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UNITED STATES DEPARTMENT OF STATE 

AND THE BROADCASTING BOARD OF GOVERNORS

OFFICE OF INSPECTOR GENERAL

AUD-SI-14-20 Office of Audits February 2014

Keystone XL Pipeline Project 

Compliance Follow-up Review: 

The Department of State’s Choice of 

Environmental Resources Management, Inc., 

To Assist in Preparing 

the Supplemental Environmental Impact Statement

IMPORTANT NOTICE: This report is intended solely for the official use of the Department of State or the 

Broadcasting Board of Governors, or any agency or organization receiving a copy directly from the Office of 

Inspector General. No secondary distribution may be made, in whole or in part, outside the Department of State 

or the Broadcasting Board of Governors, by them or by other agencies of organizations, without prior 

authorization by the Inspector General. Public availability of the document will be determined by the Inspector 

General under the U.S. Code, 5 U.S.C. 552. Improper disclosure of this report may result in criminal, civil, or 

administrative penalties.
United Stales De partment of State 

and the Broadcasting Board of Governors 

Office of Inspector General 

PREFACE 

This report was prepared by the Office of Inspector General (OIG) pursuant to the 

Inspector General Act of 1978, as amended, and Section 209 of the Foreign Service Act of 1980, 

as amended. It is one of a series of audit, inspection, investigative, and special reports prepared 

by OIG periodically as part of its responsibility to promote effective management, 

accountability, and positive change in the Department of State and the Broadcasting Board of 

Governors. 

This report is the result of an assessment of the strengths and weaknesses of the office, 

post, or function under review. It is based on interviews with employees and officials of relevant 

agencies and institutions, direct observation, and a review of applicable documents. 

The recommendations therein have been developed on the basis of the best knowledge 

available to OIG and, as appropriate, have been discussed in draft with those responsible for 

implementation. It is my hope that these recommendations will result in more effective, 

efficient, and/or economical operations. 

I express my appreciation to all of those who contributed to the preparation of this report. 

Norman P. Brown 

Assistant Inspector General 

for Audits 
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Acronyms 

CEQ Council on Environmental Quality

EIS environmental impact statement

ENR Bureau of Energy Resources

ENV Office of Environmental Policy

EQT Office of Environmental Quality and Transboundary Issues

ERM Environmental Resources Management, Inc.

FERC Federal Energy Regulatory Commission

FOIA Freedom of Information Act

L/OES Assistant Legal Advisers for Oceans, International Environmental and Scientific 

Affairs

NEPA National Environmental Policy Act

OIG Office of Inspector General

OES Bureau of Oceans and International Environmental and Scientific Affairs

PDAS Principal Deputy Assistant Secretary

RFP Request for Proposals

SEIS supplemental environmental impact statement
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Table of Contents

Section Page

Executive Summary.........................................................................................................................1

Background.....................................................................................................................................5

Review Objective ........................................................................................................................11

Review Results ..............................................................................................................................12

Finding A. The Process Used To Select the Department’s Third-Party Contractor 

 Substantially Followed Prescribed Guidance ................................................12

Finding B. The Process Used To Assess Organizational Conflicts of Interest was 

 Effective.........................................................................................................15

Finding C. The Department Should Enhance Documentation and Disclosure of the 

 Third-Party Contracting Process.....................................................................22

List of Recommendations..............................................................................................................26

Appendices

A. Scope and Methodology................................................................................................27

B. Bureau of Oceans and International Environmental and Scientific Affairs and Office 

 of the Legal Adviser Response .....................................................................................28

Major Contributors to Report.........................................................................................................30
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Executive Summary

The Keystone XL project (Keystone XL) is a proposed 875-mile pipeline that is intended 

to run from Alberta, Canada, through Montana and South Dakota to Nebraska, where it would 

link with pipelines running to the U.S. Gulf Coast. The project is to be built and operated by 

TransCanada Keystone Pipeline LP (TransCanada), an entity controlled by TransCanada 

Corporation, a Canada-based energy company. On September 19, 2008, TransCanada submitted 

a Presidential permit application to the Department of State (Department) because Keystone XL 

crosses the U.S. - Canadian border into Montana. Under Executive Order 13337, issued on April 

30, 2004, the Department is the Federal agency responsible for reviewing applications for 

cross-border oil pipelines and deciding whether issuance of a permit to construct, operate, and 

maintain pipeline facilities that cross a border of the United States will serve the national interest. 

As part of the permit application review process, the Department may prepare an 

environmental impact statement (EIS). The Department, like many Federal agencies, uses 

“third-party contractors” to help prepare EISs required for permit applications. In accordance 

with the “third-party contract” arrangement, the Department selects and directly supervises the

third-party EIS contractor, independent of the permit applicant, but the permit applicant pays the 

contractor for its work. For TransCanada’s 2008 application, the Department selected ENTRIX, 

Inc., now known as Cardno ENTRIX, to prepare the EIS, which was issued in final form on 

August 26, 2011.1

On December 23, 2011, the Temporary Payroll Tax Cut Continuation Act of 2011 was 

enacted.

2

 It required the President to determine, within 60 days of enactment, whether Keystone 

XL would serve the national interest. On January 18, 2012, the Department recommended that 

the application be denied on the grounds that there was insufficient time to conduct the required 

analysis and, on the same day, the President agreed and denied the application.

3

Meanwhile, based on a request received from 14 members of Congress in October 2011, 

the Office of Inspector General (OIG) initiated a review in November 2011 and issued a report in 

February 2012 that addressed concerns that TransCanada had improperly influenced the 

Department’s selection of Cardno ENTRIX.

4

 OIG found no evidence of improper influence, but 

made recommendations to improve the Department’s process for selecting third-party contractors 

and screening contractors for organizational conflicts of interest. 

Following the President’s January 2012 denial, TransCanada filed a new Keystone XL 

permit application in May 2012. A supplemental EIS (SEIS) was required because the route 

 1 The EIS is available at http://keystonepipeline-xl.state.gov/archive/dos_docs/feis/index.htm. 2 Available at http://www.gpo.gov/fdsys/pkg/PLAW-112publ78/pdf/PLAW-112publ78.pdf. 3 Available at http://www.whitehouse.gov/the-press-office/2012/01/18/statement-president-keystone-xl-pipeline. 4 Special Review of the Keystone XL Pipeline Permit Process (AUD/SI-12-28, February 2012) is available at 

http://oig.state.gov/documents/organization/183864.pdf. 
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through Nebraska proposed by TransCanada had changed, so the Department needed to select an

EIS contractor to help prepare the SEIS.

5

 

In May 2012, the Department published a modified version of its third-party contractor 

selection process6 in response to OIG’s previous recommendations. That same month, the 

Department began using its revised process for the first time to select a third-party contractor for 

the Keystone XL SEIS. The Department selected Environmental Resources Management, Inc.

(ERM).

In March 2013, the Department issued a draft SEIS for Keystone XL. Thereafter, OIG

and the Department received a number of complaints asserting that ERM and its staff lacked the 

requisite independence to serve as the SEIS contractor and that ERM’s answers in the conflict of 

interest questionnaire submitted as part of the SEIS contractor selection process were not 

accurate.7 In response to these concerns, OIG initiated this follow-up review to determine how 

well the process used to select ERM followed prescribed guidance and to determine how 

effective the revised process was in assessing and addressing organizational conflicts of interest 

for third-party contractors. As part of this review, OIG evaluated the Department’s handling of 

potential conflict of interest issues, including conflict of interest allegations regarding ERM that 

were raised in the letters to OIG. To conduct this review, OIG reviewed documentation and

interviewed Department officials, Federal Energy Regulatory Commission (FERC) officials, and 

ERM employees. 

In January 2014, the Department issued the Final SEIS and posted it to its Web site with 

additional related documents, including organizational conflict of interest material provided by 

ERM and others.8 The Department had previously provided the organizational conflicts of 

interest documents to OIG during the course of OIG’s review. Keystone XL is now in the 

National Interest Determination/Final Decision phase. 9

Office of Inspector General Findings

Based on the information provided and interviews conducted, OIG found that the process 

the Department used to select ERM to help prepare the Keystone XL SEIS substantially followed 

 5 The Department maintains a public Web site, where the application and other pertinent materials discussed in this 

report are posted, at http://www.keystonepipeline-xl.state.gov/. 6 Interim Guidance for the use of Third-party Contractors in Preparation of Environmental Documents by the 

Department of State is available at http://www.state.gov/documents/organization/190304.pdf. 7 The April 8, 2013, letter from 11 organizations is available at http://checksandbalancesproject.org/2013/04/09/cbpcalls-for-state-dept-investigation-into-keystone-xl-consultants-conflicts-of-interest/. The April 22, 2013, letter from 

11 organizations is available at http://www.sierraclub.org/pressroom/downloads/IG-INVESTIGATION-REQUESTLETTER-4-22-13.pdf. 8 The additional information regarding potential organizational conflicts of interest disclosed by ERM is available at 

http://www.keystonepipeline-xl.state.gov/. 9 The National Interest Determination phase involves consideration of many factors, including energy

security; environmental, cultural, and economic impacts; foreign policy; and compliance with relevant

Federal regulations and issues. A process timeline is included in the Department’s fact sheet at 

http://keystonepipeline-xl.state.gov/documents/organization/221283.pdf. 
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its prescribed guidance and at times was more rigorous than that guidance. The Department’s 

published guidance provides a general outline for the contractor selection process, and

Department personnel managing the process drew on their previous experience to implement the 

process. For example, the Department used a selection panel of six Department employees to 

review the proposals submitted by the three third-party candidates that applied to serve as the 

SEIS contractor, and that panel interviewed each candidate. Neither the selection panel nor 

candidate interviews are prescribed by the published guidance. Although in two instances the 

Department made reasonable deviations from its prescribed guidance, OIG found that these 

deviations did not adversely affect the selection process. In one of the instances, for example, 

the Department elevated the final contractor selection decision from the office director to a 

higher-ranking official, an assistant secretary.

