Energy

Secrets, Lies, and Missing Data: New Twists in the Keystone XL Pipeline


Construction of the Gulf Coast Project in Prague, Oklahoma, part of the Keystone XL Pipeline Project

Photograph by Daniel Acker/Bloomberg

Construction of the Gulf Coast Project in Prague, Oklahoma, part of the Keystone XL Pipeline Project

(Corrects to add findings of inspector general's report on Cardno Entrix's alleged conflicts of interest)

Even if you haven’t been following the saga of the proposed Keystone XL pipeline, and haven’t decided if it’s a fast track to U.S. energy independence (those in favor) or “game over” for human civilization (those opposed, because of its role in climate change), yesterday’s developments are too rich to ignore. In fact, it may be game over for the Keystone XL—at least until 2016—thanks, once again, to U.S. State Department oversight.

First, a refresher: Because the proposed line crosses the Canada-U.S. border, TransCanada, the Calgary-based company that wants to build and operate the pipeline, needs President Obama’s approval. The president, in turn, is relying on State to assess the viability and safety of the plan, as he indicated in a speech a little over a week ago. “The State Department is going through the final stages of evaluating the proposal,” Obama said, sweating profusely at Georgetown University. ”That’s how it’s always been done.”

Three years ago, the Keystone XL was a lot closer to being OK’d than it is today. As Paul Tullis noted in his 2011 feature, “the XL’s predecessor, which runs from Canada to Oklahoma and branches into Illinois, breezed through the permit process during the Bush Administration with barely a whiff of concern from the public.” By the time the XL came along, however, things had changed. In June 2011, after former NASA climate scientist James Hansen condemned the pipeline, Vermont professor Bill McKibben and a troop of college students answered Hansen’s call, surrounding the White House as part of a committed #NOKXL campaign. A strange-bedfellows coalition of ranchers and environmentalists rose up to protest property easements and to protect the aquifers of the Great Plains. And on July 10, 2011, the Los Angeles Times reported on correspondence released by WikiLeaks revealing that David Goldwyn, an aide to Hillary Clinton, was something of a mole for TransCanada, coaching the company’s executives on how to win favor at State with “better messaging.” After leaving the State Department, Goldwyn testified before Congress in favor of Keystone XL.

Then the real bomb dropped: Cardno Entrix, the Houston (Tex.) company State had contracted with to complete an environmental impact statement (EIS) on Keystone—the substance of the evaluation Obama referred to—turned out to be a preexisting client of TransCanada and, as such, appeared to have a blatant conflict of interest. After several members of Congress requested a review of the process, the inspector general was brought in to investigate and to establish new conflict of interest guidelines. The inspector general “found no evidence that TransCanada had improperly influenced the Department’s selection of Cardno Entrix,” according to a representative from State, who also said the agency’s prior relationship with TransCanada did not “impair the contractor’s objectivity.” Meanwhile, a supplemental environmental assessment was ordered up, this time from a U.K. multinational called ERM.

Well, it happened again. Two environmental groups, Friends of the Earth and the Checks and Balances Project, have revealed that ERM lied about its own ties to TransCanada. Specifically, these environmental watchdogs report (pdf):

• In papers filed with the State Department in June 2012, ERM certified that it had had “no existing contract or working relationship with TransCanada” for at least three years. But public records show that TransCanada, ERM, and an ERM subsidiary, Oasis Environmental, have worked together at least since 2011 on the Alaska pipeline project.

• ERM’s own publicly available documents show that the company has business with more than a dozen companies with operating stakes in the Alberta tar sands.

• ERM staff working on the Alaska Pipeline Project have attempted to cover up ERM’s ties to TransCanada. On May 14, 2013, Mark Jennings’ LinkedIn profile listed him as Socioeconomic Adviser for ERM and listed among his roles “Consultant to ExxonMobil Development Company for the Alaska Pipeline Project.” By June 6, amid mounting calls for an investigation of ERM’s ties to the oil industry, his LinkedIn profile made no mention of ERM.

In other words, ERM appears to have as many conflicts of interest as Cardno Entrix ever did; it’s as if the inspector general never established new protocols for avoiding or, at least, disclosing such conflicts. (ERM did not return this reporter’s call on deadline.) The State Department was supposed to have independently verified any claims made by contractors. How hard would it have been for a State Department official to look on ERM’s website? A call to the State Department elicited some “trust us” boilerplate.

“Our rigorous conflict of interest procedures ensure that no contractors or subcontractors have financial or other interests in the outcome of a project,” says State Department spokesperson Jen Psaki. “The selected contractor works directly with and under the sole direction of the Department of State while the applicant pays for the work. The contractor certifies that it has not had, and does not have, any direct contracts with the applicant. The contractor is not permitted to communicate with the applicant unless specifically directed to do so by Department officials.”

“From the beginning, the State Department’s review of Keystone has been plagued by influence peddling and conflicts of interest,” says Ross Hammond, senior campaigner for Friends of the Earth, who presented his group’s findings in a press conference yesterday. “This is more serious: If ERM lied about its relationship with TransCanada, how can Secretary Kerry, President Obama, or the American people believe anything the company says about the pipeline’s environmental impact?”

Doug Hayes, an attorney with the Sierra Club in its Boulder (Colo.) office, notes that the process has a built-in conflict of interest, because the contractors who do EIS studies for the government are paid for by the applicant—in this case, TransCanada. “The only other option is for taxpayers to pay for these things, and that’s not really reasonable. It makes some sense that the company that wants to build something pay to find out if it’s safe.” But, he says, that’s why it’s so crucial that the government agencies are vigilant about any conflicts. “The thing here is that ERM doesn’t just have ties to TransCanada, but relationships with something like 12 companies that stand to benefit from the Keystone and tar sands development.” Allowing that it may be difficult to find third parties in energy services that don’t have a relationship with a big company like TransCanada, Hayes notes that the issue comes down to disclosure—something sorely lacking, he says, in this process.

Several months ago, Hayes says, the Sierra Club submitted a Freedom of Information Act (FOIA) request to the Army Corps of Engineers, asking for details on the proposed route for the pipeline. TransCanada has kept the exact route a trade secret, citing security issues. The U.S. State Department has issued approximate maps but not precise coordinates. If anyone would have precise details, the Sierra Club figured, it’d be the Army Corps. The Corps denied the request.

Recently, San Francisco photographer Thomas Bachand tried to get the route from the State Department with even more baffling results, as first reported by Steve Horn’s DeSmog blog. As a letter Bachand posted online reveals, the State Department claims not to have any GIS data on the route—or to know who within the federal government does.

Which raises a final question: If no one can share the route, how can anyone approve it?

Wieners_190
Wieners (@bradwieners) is an executive editor for Bloomberg Businessweek.

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