Two conflicted third-party contractors slipped through a federal vetting process last year for the review of two separate TC Energy gas pipeline projects. The Federal Energy Regulatory Commission (FERC) hired consulting firms to review TC Energy’s proposed projects, but the firms did not disclose that they were simultaneously working for the Canada-based pipeline giant. While FERC addressed the conflict of interest last year after a review, newly obtained documents show that TC Energy and the contractors failed to disclose the full scale of the potential issues to the federal agency.
Last fall, TC Energy filed with FERC two separate proposals for gas pipeline expansion projects, the Virginia Electrification Project in Virginia, and the GTN XPress in Idaho, Washington, and Oregon. To assist in FERC’s environmental review of the projects under the National Environmental Policy Act (NEPA), TC Energy requested that FERC approve hiring third-party contractors.
Though the pipeline company pays for these contractors, they are considered “independent” and are supposed to work under the supervision of FERC staff. FERC’s rules spell out the hiring process: the pipeline company sends Requests For Proposals (RFPs) to prospective consulting firms. The firms then must submit an organizational conflict of interest (OCI) statement with their respective bids to the pipeline company, which conducts a screen to determine if the contractor is “capable of impartially performing the environmental services required under the third-party contract” before then submitting all applications to FERC. FERC then reviews the information in the applications and makes a final selection.
Conflicts in Virginia
In December 2021, a Bay Journal reporter alerted FERC that the third-party contractor for the Virginia Electrification Project, Burns & McDonnell, was working directly for TC Energy on a related project, this one called the Virginia Reliability Project (VRP), and inquired about a possible conflict. As part of the VRP, TC Energy plans to replace nearly 50 miles of pipeline and upgrade existing compressor stations to increase gas supply to the Hampton Roads region.
Shortly after this inquiry, FERC terminated its contract with Burns & McDonnell, due to the agency’s “recent identification of an organizational conflict of interest”:
Burns & McDonnell agreed to “immediately notify FERC and submit a plan to mitigate the conflict, in the event an organizational conflict of interest is discovered” when the contract was executed with FERC and TC Energy on November 30, 2021. The contract also required Burns & McDonnell to refresh its organizational conflict of interest (OCI) statement “if the business relationships have changed in a manner that affects the previously submitted OCI statement”.
Documents obtained by the Energy and Policy Institute through a Freedom of Information Act (FOIA) request reveal that Burns & McDonnell did not disclose any relationship with or work for TC Energy on the VRP in its original OCI disclosure, submitted to TC Energy on October 5, 2021.
Elsewhere in the bid, the contractor stated it was “not aware” of any conflicts.
Burns & McDonnell did not respond to the Energy & Policy Institute’s request for comment.
Undisclosed Work in the Northwest
TC Energy’s proposal of a conflicted environmental reviewer to FERC was not isolated to the Virginia project, according to documents newly obtained by the Energy and Policy Institute via FOIA.
On December 12, 2021, FERC announced it had selected SWCA Environmental Consultants (SWCA) as the third-party contractor for the GTN XPress project in the Pacific Northwest, after receiving a number of bids submitted by TC Energy in early November.
But on January 18, 2022, TC Energy informed FERC that it “was made aware by SWCA that certain statements included in the OCI documents, submitted with SWCA’s original proposal, required revision.” Emails obtained by EPI through a FOIA request revealed that SWCA’s executives directed staff to conduct an internal review of its work for TC Energy after the Bay Journal article about conflicts with the Virginia Electrification Project.
“I want to make sure we are clean,” SWCA’s Director of SWCA’s Oil & Gas Business Line Scott Urwick wrote to colleagues, “I don’t want SWCA’s name in the news like Burns and Mac’s was.”
In its original conflict of interests disclosure it submitted to TC Energy in October 2021, SWCA stated it did not have “a direct or indirect relationship… with any business entity that could be affected in any way by the proposed project.”
Yet in the updated disclosure provided to TC Energy and FERC in January 2022 SWCA acknowledged it had been working for TC Energy for the past three years and has two ongoing projects for the pipeline company. SWCA stated that its “remaining work on these two projects will not affect or be affected by the proposed work under this solicitation.”
In early February 2022, SWCA’s lead environmental consultant for the GTN XPress emailed colleagues with the subject “GTN XPress bad news,” informing them that FERC removed SWCA as the third-party contractor for TC Energy’s GTN XPress project. “SWCA is now considered to have a conflict of interest based on our last submittal [sic] of the OCI to TCE,” according to the email.
SWCA did not respond to the Energy & Policy Institute’s request for comment.
A FERC spokesperson confirmed to the Energy and Policy Institute that there are now no third party contractors for the VEP and GTN XPress. The contractors were fired for failing to disclose conflicting interests, leaving FERC staff to independently conduct the NEPA reviews for each of the projects.
TC Energy did not respond to a request for comment.
A History of Conflicts
This is not the first time the pipeline industry hires potentially conflicted contractors to assist in federal environmental reviews of its projects. In 2016, DeSmog revealed that Spectra Energy (now Enbridge) hired a third-party contractor to review its Atlantic Bridge Project even though the contractor was working for Spectra at the time on a related project.
Following the revelation, FERC updated its rules by which third party contractors are hired. The updated rules specified in greater detail the roles of both the pipeline applicant and FERC in ensuring contractors are vetted for conflicts.
Update: On October 18, 2022, we updated this piece to provide additional information to outline Burns & McDonnell’s obligations to disclose an organizational conflict of interest.