Keystone contractor followed U.S. rules, report says

AP

A consulting firm that helped write an environmental review of the proposed Keystone XL oil pipeline complied with U.S. federal rules regarding possible conflict of interest, the State Department’s inspector general said Wednesday in a report that buoyed supporters of the controversial pipeline and disappointed critics.

The report said the contractor, Environmental Resources Management, fully disclosed that some staff members who worked on the State Department report had previously done work with the pipeline operator, Calgary-based TransCanada. None of the work for TransCanada involved Keystone XL, and all of it occurred before the staff members began work at ERM, the report said.

The State Department followed U.S. guidelines regarding use of outside contractors, the report said, “and at times was more rigorous than that guidance.”

Still, the report said the State Department’s process for hiring outside contractors can be improved, adding that requirements for documenting how contractors are selected were “minimal.”

London-based ERM largely wrote the State Department’s Jan. 31 environmental report on the proposed pipeline, which would carry oil derived from tar sands in western Canada through the U.S. heartland to the Gulf Coast in Texas. The report raised no major environmental objections to the pipeline and was seen as a major victory for pipeline supporters.

Environmental groups have criticized the State Department’s hiring of ERM, saying the firm should be disqualified because of its previous work for TransCanada.

A spokesman for Republican House Speaker John Boehner, a strong Keystone supporter, said the inspector general’s report was the latest study that found no reason for the Obama administration to continue blocking the project. The pipeline was first proposed in 2008. “It’s long past time the president stop pandering to his extremist allies and just approve it so we can get people back to work,” Boehner spokesman Brendan Buck said.

But Rep. Raul Grijalva, a Democrat who is a pipeline critic, said the inspector general’s review was overly narrow.

The report focused on “whether the State Department followed its own flawed process for selecting a third-party contractor,” Grijalva said. “The fact that the answer is ‘yes’ doesn’t address any outstanding concerns about the integrity of ERM’s work, the State Department’s in-house ability to evaluate its quality or whether the process itself needs to be reformed.”

Far from inspiring confidence in the project, the report “is evidence of the problem,” Grijalva said.

The 1,179-mile (1,897-kilometer) pipeline has become a symbol of the political debate over climate change.

Pipeline supporters, including lawmakers from both parties and many business and labor groups, say the project would create thousands of jobs and reduce the need for oil imports from Venezuela and other politically turbulent countries.

Opponents say the pipeline would carry “dirty oil” that contributes to global warming. They also worry about possible spills.