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State denies conflict of interest in Keystone pipeline review
The State Department is rebutting claims that its review of the proposed Keystone XL oil sands pipeline is compromised by a conflict of interest involving a contractor that performed a major environmental study.
In an Oct. 31 letter to senators, a State official defended use of the firm Cardno Entrix to perform the environmental analysis — which gave the pipeline a positive review — and sought to downplay the firm's ties to pipeline developer TransCanada Corp.
Sanders and more than a dozen other lawmakers are also calling for the State Department’s inspector general to investigate State’s review of the pipeline project.
But the letter from David Adams, assistant secretary of State for legislative affairs, seeks to explain the fact that Cardno Entrix had listed TransCanada as a “major client” — a relationship that pipeline critics call evidence of a review biased toward TransCanada.
“Cardno/Entrix identified TransCanada as a ‘major client’ based on the fact that the federal government had selected Entrix to do third-party contract work for four TransCanada permit applications — two with the Federal Energy Regulatory Commission (FERC) and two with the Department of State,” says the letter to Sanders, which states in a footnote that the company received roughly $13 million for this work from TransCanada.
“Under [National Environmental Policy Act] regulations, this does not constitute a conflict of interest; the federal government is the client — the federal government is selecting and directing the work of Entrix (now Cardno/Entrix) — not TransCanada (whose projects were being assessed),” the letter adds.
The letter notes that while the pipeline applicant pays for the environmental review work, the contractor takes direction from and reports solely to State.
Sanders, along with Sens. Ron Wyden (D-Ore.) and Patrick Leahy (D-Vt.), have questioned State’s review and called for a new environmental analysis of the proposed pipeline to bring crude from Canadian oil sands projects to Gulf Coast refineries.
The Adams letter acknowledges that while pipeline applicants can solicit prospective contractors to perform environmental analyses, it was State that made the final decision to select Entrix (which the Australian firm Cardno acquired in 2010).
The letter says the decision was based largely on the company’s experience conducting environmental reviews of similar projects for the federal government.
Sanders, in a letter back to the State Department Tuesday, said he remains “deeply troubled” and questions the notion that Cardno Entrix was working on behalf of State, not TransCanada.
“[I]t has recently come to my attention that, in fact, Cardno Entrix identified ‘TransCanada Keystone Pipeline’ on its website as its client for this project and said on its website in September 2011 that ‘Keystone contracted with Cardno Entrix’ to conduct the environmental reviews. Therefore, despite the State Department’s contention, Cardno Entrix has publicly represented that it views TransCanada as its client in this matter,” Sanders’ letter states.
He asks for a slew of documents and insists a new environmental analysis is warranted.
Sanders is asking State for documents including any contracts, agreements or other documents that describe the “relationships, responsibilities and obligations” among Cardno Entrix, State and TransCanada about the pipeline, as well as conflict-of-interest statements for contractors regarding State’s Keystone XL review.
“These documents should clarify definitively who the ‘client’ is in this case, how much control TransCanada has over the process, whether any improper meetings took place, and whether all parties have complied with their legal obligations in disclosing conflicts of interest,” Sanders writes.
State hopes to make a final permit decision on the proposed $7 billion pipeline by the end of the year.
