State Department OIG finds no Keystone XL EIS irregularities

The US Department of State’s Office of Inspector General found no significant irregularities in the preparation of an environmental impact statement for TransCanada Corp.’s proposed Keystone XL crude oil pipeline project, it announced.

TransCanada did not improperly influence DOS’s choice of a third-party contractor to do the EIS, and there was no evidence that communications among DOS, TransCanada, the Canadian government, and the project’s proponents and opponents violated federal law, the OIG said in a Feb. 10 report.

It conducted the investigation in response to an Oct. 26, 2011, request from 27 members of Congress of allegations concerning the proposed project’s EIS, which DOS issued on Aug. 26 as part of its deliberations on whether approving a permit for the 1,700-mile pipeline from Alberta’s oil sands to US Gulf Coast refineries was in the US national interest.

Questions concerning the proposed pipeline’s route across the Ogallala Aquifer in Nebraska led to US President Barack Obama’s Nov. 11 move to delay the decision until after the 2012 elections.

After Congress imposed a deadline in the payroll tax cut extension bill at the end of 2011, he backed DOS’s denial of the permit on Jan. 18 so more time could be spent analyzing proposed routes and their potential consequences.

The investigation determined that DOS’s final EIS for Keystone XL generally incorporated and addressed the US Environmental Protection Agency and other federal agencies’ views concerning the proposed pipeline’s alternatives and mitigation, pipeline safety, and environmental risks.

Report cites limitations

“However, some concerns, such as the manner in which alternative routes were considered in the department’s EIS, were not completely incorporated,” it added. “OIG also determined that the department’s limited technical resources, expertise, and experience impacted the implementation of the [National Environmental Policy Act] process.”

It recommended that DOS add at least one full-time employee with NEPA experience to its Bureau of Oceans and International Environment and Scientific Affairs; and that BOIESA, in coordination with DOS’s administration bureau and legal advisor, redesign the process for selecting third-party EIS contractors by maximizing DOS’s role and minimizing an applicant’s influence to eliminate possible conflicts of interest.

OIG’s investigation also found DOS did not violate its role as an oversight agency by advising TransCanada to withdraw its permit proposal to operate the pipeline at higher pressures with a reassurance that the company could reapply later under a less scrutinized and less transparent process.

It noted that the US Pipeline and Hazardous Materials Safety Administration, and not DOS, has authority to issue special pipeline safety permits; and that DOS became actively involved in discussing special permit conditions only after TransCanada withdrew its special permit application because DOS wanted to enhance the pipeline’s safety. At that point, DOS worked with TransCanada and PHMSA to adopt 57 special conditions for that purpose, the report said.

The DOS OIG’s report confirms TransCanada acted appropriately during all parts of the permit review process, TransCanada said on Feb. 9.

“When claims made by opponents of Keystone XL were brought forward, we welcomed an independent review by the inspector general's office,” said Russ Girling, TransCanada’s president and chief executive. “This independent investigation confirms we followed all of the procedures and practices established by DOS and other federal agencies."

‘Clean bill of health’

US oil and gas industry groups also welcomed the findings. “The IG report gives the Keystone XL environmental review process a clean bill of health and concludes that the review was correct and done well,” American Petroleum Institute President Jack N. Gerard said on Feb. 9.

“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?”

American Fuel and Petrochemical Manufacturers’ President Charles T. Drevna told OGJ on Feb. 10 that he considered the delay another “false impediment” and “another false excuse.”

“Everyone knew what the outcome would be. Now the question is what other false excuse the administration could come up with. There are 20,000 individuals waiting for the president to put them to work, and tens of thousands more who would get indirect work.”

Association of Oil Pipe Lines President Andrew J. Black, said the federal environmental review process was thorough and objective.

“It is sad that consumers and workers have been made to wait longer for additional pipeline capacity,” Bloack said.

DOS released the investigation’s findings 3 days after the US House Energy and Commerce Committee passed Rep. Lee Terry’s (R-Neb.) bill which move authority to grant the project’s permit to the Federal Energy Regulatory Commission.

HR 3548 would instruct FERC to approve the project within 30 days if the permit remains in compliance with DOS’s EIS, the committee’s majority leadership said. It also would give FERC 30 days to approve a new route across Nebraska once the environmental review is complete and Gov. Dave Heineman (R) has approved it, they indicated.

 

Contact Nick Snow at nicks@pennwell.com

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