WASHINGTON (Dow Jones)
U.S. auditors are launching a "special review" of the State Department's handling of the Keystone XL pipeline, saying they want to determine whether the department followed the rules when processing a permit for the 1,700-mile pipeline project.
The auditors' review ratchets up the level of scrutiny that accompanies the Keystone XL proposal, but it's unclear whether it will delay a final decision on the project. The State Department, which is in the process of determining whether the pipeline serves the interests of the U.S., has said it wants to make a decision by year end.
If approved, the Keystone XL pipeline would stretch from Canada to Texas and pass through six U.S. states. It would transport up to 500,000 barrels of oil a day.
Opposition to the pipeline, particularly from environmental groups, has been building. On Sunday, thousands of protestors formed a human chain around the White House and urged President Barack Obama to block construction of the pipeline.
In a Nov. 4 memo, released Monday, the State Department's inspector general said it wants to review the Department's handling of an environmental analysis and a so-called national interest determination.
The IG did not say it believes the State Department broke any rules.
The IG's review follows allegations that TransCanada Corp. (TRP, TRP.T), the company that wants to build the pipeline, had gained too much influence over the State Department's analysis. In an Oct. 26 letter to the IG, several lawmakers said they were concerned about a conflict of interest.
Specifically, the lawmakers cited concerns with TransCanada's role in selecting a third-party company to review the pipeline's environmental impacts. Environmental groups have also accused a State Department employee of maintaining a cozy relationship with a TransCanada lobbyist.
TransCanada has long maintained its compliance with all laws. Company spokesman Terry Cunha said Monday that "we conduct ourselves with integrity and in an open and transparent manner. We are certain that the conclusion of this review will reflect that."
The State Department was not available for immediate comment.
A spokesman for the State Department's IG, Douglas Welty, said the auditors "are certainly not at any point to say" whether there was any criminal activity. Welty also said the auditors would try to expedite a review of the Keystone XL project given the high level of interest from lawmakers and the public.
(Edward Welsch and Benjamin Lefebvre contributed to this story.)
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