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ALEC’s Most Wanted: Exposing a front group for fossil fuel interests (and other corporations)

May 10, 2013 by gabrielelsner 1 Comment

The Center for Media and Democracy’s (CMD) Brendan Fischer and Nick Surgey uncovered an internal document from the American Legislative Exchange Council (ALEC) at the controversial organization’s meeting last week in Oklahoma City. The document entitled “OKC anti-ALEC photos” featured the headshots of eight reporters and public interest advocates that have written about ALEC or been critical of ALEC’s activities (as a front group working on behalf of its corporate membership).

CMD’s Surgey attempted to attend the keynote address by Oklahoma Governor Mary Fallin, which was billed as open to the press. After registering for press credentials at the ALEC registration desk, Mr. Surgey ascended the escalator towards the keynote speech, but was confronted by ALEC staff members and then approached by a uniformed Oklahoma City police officer.

Mr. Fischer and Surgey recount the exchange in which Surgey had his credentials revoked and was ejected from the ALEC meeting. From PR Watch:

“I need those credentials,” the officer said.

“I registered,” Surgey replied.

“No, you didn’t,” said a female ALEC staffer, who was accompanying the officer.

“I did, downstairs,” he said.

“It was… you shouldn’t have been able to.”

The reason Surgey shouldn’t have been allowed to register, according to the ALEC staffer: “Because we know who you are.

Surgey asked the ALEC staffer for her name as she asserted that he had to leave:

Can I ask your name?” Surgey asked the ALEC staffer who challenged his press credentials.

“Erm, why?” she replied.

“Is there any reason you wouldn’t want to tell me your name?”

“Yeah, because I know who you are,” she said.

The staffer — whose organization had developed talking points claiming to support the First Amendment, which protects a free and vibrant press — added: “Because you’re going to write an article about it.”

Less than 10 minutes after registering as press, Surgey had his credentials revoked and was ejected from the ALEC meeting by a police officer. As he was escorted away, the ALEC staffer repeated: “We know exactly who you are.”

As Director of the Checks & Balances Project, I was one of the eight people featured on the “ALEC Most Wanted” document alongside other reporters and public interest advocates who have criticized ALEC’s efforts to influence state legislators on behalf of special interests. Fischer and Surgey write:

The page featured pictures and names of eight people, four of whom work with CMD, including Surgey, CMD’s general counsel Brendan Fischer and its Executive Director Lisa Graves, as well as CMD contributor Beau Hodai.

It is not known whether the photo array of people who have reported on or criticized ALEC was distributed to ALEC members or shared with Oklahoma City law enforcement.

Other targets on the document included The Nation‘s Lee Fang, who has written articles critical of ALEC, and Sabrina Stevens, an education activist who spoke out in an ALEC task force meeting last November. Also featured were Calvin Sloan of People for the American Way and Gabe Elsner of Checks and Balances Project, both of whom are ALEC detractors.

The name of ALEC Events Director Sarah McManamon was in the top corner, indicating the document was printed from her Google account.

As Fischer and Surgey point out, ALEC claims to support the freedom of the press. But in practice, the organization seems reluctant to provide transparency and access required for a free press to be functional. Instead, “ALEC assembled a dossier of disfavored reporters and activists,” and “kicked reporters out of its conference who might write unfavorable stories…”

ALEC’s sensitivity to transparency shows that the accountability work by C&BP, CMD, People for the American Way and others is working. A free society can’t work unless there is some check on the concentration of power. Now, more than ever, society needs more of the most powerful check on concentrations of power – public scrutiny. Most recently, C&BP has worked to expose ALEC’s efforts to eliminate clean energy laws in states across the country and bring to light that these attacks are being driven by powerful special interests.

ALEC exemplifies how fossil fuel corporations and other special interests have an oversized influence in our public process. And, C&BP is proud to be part of the effort to expose ALEC, fossil fuel-funded front groups and other fossil fuel interests using their power and resources to attack clean energy policies — even if it lands us on ALEC’s Most Wanted list.

Filed under ALEC Tagged with 1st Amendment, ALEC, ALEC Most Wanted, American Electric Power, American Legislative Exchange Council, Beau Hodai, Big Gas, Big Oil, BP, Brendan Fischer, Calvin Sloan, Center for Media and Democracy, Checks and Balances Project, Chevron, CMD, Duke Energy, Energy, ExxonMobil, Fracking, Freedom of the Press, Front Group, gas, Industry, Koch Brothers, Koch Industries, Lee Fang, Lisa Graves, Most Wanted, natural gas, Nick Surgey, Oklahoma City, People for the American Way, politics, Progress Energy, Sabrina Stevens, Sarah McManamon, Shell, State Legislators, State Legislatures, The Nation

Oil & gas public lands management 101: How to put our farms, water, and national parks at risk

April 24, 2013 by Checks And Balances Project Leave a comment

Bureau of Land Management (BLM) Colorado State Director Helen Hankins has developed a pattern of offering controversial drilling plans, which when met with widespread public outcry are temporarily halted, only to be re-offered after the furor has died down.

In 2011 Dir. Hankins proposed oil and gas leasing in Park County at South Park, home to several large reservoirs for metro Denver, Colorado’s drinking water, serving over two million people.

