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State Department Review Process Revolving Door for Private Corporate Interests

Our investigative research into the environmental reviews of the Keystone XL pipeline has revealed a broken process that seriously undermines the trust that citizens are supposed to be able to place in their government. The State Department review process acts as a revolving door through which pipeline companies get their projects green-washed by third party contractors who specialize in getting project permits granted.

The goal of these contractors is not to conduct an objective study into the possible impacts pipeline projects will have on the land, water, and people who will be affected. Their business model is based on getting pipeline companies their permits as quickly and seamlessly as possible. It works like this:

Step 1: The applicant (Ex: TransCanada) decides which companies even get to apply to be contracted to conduct the review in the first place.

Step 2: TransCanada then determines its “top three” companies, and gives those options to the State Department.

Step 3: Out of this already screened list of contractors (who already have deep ties to the pipeline and oil industry), the State Department decides which one conducts the review.

Step 4: The contracted company conducts the environmental review, doing so in a manner that addresses rather than studies environmental  risks. Throughout the review, the contractor assures that the pipeline company has put in measures that will prevent any possible harm.

Step 5: Satisfied that the pipeline company has adequately dealt with the environmental risks, the State Department (or FERC, if it’s a natural gas  pipeline) approves the permit application and the pipeline gets built on schedule.

Given that the pipeline company rigs the selection process of the company that is supposed to conduct an objective review, the fact that the reviews are nothing more than rubber stamps is not all that surprising. The depth of the relationship that exists between these third party reviewers and pipeline companies becomes more obvious when we do a little digging into their work histories, and visiting these contractors’ websites demonstrates that they exist to serve the oil industry, not citizens.

There have been three main companies taking the lead on the KXL environmental reviews: Cardno Entrix and ERM conducted the State Department reviews, while HDR conducted the NDEQ review on the Nebraska route. Both Cardno Entrix and ERM will have undergone inquiries by the Office of the Inspector General for conflicts of interest—but only because of watchdog groups who have been calling out “business as usual” in an effort to get a fair, objective report.

ERM (Environmental Resources Management) is the current subject of scrutiny for having lied on their conflict of interest statements. ERM claimed on the official documents that they had not had any working relationship with TransCanada in the past three years. But, they just helped complete a review of TransCanada’s Point Thompson pipeline in Alaska, a project jointly proposed by TransCanada and Exxon. The Point Thompson pipeline sounds familiar to you because the company hired to do the environmental review of the Nebraska route, HDR, was the lead contractor on that project, and HDR also lied on its conflict of interest disclosure forms. Feel like taking a stab at the other third party contractor that did work on the Point Thompson pipeline project? If you guessed Cardno Entrix, the company that conducted the first environmental review of the KXL, and also underwent an inquiry by the OIG, you would be correct. So we have the same three companies conducting the reviews of the KXL at the same time that they conducted another review of a different project for TransCanada in Alaska. (See documents below)

No conclusions have yet been made in the OIG inquiry into ERM, which just started last week. But when the OIG investigated Cardno Entrix, it was found that no official conflict of interest was present, although the OIG did acknowledge that there was a “perceived” conflict of interest that could weaken the legitimacy of the review in the public’s eyes. Indeed, it has. The OIG recommended that the State Department remedy this and do a better job of reviewing conflict of interest disclosures. If State had done that, then maybe it wouldn’t be undergoing yet another inquiry over their selected contractor for the most recent KXL environmental review.

I’m not sure how it could be any clearer that these reviews are an insider’s game when we look at the facts:

  1. The pipeline company rigs the contractor selection process.
  2. The same three companies (Cardno Entrix, HDR, and ERM) conducted two different reviews of two different projects for the same company (TransCanada) during roughly the same time frame (during the past three years). Cardno Entrix had done business with TransCanada on four previous projects, as well.
  3. ERMHDR, and Cardno Entrix all display on their websites that they help companies overcome regulatory challenges so that permits can be  granted on schedule.
  4. All of the reviews conducted on the KXL to date have brushed serious environmental concerns under the rug, earning scathing retribution by the EPA and watchful citizens.
  5. The State Department admitted that it did not verify the information that ERM wrote in its conflict of interest statements, and the department gets extremely defensive about the allegations regarding the Cardno Entrix conflict. No investigation of the HDR conflict was ever conducted, and the issue was dismissed by the press—but HDR’s work was incorporated in the State Department’s most recent EIS.

Given the facts, it’s no wonder that these reviews are able to show “no risk” at the same time that hundreds of serious pipeline incidents put families’ lives and livelihoods at risk every year. We have been raising this inherent problem that de-legitimizes these environmental reviews since we first discovered the Cardno Entrix conflict of interest. We raised it again with the NDEQ hiring HDR and now it is being raised again about ERM. Pipeline supporters say that the fact the review process has lasted several years and has shown no serious environmental consequences is evidence enough that the pipeline should be built. But tampered and false evidence is meaningless. It’s enough to call a mistrial in the court of law and it should be enough to call the environmental reviews that we have on the KXL shams. The government bodies responsible for issuing these permits need to address this by revamping the environmental review process, and by re-examining their definition of “conflict of interest.” We will not just sit back and watch as these companies play games with our future. These reviews need to be conducted by truly objective third parties, not by “one-stop-shop” permit acquisition machines.

 

Supporting Documents:

When facing these conflict of interest allegations over the Alaska Pipeline/Point Thompson Pipeline project, TransCanada claimed that it isn’t a conflict because Exxon was the company leading that project. This is not true, as the document below shows that the two companies jointly filed for the permit application:

TransCanada and Exxon’s Joint Application to FERC for Point Thompson Pipeline Project (see pg. 11)

 

 

The list of preparers of the Point Thomspon Project FEIS, published in November 2011, shows that HDR, ERM, and Cardno Entrix were the three companies that contributed.

Point Thompson Pipeline Project List of Preparers

 

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