The State Department's inspector general (IG) today vindicated the department's handling of the Keystone XL pipeline, including the hiring of a contractor with ties to the project's sponsor that that drew fire from Democrats and green groups.

The IG report on State's review of Keystone XL -- now fueling a nasty battle between President Obama's party and Republicans who accuse him of rejecting it for political purposes -- gave pipeline supporters fodder for a continued defense of the $7 billion Canada-to-U.S. oil link as fully vetted.

But the IG also affirmed several attacks pipeline foes have aimed at the XL review, writing that the environmental assessment was affected by insufficient technical expertise at State.

If State "had more expertise in" the details of conducting reviews under the National Environmental Policy Act, the IG wrote in its report to Democratic congressional requesters, "the department may have been able to avoid" the poor rating given to its Keystone XL evaluation by U.S. EPA -- a thumbs-down that prolonged the process and handed a key weapon to environmentalists opposed to the pipeline (Greenwire, June 7, 2011).

The IG also cleared State of any conflict-of-interest charges in its decision to hire Cardno ENTRIX, a contractor that had done previous work for Keystone XL sponsor TransCanada Corp. In doing so, however, the auditor also rapped the department for not performing an "independent inquiry" to affirm the contractor's avowal that its work on the pipeline review would not be compromised.

Both sides of the aisle claimed victory in the wake of the report's release.

"There is no 'there' there in the OIG report," Neil Brown, a senior adviser to pipeline supporter Sen. Richard Lugar (R-Ind.), said via email. "It doesn't support conspiracy theories that KXL opponents freely spread."

But Sen. Bernie Sanders (I-Vt.), one of the Keystone XL critics who requested the report, drew a much harsher conclusion. "The findings confirm once again why the project should not be rubber stamped for approval, despite efforts by Republicans in Congress to do just that," he said in a statement.

Click here to read a copy of the IG's report.