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Need to Re-Examine Conflict of Interest Law

Update, 3/21/13, 10am: Mother Jones just broke their story on this same topic of major conflict of interest. This is the second time citizens and press have been bamboozled by a report that was written for and by TransCanada. Enough of big oil thinking they can just buy a permit. It’s time for Sec. Kerry and Pres. Obama to step in and deny this risky pipeline. Lisa Song, with Inside Climate News, first wrote about the conflicts.

As a reminder to our readers, the Nebraska DEQ report was also written by TransCanada contractors and paid for by TransCanada. Does anyone really think we have “pile of environmental reviews” as Rep. Lee Terry and Gov. Heineman like to say we do on this risky pipeline or do we have a pile of reviews written and paid for by oil companies so they can make more money while our communities take on all the risks.

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Just when we hoped that maybe, just maybe, this time the State Department review would be a truly non-biased report, Lisa Song with InsideClimateNews released an article revealing that at least two of the agencies contracted to review the pipeline, EnSys Energy and IFC International, have ties to the industry and the firms that will benefit from the KXL. EnSys and IFC were hired to conduct the market analysis portion of the SEIS, and found that “the Keystone XL pipeline ‘is unlikely to have a substantial impact’ on the rate of Canada’s oil sands development.” This is the typical conclusion made by those who would like to see the pipeline approved because they see it as evidence for climate change impacts to not be included in the analysis of the project. In response to InsideClimateNews’ findings that EnSys has a conflict of interest in the project (EnSys has worked with Exxon, BP, and Koch Industries, which all have interest in seeing this pipeline built), EnSys President Martin Tallett said “We don’t do advocacy…Our goal is to tell it like it is, to tell the way we see it…” Tallett goes on to attempt to validate EnSys’s independence from the oil industry by saying:

“although his company’s clients include the American Petroleum Institute and other industry interests, EnSys has also worked against the oil industry. EnSys employees acted as expert witnesses for various state water agencies in court cases on groundwater contamination from MBTE, a gasoline additive.”

 The obvious implication of Tallett’s statement is that if EnSys is willing to work for both sides, then their input into this report must therefore be unbiased and trustworthy. But EnSys didn’t work against the oil industry in these litigation cases – Tallett worked against the MBTE industry.

For this to hold any significance, I need to delve into some technical information regarding this series of cases in which Tallett implies that EnSys was some sort of crusader for clean water. MBTE is a gasoline additive used to reduce air pollution emissions, and is one of two ways to produce “reformulated gasoline” (RFG), which is used in order to comply with Clean Air Act Standards (ethanol RFG is the other). States like New York and California enacted laws placing a ban on MBTE RFG because it was found to be linked to groundwater contamination. The Oxygenated Fuels Association (OFA) sued these states because the laws would hurt their business and they argued that the Clean Air Act should pre-empt the MBTE bans. The OFA argued that the MBTE resulted in lower air pollutant emissions than the emissions that result from using the ethanol additive, so under the Clean Air Act guidelines, MBTE should continue to be the first choice when refiners look at which RFG is better to use.

In defending its ban of MBTE, the State of New York used EnSys President Martin Tallet as “an expert on refinery modeling” to discredit the testimony of OFA’s refinery expert, David Hirshfeld. Basically, to demonstrate that the MBTE ban would go against the Clean Air Act’s standards, Hirshfeld ran a model that predicted which of the eight EPA accepted properties refineries would use to create ethanol if MBTE was banned. His argument rested on the assumption that the banning of MBTE would result in air pollutant emissions higher than those that exist when MBTE is used. Tallett discredited Hirshfeld’s model by finding that Hirshfeld had placed constraints on three of the 8 properties when he shouldn’t have in order to reach the conclusion that ethanol resulted in more  emissions and thus lesser compliance with the Clean Air Act. Finding that Hirshfeld had done this in his model made it obsolete and discredited his testimony—the State of New York won the case.

When Tallett modeled the emissions that would occur under Hirshfeld’s model and took away the constraints Hirshfeld had in place, he found that “in some cases, switching to ethanol RFG would result in lower emissions.” However, this doesn’t appear to reflect reality. Upon further research I found that the Energy Information Administration agrees with Hirshfeld—ethanol emits significantly more air pollutants than MBTE does. In summary, Tallett’s testimony had nothing to do with concern for water quality. His sole purpose in the case was to discredit another refinery modeling expert.  This should of course lead us to ask why Tallett found an interest in being an “expert witness” in this case. Is it because the refineries he was in business with had nothing to lose and everything to gain by having the MBTE competition with ethanol removed from the RFG market?

While I am certainly not arguing against the use of ethanol or that MBTE should make a come-back; the details of this case, OFA vs. State of New York sheds light on what we can expect out of Martin Tallett and EnSys. These cases against MBTE are what Tallett is using to lend himself and his company credibility. Using these cases as evidence that EnSys has “been against the oil industry” before is not only misleading; it’s a flat out lie. This case is not evidence of EnSys being against the oil industry, it’s evidence of a company resorting to drawing upon a past role surrounding an obscure acronym that most people don’t know about in order to fool American citizens and the U.S. Government into believing that they are not completely aligned with the oil industry.

Last week an article appeared in the National Geographic that explained how the KXL has marked a “new battle line” in Cushing, OK. In it, author Bret Schulte noted:

It’s perhaps no wonder, then, that Keystone XL, whose clearest beneficiaries are Canadian oil producers and Gulf Coast refiners, has not been able to stir a great deal of grassroots support.”

EnSys’s expertise lies in the refining sector. This expertise can, on the surface, lend credibility to a market analysis done on the Keystone XL looking at how refineries will be affected. But that credibility gets wiped away when it becomes clear that EnSys will never be against the oil industry’s interests. There are many more experts out there, including those in Canada, who confirm again and again how important the KXL is to expanding the tar sands—and how the expansion of tar sands will mean “game over” for the climate.

The commissioning of EnSys to conduct the market analysis is yet another cog in this broken machine we call Federal Environmental Reviews. There is certainly more research to be done on additional conflicts of interests that may exist in the current SEIS document, but I’m not sure that I really need to find any more evidence that there is something seriously wrong with the way oil pipelines are permitted. On a quick Google search, I have not found a single pipeline that was denied under NEPA standards. Please, someone, if you can find a case, let me know. Otherwise, I’m going to continue to believe that the Keystone XL will be a historical first.

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