When the City of Aurora raised serious concerns about the sale, including a lease parcel located within ¼ mile of the high water mark of a city reservoir, Hankins temporarily halted the lease plan. Unfortunately, in 2012, Hankins revived plans to lease South Park for oil and gas drilling. True to form, Hankins temporarily halted the oil and gas lease plans again after local elected officials, sportsmen and others raised significant concerns about the plans, including impacts to water quality, wildlife habitat and tourism.

In early 2012, Colorado BLM proposed drilling next to vineyards, orchards, organic farms and a dairy in the North Fork Valley. When local farmers, ranchers, businesses and residents overwhelmingly opposed the plan, Hankins, again, temporarily halted BLM’s plans to lease the area for oil and gas drilling.

Fast forward to the end of 2012, and Hankins – predictably – offered a similar plan that still threatened the Valley’s local economy and water supplies, and even included leasing land for oil and gas drilling near a public school. Residents, local business owners and others once again opposed the controversial plan, and widely criticized Hankins for basing her plan on outdated analysis and failing to pursue a balanced approach to energy development. In early February 2013, Hankins again temporarily halted drilling plans in North Fork Valley.

Name this tune: In late 2012, Colorado BLM announced plans to lease land for oil and gas drilling next to Dinosaur National Monument’s visitor center and along its southern entrance, as well as near Mesa Verde National Park. BLM’s proposal would mean that visitors could see drill rigs along with 149 million year old fossils, and create more air quality problems for Mesa Verde National Park – which is already beset with pollution problems. This time, the former Superintendent of Dinosaur National Monument, National Parks Service, and La Plata County joined the chorus of locals who raised serious concerns the drilling proposals. And, once again, Hankins halted the lease plans.

Unfortunately, since then, statements from Dir. Hankins’ staff indicate that this stoppage is temporary. In March, the local Colorado BLM assistant field manager said that the drilling leases near Mesa Verde National Park could be back on the auction block as early as this summer.

Dir. Hankins needs to end this contentious cycle of offering controversial oil and gas drilling leases, deferring them when locals rise up, and then trying to drive them back through later when protests have died down.

Dir. Hankins needs to adopt a new curriculum. She needs a smart-from-the-start approach that addresses the concerns of local residents, business owners, and the many industries that drive Colorado’s economy. She needs to adopt a balanced approach that protects the state’s drinking water, farms and national parks.

Filed under Blog, Fracking Tagged with BLM, Checks and Balances Project, Department of Interior, Fracking, hankins, Industry, Public Lands, water

C&BP Calls for State Dept. Investigation into Keystone XL Consultant’s Conflicts of Interest

April 9, 2013 by Checks And Balances Project Leave a comment

Letter to Secretary of State John Kerry and State Dept. Deputy Inspector General Harold Geisel

Yesterday, Checks & Balances Project and 11 environmental, faith-based and public interest organizations called on Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel to investigate whether Environmental Resources Management (ERM) hid conflicts of interest which might have excluded it from performing the Keystone XL environmental assessment and how State Department officials failed to flag inconsistencies in ERM’s proposal. Tom Zeller, Senior Writer at The Huffington Post, wrote an article highlighting the letter callings for an investigation.

Early last month, the State Department released a 2,000 page environmental impact study for the Keystone XL pipeline claiming that the pipeline would not have major impact on the environment. But, Environmental Resources Management (ERM), the consulting firm hired to perform the “draft supplemental environmental impact statement (SEIS),” has ties to fossil fuel companies with major stakes in the Alberta Tar Sands. This conflict of interest was not accurately disclosed in ERM’s answers on a State Department questionnaire. Checks & Balances Project considers ERM’s responses in its proposal to be intentionally misleading statements.

Unredacted Documents Uncover Conflicts of Interest
Last week, Mother Jones released unredacted versions of the ERM proposal, showing that three experts “had done consulting work for TransCanada and other oil companies with a stake in the Keystone’s approval.”

The unredacted biographies show that ERM’s employees have an existing relationship with ExxonMobil and worked for TransCanada within the last three years among other companies involved in the Canadian tar sands.

Here’s more from Mother Jones’ Andy Kroll:

“ERM’s second-in-command on the Keystone report, Andrew Bielakowski, had worked on three previous pipeline projects for TransCanada over seven years as an outside consultant. He also consulted on projects for ExxonMobil, BP, and ConocoPhillips, three of the Big Five oil companies that could benefit from the Keystone XL project and increased extraction of heavy crude oil taken from the Canadian tar sands.

Another ERM employee who contributed to State’s Keystone report — and whose prior work history was also redacted — previously worked for Shell Oil; a third worked as a consultant for Koch Gateway Pipeline Company, a subsidiary of Koch Industries. Shell and Koch have a significant financial interest in the construction of the Keystone XL pipeline. ERM itself has worked for Chevron, which has invested in Canadian tar-sands extraction, according to its website.”

When asked about who at the State Department decided to redact ERM’s biographies, a State Department spokesperson said “ERM proposed redactions of some information in the administrative documents that they considered business confidential.” Disclosing past clients may be business confidential information, but from what the biographies show, ERM may have recommended the redactions to hide conflicts of interest from public disclosure.

Problem with ERM Answers on Conflict of Interest Questionnaire

ERM’s Proposal to the State Department

The biographies on ERM’s proposal show that the company has had direct relationships with multiple business entities that could be affected by the proposed work in the past three years.

