11/14/2014 04:37 pm ET Updated Jan 14, 2015

Second Canadian Company Completing Tar-Sands Pipeline into the U.S.

Originally published by The Washington Spectator.

For six years, TransCanada has negotiated federal and state laws, and contended with the opposition of environmental organizations and landowners, to build the Keystone XL: a 36-inch-diameter, 1,700-mile pipeline that, if completed, would transport 830,000 barrels per day (bpd) of Canadian tar-sands oil from Alberta, Canada, to the Gulf Coast.

The U.S. State Department has not issued the required presidential permit, which would declare the importing of tar-sands oil in the "national interest." And the Nebraska Supreme Court just heard oral arguments on a landowners' lawsuit that could cost TransCanada another year if it has to reapply for its permit in the state.

The stalled process has led one equities analyst to observe that, "Keystone XL doesn't look like it will ever get fully up and running."

Yet TransCanada's fight, and the Keystone XL pipeline, might be moot -- along with the campaign that brought together a broad coalition of environmental groups working to block the project and contain the import of tar-sands oil.

According to State Department documents, annual corporate reports, and interviews with company officials and attorneys, Enbridge Inc. and its U.S. subsidiary have circumvented the pipeline permitting process. By the middle of next year, the Calgary-based company will be transporting 800,000 bpd of tar-sands oil from western Canada into the U.S.

Barring litigation, or action by the State Department, Enbridge will achieve what has eluded TransCanada. And it will have done so with scant attention from the media and without the public debate generated by campaigns against the Keystone XL.

Enbridge will be transporting the same tar sands described by former NASA climate scientist James Hansen as one of the "dirtiest most carbon-intensive fuels on the planet." Mining and burning Alberta's tar-sands oil alone, University of Saint Thomas (Minnesota) engineering professor John Abraham warned in Scientific American, will result in a global temperature increase that's equivalent to "half of what we've already seen."

"It's a complicated story," an environmental lawyer said of Enbridge's pipeline, "so it's not getting much media coverage." Also lacking media attention is Enbridge's role in the largest inland oil spill in U.S. history, the result of a ruptured pipe in 2010.

How They Did It

In November 2012, Enbridge's U.S. subsidiary applied for a presidential permit that would allow the company to import tar-sands oil, requesting authorization for "full capacity" operation (800,000 bpd) of its "Alberta Clipper Pipeline."

The Alberta Clipper begins in Alberta, crosses the Canadian border, and continues for 327 miles, ending at a tank battery in Superior, Wisconsin. From there, the oil would flow to Cushing, Oklahoma, then to the Gulf Coast for refining and export.

After 18 months, Enbridge lost patience with the State Department.

In a June 16, 2014, letter to the State Department's Office of Environmental Quality and Transboundary Issues, a lawyer representing Enbridge announced that the company was changing course. (The Alberta Clipper Pipeline is also known as the "Line 67 Project.")

"As we explained, the unforeseen Line 67 Project permitting delay at the Department of over a year has led Enbridge to recently assess options for achieving this additional capacity ... Enbridge intends to construct the interconnections and Pump Upgrades, and to operate those facilities to increase the flow of oil on the Line 67 south of border segment, whether or not a new Presidential Permit is issued by the Department" (emphasis added).

Enbridge wasn't asking.

It was informing the State Department of its plans to press ahead.

With or Without Permission

The State Department has authority over construction within three miles of international borders. Enbridge has already built one stretch of the Alberta Clipper Pipeline in Canada. It has built another stretch in the U.S. What it lacks is permission to connect them.

Yet Enbridge has another permitted line, though not for tar sands, that crosses the border. In a bewildering paragraph in the permit application, Enbridge attorneys describe a series of "interconnector" pipelines leading to the existing transborder pipeline. By diverting tar-sands oil to the pipeline that already crosses the border, Enbridge circumvents the State Department permitting process.

The transborder pipe was built in 1967, long before the exploitation of tar-sands oil was commercially viable. Terri Larson of Enbridge Energy Partners, in Houston, said in an email that the older pipe has recently been replaced with 17 miles of new 34-inch pipe. And that the "maintenance was allowable under the existing presidential permit."

"The State Department has been fully briefed on the interconnection and provided Enbridge with a letter on July 24, 2014, concluding that, 'Enbridge's intended changes to the pipeline outside of the border segment do not require authorization from the U.S. Department of State,'" Larson said.

An attorney from Enbridge's law firm, Steptoe and Johnson, also responded by email to the legality of using an existing pipe to move tar-sands oil across the border.

"The answer to your question on whether Enbridge can expand daily capacity to 800,000 bpd ... using an already permitted line to move the oil across the border, without a new presidential permit is yes," David Coburn said.

Enbridge Vice President Leigh Kelln told investors on a September 13, 2014, conference call: "We're expanding the capacity of our Alberta Clipper system from 450,000 barrels a day to 800,000 barrels a day. This capacity is expected to be permitted and available by the middle of next year."

As far as Enbridge is concerned, a "Keystone XL Clone" is a done deal.

It's Illegal

Environmentalists, unsurprisingly, disagree.

"The State Department is charged with determining if the importing of Canadian tar-sands oil is in the national interest," Sierra Club Staff Attorney Doug Hayes said in a telephone interview.

"Enbridge applied for a permit a year ago [sic], then in June informed the State Department that the process was taking too long. So they came up with their scheme to avoid, to try to avoid, the State Department permitting process and expand the pipeline immediately. And the State Department basically looked the other way and said, 'That's fine with us.'

"But what they are doing is illegal. First of all, it is illegal because it violates the National Environmental Policy Act. It also violates the existing presidential permits for the Alberta Clipper and the adjacent Line 3 Pipeline.

