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State Department Comes Under Fire for its Relationship with the Energy Industry – Again

October 13, 2011

A poster protesting the Keystone XL Pipeline, which would run from Canada to Texas.

The State Department has recently found itself to be the recipient of unwanted attention as a result of a Freedom of Information Act request.

The publicity comes from reports regarding the State Department’s relationship with the Canadian energy giant TransCanada. The accusations focus on a FOIA request from environmental advocates Friends of the Earth regarding the proposed construction of a new 1,700 mile pipeline that would run from Western Canada through the United States and end in Texas – the Keystone XL project.

In response to their FOIA request Friends of the Earth received an array of documents that indicate what the Friends believe to be the presence of an inappropriate relationship between senior State Department officials and TransCanada employees. The most controversial of the correspondences are between an American Embassy employee working in Ottawa on energy and environmental issues, Marja Verloop, and pipeline lobbyist Paul Elliott. These point to a conspiratorial relationship, in which Ms. Verloop heaps praise upon Mr. Elliott after TransCanada received support from Senator Max Baucus.

The State Department, on the other hand, claims that the documents obtained by Friends of the Earth only tell one side of the story and that Ms. Verloop maintained equal relationships with environmental groups as well as energy industry representatives. The State Department pledges that they will continue to keep the construction of the Keystone XL project transparent and even-handed, despite Mr. Elliott’s role in Secretary of State Hillary Clinton’s 2008 presidential bid.

The suspicion of government imbededness with the energy industry is not entirely shocking. Declassified 1970’s documents of Kissinger’s negotiations with the Canadians show that the US government has a history of heavy-handed interest in the energy sector.

History Repeats Itself?

A 1973 photo of Secretary Kissinger and King Faisal of Saudi Arabia in Riyadh, Saudi Arabia. By the end of the meeting Kissinger had failed to convince the Saudis to lift the oil embargo.

The National Security Archives digital collection houses more than half a million pages of previously classified US government documents, including some that shed light on the long history of the federal government’s relationship with the oil and gas industry and indicate that the US has a record of shadowy operations with the energy sector.

Take, for example, the memorandums detailing Secretary of State Henry Kissinger’s interest in the Mackenzie Valley Pipeline in the mid-1970s, when the US was on high-alert after the OPEC oil embargo of 1973 and was looking for ways to boost its own oil and gas industry and to safeguard against future disruptions to production.

The first telcon takes place in 1974 and documents a phone call between then Secretary of State Kissinger and former Secretary of the Treasury William Simon. During the discussion Simon indicates a desire to start negotiations on the Mackenzie Valley Pipeline. Simon said that he would be appreciative of Kissinger’s assistance so Simon could “whisper that in his [Donald Macdonald, Canadian Minister of Energy, Mines and Resources] ear tonight before the meeting tomorrow, we could really set the tone.” This thread is continued in the second telcon – a 1975 transcription of a phone call between Kissinger and Assistant Secretary of State for European and Canadian Affairs Arthur Hartman, in which Hartman indicates that the Americans and the Canadians are reaching a basis for negotiation on the pipeline.

Text from a declassified 1975 telcon showing the US' interest in a trans-Canadian pipeline

The final 1976 telcon between Kissinger and the Canadian Secretary of State for External Affairs Allen MacEachen and their respective assistants discussed a pipeline (ostensibly the Mackenzie Valley Pipeline) that would transport natural gas from the Northern Territories to British Columbia is of particular interest because the conversation turns to who will be favored to build the pipeline – with the American contingent pushing for an All-American construction project. The core of the final document highlights the State Department’s eagerness to manipulate official government procedure – by “allowing the President to move on this[the pipeline] expeditiously rather than wait for the regulatory process” – to generate an economic windfall for the American oil and gas industry; and to provide a closer energy source – things that the State Department desired in light of the OPEC embargo.

Text from a declassified 1976 telcon showing the State Department's eagerness to circumvent legislation

The negotiations – and the State Department’s efforts – were effectively ended when Canadian Justice Thomas Berger declared that the construction of such a pipeline would, among other things, violate the right of the First Peoples, the indigenous peoples of Canada. Justice Berger called for a ten-year halt on any development, effectively ending the discussions of a trans-Canada pipeline.

Until now, that is.

The Mackenzie Valley Pipeline was revitalized in 2004 and there is currently a consortium of five oil and gas companies involved in its tentative construction. Interestingly enough, the company that is now lobbying for the construction of the Keystone XL pipeline – TransCanada – is involved in the re-emergence of the Mackenzie Valley Pipeline as well. While they do not have a direct stake in the project, TransCanada would earn money via its financial support of the Aboriginal Pipeline Group, which has a third of the share of the project.

So What?

As the Kissinger transcripts and today’s State Department activities show, history repeats itself. These occurrences confirm that some in the US government often –then and now– feel justified to bypass the legislative process for “important” things, including energy and national security. Nonetheless, the exigency that is sometimes required to resolve pressing national issues does not trump the requirement that US officials follow US laws.

One way to improve agencies’ adherence to the rule of law is to continue to reinforce the principles of the Freedom of Information Act, which allows the public a mechanism to see what their agencies are doing – legally or illegally – in their name.

3 Comments leave one →
  1. Davey permalink
    October 13, 2011 5:36 pm

    All true. The government tends to be heavy-handed when it comes to the energy sector. However, it certainly doesn’t always work to their advantage. I’d estimate that when the federal government meddles, it helps and hinders in equal measure.

    It’s important to remember that the “oil business” and US federal government have had an ambivalent relationship since the Standard Oil breakup. In the past, the US State Department has certainly objected to (and interfered with) oil company’s relationships with other governments in the middle east; Saudi Arabia, Iran; and central & south america.

    If the environmentalists are upset, tell them to wait a spell. The pendulum will swing back against the energy sector soon enough.

  2. July 10, 2016 6:38 am

    As a boy the age of twelve, the searing memories from the creation of OPEC and the Arab Oil Embargo had a profound affect upon A rather interesting view of our nation in that suddenly we were “vulnerable”

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