State Dept. IG to probe Keystone XL pipeline review

Michael Bastasch | Contributor

The State Department’s inspector general is investigating the contractor hired to conduct the Keystone XL pipeline’s draft review over a potential conflict of interest, based on allegations by environmental groups.

Several anti-Keystone groups argue that the consulting firm used by the State Department to conduct the pipeline’s review had financial ties to the American Petroleum Institute and to TransCanada, the company building the pipeline.

In March, Mother Jones reported that the consulting firm Environmental Resources Management had previously done work for TransCanada and API. Last month, the Sierra Club sued the State Department for documents related to the Keystone review, alleging ERM had “financial ties to [TransCanada] and the American Petroleum Institute, one of Keystone XL’s most active and vocal lobbyists.”

“Secretary Kerry needs to stop the Keystone XL process until the Inspector General completes a full investigation of these conflicts of interest and the State Department has an unbiased review of Keystone XL’s impact,” says the Checks and Balances Project, which has been alleging a conflict of interest between ERM and the oil industry.

However, ERM has said that it has “no business relationship with TransCanada or its affiliates” in its disclosure documents and that “no conflict of interest exists” regarding the company’s work the pipeline.

The investigation could potentially cause more delays for the approval of the controversial pipeline, especially given recent statements from the Obama administration.

Earlier this year, the Environmental Protection Agency challenged the State Department’s Keystone pipeline review, which said that the project would have little impact on the environment or global warming. The EPA called the review “insufficient,” arguing the review needed to take a harder look at the pipeline’s environmental and climate impacts.

Last week, President Obama twice downplayed the economic benefits of the Keystone pipeline, controversially claiming that the jobs the project was likely to create were just a “blip” in the economy.

President Obama told The New York Times that the pipeline “might create maybe 2,000 jobs during the construction of the pipeline — which might take a year or two — and then after that we’re talking about somewhere between 50 and 100 [chuckles] jobs in a economy of 150 million working people.”

The pipeline’s approval has taken nearly five years and has been staunchly opposed by environmental groups worried that it will contribute to global warming and harm the environment.

“It’s a climate disaster that will risk our water and our communities to ship toxic tar sands overseas,” said the Sierra Club’s Beyond Oil Campaign director Michael Marx. “The oil industry is pushing a host of empty promises, but the president is seeing the clear connection to his promise not to betray our children’s future.”

Republicans and the oil industry have contended that the pipeline will create thousands of jobs and bolster U.S. energy security.

“As the administration continues to level attacks against its political opponents for pursuing ‘phony’ scandals, the president was caught pushing phony jobs numbers in attacking the landmark Keystone pipeline and its $7 billion in private investment,” according to Republicans on the House Energy and Commerce committee.

“Over the past week, leading fact checkers have undercut the president’s claims that the Keystone XL pipeline would only create 2,000 jobs when his own State Department found the project would support over 42,000 jobs,” the committee Republicans added.

But the jobs estimate won’t be the deciding factor in Keystone’s approval. The president said that he would oppose the pipeline’s approval if it significantly adds to carbon dioxide emissions — which the State Department says it would not.

“Four out of four State Department assessments have affirmed the project is safe for the environment,” said Cindy Schild, API’s downstream operations senior manager for refining and oil sands. “There is no question the economic, energy security and national security benefits of Keystone XL serve our national interests. All that remains is for President Obama to heed the overwhelming public support and decisive evidence accumulated over almost five years of study and move forward with Keystone XL. He could move forward today!”

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