Exclusive: Keep Pipeline out of Tax Cuts, Senators Tell Reid

(Reuters) - Five U.S. senators urged Senate Majority Leader Harry Reid to reject Republican efforts to make approval of the Keystone XL pipeline part of a payroll tax cut bill expected to pass through Congress in the next two weeks.

Last week Republicans in the House of Representatives said they would include a measure in the payroll tax cut bill that would give the power to approve the $7 billion Canada-to-Texas pipeline to an energy regulator, taking the decision out of the hands of the administration of Democratic President Barack Obama.

We strongly oppose the inclusion of provisions that require approval of this pipeline in an arbitrary timeframe in any legislative package moving forward in the Senate, wrote senators Bernie Sanders, an independent, along with Democrats Ron Wyden, Patrick Leahy, Sheldon Whitehouse and Frank Lautenberg, in a letter to Reid on Tuesday.

For the Keystone measure to advance, it must be agreed to by the Democratic-controlled Senate - a major hurdle, as signaled in the senators' letter.

The senators called the Republican plan would be a rubber stamp for the TransCanada Corp project, which would move 700,000 barrels a day of crude from the Canadian oilsands to Texas refineries.

Republicans support the project because it would create thousands of jobs at a time when the economy is struggling. But some Democrats are wary of the climate-changing emissions from the oil and the impact any accidental spills could have on the environment.

The House plan would short-circuit the legally required environmental review process, said the senators to Reid, who will play a key role in brokering a final deal on the extension of the tax cuts.

BACK-ROOM DEAL

By law, approval of the cross-border pipeline rests with the State Department, which had been on track to approve the project by the end of the year.

But it was put aside last month after Nebraska raised fierce objections to the pipeline's route. The state and TransCanada agreed to a new route, and the State Department said it needs until 2013 to study the plan.

Environmental groups fighting the pipeline had sworn to make its approval an election issue.

The Republican plan sparked fresh concern among green groups, with more than 100,000 people signing a petition to Reid and House Minority Leader Nancy Pelosi.

They need to know all hell will break loose if they allow a back-room deal that cuts environmentalists off at the knees, said Becky Bond, political director of CREDO Action, the environmental group that organized the petition, in a statement.