OIG also found that the process the Department used to assess organizational conflicts of 

interest was effective in that (i) a reasonable review was undertaken to independently evaluate 

ERM’s certification that it had no conflict of interest and (ii) the process achieved its intended 

result. That is to say, the Assistant Legal Advisers for Oceans, International Environmental and 

Scientific Affairs (L/OES) reviewed all conflict of interest materials submitted by ERM,

TransCanada, and others and made additional inquiries on potential issues. Furthermore, L/OES 

attorneys analyzed this information in a manner consistent with the Department’s guidance, 

applicable regulations and guidance of the White House Council on Environmental Quality 

(CEQ), and relevant case law.

For example, in the case of concerns raised about ERM’s alleged lack of objectivity

because current ERM staff had previously worked for TransCanada and other oil and pipeline 

companies, OIG found that the Department’s conflict of interest review was effective and that 

the review’s conclusions were reasonable. Specifically, OIG’s review found the following: (i) 

ERM had fully disclosed the prior work histories of its team members as part of its proposal; (ii) 

L/OES attorneys had reviewed and researched the nature of the prior work and had discussed the 

prior work with ERM during the pre-selection interview; (iii) L/OES attorneys had determined 

that the prior TransCanada work occurred before the staff began work at ERM and that none of 

the prior work had involved Keystone XL; (iv) the Department’s prescribed conflict of interest 

guidance provides four factual scenarios that may create impairments to objectivity;10 (v) the 

employees’ prior work histories did not involve any of those four scenarios; (vi) this prior work 

had not impaired ERM’s objectivity; (vii) the totality of information provided by ERM to the 

Department was not misleading; and (viii) the Department’s conflict of interest guidance is 

consistent with pertinent regulations and case law.

However, OIG did find that the process for documenting the contractor selection process, 

including the conflict of interest review, can be improved. Very little documentation is 

specifically required by CEQ regulations and Department guidance, and the Department has met

 10 Where: (1) the contractor has been involved with the applicant on the project before the project is proposed to the 

Department or while it is pending with the Department; (2) the contractor has an ongoing relationship with the 

applicant; (3) the contractor would be called on to review its own prior work; or (4) the contractor has a financial or 

other interest in the outcome of the Department’s decision.
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those minimal requirements.11 However, the Department did not fully document its process, and

additional documentation would help ensure effective management and oversight of this process. 

For example, the Department did not document its internal substantive analyses of the specific

organizational conflict of interest issues it reviewed prior to May 2013.

12 Thus, OIG had to rely 

primarily on Department employee interviews to replicate this portion of the conflict of interest 

review process. Lack of such documentation also could lead to inconsistency in future 

applications of the process. The Department has acknowledged that its internal formal 

documentation could be improved and has begun more fully documenting its conflict of interest 

analysis for both the ongoing Keystone XL process and another third-party contractor process 

currently underway at the Department.13 Effective documentation is a necessary component of 

any government program and can go far to enhance oversight and reduce potential 

misperceptions of the process. 

OIG also found that the Department’s public disclosures concerning its conflict of 

interest review could be improved. The record shows that ERM provided the Department all 

required information, disclosures, and certifications in its initial proposal and provided 

supplemental submissions throughout its ongoing interaction with the Department. However,

when the Department published ERM’s proposal and the draft SEIS in March 2013, the 

Department agreed to redact information ERM considered confidential business information and 

did not publish any of ERM’s supplemental submissions. The Department’s partial disclosure 

apparently created misperceptions that ERM had not provided all required information to the 

Department and that ERM and the Department were attempting to conceal conflicts of interest. 

Those misperceptions might have been avoided had the Department explained its partial 

disclosure as part of a more comprehensive approach to disclosing information regarding its 

conflict of interest review. 

Office of Inspector General Recommendations

OIG is making four recommendations intended to improve the documentation and public 

disclosure of the contractor selection process and conflict of interest review process. The 

Department should: (i) enhance its guidance to more fully articulate its selection and conflict of 

 11 CEQ regulations require only a “[contractor] ... statement ... specifying that they have no financial or other 

interest in the outcome of the project.” 40 CFR §1506.5(c). Similarly, Department guidance only specifies a few 

documents that potential contractors must include as part of their proposals: (i) a certification statement as required 

by CEQ regulations, (ii) a similar certification acknowledging that conflict of interest disclosure is an ongoing 

obligation throughout contract performance, and (iii) a conflict of interest questionnaire. These documents were 

included as part of ERM’s proposal. 12 Documentation of the Department’s conflict of interest review prior to May 2013 consists of: (i) documents 

associated with L/OES drafting of its May 2012 conflict of interest guidance, (ii) the conflict of interest information 

included in ERM’s original proposal, (iii) supplemental organizational conflict of interest documents submitted by 

ERM, (iv) organizational conflict of interest documents from ERM sub-contractors and TransCanada, and (v) email 

communications between the Department and ERM. OIG obtained much of the conflict of interest review process 

information contained in this report from interviews of Department employees. Since May 2013, the Department 

has more thoroughly documented its organizational conflict of interest review. 13 The Department is reviewing an application for a Presidential permit for the Alberta Clipper Pipeline. Available at 

http://www.state.gov/e/enr/applicant/applicants/202433.htm.
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interest review processes; (ii) explain in greater detail the definition of “organizational conflict of 

interest” relied upon by the Department; (iii) specify in its guidance the documentation required 

in the contractor selection and conflict of interest processes and establish standard operating 

procedures to capture and retain this information; and (iv) enhance its guidance to integrate a 

process for public disclosure of appropriate information. 

In its February 2014 responses (see Appendix B) to the draft report, the Bureau of

Oceans and International Environmental and Scientific Affairs (OES) and the Office of the Legal 

Adviser concurred with the four recommendations. Based on the responses, OIG considers the 

four recommendations resolved, pending further action. Management responses and OIG’s 

replies to those responses are included after each recommendation. 

Background

The Keystone XL project is a proposed 875-mile pipeline that is intended to run from 

Alberta, Canada, through Montana and South Dakota to Nebraska, where it would link with 

pipelines running to the U.S. Gulf Coast. The project is to be built and operated by 

TransCanada, an entity controlled by TransCanada Corporation, a Canada-based energy 

company. On September 19, 2008, TransCanada submitted a Presidential permit application to 

the Department because Keystone XL crosses the U.S. - Canadian border into Montana. 

The Presidential Permit Process and Applicable Laws and Regulations

Executive Order 13337 was issued by the President on April 30, 2004. The executive 

order requires a Presidential permit for the “construction, connection, operation, or maintenance, 

at the borders of the United States, of facilities for the exportation or importation of petroleum, 

petroleum products, coal, or other fuels to or from a foreign country.”14 It assigns the 

Department responsibility for reviewing applications for cross-border oil pipelines and for 

deciding whether issuance of a requested Presidential permit “would serve the national interest.” 

Upon receiving an application for a Presidential permit, the Secretary of State must 

request the views of the Secretary of Defense, the Attorney General, the Secretary of the Interior, 

the Secretary of Commerce, the Secretary of Transportation, the Secretary of Energy, the 

Secretary of Homeland Security, and the Administrator of the Environmental Protection Agency. 

The Secretary may also consult with state, tribal, and local government officials and foreign 

governments. Moreover, the Secretary may publish a notice in the Federal Register regarding 

the Department’s receipt of an application to receive public comments. After considering 

comments, the Secretary will determine whether to approve or deny a permit based on whether 

issuance of the permit would serve the national interest. In preparing the national interest 

determination, the Secretary is required by the Executive Order to consider an array of factors, 

including the proposed project’s impact on economics, energy security, foreign policy, the 

environment, and culture.15

 14 Executive Order 13337 is available at http://www.gpo.gov/fdsys/pkg/FR-2004-05-05/pdf/04-10378.pdf. 15 The Temporary Payroll Tax Cut Continuation Act of 2011 required the President to make this determination. 
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As part of the permit application review process, the Department prepares an EIS or other 

environmental analysis to inform the national interest determination. The National 

Environmental Policy Act16 (NEPA) and CEQ regulations for implementing NEPA prescribe the 

process for completing an EIS. The regulations provide that any EIS prepared pursuant to NEPA 

shall be prepared by the Department or by a contractor selected by the Department.17 The 

regulations also state that the contractor be chosen solely by the Department in order “to avoid 

any conflict of interest” and that contractors “shall execute a disclosure statement...specifying 

that they have no financial or other interest in the outcome of the project.”18

The Department’s EIS contractors are outside or third-party contractors that are selected 

and managed by the Department to help the Department prepare the EIS. However, third-party 

contractors are paid through a contract with the permit applicant. In the case of Keystone XL, 

ERM was selected by and works for the Department but submits bills to and is paid by 

TransCanada. Except for the billing process, ERM is not permitted to communicate with 

TransCanada, unless specifically allowed by Department officials.

