TransCanada Corporation: Keystone XL Pipeline (2015)

TransCanada's logo

Controversy

TransCanada Corporation was founded in 1951 in Calgary, Alberta, Canada. The company deals with energy infrastructure based on natural gas and oil. The company operates 91,500 km of natural gas pipelines while owning 653 billion ft3 of natural gas storage facilities. TransCanada also operates 4,300 km of oil pipelines, which has already transported 1.4 billion barrels of oil, which is equivalent to 58.8 billion gallons. TransCanada also employes 7,178 people across the U.S. Canada and Mexico. TransCanada’s energy infrastructure supplies many energy requirements across North America. They supply 27% of natural gas used daily, they produce enough power (10,700 MW) to light more than 10 million homes, and transport about 20% of Western Canada’s oil production to refineries in the U.S. (8)Recently TransCanada has come under scrutiny with the 4th phase of the Keystone pipeline system, called the Keystone XL, the company is trying to build. TransCanada already operates 2,925 miles of crude oil pipeline that transports oil produced from the Western Canadian Sedimentary Basin to refineries in Texas and Illinois. The proposed Keystone XL pipeline would add 1,179 miles and 830,000 barrels a day to their infrastructure, taking a more direct route to a terminal in Steele City, Nebraska. Environmentalists are protesting the pipeline as it would increase greenhouse gas emissions, produce more frequent oil spills, and many see the construction of the pipeline as a battle for America's energy future. Farmers are also protesting the pipeline where their land would be taken and forced to have the pipeline cross their farms. The Keystone XL pipeline expansion was originally proposed in 2008 and Canada's National Energy Board accepted the proposal in 2010. Since the pipeline extends across the Canadian-U.S. border, it also must be approved by the President of the United States. In 2010 the Environmental Protection Agency released a statement saying that the draft of the environmental impact study for the pipeline was inadequate and narrow. The full report was released in 2011 and revealed the pipeline would pose no real environmental threat if modern environmental protection and safety measures are followed. The report did say the pipeline would pose a significant cultural impact on the region. (10) The State Department postponed making a decision on the pipeline in late 2011 to find alternative routes around the sensitive Sandhills region in Nebraska for the pipeline. “After first saying XL would not have significant adverse effects on the environment, it advised TransCanada to explore alternative routes in Nebraska because the Sandhills region is a fragile ecosystem.” (3) Finally in 2013 President Obama rejected the Keystone XL pipeline application as Congress passed a 60-day deadline on the President to make a decision. President Obama said the deadline prevented a complete assessment of the pipeline's impact. In early 2013, Mother Jones reported that key personnel involved in a Supplemental Environmental Impact Statement (SEIS) released at the same time also preformed contract work for TransCanada, creating a conflict-of-interest in the environmental report. (1) The EPA rated the SEIS a 2; insufficient information. The EPA also wrote a letter written by the assistant administrator of the EPA in response to the State Department’s SEIS. The letter says the construction of the Keystone XL pipeline could increase greenhouse gas emissions if the price of oil rose above $65 a barrel. The SEIS states oil sands production produces 17% more pollution than conventional oil. So demand for oil sands by rail would fall if oil was below $65 a barrel. At the time oil was $51 a barrel. (5) Farmers living in Nebraska and Texas are also against the pipeline because of eminent domain. Eminent domain is a law in the U.S. which allows the government to seize private land with compensation in the interest of the public. The problem farmers are having is the pipeline isn’t in the interest of the public. The pipeline will only create ~30 permanent jobs and not realistically affect the economy. The government does not have a suitable reason for applying eminent domain to landowners on the Keystone XL route. Some farmers are also against where the oil comes from in the pipeline. “When I found out and saw pictures of the Tar Sand, I was like, oh, my gosh, that just looks like a horrific thing…” (2) The way oil is extracted in Alberta is by literally digging up the earth and extracting the oil from that. Oil companies in Alberta destroy millions of acres mining the oil this way. Farmers and landowners are trying to protect their land from the damage the pipeline could cause on property they own. Unfortunately, not everyone agrees with the people who are hurt by the pipeline. In early 2015, Congress voted 62-36 and 270-152 in favor of a bill to approve the Keystone XL pipeline and bypass presidential support. President Obama vetoed the bill and the Senate didn't have the 2/3 majority to override the veto (62-37). Now more recently, President Trump in 2017 approved the application of the Keystone XL pipeline. “In his latest moves to dismantle the legacy of his predecessor, Mr. Trump resurrected the Keystone XL pipeline that had stirred years of debate…” (6) President Obama rejected TransCanada’s proposal to stay in line with his climate change promises and President Trump thinks the pipeline will help create energy independence and a stronger economy.

