WASHINGTON — The consultants writing the State Department’s environmental report of the Keystone XL pipeline have reviewed other projects undertaken in recent years by companies including Keystone’s owner, TransCanada, according to a department official’s letter obtained by environmental groups opposed to the Keystone XL project.
But while environmental groups say that new details in the letter show a conflict of interest and assert that the consultants were working for the big pipeline companies, a State Department official said that the consulting firm was working for landowners in these instances.
An Aug. 8, 2013, letter from then-State Department official Genevieve Walker thanks the firm, Environmental Resources Management (ERM), for its June 13 and July 17 disclosures that it was reviewing environmental assessments of four other pipelines, including two TransCanada gas lines to Canada’s west coast, as well as for Enbridge’s proposed Northern Gateway crude oil pipeline, which would run from the oil sands to Canada’s coast.
Walker — who coordinated the agency’s National Environmental Policy Act reviews at the time — writes that as long as ERM separated the personnel working on those projects, particularly those linked to TransCanada, the State Department would have no objection. “Such a step will help further alleviate any concern with respect to perceived conflicts of interest,” she wrote.
ERM is a global provider of environmental, health, safety, risk, and social consulting services. The company has about 4,600 employees, nearly half of whom work in the United States. Its Web site says that “a substantial portion of our annual revenue comes from projects with mining, oil and gas, and other energy companies.”
The letter, which the advocacy group Sierra Club obtained through the Freedom of Information Act, also indicates that ERM passed up some energy-related contracts to avoid possible charges of conflicts of interest.
“We also note that ERM has determined on its own to forego potential work” for a client linked to TransCanada’s transmission line to Canada’s west coast, the letter said. The other project was in Alaska for a joint venture that included TransCanada.
A State Department official, who asked not to be identified because it involved a legal matter, said the letters “show that our process to avoid conflicts of interest worked,” adding that in the case of the project that ERM passed up, the public could have reasonably perceived that ERM would have had a conflict of interest, because the potential client could have had an interest in the decision regarding the Keystone pipeline.”
David McArthur, ERM’ s regional chief executive for the Americas, did not return calls for comment.
The State Department did not disclose the identity of the landowners, citing privacy concerns. Pipelines to Canada’s west coast have sparked opposition from environmental groups in British Columbia and First Nation tribes.
Several environmental groups argue that ERM has conflicts of interest grave enough to invalidate the conclusions in the State Department’s final environmental impact statement on Keystone. The State Department’s inspector general confirmed in August that it is reviewing the matter.
Ross Hammond, a senior campaigner at Friends of the Earth’s climate and energy program, noted that ERM has ties to nearly a dozen companies with a financial stake in heavy crude extraction in Canada’s oil sands.
“It’s hard to believe there’s no financial incentive for ERM to fudge the numbers when so many of their clients will profit from the construction of Keystone XL,” Hammond said. “This is a full-blown scandal that should make it impossible for the president to use this flawed report as a basis for his decision on the pipeline.”
According to individuals familiar with the inspector general’s probe, who asked not to be identified because the report is not final, a current draft suggests the agency examine its conflict-of-interest precautions but does not find that State Department officials violated agency rules in retaining ERM. A spokesman for the inspector general’s office, Douglas Welty, said that “it is OIG policy not to comment on drafts.”
The State Department official who had asked for anonymity said of the review, “We look forward to the inspector general’s office completing its review of our compliance with the department’s conflict-of-interest guidelines.”
The official noted that the exchange of letters between ERM and agency officials were published along with the Final Environmental Impact Statement on Jan. 28: “We are not trying to hide these details.”
One of the key questions in the review centers on how ERM responded to the question of whether “Within the past three years, have you (or your organization) had a direct or indirect relationship . . . with any business entity that could be affected in any way by the proposed work?”
ERM responds: “No. ERM has no existing contract or working relationship with TransCanada.”
But energy experts said it is difficult to find consulting firms with pipeline and environmental impact expertise who have not done work for the oil and gas industry.
“Given the current state of affairs, the State Department would have a very difficult time finding a capable consultant that doesn’t have ties to the oil and gas industry,” said Michael Levi, a senior fellow for energy and the environment at the Council on Foreign Relations.
Levi emphasized that the U.S. government had enough financial leverage to change the situation. “If the federal government adopted a policy that it would only contract with companies that had no industry relationships you would see serious consultancies built for that purpose,” he said. “I can’t imagine that no one would step up to that.”
On its website, ERM defends its role, listing Keystone as one of three of its “sometimes controversial” projects.
Even though the administration is months away from making a final decision on the Keystone project, environmentalists are already planning their next protest. On March 2 youth activists plan to march from Georgetown University to the White House, hold a rally in Lafayette Square and risk arrest by staging a sit-in at the White House fence.