State Department Inspector General Probing Keystone XL Contractor’s Conflicts of Interest

May 29, 2013 by 7 Comments

In yet another investigation into the Obama Administration’s activities, the State Department Inspector General is probing the conflicts of interest surrounding the contractor that performed the Keystone XL review,.

ERMProposalThe American public was supposed to get an honest look at the impacts of the Keystone XL pipeline. Instead, Environmental Resources Management (ERM), a fossil fuel contractor, hid its ties from the State Department so they could green light the project on behalf of its oil company clients.

Hiring an oil company contractor to review an oil pipeline that its clients have a financial interest in should be illegal – and it is. The Federal Government has strict laws to avoid conflicts of interest and prevent the hiring of contractors who cannot provide unbiased services.

Unredacted documents from the contractor’s proposal (revealed by Mother Jones) show that the company had worked for TransCanada, ExxonMobil and other fossil fuel companies that have a stake in the Canadian Tar Sands.

But, ERM misled the State Department at least twice in its proposal (see C&BP’s original post on ERM’s conflicts of interest)– which may have led to its selection by the State Department to review the Keystone XL pipeline.

OCI Question 6

First, ERM answered “No” to the question “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 appears to have added to the Yes/No questionnaire that, “ERM has no existing contract or working relationship with TransCanada.” Regardless of the addendum, the oil company contractor misled the State Department by checking “No” to the specific question above. Despite the fact that unredacted documents show that ERM worked for TransCanada and other fossil fuel companies with a stake in Keystone XL pipeline in the three years prior to its proposal.

Second, ERM claimed it was not an energy interest. The State Department question defines an energy interest in part as any company or person engaged in research related to energy development. Yet, ERM has worked for all of the top five oil companies and dozens of other fossil fuel companies. In other words, ERM is clearly an energy interest.

How can we trust ERM to perform an honest review of the Keystone XL pipeline, if it can’t answer a yes/no question honestly?

These misleading statements should have been flagged by the State Department and the contractor should not have been able to perform the review because of these seeming conflicts of interest.

ERMLetterBecause of the issues above, Checks & Balances Project (C&BP) and 11 environmental, faith-based and public interest organizations sent a letter  [.PDF] on April 8, 2013, calling on Secretary of State John Kerry and the State Department Deputy Inspector General Harold Geisel to investigate two things: first, whether ERM hid conflicts of interest which might have excluded it from performing the Keystone XL environmental assessment and second, how State Department officials failed to flag inconsistencies in ERM’s proposal.

A few weeks later, C&BP received a voicemail from a Special Agent at the State Department’s Office of Inspector General (OIG):

Hello Mr. Elsner, my name is Special Agent Pedro Colon from the State Department’s Office of Inspector General.  I’m calling to inform you that we have received your request and are reviewing the matter.  If you have any questions please contact me at 703-284-2688.

On May 7, 2013, I called Special Agent Colon but he was unable to speak at the time. I followed up the next day and spoke with the Special Agent via phone regarding the request for an investigation. I asked a few basic questions about the status of the complaint and asked specifically if C&BP would be informed should the complaint be fully investigated by the Office of Inspector General (OIG). Special Agent Colon informed me that he could not speak to any of the questions and referred us to other staff in the OIG.

On May 9, 2013, I received an email from the OIG General Counsel saying, “that the complaint was being processed per the OIG hotline procedures and is under review.” (See the entire email correspondence here [.PDF])

I then asked the OIG General Counsel the same question he asked Mr. Colon:

If the hotline is moved out of the review process and onto the next step (an investigation?), will I be notified?

The OIG  replied via email saying that the OIG Office of Investigations will not comment if it is engaged in an investigation.

The correspondence between C&BP and the OIG indicates that there is a probe into the Keystone XL review conflicts of interest.

The public was supposed to get an honest look at the impacts of the Keystone XL pipeline. Instead, ERM, an oil company contractor, misled the State Department, in what appears to be an attempt to green light the project on behalf of oil industry clients.

The American Public needs a full investigation into the conflicts of interest and misleading statements of the Keystone XL review contractor, Environmental Resources Management.

Secretary Kerry needs to stop the Keystone XL process until the Inspector General completes a full investigation of these conflicts of interest and the State Department has an unbiased review of Keystone XL’s impact.

Filed under KeystoneXL Tagged with , , , , , , , , , , , , , ,

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

May 10, 2013 by 1 Comment

ALEC Most WantedThe 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.

