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Keystone contractor gives us 5 more reasons it has a conflict of interest

Posted Dec. 18, 2013 / Posted by: Ross Hammond

Politico just broke a big story. Environmental Resources Management, the firm hired by the State Department to do the environmental review of the Keystone XL tar sands pipeline, is a member of five oil industry booster groups that have advocated for the approval of the pipeline and spent millions to lobby for its approval.

The groups include the American Petroleum Institute, American Fuel and Petrochemical Manufacturers, and the Western Energy Alliance, all of whom signed a letter to Congress calling for approval of the pipeline. API has spent upwards of $16 million lobbying for the pipeline since 2011, not a small sum by any standard.

These latest revelations should be the final nail in the coffin for the State Department’s flawed review which had already come under fire from the EPA and environmental groups for downplaying the climate impacts of the pipeline. Add the ongoing inspector general inquiry into ERM’s conflicts of interest which was launched in August, and it’s clear that  Secretary Kerry and President Obama should scrap ERM’s environmental review and start anew.

It's not just me questioning the validity of the environmental review of Keystone XL.

Last week, led by Congressman Raul Grijalva, 25 members of the House of Representatives wrote to President Obama asking him to delay the release of the State Department’s environmental review of the pipeline until its inspector general completes its inquiry into the conflict of interest at the heart of the report.  “If the allegations that ERM lied…about its conflicts of interest turn out to be true” they wrote, then the State Department “must conduct a new EIS that is not tainted by conflicts of interest.”

For the uninitiated, here’s the backstory: TransCanada, the company behind Keystone XL, was asked in 2012 to submit a list of possible contractors to the State Department to conduct the Environmental Impact Statement for the pipeline. Unfortunately, this cozy practice of approving contractors is standard practice. Every contractor on TransCanada’s list had conflicts of interest. So State hired ERM, a London-based firm with offices in 36 states plus the District of Columbia.

What followed is isn’t quite Watergate, so we don’t need a Deepthroat to know what happened next. In fact all of the incriminating evidence that ERM lied on its application to get the Keystone contract is available on the internet, something not available to Watergate investigators.  On the official conflict of interest disclosure form it was required to submit ERM claimed that it had “no direct or indirect relationship ... with any business entity that could be affected in any way by the proposed work.” In truth, ERM worked with TransCanada, the company behind Keystone XL, on the Alaska Pipeline Project in 2011. We also know that ERM has worked for over a dozen oil companies with a direct stake in whether Keystone XL gets built, despite stating on its conflict of interest disclosure form that it had no such ties.

All of this amounts to a big problem, a problem State Department officials should have avoided by denying ERM’s application. Congress now wants to find out why. We all should.

Changing market forces

While the State Department finishes its faulty environmental assessment of Keystone XL, new information keeps coming to light which undercuts the oil industry’s (and the State Department’s) argument that tar sands crude is coming out of the ground with or without Keystone XL. Chevron, for instance, recently estimated that bottlenecks in the supply chain for tar sands have cost the industry more than $16 billion per year. Two of the largest tar sands shippers, the ironically named Canadian Natural and Suncor, are waiting for Keystone XL to increase their production and losing money everyday that they can’t expand.

We also have learned from internal government documents that the Canadian government seems to have no intention of putting a cap on global warming emissions from the tar sands. NRDC’s Danielle Droitsch explains:

The newly released documents reveal industry and the Canadian and Alberta governments have been negotiating behind closed doors to identify possible new climate regulations for the tar sands sector.  Promises for new regulations on the oil and gas – including tar sands – sector have been sold to U.S. audiences as part of an aggressive lobbying campaign to promote the proposed Keystone XL tar sands pipeline.  What the documents show is that under any of the proposals tar sands emissions will grow.  Industry’s proposal would enable a 70 percent growth in tar sands carbon pollution levels by 2020 from today’s level. Even the “toughest” proposal under consideration would lead to an increase of 60 percent of tar sands emissions.  And none of proposals under consideration will enable Canada to meet its international climate target. 

Whatever happens with the inspector general’s report and the State Department’s review is anyone’s guess and is made more complicated by the fact that TransCanada and the Province of Alberta have hired, in the words of the Financial Times, a “who’s who of lobbyists and communications professionals with links to the Obama administration – and to John Kerry in particular.”

What we do know for sure is that eventually this will all land on President Obama’s desk. The president was swept into office, in part, by people who believed that he would tackle the climate crisis. Now is his chance to make good on his promises. He can show Big Oil that they can’t game the system by cleaning up the State Department’s flawed review and ultimately saying no to Keystone XL.

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