Senators question integrity of permitting process for Keystone XL pipeline

Last Friday, U.S. Senators Sanders, Leahy, and Wyden wrote a letter to the State Department raising  “serious concerns” about whether the permitting process for the Keystone XL tar sands pipeline has been fair and objective.  The letter cites a recent New York Times article exposing a troubling conflict of interest between TransCanada, the proponent of the pipeline, and Cardno Entrix who completed the environmental analysis for the pipeline.  The Senators have urged the State Department to conduct a new and objective environmental review saying they have “little confidence” in the current review that found the pipeline had no significant impact to most resources. There is a need for the Obama administration to investigate this conflict of interest to determine whether the environmental review process has been fair, balanced, and impartial.  Most importantly, this investigation should be completed before the State Department issues any permit for the pipeline.

The letter is the most recent in a series of new revelations exposing bias within the State Department in favor of approving the Keystone XL tar sands pipeline.  This is a story that deserves far more national attention than it currently receives and there is a fair argument that the unfolding scandal at Keystone XL is getting ignored while the Solyndra scandal is being overblown. The picture painted thus far is disturbing.

Problem #1: The State Department allowed a firm with a serious conflict of interest to conduct the environmental review.

The New York Times article reported that TransCanada, the proponent of the pipeline, managed the bidding process and recommended Cardno Entrix to draft the environmental analysis of the project. The problem is that Cardno Entrix has a substantial conflict of interest - it lists TransCanada as one of its major clients and has done work for other pipeline companies, including oil spill response when pipelines fail.  In other words, it could benefit financially if the pipeline were to rupture.  The New York Times also reported that Cardno Entrix is involved in the TransCanada Bison pipeline project—something they did not reveal to the State Department in their disclosure form. Not surprisingly, the Final Environmental Impact Statement drafted by Cardno Entrix for the State Department found the pipeline would not cause a significant environmental impact despite significant evidence to the contrary.

We might expect TransCanada to support its favored contractor but there are serious questions about why the State Department approved the firm that clearly has a direct financial interest in the outcome of the project.  Climate activist Bill McKibben and Canadian author Naomi Klein said, “This is quite possibly the biggest potential scandal of the Obama years.”   Unfortunately, State Department Assistant Secretary Kerri Ann-Jones proclaimed last week that Cardno Entrix completed a solid study. 

But environmental groups are not buying that.  While the State Department might claim that they heard from many voices, including those in opposition to the pipeline, it is hard to find where in the environmental review the concerns raised by opponents are reflected.  “Entrix should never have been hired to conduct this assessment. Given that Entrix has made millions of dollars off of TransCanada, and has been involved in a number of TransCanada's controversial projects, it is stunning that the State Department hired them given this conflict of interest,” said Damon Moglen, Climate and Energy Project Director for Friends of the Earth.

Problem #2: Key State Department officials are biased in favor of the pipeline.

There is also evidence of a pro-pipeline bias within the State Department.  The initial evidence of this came from Secretary Clinton herself back in October 2010 when she said the State Department was “inclined” to approve the pipeline despite the fact that thousands of comments were in the midst of being reviewed for the first environmental assessment.

Earlier this year, the Los Angeles Times reported on a 2009 Wikileaks cable revealing how David Goldwyn, a former State Department energy envoy, helped instruct Canadian officials on improving their “oil sands messaging” and “increasing visibility and accessibility of more positive news stories” while he was on staff to the Secretary (the envoy positions report directly to the Secretary so have considerable power).  Within months of his departure from the State Department, Goldwyn was testifying before the House Foreign Affairs Subcommittee on the Western Hemisphere in favor of the pipeline.

Emails obtained by Friends of the Earth, Corporate Ethics International, and the Center for International Environmental Law reveal a close and cozy relationship between TransCanada’s primary lobbyist Paul Elliott and a State Department employee Marja Verloop based out of Ottawa, Canada in the U.S. Ambassador’s office.  

