Nel's New Day

February 28, 2014

Conflict of Interest, in the Eye of the Beholder

When is a conflict of interest not a conflict? Today it’s when the State Department says it isn’t. After the agency hired the Environmental Resources Management (ERM) as its consulting firm to review environmental effects of the Keystone XL pipeline, people complained about the connections of the consulting firm, but the agency’s inspector general investigated and found—no problem!

The State Department’s has again reported that the environmental impact study commissioned to ERM regarding the trans-country pipeline found no significant climate impacts. That’s the study from a company listing TransCanada as a client just a year before the Keystone contract while telling the State Department that it had been at least five years since ERM worked with the company building the pipeline. ERM didn’t mention that one of its divisions, ERM West, worked with TransCanada on the Alaska Pipeline Project until last summer—after ERM was hired to write the report.

Until the State Department was asked about the conflict of interest, ERM didn’t say anything about its bidding for contracts in Canada that could include two new TransCanada projects. As recently as 2010, ERM was part of a lobbying group, the International Carbon Black Association, that a subsidiary (Cancarb) of TransCanada owns—a company that includes major Keystone XL proponents and potential beneficiaries. ERM also failed to identify its membership in several trade organizations that support the pipeline, including the Western Energy Alliance, the American Fuel and Petrochemical Manufacturers, and the Louisiana Mid-Continent Oil and Gas Association.

ERM must have understood its conflict of interest when the firm suddenly removed the names of subcontractors formerly working on TransCanada projects from its website. Later the names reappeared without their affiliations to TransCanada.

Although ERM was paid to prepare the environmental impact report, another firm, one that is outright owned by a tar sands developer, actually did the assessment. Jacobs Engineering’s most recent contract was with Canadian oil sands leader Suncor.

Rep. Raúl Grijalva (D-AZ) has asked the Government Accountability Office to do a separate investigation into State’s process for vetting contractors, and he says the GAO is planning to act on his request. He added that the inspector general’s report focused on “whether the State Department followed its own flawed process for selecting a third-party contractor. The fact that the answer is ‘yes’ doesn’t address any outstanding concerns about the integrity of ERM’s work, the State Department’s in-house ability to evaluate its quality or whether the process itself needs to be reformed.”

Supporters of the Keystone XL think that it will solve their dual needs for jobs and low-cost energy. The short film “Keystone PipeLIES Exposed” explains how the Keystone XL project fails to do either one. Big business has highly inflated the number of jobs created, and most of the smaller number of jobs disappears after construction ends. Even with a rosy view, the State Department concluded that 3,900 direct jobs would be created during pipeline construction; at its completion, there would be 35 permanent and 15 temporary jobs.

The pipeline would most likely increase fuel prices in the United States while generating no taxes from TransCanada after it files a “Master Limited Partnership.” Tar sands oil shipped to the Midwest current sells for about $70 per barrel, much less than the $100 a barrel possible on the open market. As the map shows, the oil will move through the U.S., be refined, and then ship off to the international market which has a higher yield than in this country.

pipeline

The United States gets higher fuel prices and almost no jobs, but it does get leaking pipelines across the country that destroy the nation’s water, especially in the Ogallala Aquifer, the largest freshwater supply in the middle of the country. As the leaks devastate the U.S. agriculture, taxpayers pay to clean up the spills because tar sands oil is exempt from corporations having to pay into the oil spill liability trust fund.

In its environmental impact, the State Department certified that the pipeline’s additional carbon emissions would be the equivalent of an additional 300,000 cars on the road. The contractor most closely linked to TransCanada reported, however, that this was negligible because TransCanada wouldn’t stop drilling.

So who benefits from the United States destroying its food supply, water, and environment? China, according to Rep. Alan Grayson (D-FL). Now that the Chinese have our manufacturing jobs, they need raw materials and energy. Canada is the most stable country to provide energy, and people in the United States might be willing to let the oil pass through our country into China—all with no benefits for anyone in the U.S. China annually imports about $50 billion in goods from the United States and exports about $350 billion in mostly manufactured goods to the United States. Each year, China also buys about $300 billion in U.S. assets, mostly U.S. Treasuries.

China has put about $30 billion of the trade surplus into Canadian tar sands. All the oil that passes through the Trans-Alaska Pipeline has to be sold in the U.S., but the Keystone XL Pipeline is permitted a tax-free zone to provide Chinese energy independence. The Koch brothers, who own the refineries, benefit; the people of the United States don’t.

If people in the United States were intelligent and far-seeing, we would keep the environment clean and sell food to China when they can no longer grow it. Their air pollution is so bad that it is like a nuclear winter. The slowing photosynthesis in plants may greatly decrease the possibility of growing food. This week’s smog in Beijing and large parts of six northern provinces is so bad that the PM 2.5 particles can enter the bloodstream through the lungs. A safe level is 25. Flights are grounded, highways are closed, and tourists are kept at home. Air pollutants adhering to greenhouse surfaces have cut the light inside by 50 percent.

Buildings are seen through thick haze in Guangzhou

In a first for China, a man in Shijiazhuang, the capital of Hebei province near Beijing, is suing the local environmental protection bureau for failing to rein in the smog. Li Guixin is also asking for compensation because of economic losses.

The Keystone XL pipeline has received publicity because it goes from one country to another, requiring presidential approval. Within the United States, however, pipeline construction is not inhibited in the same way. In the five years since the first TransCanada application, the 589-mile Flanagan South, moving through about 1,950 wetlands and waterways including the Missouri and Mississippi rivers, has been approved because of a loophole allowing companies to fast-track pipeline projects and bypass environmental protection laws. About half the length of Keystone XL, Flanagan South carries tar sands and Bakken crude from Pontiac (IL) to Cushing (OK).

FlanaganSouth

Although each part of the pipeline could not exist without the rest of it, the Army Corps of Engineers allowed each water crossing to be separate for the purpose of permits, thus avoiding any environmental review. A federal judge who heard a lawsuit last week will decide within the next few weeks whether the Sierra Club’s claims have merit. The same loophole was used on the southern half of Keystone XL, which began shipping oil last month despite the pipelines’ leaks.

Enbridge, the company in charge of Flanagan South, was responsible for the 1,000,000-gallon spill in July 2010 when tar sands crude went into a tributary of the Kalamazoo River. Oil is still being removed from the area after Enbridge missed its EPA deadline to finish cleanup by the end of 2013.

Even conservative Nebraskans understand the danger of pipelines crossing lands vital for agriculture and water. After Gov. Dave Heineman approved the Keystone XL route through the state, a judge struck down his decision because it forced landowners to sell their property. Lancaster County Judge Stephanie Stacy ruled that only the state Public Service Commission can give TransCanada eminent domain powers. The commission was created in the 1890s to stop governors from giving political favors to railroad executives.

Jane Kleeb, executive director of Bold Nebraska, said,”TransCanada learned a hard lesson today: Never underestimate the power of family farmers and ranchers protecting their land and water.” We need more Jane Kleebs to protect land and water across the United States.

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1 Comment »

  1. “If people in the United States were intelligent and far-seeing,” Ha-ha-ha-ha — Good one. Oh wait. That wasn’t a joke?

    Like

    Comment by gkparker — February 28, 2014 @ 5:15 PM | Reply


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