TransCanada’s decision to purchase all of the pipe needed to complete the Keystone XL Pipeline before receiving a presidential permit could prove a costly mistake.

Not only is President Obama expected to reject the permit TransCanada needs in order to cross the U.S.-Canadian border, the company must recertify an expired permit before it can install the pipeline though South Dakota as well.

At a hearing that began on July 29 in Pierre, South Dakota, the state Public Utilities Commission (PUC) is tasked to decide if it should recertify the company’s permit to build the Keystone XL pipeline through the state. Those opposing the Keystone XL, referred to as interveners, are making the case that TransCanada is not up to the job.

During the first week of the hearing, a mix of members of the grassroots group Dakota Rural Action, Native American tribes, individual landowners, and a team of all of the interveners’ lawyers began presenting testimony challenging TransCanada’s narrative that the Keystone XL “will be the safest pipeline ever built.” The interveners claim that is a public relations ploy far from the truth about TransCanada’s performance record.

TransCanada bears the burden to prove it is capable of following the rules that the PUC set when the original Keystone Pipeline permit was granted in 2010, so it is no surprise that the company objected to the interveners’ introduction of evidence that showed the company has had problems with its other recently constructed pipelines, including the Keystone XL’s southern route, renamed the Gulf Coast Pipeline.

Lawyers for the interveners have also questioned the PUC’s impartially. They believe the commissioners’ pre-hearing rulings to exclude testimony relevant to their case was unjustified. But instead of letting the PUC’s move weaken their case, they laid the foundation during their examination of witnesses that enabled them to refer to the excluded documents in their cross-examination. It was a technique John White, an attorney for TransCanada, repeatedly objected to, but in many instances his objections were overruled. 

The interveners also challenged the credibility of the witnesses called by TransCanada and the PUC staff by pointing out the witnesses’ lack of expertise and potential conflicts of interest. Though the commissioners did not strike the testimony of any of the witnesses as requested by the interveners, the testimony given by some of those witnesses was tainted. 

“The PUC staff have gotten upset with us for accusing them on the record of being in collusion with TransCanada,” Bruce Ellison, a lawyer for the Dakota Rural Action group, told DeSmog. 

“We are just calling it as we see it based on their continued support of TransCanada to keep the PUC from hearing evidence it should hear about the realities of this trans-national and its hired witnesses – two of whom work for an engineering company that lists TransCanada as one of its clients – who are being called on to support TransCanada’s bid for recertification of its construction permit through South Dakota.”

David Schramm, vice president of EN Engineering, is one of the witnesses hired by the commission to testify as an expert witness on corrosion. When questioned about his relationship with TransCanada, he insisted he never worked for the company and didn’t know if EN Engineering was currently doing business with TransCanada, despite the fact that TransCanada was listed as a client on EN Engineering’s website, according to the interveners’ attorney. Schramm did acknowledge the company had done work for TransCanada.

The interveners also questioned the credentials held by Meera Kothari, who was the manager of technical services pipeline engineering for Keystone Oil Projects, and who had oversight responsibility for design and engineering for the Keystone XL Pipeline project. She was recently moved to another position in the company, but was one of those chosen by TransCanada to testify about the Keystone project.

Kothari frustrated the interveners by avoiding answering numerous questions by stating, “That isn’t my area of expertise.” Interveners say she seemed to know very little for someone with such a high level of responsibility on the project. Although she lived in Houston for a number of years, Kothari never obtained an engineering license in Texas, a point the interveners stressed.

Precluded from pre-trial evidence were photos of segments of pipe procured for the Keystone XL that were stored at the Gascoyne pipe yard in North Dakota. The interveners were able to introduce the photos during their cross examination of Kothari when she disclosed that the pipe had been purchased by 2011.

At first Kothari claimed the pipe was stored at a few manufacturing facilities, but when questioned about pipe being stored at the Gascoyne pipe yard, she admitted some of it was also at that location.

The photos of the Gascoyne pipe yard show sections of pipeline piled up several layers high and left out in the open. The duration of time the pipes were stored without protection against the elements led the interveners to question the integrity of the pipe materials.

EN Engineering’s Schramm testified that the National Association of Pipe Coating Applicators recommends protecting pipe materials left above ground within six months. But Schramm added that Scotch, a,manufacturer, recommends taking measures to protect the pipe within 12-18 months. (Audio of Schramm’s relevant testimony at 0:23:15 – 0:29:00 on Saturday Aug. 1)

However, Sabrina King, a member of the Dakota Rural Action group who shot the photos referred to during the hearing, claimed the pipe had been at the Gascoyne yard in North Dakota since December 2010.

King’s photos were taken in May of 2013. By August that year, TransCanda did take action and protect the pipe, past both of the recommended times that Schramm mentioned.

“That is 2.5 years of pipe laying out in North Dakota, where the weather is horrendous, before it was fully covered,” King told DeSmog.( Audio of Schramm’s relevant testimony at 20:30 to 26:00 on Saturday Aug. 1)

At the close of the first week, John Harter, a South Dakota landowner and an intervener, described the proceedings as tense at times. “TransCanada has done little to help itself, sending incompetent witnesses,” Harter told DeSmog. He complained of TransCanada “witnesses answering questions with two answers, and witnesses not knowing what they are talking about.”

During questioning of Kothari, she responded that TransCanada is asking the PUC to recertify its permit based on documents submitted into evidence, some of which are out of date and have not been signed off on by engineers.

Kothari also revealed that the engineering for the pipeline is still not complete.  (Audio of relevant cross examination of Kothari at ~1:34-1:38 Saturday Aug 1)

Harter expressed bewilderment that the commission was willing to make a decision with incomplete information. 

Purchasing all of the pipe needed to build the entire project before getting a Presidential permit demonstrates the kind of risks TransCanada is willing to take, the interveners argue.

Despite the huge sums of money the company has spent lobbying for the Keystone XL Pipeline and for advertising, the pipeline’s completion is far from a done deal.

The PUC hearing has turned into a marathon event. Although the process was predicted to wrap up by August 4,the commissioners acknowledged the hearing timeframe would have to be lengthened. Parties involved in the proceedings tried to nail down an end for the hearing unsuccessfully at the start of today’s proceedings.  It is possible a decision on the presidential permit could come before the commission decides on how it will rule on TransCanada’s permit.

Photo: Pipe for the Keystone XL Pipeline at Gascoyne pipe yard in North Dakota. © 2013 Sabrina King