In the “Organizational Conflict of Interest Questionnaire,” the State Department asks (page 42), “Within the past three years, have you (or your organization) had a direct or indirect relationship (financial, organizational, contractual or otherwise) with any business entity that could be affected in any way by the proposed work?“ ERM’s Project Manager, Steve Koster, checked “No” but appears to have added to the Yes/No questionnaire that, “ERM has no existing contract or working relationship with TransCanada.”

Regardless of the addendum Koster added, he still submitted an incomplete statement when checking “No” to the specific question above. Simply put, the information provided by Mr. Koster was an incomplete statement if one simply reviews the biographies of ERM’s employees for the project.

The State Department Contracting Officer should have flagged this inconsistency when reviewing the staff biographies. ERM’s answers did not properly reveal in the Yes/No questionnaire that ERM did have a current “direct relationship” with a business enetity that could be affected by the proposed work and a relationship in the past three years with TransCanada, the company building the pipeline.

Koster’s incomplete statement on direct business relationships is not the only odd statement in ERM’s proposal. ERM also answered “No” to the question, “Are you (or your organization) an ‘energy concern?’” which the State Department defines (in part) as: “Any person — (1) significantly engaged in the business of conducting research…related to an activity described in paragraphs (i) through (v).” Paragraph (i) states: “Any person significantly engaged in the business of developing, extracting, producing, refining, transporting by pipeline, converting into synthetic fuel, distributing, or selling minerals for use as an energy source…” ERM as a research firm working for fossil fuel companies is, unequivocally, an energy interest.

So the question must be asked: If ERM is unable to accurately fill out a simple questionnaire regarding conflicts of interest, how can we trust the company to perform an unbiased environmental assessment of a 1,179 mile-long pipeline cutting through the American heartland? And, why did the State Department’s Contracting Officer not flag the inconsistencies in ERM’s Conflict of Interest Questionnaire when reviewing the proposals?

Intentions of State Department and ERM in Question

The Federal Government has strict ethics rules to prevent Organizational Conflicts of Interest (OCIs) from impacting the impartiality of government contracts and to prevent hiring contractors who cannot provide independent and unbiased services to the government.

According to a white paper from the Congressional Research Service, before the State Department could choose ERM as the contractor, the “Contracting Officer” had to make an “affirmative determination of responsibility.” All government contractors (including ERM) must be deemed responsible, in part by meeting strict ethics guidelines, known as “collateral requirements.”

According to current collateral requirements, contractors must be found “nonresponsible” when there are unavoidable and unmitigated OCIs. Checks & Balances Project believes that the Contracting Officer should have deemed ERM “nonresponsible” because the company serves as a contractor for major fossil fuel companies that have a stake in the Keystone XL pipeline. If ERM were “nonresponsible”, the company would have been ineligible to perform the environmental impact review of the Keystone XL pipeline.

These potential material incomplete statements on a Federal Government proposal calls into question the integrity of ERM and threatens millions in government contracts.

If ERM were determined to be “nonresponsible” or “excluded” because of these incomplete statements, it could jeopardize ERM’s ability to perform any work for the Federal Government. Again, according to the Congressional Research Service:

“Decisions to exclude are made by agency heads or their designees (above the contracting officer’s level) based upon evidence that contractors have committed certain integrity offenses, including any “offenses indicating a lack of business integrity or honesty that seriously affect the present responsibility of a contractor.””

Certainly these incomplete statements call into question both the independence of ERM and the judgement of the Contracting Officer in making the “affirmative determination of responsibility.” This proposal process should be investigated by the State Department Inspector General to determine if ERM’s statements are cause for exclusion.

Groups Calling for Inspector General Investigation

We believe ERM used multiple material incomplete statements and had clear conflicts of interest as shown in the unredacted documents. So, why was ERM hired by the State Department?

Checks & Balances Project asked a State Department spokesperson about the conflicts of interest and the spokesperson said: “Based on a thorough consideration of all of the information presented, including the work histories of team members, the Department concluded that ERM has no financial or other interest in the outcome of the project that would constitute a conflict of interest.” Perhaps the State Department’s Contracting Offier made the decision to hire ERM because of the company’s incomplete statements on the conflict of interest questionnaire.

Harold Geisel, Deputy Inspector General, U.S. State Department

Checks & Balances Project along with 11 other groups (Better Future Project, Center for Biological Diversity, Chesapeake Climate Action Network, DeSmogBlog, Forecast the Facts, Friends of the Earth, Greenpeace, NC WARN, Oil Change International, Public Citizen’s Energy Program and Unitarian Universalist Ministry for Earth) sent a letter to Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel calling for an investigation into the matter. These incomplete statements and the determination by the Contracting Officer that ERM did not have any conflicts of interest, despite clear evidence to the contrary, are grounds for further investigation.

Filed under KeystoneXL Tagged with Andrew Bielakowski, Andy Kroll, Better Future Project, Big Oil, BP, Center for Biological Diversity, Checks and Balances Project, Chesapeake Climate Action Network, Chevron, Conflict of Interest, Conflicts of Interest, Congressional Research Service, ConocoPhillips, DeSmogBlog, Disclosure, Energy, Environment, Environmental Resources Management, ERM, ExxonMobil, Federal Acquisition Regulation, Federal Government, Forecast the Facts, Friends of the Earth, Greenpeace, Harold Geisel, Huffington Post, Industry, John Kerry, Keystone XL, Koch Gateway Pipeline Company, Koch Industries, KXL, lobbying, Mother Jones, NC WARN, Oil Change International, politics, Public Citizen's Energy Program, Shell, State Department, Steve Koster, Tar Sands, Tom Zeller, TransCanada, Unitarian Universalist Ministry for Earth

Americans for Tax Reform and Grover Norquist’s Deceptive Campaigns for Dirty Energy and Big Tobacco

April 1, 2013 by Checks And Balances Project Leave a comment

JIM WATSON/AFP/Getty Images

Grover Norquist is a familiar player in Washington debates, renowned for convincing nearly every Republican in Congress to sign a pledge to not raise taxes. But Norquist’s main job is not as a principled advocate for his brand of limited government but functioning as a paid lobbyist for whatever corporate interests are ready to write him a check. Norquist is a prominent pundit for Big Pharma and Big Tobacco, and now, he’s also batting for Big Oil.

