Conflict of interest: State Department contractor on Keystone XL study lied about ties to TransCanada & oil industry

ERM employee tried to cover up deceit online

WASHINGTON, D.C. – The company hired by the State Department to review the environmental impact of the Keystone XL tar sands pipeline lied on its conflict of interest disclosure form about its work for pipeline builder TransCanada and other oil companies, according to research released today by Friends of the Earth and The Checks & Balances Project.

Friends of the Earth’s investigation of the business connections of Environmental Resources  Management — the London-based international consulting firm that conducted a study for the State Department claiming the pipeline will not cause significant environmental harm — uncovered an extensive dossier of publicly available documents that show:

  • On its conflict of interest disclosure forms, ERM lied to the State Department about not working with TransCanada. In fact, ERM and TransCanada have worked together at least since 2011 on another pipeline project in Alaska.
  • ERM lied again when it said it had no relationship with any business that would be affected by construction of the Keystone XL, which would carry tar sands oil from northern Alberta to refineries on the Gulf Coast. In fact, ERM’s own publicly available documents show that the firm has business with over a dozen companies with operating stakes in the Alberta tar sands.
  • In recent weeks, as calls grew louder for an investigation of the numerous conflicts of interest tainting the State Department’s handling of the Keystone proposal, an ERM employee tried to cover up his work for the Alaska Pipeline Project, a partnership between ExxonMobil and TransCanada.

“From the beginning, the State Department’s review of Keystone has been plagued by influence peddling and conflicts of interest,” said Ross Hammond, senior campaigner for Friends of the Earth. “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?”

Hammond said ERM’s lies call into question the entire Keystone XL environmental review process. Friends of the Earth and The Checks & Balances Project have called for an investigation by the State Department’s Inspector General into how ERM was hired given these conflicts of interest. In the wake of the new evidence that ERM lied on State Department disclosure forms, the groups are asking Secretary of State John Kerry to throw out the ERM study and not allow it to determine the Obama Administration’s decision on whether to issue a pipeline permit.

In papers filed with the State Department in June 2012, ERM certified that it 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.

On its conflict of interest form, ERM also certified that it had no “direct or indirect relationship … with any business entity that could be affected in any way by the proposed work.” But ERM’s own publicly available documents show that in the period 2009-2012 the firm was working for over a dozen of the largest energy companies involved in the Canadian tar sands which stand to benefit if Keystone is built, including Exxon, Shell, Chevron, Conoco Phillips, Total and Syncrude.

More recently, on May 14 the LinkedIn profile for Mark Jennings listed him as Socioeconomic Advisor for ERM. Among his roles for the company were since 2011, “Consultant to ExxonMobil Development Company for the Alaska Pipeline Project,” for which Exxon and TransCanada are partners. But less than a month later, his LinkedIn profile made no mention of his work for ERM.

The State Department’s review of Keystone XL has been sharply criticized by the EPA and the scientific community for failing to consider the climate and other impacts of the pipeline. The Checks and Balances Project and Friends of the Earth said it is impossible for the State Department to fairly evaluate whether the pipeline is in the national interest when its environmental review was conducted by a company with deep ties to the oil industry.

“Secretary Kerry must halt this flawed review process and direct the State Department to conduct a full, unbiased review of the Keystone XL pipeline’s impact,” said Gabe Elsner, director of the Checks and Balances Project. “In addition, the State Department Inspector General should pursue a full investigation into how a contractor with clear conflicts of interest was allowed to write the U.S. government’s assessment of Keystone XL and why the State Department failed to bring those conflicts of interest to light. Finally, the State Department should determine appropriate disciplinary actions for ERM to discourage contractors from lying to the federal government in the future.”

C&BP Calls for State Dept. Investigation into Keystone XL Consultant’s Conflicts of Interest

ERMLetter

Letter to Secretary of State John Kerry and State Dept. Deputy Inspector General Harold Geisel

Yesterday, Checks & Balances Project and 11 environmental, faith-based and public interest organizations called on Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel to investigate whether Environmental Resources Management (ERM) hid conflicts of interest which might have excluded it from performing the Keystone XL environmental assessment and how State Department officials failed to flag inconsistencies in ERM’s proposal. Tom Zeller, Senior Writer at The Huffington Post, wrote an article highlighting the letter callings for an investigation.

Early last month, the State Department released a 2,000 page environmental impact study for the Keystone XL pipeline claiming that the pipeline would not have major impact on the environment. But, Environmental Resources Management (ERM), the consulting firm hired to perform the “draft supplemental environmental impact statement (SEIS),” has ties to fossil fuel companies with major stakes in the Alberta Tar Sands. This conflict of interest was not accurately disclosed  in ERM’s answers on a State Department questionnaire. Checks & Balances Project considers ERM’s responses in its proposal to be intentionally misleading statements.

