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People’s Dossier of FERC Abuses: Consultant Conflicts of Interest

FERC Routinely Uses Conflicted Consultants to Conduct Project Reviews and Make Recommendations

(Download Printable copy of “People’s Dossier of FERC Abuses: Consultant Conflicts of Interest with attachments here)

FERC routinely hires third party consultants to lead its project reviews knowing full well that these same consultants are simultaneously working as consultants for the pipeline companies seeking FERC approval for their projects.  The use of these conflicted consultants, that are operating on both sides of the FERC approval process at the same moment in time, sometimes even on directly related projects, injects an obvious source of bias and concern.

For example:

The FERC Environmental Assessment (EA) for Spectra Energy’s [now Enbridge] Atlantic Bridge project was prepared with the help of NRG [now Environmental Resource Management (ERM)], a third party contractor hired by FERC.  At the same time, Spectra had also retained NRG as a “public outreach and relations” consultant on the PennEast pipeline project, of which Spectra owns 10% interest. This means that NRG was hired by FERC to conduct an objective, unbiased review of Spectra’s Atlantic Bridge project, while at the same time receiving money from Spectra Energy to conduct the preliminary review for another of the company’s proposed pipelines (i.e. PennEast pipeline). Additionally, the two projects (PennEast and Atlantic Bridge) are physically connected, further entrenching the conflict of interest. It is no stretch of the imagination that NRG would financially benefit from Spectra’s Atlantic Bridge project if the project were approved, a project which NRG was partially tasked by FERC with “objectively” reviewing.  In fact, while NRG was conducting its “review”, Spectra hired NRG for no less than five other projects. (Attch 1)

FERC’s own handbook defines such a situation as a conflict of interest, stating a conflict of interest exists when a contractor has an ongoing relationship with an applicant. The conflicts involving NRG, Spectra, the PennEast Pipeline (FERC Docket No. CP15-558), and the Atlantic Bridge Pipeline (FERC Docket No. CP16-9) were brought to FERC’s attention by concerned community members and two U.S. Senators. Instead of conducting a new, unbiased review, FERC’s then-Chairman Norman Bay simply responded by quoting sections of FERC’s handbook on hiring third-party contractors. NRG’s review still stands intact because despite clear evidence to the contrary, FERC took NRG’s word that no conflicts existed. (Attch 2) Documents revealed after these comments were made and FERC had approved the project reveal that FERC had clear information that a contractor [NRG] hired to review Spectra Energy’s proposed Atlantic Bridge gas project did not fully disclose its work for Spectra on a related project [PennEast].” (Attch 3)

Recently, Canada’s Enbridge purchased Spectra Energy. Because ERM currently works for Enbridge on several other projects, the contractor is conflicted and required to get special approval from FERC to continue working on Atlantic Bridge, providing construction compliance monitoring in the state of New York. FERC staff acknowledged in an internal memo “that ERM currently works for Enbridge and thus has a conflict of interest.” (Attch 4) But instead of finally taking corrective action regarding the extensive conflicts of interest involved in the project, FERC ultimately ruled that the company may serve as third-party contractor to monitor Atlantic Bridge’s construction phase, “reasoning that hiring a new contractor would have ‘detrimental consequences’ for the project, which ‘would be contrary to the public interest’” and would impose further significant delays on the construction of this project” (specifically citing the construction schedule’s limited tree-clearing window), (Attch 5) and that because “ERM reported it had received less than one percent of its income from Enbridge in each of the previous three years.” (Attch 4) However, FERC does not independently verify financial reporting from third-party contractors and documents obtained by DeSmog Blog reveal that ERM’s relationship with Enbridge may in fact be more extensive. (Attch 4)

By way of further example:

Tetra Tech is a known consultant for FERC, most recently on the PennEast Pipeline project. Tetra Tech is also a member of the Marcellus Shale Coalition.  Founded in 2008, the Marcellus Shale Coalition works to advance production and distribution of gas fracked from the Marcellus and Utica Shales.  The support of the Marcellus Shale Coalition is not just well known, but is touted by the PennEast Pipeline company raising another significant conflict for FERC on the PennEast Pipeline project. (Attch 6)

In addition to Tetra Tech’s clear bias for natural gas infrastructure, FERC was aware of the company’s history of bias and misconduct and that “a federal court previously found evidence indicating that Tetra-Tech tried to influence agency policy in the course of preparing an EIS:”1

In the case involving Tetra-Tech’s preparation of an environmental impact statement for the U.S. Forest Service (“USFS”), a federal judge also found that evidence of Tetra-Tech’s bias and improper conduct raised such serious problems that it authorized the extraordinary remedy of preliminary injunction against a USFS decision to grant special use authorization to a real estate developer for certain rights-of-way across National Forest System (NFS) lands.

Even worse, a federal magistrate judge found that Tetra-Tech destroyed evidence relating to the claims of improper email communications concerning the EIS with the project proponent by erasing the computer hard drive of its employee. In the Colorado Wild case, the Court found the agency administrative record filed with the Court to have been “incomplete”, due to Tetra-Tech’s destruction of documents by erasing a computer hard drive.2

1 See Colorado Wild, Inc. v. U.S. Forest Serv, as paraphrased in Lower Saucon, Pennsylvania’s Request for Rehearing and Motion for Stay re PennEast Pipeline Company, LLC. ) Docket No. CP15-558-000, Before the Federal Energy Regulatory Commission.
2 See Colorado Wild, Inc. v. U.S. Forest Serv, as paraphrased in Lower Saucon, Pennsylvania’s Request for Rehearing and Motion for Stay re PennEast Pipeline Company, LLC. ) Docket No. CP15-558-000, Before the Federal Energy Regulatory Commission.

In response to Tetra Tech’s role in PennEast, FERC acknowledged the conflicts while claiming it did not constitute their disqualification, adding that this sort of bias is the norm for third-party contractors working on pipeline proposals:

“…allegations that Tetra Tech has a “financial, business, and corporate interest” in promoting natural gas infrastructure in the Marcellus Shale region do not demonstrate that
Tetra Tech has an OCI that necessitates an invalidation of the Final EIS. …Nor do we believe that Tetra Tech’s membership in, or role as a technical consultant to, a trade organization that promotes the development of natural gas supplies in the Marcellus Shale region constitutes a disqualifying OCI. It would be inappropriate to disqualify Tetra Tech from serving as a third-party contractor for belonging to a professional organization. Were this the standard for conflicts of interest, nearly all third-party contracts would likely be disqualified for conflicts of interest.”3

3 See Federal Energy Regulatory Commission’s Order on Rehearing, PennEast Pipeline Company, LLC Docket No. CP15-558-001 (Issued August 10, 2018).

Complete People’s Dossier: FERC’s Abuses of Power and Law
available here.