Norquist, President of Americans for Tax Reform (ATR), is at the forefront of the latest fight against renewable energy in the United States.

Conservative front groups and fossil fuel interests are attacking renewable energy standards in a coordinated assault to protect profits generated from fossil fuel-based electricity. Twenty-nine states have renewable energy standards and twenty-two of those have become fierce battlegrounds.

This coordinated attack on clean energy bears resemblance to the effort by Big Tobacco to prevent public health laws from impacting the profitability of tobacco companies. And it turns out, a lot of people working to dismantle renewable energy laws are deeply connected to Big Tobacco. Some, like Grover Norquist, even worked with Big Tobacco on their misinformation campaigns and are now turning their lobbying power to attack state clean energy policies.

The attacks on the Renewable Portfolio Standards (RPS) originated primarily from the American Legislative Exchange Council (ALEC), whose energy task force is comprised of fossil fuel companies and front groups members like ATR. In late February, several ALEC groups including ATR attempted to convince Kansas legislators to weaken their renewable energy law, which would require renewable energy to make up at least 20% of their energy portfolio.Norquist himself testified to the Kansas legislature to roll-back the RPS.

Americans for Tax Reform has received $525,000 from the American Petroleum Institute between 2008 and 2011 and $60,000 from foundations connected to Koch Industries between 2003 and 2011.

Fighting against renewable energy in the states isn’t Norquist’s only project working to protect fossil fuel interests. ATR is part of a Tea-Party “last stand” seeking to derail the U.S. Environmental Protection Agency’s effort to regulate carbon dioxide emissions. Last year, Norquist also made a public statement that there was “no conceivable way” he could support a carbon tax aimed at slowing global warming and pollution.

Norquist has a track record of defending industries engaged in massive denial of scientific knowledge. The dirty energy industries that fund ATR pretend that the climate change science is inconclusive despite broad scientific consensus. But that approach is not new – it was refined through millions of dollars in lobbying, public relations and front groups by the tobacco industry, which denied the harms caused by smoking.

Americans for Tax Reform, run under Norquist, has been a longtime ally of the U.S. tobacco industry and a major player in pro-tobacco tax policies. ATR’s history with Big Tobacco was pulled from hundreds of documents that live in the Tobacco Archives and documented by SourceWatch.

1990s: Big Tobacco Loses Public Opinion, Calls on Third Party Support

In the early 1990s, the government started increasing tobacco regulation via taxes and bans to compensate for the health costs of smoking. Philip Morris President Roy Marden wrote an internal memo calling attention to the need to “regain the upper hand” on public opinion of tobacco. In 1992, RJ Reynolds documented a campaign plan to “move public opinion in the right direction” – in order to weaken tobacco regulation.

One aspect of the plan was third-party coalition work, with ATR listed as a likely coalition partner. The reason: “Credible, non-tobacco voice for hearings and for generating information on issue to media, op-eds, letters, etc.” The draft plan also mentions Norquist specifically, noting, “Tim Hyde to work with Grover Norquist for possible by-line piece.”

The following year, ATR’s pro-tobacco campaign began. With the help of focus groups from eight different cities, ATR launched an advertisement in 152 newspapers targeting 51 Members of Congress. Their success was documented by Philip Morris, and used for even further campaigning.

ATR continued to campaign against tobacco taxes, so much that they were described in an internal Philip Morris review as a “staunch ally of PM for a number of years in many tax battles.”

Along with coalition support came monetary support. Philip Morris contributed $30,000 to the ATR Foundation in 1994, according to internal documents. The R.J. Reynolds Tobacco Company contributed $100,000 to ATR two years later and ATR received additional money from RJR in 1997 to continue PR support of lobbying activities, one month before Norquist went on the road to speak out against cigarette tax increases.

1999: Litigation against Big Tobacco Begins, Norquist and ATR continue support

President Bill Clinton announced that “the Justice Department [was] preparing a litigation plan to take the tobacco companies to court, and with the funds [they] recover, to strengthen Medicare” in his 1999 State of the Union Address. Less than one month after Clinton’s speech, Norquist had published a media release and letters to radio show hosts complaining about the litigation – without disclosing his own financial ties to tobacco. Weeks later, Norquist wrote a letter to Kirk Blalock of Philip Morris requesting $200,000 in continued support.

Norquist and ATR spent the next few years continuing to campaign against the litigation efforts, writing letters to warn Congressmen of dire consequences.

ATR continued to receive monetary support from Philip Morris, but Norquist campaigned for even more money from a coalition of tobacco groups. He sent a proposal to Lorillard and Philip Morris titled “No taxation through litigation – stopping the federal Medicare suit.” The proposal was seeking $582,672.