Unredacted Documents Uncover Conflicts of Interest
Last week, Mother Jones released unredacted versions of the ERM proposal, showing that three experts “had done consulting work for TransCanada and other oil companies with a stake in the Keystone’s approval.”

The unredacted biographies show that ERM’s employees have an existing relationship with ExxonMobil and worked for TransCanada within the last three years among other companies involved in the Canadian tar sands.

Here’s more from Mother Jones’ Andy Kroll:

“ERM’s second-in-command on the Keystone report, Andrew Bielakowski, had worked on three previous pipeline projects for TransCanada over seven years as an outside consultant. He also consulted on projects for ExxonMobil, BP, and ConocoPhillips, three of the Big Five oil companies that could benefit from the Keystone XL project and increased extraction of heavy crude oil taken from the Canadian tar sands.

Another ERM employee who contributed to State’s Keystone report — and whose prior work history was also redacted — previously worked for Shell Oil; a third worked as a consultant for Koch Gateway Pipeline Company, a subsidiary of Koch Industries. Shell and Koch have a significant financial interest in the construction of the Keystone XL pipeline. ERM itself has worked for Chevron, which has invested in Canadian tar-sands extraction, according to its website.”

When asked about who at the State Department decided to redact ERM’s biographies, a State Department spokesperson said “ERM proposed redactions of some information in the administrative documents that they considered business confidential.” Disclosing past clients may be business confidential information, but from what the biographies show, ERM may have recommended the redactions to hide conflicts of interest from public disclosure.

Problem with ERM Answers on Conflict of Interest Questionnaire 

ERMProposal

ERM’s Proposal to the State Department

The biographies on ERM’s proposal show that the company has had direct relationships with multiple business entities that could be affected by the proposed work in the past three years.

In the “Organizational Conflict of Interest Questionnaire,” the State Department asks (page 42), “Within the past three years, have you (or your organization) had a direct or indirect relationship (financial, organizational, contractual or otherwise) with any business entity that could be affected in any way by the proposed work?“ ERM’s Project Manager, Steve Koster, checked “No” but appears to have added to the Yes/No questionnaire that, “ERM has no existing contract or working relationship with TransCanada.”

Regardless of the addendum Koster added, he still submitted an incomplete statement when checking “No” to the specific question above. Simply put, the information provided by Mr. Koster was an incomplete statement if one simply reviews the biographies of ERM’s employees for the project.

The State Department Contracting Officer should have flagged this inconsistency when reviewing the staff biographies.  ERM’s answers did not properly reveal in the Yes/No questionnaire that ERM did have a current “direct relationship” with a business enetity that could be affected by the proposed work and a relationship in the past three years with TransCanada, the company building the pipeline.

Koster’s incomplete statement on direct business relationships is not the only odd statement in ERM’s proposal. ERM also answered “No” to the question, “Are you (or your organization) an ‘energy concern?’” which the State Department defines (in part) as: “Any person — (1) significantly engaged in the business of conducting research…related to an activity described in paragraphs (i) through (v).” Paragraph (i) states: “Any person significantly engaged in the business of developing, extracting, producing, refining, transporting by pipeline, converting into synthetic fuel, distributing, or selling minerals for use as an energy source…” ERM as a research firm working for fossil fuel companies is, unequivocally, an energy interest.

So the question must be asked: If ERM is unable to accurately fill out a simple questionnaire regarding conflicts of interest, how can we trust the company to perform an unbiased environmental assessment of a 1,179 mile-long pipeline cutting through the American heartland? And, why did the State Department’s Contracting Officer not flag the inconsistencies in ERM’s Conflict of Interest Questionnaire when reviewing the proposals?

Intentions of State Department and ERM in Question

The Federal Government has strict ethics rules to prevent Organizational Conflicts of Interest (OCIs) from impacting the impartiality of government contracts and to prevent hiring contractors who cannot provide independent and unbiased services to the government.

According to a white paper from the Congressional Research Service, before the State Department could choose ERM as the contractor, the “Contracting Officer” had to make an “affirmative determination of responsibility.” All government contractors (including ERM) must be deemed responsible, in part by meeting strict ethics guidelines, known as “collateral requirements.”

According to current collateral requirements, contractors must be found “nonresponsible” when there are unavoidable and unmitigated OCIs. Checks & Balances Project believes that the Contracting Officer should have deemed ERM “nonresponsible” because the company serves as a contractor for major fossil fuel companies that have a stake in the Keystone XL pipeline. If ERM were “nonresponsible”, the company would have been ineligible to perform the environmental impact review of the Keystone XL pipeline.

These potential material incomplete statements on a Federal Government proposal calls into question the integrity of ERM and threatens millions in government contracts.

