Another Delay for Keystone XL?

Another Delay for Keystone XL?

An inquiry into conflict-of-interest allegations will likely push the State Department’s decision on the pipeline to 2014. 


Environmental leaders and activists handcuffed themselves to the White House gate on February 13, 2013. (George Zornick)

The Obama administration may put off its decision about the Keystone XL pipeline until next year because of an inquiry into a contractor’s alleged conflicts of interest.

The State Department’s Office of the Inspector General is investigating allegations that Environmental Resources Management (ERM), the company hired to conduct the environmental assessment of the pipeline, hid its ties to TransCanada, the pipeline’s backer, as well as to other tar sands stakeholders. On Friday, the OIG announced that its probe would not be completed until January 2014, suggesting that the State Department might not issue its final recommendation on whether to grant a permit for the project this fall as expected.

The State Department wouldn’t comment on whether the OIG’s inquiry would delay the final decision on the pipeline. Because KXL crosses the US/Canada border, final approval of the project rests with State, and the environmental impact statement will inform the agency’s ruling. Given the close scrutiny of the review process it seems unlikely that State would make an announcement before the OIG finalizes its investigation.

Speaking on background, a State Department official told The Nation that the OIG’s review “will provide independent and impartial assessment of the department’s actions taken in response” to a recommendation that the OIG made in 2012 that State redesign its process for selecting third-party contractors. That recommendation came after the firm State initially chose to complete the environmental review, Cardno Entrix, was found to be a “major client” of TransCanada.

Now it appears that ERM, which was hired to write a supplement assessment after the Cardno Entrix scandal, failed to disclose its own conflicts of interest. The OIG opened its current inquiry earlier this month after two environmental watchdogs dug up public documents showing that ERM worked recently with TransCanada on a pipeline project in Alaska, as well as with more than a dozen other companies with a stake in the development of Alberta’s tar sands. That information contradicts statements ERM made to the State Department in 2012, when the contractor certified that it had “no existing contract or working relationship with TransCanada” nor any “direct or indirect relationship…with any business entity that could be affected in any way by the proposed work.”

ERM’s omission of its relationship with TransCanada and other stakeholders is a problem, but the State Department’s failure either to verify the assertions ERM made during the disclosure process or to disqualify the contractor are more troubling, particularly since this is the second conflict-of-interest inquiry to cloud the environmental review process.

“The department is committed to a rigorous, transparent, and efficient federal review of the Keystone XL application,” the State Department spokesperson maintained. “Our rigorous conflict-of-interest procedures ensure that no contractors or subcontractors have financial or other interests in the outcome of a project.”

If the OIG inquiry does delay State’s decision, it will be a temporary win for pipeline opponents. There are signs that investors are losing interest in Alberta’s oil sands because of continued setbacks, lessening some of the pressure behind the project. But KXL won’t be dead until the Obama administration calls it.

Meanwhile, TransCanada’s Gulf Coast pipeline is nearly complete, and could already be carrying oil from Oklahoma to Texas by the time the OIG finalizes its inquiry. Enbridge is quietly building an artery through the midwest to carry heavy crude from the Bakken formation, and that’s just one element of the company’s plans to massively increase the amount of oil moving from the northern plains of the United States and western Canada to the Gulf Coast. Coal companies are pushing for an expansion of mining on federal lands in Wyoming and Montana, and for new export facilities on the west coast that would put more carbon on the market than KXL.

This expansion of dirty energy infrastructure warrants the same attention as KXL. It’s time to wind down, not build up, our reliance on fossil fuel, regardless of where it comes from.

Bill McKibben explains how communities can save the planet.

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Katrina vanden Heuvel
Editorial Director and Publisher, The Nation

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