As discussed above, in selecting a third-party EIS contractor, Federal agencies are 

required to determine that the contractor has no organizational (entity-level) conflict of interest 

that would prevent the agency from producing an objective EIS. The CEQ regulation states that 

contractors must have “no financial or other interest in the outcome of the proposed project.”19 

In a 1981 memorandum, published in the Federal Register, CEQ explained that it defines the 

term "financial or other interest” in the project’s outcome “broadly to cover any known benefits 

other than general enhancement of professional reputation.”20 Later, in a 1983 memorandum 

also published in the Federal Register, CEQ further elaborated on the meaning of this provision

based on the observation that some Federal agencies were interpreting the conflict of interest 

regulations in an overly burdensome manner. CEQ explained in the 1983 memorandum that “a 

firm which has an agreement to prepare an EIS for a construction project cannot, at the same 

time, have an agreement to perform the construction, nor could it be the owner of the 

construction site.”21 The memorandum further states that “if there are no such...interests or 

arrangements, and if the contract for EIS preparation does not contain any incentive clauses or 

 16 NEPA, as amended (Pub. L. No. 91-190, 42 U.S.C. §§ 4321-4347, Jan. 1, 1970, as amended by Pub. L. No. 94-52, 

July 3, 1975, Pub. L. No. 94-83, Aug. 9, 1975, and Pub. L. No. 97-258, § 4(b), Sept. 13, 1982), is available at 

http://energy.gov/sites/prod/files/nepapub/nepa_documents/RedDont/Req-NEPA.pdf. NEPA requires Federal 

agencies to assess and consider the environmental effects of their proposed actions prior to making decisions. 17 40 CFR §1506.5(c) states, “[A]ny environmental impact statement prepared pursuant to the requirements of 

NEPA shall be prepared directly by or by a contractor selected by the lead agency...” 18 40 CFR §1506.5(c) further states, “It is the intent of these regulations that the contractor be chosen solely by the 

lead agency...to avoid any conflict of interest. Contractors shall execute a disclosure statement...specifying that 

they have no financial or other interest in the outcome of the project.” 19 40 CFR §1506.5(c). 20 Forty Most Asked Questions Concerning CEQ's National Environmental Policy Act Regulations, 46 Fed. Reg. 

18,026, 18,027 (1981). 21 Guidance Regarding NEPA Regulations, 48 Fed. Reg. 34,263, 34,266 (CEQ 1983).
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guarantees of any future work on the project, it is doubtful that an inherent conflict of interest 

will exist.”22 

Federal courts applying the CEQ regulations and guidance to agencies’ use of third-party 

EIS contractors have rarely found a conflict of interest problem.

23 Indeed, even when an EIS 

contractor has a conflict of interest, courts will not necessarily invalidate an EIS if the agency 

can demonstrate that it has exercised control over the EIS preparation sufficient to demonstrate 

that the objectivity and integrity of the NEPA process has not been compromised.

24

The Department implements CEQ’s conflict of interest requirements through its Interim 

Guidance for the Use of Third-Party Contractors in Preparation of Environmental Documents 

by the Department of State (Guidance) published in May 2012.

25 That document gives the 

 22 Id. 23 See, e.g., Associations Working for Aurora's Residential Environment (“AWARE”) v. Colorado Dept. of Trans., 

153 F.3d 1122, 1127 (10th Cir. 1998) (noting developments in CEQ’s guidance in 1981 and 1983 and holding that 

an expectation of future construction work on the project without an enforceable contract was not a sufficient 

conflict of interest to invalidate the EIS); Colorado Rail Passenger Association v. Federal Transit Administration, 

843 F. Supp. 2d 1150, 1161 (Dist. Co. 2011) (finding no organizational conflict of interest where an individual 

consultant hired as EIS Manager for a transit station project was also an employee of the company managing 

development of the overall transit project because, although there was “certainly overlap,” there were no “incentive 

clauses or guarantees of future work in [the company’s] contract that would have been significantly impacted by the 

results of the EIS process”); Northern Crawfish Frog v. Federal Highway Admin., 858 F. Supp. 1503, 1529 (D. Kan. 

1994) (where local engineering firm participating in preparation of the EIS for a highway project allegedly would 

benefit financially from resulting future development on nearby properties, but firm had no incentives or guarantee 

of future work, there was no organizational conflict of interest); Cmtys. Against Runway Expansion, Inc. v. FAA, 355 

F.3d 678 (D.C. Cir. 2004) (finding no organizational conflict of interest where EIS consultant had other existing 

contractual relationships with the applicant but certified it had no interest in the project and could participate 

objectively). 24 See, e.g., AWARE, 153 F.3d at 1129 (“When reviewing an EIS prepared by a contractor who has allegedly 

breached a requirement imposed by 40 C.F.R. § 1506.5(c), the ultimate question for the court is...whether the 

alleged breach compromised the objectivity and integrity of the NEPA process.” The court “can evaluate the 

oversight that the agency provided to the [EIS] process as a factual matter and make a determination upholding the 

[EIS]”); See Brandon v. Pierce, 725 F.2d 555, 564 (10th Cir. 1984) (overlooking organizational conflict of interest 

when agency “substantially carried out its [NEPA] duties by making the ultimate decision and giving the required 

notice of that decision.” As allowed by HUD authorities, a city applying for a HUD grant hired and supervised the 

EIS contractor. However, the city had a contract for that same company to do engineering work on the project if it 

was approved, and the city paid for the EIS work as part of the engineering contract. The court acknowledged this 

created a potential conflict for the contractor, but found that the city’s supervision and control of the final EIS had 

maintained the objectivity of the EIS); Citizens Against Burlington, Inc. v. Busey, 938 F.2d 190 (D.C.Cir.), cert. 

denied, 502 U.S. 994 (1991) (holding that even though the Federal Aviation Administration (FAA) violated CEQ 

regulations in selecting the third-party EIS contractor, that error alone did not compromise the objectivity and 

integrity of the NEPA process. FAA had failed to obtain a conflict of interest certification from an EIS contractor 

that had a separate contract with the applicant for work related to the project. The court did not invalidate the EIS or 

enjoin the project, instead ordering FAA to obtain the required certification and “should the agency find that a 

conflict exists, to decide - promptly - on the measures to take in response”). 25 This Guidance (available at http://www.state.gov/documents/organization/190304.pdf) contains a section 

specifically on organizational conflict of interest titled Interim Guidance for the Disclosure of Organizational 

Conflict of Interest in the Use of Third-Party Contractors in Preparation of Environmental Documents by the 

Department of State. For the purposes of this report, we refer to the overall document as the Guidance. In 2006, the 

Department, after consulting with CEQ, concluded that FERC employed the best practices for selecting third-party 

EIS contractors and adopted that model, with some modifications, for its Guidance.
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Department’s Office of the Legal Adviser primary responsibility for undertaking a conflict of 

interest review. The Guidance explains that an organizational conflict of interest “exists when 

the nature of the work to be performed may, without some restriction on future activities: a) 

result in an unfair competitive advantage to a contractor; or b) impair the contractor's objectivity 

in performing the contract work.” The Guidance then states that a conflict of interest may exist 

where a contractor and/or its employees “have a past, present, or ongoing financial interest in a 

project to be covered by the third-party contract.” It then provides four examples of 

circumstances under which an organizational conflict of interest may exist. Specifically, a 

conflict may exist if the contractor:

(1) has been involved with the applicant on the project or any of the proposed project’s 

connected actions before the project is proposed to the Department or while it is 

pending with the Department;

(2) has an ongoing relationship with the permit applicant, or any of the applicant’s 

subsidiaries and/or parent companies;

(3) would be called on to review its own prior work; or

(4) has a financial or other interest in the outcome of the Department’s decision. 

Department Bureaus and Offices Primarily Responsible for the Keystone XL

Environmental Impact Statement

The OES Office of Environmental Quality and Transboundary Issues (EQT),

26 among 

other things, leads the Department’s environmental review process for Presidential permitting of 

infrastructure that crosses U.S. borders and was responsible for preparing the EIS for the 

Keystone XL permit. 

The Bureau of Energy Resources (ENR) formulates policy to advance U.S. energy 

security interests in the fields of petroleum, natural gas, biofuels, and other energy resources and 

manages the Department’s overall national interest determination process.

Office of the Legal Adviser provides legal advice to Department leadership and all 

components as well as to the executive branch on legal and legal policy issues in connection with 

U.S. foreign policy and Department activities. Legal advisers work closely with OES and ENR 

throughout the EIS and the national interest determination processes. Legal advisers also assist 

OES with selection and oversight of third-party contractors and have primary responsibility for 

assessing potential contractor conflict of interest.

27 

 26 This office was formerly named the Office of Environmental Policy (ENV), which appears in documents cited in 

this review. The name was changed on October 1, 2012, to EQT. 27 Interim Guidance for the use of Third-party Contractors in Preparation of Environmental Documents by the 

Department of State is available at http://www.state.gov/documents/organization/190304.pdf.
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Keystone XL Presidential Permit Application Timeline

The Keystone XL permitting process formally began on September 19, 2008, when

TransCanada submitted a Presidential permit application to the Department. Thereafter, the 

Department selected Cardno ENTRIX as the third-party contractor to help prepare the EIS. On

August 26, 2011, the Department issued a final EIS.

On October 26, 2011, 14 members of Congress requested that OIG “launch an 

investigation into the State Department’s handling of the EIS and National Interest 

Determination.”28 In response, OIG initiated a special review and began fieldwork on November 

10, 2011. The primary objective of that review was to determine to what extent the Department 

complied with Federal laws and regulations relating to the Keystone XL Presidential permit 

process. 

