Environmental leaders and activists handcuffed themselves to the White House gate on February 13, 2013. (George Zornick)
The Obama administration may put off its decision about the Keystone XL pipeline until next year because of an inquiry into a contractor’s alleged conflicts of interest.
The State Department’s Office of the Inspector General is investigating allegations that Environmental Resources Management (ERM), the company hired to conduct the environmental assessment of the pipeline, hid its ties to TransCanada, the pipeline’s backer, as well as to other tar sands stakeholders. On Friday, the OIG announced that its probe would not be completed until January 2014, suggesting that the State Department might not issue its final recommendation on whether to grant a permit for the project this fall as expected.
The State Department wouldn’t comment on whether the OIG’s inquiry would delay the final decision on the pipeline. Because KXL crosses the US/Canada border, final approval of the project rests with State, and the environmental impact statement will inform the agency’s ruling. Given the close scrutiny of the review process it seems unlikely that State would make an announcement before the OIG finalizes its investigation.
Speaking on background, a State Department official told The Nation that the OIG’s review “will provide independent and impartial assessment of the department’s actions taken in response” to a recommendation that the OIG made in 2012 that State redesign its process for selecting third-party contractors. That recommendation came after the firm State initially chose to complete the environmental review, Cardno Entrix, was found to be a “major client” of TransCanada.
Now it appears that ERM, which was hired to write a supplement assessment after the Cardno Entrix scandal, failed to disclose its own conflicts of interest. The OIG opened its current inquiry earlier this month after two environmental watchdogs dug up public documents showing that ERM worked recently with TransCanada on a pipeline project in Alaska, as well as with more than a dozen other companies with a stake in the development of Alberta’s tar sands. That information contradicts statements ERM made to the State Department in 2012, when the contractor certified that it had “no existing contract or working relationship with TransCanada” nor any “direct or indirect relationship…with any business entity that could be affected in any way by the proposed work.”