October 2011


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Michael Balter <[log in to unmask]>
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Science for the People Discussion List <[log in to unmask]>
Sat, 8 Oct 2011 11:07:20 -0400
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October 7, 2011
Pipeline Review Is Faced With Question of Conflict By ELISABETH

The State Department assigned an important environmental impact study of the
proposed Keystone
to a company with financial ties to the pipeline operator, flouting the
intent of a federal law meant to ensure an impartial environmental analysis
of major projects.

The department allowed TransCanada <>, the
company seeking permission to build the 1,700-mile pipeline from the oil
northern Alberta to the Gulf Coast in Texas, to solicit and screen bids for
the environmental study. At TransCanada’s recommendation, the department
hired Cardno Entrix <>, an environmental contractor
based in Houston, even though it had previously worked on projects with
TransCanada and describes the pipeline company as a “major client” in its
marketing materials.

While it is common for federal agencies to farm out environmental impact
studies, legal experts said they were surprised the State Department was not
more circumspect about the potential for real and perceived conflicts of
interest on such a large and controversial project.

John D. Echeverria, an expert on environmental law, referred to the process
as “outsourcing government responsibility.”

The subsequent study<>,
released at the end of August, found that the massive pipeline would have
“limited adverse environmental impacts” if operated according to
regulations. That positive assessment removed one of the last hurdles for
approval of the proposed pipeline.

Cardno Entrix also played a substantial role in organizing the public
the project for the State Department, the last of which was held Friday in
Washington. The proposal is open for public
midnight Sunday, and the department’s Web site directs
a Cardno Entrix e-mail address.

Environmental groups, as well as some citizens and public officials along
the route, have opposed the project, citing the relatively high emissions
created by extracting crude from oil sands and the spill threat posed to
important aquifers by a pipeline filled with a potentially corrosive crude,
among other concerns. The E.P.A. has criticized two prior draft
environmental impact statements prepared by Cardno Entrix on Keystone XL as
“inadequate” and providing “insufficient information,” but has not yet
rendered an appraisal of the final study. The E.P.A.’s role is purely

Advocates for the project say that Keystone XL, which would carry 700,000
barrels of crude a day, would create thousands of jobs and help ensure a
stable fuel supply from a friendly neighbor.

The State Department is the agency that approves transboundary pipelines by
determining whether they are in the national interest. Its decision is
expected by the end of the year.

The National Environmental Policy Act <>,
which took effect in 1970, allows for agencies to hire outside contractors
to perform its required environmental impact studies, but advises that
contractors be chosen “solely by the lead agency” and should “execute a
disclosure statement” specifying that they “have no financial or other
interest in the outcome of the project.”

And yet legal experts said it had become common for companies applying to
build government projects to be involved in assigning and paying for the
impact analysis. Some say such arrangements are nearly inevitable because
federal agencies typically lack the in-house resources or money to conduct
these complex studies. “What’s normal is deplorable, and it’s NEPA’s dirty
little secret,” said Mr. Echeverria, acting director of the Environmental
Law Center at Vermont Law School, referring to the law. He said federal
agencies are supposed to review the findings, but often lack the expertise
to do so.

Oliver A. Houck, a law professor at Tulane University and an expert on NEPA,
said Cardno Entrix should never have been selected to perform the
environmental study on Keystone XL because of its relationship with
TransCanada and the potential to garner more work involving the pipeline.
The company provides a wide ranges of services, including assisting in oil

Cardno Entrix had a “financial interest in the outcome of the project,” Mr.
Houck said, adding, “Their primary loyalty is getting this project through,
in the way the client wants.”

Kerri-Ann Jones, the assistant secretary of state for oceans and
international environmental and scientific affairs, in an interview, said
the State Department followed all federal regulations and had closely
managed and supervised the company’s work, adding, “We have final say.”

She said that TransCanada had managed the bidding process and recommended
three candidates with Cardno Entrix topping the list. The department vetted
Cardno Entrix by consulting with other agencies like the Bureau of Land
Management. TransCanada pays the consultant directly, but would not reveal
the amount.

Ms. Jones said that Cardno Entrix provided a solid and impartial study,
which became more robust through the draft process, with advice from
agencies like the E.P.A. “I think it required a lot a lot of work to get it
where it is now,” she said. “We have done an objective environmental impact

The State Department has also faced charges of political conflict of
interest <> over
its handling of the Keystone XL application because TransCanada’s chief
Washington lobbyist, Paul Elliott, was a top official in Hillary Rodham
Clinton’s 2008 presidential campaign.

Cardno Entrix officials referred all questions about its participation to
the State Department. Cardno Entrix did submit a disclosure statement
acknowledging that it was paid $2.9 million to handle the environmental
review of an earlier pipeline in the Keystone network. It did not mention
another project it had done for TransCanada, consulting on a natural gas
pipeline that runs through Wyoming, Montana and North Dakota.

A spokesman for TransCanada, Terry Cunha, said that his company had
recommended contractors to the State Department based on “technical ability,
experience, and appropriate personnel.” But he said the final contract for
the environmental assessment “provides that Department of State directs
Entrix. As a result, we don’t have a direct relationship with Entrix.” The
American company, Entrix, merged with the Australian company Cardno Limited
in 2010.

Environmental groups say the study underplays both the emissions impact of
the new pipeline and the danger posed by a spill of crude from oil sands,
called diluted bitumen, a hard-to-remediate mixture. An accident at a
pipeline <> owned by
Enbridge Energy in July 2010 dumped 843,000 gallons of such
Marshall, Mich.

A 35-mile stretch of the Kalamazoo River remains closed and cleanup has proved
extremely difficult<>,
running over budget and past deadlines set by the E.P.A. Estimates of
cleanup costs have run well over $500 million. The E.P.A.’s regional
administrator said her office had never seen a river system affected by so
much submerged oil.

But the impact report for the Keystone XL project says that “response to a
spill from the proposed pipeline would not require unique clean up

The Enbridge spill is only mentioned briefly in addendums. And Cardno Entrix
would have been aware of the challenges in Michigan: it was hired by
Enbridge to assess the damage to natural resources caused by the spill.

Steven Da Silva, a retired science teacher who attended public hearings in
Austin and Port Arthur, Tex., last week to oppose the pipeline, said he was
surprised to see officials wearing Cardno Entrix nametags and was not sure
whether State Department employees were present.

The department said its personnel moderated all hearings.

Legal experts said it is not unusual for subcontractors to conduct hearings
and prepare responses to complaints. But they also said the State Department
should closely monitor the work to make sure that any concerns raised are
taken seriously. James W. Spensley, a Colorado-based environmental lawyer
with broad experience in government pointed out that the courts provided an
import check on abuse, since shoddy or biased studies are vulnerable to
legal challenges.

“Generally,” he said, “lead agencies are very cautious about finding someone
who is going to give them good, reliable, information because they are the
ones that are going to get sued.”

Michael Balter
Contributing Correspondent, Science
Adjunct Professor of Journalism,
New York University

Email:  [log in to unmask]

“Faced with the choice between changing one’s mind and proving that there is
no need to do so, almost everyone gets busy on the proof."
                                                  --John Kenneth Galbraith