By David Lawder
WASHINGTON (Reuters) - Senate Democrats closed ranks on Tuesday to block quick approval of the Keystone XL oil pipeline as they begin negotiations with House of Representatives Republicans on a compromise job-creating transportation construction bill.
Senate leaders named eight Democrats and six Republicans to a conference committee that will hammer out differences between a two-year, $106 billion Senate bill to fund road, bridge and rail projects, and a House-passed 90-day extension of current law that also includes approval of the controversial Keystone pipeline.
President Barack Obama, who has put northern portions of Keystone on hold due to environmental concerns, has threatened to veto any bill containing the pipeline if it included an immediate approval of the entire project.
Most Senate Democrats are opposed to including the Canada-to-Texas pipeline in the bill, but it would only take two of the Democratic negotiators to join Republicans to move the project another step closer to congressional approval. It now appears as if none will.
One Senator, Max Baucus of Montana, which stands to gain economically from the pipeline, voted in favor of a similar Keystone approval measure that was defeated by the Senate in March. But on Tuesday his office said he was reluctant to include it in a transportation bill compromise - especially if it means any fight over it would delay road construction jobs.
"No one is a bigger supporter of the Keystone pipeline than Senator Baucus and he is looking for every opportunity to help move the project forward," his office said in a statement.
"But Senator Baucus will not put more than 1 million American jobs supported by the highway bill in jeopardy unless he's sure whatever Keystone measure proposed has the legs to pass Congress, be signed into law, and stand up to legal scrutiny, so we don't end up delaying the project even further by getting it tied up in the courts," the statement said.
The House's stop-gap highway bill, which contains the Keystone measure, passed 293-127, including 69 Democratic votes in the Republican-controlled chamber. While this is theoretically a veto-proof majority, some Democratic congressmen said they only voted yes to move the measure into negotiations with the Senate.
Baucus has supported TransCanada Corp's Keystone project because in addition to carrying Canadian oil sands crude to U.S. Gulf Coast refineries, it would also transport oil from the Bakken shale formation in Montana and North Dakota.
A Democratic Senate leadership aide said that Baucus is the only Senate Democratic negotiator who is seen as possibly voting in favor of including Keystone in the transportation bill.
Democratic Senator Tim Johnson of South Dakota, another state that stands to see some economic benefit from constructing the pipeline, remains opposed to including it in the transportation bill.
"The senator has said that there's a process in place for the (Obama) administration to deal with Keystone. It is not necessary to legislate this," said Perry Plumart, Johnson's spokesman.
The House-Senate talks are scheduled to start in coming weeks. An initial transport project extension expires June 30.
(Reporting By David Lawder, editing by Richard Cowan and Philip Barbara)