"They are borrowing a 1967 permit and saying that, 'For the Alberta Clipper, we are going to divert the flow over to this pipeline [to cross the Canada-U.S. border]," Hayes continued.

In March, the Sierra Club filed a Freedom of Information Act request with the State Department, asking for permit-application information and State Department correspondence with Enbridge.

The request was denied.

"This is all happening behind closed doors," Hayes said, "It is a deliberate effort to keep the public out of the process."

The Kalamazoo River Spill
Minnesota is one of four states that Enbridge's Alberta Clipper will cross. Environmentalists, and some Minnesota legislators, have opposed the pipeline, and a second proposed Sandpiper Pipeline, for which Enbridge is attempting to secure a state permit.

"I have serious concerns about the safety of Enbridge's pipelines after the Kalamazoo River spill," Minnesota state Representative Frank Hornstein (D) said in a phone interview.

Part of the Kalamazoo River 100 miles east of Detroit was the site of the largest inland oil spill in U.S. history. A $1 billion-plus cleanup is still not complete four years later.

The details are spelled out in the "accident summary" in a National Transportation and Safety Board report (NTSB):

On the evening of Sunday July 25, 2010, at approximately 5:58 p.m., a 4-foot- long pipe segment in Line 6 B, located approximately 0.6 miles downstream of the Marshall, Michigan, pump station ruptured. The Line 6 B is owned and operated by Enbridge Energy Inc. ...

The accident resulted in an Enbridge reported release of 20,082 barrels (843,444 gallons) of crude oil. ... The rupture location is a high consequence area within a mostly rural, wet, and low-lying region. The released oil pooled in a marshy area before flowing 700 feet south into Talmadge Creek, which ultimately carried it into the Kalamazoo River.

NTSB investigators found that technicians working at Enbridge's control center in Alberta did not respond to the spill and activate remote-control valves until nearly 17 hours after the pipe ruptured.

According to related testimony at a September 15, 2010, House Committee on Transportation and Infrastructure hearing, 13 alarms in the control center had been ignored or misinterpreted. Enbridge technicians in Alberta were informed of the spill by a utility worker from another company who called from Marshall, Michigan.

The late Jim Oberstar, a Minnesota Democrat who chaired the House Transportation and Infrastructure Committee's September 2010 hearing, stated that Enbridge had requested a two-and-a-half-year extension from the Department of Transportation to repair 329 defects, of which the company had been aware for two years.

Oberstar also said that inspections Enbridge conducted in 2005, 2007 and 2009 had detected a defect in the pipe that ruptured at Marshall. No repair was made because in the company's judgment, the problem did not reach the repair criteria defined by the Pipeline and Hazardous Material Safety Administration (PHMSA).

None of this information, Oberstar said, had been provided to members of the House Subcommittee on Railroads, Pipelines and Hazmat, when at an earlier hearing they questioned an Enbridge executive about pipeline integrity and spill-detection. That hearing, as it turned out, was held exactly 10 days before the Kalamazoo spill.

State-Level Challenge

In a telephone interview, Hornstein, who represents a Minneapolis district in the Minnesota Legislature, said that considering what is known about the Kalamazoo spill one would expect Enbridge to agree to reasonable environmental safeguards.

That, however, was not the case.

Hornstein was one of four legislative committee chairs who signed a letter to Minnesota's Environmental Quality Board, protesting Enbridge's failure to agree to safety requirements in proposed legislation.

Among the requirements:

* Provide monitoring equipment within three hours of a discharge or to develop an annual plan to deliver monitoring equipment to a discharge site;
* Provide containment booms from land across sewer outfalls, creeks, ditches and other places where oil and other hazardous substances may drain in order to contain leaked material before it reaches those resources;
* To have capability to deliver containment booms, boats, oil recovery equipment and trained staff within eight hours of a confirmed discharge to recover 10% of a worst case discharge;
* Deliver equipment to protect sensitive environmental areas and drinking water intakes, within 60 hours of a major spill.

Hornstein said that representatives of Enbridge met with members of the Minnesota House of Representatives to discuss the proposed safety requirements.

"Then they went to work in the Senate and had the word 'pipeline' stripped from the [transportation safety] bill. If the railroads can agree with these safety measures, why can't Enbridge?"

The Alberta Clipper passes through Minnesota. A second Enbridge pipeline, the Sandpiper, has been put on hold by the Minnesota Public Utilities Commission, after environmentalists and legislators, including Hornstein, protested.

"Enbridge ignored our requests to consider a southern route for the pipeline, which would have avoided wetlands and lakes and Native American's rice beds where a spill would be a disaster," Hornstein said.

Tar-Sands Spigot Opens

In September, three of the five members of the commission directed Enbridge to consider six alternate routes for its Sandpiper Pipeline.

Enbridge's Alberta Clipper Pipeline is unlikely to encounter any such administrative delays. At least not at the federal level.

A State Department spokesperson said that, "In the case of Line 3, the department determined that Enbridge's proposed replacement of the border segment was consistent with the authorization in the existing presidential permit."

He added that the State Department issued a Federal Register notice on August 18, 2014, which includes new information provided by Enbridge regarding the company's intention to use its existing line to move oil across the border and ramp up pumping beyond the border. And that in both cases, he stressed that he was not speaking for state and local entities, which could exercise their own authority.

While Terri Larson in Enbridge's Houston office described using an existing pipeline to move oil across the border a "short term" solution "that does not address the longer term need," David Coburn, the D.C. attorney handling the permit, says the company can import 800,000 barrels of tar sands oil per day "with no additional permit."

Whether that is a contradiction or a distinction without a difference, in six to eight months the Canadian tar-sands spigot opens to full capacity.