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Keystone Decision Hands GOP Ammo

President Barack Obama’s rejection of the Keystone XL pipeline on Wednesday handed Congressional Republicans a rallying point, with Speaker John Boehner (Ohio) warning, “This is not the end of the fight.”

“All options are on the table,” Boehner said when asked whether he would look to include pipeline language in a conference committee’s deliberations to extend a popular payroll tax cut.

“There are legislative vehicles that will be moving in the weeks and months ahead” that Republicans could attach the language to, he added.

Senate Minority Leader Mitch McConnell (R-Ky.) also blasted the decision.

“[Obama’s] decision to block the development of the Keystone XL pipeline, thousands of jobs and increased energy security is stunning. His decision shows a fundamental disconnect with job creation in this country and, sadly, that his focus is on appealing to his liberal environmental base rather than taking steps that can lead to thousands of jobs and energy security for our nation,” McConnell said.

Earlier Wednesday, the White House announced that Obama would deny the permit request. In a statement, Obama blamed Congressional Republicans for setting a “rushed and arbitrary deadline” that prevented the State Department from making a “full assessment of the pipeline’s impact, especially the health and safety of the American people, as well as our environment.”

Obama noted that his decision was “not a judgment on the merits of the pipeline, but the arbitrary nature of a deadline that prevented the State Department from gathering the information necessary to approve the project and protect the American people.”

Still, the decision handed the GOP a ready-made talking point.

Rep. Kevin Brady (R-Texas), a member of the conference committee handling the payroll tax cut talks, said the issue may reemerge.

“This I know: We’re not giving up on that project. There’s too many jobs at stake. Too much common-sense energy development that benefits us and Canada. It’s a huge mistake the president’s making economically,” Brady said.

Senate aides from both parties appeared surprised by the White House’s decision to announce its position on the pipeline so far before its deadline.

Senate Republicans reveled in the opportunity to replay a fight they felt they were winning until the House GOP rejected a short-term extension of the payroll tax holiday that included language to expedite the pipeline. They are currently reviewing legislative ways to revive the issue, according to a leadership source, and many Members of both parties were quick to release statements opposing the president’s action.

“I am disappointed in the president’s decision. … I will continue to champion Montana’s role in securing America’s energy future,” Sen. Jon Tester (D-Mont.) said in a release. Tester faces a tough re-election contest this November.

During the last payroll tax cut debate, Democrats said they allowed Republicans to hammer on the Keystone issue because they felt they could win a messaging battle that pitted middle-class tax cuts against pipeline construction.

Republicans used the pipeline as a narrative about job creation.

Some sources suggested that by releasing its decision now, the White House would lessen the effect of the pipeline issue on the conference committee’s deliberations on longer-term extensions of the payroll tax cut, unemployment insurance benefits and a heading-off of a scheduled cut to Medicare physicians’ reimbursements.

The conference committee has yet to delve deeply into its work, except for regular conversations between the lead negotiators, Senate Finance Chairman Max Baucus (D-Mont.) and House Ways and Means Chairman Dave Camp (R-Mich.).

Baucus was among the Senate Democrats vowing to continue to fight for the pipeline. “There is absolutely no reason we cannot start putting Montanans to work on the Keystone XL pipeline right away,” Baucus said in a statement. Such sentiment will likely gain traction with the GOP as well.

The National Republican Congressional Committee is targeting House Democrats over the issue, accusing them of “buckling under pressure from their radical base and preparing to send these thousands of jobs from the Keystone XL pipeline project overseas to countries like China instead.”

Democrats and the president have dueling constituencies on opposite sides of the issue. Environmentalists oppose the pipeline because the oil comes from Canadian tar sands and because the pipeline might be built through environmentally sensitive areas of the United States, but unions back the program because it could create jobs.

The business community also blasted the administration’s decision.

“This political decision offers hard evidence that creating jobs is not a high priority for this administration,” U.S. Chamber of Commerce President and CEO Tom Donohue said in a statement. “The president’s decision sends a strong message to the business community and to investors: keep your money on the sidelines, America is not open for business.”

Business Roundtable President John Engler said it is a good sign that the State Department will allow TransCanada to reapply for the pipeline permit.

“In fact, I am confident the Keystone pipeline will be approved in the future because it is in the national interest,” he said in a statement. “There will always be people who oppose any permitting of projects like the Keystone pipeline, but our government will have to say yes to these kinds of projects if our nation is going to grow, prosper and compete.”

Kate Ackley and Steven T. Dennis contributed to this report.

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