Climate & Energy Blog

The Keystone XL Pipeline Influence Scandal

Posted Oct. 18, 2011 / Posted by: Kelly Trout

Evidence is mounting that the State Department’s review of a proposed tar sands oil pipeline has been corrupted by bias, lobbyist influence and conflicts of interest. The growing scandal is making front-page headlines and putting new pressure on President Obama to stop the pipeline.

The proposed pipeline — TransCanada’s Keystone XL — would transport the world’s dirtiest oil from Canada’s tar sands to refineries on the U.S. Gulf Coast. The pipeline threatens drinking water, air quality, and the livelihoods of the people who live along its route. It would also act as a “carbon bomb” that jeopardizes our climate.

At the core of the scandal: the firm Cardno Entrix, allowed by the State Department to conduct the impacts review for the pipeline despite a stunning conflict of interest; emails between State Department staff and TransCanada lobbyist Paul Elliott, previously a top Hillary Clinton campaign aide, that indicate bias and complicity at State; a web of lobbyists and State Department employees cozy with the oil industry; and Secretary of State Hillary Clinton, who announced last year announced she was “inclined” to approve the pipeline even though the State Department’s review was not yet complete.

Internal emails reveal bias and complicity in the Keystone XL review

A web of lobbyist influence surrounds the decision

Overview

A presidential executive order gives the State Department the authority to determine whether to approve the Keystone XL pipeline. Unfortunately, it has become clear that the State Department’s review is deeply, irreparably flawed.

The law requires the State Department to act impartially and undertake an independent, rigorous, science-based analysis of the controversial pipeline’s risks. Instead, the department allowed TransCanada (the company seeking to build the pipeline) to play a key role in choosing the firm that would conduct the impacts study at the center of the review. TransCanada recommended Cardno Entrix, which says TransCanada is a “major client.” Despite the glaring conflict of interest, the State Department signed off. The result is an environmental impact statement largely prepared by Cardno Entrix that grossly understates the damage the pipeline is likely to cause.

Even before conflict of interest revelations surfaced, numerous problems in the review were exposed. Friends of the Earth and allies used the Freedom of Information Act to obtain internal State Department documents related to former Clinton campaign aide and current TransCanada lobbyist Paul Elliott that provide clear evidence of a corrupted process. Documents made public via WikiLeaks and reported by the Los Angeles Times bolster the case. Together, the documents show that State Department officials coached, provided inside information to, alleviated the concerns of and cheered on pipeline proponents at a time when they were supposed to be undertaking an impartial review.

In his 2008 campaign, President Obama promised to tell lobbyists that "their days of setting the agenda are over." Unfortunately, his State Department has failed to live up to this promise.

As the Pittsburgh Post-Gazette concluded in a recent editorial: “given the importance of the [pipeline] decision to America and the role played in it so far by Cardno Entrix, TransCanada's important client, and Mr. Elliott, Ms. Clinton's former campaign aide … a new and truly independent environmental impact statement [must]be prepared on Keystone XL before the matter goes any further. At this point the affair is giving off a very foul odor.”

The evidence is in: the State Department is running a sham process, rigged in favor of dirty oil. It is up to President Obama to make things right.

Key concerns

Glaring conflict of interest — The firm hired by the State Department to prepare the pipeline’s environmental impact statement and hold public hearings — Cardno Entrix — was recommended to the State Department by TransCanda and recently listed TransCanada as one of its “major clients.” Worse, Cardno Entrix failed to report all of its past work with TransCanada on required disclosure forms that are intended to reveal conflicts of interest.
Coaching and private assurances — A WikiLeaked document reported on by the Los Angeles Times indicates that State Department official David Goldwyn met with pipeline proponents and “alleviated” their concerns about whether the pipeline might be approved. In addition he provided “messaging” advice. Documents obtained by Friends of the Earth and allies show additional coaching by Goldwyn, as well as the provision of inside information.
Oily revolving door — The same State Department official, David Goldwyn, was an oil lobbyist advocating, among other things, policies aimed at benefiting Libyan dictator Muammar Gaddafi shortly before he was hired into Secretary Clinton’s State Department. After working on the Keystone XL at State, Goldwyn cashed in. He is now once again offering his services to the oil industry. This spring, while marketing himself to oil clients, he testified in front of Congress on behalf of the pipeline.
Definitive evidence of bias — Internal State Department documents show a State Department official rooting for TransCanada’s lobbying efforts. State Department employee Marja Verloop literally cheered “Go Paul!” after TransCanada lobbyist Paul Elliott — the former Clinton campaign aide — announced TransCanada had obtained new support for the pipeline.
Cozy, complicitous relationships with lobbyist Elliott — The documents also provide evidence of inappropriately cozy relationships between multiple department employees and lobbyist Elliott. In addition to unusually friendly emails, a State Department staffer forwarded correspondence from Elliott making it clear to colleagues that he had worked with her and other State employees “on the campaign.”
Illegal undisclosed lobbying — TransCanada lobbyist Paul Elliott lobbied illegally for as long as two years due to his failure to disclose his lobbying as required by the Foreign Agents Registration Act. This lack of disclosure denied the public its right to know that the U.S. government was being lobbied by an agent of a foreign corporation.
Broad web of lobbyist ties — TransCanada and pipeline proponents have hired a broad array of lobbyists with close ties to Secretary of State Clinton to push for the Keystone XL. These including major Clinton campaign donors, two former U.S. ambassadors to Canada, and a lobbyist with a reputation for being able to get Secretary Clinton on the phone.
Shared private understandings — The internal documents reveal multiple department officials’ understanding that TransCanada planned to pipe oil at dangerous pressures after the Keystone XL was approved. (TransCanada announced in August 2010 that it was withdrawing its application for a high-pressure permit, but it turns out this is likely to be only a temporary political move, as TransCanada has plans to apply for a permit to increase pressures after the pipeline is built.)
Illegal construction allowed by State Department — The State Department has allowed TransCanada to begin construction activity even though the pipeline is not yet approved -- a violation of law. A lawsuit has been filed to force the State Department to stop this premature construction.
Lopsided environmental analysis understates threats — Multiple draft environmental impact statements that were largely produced by Cardno Entrix have been strongly criticized by the EPA. The most recent draft, which the State Department asserts is final, continues to have substantial flaws: It understates the likelihood of and harm that could be caused by spills, it fails to fully consider the health impacts that resultant air pollution would have on low-income communities and communities of color near refineries where the pipeline terminates, and it does not accurately reflect the extent to which the pipeline would make climate change worse. The draft also fails to include serious analysis of alternative routes that would avoid the sensitive Sand Hills region in Nebraska and the Ogallala aquifer, which provides drinking water to millions of people.
TransCanada authors part of State Department’s review — The environmental impact statement released by the State Department in August included an appendix (pdf) written by two TransCanada employees and a TransCanada consultant but did not identify TransCanada as the author. The appendix was a response to an independent report by University of Nebraska professor John Stansbury, Ph.D., about what the worst Keystone XL spills could look like. Though the TransCanada-authored response was included in the environmental impact statement, Stansbury's report itself was not.