What came of the proposal was undocumented, but ATR has continued to lobby on behalf of the tobacco industry. They organized an anti-tobacco tax rally in 2010, using an email list paid for by Philip Morris. They list several appeals to oppose bills that would raise tobacco taxes on their website, including a 2011 Louisiana bill and an Arkansas House Bill. In early 2012 they campaigned against California’s Proposition 29, another tobacco tax increase. Sacramento Bee editor Dan Morain asked Patrick Gleason, a Norquist aide, whether Americans for Tax Reform still accepted tobacco money, to no response.

A 2006 ruling by U.S. District Judge Gladys Kessler concluded that the tobacco industry has “lied, misrepresented and deceived the American public, including smokers and the young people they avidly sought as ‘replacement’ smokers, about the devastating health effects of smoking and environmental tobacco smoke.”

The lies and deception continue with climate change denial and attacks against renewable energy standards on behalf of the fossil fuel industry. It seems Grover Norquist and Americans for Tax Reform will campaign for anything, for the right price.

Filed under Tobacco Profiles Tagged with ALEC, American Legislative Exchange Council, American Petroleum Institute, Americans for Tax Reform, Big Oil, Big Pharma, Big Tobacco, Checks and Balances Project, clean energy, Clean Energy Standards, climate change, Energy, Grover Norquist, Kansas, Koch Brothers, Koch Industries, Norquist, Philip Morris, politics, Proposition 29, R.J. Reynolds, renewable energy standards, RPS, taxes, tobacco

Keystone XL Environmental Impact Consultant’s Cozy Relationships with Fossil Fuel Interests

March 31, 2013 by gabrielelsner Leave a comment

Environmental Resources Management (ERM), the consulting firm hired to perform the supplemental environmental analysis of the Keystone XL pipeline works for and has worked for fossil fuel companies with a stake in the Canadian Tar Sands. Mother Jones’ Andy Kroll exposed the conflicts of interest in an exclusive story, which included unredacted documents that show the recent work history of ERM’s consultants.

It’s no surprise that ERM painted a rosy picture of Keystone XL’s environmental impact. Their business depends on it. ERM’s major clients in the fossil fuel industry would steer clear of an environmental consulting company that determines fossil fuel projects are not environmentally responsible. ERM claimed in the report that the Keystone
XL pipeline would not lead to an increase in greenhouse gas emissions or significantly impact the environment along its route.

Last week, Steve Horn from DeSmogBlog documented major problems with another pipeline (the 1,300 mile-long Baku–Tbilisi–Ceyhan (BTC)) determined by an ERM environmental assessment to be “environmentally and socio-economically sound.” Horn wrote, “An Aug. 2008 Wikileaks cable discusses a BTC explosion in a mountainous area of eastern Turkey …which spewed 70,000 barrels of oil into the surrounding area.” The BTC
pipeline caused enormous environmental damage and failed to live up to the jobs hype created by the project developers, which included BP, State Oil Company of Azerbaijan (SOCAR), Chevron, ConocoPhillips, Eni and Total.

Horn goes on to quote Mik Minio-Paluello, co-author of The Oil Road - a new book documenting the slew of destructive impacts of BTC saying, “Supposedly an environmental consultancy, in practice ERM operated more like aPR firm representing BP and now they’re fulfilling a similar role for TransCanada.”

So why does ERM operate more like a PR firm than an environmental consultancy?

Let’s say ERM provided a review claiming a fossil fuel project was skirting safety precautions or moving too quickly to ensure quality seals on the pipeline (see Keystone XL’s faulty welding here). Would a fossil fuel company, whose financial interest is building more fossil fuel infrastructure, want to hire a consultant that results in delays and increased costs for developing that infrastructure?

Checks & Balances Project contacted ERM’s Global Head of Communications Simon Garcia multiple times over the past week without any response. We requested comment on the following question: Has ERM ever determined that a proposed fossil fuel project was not “environmentally sound” in an assessment?

The answer is probably “no.”

Filed under KeystoneXL Tagged with Andy Kroll, Baku-Tbilisi-Ceyhan Pipeline, Big Oil, Checks and Balances Project, Conflict of Interest, Contractors, Energy, Environmental Resources Management, ERM, ExxonMobil, Keystone XL, Mik Minio-Paluello, Mother Jones, oil, Oil & Gas, Oil and Gas, Oil Spill, politics, PR, Simon Garcia, State Department, Tar Sands, The Oil Road, TransCanada

Wall Street Journal Editorial Twists CRS Report Like a Drill Bit

March 13, 2013 by Checks And Balances Project Leave a comment

In an editorial today, the Wall Street Journal claimed a “sharp drop in production on federal lands is the direct result of Obama Administration policies.” They cherry pick statements from a Congressional Research Service (CRS) report to try and support their claim, but ignore sections of the report that directly refute them. The CRS report actually shows that outside factors such as price and geology are driving industry to drill on nonfederal lands, where the most lucrative plays exist.

