12/18/2011 02:56 EST | Updated 02/17/2012 05:12 EST

Keystone XL Pipeline: Republican Deadline Approved By Senate Could Kill Project

Getty Images

WASHINGTON - Republicans may be crowing about the U.S. Senate's passage of a payroll tax cut bill that includes a measure aimed at expediting approval of TransCanada's Keystone XL pipeline.

But could the measure passed over the weekend all but sign the death warrant for the pipeline?

The White House isn't likely to approve the pipeline after just a 60-day review of a proposed new route for the $7 billion project, one of U.S. President Barack Obama's top economic advisers said Sunday.

U.S. State Department officials reviewing alternative routes around a crucial aquifer in Nebraska had already made clear that two months was not enough time to decide the fate of the pipeline, Gene Sperling told CNN's "State of The Union."

The bill calls for Obama to approve the pipeline within 60 days or decide it's not in the national best interest of the United States.

But the two-month deadline "would make it almost certainly impossible" that the project will get the green light, added Sperling, joining the chorus of Senate Democrats who have made similar assertions.

"They've just killed the Keystone pipeline. They killed it because they forced the president to make a decision before he can make it so he's not going to move forward with it," Sen. Barbara Boxer, an ally of environmental groups, said Friday.

Sen. Carl Levin, a Michigan Democrats, suggested his party out-smarted Republicans.

"The president is apparently just going to use the option given to him not to let it go (forward)," said Levin. "There's a waiver in there which we understand the president is going to exercise."

The Canadian pipeline, a project that few Americans had even heard of just a few months ago, has become the latest flashpoint in a momentous, year-end legislative battle between Democrats and Republicans on Capitol Hill.

Democrats were clamouring for bipartisan agreement on a bill that would extend payroll tax cuts and unemployment benefits for hard-hit Americans, and were miffed when Republicans in the House of Representatives inserted the Keystone provision into their legislation.

The House Republicans did so in the wake of a U.S. State Department decision to defer a final ruling on the pipeline until after next year's presidential election. State Department officials are assessing the pipeline because it crosses an international border.

The entire bill passed on Saturday, in fact, was in question again just a day later. The latest obstacle had nothing to do with Keystone XL, but because House Republicans want the payroll tax cuts to be extended for a full year, not just the two months currently proposed.

House Speaker John Boehner was calling for meetings with Senate leaders to come up with some kind of agreement.

Last month's announcement by the State Department on Keystone XL prompted howls of protest from Republicans. They accuse the Obama administration of making a political decision aimed at shielding the president from a backlash by his liberal base next November.

The State Department said it was deferring a final decision on Keystone XL so it could undertake a further environmental analysis on alternative routes around Nebraska's Ogallala aquifer, a major source of drinking water for millions on the Great Plains. But sources familiar with the State Department decision said it resulted from pressure by senior White House advisers.

Appearing on NBC's "Meet the Press," Boehner pointed out that the White House was once fully supportive of the pipeline, and scoffed at the need for yet another environmental review.

"That's nonsense, they've had three years," Boehner said. "This was about to be approved last summer, so waiting and waiting and waiting is not the answer. It's time to proceed with the pipeline."

He added the president is "just kicking the can down the road because it may anger some people in his base."

The pipeline would carry millions of barrels of Alberta oilsands crude through six U.S. states to Gulf Coast refineries. Proponents say the pipeline will create thousands of jobs and end American dependence on Middle East oil, while opponents say the pipeline is an environmental disaster waiting to happen.

Republican lawmakers have been attempting to paint Obama as weak on job creation, and are holding up the Canadian project as a symbol of what they say is White House economic incompetence.

Obama, meantime, had suggested he'd veto any payroll tax cut bill that included the pipeline measure, and faced accusations this weekend from his liberal base that he'd blinked on that promise after the Senate, controlled by Democrats, left the Keystone XL language in the bill.

Sperling denied it.

"The president did make clear that he was not going to allow Congress to tie that vote to something that would mandate or force him to accept the Keystone permit when there was not adequate time to do a health and safety environmental review," he said.

"Because nothing in this bill mandates the president to do that, this ... did not go against his veto threat."

Republicans have vowed to carry on fighting for the pipeline, even if Obama refuses to approve it in 60 days.

"If the president denies the American people these jobs and this source of energy from our ally, Canada, it will not be the last time he sees this bill," a Senate Republican leadership aide told the Washington Post.

"Republicans will continue fighting for this bipartisan job-creation (measure), even if the president wants to stand between the unemployed and good American jobs."

Democratic Sen. Charles Schumer, meantime, scoffed at his Republican colleagues this weekend on Capitol Hill.

"The bottom line is that Secretary of State Clinton has said that if they rush the process, they're going to end the pipeline .... And the president is totally on board with that strategy," he said.