The State Department's Keystone review is riddled with conflicts of interest

Reports reveal more ties to TransCanada and the fossil fuel industry by pipeline consultants

Published March 13, 2014 2:19PM (EDT)

The State Department brushed off the first one: While a contractor involved in an early draft of its environmental review of Keystone XL (the one that found it would have "no significant impact") had previously worked for TransCanada -- the company building the pipeline -- an inspector general’s investigation concluded that this didn't represent a conflict of interest. So long as the firm fully disclosed its ties to the industry, and ensured that it had completed its work with TransCanada prior to undertaking the review, the report concluded, everything was aboveboard. Even the fact that the State Department had redacted this information, seemingly to hide the contractor's ties to fossil fuels, was deemed OK.

But that's not the end of it.

At the Huffington Post, Kate Sheppard reports that ICF International, another firm contracted by the State Department to evaluate Keystone -- specifically, to look at greenhouse gas emissions -- also had ties to TransCanada:

Its 2012 letter said that its Canadian affiliate had been retained by TransCanada Pipelines Limited since 2008 -- and was still doing work at the time of the disclosure -- "to provide advisory services related to air emissions issues associated with operations in Canada and the U.S." Those services included "climate policy analysis and regulatory support." ICF said that it was paid "less than $300,000" for that work between 2010 and August 2012, which accounted for "less than 0.1%" of its total revenues over that period. The company said that it believed the "nature and scale of this work do not represent an Organizational Conflict of Interest," but that it would take "additional mitigation measures to ensure that no such conflict arises," a description of which the company said appeared in its conflict-of-interest plans-and-procedures document. The State Department published the plans-and-procedures document, too, but it is heavily redacted and the mitigation steps are not visible.

ICF has also provided services to other oil interests that support the construction of the Keystone XL pipeline. The firm did consulting work in 2008 for the American Petroleum Institute, evaluating the potential effects on the oil and gas industry from greenhouse gases cap-and-trade legislation then under consideration in Congress. That study concluded that the bill would increase the cost of drilling and operating natural gas wells and would likely lead to a decrease in drilling.

Last year, InsideClimate News noted ICF's work for pipeline and oil companies generally. The company does not list its clients online.

The release of the environmental review marked the beginning of the State Department's 90-day national interest determination for the pipeline. Next up is the U.S. Senate Foreign Relations Committee's hearing on that process, being held Thursday. It features pipeline lobbyist Jim Jones, who's serving as a key witness.

A former national security adviser to President Obama, Jones is now a paid adviser for the American Petroleum Institute, a group that, as DeSmogBlog notes, has spent $22 million lobbying on behalf of the pipeline since 2008. Further investigation reveals that's only the beginning of Jones' ties to the gas and oil industry: They include close involvement in the Chamber of Commerce's campaign to endorse Alberta tar sands expansion and the Keystone XL pipeline as the vehicle for doing so; a stint on Chevron's board of directors; high-ranking positions at the oil and gas-affiliated Atlantic Council, Bipartisan Policy Center and Center for Strategic and International Studies; and advisory roles at the lobbying firms Van Scoyoc and Akin Gump.

Not that he'll be representing himself as such: On the witness list, Jones is identified only by his official title as president of Jones Group International. The coverup of his other affiliations is enough that, as Media Matters notes, National Journal entirely overlooked it in its overview of the hearing. Fortunately for him, this won't be a problem, as there are no disclosure rules for hearing witnesses in the Senate. Environmental group Friends of the Earth is calling on Jones to formally release his long list of industry affiliations prior to the hearing.

Ross Hammond, a senior climate and energy campaigner at Friends of the Earth, spoke out against both conflicts of interest. “Gen. Jones needs to come clean with the Senate Foreign Relations Committee about who, exactly, is paying him to advocate on behalf of this dirty, dangerous pipeline and how much he is being paid,” he told BuzzFeed.

And while, in a statement, the State Department maintained to the Huffington Post that its "processes not only avoided conflicts of interest, but were more rigorous than required," Hammond countered that the ICF disclosure only confirmed that such processes "are a complete and total joke."

"If there’s one thing that the oil industry and environmentalists agree on, it's that Keystone XL is critical to developing the Canadian tar sands," Hammond said. "By hiring a known TransCanada contractor to reach the opposite conclusion, State Department bureaucrats have proven that they simply cannot be trusted to oversee an objective and unbiased review of this controversial pipeline."

By Lindsay Abrams

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American Petroleum Institute Gas And Oil Keystone Xl Pipeline Senate State Department Transcanada