On December 23, 2011, the President signed into law the Temporary Payroll Tax Cut 

Continuation Act of 2011, which included a provision requiring that “not later than 60 days after 

the enactment of this Act, the President ... shall grant a permit under Executive Order No. 13337 

... for the Keystone XL pipeline” unless “the President determines that the Keystone XL pipeline 

would not serve the national interest.”29 On January 18, 2012, the Department recommended 

that the application be denied due to insufficient time to conduct the required analysis.30 The 

same day, the President publicly stated that he agreed with the Department’s 

recommendation31and issued a memorandum to the Secretary of State directing him to “submit 

the report to the Congress as specified in section 501(b)(2) of the Temporary Payroll Tax Cut 

Continuation Act of 2011 and to issue a denial of the Keystone XL pipeline permit 

application.”32

On February 8, 2012, OIG issued a report33 that addressed the issues raised in the 

October 26, 2011, congressional letter. OIG found no evidence that TransCanada had 

 28 They were: Senators Bernard Sanders, Sheldon Whitehouse, and Ron Wyden and Representatives Earl 

Blumenauer, Steve Cohen, Raul M. Grijalva, Mazie K. Hirono, Michael M. Honda, Hank Johnson, Dennis J. 

Kucinich, Chellie Pingree, Mike Quigley, Tim Ryan, and Peter Welch.

29 H.R. 3765, the “Temporary Payroll Tax Cut Continuation Act of 2011” is available at 

http://www.gpo.gov/fdsys/pkg/PLAW-112publ78/pdf/PLAW-112publ78.pdf. 30 The Department described this part of the project’s procedural history in congressional testimony on January 25, 

2012, available at 

http://energycommerce.house.gov/sites/republicans.energycommerce.house.gov/files/Hearings/EP/20120125/HHRG

-112-IF03-WState-KJones-20120125-SD001.pdf. 31 Available at http://www.whitehouse.gov/the-press-office/2012/01/18/statement-president-keystone-xl-pipeline. 

The President issued a statement explaining his denial as follows: “The rushed and arbitrary deadline [of February 

21, 2012, established by Congress]...prevented a full assessment of the pipeline’s impact.” The President’s 

statement further noted that his decision was “not a judgment on the merits of the pipeline, but the arbitrary nature of 

a deadline that prevented the State Department from gathering the information necessary to approve the project and 

protect the American people.”

32 Presidential Memorandum -- Implementing Provisions of the Temporary Payroll Tax Cut Continuation Act of 

2011 Relating to the Keystone XL Pipeline Permit, available at http://www.whitehouse.gov/the-pressoffice/2012/01/18/presidential-memorandum-implementing-provisions-temporary-payroll-tax-cut. 33 AUD/SI-12-28, February 2012. Available at http://oig.state.gov/documents/organization/183864.pdf.
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improperly influenced the Department’s selection of Cardno ENTRIX as the EIS third-party 

contractor. However, OIG made recommendations to improve the Department’s process for 

selecting third-party contractors and for screening conflicts of interest. Specifically, OIG 

recommended that the Department: (1) redesign its process for using third-party contractors in 

order to maximize the Department’s control of each step and minimize the permit applicant’s 

role in the process; (2) fill at least one full-time position within OES with staff who have 

experience and expertise in handling NEPA issues and the EIS process; and (3) redesign the 

process for selecting and using third-party contractors in order to improve the Department’s 

conflict of interest screening process.34

On May 4, 2012, TransCanada filed a new application for Keystone XL. On May 10, 

2012, the Department approved its modified third-party contractor selection process (the 

previously discussed Guidance). In May 2012, the Department began the process of selecting a 

third-party contractor to assist with the preparation of the SEIS.35 On July 13, 2012, the 

Department advised TransCanada of its selection of ERM as the SEIS contractor, and on August 

16, 2012, the Department posted a notice on the project-specific Web site for Keystone XL36

announcing the selection of ERM.

On March 1, 2013, the Department published its draft Keystone XL SEIS, prepared with 

the assistance of ERM, and posted a redacted copy of the documents ERM submitted in June 

2012 when it applied to serve as the SEIS contractor. Notably, however, as discussed below, the 

Department did not publish any other documents that ERM had submitted to the Department 

over ensuing months (until the release of the final SEIS in January 2014).

On April 8, 2013, representatives of 13 organizations sent a letter to the Secretary and 

OIG calling for an investigation of two issues they identified in the posted ERM documents: 

(i) incomplete statements made by ERM on its conflict of interest disclosure statement and

(ii) the Department’s determination that ERM had no conflicts of interest to serve as the 

Department’s EIS contractor notwithstanding that three ERM experts had done work for 

“TransCanada and other oil companies within the past three years.”37

On April 22, 2013, representatives of 11 additional organizations sent a letter to OIG to 

request that OIG initiate an investigation into the Department’s selection of ERM as the SEIS 

third-party contractor. The letter cited “misleading disclosures on ERM’s conflict of interest 

 34 On September 28, 2012, OIG reviewed and accepted documentation showing that the Department had 

implemented the steps necessary to close the three recommendations issued in the previous report. The Department 

(1) redesigned its process for using third-party contractors, including the organizational conflict of interest screening 

process and (2) filled a full-time Civil Service NEPA Coordinator position with staff who have experience and 

expertise in handling NEPA issues and the EIS process. 

35 During 2011, Cardno ENTRIX completed its contractual obligations to help prepare the Keystone XL EIS under 

the 2008 permit application. As discussed previously, an SEIS was needed to address the changed route through 

Nebraska and other new issues associated with the 2012 permit application.

36 The Department maintains a public Web site, where it posted announcements on the Keystone XL project, at 

http://www.keystonepipeline-xl.state.gov/. 37 The April 8, 2012, letter is available at http://checksandbalancesproject.org/2013/04/09/cbp-calls-for-state-deptinvestigation-into-keystone-xl-consultants-conflicts-of-interest/.
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questionnaire; the Department’s failure to independently verify ERM’s statements; potential 

conflicts of interest between ERM and entities that may benefit from Keystone XL; the 

Department’s apparent attempt to conceal ERM employees’ prior work experience on 

TransCanada projects; and whether the Department violated its own conflict-of-interest 

screening guidelines.”38 

OIG’s Office of Investigations conducted a preliminary inquiry based on those April 

2013 allegations and determined that the matter did not warrant opening a criminal investigation. 

On September 18, 2013, the OIG Office of Audits initiated this follow-up review of the 

process used to select ERM. 

On October 30, 2013, 24 organizations (many of which signed the April 8 and April 22 

letters) sent OIG a letter, again urging an inquiry and requesting, among other things, that ERM

be disqualified from acting as the Department’s SEIS contractor based on alleged concealment of 

connections with parties with interests in Keystone XL. The letter further asserted that the 

Department had failed to independently verify ERM’s statements denying the existence of any 

conflict of interest.

39

On January 31, 2014, the Department issued the Final SEIS and posted it to its Web site 

with additional related documents including organizational conflict of interest material provided 

by ERM and others.40 The Department had previously provided the organizational conflicts of 

interest documents to OIG during the course of OIG’s review. The Final SEIS is not a decisional 

document on whether to approve or deny the proposed project but is a technical assessment of 

the potential environmental impacts related to the proposed pipeline. Keystone XL is now in the 

National Interest Determination/Final Decision phase. 41

Review Objective

OIG conducted this follow-up review to determine (1) whether the process used by the 

Department in selecting a third-party SEIS contractor followed prescribed guidance and (2) 

whether the process used by the Department to review third-party contractor organizational 

conflict of interest issues was effective.

 38 The April 22, 2013, letter is available at http://www.sierraclub.org/pressroom/downloads/IG-INVESTIGATIONREQUEST-LETTER-4-22-13.pdf. 39 The October 30, 2013, letter is available at

http://libcloud.s3.amazonaws.com/93/81/6/3298/Linick_Letter_Final.pdf. 40 The additional information regarding potential organizational conflicts of interest disclosed by ERM is available 

at http://www.keystonepipeline-xl.state.gov/. 41 The National Interest Determination phase involves consideration of many factors, including energy

security; environmental, cultural, and economic impacts; foreign policy; and compliance with relevant

Federal regulations and issues. 
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Review Results

Finding A. The Process Used To Select the Department’s Third-Party 

Contractor Substantially Followed Prescribed Guidance

The process used by the Department in selecting a third-party contractor to help prepare

the Keystone XL SEIS substantially followed and at times was more rigorous than its prescribed 

Guidance. In addition, the Department’s selection process met the CEQ requirement that the 

selection be made by the Department. 

The Department’s published Guidance provides only a general outline for the process. 

However, the Department officials managing the process drew on their earlier experience to 

implement the process, especially when no specific direction was prescribed in the Guidance. 

For example, the Department used a selection panel consisting of six Department officials to 

review submitted proposals. That panel interviewed each of the three companies that submitted 

a proposal. Neither the use of selection panels nor interviews are prescribed by the Guidance. 

OIG also noted two instances in which the Department made reasonable deviations from 

portions of the process that are specifically described in the Guidance. However, OIG found that 

these deviations did not adversely affect the selection process. First, the Department elevated the 

final selection decision to the Assistant Secretary for OES, whereas the Guidance indicates that 

the Director of the OES Environmental Policy Office, a lower-ranking official, will make the 

final selection decision. The Director is a subordinate of the Principal Deputy Assistant 

Secretary (PDAS) and, in this case, the PDAS and the Director participated as members of the 

selection panel. As a result, the panel’s collective recommendation was forwarded to the PDAS’ 

superior, the Assistant Secretary, for final action. Second, the Guidance states that the 

Department will share copies of the proposals with the permit applicant so the applicant can

verify that no conflicts exist between the potential contractor and the permit applicant. However, 

in this instance, the Department decided not to share all three proposals with TransCanada 

because only one potential contractor made it through the Department’s screening and 

assessment of the proposals. The Department did send ERM’s proposal to TransCanada, and 

TransCanada provided the required written certification that it had no conflict of interest with 

ERM. 

Department Guidance for Selecting a Third-Party Contractor to Prepare SEIS and Other 

Environmental Documents

In response to OIG’s February 2012 report, the Department approved its new Guidance in 

May 2012.42 The Guidance establishes the Department’s processes for developing a Request for 

Proposals (RFP), reviewing the proposals, selecting a third-party contractor, and managing the 

work of a third-party contractor to assist the Department with its environmental reviews. 

