09/26/2013 12:27 EDT | Updated 11/26/2013 05:12 EST

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, limiting the process to months and taking the decision out of the State Department's hands.

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 project is behind schedule and expected to become costlier amid intense lobbying by environmentalists, landowners, businesses and politicians on both sides of the border.

A State Department decision isn't expected until 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 countries 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 less clean than other energy 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, chairman of the committee on energy and commerce, 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 in an interview that the projects would be subject to environmental scrutiny at the state level.

"You still have to go through the process of getting eminent domain and permits through the states, and the environmental reviews that have to go with that," he said.

The current system is made up of piecemeal executive orders from various presidents. Green said he's like to see something more consistent and predictable — especially since Canada, Mexico and the United States are free-trade partners.

"Following what happened with Keystone, we wanted to put it in statute so people would have some certainty about when they apply for a pipeline permit," said Green.

The energy and power subcommittee will hold a hearing next Wednesday to examine the proposed legislation.

Jim Murphy, senior counsel at the National Wildlife Federation, said the bill would "eviscerate" reviews under the National Environmental Policy Act, which requires agencies to thoroughly examine a project's environmental impacts. He also raised concerns over how much public input would be allowed under the proposed legislation.

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."

In addition to oil pipelines, the proposed bill deals with cross-border natural gas and electrical infrastructure, as well as rules on natural gas imports and exports.

Meanwhile in New York, Prime Minister Stephen Harper sharpened his sales pitch for Keystone XL in a speech to a high-powered business audience.

"My view is that you don't take no for an answer," Harper said. "We haven't had that. If we were to get that, that won't be final. This won't be final until it's approved and we will keep pushing forward."