An oil pipeline

Stakeholders

A stakeholder is a person or group of people who hold an interest in the actions of a company or business. The stakeholders involved in TransCanada's ethical problems with Keystone XL are the stockholders in TransCanada, people working the oil sands in Alberta, construction workers that would build the pipeline, people who own the land the pipeline would cross, and the U.S. government. Stockholders in TransCanada have an obvious interest in the case because TransCanada is building the pipeline to make a larger profit, which increases stock price, which benefits the stockholders. People working in the oil sands of Alberta are interested in this case because the pipeline would help increase the production of oil in the region, creating more jobs but also creating more pollution problems in the area. TransCanada will also need to hire roughly 28,000 temporary construction workers to build the pipeline. People living and owning land in the area of the pipeline have an interest in the case because of the reduction in quality of life the pipeline could bring and the use of eminent domain by the government to provide TransCanada with the land necessary to build the pipeline. The U.S. government has an interest in the case because they have to issue a permit for TransCanada to build the pipeline while using eminent domain to provide TransCanada with land.

Individualism

CEO of TransCanada Russell Girling

Individualism is a philosophical theory which gives importance to an individual's rights and desires. Individualism says everyone has a right to pursue their own interest and no one has a right to make other people’s choices about their pursuits. Libertarianism is very similar to Individualism but is applied to how the government interacts with its citizens. Milton Friedman, a Nobel Prize winning economist, took Individualism and applied it to businesses. Friedman said a company’s sole purpose is to maximise profit for the owner or stockholders while operating inside the law. TransCanada, in this case, was trying to maximise profits for their stockholders, and was operating within the law. The pipeline would bring more profit to TransCanada, increasing the prices of their stock which increases the profit of the stockholders. TransCanada will profit even more than normal because the government will pay out the compensation for eminent domain usage instead of TransCanada. If an oil spill happens along the pipeline route however, TransCanada and therefore the stockholders may not profit due to public outrage and clean-up costs. While Keystone XL is already a hot topic, an oil spill from the pipeline would completely ruin TransCanada’s public image and their stocks would go down in price. But, considering all this, this case conforms to Milton Friedman’s idea of Individualism and is ethical. TransCanada is trying to obtain the largest profit they can, and the Keystone XL pipeline is not illegal. Individualism is narrow in its applications though, as it doesn’t take into account all the stakeholders affected by the company. 

Utilitarianism

Utilitarianism is an ethical theory based around the happiness of all involved in an action. Utilitarianism states the best action is one that maximizes utility. Utility is defined differently by different people, but generally is the well-being of sentient entities, like animals and people. Jeremy Bentham, the founder of Utilitarianism, describes utility as the sum of all pleasure and pain gained from an action, pleasure being positive and pain being negative. So, according to Utilitarianism, animals are a stakeholder in this case with pollution and the destruction of their home the main interest. TransCanada’s stockholders are happy because of the increased profits gained from the pipeline, but they represent a small portion of the stakeholders. Workers involved with oil production and construction of the pipeline are happy in this case with the increase in jobs and the growth of the economy around Alberta. The workers in Alberta and workers building the pipeline are a larger group than the stockholders, but still do not represent the majority of the stakeholders. The largest group of stakeholders are the people whose land is being taken by the government and the animals hurt by the pollution in Alberta and the pollution along the pipeline. The farmers and landowners are definitely not happy with their land being taken from them without a say by the government. And the animals affected by this pipeline are hurt when their homes will be destroyed and their lives threatened by construction of the pipeline and increased oil production in Alberta. Therefore, according to Utilitarianism, this case is not ethical. Utilitarianism is also flawed like Individualism. Utilitarianism only focuses on the end, and not the means. Slavery shouldn’t be used even if it is for a common good. 

Kantianism

Immanuel Kant was a german philosopher during the Enlightenment. Kant is considered a central figure in modern philosophy and developed an ethical theory based on actions rather than the results. Kantianism states the only good thing is goodwill; an action is only good if it follows moral laws. Actions must be rational and have good intentions. Actions cannot be in contrast to established moral laws and must benefit someone in someway. Individual freedoms and rights must also be respected. TransCanada does not respect the individual rights people have to their property along the pipeline route by using eminent domain to take their land. TransCanada is acting rational however by building a pipeline to improve the profit of the company. The means is appropriate according to Kant, and the ends is also appropriate; as a business it is their job to increase profit for their stockholders. TransCanada is respecting the workers involved with the pipeline and oil in Alberta by providing jobs and economic growth. However, the treatment of farmers and landowners along the pipeline route is unacceptable to Kant, and therefore this case is unethical. This case could become ethical if TransCanada would respect the landowner's wishes to not have a pipeline built on their land. All of the above ethical theories are limited to the actions and results of said actions. They don't look at the human characteristics that have led to this action and result happening. 

Virtue Theory

Virtue Theory is an ethical theory that focuses on the human characteristics of the action of a business or company. Suppose someone is in need of help. A utilitarian would help because it would maximize the happiness of everyone. A Kantian would help because they would be acting within a moral rule, such as "do unto others as you would be done by" . A virtue ethicist would help because it is charitable and benevolent to help someone. A virtue is a trait of character considered good and benevolent to have as a trait. A vice is the exact opposite of virtue, a bad and malevolent trait to have. The four main virtues in business are: honesty, temperance, courage, and justice. Honesty is useful in doing business with other companies, and in treating employees with respect. Temperance is useful in keeping a company under reasonable control; preventing a company from making aggressive mergers. Courage is the ability for a company to take a stand for what is right. Justice is the application of hard work, good ideas, and fair practice to achieve a better company. TransCanada follows the honesty virtue and the justice virtue but not the temperance or justice virtue. TransCanada wants to create more jobs with the pipeline and help the economy, albeit indirectly. TransCanada is putting in hard work to counter the resistance encountered with the construction of the pipeline too. TransCanada doesn't want to talk about how they are taking land from people or how TransCanada is being very aggressive in its expansion of the Keystone pipeline system. This case is difficult to analyze as a virtue ethicist, as TransCanada has represented some, but not all, virtues of businesses. 