If ERM were determined to be “nonresponsible” or “excluded” because of these incomplete statements, it could jeopardize ERM’s ability to perform any work for the Federal Government. Again, according to the Congressional Research Service:

“Decisions to exclude are made by agency heads or their designees (above the contracting officer’s level) based upon evidence that contractors have committed certain integrity offenses, including any “offenses indicating a lack of business integrity or honesty that seriously affect the present responsibility of a contractor.””

Certainly these incomplete statements call into question both the independence of ERM and the judgement of the Contracting Officer in making the “affirmative determination of responsibility.” This proposal process should be investigated by the State Department Inspector General to determine if ERM’s statements are cause for exclusion.

Groups Calling for Inspector General Investigation

We believe ERM used multiple material incomplete statements and had clear conflicts of interest as shown in the unredacted documents. So, why was ERM hired by the State Department?

Checks & Balances Project asked a State Department spokesperson about the conflicts of interest and the spokesperson said: “Based on a thorough consideration of all of the information presented, including the work histories of team members, the Department concluded that ERM has no financial or other interest in the outcome of the project that would constitute a conflict of interest.” Perhaps the State Department’s Contracting Offier made the decision to hire ERM because of the company’s incomplete statements on the conflict of interest questionnaire.

Harold Geisel, Deputy Inspector General, U.S. State Department

Checks & Balances Project along with 11 other groups (Better Future Project, Center for Biological Diversity, Chesapeake Climate Action Network, DeSmogBlog, Forecast the Facts, Friends of the Earth, Greenpeace, NC WARN, Oil Change International, Public Citizen’s Energy Program and Unitarian Universalist Ministry for Earth) sent a letter to Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel calling for an investigation into the matter. These incomplete statements and the determination by the Contracting Officer that ERM did not have any conflicts of interest, despite clear evidence to the contrary, are grounds for further investigation.

3 More Sketchy Connections between Hillary Clinton and the KeystoneXL Pipeline

New developments suggest former Clinton staffer dodged rules while lobbying Congress

New developments from Washington, DC reveal that lobbyists for TransCanada’s proposed Keystone XL pipeline acted inappropriately while trying to gain support for the crude pipeline that would connect the Alberta Tar Sands with the Gulf of Mexico. Recent reports show that a chief lobbyist for TransCanada tried to influence American energy policy without filing under the Foreign Agents Registration Act (FARA). The reports also show a “cozy” relationship between Hillary Clinton’s State Department and TransCanada, as well as direct contact between the unregistered lobbyists and several members of congress. This news comes as the State Department continues to give every indication that it will allow the pipeline to be built, despite outcries from both the environmental community as well as those outraged about the ethical bankruptcy coming from Hillary Clinton’s department.

FARA violations

The FARA requires that any foreigners attempting to influence the United States Congress must register with the FARA Registration Unit of the Department of Justice. Emails between the State Department and TransCanada’s government relations employee Paul Elliott show that contact between the two had taken place form more than a year before he first registered as a lobbyist. This activity has resulted in questionable actions calling for a full investigation according to a report filed on September 27th. “Paul Elliott, a government relations employee of TransCanada, has acted as agent of a foreign principal and therefore violated the Foreign Agents Registration Act. We respectfully request that you immediately open an investigation of this matter,” Friends of the Earth attorney Gail Harmon wrote in a letter to Heather Hunt of the FARA Registration Unit of the Department of Justice.

The “cozy” relationship

Paul Elliott’s connections to Hillary Clinton are well documented. Elliott was a high-level campaign advisor to Clinton when she was running for the Democratic Party’s presidential nomination in 2008. When her campaign fizzled, Elliott jumped aboard TransCanada’s lobbying team as the company geared up to convince the Obama administration that a pipeline carrying millions of barrels of crude oil across the country was a good idea. Emails obtained by Friends of the Earth reveal that while Elliot was contacting members of the United States government illegally, the State Department was providing, “insider information and coaching to Mr. Elliot and TransCanada.”

“Friends” in Congress

Even though TransCanada can face “serious penalties” for failing to immediately disclose their lobbying activity in the United States, it didn’t keep the multinational corporation from reaching out to members of both political parties. Some of the members that discussed the pipeline with Elliott’s team include Sens. James Inhofe (R-Okla.), John Thune (R-S.D.), Jon Tester (D-Mont.), Ben Nelson (D-Neb.) and Lisa Murkowski (R-Ala.).

Five things to consider about the Yellowstone Pipeline leak

Nearly a week has passed and thousands of gallons of crude oil have poured into the Yellowstone River in Montana. The spill has placed attention on America’s often overlooked and aging pipeline system. As the media continues to cover ExxonMobil and its ruptured pipeline, here are a few things to consider about pipelines in the United States.

