The Corruption of Keystone: Congressional Permits to Drill Don’t Change Public Opinion

When TransCanada Corporation announced its plans for a Keystone XL pipeline expansion project in 2008, the company projected capital costs to be $4.3 billion for the entire project. After 6 years of waiting for US executive approval, including countless congressional votes, a Nebraska Supreme Court case and a president who has yet to budge, TransCanada increased estimated capital investments for the pipeline another $2.5 billion. The reason? “Lengthy delays,” undoubtedly exacerbated by community protests and opposition from environmental and social interest groups.

One of the loudest proponents of pipeline opposition, and arguably the most vulnerable, are North America’s Indigenous Peoples. For extractive companies, indigenous lands are one and the same with their profit source – approximately 30 percent of current extractive production is located on indigenous lands, along with an approximated 60 percent of future reserves. For indigenous communities, the presence of corporations in indigenous territories, regardless of consent, is fraught with social costs – extractive projects often threaten indigenous cultural practices, sacred sites and subsistence livelihoods. Corporations must be held accountable for the losses they impose on indigenous assets.

And in some ways, they have been held accountable. Social responsibility has been on the corporate radar for over a decade now, thanks to NGOs, student movements, protests and the legal system holding corporations morally accountable for their actions.

One major missing link in demanding corporate accountability: the government. Surprisingly Congress, meant to be the biggest advocate of the American public, has transcended silence on the pipeline to promote active pursuit of exploration and drilling permits. Our entitled government has taken it upon itself to grant TransCanada a social license to operate, as though it were another pithy “ye” or “nay” vote interrupting their afternoon nap.

Congress cannot grant a social license for the Keystone XL pipeline – the only people who can grant a social license to operate is the American public, the local communities and stakeholders affected by the project. Moreover, Congressional permits shoved down the American publics’ throats won’t change their opinion of the pipeline. Congress needs to realize that a social license to operate, much like a congressional mandate to lead, comes from Main Street – not Wall Street.

There is no way to gloss this over as Congress acting “for the common good.”When governments make decisions without citizens’ consent or support, including those of indigenous peoples’, they hurt the businesses within their borders. A recent report from First Peoples Worldwide found that governments that failed to recognize Free Prior Informed Consent (FPIC) or respect indigenous rights hosted extractive projects at the highest risk of community protests, work stoppages and inevitable profit loss. This is becoming increasingly evident in Canada, Indonesia, Ecuador, Peru and other emerging resource economies.

In 2013, a consortium of Canadian leaders (including industry representatives) warned that Canada is “heading for a gridlock in energy development that will rob the country of future wealth unless it can solve vexing environmental and Aboriginal conflicts.” Indonesia has become saturated with violent resource conflicts, with more than 2,230 indigenous communities requesting investigations into violations of their land rights. Also in 2013, auctions for oil and gas concessions in Ecuador and Peru encountered both vehement opposition from indigenous peoples and “underwhelming” interest from companies – raising speculation that the indigenous protests influenced companies’ decisions.

It’s a simple formula to understand – when a government doesn’t listen to its people, protests happen. Protests around extractive projects cause work stoppages and overrun budgets for companies like TransCanada, which is spending an extra $2.5 billion on its “delayed,” and heavily protested, Keystone XL pipeline.

The Keystone XL pipeline debate is not about climate change, oil independence, or increased jobs – it’s about government corruption. A government that overruns its peoples’ lands by granting eminent domain to corporations is the same government that causes civil unrest, corruption, violence and therefore high risk for companies. Without a social license, TransCanada Corporation faces a future of continued protests, site closures and diminished shareholder ratings – ultimately amounting to profit loss. The American public’s opposition to the pipeline is going to keep costing TransCanada, regardless of whether or not Congress grants the necessary permits, or even if the State Department signs off on the project. When both governments and extractive industries lack a social license to operate, it’s a lose-lose game.