Greens had already seized on ERM’s membership in the American Petroleum Institute. Conflict of interest on Keystone?

A contractor that worked on the State Department’s environmental review of the Keystone XL pipeline is a member of several energy industry groups that have urged the government to support the project — news that is sure to further opponents’ accusations of bias.

Climate activists have already complained about alleged conflicts of interest by the London-based firm Environmental Resources Management, a company that worked on a State Department draft study concluding that TransCanada’s Alberta-to-Texas pipeline would pose little risk to the environment. The department’s inspector general is also conducting a probe into possible conflicts of interest in the pipeline review process.


While a previous State Department investigation found no conflicts of interest, the latest information could further roil a debate that has already turned Keystone into a political headache for the Obama administration, a campaign issue for Republicans in 2014 and a source of tension between the U.S. and Canada.

Websites or promotional material of the Western Energy Alliance, the American Fuel and Petrochemical Manufacturers and the Louisiana Mid-Continent Oil and Gas Association all list ERM as a member. In addition, two top ERM staffers are listed on the boards of the Western States Petroleum Association — another coalition of energy interests that supports the Keystone pipeline network.

Greens had already seized on ERM’s membership in the powerful American Petroleum Institute, another supporter of the pipeline.

ERM declined to make a spokesperson available for comment Monday after POLITICO contacted the company four times at its Washington and Houston offices. But 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.”

Environmental activists and other pipeline opponents say the ties raise new questions about whether the contractor can provide an unbiased assessment of the project’s impact.

“They can’t seem to tell the most basic truth about their affiliations and work history,” Ross Hammond, senior campaigner with the anti-Keystone, environmental nonprofit Friends of the Earth.

ERM helped prepare a draft report in March in which the State Department concluded that the pipeline poses no significant environmental risk. Both supporters and critics are awaiting the department’s final environmental study, which could come at any time.

All five of the trade associations and coalitions that ERM is part of have been vocal in their support for the pipeline, which would be part of a network carrying oil from Alberta’s oil-sands region to the Texas Gulf Coast. Supporters say the project would create thousands of jobs and boost North American energy independence. Liberal activists and environmental groups say the pipeline would encourage a spike in oil production in western Canada, unleashing huge amounts of greenhouses gases into the atmosphere.

API has spent more than $6 million on all lobbying issues in 2013 alone, and the group has been vocal in its support for Keystone. (It’s unknown how much of the lobbying money specifically went to championing Keystone.) The other energy trade associations that ERM is part of have been similarly supportive of the pipeline.

For instance, API, Western Energy Alliance and AFPM all signed a 2012 letter urging Congress to approve the pipeline, saying that “there are no more excuses to delay this critical project.” AFPM’s leaders have written several op-eds on the topic.

A State Department official told POLITICO in a statement that the department “employs rigorous conflict of interest procedures designed to ensure that contractors and subcontractors have no financial or other interest in the outcome of a project.” The official also noted that State required ERM to conduct an “internal inquiry to ensure that it was free of any conflicts of interest regarding the proposed pipeline project.”

“U.S. government agencies commonly use third-party contracts to assist with environmental reviews of projects proposed by private applicants,” the official continued. “The selected contractor works directly with, and under the sole direction of, the Department of State on the assessment, while the applicant, pays for the work. ERM is not permitted to communicate with TransCanada unless specifically directed to do so by department officials.”

In October, a department official responded to previous conflict-of-interest allegations by saying, “We have confirmed — no Environmental Resources Management employees working on the review have worked for TransCanada.”

But in recent months, environmental groups have unearthed documents that they say show ERM has deep ties to the oil industry. Previously redacted documents obtained by Mother Jones in March appear to show that ERM officials working on the Keystone environmental review had previously served as consultants for projects developed by TransCanada and other oil companies.

Activists also released documents over the summer that appear to show ERM has worked on the Alaska Pipeline Project, a joint venture between TransCanada and ExxonMobil.

In a statement Monday, TransCanada spokesman Shawn Howard said: “TransCanada has not entered into any contracts with ERM related to our partnership in the Alaska Pipeline Project, and we have previously confirmed that our project partner has worked with ERM before.”

Howard noted that TransCanada did not hire ERM to work on the Keystone environmental analysis. He directed inquiries to the State Department and ERM.

The State Department’s inspector general is expected to issue a report in early 2014 examining whether the department’s process for selecting a third-party contractor to work on the Keystone environmental analysis was “effective in assessing potential organizational conflicts of interest.”

IG spokesman Douglas Welty said the report should be released at the end of January. But Welty would not comment on the scope of the probe, including whether it will delve into ERM’s membership in industry trade groups.

A State IG report released in February 2012 found no evidence of conflict of interest or bias in the department’s review of the pipeline up to that point. It also found no evidence to support conflict-of-interest allegations that activists had lobbed at Cardno Entrix, a previous third-party contractor that worked on a separate environmental analysis of the pipeline.

The American Petroleum Institute, the oil industry’s top lobbying group and a major Keystone supporter, confirmed that ERM is one of its more than 550 member companies.

“And, it might go without saying that it is natural for consulting firms to be members of trade associations, especially if they have expertise in a respective industry,” API spokeswoman Sabrina Fang said in an email.

While API is known in Washington mostly for its advocacy work, many of its members are much more focused on the group’s technical work in creating industry standards, certification programs and training programs, on subjects including service station practices and high-tech software systems.

The Western Energy Alliance confirmed that ERM has an “associate membership” with the group. The other trade associations did not respond to requests for comment.

Matt Daily contributed to this report.