One troubling email exchange between Verloop and Elliott reveals a “gentleman’s agreement” between TransCanada and the State Department to relax pipeline safety standards after they obtain a presidential permit for the pipeline.  They discuss an announcement made by TransCanada in 2010 to abandon their request for a special exemption allowing them to pump oil through the pipeline at a dangerously high pressure threatening pipeline safety.  As my colleagues Susan Casey-Lefkowitz and Anthony Swift discuss in more detail, the email exchange makes it clear that both Ms. Verloop and Mr. Elliott had an understanding that TransCanada would likely re-apply for the exemption to raise the pressure after the pipeline was constructed and when opposition was less fierce.

Ruptured-Enbridge-Pipeline-from-Kalamazoo-Spill-credit-NTSB.jpg

In spite the fact that Entrix also worked for another pipeline company when it spilled 900,000 gallons of tar sands oil into the Kalamazoo River, there is barely a mention of this event in the Keystone XL EIS.

The State Department has suggested that these emails only reflect the views of one of their employees.  But it is clear that Verloop directly briefed the U.S. Canadian Ambassador David Jacobson as well as U.S. Counsel General Laura Lochman on these issues.   Ultimately, the emails released by the State Department are only a slice of what is available.  More information is needed for a fuller picture of the extent to which the bias persisted within the department.

Problem #3:  TransCanada has had special access to Secretary Clinton.

The released documents also reveal TransCanada has had special access to the State Department primarily through Paul Elliott, who was a former high level staffer for Hillary Clinton’s presidential campaign and who is now TransCanada’s lobbyist promoting Keystone XL before Congress and federal agencies.

For example, at one point the State Department was considering a possible two-year delay of the pipeline.  After hearing about this, Elliot used his connections to Clinton’s office and specifically to her Chief of Staff Cheryl Mills to sway the department the other way.  While we do not know if Elliott ever met with Clinton or her close officials, there were meetings with senior State officials and the two year delay never happened.

The documents released by Friends of the Earth and a subsequent investigation by DeSmogBlog are now revealing a network of lobbyists as reported by the Washington Post many of whom have been significant big money contributors to Hillary Clinton’s presidential campaign. For example, McKenna Long  & Aldridge, a firm that lobbies for TransCanada, also donated $41,650 in contributions to Hillary Clinton according to the Center for Responsive Politics. The Government of Alberta who is one of the largest proponents of the pipeline retained DLA Piper, the largest single source of corporate funds to Clinton’s 2008 presidential campaign.  DLA Piper, its employees and PACs contributed nearly half a million dollars to Clinton’s presidential campaign. 

There are now eight individuals or firms somehow connected to supporting Hillary Clinton’s presidential campaign but who also advocate for TransCanada.  A new FOIA request has been submitted by Friends of the Earth and others seeking to understand the role of these lobbyists and how they have interacted with the State Department on the pipeline decision.  

One more reason not to rush the pipeline decision

There are many reasons the State Department should reject the Keystone XL pipeline as not being in America’s national interest.  But at a minimum, revelations such as these suggest the State Department slow down and stop rushing the decision.  The State Department has ignored the Environmental Protection Agency’s call in 2010 and 2011 for detailed studies on pipeline safety, refinery emissions, and a closer look at alternatives.  The State Department also has rejected calls by U.S. Congress Nebraska’s senators Mike Johanns and Ben Nelson as well as Governor Heineman to consider a rerouting of the pipeline around the Ogallala aquifer.  

There is plenty of evidence supporting calls for an investigation into the State Department and its process.  There is no comfort in the State Department’s defense of their review against claims of pro-industry bias.  The State Department should ask that the President make the final decision rather than make a decision that will be widely criticized as illegitimate.  Millions of Americans have weighed in with their concerns about this pipeline.  They deserve a fair and unbiased process.  While the cozy relationships, conflicts of interest, and allegations of undue influence are troubling, the near absence of response by the State Department to the substantive concerns raised in the environmental review makes this all the more important.

About the Authors

Danielle Droitsch

Senior Policy Analyst, Canada Project

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