ALEC's_Most_Wanted OriginalAs 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 , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

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

April 9, 2013 by Leave a comment

ERMLetter

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

Originally posted on April 9, 2013. 

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 

ERMProposal

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 , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

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

April 1, 2013 by Leave a comment

JIM WATSON/AFP/Getty Images

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 , , , , , , , , , , , , , , , , , , , , , , , ,

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

March 31, 2013 by Leave a comment

ERMFossilRelationshipsBlogEnvironmental 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 , , , , , , , , , , , , , , , , , , , , , , ,

Senators get it wrong on oil & gas production at Jewell nomination hearing; Industry is following the oil to nonfederal lands

March 8, 2013 by Leave a comment

The Senate Energy and Natural Resources convened, Thursday, to question President Obama’s Interior Sec. nominee, REI Chief Executive Officer Sally Jewell. The three-hour hearing was generally friendly, but some Senators couldn’t pass up the chance to repeat oil and gas industry talking points, rather than deal in facts.

The Checks and Balances Project watched the hearing and used Twitter to fact check senators. Sen. Lisa Murkowski (R-AK), Sen. Joe Manchin (D-WV) and Sen. Tim Scott (R-SC) all ignored the facts about western land use and energy development at various points during the hearing.

Here are five statements from the hearing where senators got it wrong on U.S. oil and gas production*:

“They’ve driven us backward on the development of nearly a trillion barrels of oil shale in the Green River formation in Colorado, Utah, and Wyoming.”

– Sen. Tim Scott (1:29:38 – 1:30:05)

The facts: BLM released a revised PEIS late in 2012 that gave oil shale speculators access to 600,000 acres of public lands. For more than a century, people have tried and failed to make oil shale – a rock that doesn’t actually contain oil – a viable energy source. Along the way, billions of American taxpayer dollars have been risked, with nothing to show for it. According to Taxpayers for Common Sense, the federal government awarded nearly $7 billion in the 1980’s (over $12 billion adjusted for inflation) on oil shale loan and price guarantees.

Being from South Carolina, Sen. Scott may not know all this about oil shale, since they don’t have any. We suggest he reads our Century of Failure report, and visits No More Empty Promises, to learn more.

* * *

“If you look at the amount of production we have off of federal lands, that you would be responsible for, has declined, when private land production has increased. So it looks like the Department of Interior was going a different direction when the economy and the market was driving it – in the private sector – in a complete different direction.”

– Sen. Joe Manchin (54:20 – 54:45)

The facts: Earlier this week the Salt Lake Tribune ran a story on a new report which shows that price and geology are the reason there’s more drilling on private lands today:

Overproduction of U.S. natural gas, not burdensome drilling regulations, is driving energy developers from western public mineral leases to non-federal lands rich in oil to the east…According to the new report, 89 percent of shale oil and mixed oil and gas in the Intermountain West occupy non-federal deposits even though the feds control much of the region’s lands.

Phil Taylor at Greenwire also wrote on oil shale production on federal lands, showing that it’s actually on the rise.

* * *

“Despite tremendous resources on federal lands, nearly all gains in energy production have occurred on State and private lands.”

– Sen. Lisa Murkowski (Opening statement)

The facts: In 2011 the Bureau of Land Management held three of its five largest-ever lease sales for the rights to drill on public land for oil and gas. Those are just some of the 6,314,914 acres of public land the Obama Administration has leased to oil and gas companies – nearly 2.5 times as much as the Administration has permanently protected. A Denver Post story, U.S. oil and gas drilling moving to private land where the shale is, cited a new report from the Center for Western Priorities on the industry’s shift to drilling on nonfederal lands, saying that:

…nationally 93 percent of the shale oil and mixed oil-gas plays and 90 percent of the pure shale natural gas plays were not on federal land.

Oil and gas companies have plenty of public land – so much that 20 million acres of leased lands and nearly 7,000 approved drilling permits lay idle. The most valuable commodities are on private lands, so that’s where industry is drilling.

* * *

“It seems the President’s ‘all of the above’ strategy has not included public land very much. It seems like our success has been on private lands, state lands, but not on public lands, federally owned.”

– Sen. Tim Scott (1:31:08 – 1:31:20)

The facts: Obviously, Sen. Scott also needs to get up to speed on basic facts on U.S. oil and gas production. If CWP’s report isn’t enough, Sen. Scott should read a recent Congressional Research Service report that stated:

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.