Justified Ethics Evaluation

In my opinion, TransCanada did not act ethically in this case. The Keystone XL pipeline cutting through people's land, which they don’t want, is wrong, and making them have the pipeline is worse. The government is misusing eminent domain powers to give TransCanada their pipeline. The pipeline will increase oil production in Alberta which cause irreparable damage to the environment in Alberta. An oil spill cause by the Keystone XL pipeline would also cause a lot of damage to the environment, which everyone depends on. 

References

(1) Kroll, Andy, Elbert Barnes/Flickr, Kate Sheppard, Suzanne Goldenberg, Michael Klare, Pema Levy, Nathalie Baptiste, and Ben Dreyfuss. "EXCLUSIVE: State Dept. Hid Contractor's Ties to Keystone XL Pipeline Company." Mother Jones. Mother Jones, 21 Mar. 2013. Web. 04 Apr. 2017. <http://www.motherjones.com/politics/2013/03/keystone-xl-contractor-ties-transcanada-state-department>.

(2) Seigel, Robert. "Nebraskan Farmer Voices Opposition To Keystone XL Pipeline." NPR. NPR, 3 Nov. 2015. Web. 31 Jan. 2017. <http://www.npr.org/2015/11/03/454342281/nebraskan-farmer-voices-opposition-to-keystone-xl-pipeline>.

(3) "Keystone XL Pipeline: Why Is It so Disputed?" BBC News. BBC, 24 Jan. 2017. Web. 30 Jan. 2017. <http://www.bbc.com/news/world-us-canada-30103078>.

(4) DAVIS, JULIE H. "Obama Won’t Yield to Company’s Bid to Delay Keystone Pipeline Decision." The New York Times. New York Times, 3 Nov. 2015. Web. 30 Jan. 2017. <https://www.nytimes.com/2015/11/04/us/politics/obama-wont-yield-to-companys-bid-to-delay-keystone-pipeline-decision.html?rref=collection%2Ftimestopic%2FKeystone%20XL&action=click&contentCollection=timestopics®ion=stream&module=stream_unit&version=latest&contentPlacement=40&pgtype=collection&_r=0>.

(5) Davenport, Coral. "E.P.A. Says Pipeline Could Spur Emissions." The New York Times. New York Times, 3 Feb. 2015. Web. 30 Jan. 2017. <https://www.nytimes.com/2015/02/04/us/politics/epa-review-of-keystone-pipeline-notes-potential-rise-in-greenhouse-gases.html?rref=collection%2Ftimestopic%2FKeystone%20XL>.

(6) Baker, Peter, and Coral Davenport. "Drumpf Revives Keystone Pipeline Rejected by Obama." The New York Times. New York Times, 24 Jan. 2017. Web. 30 Jan. 2017. <https://www.nytimes.com/2017/01/24/us/politics/keystone-dakota-pipeline-trump.html?rref=collection%2Ftimestopic%2FKeystone%20XL>.

(7) "Vision and Strategies." TransCanada Corporation. Http://www.transcanada.com/vision-strategies.html, n.d. Web. 04 Apr. 2017. <http://www.transcanada.com/vision-strategies.html>.  

(8) "Our Business At A Glance." (n.d.): n. pag. Mar. 2017. Web. 4 Apr. 2017. <http://www.transcanada.com/docs/About_Us/TransCanada-Our-Business-At-A-Glance.pdf>.

(9) "Report of the Annual Meeting." (n.d.): n. pag. TransCanada Corporation. TransCanada, Feb. 2017. Web. 4 Apr. 2017. <http://www.transcanada.com/docs/Investor_Centre/2016_Annual_Report.pdf>.

(10)     Tracy, Tennille, and Edward Welsch. "News and Information for the Downstream Oil and Gas Industry." DownstreamToday.com Your Refinery, Petrochem, Pipeline and LNG Destination. DownStreamToday, 26 Aug. 2011. Web. 05 Apr. 2017. <https://downstreamtoday.com/news/article.aspx?a_id=27703&AspxAutoDetectCookieSupport=1>.

(11)     Israel, Josh. "TransCanada Is Seizing People's Land To Build Keystone, But Conservatives Have Been Dead Silent." ThinkProgress. ThinkProgress, 01 Mar. 2015. Web. 11 Apr. 2017. <https://thinkprogress.org/transcanada-is-seizing-peoples-land-to-build-keystone-but-conservatives-have-been-dead-silent-29f361eaeea4>.