TransCanada's Keystone Pipeline Network Under Investigation by Federal Regulators

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A month after revealing that TransCanada is under a compliance review for the Keystone 1 Pipeline, the Pipeline Hazardous Materials Safetyย Administration (PHMSA) disclosed it is also investigating theย operations of Keystone XL‘s southern route, renamed the Gulf Coast Pipelineย when the project was split inย half.

The results of these investigations could play a part in President Obama’s final decision on the Keystone XL permit that TransCanada needs to complete itsย Keystone pipeline network.ย According to the State Departmentโ€™sย website, one of the factors the KXL presidential permit review process focusesย on isย compliance with relevant federalย regulations.ย 

At TransCanada’s latest shareholder meeting in Calgary, Evan Vokes, a former employee turned whistleblower, asked CEO Russ Girlingย why the company had not disclosed the ongoing investigations in itsย current annual report.ย Girling acknowledged that the company is under review,ย butย assured shareholdersย thatย pipeline safety remains the company’s topย priority.ย 

After informingย stockholders that another whistleblower recently disclosed documents showing that TransCanadaย had brokenย the same rules that Vokes exposedย in 2010, he asked Girling what TransCanada had done to change things since Vokes worked for theย company.

โ€œTo the extent that they [the regulators] find anyย issues with our corporation, we will change to evolve but at the current time there has been nothing put forward that we need to respond to,โ€ Girling said. โ€œAcross 70,000 kilometers of pipeline and 64 billion dollars of rotating equipment,ย there are things we have to address everyday,โ€ย Girling said, withoutย citingย anythingย specific.

Vokes alleges TransCanada’s โ€œculture of noncomplianceโ€ has not changed. Mounting pipeline failures, including the Suffield Lateral line in Alberta, Canada that failed on May 11,ย help validate hisย claim.ย 

โ€œShareholders believe they have safe mom-and-pops blue chip shares,โ€ Vokes told DeSmog. โ€œBut the stock has a larger liabilityย than stockholders imagine.โ€

Vokes likened holding stock in TransCanada to โ€œroulette tableย investing.โ€ย 

Multiple noncompliance issues alleged by PHMSA raise questions about the integrity of the completed segments in TransCanadaโ€™sย Keystone pipeline network. The network is made up of the Keystone1ย Pipeline, theย Cushing Gulf Coast Extension, and the Gulf Coastย Pipeline. The northern route of the Keystone XL, if built, will complete theย network.ย 

by Julie Dermansky
Marking on the Gulf Coast Pipeline at anย anomalyย excavation site. ยฉ2013 Julieย Dermansky

The Keystone 1 line starts inย Hardisty, Alberta, andย connects to the Cushing Gulf Coast Extension pipeline in Steele City, Nebraska. Theย Cushing Gulf Coast Extension pipelineย ends in Cushing, Oklahoma,ย where it connects to the Gulf Coast pipeline, which ends up at refineries onย the Gulf Coast of Texas. The northern route of the Keystone XL, if built, would run from Hardisty to Cushing, where it would connectย toย the Gulf Coastย pipeline.ย 

The Keystone 1 pipeline had over a dozen spills in its first two years of operation. And TransCanadaย temporarily shut down theย pipeline when areas of extreme external corrosion were detected in Oct.ย 2012.

Cathodic protection is used to prevent pipelines’ external walls from corroding. Whenย DeSmog asked TransCanada if the Keystone 1 pipelines’ย cathodic protection failed, the company did not reply; however,ย aย spokesperson for the companyย told Politico that the problems were linked toย โ€œlow-voltage electric currents from Keystone and a nearby pipeline interfering with oneย another.โ€ย 

โ€œThat explanation describes a failure in the cathodic protection,โ€ Vokes told DeSmogBlog, โ€œIf the code of construction was followed, theย corrosion would not haveย happened.โ€ย 

TransCanada’s internal report on lessons learned from the building of the Cushing Extension recommends, โ€œaddressingย noncomplianceย issues.โ€ย 

PHMSA‘s final inspection reportย onย the Gulf Coast pipeline noted instances of TransCanada’s failure to adhere to the code.ย Theย companyย got unsatisfactory marks on welding procedures and installationย practices related to the pipelineโ€™s cathodicย protection.

Warning letters sent by the agency to TransCanada reprimanded the company for hiring unqualified welders and not protecting the pipeline’sย coating duringย installation.

TransCanada sent a letter in response, claiming the company had remedied all of the issues that had PHMSA concerned. It also assuredย the agency that all the anomalies (defects in a pipeline) identified by aย mandatory pressure test were inspected andย repaired.ย 

Public Citizen, an advocacy group, and the Tar Sands Blockade, a grassroots activist organization, conducted their own investigation of theย repair work done on the Gulf Coast pipeline. They remainย skeptical of the pipeline’s integrity because the same contractors whose non-compliant work led to the problems were tasked to fix them.