If you read the CRS report, you learn that:

“Any increase in production of natural gas on federal lands is likely to be easily outpaced by increases on non-federal lands, particularly because shale plays are primarily situated on nonfederal lands and is where most of the growth in production is projected to occur.” (Pg. 3, 1^st and 2^nd paragraph)

“The big shale gas plays are primarily on non-federal lands and are attracting a significant portion of investment for natural gas development.” (Pg. 1, 2^nd paragraph)

“But having more lands accessible may not translate into higher levels of production on federal lands, as industry seeks out the most promising prospects and highest returns.” (Pg. 2, 3^rd paragraph)

Filed under In The News, Permitting Tagged with Big Oil, Checks and Balances Project, drilling, Public Lands

Eyes on Enefit: Financially unstable and unprofitable, and not ready for prime time

March 12, 2013 by Checks And Balances Project Leave a comment

Over the past few weeks, we’ve examined Estonian oil shale company, Eesti Energia, known as Enefit in the U.S., to find out the real story on Estonian oil shale and how it could affect the American West. The outlook is grim.

Even though Eesti Energia is widely considered the world’s leading oil shale firm and is the largest company in the world working with oil shale, it is in a financially vulnerable position. The company has made a number of poor investments, including a new bloc for an Estonian oil shale plant – an investment the Estonian State Audit Office found to be legally questionable and “not economically feasible.” Less than a year after breaking ground on the plant, Eesti Energia abandoned the project.

Things have gotten so bad for Eesti Energia that credit benchmark Moody’s has downgraded the company’s credit rating (now rated negative) twice in the past 15 months.

Even Eesti Energia’s CEO admits that oil shale is not profitable without government subsidies. The reason is simple: oil shale fails the basic economic test. In other words, the return on oil shale doesn’t outweigh the investment.

Over here in the United States, we found Enefit has run into trouble trying to commercially develop oil shale. Despite the company’s claims that extracting Utah oil shale is a “simple mining project,” Enefit has experienced significant problems. Tests show that Enefit hasn’t been able extract oil from the oil shale ore mined in Utah as easily as executives had hoped and promised, and that it requires more energy to process Utah oil shale than expected, which results in higher carbon dioxide emissions. An internal company document called the Utah test results “not promising.” And, despite all the “around the corner” rhetoric we hear from oil shale supporters, at least one Estonian expert thinks that a method for viably extracting Utah oil shale is decades away.

Company dismissals of these concerns are, as one Colorado columnist put it: “reminiscent of previous failures to extract commercial quantities of petroleum from [oil] shale.”

Even when Eesti Energia has been able to produce subsidized energy from oil shale in Estonia, the environmental impact has been disastrous. The company’s Estonian operations have contaminated groundwater, created 600-foot high mountains of oil shale waste that spontaneously ignite, and caused the emission of “lots of carbon dioxide.” A former executive at Red Leaf Resources testified before Congress that Eesti Energia’s Estonian operations were a “nasty business.”

Given this web of problems, it shouldn’t be surprising that company officials can’t seem to keep their stories straight. What is said in the U.S. often doesn’t match up to what is said in Estonia.

Oil shale – a rock that actually contains no oil – has a 100-year track record of failure in the U.S. despite the billions in taxpayer dollars that have been risked on failed oil shale experiments.

The facts from our Eyes on Enefit series argue for taking a cautious, balanced approach to oil shale. Companies like Enefit should not be given more federal land or money for oil shale experiments until they can prove that they are able to develop oil from oil shale in a commercially and environmentally sound way.

This blog is a summation of our series about Enefit, known at home in Estonia as Eesti Energia, covering the company’s financial outlook, background and status of its Utah project.

Filed under Blog, Eyes On Enefit, oil shale Tagged with Checks and Balances Project, enefit, Oil Shale, Public Lands, water

Eyes on Enefit: Conflicting Claims

March 5, 2013 by Checks And Balances Project Leave a comment

For over a century, conflicting claims have surrounded the rock called oil shale. Estonian oil shale company Eesti Energia, and its U.S. arm, Enefit, are no exception to this rule. Whether it’s company executives, other oil executives or financial experts, we’ve seen numerous inconsistencies about Enefit’s financial health, technological capability, impact on the environment, and its Utah project.

Technology

What Enefit says in the U.S.	What Enefit says in Estonia
“And most importantly for our project in Utah, and for our activities here in the U.S., we also have demonstrated proven commercial shale oil production. We have our own proprietary technology. We have our own operating plants. And we’ve been operating those plants for more than 30 years. And we produce about 1 million barrels a year.” - Rikki Hrenko, CEO of Enefit America Oil. Transcript of API/Colorado School of Mines Briefing. June 19, 2012.	“But it is not a big surprise that a new technology [Enefit 280] does not work right away.” - Sandor Liive CEO, Eesti Energia. BBC Monitoring Europe, Text of report by private Estonian newspaper Postimees. November 30, 2012.
The company’s technology “does not need to be proven,” says [Enefit] Chairman Harri Mikk, who points out that Enefit has successfully operated an oil shale plant in Estonia for decades. - Utah Business. August 1, 2011. +Note Mikk has since resigned from Enefit’s Board Chair	“According to [Sandor] Liive, [oil] shale has so far been produced in Estonia by employing the trial and error method. The old Eesti Energia production plant is a proof of that – over the years, the solutions used there have been almost completely changed. - BBC Monitoring Europe, via Postimees. May 4, 2010.
	“The tests are not promising,” - Eesti Energia internal document obtained by Eesti Ekspress. Estonian Public Broadcasting. January 24, 2013.