 42 Interim Guidance for the use of Third-party Contractors in Preparation of Environmental Documents by the 

Department of State is available at http://www.state.gov/documents/organization/190304.pdf.
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Preparation of the Request for Proposals

The Department’s guidance requires that, in the first instance, the permit applicant 

prepare a draft RFP for the purpose of soliciting third-party contractors interested in preparing 

environmental documents. Once the Department receives the draft, it is reviewed and finalized. 

The Department will circulate the final RFP to a targeted list of contractors (whenever possible, 

at least seven), publish notice of the RFP in the Federal Register, or otherwise publicize the RFP 

to solicit responses from potential contractors.

If a targeted list of contractors is employed, the Department develops the list after 

considering any contractors suggested by the permit applicant and obtaining recommendations 

from other agencies with expertise in similar types of environmental reviews, such as FERC or 

the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration. 

The Department will normally provide 14 days for potential contractors to submit proposals, and 

potential contractors must submit the responses directly to the Department.

Selection of the Third-Party Contractor

Department staff screens and assesses proposals on the basis of three criteria: technical 

adequacy, managerial capacity to address the needs of the project, and potential organizational 

conflict of interest. A contractor whose proposal does not include an organizational conflict of 

interest statement or who has an organizational conflict of interest that cannot be mitigated to the 

Department’s satisfaction will be rejected. The Department staff shares copies of proposals with 

the permit applicant. The permit applicant must then review all conflict of interest materials to 

verify that the applicant has no organizational conflict of interest with the contractor candidate, 

or identified subcontractor candidates, that would affect the potential contractor’s ability to 

impartially perform the required environmental services for the Department. The Office of the 

Legal Adviser conducts the final conflict of interest review. 

The Guidance states that the Director of the OES Environmental Policy Office will make 

the final contractor selection. Following contractor selection, the Department notifies the permit

applicant, who negotiates a contract and submits the final contract to the Department for 

approval.

Department’s Implementation of the Guidance To Select Environmental Resources 

Management, Inc. 

In May 2012, the Department hired a NEPA Coordinator with 30 years of experience in 

the public sector dealing with NEPA and other environmental issues. This action was consistent 

with the recommendation in OIG’s February 2012 report that the Department fill at least one 

full-time Civil Service position within OES with staff who have experience and expertise in 

handling NEPA issues and the EIS process. The NEPA Coordinator was involved in the 

Keystone XL SEIS contractor selection process. In particular, she consulted with other Federal 

agencies regarding potential third-party contractors, reviewed proposals, interviewed potential 

third-party contractors, and participated on the contractor selection panel. 
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In addition, OES and L/OES officials who had experience with prior pipeline permit 

applications were also involved in the process. They reviewed proposals, interviewed potential 

third-party contractors, and participated on the contractor selection panel. In the case of L/OES 

attorneys, they also conducted the organizational conflict of interest review. 

On May 7, 2012, TransCanada submitted a draft RFP to OES and L/OES for review.

Department staff reviewed, edited, and approved the RFP. The staff consisted of representatives 

from ENR, EQT, and L/OES. 

The Department sent the final RFP to 10 potential third-party contractors to solicit their 

responses.43 In accordance with the Guidance, the list was developed by EQT after consulting 

with Federal agencies with expertise managing environmental reviews of similar types of 

projects and considering suggestions from TransCanada.

44 The Department then gave 10 

potential contractors 14 days to submit proposals in response to the RFP. 

The Department ultimately received proposals from three contractors: Ecology and 

Environment, Inc.; ICF International; and ERM. The Department then employed a selection 

panel consisting of six Department officials from OES, ENR, and L/OES to review the three 

proposals. Although the Guidance does not require use of a panel, the Department had employed 

a similar panel to select the original Keystone XL EIS contractor in 2008.

OIG interviewed the panel members, who said that they had screened and assessed the 

proposals on the basis of the three criteria listed in the Guidance: technical adequacy, 

managerial capacity to address the needs of the project, and potential organizational conflict of 

interest. Part of the screening process included interviewing representatives from each of the 

three companies. During these interviews, the representatives made a presentation to the panel 

about their expertise and ability to perform the work outlined in their proposals. 

L/OES attorneys also reviewed the conflict of interest material submitted by each 

applicant. Their review process is described in Finding B. Panel members also considered 

potential conflict of interest issues during the selection process, including during the interviews 

of the potential contractors. However, consistent with the Guidance, the other four panel 

members ultimately deferred to the two L/OES panel members on conflict of interest issues. As 

discussed above, the Guidance provides that the Office of the Legal Adviser is responsible for 

conflict of interest determinations.

 43 The contractors were: Cardno ENTRIX; ICF International; Ecology and Environment, Inc.; ERM; AECOM; JBR 

Environmental Consultants, Inc.; Tetratech, Inc.; CH2M Hill; Mergent, Inc.; and Science Applications International 

Corporation. 44 The Department’s NEPA Coordinator obtained lists of recommended contractors from FERC, the Department of 

Energy, the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, the 

Department of the Interior’s Bureau of Land Management, the Department of Agriculture’s Rural Utility Service, 

and the permit applicant. The NEPA Coordinator created the final list by choosing the 10 contractors who were 

included in more than one list. 
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Only one potential contractor, ERM, made it through the Department’s screening and 

assessment process. Consequently, the Department only forwarded ERM’s proposal to 

TransCanada. Although the Guidance states that the Department will share copies of all the 

proposals with the permit applicant, in this instance, the Department had already eliminated the 

other proposals from consideration and therefore did not need TransCanada’s review or input on 

the other proposals. Sharing the eliminated proposals with TransCanada would have contributed 

nothing to the Department’s selection process. OIG concludes that, under these circumstances, it 

was reasonable to share only ERM’s proposal with TransCanada. TransCanada certified that it

had no conflicts of interest with ERM. 

The panel summarized its assessment and recommendation to select ERM in a decision 

memorandum sent to the Assistant Secretary for OES. The Assistant Secretary agreed with the 

panel’s recommendation. Although the guidelines require only that the Office Director for EQT

make the final determination, the Director, along with his supervisor (the PDAS for OES) served 

on the selection panel. Accordingly, the selection was elevated to the Assistant Secretary. OIG 

concludes that, under the circumstances, the elevation was appropriate.

On July 13, 2012, OES advised TransCanada of the Department’s selection of ERM. 

TransCanada and ERM then negotiated over the payment terms of ERM’s contract, and 

TransCanada submitted the final contract for approval to the Department on July 27, 2012. 

Finding B. The Process Used To Assess Organizational Conflicts of Interest 

was Effective

OIG found that the process the Department used to assess organizational conflicts of 

interest was effective in that (i) a reasonable review was undertaken to independently evaluate 

ERM’s certification that it had no conflict of interest and (ii) the process achieved its intended 

result. That is to say, L/OES attorneys reviewed all conflict of interest materials submitted by 

ERM, TransCanada, and others and made additional inquiries on potential issues. Furthermore, 

L/OES attorneys analyzed this information in a manner consistent with applicable CEQ 

regulations and guidance, relevant case law, and the Department’s Guidance. 

OIG’s review found that L/OES attorneys gathered sufficient information to conduct an 

effective conflict of interest review. L/OES attorneys, consistent with CEQ regulations 

discussed above, focused on whether ERM had a financial or other interest in the outcome of 

Keystone XL. L/OES attorneys began by reviewing the conflict of interest disclosures submitted 

by ERM in its proposal. The proposal included a section on ERM’s qualifications and 

experience, including descriptions of energy transportation projects in which ERM provided 

assistance.

45 The proposal also included a conflicts of interest section in which ERM stated that 

it “has no business relationship with TransCanada or its affiliates....”46 The proposal package

 45 “ERM Proposal to United States Department of State, Keystone XL Oil Pipeline Project Request for Proposal No. 

6152012 Supplemental Environment Impact Statement Third-Party Contractor Services,” at 20-32, is available at 

http://keystonepipeline-xl.state.gov/admindocs/index.htm. 46 Id. at 38.
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was posted on the Department’s Web site on March 1, 2013, in redacted form to omit

information ERM claimed and the Department agreed was confidential business information. 

The attachments accompanying the conflicts of interest section of ERM’s proposal 

included an organizational conflict of interest Representation Statement from the ERM project 

manager, certifying that no conflict existed, as well as a one-page description of the internal 

procedures ERM followed to identify potential conflicts of interest47 and an additional 

certification from the project manager acknowledging that avoiding an “[organizational conflict 

of interest] is an ongoing obligation” for ERM.48 ERM also submitted answers to a 13-question 

organizational conflict of interest questionnaire required as part of its proposal. In the answers, 

signed by the project manager, ERM asserted, among other answers, that ERM had “no existing 

contract or working relationship with TransCanada” in response to the question asking whether 

“[w]ithin the past three years, have you (or your organization) had a direct or indirect 

relationship (financial, organizational, contractual or otherwise) with any business entity that 

could be affected in any way by the proposed work.”49 ERM’s written response on the 

questionnaire did not directly answer the question that was asked because it was broad and 

sought information about existing and past relationships with any business entity that could be 

affected by the work. Instead, ERM limited its response to existing relationships with one 

business entity, TransCanada. However, as discussed below, the broader information sought by 

this question was included in other sections of ERM’s proposal (including information about 

ERM’s past work in the oil and pipeline industries and relationships with other business entities), 

and L/OES attorneys requested and received additional information as needed. ERM’s 

submissions, taken as a whole, provided all of the information required for the Department’s

conflict of interest analysis.

