State Department Inspector General Probing Keystone XL Contractor’s Conflicts of Interest

In yet another investigation into the Obama Administration’s activities, the State Department Inspector General is probing the conflicts of interest surrounding the contractor that performed the Keystone XL review,.

ERMProposalThe American public was supposed to get an honest look at the impacts of the Keystone XL pipeline. Instead, Environmental Resources Management (ERM), a fossil fuel contractor, hid its ties from the State Department so they could green light the project on behalf of its oil company clients.

Hiring an oil company contractor to review an oil pipeline that its clients have a financial interest in should be illegal – and it is. The Federal Government has strict laws to avoid conflicts of interest and prevent the hiring of contractors who cannot provide unbiased services.

Unredacted documents from the contractor’s proposal (revealed by Mother Jones) show that the company had worked for TransCanada, ExxonMobil and other fossil fuel companies that have a stake in the Canadian Tar Sands.

But, ERM misled the State Department at least twice in its proposal (see C&BP’s original post on ERM’s conflicts of interest)– which may have led to its selection by the State Department to review the Keystone XL pipeline.

OCI Question 6

First, ERM answered “No” to the question “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 appears to have added to the Yes/No questionnaire that, “ERM has no existing contract or working relationship with TransCanada.” Regardless of the addendum, the oil company contractor misled the State Department by checking “No” to the specific question above. Despite the fact that unredacted documents show that ERM worked for TransCanada and other fossil fuel companies with a stake in Keystone XL pipeline in the three years prior to its proposal.

Second, ERM claimed it was not an energy interest. The State Department question defines an energy interest in part as any company or person engaged in research related to energy development. Yet, ERM has worked for all of the top five oil companies and dozens of other fossil fuel companies. In other words, ERM is clearly an energy interest.

How can we trust ERM to perform an honest review of the Keystone XL pipeline, if it can’t answer a yes/no question honestly?

These misleading statements should have been flagged by the State Department and the contractor should not have been able to perform the review because of these seeming conflicts of interest.

ERMLetterBecause of the issues above, Checks & Balances Project (C&BP) and 11 environmental, faith-based and public interest organizations sent a letter  [.PDF] on April 8, 2013, calling on Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel to investigate two things: first, whether ERM hid conflicts of interest which might have excluded it from performing the Keystone XL environmental assessment and second, how State Department officials failed to flag inconsistencies in ERM’s proposal.

A few weeks later, C&BP received a voicemail from a Special Agent at the State Department’s Office of Inspector General (OIG):

Hello Mr. Elsner, my name is Special Agent Pedro Colon from the State Department’s Office of Inspector General.  I’m calling to inform you that we have received your request and are reviewing the matter.  If you have any questions please contact me at 703-284-2688.

On May 7, 2013, I called Special Agent Colon but he was unable to speak at the time. I followed up the next day and spoke with the Special Agent via phone regarding the request for an investigation. I asked a few basic questions about the status of the complaint and asked specifically if C&BP would be informed should the complaint be fully investigated by the Office of Inspector General (OIG). Special Agent Colon informed me that he could not speak to any of the questions and referred us to other staff in the OIG.

On May 9, 2013, I received an email from the OIG General Counsel saying, “that the complaint was being processed per the OIG hotline procedures and is under review.” (See the entire email correspondence here [.PDF])

I then asked the OIG General Counsel the same question he asked Mr. Colon:

If the hotline is moved out of the review process and onto the next step (an investigation?), will I be notified?

The OIG  replied via email saying that the OIG Office of Investigations will not comment if it is engaged in an investigation.

The correspondence between C&BP and the OIG indicates that there is a probe into the Keystone XL review conflicts of interest.

The public was supposed to get an honest look at the impacts of the Keystone XL pipeline. Instead, ERM, an oil company contractor, misled the State Department, in what appears to be an attempt to green light the project on behalf of oil industry clients.

The American Public needs a full investigation into the conflicts of interest and misleading statements of the Keystone XL review contractor, Environmental Resources Management.

Secretary Kerry needs to stop the Keystone XL process until the Inspector General completes a full investigation of these conflicts of interest and the State Department has an unbiased review of Keystone XL’s impact.

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.).