Sen. Scott may also want to check out a report (pg. 22) from the Bipartisan Policy Center that states:

This shift [in drilling location] generally reflects a coincidence of geography. The large shale formations that have attracted most of the recent development activity are located in parts of the country where the federal government simply does not have large land holdings (including notably the Bakken, Barnett, Haynesville, Marcellus, and Fayetteville plays).

* * *

“This administration has obstructed access to billions of barrels of oil in ANWR, off our Atlantic, Pacific, and Gulf coasts, and on federal lands out west.”

– Sen. Tim Scott (1:29:38 – 1:30:05)

The facts: The oil and gas industry are sitting on 7,000 idle, green lighted drilling permits, and the federal government consistently approves drilling permits faster than industry can drill new oil and gas wells. Any delays in the permitting process are largely attributable to industry, and not the federal government.

If Sen. Scott would like to come visit the West to see this all for himself, we’d be happy to show him around.

*Transcribed by Checks and Balances Project from Energy and Natural Resources Committee Archived Webcast,

Filed under Blog, In The News Tagged with , , , , , , ,

#NYFrackingScandal Hits Cuomo Administration: Newly Disclosed Documents Show Conflicts of Interest

February 11, 2013 by Leave a comment

Photo from NYPost.com

With only two days before the expected release of New York’s Environmental Impact Assessment on fracking (also known by the industry term hydraulic fracturing), Governor Andrew Cuomo’s administration is at the center of a new conflict of interest scandal regarding two of his top aides.  Today, seven groups requested the Albany County District Attorney General David Soares investigate the Cuomo Administration’s conflicts of interest surrounding two staffers that hold “key positions in New York’s decision over whether to allow high-volume hydraulic fracturing.”

There are looming questions on the impartiality of Lawrence Schwartz and Robert Hallman, two top Cuomo Administration officials, who have significant influence on the Governor’s fracking decision. New documents obtained by DeSmogBlog through New York’s Freedom of Information Law (FOIL) show that Mr. Schwartz has significant stock holdings in companies that stand to benefit from fracking in New York state, and that Mr. Hallman failed to make specific financial disclosures, raising questions about his objectivity on the issue.

The two top aides, Lawrence Schwartz, Secretary to Governor Andrew M. Cuomo, and Robert Hallman, Deputy Secretary for Energy and Environment, have significant oversight within the Cuomo Administration on the issue of hydraulic fracturing. According to the groups’ letter, Mr. Schwartz supervises all state deputies and commissioners, including Mr. Hallman and the Commissioner of the New York State Department of Environmental Conservation – the agency that is tasked with studying high-volume hydraulic fracturing and developing the state’s policy regarding this extraction technique. Mr. Hallman is the state’s highest gubernatorial staff member who has oversight over the state Department of Environmental Conservation.

According to financial disclosure documents, Schwartz has substantial holdings in companies engaged in shale gas development, including ConocoPhillips, Occidental Petroleum and ExxonMobil. ExxonMobil alone holds 43,000 acres of leases for fracking in New York under its subsidiary XTO Energy Inc. Schwartz also identified “Williams Co.,” apparently a reference to “The Williams Companies Inc.,” a pipeline company that plans to build a $750 million pipeline through the southern portion of New York.

Mr. Hallman failed to specify his stock holdings in his financial disclosure forms, which seems to violate (at the very least) the spirit of N.Y. Pub. Off. § 73-a. The law states that “Public officials are required to list “EACH SOURCE” of income greater than $1,000 and “the type and market value of securities… from each issuing entity” greater than $1,000,” according to the letter from seven groups to District Attorney General Soares. Instead of disclosing each source, Mr. Hallman listed “various common stock” and “various corporate bonds.” His lack of disclosure should serve as a red flag and calls into question his impartiality on the state’s fracking decision.

Furthermore, records obtained via the FOIL request indicate that fracking companies have recently worked directly with Cuomo Administration officials.  XTO Energy Inc, a subsidiary of ExxonMobil, wrote to Mr. Schwartz and Mr. Hallman requesting changes to the state’s draft regulations on fracking in August 2012. And, The Williams Companies communicated with Mr. Hallman regarding natural gas pipelines twice in the summer of 2012.

New York state law states that public officials should avoid personal investments that could “create substantial conflict between his duty in the public interest and his private interest.” Both Mr. Schwartz and Mr. Hallman may have conflicts of interest that violate this standard.

Today during a press conference in Albany, Alex Beauchamp, Food & Water Watch Northeast Region Director, said, “We are outraged to discover that Governor Cuomo’s top aide is so heavily invested in oil and gas companies. And further, that he made these investments during the very timeframe this administration has been considering whether to allow fracking in New York. Clearly, this administration must not allow fracking to move forward under this cloud of scandal.”