Both groups, along with concerned landowners on whose land the pipelineย wasย built, asked that PHSMA require TransCanada to doย a new pressure test to check the integrity of the repair work done, includingย segments of the pipeline thatย wereย replaced.ย 

PHMSA has the power to require an additional pressure testย โ€” orย shut a pipeline down โ€” if the agency โ€œfeels there is a serious risk,โ€ PHMSAย spokesman Damon Hill toldย DeSmog.

The agency did not requireย an additional pressure test of the Gulf Coast line, but Hill said, โ€œwe aren’t shyย about using the full force of our enforcement authority when we need to.โ€

Whileย no fines were issued when the final inspectionย report was completed, Hill said the agency reserves the right to fine TransCanada at the conclusion of its review of the pipelineโ€™sย operations.ย 

Vokes thinks it was irresponsible for PHSMA not to demand a new pressure test after Public Citizen reported observers found 125 excavation sites of possible anomalies in a 250-mile stretch of the Gulf Coast line.ย DeSmog asked TransCanada for the final count of the repairsย done to the pipeline, but the company never cited aย figure.

โ€œThe lack of accountability with regulators is appalling,โ€ Vokes said. PHSMA and the National Energy Board of Canada have done nothingย more then scold TransCanada.ย 

Compliance issues related to other aspects connected to the Keystone XL pipeline have also arisen.ย An environmental impact study in Texas was notย completed before President Obama fast-tracked the Gulf Coast Pipeline. Though the Sierraย Club lost a case to get a temporary injunction to stop the pipeline from being built, alleging the National Environment Protection Actย requires an environmental impact study, Michael Bishop, a landowner inย Douglas, Texas, is challenging the government with a similar lawsuit.ย 

Furthermore, President Obama has failed to nominate a new head of PHSMA in the required time allotted for him to do so. PHSMA hasย been without a leader for more than 425ย days.ย 

FBI SPYING ON PIPELINE ACTIVISTS

The FBI‘s monitoringย ofย the Tar Sands Blockade’s activities โ€œbreached its own internal rules,โ€ according a report by the Guardian, by โ€œfailing to get approval before it cultivated informants and opened files on individuals protesting against the construction of the pipeline inย Texas.โ€

by Julie Dermansky
Member of the Tar Sands Blockade during a tree sit in the path of the Gulf Coast Pipeline inย Winnsboro, Texas. ยฉ 2012 Julieย Dermansky

Documents obtained byย The Guardian and Earth Island Journal for the report revealed that the โ€œFBIโ€™s Houston office said it would share with TransCanada โ€œany pertinent intelligence regarding any threatsโ€ to the company in advance of a forthcoming protest.โ€ย Also that โ€œone FBI investigation, run from its Houston field office, amounted to โ€œsubstantial non-complianceโ€ of Department of Justice rules that govern how the agency should handle sensitiveย matters.โ€

โ€œThere is a raft of criminal behavior on the part of TransCanada that doesn’t raise the eyebrows of the FBI the way that a group of peacefulย protesters engaging in civil disobedience did,โ€ Tar Sands Blockadeย member Ramsey Sprague told DeSmog.ย โ€œYou have landowners who accused TransCanada of racketeering and eminent domain land theft issues,โ€ he said. โ€œTransCanadaโ€™s failure toย restore condemned land, leaving property like Julia Triggย Crawford’s in ruins, offers further proof the company ignores itsย contractualย obligations.โ€

Julia Trigg Crawford, a Texas landowner who fought against TransCanada’s right to condemn her land, and other Texas landownersย including Eleanor Fairchild and Michael Bishop who resistedย TransCanada before ultimately signing agreements with the company, eachย told DeSmogBlog that their land has not been restored to its originalย condition.ย 


Efforts to control erosion that began after the installation of the Gulf Coast Pipeline on Eleanor Fairchildโ€™s land inย Winnsboro Texas have failed. According to Fairchild her land has yet to be restored to its original condition.ย ยฉ2013 Julieย Dermanskyย 

Sprague is also concerned about TransCanada’s โ€œshoddy construction.โ€ The Tar Sands Blockade and Public Citizen documentedย questionable practices during the construction and repair of the Gulf Coastย pipeline that show damaged coating of the pipeline and holes in aย weld that light could shine through.ย 

President Obama’s decision to grant TransCanada the needed permit allowing the pipeline to cross internationalย bordersย could come at anyย time. Eight federal agencies have all completed reviews they wereย requested toย do.ย 

Issuing a permit for the northern route of the Keystone XL before PHMSA‘s investigations are completed would be contrary to the Stateย Department’sย own guidelines.

But who follows the rules these days?ย 

Image credits: Julieย Dermansky

Julie-Dermansky-022
Julie Dermansky is a multimedia reporter and artist based in New Orleans. She is an affiliate scholar at Rutgers Universityโ€™s Center for the Study of Genocide and Human Rights. Visit her website at www.jsdart.com.

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