State Department Cleared Of Keystone Wrongdoing

(Dow Jones) - The US State Department has been cleared of any major wrong-doing in its review of the Keystone XL oil pipeline, ending at least one skirmish in a broader battle over the pipeline that has gotten increasingly messy in recent months.

The State Department's Inspector General released a report Thursday that said the department acted appropriately when conducting a years-long review of the Keystone XL pipeline, despite accusations of bias and conflicts of interest from environmental groups that oppose the project.

The Inspector General "determined that the department did not violate its role as an unbiased oversight agency," the report said.

The State Department's role in the 1,700-mile Keystone XL pipeline came under scrutiny last year after environmental groups accused the department of allowing TransCanada Corp., the company that wants to build the pipeline, of handpicking a third-party contractor to conduct an environmental analysis. The groups said the contractor, Cardno Entrix, had done previous work for Transcanada and was in a position to do even more if the pipeline were approved.

Environmental groups also accused department officials of having a cozy relationship with a TransCanada lobbyist.

While clearing the State Department of wrong-doing, the Inspector General does say the department should assume more control over the selection of third-party contractors.

"The findings confirm once again why the project should not be rubber stamped for approval," said Sen. Bernie Sanders (I-Vt.), one of the lawmakers who asked the Inspector General to look into the matter.

The battle over Keystone XL has recently shifted away from the department and toward Congress. Angry at the Obama administration's decision to reject the pipeline -- at least for now -- Republicans on Capitol Hill are trying to pass laws that mandate approval of the project.

Republicans say construction of the pipeline, which would stretch from Canada to Texas and pass through six US states, will create jobs. Democrats accuse the Republicans of being a mouthpiece for big oil companies.

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