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State Department Considered 2-Year Keystone Pipeline Delay—Briefly

Did TransCanada’s well-connected lobbyist help scuttle the idea?

Sep 27, 2011
Secretary of State Hillary Clinton

In June of 2010, in the midst of the BP Gulf oil disaster, someone deep in the bowels of the U.S. State Department was considering a two-year delay in the Keystone XL pipeline project, according to documents released last week. Public concerns about the oil industry were peaking, and the $7 billion Canada-to-Texas oil sands pipeline, which had looked like a shoo-in at the beginning of 2010, was getting a closer look.

At one point, the State Department even asked a lawyer for TransCanada, the Alberta-based company that was trying to get a federal permit to build the pipeline, to provide an assessment of how such a delay would impact the company.

What happened to that request—or to the idea of possibly delaying federal approval of the pipeline—remains a mystery, crucial to understanding the decision-making process behind one of the biggest energy projects pending before the Obama administration. The pipeline would allow an enormous supply of a particularly dirty form of oil, locked up in Alberta's tar sands, to reach refineries in the Gulf of Mexico and markets around the world.

The documents, which the State Department released last week in response to a Freedom of Information Act request by Friends of the Earth, contain no further mention of a possible delay beyond an email thread that began on June 28 and petered out on June 30.

The documents do show, however, that TransCanada had special access to key State Department officials during this delicate period, when the future of the company's most important project hung in the balance. In 2009 TransCanada had begun ordering the large-diameter pipe it would need for the project. Evraz, the Russian company that got some of the business, announced that steel and pipe production for TransCanada’s order would begin in 2010.

TransCanada's most important link to the State Department was its Washington, D.C.-based lobbyist, Paul Elliott, who had been a senior member of Secretary of State Hillary Clinton's 2008 presidential campaign. A month earlier, Elliott had secured an exclusive meeting for TransCanada's CEO with a key State Department official, who coached him on what the company should insert into the public record.  

Now Elliott went to work again, relaying TransCanada's concern about the possible two-year delay to the office of the Secretary of State. His contact there was Nora Toiv, a special assistant who knew him from having also worked on the Clinton campaign. Toiv forwarded his note up the chain, and within two days it was slated for discussion with Secretary Clinton's Chief of Staff, Cheryl D. Mills. Like Elliott and Toiv, Mills had worked on Clinton's presidential campaign.

Nick Berning, the communications director with Friends of the Earth, said the newly released documents offer clear evidence of a conflict of interest involving the Secretary of State and her staff, which is unfairly tipping the scales in favor of the oil industry at the expense of public health and welfare.

"The State Department’s job is to act in the public interest, but this document implies State was looking out for a private oil firm instead," Berning said.

Friends of the Earth received 34 documents from the State Department in response to its freedom of information request, but plans to ask for more. Damon Moglen, the organization's climate and energy director, said attachments referenced in the emails are missing, along with notes that would have been routinely taken during meetings that TransCanada had with State Department officials. There is also evidence that some official business was being conducted between Elliott and State Department staffers via their personal email accounts, he said.

TransCanada spokesman Terry Cunha referred questions about the possible two-year delay, and about TransCanada's access to high-level officials, to the State Department.

"In the three years this project has been reviewed by the Department of State (DOS), we have submitted hundreds of pages of information, including the impact not approving this project would have, to the DOS. It’s all available from the DOS," Cunha said.

Calls to the State Department for further information were not returned.

Cunha rejected the idea that his company enjoys special access to the State Department.

"One other thing that I’d like to highlight,” he told InsideClimate News in an email, is that "the State Department has met with many interested organizations." He then listed 16 groups, most of them opponents of the pipeline, including Friends of the Earth.

TransCanada Gets Some Coaching

But the pipeline's opponents didn't enjoy the exclusive access that TransCanada had through Elliott, who was Secretary Clinton's national deputy director during her presidential campaign.

The documents show that in May 2010 Elliott had arranged for Hal Kvisle, president and CEO of TransCanada Corporation at the time, to meet with David Goldwyn, head of international energy affairs for the State Department.

"Our meeting with David Goldwyn and Michael Sullivan (another State Department official) was very productive," Elliott wrote to Toiv, his acquaintance from Clinton's campaign days. "David provided us with insight on what he'd like to see by way of on-the-record comment during this public comment period of this Keystone KXL draft environmental impact statement. We are working with our stakeholders, shippers and vendors to deliver on the insight David shared with us and to do so by the June 15 deadline."

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