Houston-based Cardno Entrix is the latest target of scrutiny in the newest allegations of cronyism surrounding TransCanada's Keystone XL Pipeline project. A group of U.S. senators has called for an investigation into the State Department's handling of the Keystone XL permitting process, dragging the local environmental consultant company into the national spotlight last week.
At issue is the State Department's selection of the firm to produce the Keystone XL Environmental Impact Study (E.I.S.) and National Interest Determination (N.I.D.) reports -- research used to evaluate TransCanada's permit application. In August, Cardno Entrix submitted their final E.I.S. report concluding that the proposed plan to construct the 1,700-mile pipeline through six states from Canada to Texas would have "limited adverse environmental impacts." The "environmentally acceptable" recommendation gives the State Department the green light to recommend the permit be granted. It's the final approval TransCanada needs to start tearing up trees and laying pipe.
However, news stories calling attention to "pre-existing financial" ties between the two companies and Cardno Entrix's description of TransCanada as a "major client" in company advertisements have "disturbed" 14 senators enough to request a formal investigation into the "appearance of a conflict of interest." They specifically cite an October 7 New York Times story in their formal request that reports TransCanada was allowed to screen the companies submitting bids for the contract that would determine their project's fate.
The State Department released a response to the senators' concerns on Monday explaining that the reported "financial ties" totaled less than $35,000 (.01 percent of company revenues) and denying that a conflict of interest exists. It is within agency rules that the proponent of a proposed project can screen companies bidding on the research contract. They also dismiss the "major client" reference in Cardno Entrix's literature as a miscommunication.
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"The firm referred to TransCanada as a "major client" because "the federal government selected Entrix" for work on four TransCanada permits," the State Department said.
Responding to other accusations that the consulting firm purposely coordinated public hearings at inconvenient times and in cities less likely to oppose the pipeline, Cardno Entrix Director of Client Services Jim Teitt said, "We only helped facilitate the hearings. The State Department picked the locations." More fuel was added to the controversial fire this week amid reports that "tens of thousands" of public comments submitted to Cardno Entrix via e-mail never made it to the State Department and that there was no clear process for handling public comments collected in the last round of hearings.
The conclusions of the Keystone XL environmental report are cited by some as evidence that "a new and objective" E.I.S. should be conducted. Keystone XL opponents are also quick to point out TransCanada's handling of their smaller Keystone 1 pipeline, the first long-range pipeline project granted a Presidential Permit based on Cardno Entrix's research. The pipeline has experienced 12 leaks and was shut down for two days due to safety concerns in an 11-month period last year.
"The fact that Cardno Entrix gave Keystone XL such a low leak risk factor when Keystone 1 was spilling tar sands like a leaky faucet sure points to the fact that Cardno Entrix had a severe conflict of interest regarding TransCanada and the Keystone XL pipeline," said Kate Colarulli, associate campaign director of Sierra Club's Beyond Oil campaign.