Yesterday, Politico’s website ran a story  titled: “Keystone XL handled well by State Department, inspector general says.” The story asserted that “there is no evidence of conflict of interest or bias in the State Department’s review of TransCanada’s proposed Keystone XL pipeline.”
Well, not quite. The IG found that there wasn’t any technical conflict of interest when the State Department selected the firm Cardno Entrix to perform an environmental impact review of the project, but the report did highlight plenty of flaws in the review process—and also recommended the State Department change its contracting processes going forward.
Cardno Entrix had previously identified TransCanada, the company building the pipeline, as a “major client ,” which would seem to be a clear conflict of interest. Among the report’s findings:
TransCanada influenced  the State Department’s selection of Cardno Entrix. The report characterizes the influence as “minimal” and not “improper,” but does acknowledge TransCanada selected Cardno Entrix as its preferred company to perform the review. A rejoinder from one State Department employee in the report was simply that “we don’t care who TransCanada picks.”
The State Department failed  “to perform any independent inquiry to verify Cardno Entrix’s organizational conflict of interest statements.”
TransCanada was not asked  by the State Department to view and certify Cardno Entrix’s conflict of interest statements.
Overall, the review found  that the State Department’s “limited technical resources expertise and experience” limited environmental review process. The officers in charge of the review, according to the report, had “little or no” experience with environmental law “and had to seek training and learn quickly on the job.”
The State Department has already agreed  to tweak its contractor review process, but this won’t affect the official environmental impact statement that’s already been performed.
Opponents of Keystone XL, however, are using the report to make the case that the project isn’t environmentally sound, despite the State Department review. “The [IG] findings confirm once again why the project should not be rubber stamped for approval, despite efforts by Republicans in Congress to do just that,” said  Senator Bernie Sanders. “The more we learn, the less merit there is to this project.”
The soundness of the State Department review is likely to come back into play in the future—President Obama has delayed, but not cancelled, a final decision on the project. And this week, a Republican-led House panel approved  a bill to fast-track Keystone XL. That effort will probably die in the Senate, but Republicans could attach it  as a poison pill in the massive transportation bill that Congress will presumably pass some time this year.