State Department faces review of Keystone XL pipeline process

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Amid growing criticism of the U.S. State Department’s review of the proposed 1,700-mile Keystone XL oil pipeline, the department’s inspector general’s office announced Monday that it was opening an investigation to determine whether the department had complied with federal laws in evaluating the $7-billion project.

The move comes in response to charges by pipeline opponents that builder TransCanada Corp. has improperly influenced what is supposed to be an independent assessment of whether the pipeline is in the national interest and meets U.S. environmental standards.

Critics in Congress and the environmental community have specifically raised questions about the State Department’s hiring of a contractor to help prepare the environmental impact statement for the project. That company, Cardno Entrix of Texas, had previous business connections with TransCanada.

The inquiry could also take in a host of other issues raised by Keystone XL opponents -- including whether oil transported through the pipeline wouldbe used in the U.S. or exported; whether the State Department has considered the effects on climate change of shipping tar sands oil through the U.S.; and whether the oil industry is prepared to clean up a spill of the thick, corrosive oil the pipeline is designed to carry.

The Keystone XL project would carry oil extracted from the tar sands in Alberta, Canada, as well as ordinary crude from Montana, North Dakota and Mexico, to refineries in the Midwest and along the Texas Gulf Coast.

In a memo Monday, Deputy Inspector General Harold Geisel said the “special review” was in response to a letter last month from 15 members of Congress asking for an investigation. He said it would determine “to what extent the [State] department and all other parties involved complied with federal laws and regulations relating to the Keystone XL pipeline permit process.”

State Department officials have said they hope to make a determination of whether the pipeline is in the national interest -- the key to issuing the international permit required for the structure to cross into the U.S. -- before the end of the year. President Obama has signaled that he would be personally involved in evaluating it.

The State Department’s decision-making process has been controversial from the beginning, when Secretary of State Hillary Rodham Clinton said she was “inclined” to approve a permit for the project. Proponents say it would generate jobs and additional energy supplies from a close U.S. ally.

Later, documents unearthed by pipeline opponents revealed a close working relationship between State Department officials and TransCanada lobbyists, one of whom was a former Clinton campaign aide.

“This is a critically important issue for our environment and the energy future of our country. At a time when all credible scientific evidence and opinion indicate that we are losing the battle against global warming, it is imperative that we have objective environmental assessment of major carbon-dependent energy projects,” U.S. Sen. Bernie Sanders said in a statement after the inspector general’s announcement. An independent from Vermont, he let the group of representatives asking for the inquiry.

The review will presumably examine criticism of the State Department’s decision to contract with Cardno ENTRIX to help prepare the environmental documentation on the project -- which has been criticized by opponents and even some evaluators for the Environmental Protection Agency for purportedly underestimating potential damage from the pipeline.

The company also helped conduct a series of public hearings across the country on the pipeline proposal. Project opponents said staff members they believed were attached to Cardno Entrix in some cases prevented critics of the project from approaching and talking to State Department hearing officers.

Cardno Entrix recently listed TransCanada as one of its “major clients,” a relationship pipeline opponents say presents a conflict of interest when the agency is preparing what is supposed to be an independent assessment for the U.S. government.

The State Department has said Cardno Entrix was selected after a competitive request for proposals to help prepare the environmental impact statement, prepared at TransCanada’s expense, under the department’s direction.

As for the company’s involvement in public meetings, Kerri-Ann Jones, assistant secretary of State, told reporters last month that all the meetings were “run” by the department, and Cardno Entrix’s participation occurred under the department’s supervision.

“They are the contractor. We did look to them for some administrative support, so they did provide some administrative support on all of the meetings, but under our direction and our supervision, and it was all logistics regarding the meetings,” Jones said.

TransCanada spokesman Terry Cunha emphasized that the selection of the company was done by the State Department in the typical manner for selecting such outside contractors.

“At TransCanada, we conduct ourselves with integrity and in an open and transparent manner,” he said in a statement. “We are certain that the conclusion of this review will reflect that. We welcome and independent review by the inspector general’s office so that these latest claims by professional activists and lawmakers who are adamantly opposed to our pipeline project can be addressed.”

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-- Kim Murphy in Seattle