Group: State Department inspector general is probing Keystone pipeline review

A liberal watchdog group says the State Department’s inspector general (IG) is probing possible conflicts of interest in the federal environmental review of the proposed Keystone XL oil sands pipeline.

The Checks and Balances Project said it will unveil evidence next Wednesday of an IG inquiry into State’s use of Environmental Resources Management (ERM), the consultants behind State's March draft analysis that gave Keystone a largely clean bill of health.

In April, Checks and Balances and other green groups called for an IG probe.Their request followed revelations in Mother Jones magazine that a senior ERM analyst had worked as a consultant for Keystone developer TransCanada Corp. on previous projects.

The Mother Jones story, based on unredacted ERM filings with State, showed that the ERM official had also worked with big oil companies, and also showed previous work with oil industry interests by two other ERM contributors to the Keystone analysis.

Doug Welty, a spokesman for State’s IG office, said Friday that it’s the IG’s policy not to comment on “any possible, pending, ongoing or future investigations.”

The April letter to the IG from the green groups urged a probe into allegedly “incomplete statements on the Organizational Conflict of Interest ... questionnaire” by ERM, and the State Department contracting officer’s determination that ERM did not have any conflicts of interest.

The letter from groups including Greenpeace, Public Citizen, Friends of the Earth and others alleged ERM has “direct business relationships” in recent years with oil companies that have a financial interest in Keystone.

The Checks and Balances Project said that next Wednesday it will disclose a voicemail from an agent heading the IG probe and email correspondence.

Environmental groups oppose Keystone, which would bring oil sands crude from Alberta into the U.S. en route to Gulf Coast refineries. They argue it would worsen climate change by serving as a catalyst for expanded oil sands production.

But State’s March draft review dealt a blow to project opponents by concluding that approving or rejecting Keystone would not have much effect on the rate of oil sands production expansion.