Leaky past

Over the last eighteen months the United States has seen a steady flow of pipeline accidents that have resulted in the spilling of millions of gallons of oil, the destruction of homes from coast to coast and several deaths and injuries. Between January 2010 and February 2011 nine major pipeline explosions resulted in 18 deaths, 13 injuries and 85 destroyed homes in the United States.

A full list of all pipeline accidents in the United States, including the Yellowstone River incident, can be found here. The list also includes the estimated 800,000 gallons of crude that spilled into the Kalamazoo River last year, as well as the 600,000 gallons of crude that made it into a Chicago suburb just months later. Both spills were the result of pipeline failures.

Regulating the flow

The management of pipelines is a bureaucratic nightmare. Six seemingly unrelated federal agencies, including the Department of Transportation, Mineral Services Management and U.S. Army Corp of Engineers, have a share in the responsibility as the Agencies of The Joint Pipeline Office dealing with concerns over safety, regulation, transportation and access of oil and gas from interstate pipelines. The agencies are responsible for thousands of miles of aging pipelines, some of which have been around since the 1860s. Yet, spills continue to happen causing leaks into our precious natural resources.

Exxon’s lies

In the wake of the Yellowstone River spill, ExxonMobil is increasingly going on the defensive for not telling the truth to federal officials and Montana Governor Brian Schweitzer. The Associated Press reports that an ExxonMobil said the oil spill had been contained within 30 minutes of the rupture. That reports shows that it was actually nearly an hour before the pipeline had been fully turned off. This was not the first discrepancy between ExxonMobil’s rhetoric and the reality of the Montana disaster.

Before giving federal officials and Schweitzer false information about how long crude flowed into the Yellowstone, ExxonMobil had been sticking to their story that ten miles of the Yellowstone River could be affected by the spill. By the time Schweitzer spoke on television on Tuesday night, the governor knew that the dynamics of the flowing Yellowstone River meant that ExxonMobil’s ten-mile claim was bogus. “At seven miles per hour, some oil is already in North Dakota. That’s a given,” Schweitzer said. That same day, the same transportation officials who were told that oil wouldn’t go beyond a ten-mile stretch, acknowledged that oil had been observed in Terry Montana, more than 240 miles downstream.

Keystone concerns

The Yellowstone River disaster comes at a critical time for America’s pipeline and energy industry. The Secretary of State’s office is currently considering approval for what would be a major pipeline that would connect crude oil reserves in the Alberta Tar Sands to refineries in the United States. This proposed expansion of the existing Keystone pipeline has raised concerns for several reasons. First, the pipelines will come close to existing waterways and aquifers. Modern pipelines can be buried as much as 25 feet beneath bodies of water; Exxon Mobil’s Silvertip line was 5 to 8 feet below the bottom of the Yellowstone. In Nebraska, several state legislators have expressed concerns that if a disaster like the spill in the Yellowstone River were to happen near the Oglala Aquifer, the damage done to a critical water supply to one of the nation’s leading agricultural states could be catastrophic. The same concern has been echoed by Nebraska’s two United States Senators who despite being members of different political parties, are both skeptical of the project’s potential harm to drinking water.

Of course this raises the question of the likelihood of spill from an expanded Keystone XL pipeline. According to a report by the National Resources Defense Council, spills from the existing Keystone XL pipeline occur at a rate of about one per month. Over the last eleven months eleven spills have occurred at pumping stations along the pipeline. This includes a May 7 spill of 500 barrels in North Dakota, which sent a geyser of oil spurting 60 feet into the air and shutdown the pipeline for a week.

Another reason for concern surrounding plans to expand the Keystone XL comes down to ties between Secretary of State Hillary Clinton and TransCanada. TransCanada is the company that owns the existing Keystone XL pipeline. TransCanada’s main Washington, DC lobbyist is Paul Elliot, who served as the Secretary of State’s national deputy director for her failed presidential run in 2008. This cozy relationship has resulted in several organization filing requests to see the discussions between Clinton and Elliot throughout this process. Currently, the Secretary of State’s office is in the review stages of the approval process for the pipeline, which if given the go-ahead would allow for 900,000 barrels of crude to be pumped into the United States every day.

Clean up costs

Not only does ExxonMobil make $5 million per hour, the company is a beneficiary of $21 billion in tax breaks (over the next five years) to the top five oil corporations.

Yet the “richest company in the world is using oil spill technology that is at least 40 years old,” said Eric Pica, president of Friends of the Earth during an appearance on MSNBC. ExxonMobil has not invested any funds into the ‘technological innovation’ of clean up equipment even though the Yellowstone Pipeline “has leaked at least 71 times on tribal lands, including one failure that resulted in a 163,000 gallon spill into a reservation creek.”

ExxonMobil will mostly be able to write off the clean up costs as a classic business deduction. Like Americans did during the BP spill (which reportedly cost $5 billion to clean up), they will accrue most of the financial costs of this leak. And who knows how much the tab will end up costing this time.