Learn more at NYFrackingScandal.com.

Filed under Fracking, New York, News Tagged with , , , , , , , , , , , , , , , , , ,

House Energy and Power Subcommittee promotes failed oil shale speculation, despite century of failure and new reports that world’s leading firm could lose big on Utah oil shale project

February 5, 2013 by Leave a comment

“It’s disappointing to see Rep. Whitfield and House Republicans recycling the same old failed energy ideas. Despite being awarded billions in taxpayer funds, all these oil shale speculators have to show is failure. We need real energy solutions, not more speculation and failed investments,” said Ellynne Bannon, western lands program manager for the Checks and Balances Project.

Key Facts

  • The Obama Administration has moved forward with new research and development leases for oil shale on public lands. In November 2012, the U.S. Bureau of Land Management finalized two new oil shale research, demonstration, and development leases to ExxonMobil and Natural Soda.
  • Oil shale is not oil. It is a rock that has to be heated to 700 degrees or more over months, or even years, in order to be processed into oil. Taxpayer dollars have already funded $3.2 billion dollars in loan guarantees and $3.7 billion in price guarantees to oil companies for oil shale with nothing to show for it except failed projects.
  • Some oil shale advocates like to point to the nation of Estonia as proof that oil shale can be a viable energy source. Unfortunately, Estonia isn’t saying the same thing about U.S. oil shale.  The CEO of Eesti Energia, Enefit’s parent company, a world leader in oil shale development has acknowledged that oil shale isn’t profitable and that “we have time” to wait and “we will not make any real investments” in the U.S. until the oil shale industry in Estonia is at a “new level.”
  • Just last month Enefit, a company trying to produce oil shale in Utah, came under fire from a key investor – the Estonian government – when it was revealed that the company could lose up to $100 million dollars on their project in Utah. It was also reported that Enefit’s Utah project has proven to be “unexpectedly difficult to do, and that tests indicate that Utah oil shale requires more energy to break down than expected, resulting in higher carbon dioxide emissions.

Filed under Blog, oil shale Tagged with , , , , ,

Natural Resources Committee can’t continue 112th’s land use approach in the 113th

January 4, 2013 by Leave a comment

“Those who cannot remember the past, are condemned to repeat it.”
– George Santayana, Life of Reason, Reason in Common Sense

Over the course of the 112th Congress, we stood witness to an approach to public land use that has swung spectacularly out of balance. Nowhere is this more evident than in the actions of the House Natural Resources Committee (HNRC). So as the curtain rises on the 113th Congress, we wanted to take a moment to remember the past two years, lest the nation be condemned to repeat them.

Any lip service paid by the HNRC’s leadership to a balanced energy approach has been thoroughly disproven by their actions. Rather than take a smart approach that creates the most energy while protecting our water, communities and resources for future generations, Hastings and his team spent the 112th falling over themselves to continue billions in taxpayer-funded handouts to oil and gas companies.

Under the leadership of Chairman Doc Hastings (R-Wash.) and his lieutenants, Rep. Doug Lamborn (R-Colo.) and Rep. Robert Bishop (R-Utah), HNRC focused on promoting the long-failed oil shale experiment. Their oil shale swindle would have given two million acres of public land to oil companies for oil shale speculation, while providing bargain basement royalty rates.

The bill (H.R. 3408), sponsored by Rep. Lamborn, would have provided no energy and no revenue to Americans – just millions in taxpayers handouts to the oil and gas industry.

House Speaker John Boehner named Lamborn’s bill a funding source for his highway bill, but an analysis from the nonpartisan Congressional Budget Office found that the bill would generate zero revenue.

The extremism of the HNRC didn’t stop there.  The committee also failed to address or even investigate the causes of the Deep Horizon spill in the Gulf of Mexico, or to consider policies needed to prevent a further spill – despite the billions in damages BP caused. To the contrary, HNRC voted multiple times to lift the temporary safety moratorium that was installed following the Gulf of Mexico spill.

The majority on the HNRC also fought tirelessly to secure more of our public lands – forests, canyons, waterways – for oil and gas drilling. Hastings and his peers ignored facts like record-level production, decreased nominations by oil companies and that new deposits like the Bakken Field and Eagle Ford are located on privately owned land.

Instead, they continually complained that oil and gas companies, which reaped some $136 billion in profits in 2011, and collected billions in taxpayer-funded handouts, were being mistreated.

The HNRC also failed to protect any new public lands as wilderness. This makes the 112th the first Congress since 1966 to not do so.