ERM provided an organizational chart identifying ERM’s affiliated companies (including 

OASIS Environmental, Inc., [OASIS]) and listed 13 employees whom ERM expected to work on 

the SEIS and provided resumes for each employee. The resumes identified each employee’s 

title, fields of competence, professional credentials, publications and presentations, 

representative projects, and included a short narrative about the employee’s pertinent 

professional experiences.50 The Deputy Project Manager/Cultural Resources Officer listed 

TransCanada on his resume—specifically, that he had done work for TransCanada on a natural 

gas pipeline project from 2005 to 2006, for TransCanada on various natural gas pipelines from 

2007 to 2010, and for ExxonMobil and TransCanada on the Alaska Pipeline Project from 2010 to 

2011. The resumes were publicly posted on the Department’s Web site, along with the other 

ERM material described above, although the Web site versions were redacted to exclude the key 

representative projects because ERM asserted and the Department agreed that that information 

was confidential business information. 

OIG learned during interviews of L/OES attorneys that they reviewed ERM’s submitted 

information, asked ERM follow-up questions about some information, and took additional steps 

 47 Id. at 39-40. 48 Id. at 41.

49 Id. at 42-45. 50 Id. at 47-74.
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to determine the accuracy of ERM’s representations. In particular, the attorneys told OIG that

they reviewed ERM’s Web site and conducted Internet searches to determine if ERM was doing 

business with or had done business with TransCanada in the recent past. OIG replicated the 

L/OES attorneys’ review steps based on information they orally articulated and found no 

evidence of any organizational conflict of interest between ERM and TransCanada. With regard 

to the Deputy Project Manager/Cultural Resources Officer’s prior work for TransCanada, L/OES

attorneys told OIG that in accordance with Department Guidance, they concluded that no conflict 

of interest existed because the prior work did not involve Keystone XL, the employee did not 

have an ongoing relationship with TransCanada, and the employee would not be called upon to 

review his own prior work. Notably, however, L/OES attorneys did not document their analysis 

and conclusions. Following this initial conflict of interest review and subsequent reviews of 

specific issues, the L/OES attorneys orally relayed their conclusions to the NEPA Coordinator 

and other Department staff. 

The Department’s conflict of interest review is an ongoing process that continues 

throughout the third-party contractor’s work for the Department. As part of that process, in July 

and August 2012, and in July 2013, ERM submitted three supplemental disclosure statements

containing information on prior work by ERM affiliates discovered through its ongoing internal 

conflict of interest review.

The July 2012 supplemental disclosure was in response to an L/OES request for greater 

detail regarding ERM’s internal conflict review. The disclosure detailed ERM’s internal 

organizational conflicts of interest check. Using a list of TransCanada’s subsidiaries and 

affiliates, ERM performed a “Client Representation Check,” which is an email inquiry sent to

appropriate key personnel throughout ERM asking if there are any ongoing projects that may

cause a conflict of interest. ERM also checked all their databases, including the client database, 

accounting database, and the sales force database. 

In its August 2012 supplemental disclosure, ERM stated that OASIS, an ERM affiliate 

purchased by ERM in 2011, had previously done work on the Alaska Pipeline Project (Alaska 

Pipeline). The disclosure stated that OASIS had worked as a subcontractor to URS Corporation, 

an environmental consultant on the Alaska Pipeline. That project was a joint venture of 

ExxonMobil and TransCanada. Although ERM had disclosed OASIS as one of its affiliates in 

its original June 2012 SEIS contractor proposal, it did not disclose the Alaska Pipeline work at 

that time. ERM told OIG that at the time of its original proposal, its management was unaware 

of this indirect connection to TransCanada through OASIS’s work on the Alaska Pipeline.

51 To 

verify the accuracy of the supplemental disclosure, an L/OES attorney told OIG that he 

conducted Internet research and had a phone conversation with ERM regarding OASIS to ensure 

that they understood the nature of the Alaska Pipeline work. L/OES attorneys also made 

inquiries of ERM to ascertain whether TransCanada or ExxonMobil paid OASIS. L/OES 

 51 In the August 2012 supplemental disclosure, ERM erroneously advised the Department that OASIS had been a 

subcontractor to a consultant of TransCanada and that OASIS’s work on the project had been completed by October 

2011. In fact, in a July 17, 2013, supplemental disclosure to the Department, ERM stated that OASIS had been a 

subcontractor to ExxonMobil and its work was completed in June 2012.
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attorneys found out that ExxonMobil paid URS, as it was the contractor, and URS paid OASIS

as its subcontractor. 

L/OES attorneys told OIG that they analyzed the disclosure and concluded that the 

OASIS Alaska Pipeline work did not constitute a conflict of interest under the prescribed 

guidelines. The prior work did not involve Keystone XL and OASIS did not have an ongoing 

relationship with TransCanada. However, L/OES attorneys again did not document their

analysis and conclusions.

ERM also disclosed to the Department in July 2013,52 that a second ERM affiliate, 

ERM-West, Inc., had also done some work for ExxonMobil on the Alaska Pipeline. To verify 

the accuracy of this disclosure, the L/OES attorneys told OIG that they followed up with ERM to 

understand better the circumstances regarding this work, and again had ERM check their billing 

records to see specifically who paid for the work (ERM advised L/OES that the work had been 

paid for by URS). L/OES attorneys also told OIG that they reviewed the supplemental 

disclosure and concluded, as was the case with OASIS and based on a similar analysis, that this 

previous work on a project other than Keystone XL did not constitute an organizational conflict 

of interest. L/OES attorneys again did not document their verification of the supplemental 

disclosures and their conflict of interest analysis and conclusions.

While serving as the Department’s SEIS contractor, ERM has also made the Department 

aware of various ERM business opportunities that have arisen involving other projects and 

parties. L/OES attorneys thoroughly analyzed each of these disclosures based on both the 

organizational conflict of interest definition established by CEQ guidance and related case law 

and the Department’s concerns regarding perceived conflict of interest. In responding to these 

ERM disclosures, the Department was more restrictive than legally required. It attempted to 

avoid even the appearance of any organizational conflict of interest by asking ERM to turn down 

some potential work for other parties on other pipelines. The L/OES attorneys’ analysis and 

conclusions regarding these disclosures is adequately documented in the related correspondence.

In sum, OIG finds that the Department’s conflict of interest review was effective. L/OES 

attorneys reviewed disclosure materials provided by ERM and made follow-up inquiries to learn 

additional details about potential conflict of interest issues, and analyzed the information 

developed based on CEQ regulations and guidance, relevant case law, and the Department’s own 

Guidance. However, L/OES attorneys did not document their analysis or conclusions, a matter 

which OIG discusses in greater detail below.

Allegations Regarding Organizational Conflict of Interest 

As discussed above, in April and October 2013, both OIG and the Department received 

communications challenging the accuracy of ERM’s conflict of interest disclosures and asserting 

 52 L/OES told OIG that it had continuously reminded ERM that avoiding and disclosing potential organizational 

conflicts are ongoing obligations.
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conflicts of interest should have raised concerns about ERM. OIG addresses here the allegations

and the Department’s review of the specific issues that were raised. 

ERM Employee Prior Work Histories

A number of communications contend that a conflict of interest exists because one ERM 

employee assigned to the Keystone XL project had previously worked for TransCanada. As 

discussed above, L/OES attorneys concluded that the employee’s prior work history did not 

disqualify ERM because it did not constitute an organizational conflict of interest as defined by 

CEQ regulations and guidance, relevant case law, and Department Guidance. OIG finds that was

a reasonable determination.

 

Partial Redaction of ERM Employee Resumes

Communications have been critical of the Department’s public posting of the partly

redacted ERM employee resumes discussed above. In particular, they cite the redaction of 

information about the employees’ prior work for TransCanada and at other companies that would 

benefit from approval of Keystone XL. As discussed above, L/OES attorneys were aware of the

work histories and concluded that they did not create an organizational conflict of interest for 

ERM. 

ERM requested the partial redaction of the resumes and other client information in its 

proposal because ERM considered the client information and employees’ prior work on specific 

projects to be confidential business information. L/OES attorneys told OIG that they had 

concluded the redacted material was confidential business information and that their analysis of 

this issue was informed by confidential business information analysis under the Freedom of 

Information Act (FOIA).

53 Client names and non-public work by employees are items that have

sometimes been held to be exempt from FOIA disclosure as confidential business information.

54 

It is uncertain whether a court would uphold those redactions if challenged under FOIA, but the 

Department’s decision was not unreasonable. OIG confirmed with FERC that it would also look 

to FOIA analyses when determining what information to redact or withhold from the public. 

 53 5 U.S.C §552(b). Exemption 4 of the FOIA protects from disclosure “trade secrets and commercial or financial 

information obtained from a person and privileged or confidential.” OIG confirmed with FERC that it also uses a 

similar FOIA-based analysis in determining whether to protect similar information as confidential business 

information. 

54 See Department of Justice Guide to the Freedom of Information Act (2009 Edition) (the “DOJ Guide”), 

“Exemption 4,” pp 263-356, available at http://www.justice.gov/oip/foia_guide09/exemption4.pdf. As noted on 

p. 309 of the DOJ Guide, for example, “in some contexts customer names have been withheld because disclosure 

would cause substantial competitive harm and in other contexts customer names have been ordered released because 

disclosure would not cause substantial competitive harm.” See RMS Indus. v. DOD, No. C-92-1545, slip op. at 3, 6 

(N.D. Cal. Nov. 24, 1992) (holding that FOIA allowed agency withholding of names and background of key 

employees and suppliers, customer and subcontractor names, and equipment descriptions submitted in connection 

with government contract, because “bidders only submit such information if it will not be released to their 

competitors”); but see Hecht v USAID, Civ. Action No. 95-263-SLR, 1996 U.S. Dist. LEXIS 22894 (D. Del. Dec. 

