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Keystone Conflict (Again): HDR Must Be Fired

Last year, I was part of the team at Bold along with fellow intern Tyson, who discovered the major conflict of interest between Cardo Entrix and the US State Department. The conflict was large enough that Cardno Entrix is no longer the company employed to review the pipeline at the federal level.

Then, just a few weeks ago, I was preparing my research for the Citizen’s Review of the pipeline and found clear conflict of interest with HDR and the Nebraska Department of Environmental Quality (NDEQ). The NDEQ had a mandate to conduct an analysis of the route that would ensure the welfare of Nebraskans.

As an organization, Bold tried to lift up this conflict of interest last year only to be brushed aside by NDEQ and HDR as nothing of matter in the OWH story. We appreciate On Earth taking this issue up and reporting on the conflict last week. The HDR conflict is a major issue and needs the action of citizens, the NDEQ and our elected officials.

Under the directives given to the NDEQ by the legislature, it was permissible for the NDEQ to contract out a third party to conduct the Environmental Impact Statement—however, that third party could not have a conflict of interest or relationship to any pipeline carrier that applies for a pipeline permit. That means HDR Inc., the third party hired to do the Environmental Impact Statement, cannot have a relationship with TransCanada outside of that to conduct the review for the KXL.


Photo credit: Mary Anne Andrei for Bold Nebraska and Farmers Union

While there are many conflicts of interest that I included in my testimony (full text and video below) at the NDEQ hearing–poorly run by HDR staff–the most important one was not included in my testimony:

For the past year, HDR has been conducting an environmental impact statement for TransCanada not just for its Keystone XL pipeline project, but also for its Point Thomson Pipeline Project.

While HDR advertises its involvement in the Point Thomson Project on its website, it only lists Exxon Mobil as the company that is the main developer. However, TransCanada and Exxon have been working together on it since 2009, and in fact, TransCanada was the company to receive the initial license for the project a year before entering into the agreement with Exxon. TransCanada has adamantly denied its involvement in the Point Thomson Project, but as will be outlined in this blog post, TransCanada and HDR Inc. have been intimately involved in the entire development of the Point Thomson Project, which has occurred along the same timeline as these two companies’ work on the Keystone XL pipeline and the KXL’s route through Nebraska—illustrating a clear conflict of interest in regards to the DEIS done on the KXL.

In 2008, TransCanada was selected by the State of Alaska to expand its natural gas pipeline system. A major component of this project is the Point Thomson Pipeline. TransCanada entered into an agreement with Exxon Mobil in 2009 to jointly develop this pipeline. As was done in the process to develop an environmental impact statement for the Keystone XL, TransCanada and Exxon selected a third party contractor to conduct the review. They selected none other than HDR. The Draft Environmental Impact Statement of the Point Thomson Project (which HDR helped prepare) was released in November of 2011—the same month that the NDEQ called on HDR to answer whether or not it had a conflict of interest in terms of having a relationship with TransCanada.  In response to the NDEQ’s inquiry, HDR acknowledged two previous projects it had worked with TransCanada on, but said there were currently no conflicts of interest:  

“We have conducted a comprehensive business review in response to your conflict of interest question. HDR has no conflict of interest related to the Keystone XL pipeline. HDR has no involvement or relationship with the Keystone XL pipeline or related TransCanada oil and gas project. To avoid any perceived issues, HDR will not accept any assignment related to TransCanada’s oil and gas or pipeline company assets for the duration of our services to NDEQ. HDR has no active task orders or assignments with other TransCanada business units.”

Given that HDR had just released a Draft Environmental Impact Statement (DEIS) for TransCanada, this response to the NDEQ was a blatant lie that enabled HDR to conduct even more business with the company it already had a cozy relationship with. In December of 2011, the NDEQ selected HDR to conduct the third party review of the KXL (using a non-competitive bid process which should also be looked into on a deeper level).

It was also in December of 2011 that TransCanada released its Draft Resource Report on the Point Thomson project. The tie between TransCanada, HDR and the Point Thomson Project can continue to be documented—in July of 2012, the Point Thomson Final Environmental Impact Statement was released, with HDR listed as a contractor, and TransCanada solicited interest of potential shippers for the Point Thomson pipeline in the same month. As recently as October 30, 2012, the same month the NDEQ released HDR’s EIS on the KXL, TransCanada listed the Point Thomson Project in its report to stakeholders (although they used the name Alaska Pipeline Project, it is the same project).

It is important to note that not only was HDR listed as a third party consultant for TransCanada’s Point Thomson Project DEIS and FEIS, but several of the reviewers for these analyses were also reviewers on the Draft Environmental Impact Statement that HDR Inc. did on the KXL. These reviewers and their roles in the NDEQ review include:

  • John Morton—one of the project managers for the KXL review
  • Garson Carothers—the chapter manager on “Pipeline Safety and Potential Spills”
  • Timothy Casey—resource specialist on noise
  • Edward Liebsch—senior reviewer on Air Quality and NEPA expertise
  • Patricia Terhaar—NEPA expertise and Technical Lead on Project Description
  • Molly Brown—NEPA projects and environmental permitting
  • Lori Buffington—technical and copy editor
  • Michele Myers—graphics specialist

This conflict of interest is clearly documented and is in violation of LB1161’s mandate to the NDEQ and what several elected officials promised to the citizens of our state. It is a conflict of interest great enough to invalidate the NDEQ’s Draft Environmental Impact Statement, requiring a new report to be compiled. It also invalidates whatever review the U.S. State Department has done in conjunction with the NDEQ and HDR as outlined in its memorandum of understanding with the NDEQ. The new analysis should utilize more scrutiny in selecting third party reviewers, and should utilize the expertise of those right here in Nebraska who have the qualifications to conduct a legitimate environmental review. These would include UNL Professors Gates, Stansbury, and Woldt. A legitimate report will also attempt to answer the questions and address the concerns of Nebraskans that were heard at the NDEQ hearing on Dec. 4th. Many of these concerns can be found in the Citizen’s Review of the NDEQ Draft Report.

