Lawmakers reach transportation deal, Keystone out

"I am so glad that House Republicans met Democrats half way, as Senate Republicans did months ago," Senator Barbara Boxer, who led the talks, said in a statement.

Boxer gave few details of the massive bill, which was a big priority for both parties ahead of November 6 elections because it supports an estimated 3 million jobs.

John Mica, who led House Republicans in the talks, said the bill would keep funding at current levels through the end of fiscal 2014 - a year longer than originally proposed by the Senate, giving more certainty to state governments planning big projects.

However, a Republican proposal forcing quick approval of the Canada-to-U.S. Keystone oil pipeline will not be part of the package, a senior Democratic aide said.

"Keystone is out," said the aide, who asked not to be identified.

A House Republican leadership aide declined to comment on specific provisions, but said Republicans "got some important wins" and improved the funding package originally passed by the Democratic-controlled Senate.

The package is also expected to include a one-year, $6 billion fix to prevent a doubling of interest rates on federal student loans. Funding for the National Flood Insurance Program might also be wrapped in, senators said on Wednesday.

The package must now pass formal votes in the Senate and House and be signed by President Barack Obama by Saturday.

KEYSTONE WAS MAJOR HURDLE

The subject of TransCanada's Keystone XL pipeline was one of the thorniest issues before negotiators during weeks of talks - but was one of the very last topics to be tackled.

Obama ruled earlier this year that more environmental reviews were needed for all but the southernmost tip of the 1,700-mile-long pipeline, which would carry crude from Canada's oilsands to Texas.

The White House has said Obama would veto a bill that overrides his decision.

Republicans have championed the pipeline's cause ahead of the November presidential and congressional elections, arguing that it would create much-needed construction jobs and panning Obama for stalling it.

The Keystone measure has passed in the House four times, but narrowly failed a Senate vote in March.

Republicans pushed hard for other concessions in the transportation funding bill, which was based on a two-year, $109 billion package passed by the Senate.

Boehner told reporters the deal would include "significant reforms" to streamline environmental reviews for certain highway projects, and reduce the number of programs in the highway bill, focusing spending on core transportation projects rather than directing money toward roadside landscaping and other ancillary programs.

The deal will include provisions to ensure that the bulk of fines imposed on BP after the Gulf of Mexico oil spill will go to Gulf coast communities.

"We think it's more than fair to have 80 percent of the fines for this event dedicated for restoration along the Gulf Coast," said Republican Senator David Vitter, who was part of the negotiating panel.

(Editing by Vicki Allen and David Brunnstrom)