(John Kemp is a Reuters market analyst. The views expressed are
By John Kemp
LONDON Dec 23 In a crushing demonstration
of the growing power of domestic energy producers, and waning
influence of environmental groups, Congress is poised to enact
legislation fast-tracking approval for the controversial
Keystone XL pipeline.
It is a stinging defeat for environment groups that have
lobbied fiercely against the Keystone extension, and comes
little more than a month after the president had sought to take
the heat out of the issue by postponing approval beyond the next
election pending a review of alternative routes through Nebraska
The Keystone provisions have been inserted by congressional
Republicans into a must-pass bill to make them difficult for the
president to veto.
The Temporary Payroll Tax Cut Continuation Act (HR 3630),
which has been approved by the Senate and is set to be agreed by
the House of Representatives following a compromise deal on
Thursday, instructs the president to grant a permit for the
pipeline within 60 days, or report to Congress on why
construction of the pipeline is not in the national interest.
If the president procrastinates and neither grants approval
nor explains why it is being withheld within 60 days, the
pipeline will be automatically approved "by operation of law".
To prevent further intervention by the courts or the
Environmental Protection Agency, the law expressly states the
environmental impact statement already performed satisfies all
the requirements of the 1969 National Environmental Policy Act
and the Historic Preservation Act.
The congressional declaration will bar further challenges to
the pipeline in court in case the route is altered in the
portions crossing Nebraska, or criticism about the adequacy of
the existing study. And to ram the point home it states
unambiguously "no further federal environmental review shall be
Other provisions seek to bar any other challenge under
federal law and ensure any re-routing around the sensitive Sand
Hills region requested by the Nebraska governor is automatically
approved by the federal authorities, subject only to ordinary
pipeline safety regulations, so construction can begin without
THE LONG ROAD TO DEFEAT
The Keystone provisions were originally inserted by the
Republican-dominated House of Representatives in a bid to compel
the president to approve them by including them in high-priority
legislation extending expiring tax cuts.
But they were approved by a lopsided 89-10 majority in the
Democrat-controlled Senate in essentially the same form.
The only change was to move them from the front of the bill,
where they had been provocatively included as Title I by the
House as "job creation incentives", to the back, where they are
now written up in Title V as "other provisions".
Congressional Democrats and President Barack Obama have both
decided tax cuts and job creation are higher priorities in the
current election cycle than environmental concerns about a
pipeline running across beautiful but remote sections of the
More broadly, the law's prospective passage is a clear sign
energy security and affordability are now higher on the agenda
than climate change and emission controls, at least in the
It marks a stunning reversal of fortune from the start of
the presidency three years ago, when environment groups were in
the ascendant, pushing for a broad federal cap-and-trade bill,
and were thwarted only by a handful of senators from
coal-producing and manufacturing states in the industrial
But the passage of the Waxman-Markey cap-and-trade bill by
the then-Democrat controlled House proved to be the high point
of the movement's influence, and the start of a long retreat,
marked by a series of reversals and climb-downs on the part of
its allies in the administration and Congress.
There is no doubt environment and climate change campaigners
over-reached, over-estimating the strength of their support and
the electorate's willingness to shoulder higher energy costs to
limit emissions of climate-altering greenhouse gases.
But in the end the climate agenda has fallen victim to the
grinding recession and persistent unemployment on the one hand,
and the fracking revolution on the other, which has suddenly
opened up the prospect of plentiful domestic energy supplies.
Fracking and economic malaise shattered the alliance between
environmentalists, national security specialists, parts of the
energy industry and progressive politicians, which provided the
early momentum for ambitious energy legislation.
With job creation now uppermost on politicians minds as the
2012 elections approach, neither congressional Democrats nor the
president can afford to be seen supporting measures that would
block the expansion of domestic energy resources.
TERMS OF DEBATE SHIFT
The triumph of the energy industry over environmental groups
on Keystone probably signals a similar shift in the debate over
hydraulic fracturing. So far, with fracking focused on natural
gas production, Congress has largely treated the issue as an
environmental one, and lawmakers have pushed the industry hard
on safety and pollution concerns.
But as fracking is redirected towards oil production, and
economic rewards to pioneering states like North Dakota and
Texas become evident, the framing of the issue is set to switch
from the environment and to energy security and affordability.
The scale of the environmentalists' defeat is difficult to
overstate. Lobbyists for energy producers managed to insert
carefully crafted provisions into an unrelated bill and railroad
it through a divided Congress and a hostile White House.
Keystone authorisation is one of the very few energy-related
measures to pass into law any time in the last decade. Most have
failed to clear Congress amid partisan divisions. But energy is
rising rapidly up the agenda, as shown by the increasing number
of oil and gas-related bills being introduced into the last two
Energy lobbyists managed to make Keystone one of the top
priorities for House Republicans, adding it as one of only a
handful of extraneous riders to the payroll tax bill, and
resisting efforts to remove it.
Congressional approval for Keystone is likely to embolden
frackers to push Congress for similar safeguards to keep
unsympathetic regulators from the Environmental Protection
Agency and other parts of the federal government out of their
industry, leaving decision-making to the states, where frack
firms will push the local job creation and economic benefits
For conservationists and those worried about climate change,
it is a bitter end to a year which has seen them pushed back on
all fronts, and will leave them scrambling to find a new
strategy in 2012.