Environmental Impact Studies: The dirty little secret

Can an oil pipeline safely cross a rainforest? What are the risks? Photo by Christiane Badgley

The controversy surrounding the proposed Canada to Texas Keystone XL pipeline and the pipeline spills in Michigan and Montana have prompted several newspapers and news agencies to look more closely at pipeline safety. Much of the current reporting indicates that authorities ought to be more concerned about the pipelines criss-crossing their states.

Conflict of interest is potentially a huge issue in the oil industry, where industry-friendly and industry-connected companies are big players in the environmental studies and oil spill clean-up businesses. Here’s more on that from the New York Times:

The State Department assigned an important environmental impact study of the proposed Keystone XL pipeline to a company with financial ties to the pipeline operator, flouting the intent of a federal law meant to ensure an impartial environmental analysis of major projects.

Environmental impact studies (or environmental and social impact assessments), as the name suggests, are intended to look at the likely impacts of a proposed project on the local environment and communities.  If a community, state or government decides that a project’s environmental and/or social cost outweighs its benefits, then, logically, the project can be halted or modified.

Makes sense.

The problem, however, as this article makes clear, is that these environmental impact studies are often farmed out to firms that have ties to the company or industry behind the proposed project:

The National Environmental Policy Act, which took effect in 1970, allows for agencies to hire outside contractors to perform its required environmental impact studies, but advises that contractors be chosen “solely by the lead agency” and should “execute a disclosure statement” specifying that they “have no financial or other interest in the outcome of the project.”

And yet legal experts said it had become common for companies applying to build government projects to be involved in assigning and paying for the impact analysis. Some say such arrangements are nearly inevitable because federal agencies typically lack the in-house resources or money to conduct these complex studies. “What’s normal is deplorable, and it’s NEPA’s dirty little secret,” said Mr. Echeverria, acting director of the Environmental Law Center at Vermont Law School, referring to the law. He said federal agencies are supposed to review the findings, but often lack the expertise to do so.

The article questions the integrity of assessment studies prepared by companies with industry ties, with several experts and environmental groups expressing their doubts. They claim that both the risks and the difficulty of cleaning-up have been downplayed.

The article cites a July 2010 spill in Kalamazoo, Michigan, where crews are still trying to clean-up:

An accident at a pipeline owned by Enbridge Energy in July 2010 dumped 843,000 gallons of such oil near Marshall, Mich.

A 35-mile stretch of the Kalamazoo River remains closed and cleanup has proved extremely difficult, running over budget and past deadlines set by the E.P.A. Estimates of cleanup costs have run well over $500 million. The E.P.A.’s regional administrator said her office had never seen a river system affected by so much submerged oil.

But the impact report for the Keystone XL project says that “response to a spill from the proposed pipeline would not require unique clean up procedures.”

The Enbridge spill is only mentioned briefly in addendums. And Cardno Entrix would have been aware of the challenges in Michigan: it was hired by Enbridge to assess the damage to natural resources caused by the spill.

The reporters conclude with a more reassuring comment from an attorney:

James W. Spensley, a Colorado-based environmental lawyer with broad experience in government pointed out that the courts provided an important check on abuse, since shoddy or biased studies are vulnerable to legal challenges.

“Generally,” he said, “lead agencies are very cautious about finding someone who is going to give them good, reliable, information because they are the ones that are going to get sued.”

This brings us to Africa. The World Bank Group, heavily invested in the extractive industries, primarily through its private financing arm, the IFC, requires that any country or company seeking WB financing for an oil development project produce an environmental impact assessment for the proposed project

In interviews I’ve done with Bank officials, this is one of their arguments for WB involvement in the sector. “If we weren’t there, anything could happen.”

Well, every environmental impact study connected to oil development in Africa that I’ve looked at has been prepared by a firm hand-picked by the oil companies. The environmental impact study for the Chad Cameroon pipeline, for example, was even criticized by Robert Goodland, the World Bank’s head environmentalist at the time. He didn’t criticize what was in the report, but what was left out. According to him, the study did not spend ample time looking at the most vulnerable areas in Cameroon, areas where any spill would have devastating consequences. In this way, the real risks were significantly downplayed.

The situation in Ghana is similar and I’ll soon be writing in more detail about the risks of offshore drilling.

In the U.S., as stated above, the courts provide “an important check on abuse, since shoddy or biased studies are vulnerable to legal challenges.” oil companies and the E.P.A. may face legal challenges (see, for example, legal action against the E.P.A. connected to the Deepwater Horizon spill), but this is highly unlikely in most African countries. The legal system and courts in countries like Ghana, Nigeria, Cameroon and Angola (just to name a few), can not provide the kinds of “checks on abuse” that  we may see in the U.S.  In countries where the judiciary is not independent, how can one count on the courts to limit abuse? And what about the lack of money for legal procedures?

If the World Bank Group is going to highlight the value of environmental impact studies as one of the justifications for its involvement in extractive industries projects, it needs to be able to guarantee the impartiality of such studies. Today it can not do that.

You can read the entire New York Times article, Pipeline Review is Faced with Question of Conflict, here.





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