The State Department did not violate conflict-of-interest rules when it chose an outside contractor to conduct an environmental impact study of the proposed Keystone XL pipeline, the department’s inspector general concluded in a report issued Wednesday.
The conclusion came as a blow to environmental groups seeking to stop the pipeline’s construction. They had urged an investigation of recent business ties between TransCanada, which plans to build it, and Environmental Resources Management, which conducted the environmental assessment.
The report concludes that the State Department “substantially followed its prescribed guidance and at times was more rigorous than that guidance” in choosing who would do the environmental assessment.
The inspector general “found that our processes not only avoided conflicts of interest, but were more rigorous than required,” said State Department spokeswoman Jen Psaki.
The environmental impact study, which was issued last month, said the Keystone XL pipeline would probably have a negligible effect on climate change. It thus bolstered the chances that Secretary of State John F. Kerry would recommend that President Obama approve the project.
The proposed $5.3-billion pipeline would run nearly 1,200 miles from Hardisty, Alberta, in Canada to Steele City, Neb., where it would link to a pipeline that would take tar sands crude oil to refineries on the Gulf Coast.
Because it crosses the U.S.-Canadian border, the pipeline needs a State Department permit. The process has been mired in controversy for about five years.
In 2012, the inspector general looked into allegations of conflict of interest between a different outside contractor and TransCanada on an earlier environmental study. That too found no serious violations.
TransCanada cheered the findings Wednesday. Supporters in Congress and the oil industry said the findings should clear the way for the Obama administration to grant the required permit.
“The State Department, over the course of five years and five exhaustive reviews, has objectively determined that the pipeline is better for safety, the environment and jobs,” said Rep. Fred Upton (R-Mich.), chairman of the House Energy and Commerce Committee.
Opponents had hoped the report would complicate or stop the permitting process.
“The real scandal in Washington is how much is legal,” said Bill McKibben, co-founder of 350.org, which has spearheaded opposition to the project. “This process has stunk start to finish.”