The State Department’s Inspector General is currently conducting a review. KXL contractor tied to trade group

The contractor hired by the State Department to evaluate the environmental risks of the Keystone XL project once held a lobbying contract from a trade group that included a subsidiary of the company seeking to build the Alberta-to-Texas pipeline.

The contractor, Environmental Resources Management, was listed as the registered federal lobbyist for the International Carbon Black Association in 2009 and 2010, according to Senate public records.


A wholly-owned TransCanada subsidiary called Cancarb remains one of seven members in the association that represents the companies that sell carbon black — a hydrocarbon additive used in rubber tires and other plastic products. TransCanada — which is seeking the permits to build the cross-border pipeline — controlled 12.5 percent of the trade group’s equity through its subsidiary as of 2009, according to the same public disclosures.

The association employed one of ERM’s federal lobbyists, Kara Rinaldi, to work on climate and cap-an-trade issues. ERM did no pipeline work for the association, according to disclosures. According to several public comments submitted to the Environmental Protection Agency at the time, the ICBA was working on weakening or loosening disclosure rules on emissions.

The ICBA spent a modest sum on direct lobbying in 2009 and 2010, according to public records — just over $10,000. It spent $187,000 on other public policy and regulatory work in 2010, according to the group’s tax documents.

The revelation adds to the growing chorus of criticism by environmentalists and anti-Keystone members of Congress that ERM should not have conducted the environmental assessment of the project because of what they contend are numerous conflicts of interest.

Environmentalists have seized on reports that ERM is a member of a half-dozen pro-Keystone energy groups, including the American Petroleum Institute, the Western Energy Alliance, the American Fuel and Petrochemical Manufacturers.

Those associations have spent millions on lobbying and advocacy — including on behalf of the Keystone pipeline. ERM has also done previous consulting work for TransCanada and its subsidiaries as well as for other energy companies that stand to benefit from the 1,179-mile pipeline that would transport crude from Alberta’s oil sands to the U.S. Gulf Coast.

ERM — an environmental firm that works with a wide variety of clients, including corporations, industry groups and others — did not respond to a request for comment. The ICBA — a trade association that reported an overall budget of just under $1 million in 2012 — also did not respond to a request for comment.

Supporters of the Keystone pipeline say that it will create jobs and help reduce America’s dependence on overseas oil. Detractors — which include major environmental groups, like the Sierra Club — say it will enable Canadian oil producers to grow their oil sands operations and lead to a massive increase in greenhouse gas emissions.

Opponents of the pipeline — including prominent members of Congress — have been leaning hard on the State Department to suspend the ERM contract until the conflict of interest questions have been sorted out by the State Department’s internal watchdog.

“You need to suspect this contract until you properly investigate links,” Rep. Raul Grijalva (D-Ariz.) told POLITICO, adding that lobbying on behalf of a trade association that TransCanada was a part of is certainly a connection that should be thoroughly investigated by the State Department.

In a December letter, Grijalva and 24 other House Democrats urged President Barack Obama to delay the Keystone decision until an Inspector General review is complete, citing “serious concerns about conflicts of interest” regarding ERM and TransCanada.

ERM helped prepare a draft report last year in which the State Department concluded that the pipeline poses no significant environmental risk. Both supporters and critics are still awaiting the department’s final environmental study, which is expected soon.

A spokesperson for the State Department said contractors are subject to a rigorous review to ensure there are no conflicts of interest, but it is not uncommon for individuals to have links to related industry associations.

“The Department required ERM to conduct an internal inquiry to ensure that it was free of any conflicts of interest regarding the proposed Keystone XL pipeline project. ERM has certified that it has not had, and does not have, any contracts with TransCanada,” the spokesperson said in an email.

The State Department’s original environmental review contractor, Cardno ENTRIX, had more direct ties to TransCanada and the industry — yet a State Department IG report cleared the company of technical conflicts of interest.

The State Department’s Inspector General is currently conducting a review into these and other alleged conflicts of interest.

In documents the company provided to the State Department in 2012, the company said that “no conflict of interest exists” with respect to its work on Keystone. It also said it “has no business relationship with TransCanada or its affiliates.”

A TransCanada company representative told POLITICO that the activities of the association were separate from their corporate activities and that the company had no control over the association’s lobbying or advocacy efforts.

“Like most companies, TransCanada is a member of a number of industry trade associations in connection with its various business lines — similar to the ICBA. Cancarb is the second-smallest member of the ICBA in terms of production capacity, and we do not control their activities,” said spokesperson Shawn Howard.

Added Howard: “This is part of the same pattern we’ve seen from opponents of Keystone XL over the past three years. In a previous investigation (relating to another company), the Inspector General confirmed that TransCanada had acted appropriately during all parts of the Keystone XL Presidential Permit review process.”

“Instead of waiting for the Inspector General to complete their latest investigation, opponents are ironically questioning the ability of a respected professional consulting firm who has done work in the past for a completely unrelated industry association that advances the health, safety and environmental aspects of a completely unrelated product. This just shows that Keystone XL’s opponents will stop at nothing to advance their fundraising and advocacy campaigns,” Howard said.