Bombshell: State Department Outsourced Tar Sands Pipeline Environmental Impact Study to “Major” TransCanada Contractor

The State Department assigned an important environmental impact study of the proposed Keystone XL pipeline to a company with financial ties to the pipeline operator, flouting the intent of a federal law meant to ensure an impartial environmental analysis of major projects.

The department allowed TransCanada, the company seeking permission to build the 1,700-mile pipeline from the oil sands of northern Alberta to the Gulf Coast in Texas, to solicit and screen bids for the environmental study. At TransCanada’s recommendation, the department hired Cardno Entrix, an environmental contractor based in Houston, even though it had previously worked on projects with TransCanada and describes the pipeline company as a “major client” in its marketing materials.

While it is common for federal agencies to farm out environmental impact studies, legal experts said they were surprised the State Department was not more circumspect about the potential for real and perceived conflicts of interest on such a large and controversial project.

John D. Echeverria, an expert on environmental law, referred to the process as “outsourcing government responsibility.”

The subsequent study, released at the end of August, found that the massive pipeline would have “limited adverse environmental impacts” if operated according to regulations. That positive assessment removed one of the last hurdles for approval of the proposed pipeline.

That’s from a stunning New York Times story today, “Pipeline Review Is Faced With Question of Conflict.”

Bill McKibben, of Tar Sands Action, tells me, “This is a crime still in progress. The surveillance camera has caught a clear image of the thieves and now we’ll see if the sheriff does anything about it or looks the other way.”

I think this is such a grotesque violation of due diligence that the entire environmental impact statement should be invalidated, and the process should begin anew. That’s particularly the case here because as the NY Times reports:

The National Environmental Policy Act, which took effect in 1970, allows for agencies to hire outside contractors to perform its required environmental impact studies, but advises that contractors be chosen “solely by the lead agency” and should “execute a disclosure statement” specifying that they “have no financial or other interest in the outcome of the project.”

Obviously Cardno Extrix has financial or other interest in making sure that TransCanada gets its pipeline.

Oliver A. Houck, a law professor at Tulane University and an expert on NEPA, said Cardno Entrix should never have been selected to perform the environmental study on Keystone XL because of its relationship with TransCanada and the potential to garner more work involving the pipeline. The company provides a wide ranges of services, including assisting in oil spill response.

Cardno Entrix had a “financial interest in the outcome of the project,” Mr. Houck said, adding, “Their primary loyalty is getting this project through, in the way the client wants.”

This isn’t the first such charge leveled at the State Dept.

The State Department has also faced charges of political conflict of interest over its handling of the Keystone XL application because TransCanada’s chief Washington lobbyist, Paul Elliott, was a top official in Hillary Rodham Clinton’s 2008 presidential campaign.

Cardno Entrix officials referred all questions about its participation to the State Department. Cardno Entrix did submit a disclosure statement acknowledging that it was paid $2.9 million to handle the environmental review of an earlier pipeline in the Keystone network. It did not mention another project it had done for TransCanada, consulting on a natural gas pipeline that runs through Wyoming, Montana and North Dakota.

The bottom line is that if the State Department doesn’t withdraw the environmental impact statement, they can, should, and no doubt will be sued:

“Generally,” he said, “lead agencies are very cautious about finding someone who is going to give them good, reliable, information because they are the ones that are going to get sued.”

And at the very least that could hold up the pipeline for a while, until we have a a president who understands the urgent need to stop building huge amounts of infrastructure that lock us into ever-rising greenhouse gases.