Petro-Dollar Diplomacy?

The State Department has won several high-profile victories in the past year (see: Libya), and Hillary Clinton is largely regarded to be among the most popular national political figures at a time when others are facing a sharp drop in approval ratings. But despite this high tide, the State Department is stuck in a brewing controversy over its role in pushing for the authorization of the Keystone XL oil pipeline from Canada — and it may be forced to answer questions about whether department officials are acting in the best interests of the American public.

The proposed TransCanada pipeline, which would stretch 1,700 miles from the Canadian tar sands to the Texas Gulf Coast refineries and cost $7 billion, has drawn criticisms from environmentalists who argue that the project has a significant risk of accidents and that the tar sands oil has a larger carbon output than conventional oil. Despite this opposition, the U.S. government has been generally supportive of the controversial project. The State Department was given responsibility for the pipeline’s approval because it would cross a national border. Whether the State Department is fairly and fully weighing the costs and benefits of the project, however, is a matter of concern to anti-pipeline activists.

The controversy has attracted not just the attention of environmentalists; high-ranking U.S. politicians have also voiced their skepticism of the project’s benefits. Senate Majority Leader Harry Reid wrote in an Oct. 5 letter to Clinton, “The proponents of this pipeline would be wiser to invest instead in job-creating clean energy projects, like renewable power, energy efficiency, or advanced vehicles and fuels that would employ thousands of people in the United States rather than increasing our dependency on unsustainable supplies of dirty and polluting oil that could easily be exported.” Reid wrote that he had “serious concern” about approving the pipeline project, a concern evidently not shared by Clinton and other State Department officials.

TransCanada has often claimed its project would help the United States by creating a significant number of jobs and increasing the energy supply. A recent study by the Cornell University Global Labor Institute, however, suggests that the company has exaggerated its job-creating potential. The researchers found that many of the company’s jobs creation claims were unsubstantiated, and that the high risk of spills and accidents would incur costs and kill jobs: “It is our assessment — based on the publicly available data — that the construction of KXL will create far fewer jobs in the U.S. than its proponents have claimed and may actually destroy more jobs than it generates.”

The industry has responded to the Cornell report with accusations of bias and inaccuracies. Robert Bradley Jr., CEO of the Institute for Energy Research, wrote in Forbes: “Keystone XL’s impact on cost is simple: A supply of plentiful and easily accessible oil drives down prices for gasoline and other consumer staples. Construction of Keystone XL will also deliver added jobs and tax revenue at a time when the country needs both. The project requires land to be prepared, miles of pipe to be welded and installed, and 30 new pumping facilities to be built and operated. Thousands of new construction jobs will be immediately necessary.”

Even if this is true, the possibility remains that the pipeline might not boost employment as much as hoped — and that TransCanada was not honest on this matter. If the company lied about the jobs that would be created, environmentalists worry TransCanada also lied about the risk for spills.

Hundreds of protesters demonstrated at the White House in opposition to the project this summer, and many leading environmental activists were subsequently arrested. Even so, they have continued their fight.

The State Department has consistently supported the project despite these concerns and opposition by environmentalists. According to activists, the reason for the department’s attitude might lie more in officials’ overly friendly relationship with TransCanada lobbyists than in an actual belief that the project will help Americans.

The State Department released a report in August concluding that the pipeline did not pose any significant environmental risks, even though the European Commission and other groups have found conclusive evidence that tar sands oil is almost a quarter more polluting than conventional crude oil. Additionally, similar tar sands pipelines have resulted in devastating spills in places like Michigan, increasing concerns about the potential risks for the larger TransCanada pipeline.

The State Department’s refusal to acknowledge this information is, according to activists, further proof that the department is unable to make an impartial decision on the project. Following a Freedom Of Information Act request, the activists released email correspondence between TransCanada employees and State Department officials, revealing a close relationship between the parties that could jeopardize the government’s ability to make an unbiased decision. In the disclosed emails, one State Department official even cheered a lobbyist’s success in gaining more political support for the project.

Anti-pipeline activists have also cited other evidence of a cozy relationship between lobbyists and government officials. Earlier this month, three conservation groups filed a lawsuit to halt preliminary work on the project, alleging that the U.S. Fish and Wildlife Service illegally gave TransCanada permission to begin preparing the pipeline’s route in Nebraska. “We learned that work was being done without a permit, and that was just flabbergasting,” said Damon Moglen, the director of the Climate and Energy Program at the environmental organization Friends of the Earth. His group, along with the Center for Biological Diversity and Western Nebraska Resources Center, sued the United States government in an effort to stop what they consider illegal work on a project that has yet to receive final approval. The activists believe the preparatory work is further evidence that the government has been facilitating and supporting the project without a full, impartial environmental assessment.

TransCanada countered that they have not begun construction and have merely been making an effort to protect the environment in the area of Nebraska along the proposed pipeline route. According to their official statement in response to the lawsuit, “Like so many claims made by the professional activists who are opposing Keystone, these claims are false — no construction has taken place in Nebraska. These professional activists need to come explain to Nebraskans why they are opposed to environmental studies, surveys, and protective measures being completed before any construction begins. It sure doesn’t make sense to us.”

Even so, environmental groups have argued that any early work along the proposed pipeline path shows that TransCanada is assuming they will soon be granted the necessary permissions and permits from the U.S. government before the official decision is made. “It’s a remarkable indication of the arrogance of the company,” Moglen said.

The alleged preparatory work is one of several complaints by activists that the government is bowing to TransCanada instead of fully considering the potential environmental impact.

In an Oct. 4 letter to President Obama, a group of environmentalists wrote, “Given this substantial evidence of pro-industry bias within your administration — evidence that the State Department was acting in partnership with the oil industry and Canadian government to secure pipeline approval prior to conducting an environmental review — it would be irresponsible for you to follow the State Department’s guidance as you make your determination about whether the pipeline is in the national interest.”

Moglen said the bias revealed in the emails and the Nebraska work is evidence that the State Department’s analysis of the project is a “tainted process,” and he hopes President Obama will intervene and make the decisions based on impartial evidence. “I think it’s clear this is a scandal of the highest order,” Moglen said. “This is something the president can no longer afford to not pay attention to.”

Additionally, activists have argued that the TransCanada scandal has shown that — despite Republican claims to the contrary — the Obama Administration has maintained a close relationship with oil companies. “They’ve been caving into the fossil fuel industry,” Moglen said.

Despite this statement, environmental activists remain optimistic that Obama will intervene, fairly assess the potential impact of the pipeline, and ultimately reject TransCanada’s project. The debate over green energy and fossil fuels is politically sensitive for the president, and his decision on the Keystone XL pipeline will undoubtedly factor into his re-election prospects. In the meantime, the fight between the environmentalists and TransCanada continues — tarnishing the State Department’s reputation with each new revelation.



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