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Shocking Keystone XL conflict of interest exposed by New York Times

Posted Oct. 8, 2011 / Posted by: Nick Berning

For Immediate Release

Contact: Nick Berning, 703-587-4454, nberning@foe.org; Damon Moglen, 202-222-4223, dmoglen@foe.org

Pipeline permit applicant TransCanada recommended firm with which it had close ties to conduct State Department's environmental review; firm produced fatally flawed review

WASHINGTON, D.C. – An exposé in this morning's New York Times reveals that the State Department “flouted the intent of a federal law” in hiring contractor Cardno Entrix to conduct its review of the proposed Keystone XL tar sands oil pipeline's environmental impacts.

The department reportedly allowed TransCanada, the company seeking to build the pipeline, to play a key role in selecting the firm that would conduct a required environmental impacts study. TransCanada recommended Cardno Entrix, which lists TransCanada as a “major client.”

The Times story reports that Cardno Entrix failed to divulge all of the work it had done for TransCanada when it filed a disclosure statement with the State Department. In fact, Cardno Entrix was simultaneously working on another TransCanada pipeline project – the Bison natural gas pipeline – which Cardno Entrix failed to disclose in public documents and which the State Department appears to have neglected to identify as a clear and glaring conflict of interest.

“In accepting the contractor recommended by TransCanada, the State Department allowed the fox to choose who guards the henhouse. The State Department neglected to take into account the clear conflict of interest presented by the fact that Cardno Entrix was working on another TransCanada pipeline at the time,” said Damon Moglen, climate and energy director at Friends of the Earth. “Given this, it's no surprise that the firm hand-picked by TransCanada to conduct this review has grossly understated the damage likely to be caused by this pipeline.”

In addition to its work for TransCanada, Cardno Entrix has worked for a host of oil industry clients. In 2010 it advised BP as it responded to the Deepwater Horizon spill in the Gulf of Mexico. That year it also advised pipeline firm Enbridge in the aftermath of a devastating tar sands pipeline spill near Kalamazoo, Michigan. Cardno Entrix's website indicates it has “standing response management contracts with the world's leading oil producers.” This means that that Cardno Entrix would be on the inside track to offer TransCanada spill response services if and when the the Keystone XL leaked.

Multiple draft environmental impact statements for the Keystone XL that were largely produced by Cardno Entrix have been strongly criticized by the EPA as being inadequate. The most recent draft, which the State Department asserts is final, continues, independent experts say, to have substantial flaws: It understates the likelihood of and potential harm that could be caused by spills, it fails to fully consider the health impacts that resultant air pollution would have on low-income communities and communities of color near refineries where the pipeline terminates, and it does not accurately reflect the extent to which the pipeline would make climate change worse. The draft also fails to include serious analysis of alternative routes that would avoid the sensitive Sand Hills region in Nebraska and the Ogallala aquifer, which provides drinking water to millions of people.

“Cardno Entrix should never have been hired to conduct this assessment. The State Department's environmental impact statement is fatally, irreparably tainted and flawed, and it needs to be thrown in the trash,” Moglen said. “It's time to go back to the drawing board and start from scratch.”

Even before revelations about the Cardno Entrix conflict of interest surfaced, Friends of the Earth and allies obtained internal State Department documents that provide clear evidence of a corrupted process. The documents indicate that State Department officials coached, provided inside information to, alleviated the concerns of and cheered on pipeline proponents at a time when they were supposed to be impartial and undertaking an independent, rigorous, science-based analysis of the risks posed by the controversial pipeline.

“The evidence is in: the State Department is running a sham process, rigged in favor of dirty oil,” Moglen said. “President Obama must intervene to make things right. Until he does so, his administration's credibility will continue to decline.”

Notes for journalists

Today's New York Times story can be viewed at: http://www.nytimes.com/2011/10/08/science/earth/08pipeline.html?hpw

Friends of the Earth has obtained the conflict of interest disclosure form completed by Cardno Entrix that fails to report its work for TransCanada on the Bison natural gas pipeline. This form is available upon request.

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