WASHINGTON — TransCanada, the company behind the Keystone Pipeline, never disclosed its previous work with a contractor the company later recommended for a key environment study, according to documents obtained by an environmental activist group.
In 2012, TransCanada recommended four firms to the State Department to conduct the critical Environmental Impact Statement, a study measuring the pipeline's effect on soil, groundwater, and greenhouse gas emissions expected to have a major impact on the State Department's decision.
Those recommendations included the company ultimately selected: Environmental Resources Management (ERM), a large, multinational company that does environmental consulting. According to documents obtained by a Sierra Club Freedom of Information Act request and shared exclusively with BuzzFeed, TransCanada never told the State Department that the two companies had worked together previously.
Ties between ERM and TransCanada have been reported before, as has ERM's contention that it had no conflict with TransCanada. What the new documents show, environmental groups who reviewed them say, is that TransCanada recommended ERM as one of the firms that had no significant conflict when it came to evaluating the environmental impact of Keystone. The critics say they also show the State Department has gotten itself into the same trouble with contractor selection it did the last time it hired a consultant for Keystone, a process that led to criticism from the Inspector General's office. State denies that there was anything wrong with the process.
According to the documents, the State Department sought input from two places: federal agencies that deal with pipelines and TransCanada. The company was asked specifically to suggest the names of consultants that it hadn't worked with before or had only worked with in an "extremely limited capacity." TransCanada provided four names, one of which was ERM.
After a departmental evaluation process, three firms bid on the State project. Before selecting one of the three, government officials discussed "reference checks" and company qualifications, according to the FOIAed documents. Environmental Resources Management emerged as the winning bidder. The State Department documents noted that the determination that ERM had no prior conflict of interest with TransCanada was a result of "self-vetted" information from the company.
Since a draft version of the study, which sided with supporters of the pipeline, was released last year, ERM's previous work with TransCanada has been reported on by various outlets.
Mother Jones reported that the firm redacted the names of some executives from documents related to getting the State Department contract ERM released at the same time as the draft report. The report didn't recommend for or against building Keystone, but ERM's findings, especially when it came to greenhouse gas emissions, were seen as an endorsement of the pipeline by climate activists.
The redacted documents uncovered by Mother Jones revealed "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." The magazine determined that "The State Department appears to be responsible for the attempt to mask the ERM-TransCanada connection."
Politico reported earlier this month that ERM once lobbied for a trade association including a TransCanada subsidiary. ERM is also "a member of several energy industry groups that have urged the government to support the project," according to further Politico reporting.
Supporters of the firm have noted that ERM has worked for some companies that opposed Keystone, like rail companies, and some that support it.
The State Department said there was nothing out of the ordinary in the ERM selection process.
"The Department of State employs rigorous conflict of interest procedures designed to ensure that contractors and subcontractors have no financial or other interest in the outcome of a project," a senior department official told BuzzFeed.
Environmentalists aren't convinced, however, and say these connections raise questions about the objectivity of the Keystone environmental study.
"It raises enormous questions about the objectivity of the State Department report," Ross Hammond, senior campaigner at Friends of the Earth, said. "It shows huge either incompetence at State for not verifying more or, you know, collusion. Either way, that doesn't make John Kerry's State Department look real good."
Ross says he finds it unbelievable that the State Department relied on TransCanada's word about conflicts and wasn't able to find ERM's ties to pro-Keystone groups on its own.
"TransCanada and ERM said they didn't have any ties, and that was apparently good enough for the State Department, which didn't bother to get on the internet and do a couple Google searches," he said.
This isn't the first time the State Department has faced questions about the consultant hired to review the environmental impact of the Keystone Pipeline. In 2011, members of Congress were critical when Cardno Entrix, a Houston-based firm, was hired by the State Department to conduct an environmental impact study. The New York Times reported Cardno Entrix listed TransCanada as "a 'major client' in its marketing material." The Times called the selection of Cardno Entrix "flouting the intent of a federal law meant to ensure an impartial environmental analysis of major projects."
A 2012 State Department Inspector General's report after the Cardno Entrix furor called for the department to "redesign" its procedures for selecting third-party environmental contractors. But, as Bloomberg BusinessWeek reported last year, "ERM appears to have as many conflicts of interest as Cardno Entrix ever did; it's as if the inspector general never established new protocols for avoiding or, at least, disclosing such conflicts."
For Hammond, the FOIA suggests Obama should scrap State's findings related to Keystone entirely.
"What we're saying to him is he already has all the evidence he needs to reject the pipeline and the State Department report is hopelessly compromised," he said. "If [Obama] doesn't want put everyone through another environmental review he can reject the pipeline based on what we already know."
TransCanada did not respond to a request for comment.