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I Guess the State Department Defines 'Conflict of Interest' Differently Than the Rest of Us
Despite numerous ties between the agency’s consultants and TransCanada, an Inspector General’s report finds no problem with the Keystone XL environmental review process.

Here are some things that do not constitute a conflict of interest in the State Department’s latest environmental review of the proposed $5 billion Keystone XL tar sands oil pipeline, according to a new report from the agency’s Inspector General:

  • The State Department chose Environmental Resources Management, or ERM, to lead the environmental review process from among four firms recommended by TransCanada, the company that is seeking a federal permit for the 1,700-mile pipeline.
  • In contract documents with the State Department, ERM certified (incorrectly, as it turns out) that it had no conflicts of interest or business relationship with TransCanada or “any business entity that could be affected in any way by the proposed work.” Apparently that’s all it takes: as Buzzfeed reports, State Department documents obtained by environmental groups note that the determination that ERM had no conflict of interest was based on “self-vetted” (now there’s a memorable turn of phrase!) information from the company.
  • When the State Department released its initial environmental assessment of the pipeline last March (an updated final version came out last month), it redacted the work histories of the experts who prepared the report. Mother Jones obtained unredacted versions showing that three ERM employees working on the report had done consulting work for TransCanada and other oil companies with a stake in KXL’s approval.
  • Mother Jones further reported: “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.”
  • ERM is a dues-paying member of the American Petroleum Institute, which DeSmogBlog reports has spent $22 million lobbying for KXL.
  • The firm, as Politico reports, was also registered as the federal lobbyist for the International Carbon Black Association in 2009 and 2010, according to U.S. Senate records. A wholly owned TransCanada subsidiary is one of seven members of the association, which represents companies that sell a hydrocarbon additive used in rubber tires and plastic products.
  • ERM has also lists Chevron and Shell as clients, both of which are extracting oil from the Canadian tar sands, which Keystone XL would carry to Gulf Coast refineries.
  • Portions of the State Department’s initial environmental review last March were outsourced to other consulting firms, InsideClimate News reports, including two called EnSys and ICF. EnSys has done consulting work for ExxonMobil, BP, and Koch Industries, which own tar sands production facilities and refineries in the Midwest. ICF also works with pipeline and oil companies.
  • A previous contractor that worked on a separate environmental analysis of the pipeline, Cardno Entrix, was also previously cleared of conflict of interest concerns by the State Department even though it listed TransCanada as a “major client” in its marketing materials. The State Department allowed TransCanada to solicit and screen bids for that environmental study, the New York Times reported.

Environmental consulting firms argue that they routinely work for both government and industry, and that if every company with industry ties was disqualified, there would be no one to prepare environmental reports. Perhaps that’s a fair point, and perhaps those consultants really can maintain their impartiality. But when a system shows this many potential flaws, perhaps that’s also a sign that all of this outsourcing is a problem, and regulatory agencies should use their own unbiased experts to perform critical environmental reviews in-house.

Worried that government agencies are too understaffed and underfunded to do the work? Then there’s a simple solution: instead of spending the money on potentially compromised consultants, charge permit application fees high enough to cover the costs of impartial government employees to do the review. The multi-billion dollar companies seeking to build these kinds of projects could certainly afford it.

As Arizona Democratic Representative Raúl M. Grijalva argues in a New York Times op-ed today, something needs to change if the Obama administration wants to restore public trust in the government’s ability to reach an unbiased, science-based opinion on Keystone XL and similar projects. Because it’s clear that following the current letter of the law still leaves a lot of room for doubt.

In the words of OnEarth contributing editor Bill McKibben, co-founder of the activist group "The real scandal in Washington is how much is legal."

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image of Scott Dodd
Scott Dodd is the editorial director of NRDC, which publishes OnEarth. He was a newspaper reporter for 12 years, contributing to coverage of Hurricane Katrina that won a Pulitzer Prize, and has written for Scientific American, Slate, and other publications. CJR praised his expansion of as an outlet for "bang-up investigative journalism." He also teaches at Columbia University. MORE STORIES ➔
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In addition to conflict of interest issues--we thought this might be an angle to pursue: I created the petition "Solar" Pipeline Alternative to the Keystone XL Project" (to send to President Obama and Secretary Kerry). The property earmarked for it (1200 miles in lenght) is basically enough to build a solar array that will produce the same amount of energy if the crude oil is used to generate electricity. And the solar alternative to the oil pipeline is also cost effective (see ROI estimates in petition write up) You can read more details here: Thank you! Mike P.S. Can you also take a moment to share the petition with others? It's really easy – all you need to do is forward this email or share this link on Facebook or Twitter: