Playing With The Numbers

by Stuart Shapiro

The State Department is currently deciding whether to approve the Keystone XL pipeline from Canada to Texas.  They are required to do an Environmental Impact Analysis, which is a complicated analysis given the vastness of the pipeline. Yesterday the New York Times reported that the firm contracted to do the analysis has a major conflict of interest.

The department allowed TransCanada, the company seeking permission to build the 1,700-mile pipeline from the oil sands of northern Alberta to the Gulf Coast in Texas, to solicit and screen bids for the environmental study. At TransCanada’s recommendation, the department hired Cardno Entrix, an environmental contractor based in Houston, even though it had previously worked on projects with TransCanada and describes the pipeline company as a “major client” in its marketing materials.

Doing an Environmental Impact Analysis involves a lot of assumptions, the results of which often determine the results of the analysis (what is the likelihood of a rupture in the pipeline, if there is one, what is the likelihood that it damages groundwater for example).  The requirement to do one was put in place to ensure that environmental considerations were part of government agency decisions.  Choosing a firm like Cardno Entrix to do to the analysis only serves to increase cynicism about government and all of its decisions.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.