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Massachusetts Democrats blast billionaire's bid to stir Senate race

By Scott Malone

BOSTON (Reuters) - Both Democratic contenders in Massachusetts' April Senate primary are pushing back against a former hedge fund manager turned environmental activist who is trying to make the proposed Keystone XL pipeline an issue in the race.

While the pipeline, which would carry crude from Canada's tar sands to Texas refineries, is not due to come anywhere near the New England state, California billionaire Tom Steyer is threatening a campaign to make it a wedge issue ahead of the April 30 primary.

Steyer, who last year stepped down from the Farrallon Capital Management hedge fund he founded, has threatened to campaign against one of the contenders for the seat, Representative Stephen Lynch, if he does not drop his support for the $5.3 billion pipeline.

Both Lynch and his rival and fellow Congressman Edward Markey, who is leading in early polls, pushed back against Steyer, saying that his plans would run afoul of a "People's Pledge" the two agreed to in an effort to keep outside money out of the campaign.

Lynch, a former ironworker, has dismissed Steyer's threat.

"I think most Americans are tired of being shoved," Lynch, a former ironworker, wrote in an op-ed published in the Boston Globe on Friday.

Markey on Friday called on Steyer to stay out of the race.

"These kinds of tactics have no place in our political discourse and should be repudiated," Markey said. "Steyer should immediately withdraw his threats and ultimatum, and stay out of this Senate race."

Under the "People's Pledge," both Markey and Lynch agreed to donate money from their campaign funds to a charity of his rival's choice if an outsider buys attack ads against a rival.

Steyer said through a spokesman that the pledge leaves room for other campaign operations, such as phone banks, research and rallies.

"While we have great respect for Ed Markey and know he is a real Democrat, the issue in this race is whether Steve Lynch is running to be the Senator from Canada fighting for increasing the wealth of a foreign oil company or a Senator from Massachusetts who will stand for the common good of the Commonwealth," said Chris Lehane, a spokesman for Steyer.

The campaign against Lynch was due to kick off on Friday with trucks driving the streets with mounted video screens showing ads questioning his stance on the pipeline, health care reform and abortion.

Late last year, Steyer stepped down from the hedge fund he founded, Farallon Capital, to focus his time on promoting alternative energy sources and expand his efforts in Democratic politics.

He went on to spend more than $30 million in California to support a ballot initiative, Proposition 30, that closed a tax loophole and funnels money to projects that create clean energy jobs.

The three Republican candidates in the Massachusetts race, which will end with the June 25 special election to fill the Senate seat that came available when John Kerry was named secretary of state, did not sign the "People's Pledge."

The trio -- former Attorney Michael Sullivan, state Representative Daniel Winslow and former Navy SEAL Gabriel Gomez -- argued that as relative political newcomers, they do not have the established campaign operations and political war chests that their Democratic rivals have.

(Reporting by Scott Malone; Editing by Paul Thomasch and Leslie Gevirtz)

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