A hefty new investigation from the Center for Public Integrity takes the Energy Department to task for giving stimulus (American Recovery and Reinvestment Act) funding to industrial polluters while waiving requirements that they conduct environmental-impact reviews.

It’s an important, substantial report, but it glosses over the Obama administration’s central dilemma with the stimulus: It’s difficult to spend money both quickly and smartly.

The administration, with the support of mainstream economists, decided it should spend stimulus quickly to kick-start the economy. Environmental safeguards — even when they’re well-designed, user-friendly, and absolutely necessary — slow down construction and research projects.

To balance these two factors, the administration issued 179,000 “categorical exclusions” that exempted stimulus projects from review under the National Environmental Policy Act, a 40-year-old cornerstone of American environmental law. CPI details how the money went to some companies and plants with filthy records. Three of the more striking examples:

  • BP’s refinery in Texas City, Texas — which has the oil industry’s worst safety record and was the site of a deadly 2005 explosion and a benzene leak earlier this year — received funding free of NEPA safeguards to do preliminary work on a carbon-capture-and-sequestration project (which has since died).
  • Duke Energy, one of the nation’s largest polluters, received $226 million to develop wind-storage battery technology and deploy smart-meter equipment, despite the company’s record of getting slapped with air-pollution violations and fighting the charges rather than cleaning up its coal plants.
  • DuPont secured $9 million for algae/seaweed biofuels research, despite a record of poisoning drinking water that resulted in a $108 million class-action lawsuit settlement with victims of cancer and liver disease.

Instead of holding up stimulus dollars while it conducted more thorough vetting, the administration developed what CPI describes as “a speedy review process that relies on voluntary disclosures by companies to determine whether stimulus projects pose environmental harm.”

The administration decided that compromises were justified in order to stimulate the economy and move forward on clean-energy projects. Administration officials “argue that [NEPA] exemptions were essential to accelerate more than $30 billion in stimulus-funded clean energy projects, allocated by the Energy Department, which they say have already created 35,000 jobs,” CPI reports. “And in the long run, they say, the exempted stimulus activities will serve to boost energy efficiency and curb pollution.”

That argument isn’t quite convincing. The Deepwater Horizon spill in the Gulf of Mexico makes a rather strong case against trusting corporations to conduct their own environmental accountability. Excusing them from independent review (or getting lazy about reviews) is likely to bite us in the a** again. Wind, solar, and smart-grid projects are inherently safer than fossil-fuel excavation, but there are still risks in many of the stimulus projects. Safeguards are a good thing.

On the other hand, I’m glad the administration supports research by historically dirty companies. Like it or not, the history of American industry involves a lot of pouring waste into public rivers and releasing it through smokestacks into public airspace. If we’re going to ask the private sector to invest in energy solutions, that means doing business — and occasionally awarding research money — to companies like BP, Duke, and DuPont.

Pete Danko of EarthTechling offers an analogy: “To nab mobsters, law enforcement has to do business with some pretty unsavory characters. A similar reality might be at play in the U.S. government’s pursuit of job-creating clean-energy projects.”

We don’t have the luxury of working only with players with clean records.