Environmental Groups Seek Probe of Keystone XL Pipeline Review

U.S. environmental groups called on the State Department’s inspector general to investigate what they called “illegality and/or abuse of authority” in the department’s review of TransCanada Corp. (TRP)’s Keystone XL pipeline.

The proposed $7 billion pipeline would deliver crude from the oil sands of Canada to refineries on the U.S. Gulf Coast. The State Department, which has jurisdiction because the project would cross an international boundary, plans to decide whether to grant approval by the end of the year.

Group including Friends of the Earth and the Natural Resources Defense Council sent a letter today to Harold Geisel, the deputy inspector general, outlining seven incidents that they said show favoritism and “coaching” for Calgary-based TransCanada by State Department officials.

“We know that this pipeline will pollute our air and our water,” Michael Brune, executive director of the Sierra Club, said today on a conference call with reporters. “What we didn’t anticipate was that political pressure would pollute the process. State Department employees have demonstrated a deep pro-industry bias.”

The groups’ demand follows a call this week by Senator Bernie Sanders, a Vermont independent, and 13 other lawmakers for an investigation. The legislators also asked that a decision on the pipeline be delayed until an inquiry into the fairness of the review process is completed.

Doug Welty, a spokesman for the inspector general, said he couldn’t comment on the letter from environmental groups because his office hadn’t yet received it. The lawmakers’ request “is being reviewed so that our office can determine the appropriate steps to take to respond quickly to the congressional request for an inquiry,” he said.

Six States

The pipeline would stretch almost 1,700 miles (2,735 kilometers) across Montana, South Dakota, Nebraska, Kansas, Oklahoma and Texas.

Pipeline advocates, including Republicans in Congress, have pushed for swift approval of the project they said would help keep down future energy costs and create 118,000 jobs.

Critics, including Nebraska’s governor and U.S. senators, have cited the risk of an oil spill in the Ogallala aquifer, which supplies 30 percent of the water used in the U.S. for agriculture.

Environmental groups said in their letter that David Goldwyn, a former State Department special envoy for international energy affairs, provided “pre-determination coaching” that amounted to “invaluable access and support for TransCanada.” Goldwyn runs Goldwyn Global Strategies LLC, a consulting group.

Clinton’s Campaign

They also cite State Department e-mails they said showed that Paul Elliott, who helped run Hillary Clinton’s 2008 presidential campaign and is now TransCanada’s chief lobbyist, “used his political connections to gain inordinate access to State Department officials and to influence their decisions and actions.” Clinton is now secretary of State and will make the department’s decision.

The company retained to conduct the environmental-impact study of the pipeline, Cardno Entrix, has “strong financial ties to TransCanada,” the environmentalists said.

The State Department has defended its review process as transparent and fair to all sides.

“We do not believe that there is any issue here with regard to affecting in an inappropriate manner the decisions that the secretary needs to make,” Victoria Nuland, a department spokesman, said at an Oct. 3 briefing. Department officials have met with environmental groups including Friends of the Earth and the San Francisco-based Sierra Club, she said.

Erich Pica, president of Washington-based Friends of the Earth, said on the call that he attended meetings on the pipeline with State Department officials.

‘Actively Aiding’

“The real question is not whether we met, but what was the impact,” Pica said. “Officials within the State Department were actively aiding TransCanada.”

Environmentalists also said they are planning a rally outside the White House on Nov. 6.

“This decision is in the hands of the president and is only delegated to the State Department,” Frances Beinecke, president of the New York-based Natural Resources Defense Council, said today. “We are looking for the president to make the right decision.”

Under a 2004 presidential executive order that governs the review process, outside agencies, including the Environmental Protection Agency, have 15 days to raise objections after the State Department issues its decision. If the agencies disagree, the decision goes to President Barack Obama for a final ruling.

To contact the reporter on this story: David Lerman in Washington at dlerman1@bloomberg.net

To contact the editors responsible for this story: Steven Komarow at skomarow1@bloomberg.net; Larry Liebert at lliebert@bloomberg.net

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