In the new Congress, Rep. Hastings remains HNRC chairman. Rep. Lamborn remains chair of the Subcommittee on Energy and Mineral Resources, and Rep. Bishop will remain chairman of the re-named subcommittee on Public Lands and Environmental Regulation. This means there is no reason to believe the balance of land use will correct itself.

Let’s hope that the American people remember the past, and let these politicians know they don’t want it repeated.

Filed under Blog, oil shale Tagged with , , , , , , ,

Oil shale: Energy’s pink unicorn

December 7, 2012 by Leave a comment

Norquist's pink unicorn

Grover Norquist, founder of the right wing, anti-tax group Americans for Tax Reform, recently spoke out about the folly of spending tax dollars on pink unicorns, since they don’t exist. Following his logic, government shouldn’t create handouts for oil shale, since it doesn’t exist as an energy source.

We want to see if Mr. Norquist is willing to join us in calling for an end to all oil shale subsidies.

After a century of efforts to turn oil shale into a viable energy source, no commercial industry for it exists. And, that’s even after the federal government has risked billions in taxpayer-backed handouts to oil companies in the name of oil shale, including a brand new $50 million subsidy that was just introduced in Congress.

Mr. Norquist’s position on pink unicorns came in response to Sen. Lindsay Graham’s (R-SC) statement about voting for tax increases. Norquist claims that spending cuts to ‘match’ tax increases won’t ever happen (In other words, the cuts will never come to exist, like pink unicorns).

“If you had a pink unicorn, how many dollars in taxes would you raise to trade for the pink unicorn? Since pink unicorns do not exist in the real world, it’s never occurred to me to worry about the senator from South Carolina.”
– November 28, 2012, NPR

Oil shale is the pink unicorn of energy.

Commonly confused with the shale oil being drilled for in the Bakken and Eagle Ford fields, oil shale is actually a rock that contains a fossilized organic substance called Kerogen. Kerogen was never subjected to the titanic heat and pressure that forms liquid oil. To take the place of Mother Nature’s process, oil shale speculators have to superheat the rocks to 700 degrees or more over months or even years, to create oil.

After a century of investment and research, oil companies haven’t found a way to duplicate those geologic forces in a commercially viable way.

In late November, the nonpartisan budget watchdog group Taxpayers for Common Sense released a report examining the billions of tax dollars that have been risked on oil shale speculation. Nearly $7 billion taxpayer-funded handouts in the form of loan and price guarantees for oil shale were made to oil companies in just the 1980s alone.

Coincidentally, just as Taxpayers released their report, Rep. Ralph Hall (R-TX) introduced a bill (H.R. 6603) with $50 million in new government handouts for the pink unicorn of energy, oil shale.

And, Rep. Hall is trying to give away this money even though companies involved in oil shale speculation say they don’t want or need taxpayer subsidies.

“We’re not asking for any special treatment[.] We’re asking to be able to proceed as any other industrial development would.
– Rikki Hrenko, CEO of Enefit American Oil, Bloomberg, February 27, 2012

Hall’s bill comes even after a Congressional Budget Office (CBO) analysis found that opening up public lands to commercial oil shale development would provide zero revenue.

That CBO analysis was sparked by Speaker Boehner and Rep. Lamborn’s proposal to use oil shale royalties to fund transportation projects. That plan had a number of flaws, including the fact that there is no commercial oil shale industry to generate royalties, and that another section of the bill slashed any potential royalties to bargain basement levels.

Oh, and Rep. Lamborn said oil shale wouldn’t help transportation funding.

After the Lamborn bill went nowhere in the Senate, the House again tried to prop-up oil shale by including new spending on oil shale research other legislation.  Cooler heads prevailed, and the amendment offered by Reps. Jared Polis (D-CO) and Gerry Connolly (D-VA) that struck funding for oil shale research from the appropriation, passed.

Rep. Hall’s bill is the third attempt by supposedly conservative members of Congress to prop up an industry that says it doesn’t need or want subsidies.

Maybe Mr. Norquist’s influence is waning in Congress, because Republicans continue to offer up pink unicorns as solutions to real energy challenges. We hope that he will lend his voice to the chorus of Americans asking our government to stop giving billion-dollar oil companies more of our tax dollars for a rock that supplies as much energy as a pink unicorn.

– Artwork by Ben Topf

Filed under Blog, In The News, oil shale Tagged with , , , , , ,

← Older posts

Follow

Get every new post delivered to your Inbox.

Join 65 other followers