18, 1996) (holding that disclosure of “biographical information” about contractor’s employees would not cause 

competitive harm because “possibility of another company recruiting away one’s employees is present in nearly 

every industry”).
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However, FERC has not had to consider whether to redact client names or employee work 

histories from third-party contractor proposals because FERC does not publicly post its 

contractors’ proposals. 

It appears that the Department’s decision to redact portions of the ERM employees’ 

resumes was reasonable. However, for the reasons discussed in Finding C, the issue of keeping 

the public better informed warrants greater attention from the Department. 

ERM an “Energy Concern?”

Communications also questioned the veracity of ERM’s “No” to the question in the 

conflicts of interest questionnaire: “Are you (or your organization) an ‘energy concern?’”55 An 

L/OES attorney advised OIG that in his opinion, ERM’s response to the question was not 

incorrect because the concept of “energy concern” does not include environmental consultants 

like ERM. OIG confirmed that the “energy concern” question is a carryover from FERC’s

conflict of interest questionnaires. FERC officials told OIG that “energy concern” is not a 

defined term and that responses to the question have never proved significant in their selection 

process. L/OES attorneys also told OIG that they are considering removing this question from 

the Department’s conflict of interest questionnaire because it is too broad and because it is a 

FERC concept not relevant to issues likely to be faced by the Department. Under these 

circumstances, OIG finds that L/OES’s treatment of ERM’s response to the “energy concern” 

question was reasonable. 

ERM’s Other Work for TransCanada

One communication, the October 30, 2013, letter to OIG from 24 organizations states that

ERM’s prior work for TransCanada should have raised concerns about ERM. The letter stated 

that “ERM has worked for TransCanada at least since 2011 on the Alaska Pipeline Project.” As 

discussed above, the relationship between ERM, its two subsidiaries (OASIS and ERM-West, 

Inc.), and TransCanada concerning the Alaska Pipeline Project was reviewed by L/OES

attorneys. They concluded that none of those relationships constituted an organizational conflict 

of interest as defined in applicable regulations, case law, and guidance. OIG finds that to be a

reasonable determination. 

 55 As defined in the FERC Handbook (available at http://www.ferc.gov/industries/hydropower/enviro/tpc/tpchandbook.pdf) and in the Department’s Guidance, the term “energy concern” includes any person: (1) significantly 

engaged in the business of developing, extracting, producing, refining, transporting by pipeline, converting into 

synthetic fuel, distributing, or selling minerals for use as an energy source, or in the generation or transmission of 

energy from such minerals or from wastes or renewable resources; (2) holding an interest in property from which 

coal, natural gas, crude oil, nuclear material or a renewable resource is commercially produced or obtained; (3) 

significantly engaged in the business of producing, generating, transmitting, distributing, or selling electric power;

(4) significantly engaged in development, production, processing, sale or distribution of nuclear materials, facilities 

or technology; and (5) significantly engaged in the business of conducting research, development, or demonstration 

related to an activity described in (1) through (5) or any person significantly engaged in conducting such research, 

development, or demonstration with financial assistance under any Act the functions of which are vested in or 

delegated or transferred to the Chair of the [FERC].
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ERM’s Work for Other Energy Companies Involved in Canadian Tar Sands

The letters to OIG also questioned the veracity of ERM’s answer of “No” to the question 

on the conflict of interest disclosure questionnaire: “Within the past three years, have you (or 

your organization) had a direct or indirect relationship (financial, organizational, contractual or 

otherwise) with any business entity that could be affected in any way by the proposed work?” 

The October 30, 2013, letter cites publicly available documents showing that between 2009 and 

2012 ERM “worked for over a dozen of the largest energy companies involved in the Canadian 

tar sands. These companies stand to benefit if Keystone XL is built....” 

As previously discussed, ERM’s written response to the questionnaire did not provide a 

complete response to the question referenced above. ERM’s answer to this question was “No. 

ERM has no existing contract or working relationship with TransCanada.”56 However, ERM 

included in other parts of its proposal and supplemental submissions all of the information, 

including identification of its other clients and work, sought by the Department for its conflict of 

interest analysis. L/OES attorneys were aware that some of those clients and some of the work

was directly or indirectly related to the oil industry and pipeline projects. According to L/OES, 

such a connection was insufficient under the Department’s prescribed guidance, as well as under 

applicable law and regulations, to constitute a conflict of interest, let alone a conflict of interest 

of sufficient import to warrant ERM’s disqualification. L/OES attorneys told OIG that they did 

not regard ERM’s answer to be misleading or that ERM’s experience with energy companies 

impaired its objectivity. OIG finds the Department’s conclusions to be reasonable.

ERM’s American Petroleum Institute Membership 

The communications also cite the fact that ERM is “a dues-paying member of the 

American Petroleum Institute, a staunch advocate for Keystone XL and the tar sands industry....

This membership should have raised concerns about possible bias from ERM on the project.” 

An L/OES attorney stated that he did not consider membership in an industry or trade 

organization to be a disqualifying organizational conflict of interest.57 In this case, OIG finds 

that to be a reasonable conclusion.

In conclusion, OIG found that the Department’s review of the issues raised in the 

communications was effective and that most of the review occurred prior to the receipt of those 

communications.

 56 ERM told OIG that it had qualified the answer because it intended this “no” only as an answer regarding 

relationships with TransCanada.

57 Membership in a business or trade association does not establish any of the circumstances defined in governing 

authority as constituting an “organizational conflict of interest” as described in the Department’s prescribed 

guidance.
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Finding C. The Department Should Enhance Documentation and Disclosure 

of the Third-Party Contracting Process

OIG finds that the Department’s current Guidance, while exceeding current CEQ 

requirements, can be improved further. The Department could improve transparency of the 

process by providing more background information and detail regarding the third-party 

contractor selection and conflict of interest review processes, including how the Department 

defines organizational conflict. The current Guidance is silent concerning both the 

documentation required to memorialize the processes and public disclosure of information 

regarding the processes. Areas for improvement should include more thoroughly describing the 

selection and organizational conflict of interest review processes, addressing required 

documentation of the processes, and maintaining appropriate public disclosure. These 

improvements would benefit all stakeholders and may help avoid future misperceptions of the 

processes.

The Department’s Guidance for the Use of Third-Party Contractors Needs Additional 

Details Regarding Background and Context

The Department’s selection of ERM was its first use of the current Guidance.58 This first 

application has resulted in the identification by OIG and the Department of opportunities to 

improve the Guidance and the underlying processes.

 

The current Guidance does not provide complete background information or context 

regarding the Department’s use of third-party contractors. Section III, entitled “Preparation of 

the Environmental Document,” only briefly describes the Department’s control of the third-party 

contractor and the environmental review process. Although the Guidance describes the basic 

steps of the third-party contractor selection process and identifies the three substantive criteria by 

which prospective contractors will be assessed, the Guidance does not provide further detail or 

address documentation of the process. 

 

The Guidance provides a definition of organizational conflict of interest, which was 

adopted from FERC’s guidance, but the Department should further clarify the definition of 

organizational conflict of interest and explain how the Department applies that definition in 

reviewing and addressing organizational conflicts of interest. The Department’s determinations 

that ERM had no organizational conflict of interest that would impair its objectivity in its work 

for the Department are consistent with the narrow definition of organizational conflict of interest

established by CEQ guidance and case law. In fact, the Department was even more restrictive 

than legally required in its conflict of interest review, as the Department attempted to avoid even 

the appearance of any organizational conflict of interest by asking ERM to turn down potential 

work for other parties on other pipelines. Amending the Guidance to provide a more thorough 

 58 The Department adapted the current Guidance from FERC guidance, making modifications consistent with OIG’s 

recommendations in its February 2012 report. The recommendations were intended to enhance Department control 

and reduce the permit applicant’s role in the third-party contractor selection process. The Department also obtained 

input from various sources to develop its Guidance and obtained CEQ review and input before finalizing the 

Guidance. 
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explanation of the Department’s organizational conflict of interest review would benefit all 

stakeholders.

Improved Documentation of the Deliberative Process Is Needed

As discussed above, the Department did not fully document its due diligence, analysis,

and conclusions regarding potential organizational conflict of interest issues. Very little 

documentation is specifically required by CEQ regulations and Department guidance, and the 

Department has met those minimal requirements. However, due to the minimal documentation,

OIG had to rely primarily on Department employee interviews to replicate this portion of the 

conflict of interest review process. Lack of such documentation also could lead to inconsistency 

in future applications of the process. 

Adequate documentation should be a high priority for the Department. By way of 

example in this case, if the process is not adequately documented, subsequent selections of thirdparty contractors may not follow a consistent and thorough process. Also, future conflict of 

interest determinations may not be consistent with prior determinations. Third-party contractor

selections and conflict of interest determinations that do not follow or do not appear to follow a 

consistent process/analysis are more likely to be subject to challenge. Additionally, the risk may 

be higher for the Department because of its practice of rotating Foreign Service personnel 

through assignments every few years. Subsequent to the selection of the third-party contractor 

and issuance of the draft SEIS in this case, Department officials recognized that the internal 

formal documentation could be improved, and they have begun to more fully document conflict 

of interest analysis for both the ongoing Keystone XL process and another third-party contractor 

process currently underway at the Department.59 

To eliminate uncertainty regarding required documentation of the deliberative process, 

the Department should determine and specify required documentation in its Guidance or in 

standard operating procedures. The documentation guidance should be based on what is 

necessary for effective operation, management, and oversight. 