Utah Project

What Enefit says in the U.S.	What Enefit says in Estonia
“And most importantly for our project in Utah, and for our activities here in the U.S., we also have demonstrated proven commercial shale oil production. We have our own proprietary technology. We have our own operating plants. And we’ve been operating those plants for more than 30 years. And we produce about 1 million barrels a year.” - Rikki Hrenko, CEO of Enefit America Oil. Transcript of API/Colorado School of Mines Briefing. June 19, 2012.	“The [Utah] tests are not promising,” - Eesti Energia internal document obtained by Eesti Ekspress. Estonian Public Broadcasting. January 24, 2013.
“This is a simple mining project. The mining component is nothing unique to oil shale. This is a simple mineral processing project.” - Rikki Hrenko, CEO of Enefit America Oil. Transcript of API/Colorado School of Mines Briefing. June 19, 2012.	The Salt Lake Tribune recently reported that Enefit is experiencing difficulties applying its technology to Utah oil shale deposits, and specifically that the company hasn’t been able extract oil from the oil shale ore mined in Utah as easily as executives had hoped and promised. - Utah oil shale becomes political punching bag in Estonia. Salt Lake Tribune. January 25, 2013.
	Ingo Valgma, director of the Department of Mining at the Tallinn University of Technology in Estonia, said that he believes oil production from Utah shale is not a matter of five to six years, as Enefit predicts, but more a question of decades. - Utah oil shale becomes political punching bag in Estonia. Salt Lake Tribune. January 25, 2013.
	Eesti Energia’s spokesperson says that the applied development technology needs enhancing. Eesti Energia has invested EUR 33.3mn [$43.1 million] in the Utah project since 2011, including EUR 29.6mn [$38.6 million] in the acquisition of the Utah-based oil shale exploration and development company. Eesti Energia is projecting an additional EUR 37mn [$48.2 million] investment in the Utah shale oil project by 2016. - Esmerk. January 18, 2013.

Environment

What Enefit says in the U.S.	What Enefit says in Estonia and what oil executives say
“A proven, efficient and environmentally sound means to help Utah become energy independent while providing long-term jobs for local families.” – Enefit Utah website.	“I worked in Estonia for several years. You’re exactly right. The old antiquated surface retorts that they use there are pretty nasty business. They produce a lot of semicoke. You know, they call them the Estonian Alps…. you would never want the retorts that are operating — operating in Estonia to come to the United States.” – Anton Dammer, NOSA Board Member and former Senior Vice President of Red Leaf. CQ Transcript—House Committee on Science, Space and Technology, Subcommittee on Energy and Environment. May 10, 2012
“[Oil shale is] commercially viable… And it can be done in an environmentally responsible manner.” - Rikki Hrenko, CEO of Enefit America Oil. Transcript of API/Colorado School of Mines Briefing. June 19, 2012.	“…our production involves the emission of lots of carbon dioxide.” – Sandor Liive, CEO, Eesti Energia. Interview Eesti Paevaleht website via BBC Monitoring Europe. July 4, 2011.

Commercial Viability

What Enefit says in the U.S.	What Enefit says in Estonia and what Moody’s says
“[Oil shale is] commercially viable. It is proven. We’re doing it on a large scale commercial production basis in Estonia and have been for decades. And it can be done in an environmentally responsible manner. “ - Rikki Hrenko, CEO of Enefit America Oil. Transcript of API/Colorado School of Mines Briefing. June 19, 2012.	“True, most of the investments are made under various subsidy schemes because even current free market prices are not high enough to make investments financially profitable.” - Sandor Liive, CEO, Eesti Energia. Interview, Eesti Paevaleht website via BBC Monitoring Europe. July 4, 2011.
“And most importantly for our project in Utah, and for our activities here in the U.S., we also have demonstrated proven commercial shale oil production.” - Rikki Hrenko, CEO of Enefit America Oil. Transcript of API/Colorado School of Mines Briefing. June 19, 2012.	In January 2013, Moody’s credit agency downgraded Eesti Energia’s bonds to negative, citing the evolving “business risk profile” of the company, and its inability to maintain profitability “given CO2-intensive oil-shale based generation assets.” - Moody’s changes outlook on Eesti Energia’s Baa1/P-2 ratings to negative. January 8, 2013.

Not even Enefit’s executives can agree whether or not oil shale is ready for prime time in the U.S. Oil shale companies like Enefit must prove they viable commercial technology that won’t harm our water or communities before they get any more public land.

This blog is part of a series about Enefit, known at home in Estonia as Eesti Energia, covering the company’s financial outlook, background and status of its Utah project.

Filed under Blog, Eyes On Enefit, oil shale Tagged with Checks and Balances Project, enefit, Energy, Oil Shale

Donors Trust: The Secret Group Funding Attacks on Clean Energy & Climate Science

February 15, 2013 by Checks And Balances Project Leave a comment

New research shows almost $120 million flowed from two secretive groups, called “Donors Trust” and “Donors Capital” to 102 groups denying climate science and attacking clean energy. The Guardian’s Suzanne Goldenberg reports that “the funds, doled out between 2002 and 2010, helped build a vast network of think tanks and activist groups working to a single purpose: to redefine climate change from neutral scientific fact to a highly polarizing ‘wedge issue’ for hardcore conservatives.”

Greenpeace research (.pdf) into the tax records of these organizations shows that publicly-disclosed funding for climate denial groups from foundations connected to the Koch Brothers began to decrease in 2006. But, funding from Donors Trust and Donors Capital Fund soared from less than $20 million per year to almost $35 million per year from 2006 to 2009. Kert Davies, research director at Greenpeace said to the Guardian, “These groups are increasingly getting money from sources that are anonymous or untraceable. There’s no transparency, no accountability for the money. There is no way to tell who is funding them.”

