Federal investigator launches probe of Keystone XL pipeline review

The State Department’s inspector general today launched an investigation into complaints that the government’s review of the Keystone XL pipeline has been undermined by bias and conflicts of interest.

The move raises the prospect that the Obama administration’s final decision on whether to permit the 1,700-mile pipeline from Alberta, Canada, to Gulf Coast refineries could be delayed until next year — or later.

Environmental activists and more than a dozen lawmakers sought the probe after government e-mails revealed a State Department employee cheering on TransCanada Corp.’s top lobbyist as he worked to build support for the pipeline project. Critics also raised questions about the State Department’s decision to allow a company that had worked for TransCanada to conduct a broad environmental assessment of Keystone XL.

State Department Deputy Inspector General Harold Geisel said his inquiry would be focused on determining “to what extent the department and all other parties involved complied with federal laws and regulations relating to the Keystone XL pipeline permit process.”

The Office of the Inspector General declined to say how long the probe would take, but Geisel signaled he would be working quickly.

Although the investigation does not automatically stop the pipeline permitting process, lawmakers and environmentalists insisted Monday that the State Department should postpone a final decision on whether Keystone XL is in the “national interest” until the inquiry is complete.

“There is overwhelming evidence that the pipeline review process has been a sham, corrupted by bias, lobbyist influence and conflicts of interest,” said Erich Pica, the president of Friends of the Earth. “It should be obvious to the White House that it would be wholly inappropriate to continue moving forward with this rigged process while violations of law and federal regulations are being investigated.”

Sen. Bernie Sanders, an independent from Vermont who caucuses with Democrats, also said a decision should be deferred until the inspector general has issued a final report.

“This is a critically important issue for our environment and the energy future of our country,” Sanders said in a statement. “At a time when all credible scientific evidence and opinion indicate that we are losing the battle against global warming, it is imperative that we have objective environmental assessments of major carbon-dependent energy projects.”

Industry supporters urged the administration to abide by its original timeline and deliver a decision by the end of the year, despite the probe.

“This project has been through an extensive review process for more than three years thanks to the thorough work by the State Department,” said American Petroleum Institute spokeswoman Sabrina Fang. “We understand the approval process needs to run its course, but we strongly urge the administration to stick to its commitment to make a final decision no later than year’s end.”

The inspector general’s review was announced just one day after thousands of activists circled the White House to protest the pipeline.

Environmentalists insist that if the pipeline is approved, it would make the U.S. more dependent on a particularly dirty form of crude harvested from Alberta’s oil sands using techniques that generate far more greenhouse gas emissions than extraction methods used for more conventional supplies.

Residents along the planned route also have warned about possible spills that could taint groundwater supplies, including the Ogallala Aquifer that provides drinking water to roughly 2 million people.

But supporters of the project — including some labor unions and the oil industry — insist that the pipeline would instantly generate as many as 20,000 construction jobs in the U.S., while ensuring the nation gets more of the oil it needs from a friendly North American ally.

The project has become a big political liability for President Barack Obama as he heads into an election that may turn on who can do the most to revive the nation’s ailing economy.

The State Department has been studying TransCanada Corp.’s pipeline proposal for three years, and has pledged its review would be done by the end of this year.

But among several signs of delays, the Environmental Protection Agency has yet to weigh in on the State Department’s final environmental impact analysis, which in August concluded that there would be “no significant impacts to most resources” in Keystone XL’s path. The State Department also said potential spills from the pipeline “would likely be limited.”

That kicked off a 90-day period for the State Department to evaluate whether the project is in the “national interest.”