The State Department today released the contract for the environmental review of the Keystone XL pipeline after a lengthy delay, affirming that its sponsor paid the contractor $2.9 million for a previous job and prompting new howls from critics of the oil link who hope to see the private firm's work disavowed by the Obama administration.

The Keystone XL contract between Alberta-based TransCanada Corp. and ENTRIX, an environmental contractor now known as Cardno ENTRIX, sparked a political furor and a State inspector general's probe last year after reports that the operator was permitted to recommend and pay for a third-party review of its $7 billion pipeline (Greenwire, Oct. 10, 2011).

Conservationists and Democrats seeking to derail the link between Alberta's oil sands and Gulf Coast refineries pointed to ENTRIX's past work for TransCanada as an indication that its assessment of Keystone XL -- given an inadequate rating by U.S. EPA in June -- was compromised by a conflict of interest.

The State inspector general last month exonerated the department of any wrongdoing in its dealings with ENTRIX and TransCanada, finding "no evidence" that the latter strong-armed the administration into hiring the former. The independent auditor also asked State to overhaul existing guidelines that allow corporations to suggest their own third-party environmental assessors, a suggestion that the department agreed to (E&ENews PM, Feb. 9).

The total amount that ENTRIX received for its work on the Keystone XL review was redacted in the documents released by State, which faced a legal threat from activists at Friends of the Earth over its initial resistance to public viewing of the contract. But a separate group of documents given to Friends of the Earth under the Freedom of Information Act show ENTRIX disclosing that it was paid "approximately $2.9 million" for a previous assessment of the environmental impacts of Keystone XL's predecessor pipeline, known simply as Keystone.

"We do not believe this work would have any impact on the project described," ENTRIX wrote in its avowal of impartiality with respect to Keystone XL.

The contracts state that ENTRIX would restrict its contacts during the review to State officials, leaving TransCanada out of the process. But such language did not stop Friends of the Earth climate director Damon Moglen from calling for the disqualification of the company's environmental assessment from the pipeline operator's pending reapplication for a U.S. permit to cross the northern border.

"It appears that the State Department put TransCanada in the driver's seat to broker the review of Keystone XL," Moglen said in a statement. "This impropriety alone should disqualify the environmental impact statement for the project."

Darren Springer, an energy aide to pipeline opponent Sen. Bernie Sanders (I-Vt.), also pointed to the revelation that the contract was between TransCanada and ENTRIX -- rather than State and ENTRIX, as the company suggests on its website by listing the government as a "client" -- as a sign that Entrix's already-completed review should not be relied on.

"The existing review does not adequately address the impact this pipeline would have in terms of increasing carbon emissions," Springer said of the previous study by ENTRIX. "The Keystone XL review has many flaws, and the fact that the contractual relationship was directly between TransCanada and Cardno ENTRIX raises new questions about the validity of that study."

Springer also poked at Republican arguments that the pipeline would lower U.S. gas prices, a claim disputed by Democrats and greens in a debate that remains extremely difficult to settle definitively (Greenwire, Jan. 31).

That lower-prices claim was reiterated by Neil Brown, a senior adviser to Sen. Richard Lugar (R-Ind.).

"Another day, another conspiracy theory," said Brown, whose boss is a chief sponsor of pro-Keystone XL legislation that fell four votes short of passage yesterday. "A large majority of Americans -- and their Senate representatives -- support Keystone XL jobs and the opportunity it brings for lower gas prices."

Click here to download a copy of the contract released by State.