Keystone backers, foes find new ammo in report on State Dept. review process

The State Department inspector general’s new finding that the State Department’s review of the Keystone XL oil sands pipeline was not marred by conflicts of interest or bias is giving a political lift to proponents of the project.

“There is no ‘there’ there in the [Office of Inspector General] report. It doesn’t support conspiracy theories that KXL opponents freely spread,” said Neil Brown, a senior aide to Sen. Dick Lugar (R-Ind.).

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Lugar is the top Republican on the Foreign Relations Committee and a key Senate backer of bills to force federal approval of the proposed pipeline, which would bring oil from Alberta, Canada’s massive oil sands projects to Gulf Coast refineries.

Pipeline opponents have alleged conflicts of interest in State’s review process, but the report released Thursday doesn’t agree with their claims.

"It's clear that another excuse not to build the pipeline has been removed, so we can only ask ourselves what's the excuse now for not approving Keystone?,” said American Petroleum Institute President Jack Gerard, whose group is lobbying in favor of Keystone.

But pipeline foes seized on the report’s finding that State should redesign its process for selecting contractors and improve its capacity to conduct environmental reviews.


The report found that State’s “limited technical resources, expertise, and experience” affected the review process, forcing heavy reliance on outside parties.

“This report undermines the integrity of the project’s review and underscores the point that the pipeline should not be approved based on a shoddy, unscientific review,” said Rep. Steve Cohen (D-Tenn.), a critic of the pipeline.

State said it agrees with the findings of its internal watchdog and is moving to improve its processes. But the department is also defending its conduct following the report that largely provided its review a clean bill of health.

State Department spokeswoman Beth Gosselin said the report's "findings underscore that the department conducted a through, rigorous and transparent review of the environmental impact of the proposed project."

Gosselin said the State Department has already started implementing the inspector general's recommendations and hopes to put them in place within two months.

The Obama administration last month rejected a permit for Keystone, alleging that a decision deadline Republicans demanded short-circuited State’s review. But developer TransCanada Corp. plans to reapply.

Pipeline proponents say the years-long review has been robust, while noting their bills to require a quick permit will allow time to continue reviewing how the pipeline can avoid an ecologically sensitive region of Nebraska.

“The point is that the Obama Administration has missed the mark on the urgency of job creation and energy security,” said Brown, Lugar’s senior aide. “They examined the evaluation for 1,217 days — more than 3 years — and still missed the urgency of our economy’s needs.”

But Bill McKibben, the environmentalist who has led ongoing opposition to the pipeline, said the report helped justify the anti-Keystone campaign.

Environmentalists oppose Keystone due to greenhouse gas emissions from Canada’s oil sands projects and other factors.

“We're very glad to know that if TransCanada or anyone else applies again, the State Department has agreed the same sort of procedures won't apply next time. This question — at root, the future of the planet's climate — is way too important for 'on the job training,' ” McKibben said.

His climate advocacy organization, 350.org, flagged several findings. They include the IG’s conclusion that some Department of Energy and EPA concerns were not “fully incorporated” into last year’s environmental study that gave the project a largely favorable review.

The audit, however, notes that other agencies’ concerns were “generally addressed” in the environmental impact statement.

Rep. Peter Welch (D-Vt.), one of the lawmakers who pushed for the IG probe, said the review was needed in light of conflict-of-interest concerns.

“In order to maintain any level of public confidence you have to have a full investigation,” he said in an interview Thursday.

Welch said the finding of deficiencies in State’s review capacity help make the case against GOP bills that require quick approval of the project. “It is all the more reason why we must insist upon having an extensive environmental assessment,” he said.

—Andrew Restuccia contributed.

This post was updated at 3:45 p.m.