The Department Should Improve Public Disclosure Concerning Aspects of the Selection 

and Organizational Conflict of Interest Review Processes

In addition to the need for better documentation, the Department should improve its 

public disclosures concerning its selection and use of third-party contractors. Indeed, in this 

case, the Department’s partial release of information contributed to perceptions of potential 

conflicts of interest and inaccurate contractor statements to the Department, where none actually 

exist. 

For example, when the Department published the draft SEIS on March 1, 2013, it also 

posted to its Web site ERM’s original proposal and accompanying organizational conflict of 

 59 The Department is reviewing an application for a Presidential permit for the Alberta Clipper Pipeline. Available 

at http://albertaclipper.state.gov/.
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interest materials. However, as discussed above, the Department posted a partially redacted 

version of ERM’s proposal and did not post ERM’s supplemental conflict of interest submissions

made in July and August 2012 and in July 2013. The partial release of information, without any 

further explanation, may have contributed to public misperceptions and concerns regarding 

ERM’s disclosure of information and the Department’s conflict of interest review. As discussed 

in Finding B, ERM’s initial publicly posted proposal did not disclose that OASIS, an ERM 

affiliate, worked as a subcontractor on the Alaska Pipeline Project in which TransCanada was a 

joint venturer. ERM did disclose this fact to the Department in its August 2012 supplemental 

disclosure. However, the Department waited until January 2014, when the Final SEIS was 

published, to publicly post that supplemental disclosure.

As the OASIS example illustrates, some of the concerns that have been publicly voiced 

could have been easily addressed at earlier junctures by other information in the Department’s 

possession or by better explanations of the Department’s review and oversight of third-party 

contractors. Improved public disclosure regarding the process may not resolve all concerns, but 

it may mitigate some concerns resulting from misperceptions or partial information.

The need for greater transparency does not mean that all Department documentation 

related to this process must be publicly released. Indeed, FERC staff has advised OIG that they 

do not release much of the information that was released by the Department in this case. In 

revising its Guidance and standard operating procedures, the Department needs to integrate the 

disclosure of appropriate information to ensure all stakeholders have sufficient information to 

fully understand and maintain confidence in the process, while also protecting information that 

should legitimately be protected from public release on a case-by-case basis.

OIG recommends that the Department take the following corrective actions to enhance its 

process for selection of third-party contractors and the associated organizational conflict of 

interest review.

Recommendation 1. OIG recommends that the Bureau of Oceans and International 

Environmental and Scientific Affairs, in coordination with the Office of the Legal 

Adviser, enhance its Guidance to more fully articulate its third-party contractor selection 

and conflicts of interest processes. 

Management Response: The Department agreed with the recommendation, stating that

it will “provide additional detail in its Guidance with respect to its procedures for 

selecting third-party contractors and assessing potential conflicts of interest to provide 

better transparency to the public.” 

OIG Reply: OIG considers this recommendation resolved, pending further action. The

recommendation can be closed when OIG reviews and accepts documentation showing

that the Department’s Guidance has been revised to more fully articulate its third-party 

contractor selection and conflicts of interest processes.

Recommendation 2. OIG recommends that the Bureau of Oceans and International 

Environmental and Scientific Affairs, in coordination with the Office of the Legal 
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Adviser, enhance its Guidance to explain in greater detail the definition of organizational 

conflict of interest relied upon by the Department. 

Management Response: The Department agreed with the recommendation, stating that

it will “add additional detail to its Guidance to explain its definition of organizational 

conflict of interest” and will “provide additional detail on how that definition is applied in 

reviewing and addressing potential conflicts of interest.”

OIG Reply: OIG considers this recommendation resolved, pending further action. The

recommendation can be closed when OIG reviews and accepts documentation showing

that the Department’s Guidance has been revised to explain in greater detail the definition 

of organizational conflict of interest relied upon by the Department.

Recommendation 3. OIG recommends that the Bureau of Oceans and International 

Environmental and Scientific Affairs, in coordination with the Office of the Legal 

Adviser, specify in its Guidance the documentation required during the deliberative 

process for selecting third-party contractors and assessing organizational conflicts of 

interest and establish standard operating procedures to consistently capture and retain this 

information. 

Management Response: The Department agreed with the recommendation, stating that

it will “further clarify in its Guidance the kind of documentation and information required 

for its review and will develop internal procedures to enhance [its] ability to obtain and 

retain such information.”

OIG Reply: OIG considers this recommendation resolved, pending further action. The

recommendation can be closed when OIG reviews and accepts documentation showing

that (i) the Department’s Guidance has been revised to specify the documentation 

required during the deliberative process for selecting third-party contractors and assessing 

organizational conflicts of interest and (ii) the Department has established standard 

operating procedures to consistently capture and retain this information.

Recommendation 4. OIG recommends that the Bureau of Oceans and International 

Environmental and Scientific Affairs, in coordination with the Office of the Legal 

Adviser, enhance its Guidance to integrate a process for public disclosure of appropriate 

information. 

Management Response: The Department agreed with the recommendation, stating that

it will “enhance its Guidance to describe how information provided by third-party 

contractors will be disclosed to the public, where appropriate, and the circumstances in 

which information may be protected from public release.”

OIG Reply: OIG considers this recommendation resolved, pending further action. The

recommendation can be closed when OIG reviews and accepts documentation showing 

that the Department’s Guidance has been revised to integrate a process for public 

disclosure of appropriate information.
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List of Recommendations

Recommendation 1. OIG recommends that the Bureau of Oceans and International 

Environmental and Scientific Affairs, in coordination with the Office of the Legal Adviser, 

enhance its Guidance to more fully articulate its third-party contractor selection and conflicts of 

interest processes. 

Recommendation 2. OIG recommends that the Bureau of Oceans and International 

Environmental and Scientific Affairs, in coordination with the Office of the Legal Adviser, 

enhance its Guidance to explain in greater detail the definition of organizational conflict of 

interest relied upon by the Department. 

Recommendation 3. OIG recommends that the Bureau of Oceans and International 

Environmental and Scientific Affairs, in coordination with the Office of the Legal Adviser, 

specify in its Guidance the documentation required during the deliberative process for selecting 

third-party contractors and assessing organizational conflicts of interest and establish standard 

operating procedures to consistently capture and retain this information. 

Recommendation 4. OIG recommends that the Bureau of Oceans and International 

Environmental and Scientific Affairs, in coordination with the Office of the Legal Adviser, 

enhance its Guidance to integrate a process for public disclosure of appropriate information. 
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Appendix A

Scope and Methodology

The Office of Inspector General (OIG) conducted this follow-up review to determine (1) 

whether the process used by the Department in selecting a third-party SEIS contractor followed 

prescribed guidance and (2) whether the process used by the Department to review third-party 

contractor organizational conflict of interest issues was effective. This review is associated with 

a previous OIG report concerning the Keystone XL permit process.

1 OIG conducted fieldwork 

for this review from September 2013 to December 2013 in the Washington, DC, metropolitan 

area.

The review followed the Council of the Inspectors General on Integrity and Efficiency 

Quality Standards for Inspection and Evaluation, January 2012, and conducted such tests and 

procedures as are considered necessary for the assignment. These standards require that OIG 

plan and perform the review to obtain sufficient, appropriate evidence to provide a reasonable 

basis for the findings and conclusions based on the review objectives. OIG believes that the 

evidence obtained provides a reasonable basis for the findings and conclusions based on the 

review objectives.

To obtain background and criteria for the review, OIG researched and reviewed 

documentation. OIG also reviewed relevant authorities that apply to the presidential permitting 

and environmental impact statement processes, such as Executive Order 13337, the National 

Environmental Policy Act of 1969, White House Council on Environmental Quality regulations, 

and relevant case law. Additionally, OIG reviewed Freedom of Information Act regulations, the 

Department of Justice Guide to the Freedom of Information Act, and relevant case law.

To address the review objective, OIG reviewed documentation received from Department 

officials in the Bureau of Oceans and International Environmental and Scientific Affairs; the 

Bureau of Energy and Resources; and the Office of the Legal Adviser. This documentation 

included the Request for Proposals, submitted proposals, supplemental disclosures, and the 

Department’s decision memorandum. OIG reviewed relevant Federal Register notices issued by 

the Department and briefing memoranda and correspondence between the Department and other 

entities that related to the Keystone XL SEIS third-party contractor. OIG interviewed 

Department officials and officials from the Federal Energy Regulatory Commission. In addition, 

OIG interviewed employees from the selected third-party contractor, Environmental Resources 

Management, Inc.

 1 Special Review of the Keystone XL Pipeline Permit Process (AUD/SI-12-28, February 2012) available at 

http://oig.state.gov/documents/organization/183864.pdf. 
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Appendix B

Bureau of Oceans and International Environmental and Scientific Affairs 

and Office of the Legal Adviser Response
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Major Contributors to This Report 

Regina Meade, Director

Security and Intelligence Division

Office of Audits

Soraya Vega, Audit Manager

Security and Intelligence Division

Office of Audits

Robert Mustain, Inspector

Office of Inspections

David Stewart, Associate General Counsel

Office of the General Counsel

Christopher Yu, Auditor

Security and Intelligence Division

Office of Audits

Hillel Weinberg

Legislative Advisor

David Z. Seide

Counselor to the Inspector General
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FRAUD, WASTE, ABUSE,

OR MISMANAGEMENT

OF FEDERAL PROGRAMS

HURTS EVERYONE.

CONTACT THE

OFFICE OF INSPECTOR GENERAL

HOTLINE

TO REPORT ILLEGAL

OR WASTEFUL ACTIVITIES:

202-647-3320

800-409-9926

oighotline@state.gov

oig.state.gov

Office of Inspector General

U.S. Department of State

P.O. Box 9778

Arlington, VA 22219