Hearing that Representative Raúl Grijalva (D-Ariz.) convened a press conference yesterday, and fired off a letter (PDF) to the U.S. Government Accountability Office, in an effort to revisit whether a study of the proposed Keystone XL pipeline was compromised by corporate conflicts of interest, a cynic might be inclined to accuse the distinguished gent from Tucson of grandstanding. If built, Keystone XL would carry heavy crude from Alberta’s tar sands to the Gulf of Mexico by bisecting Nebraska, not the Grand Canyon. (Well, he is a ranking member of the House subcommittee on public lands and environmental regulation.)
An investor in TransCanada (TRP), the Calgary-based company that wants to lay the 875-mile final leg of pipe, meanwhile, might wonder if the congressman simply doesn’t know when he has lost. Grijalva, you may recall, wrote another letter back in December urging the full environmental impact statement (EIS) not be released until after the State Department’s Office of the Inspector General had completed a review of conflicts of interest uncovered between TransCanada and the firm, Environmental Resources Management, hired to do the assessment and generate the report. Grijalva collected 24 signatures from the House of Representatives for the letter, but the only response he received from State was the release of the environmental report on the Friday before the Super Bowl. The inspector general review he sought was nowhere to be seen. If that’s how State treats U.S. elected officials, it’s no wonder some foreign leaders are wary.
The inspector general has yet to put a date on when its probe will be complete; the official response is “early 2014.” All the same, it’s still possible to get an idea of what the review might be looking at or if there’s merit to Grijalva’s concerns. So let’s recap, shall we? It’s a tad wonky, but never dull.
First, the key players: Because the pipeline crosses an international border, the decision to approve its construction lies with the president. The process of determining whether the pipeline is in the national interest and can be built safely falls to the U.S. Department of State. TransCanada, as the applicant, pays for the environmental assessment State needs to give it a thumbs-up. For some critics, this already sets up an inherent conflict of interest: What contractor comes back with a report advising that its client’s project ought to get spiked? But the only real alternative is for taxpayers to pay for all this work, and that’s a nonstarter.
TransCanada itself recommended ERM to State as the assessor after Cardno Entrix, the first company retained to do the work, was alleged to have a conflict of interest. Actually, TransCanada “provided a list of four potential consultants who were qualified to carry out a review of this magnitude,” says TransCanada spokesman Shawn Howard, and State settled on one of the four: ERM.
After Cardno Entrix was dropped back in 2011, the inspector general set new guidelines for State to follow, including a requirement that the new contractor disclose any conflicts of interest before beginning work and that State verify its claims on its own. And this is where it gets interesting. Beginning in June 2012, ERM failed ....