipelines that would bring the crude oil to refineries located in the Gulf Coast region or Midwest. Up to about 100,000 BBL/d of crude oil from the Bakken Shale formation could be transported via Keystone XL.

Click on the image at right to see a map of the planned Keystone XL pipeline from TransCanada.

President Obama's veto was cheered by Democrats and environmentalists, and jeered by Republican and trade groups representing oil companies and manufacturers.

In a statement, Jack Gerard, president and chief executive of the American Petroleum Institute (API) (Washington, D.C.), said: "Instead of standing with 72% of Americans, including a majority of Democrats, who support the pipeline, this (veto) continues us down the path of indecision and delay. Voters spoke loud and clear last fall, saying they wanted Washington to work together. Unfortunately, the veto demonstrates some are not listening."

The National Association of Manufacturers added: "With the stroke of his pen, the President said no to more than just a pipeline. He said no to a conduit for new jobs, opportunities for thousands of working men and women, and energy security for manufacturers here at home. Although we are severely disappointed with today's veto, the clock is still running on a final decision on the Keystone XL Pipeline. The President can still redeem himself by approving the project's permit--a step laborers and manufacturers urge him to take as soon as possible."

But the Sierra Club's executive director, Michael Brune, praised the president's veto in a statement: "That's what he said he'd do from the start, but Republicans in Congress continued to waste everyone's time with a bill destined to go nowhere, just to satisfy the agenda of their big oil allies. President Obama has also made it clear he will reject the tar sands pipeline if it contributes significantly to the climate crisis. The president has all the evidence he needs to reject Keystone XL now, and we are confident that he will."

Senator Bernie Sanders (I-Vermont) also supported the president's veto. In a statement, he said: "This veto tells the world that our nation takes seriously the planetary crisis of global warming and that we will not support legislation that would let a Canadian oil company ship some of the dirtiest oil on the planet across the United States."

Commenting on the imbroglio that continues to engulf the Keystone XL pipeline, Jesus Davis, Industrial Info's vice president of research for the Oil & Gas Production, Pipelines and Terminals industries, said: "The president's veto was not unexpected. He's burnishing his environmental legacy, but we are still hopeful that science and business will trump protests and PR stunts. There are disputes about a lot of aspects of this proposed project, including whether the price swoon for crude oil makes the project more or less likely. But virtually no one disputes that Canada will continue trying to get its oil sands to market. I hope the president sides with energy security."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.