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More lies: John Kerry must clean up the Keystone permit process

Posted Jul. 16, 2013 / Posted by: Ross Hammond

Last week brought fresh revelations of lying and deceit in the State Department’s environmental review of the Keystone XL pipeline. Research conducted by Friends of the Earth revealed that Environmental Resources Management -- the London-based consulting firm hired by the State Department to do the supplemental environmental impact statement for Keystone XL -- lied on its conflict of interest disclosure forms when it claimed it had no business relationships with pipeline builder TransCanada or the many oil companies active in the Canadian tar sands who are counting on Keystone to be built.

Although widely reported in Canada, the revelation that ERM lied on its conflict of interest forms has been reported on by Business Week and the Washington Post but otherwise has so far been ignored by many of the other key news organizations that have been covering the Keystone controversy.

In his major climate speech on June 25, President Obama said: “Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest… The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward. It’s relevant.”

So, the president and Secretary of State John Kerry will be relying on the ERM-authored review to determine if the pipeline will in fact lead to a net increase in carbon emissions. But since ERM lied about its relationship with TransCanada and other oil companies, how can President Obama, Secretary Kerry or the American people believe anything the company says about the pipeline's environmental impact?

Although ERM is a dues-paying member of the American Petroleum Institute, derives close to a third of its revenue from the oil and gas sector and brags on its website about its record and experience of “Gaining Development Approval and Access to Resources” for these companies, this latest scandal is not about whether a company with experience with the oil industry should be exempted from doing such a government report. Given that the State Department does not have the in-house expertise to do such a climate and environmental assessment, it’s not surprising that they have outsourced this key function of government.

What is shocking is that ERM lied on its conflict of interest disclosure form and the State Department has so far chosen so far to look the other way. This is a scandal of the first order.

Here’s what happened:

As part of the process of winning the contract to write the U.S. government’s environmental review of Keystone, ERM filed a conflict of interest disclosure form in June 2012 stating that the company had "no existing contract or working relationship with TransCanada" within the past three years. So that would cover the period from June 2009 to June 2012.

But Friends of the Earth has uncovered evidence that since at least 2011 ERM was working on the Alaska Pipeline Project, a joint venture of TransCanada and Exxon. We also found evidence that at least one ERM employee has attempted to cover up those ties. On May 14 of this year a man named Mark Jennings’ LinkedIn profile listed him as Socioeconomic Advisor for ERM, and listed among his roles “Consultant to ExxonMobil Development Company for the Alaska Pipeline Project,” a role he was in since 2011. But lo and behold three weeks later, as criticism of ERM started to mount, all references to ERM disappeared from his LinkedIn profile .

Friends of the Earth has also found extensive evidence on ERM’s own website that during the period covered by the conflict of interest form, ERM was doing work for over a dozen oil companies with tarsands operations which stand to benefit if Keystone is built, including Exxon, Shell, Chevron, Conoco Phillips, Total and Syncrude. This is despite the fact that ERM answered “no” to the question of whether it had any “direct or indirect relationship… with any business entity that could be affected in any way by the proposed work."

ERM’s answers on the conflict of interest form were not misrepresentations, a simple mistake or fudging the truth. They were lies -- and brazen ones at that, given the extensive public record of their work.

Equally troubling is that the State Department apparently did not bother to investigate whether the firm had honestly answered the questions on the conflict of interest forms. This is in spite of the guidance by its own Office of the Inspector General that it tighten up its verification procedures following the scandal caused by the hiring of Cardno Entrix to prepare the previous environmental impact statement despite obvious conflicts of interest.

As Business Week put it, “it’s as if the inspector general never established new protocols for avoiding or, at least, disclosing such conflicts. The State Department was supposed to have independently verified any claims made by contractors. How hard would it have been for a State Department official to look on ERM’s website?”

Apparently it's quite hard. Just today State Department spokeswoman Jen Psaki made a stunning admission. In an email to Postmedia News, Psaki said that ERM “certifies that it has not had, and does not have, any direct contracts with the applicant.” So apparently the State Department can still not be bothered to do a few simple internet searches.

It boggles the mind that given the history that the State Department is, at best, asleep at the wheel once again. It has let a company that is essentially part of the oil and gas industry write the report on which so much hinges. For whatever amount they were paid by TransCanada to write this report -- and we don’t know how much because that’s redacted in the State Department documents -- ERM has not produced an objective, fact-based environmental impact study, but a piece of pro-pipeline propaganda which has been roundly criticized by the EPA, the scientific community and members of Congress for vastly understating the climate impacts of the pipeline.

ERM’s tainted report absolutely must not be the basis for Secretary Kerry and President Obama’s decision on whether to permit the pipeline. Though Secretary Kerry inherited this scandal, after almost six months on the job it’s past time for him to put a stop to it.

Following the guidance issued by the inspector general the last time, he should direct the State Department to void ERM’s contract and bar the firm from future federal contracts. He also should explore additional disciplinary action against the firm, such as whether it is liable under the federal False Claims Act, which could bring penalties in the tens of thousands of dollars. In addition, the inspector general should pursue a full investigation into how a contractor with clear conflicts of interest was allowed to write the U.S. government’s assessment of Keystone and why the State Department has so far failed to bring those conflicts of interest to light.

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