Many of these organizations funded by Donors Trust and Donors Capital Fund are also working to attack clean energy. Goldenberg notes in a companion article that recipients, including groups like the Heartland Institute and Americans for Prosperity (AFP), have received millions from the two secretive organizations.

AFP, which received $7.6 million from Donors Trust and Donors Capital Fund in 2010 (43% of its budget), drove anti-wind efforts last fall, leading a coalition of fossil fuel-funded groups to write a letter calling on Congress to block tax credits for wind energy. The Washington Post reported in November 2012 that the Heartland Institute, which received $1.6 million from Donors Trust and Donors Capital Fund in 2010 (27% of its budget), joined with the American Legislative Exchange Council (ALEC) to push model legislation to state legislators in an effort to eliminate state clean energy standards across the country. In addition, organizations that are part of the State Policy Network (SPN), which received $4.8 million from Donors Trust in 2010 (36% of its budget), published reports bashing clean energy standards that are now likely being used to attack clean energy policies in states across the country (like Kansas and Ohio).

Furthermore, the Guardian revealed in a third story that Donors Trust bankrolled the Franklin Centre for Government and Public Integrity, a newly established organization founded in 2009, which is running a campaign to “stop state governments moving towards renewable energy.” The Franklin Centre has strong ties to American’s for Prosperity and the Koch Brothers, including former staff members of both AFP and a Koch Family Foundation according to a PR Watch investigation.

Are these attacks ideological? Or are other fossil fuel interests like the Koch Brothers funding these efforts to stop a potential market threat? We know that fossil fuel corporations that have a financial incentive to stop the growth of the clean energy industry and their benefactors and foundations have funded many of these groups over the years. With an ability to hide the money trail through groups like Donors Trust, I would bet fossil fuel interests continue to fund fake grassroots campaigns and front groups to attack clean energy.

Filed under In The News, Pundit Masquerade Tagged with ALEC, American Legislative Exchange Council, Americans For Prosperity, Big Gas, Big Oil, Checks and Balances Project, Donors Capital, Donors Trust, Energy, Environment, Fossil Fuels, Franklin Centre, Greenpeace, Guardian, Kansas, Koch, lobbying, media, Ohio, State Policy Network

Fact Check on #SOTU and Rep. Doc Hastings

February 14, 2013 by Checks And Balances Project Leave a comment

In Tuesday night’s State of the Union address, President Barack Obama stated:

“Now, in the meantime, the natural gas boom has led to cleaner power and greater energy independence. We need to encourage that. That’s why my administration will keep cutting red tape and speeding up new oil and gas permits.”

House Natural Resources Committee Chairman Doc Hastings claimed in a response, yesterday, that Obama administration-created red tape has slowed down energy production.

The truth is that the oil and gas industry already has plenty of land and opportunities to drill. Oil and gas companies are sitting on millions of leased acres of public land that they’re using for production or exploration, and thousands of idle drilling permits. Meanwhile, the United States has seen oil production skyrocket on federal lands. Technology, geology and price determine where and how much industry drills, not red tape.

Instead of worrying about multi-billion dollar oil and gas companies, the Obama Administration needs to adopt a more aggressive policy when it comes to conserving public land. During President Obama’s first term, his administration permanently protected far fewer acres than his immediate four predecessors. The President and Congress need to adopt a more balanced approach to public land use, putting as much effort into protecting lands that are crucial to the nation’s tourism and outdoor recreation industries as they do expanding the oil and gas industries’ already-swollen public land holdings.

A few things Americans need to know about oil and gas production on public lands:

Industry is responsible for the majority of permitting delays. Last year, BLM announced it is moving to an online permitting system that will hopefully help companies cut down the time it takes them to properly file permit applications.

BLM Table of Average Application for Permit to Drill (APD) Approval Timeframes: FY2005 – FY2012

Industry is submitting far fewer permits to drill on public lands because of the shift from public lands’ natural gas resources to private lands’ shale oil deposits, and the federal government can’t approve a permit unless industry submits an application for it. More importantly, the federal government consistently approves drilling permits faster than industry can drill new oil and gas wells. The only thing holding back industry is industry.

BLM Summary of Onshore Oil and Gas Statistics

Industry does not use the drilling permits that have already been issued for oil and gas development. In fact, there are nearly 7,000 unused drilling permits that industry could develop on federal public lands.

BLM Approve Permits – Not Drilled table

According to the Department of Interior’s Oil and Gas Lease Utilization, Onshore and Offshore report, issued May 2012, “As of March 31, 2012, approximately 56 percent (20.8 million acres) of total onshore acres under lease on public lands in the Lower 48 States were conducting neither production nor exploration activities”

DOI Oil and Gas Lease Utilization Report

The latest oil boom in the lower 48 states is due largely to an unconventional resource known as “shale oil,” (oil trapped within shale rock). The vast majority of both “shale oil” and “shale gas” (natural gas trapped within shale rock) is found under private and not public lands. The location of these resources, not safeguards for air and water, explain the shift in drilling from public to private lands.

Adam Sieminski, U.S. House, Subcommittee on Energy and Power Committee on Energy and Commerce, 2 August 2012

Filed under Blog, In The News, Permitting Tagged with Big Gas, Big Oil, BLM, Checks and Balances Project, Congress, drilling, hastings

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