Proposed House bill would overhaul cross-border pipeline review process

A bill proposed in the U.S. House of Representatives would overhaul how cross-border energy projects such as the Keystone XL oil pipeline are reviewed, so the process can be complete within months unless national security is at risk.

Under the North American Energy Infrastructure Act, co-sponsored by Michigan Republican Fred Upton and Texas Democrat Gene Green, such a project would have to be approved within 120 days, unless it’s found be against the national security interest of the United States.

And decisions on oil pipelines would be made by the Secretary of Commerce, rather than the Secretary of State and president — as is currently the case under the Presidential Permit process.

Among the casualties of the current system is the Keystone XL project, envisaged as a major conduit for connecting Alberta’s oilsands in the north to Texas refineries in the south.

However, the Upton-Green bill would need to navigate many obstacles before it could become law.

Under the U.S. congressional system, both the Senate and House of Representatives must pass identical bills — usually after highly partisan negotiations — before the proposal goes to the president, who has veto power.

Calgary-based TransCanada Corp.’s (TSX:TRP), which is not specifically mentioned in the legislation, had originally expected its proposal to ship 830,000 barrels per day through Keystone XL would easily win the necessary approvals.

However, the controversial project is behind schedule amid intense lobbying by environmentalists, land owners, businesses and politicians on both sides of the border.

TransCanada has said it doesn’t expect the State Department to announce its decision until some time in 2014 — a necessary step before President Barack Obama makes a final decision.

Proponents of the $5.4-billion project say it will reduce U.S. reliance on oil imports from unfriendly regimes and have meaningful economic benefits. Opponents fear a spill from the pipeline will have dire environmental consequences and that it will increase U.S. dependence on oilsands crude, which many see as dirtier than other sources.

“The goal of North American energy independence is finally within our reach, but our next challenge is building the infrastructure needed to harness this newfound energy abundance,” Upton said in a statement.

He added the legislation “will restore certainty and ensure future cross-border energy projects are reviewed and approved in a reasonable manner.”

Green said “this bill will bring much-needed structure to the cross-border permitting process while also importantly ensuring that these projects still must go through all relevant environmental review before actually being constructed.”

Jim Murphy, senior counsel at the National Wildlife Federation, says the bill would “eviscerate” reviews under the National Environmental Policy Act, which requires agencies to thoroughly examine a project’s environmental impacts.

But Murphy said he doesn’t think the “outrageous” bill will get much support.

“It’s really an over-the top bill. I think that there’s broad agreement in the American public that environmental concerns at least should be considered,” Murphy said.

“I think there’s also very broad support for the ability of communities and states and regions that are impacted by major oil infrastructure projects to be able to know what the risks of those projects are and to be able to have a say in the process.”

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