Additional important note:

This is not the first time HDR has failed to disclose a conflict of interest.  Earlier this year HDR bought the consulting firm that was supposed to have oversight over HDR’s design and construction of three rail stations in Hawaii. It was found that in the conflict of interest analysis, while HDR revealed two non-rail related conflicts, they did not reveal that they were developing a project currently being overseen by the company they were trying to acquisition. HDR has a history of not disclosing conflicts of interest.

More documentation on TransCanada’s tie to Point Thomson Project:

January 2012 Resource Report Filing on Point Thomson joint project with Exxon Mobil (last file, “transmittal letter”). 

March 2012 Press Release by TransCanada on Point Thomson joint project with Exxon Mobil.

Action:

You can help by emailing this blog post to any members of the press you know. We need to get the word out about this conflict of interest and the biased review that is being presented to Nebraskans on the possible pipeline re-route through our state.

Email Brian McManus at the NDEQ and tell him its time to fire HDR and start utilizing fair assessments of the pipeline risks rather than just companies and “third party” organizations that all have ties to TransCanada. Enough is enough. Nebraskans’ water, livelihoods and property rights are being put at-risk, we deserve a report that is not written for TransCanada and by TransCanada allies. Brian’s email: brian.mcmanus@nebraska.gov

My testimony to the NDEQ on HDR’s conflicts of interest:

December 4, 2012

I contributed to the Citizen Review of the NDEQ Draft Report on the Keystone XL. My role was to determine if the NDEQ violated its mandate to ensure the vendor contracted for preparation of this Supplemental Environmental Impact Statement, HDR Inc., has no conflict of interest or relationship to any pipeline carrier that applies for an oil permit. What I found really disturbed me not just because I found a plethora of conflicts of interest, but also because these conflicts were so easy to find; I can’t believe the NDEQ would commission this company to conduct what is supposed to be an impartial analysis of the route.

First, and this is on HDR’s website, the stated goal of HDR is to “help oil and gas clients overcome the challenges of increasing government regulation and oversight and harsh physical and political climates, and exploit those opportunities.” They promise to “provide reliable service and strategic integrated solutions to these challenges.” Among the services they provide to oil pipeline companies is “helping them through the environmental planning and permitting process.” HDR provides “one-stop shopping” to oil pipeline companies, so these companies “can focus on what they do best—delivering oil.” That’s quoted material, from their website. It isn’t hard to see that their work is to get permits granted to oil pipeline companies—NOT to provide impartial environmental impact statements. This business plan is clearly reflected in the NDEQ report, which I will just say is extremely flawed, others tonight have commented on all of the problems with it. It is a rubberstamp.

HDR’s conflict of interest in this project goes further. HDR has worked on two previous projects with TransCanada, significant because another tenet of good business is to keep customers happy and coming back. Clearly, HDR wants to keep TransCanada as its customer—its report gives TransCanada raving reviews. The conflict of interest goes on. HDR has invested over $128,000 in candidates that have given their public support for the Keystone XL, even introduced legislation to force the pipeline through our nation—these include Lee Terry, Mitch McConnell, Jim Inhofe, and John Boehner, among others. These same candidates have received over $2 million in donations from various players in the oil industry that will directly benefit from the Keystone XL pipeline.

I want to reiterate—this is solely money from companies that stand to benefit from the Keystone XL, not oil or pipeline companies in general. These companies include Royal Dutch Shell, Exxon Mobil, Koch Industries, Quintana, Valero, BP, Devon, and even TransCanada. I wish I was done, but I’m not. HDR is currently working with Exxon on a project, and has recently worked with Valero. HDR is currently working to develop infrastructure dependent upon the development of the Bakken shale region, which is supposedly slated to contribute oil to the Keystone XL. Thus, HDR will directly benefit from whatever expansion of infrastructure may occur in the Bakken Shale region as a result of the Keystone XL.

The commissioning of HDR for this project’s Environmental Impact Statement was negligent. The NDEQ’s mandate was to provide an impartial review to ensure the welfare of Nebraskans. That is simply not possible for a company with so much interest in the project. If you’ve read through the NDEQ report, prepared by HDR, you will have probably noticed that a lot of the issues and questions people have brought up tonight are either barely addressed or not addressed at all. This is not because these concerns are not valid. It is because if HDR were to have addressed these concerns they would not have provided TransCanada with as favorable of a result as advertised on the HDR website. So, I’m calling on NDEQ to not only answer the questions the citizens have brought tonight (before submitting a recommendation to the Gov.), but to do it without the help of HDR, because HDR is not capable of fulfilling the mandate of the NDEQ.

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