Documents show TC Energy contractors failed to report conflicts of interest to FERC
Two conflicting third-party contractors escaped a federal audit process last year for the review of two separate TC Energy gas pipeline projects. The Federal Energy Regulatory Commission (FERC) has hired consultancy firms to review projects proposed by TC Energy, but the firms have not disclosed that they are concurrently working for the Canadian pipeline giant. While FERC addressed the conflict of interest last year after a review, newly obtained documents show that TC Energy and the contractors did not disclose the scope of potential issues to the federal agency.
Last fall, TC Energy filed two separate proposals with FERC for pipeline expansion projects, the Virginia Electrification Project in Virginia, and the GTN XPress in Idaho, Washington and Oregon. To assist with FERC’s environmental review of projects under the National Environmental Policy Act (NEPA), TC Energy asked FERC to approve the hiring of third-party contractors.
Although the pipeline company pays these contractors, they are considered “independent” and are expected to work under the supervision of FERC personnel. FERC Rules outline the hiring process: the pipeline company sends requests for proposals (RFPs) to potential consulting firms. Contractors must then submit a Statement of Organizational Conflict of Interest (OCI) with their respective bids to the pipeline company, which conducts a review to determine if the contractor is “capable of impartially performing the environmental services required in under the contract with a third party” before then submitting all requests to FERC. FERC then reviews the information in the applications and makes a final selection.
Conflicts in Virginia
In December 2021, a Bay Journal reporter alerted FERC that the third-party contractor for the Virginia electrification project, Burns & McDonnell, was working directly for TC Energy on a related project, this one called the Virginia Reliability Project (VRP), and inquired about a possible conflict. Under the VRP, TC Energy plans to replace nearly 50 miles of pipeline and upgrade existing compressor stations to increase gas supply to the Hampton Roads area.
Shortly after this investigation, FERC terminated the contract with Burns & McDonnell, based on “the agency’s recent identification of an organizational conflict of interest”.
Documents obtained by the Energy and Policy Institute through a Freedom of Information Act (FOIA) request reveal that Burns & McDonnell did not disclose its work for TC Energy on the VRP in its original OCI disclosure.
Elsewhere in the bid, the contractor said he was “not aware” of any disputes.
Burns & McDonnell did not respond to the Energy & Policy Institute’s request for comment.
Undisclosed work in the North West
TC Energy’s proposal for a conflicted environmental reviewer at FERC was not isolated to the Virginia project, according to documents recently obtained by the Energy and Policy Institute via FOIA.
On December 12, 2021, FERC announced that it had selected SWCA Environmental Consultants (SWCA) as the third-party contractor for the GTN XPress project in the Pacific Northwest, after receiving a number of bids submitted by TC Energy early november.
But on Jan. 18, 2022, TC Energy advised FERC that it “has been advised by SWCA that certain statements included in the OCI documents, submitted with SWCA’s original proposal, require revision.” Emails obtained by EPI via a FOIA request revealed that SWCA executives had asked staff to conduct an internal review of their work for TC Energy after the Bay Journal article about conflicts with the electrification project of Virginia.
“I want to make sure we’re clean,” Scott Urwick, director of SWCA’s oil and gas business line wrote to his colleagues, “I don’t want the SWCA name to be in the headlines like Burns and Mac was.”
In her initial conflict of interest declaration that she submitted to TC Energy in October 2021, SWCA said it had no “direct or indirect relationship…with any business entity that could be affected in any way by the proposed project”.
Yet in the updated disclosure provided to TC Energy and FERC in January 2022, SWCA acknowledged that it had worked for TC Energy for three years and had two ongoing projects for the pipeline company. The SWCA said its “remaining work on these two projects will not affect or be affected by the work proposed in this solicitation.”
In early February 2022, SWCA’s Senior Environmental Consultant for GTN XPress sent an email to colleagues with the subject “GTN XPress bad news”, inform them that FERC removed SWCA as a third-party contractor for TC Energy’s GTN XPress project. “The SWCA is now deemed to have a conflict of interest based on our last submission [sic] from OCI to TCE,” according to the email.
SWCA did not respond to the Energy & Policy Institute’s request for comment.
A FERC spokesperson confirmed to the Energy and Policy Institute that there are no longer any third-party contractors for VEP and GTN XPress. The contractors were fired for failing to disclose conflicts of interest, leaving FERC staff to independently conduct NEPA reviews for each of the projects.
TC Energy did not respond to a request for comment.
A history of conflict
This is not the first time the pipeline industry has hired potentially conflicted contractors to participate in federal environmental reviews of its projects. In 2016, DeSmog revealed that Spectra Energy (now Enbridge) hired a third-party contractor to review its Atlantic Bridge project even though the contractor was working for Spectra at the time on a related project.
Following the revelation, FERC updated its rules by which third-party contractors are hired. The updated rules further clarified the roles of the pipeline applicant and FERC in ensuring contractors are vetted in the event of a dispute.