CNN reports what we South Dakotans know from experience: Chinese investors love the EB-5 visa investment program. According to yesterday's report, Chinese immigrants took almost 6,900 EB-5 visas in 2013, 81% of the total issued. Compare that with the 16 EB-5 visas issued to Chinese immigrants in 2004, the year South Dakota started leaning on the program to support large dairy projects in East River.

Immigration lawyers tell CNN Canada's decision to end a similar immigration program based on poor payoff has already driven more immigrants to apply for EB-5 visas. Rich Chinese looking to buy their green cards get a great bargain from the U.S.:

"The cost is very reasonable in relation to other countries," [immigration lawyer David] Hirson said. Australia, for example, requires a $4.5 million investment -- nine times the minimum required in the U.S. [Sophia Yan, "Rich Chinese Overwhelm U.S. Visa Program," CNNMoney, 2014.03.25]

Readers know I'm not nearly as fond of the EB-5 visa investment program as the handful of South Dakota players who've profited from it without proper state oversight. But let me reach for a silver lining to the Chinese takeover of the EB-5 visa quota:

For rich Chinese, opportunities in America are attractive. A green card offers a way to send their children to college, escape heavy pollution and enjoy an improved quality of life, said Kate Kalmykov, an attorney with Greenberg Taurig. Plus, the EB-5 program is relatively cheap [Yan, 2014.03.25].

These Chinese investors want to escape pollution. So when they come here and see the spate of oil spills and pipeline ruptures driven in part by their home country's increasing thirst for North American oil, those EB-5 immigrants may join our fight to protect their new home from the predations of TransCanada's China-bound Keystone XL pipeline, keep the price of driving their new American Cadillacs down, and leave a billion barrels of dirty tar sands oil in the ground. Save West River, and save the planet: bring on more EB-5 investors!


Republicans don't like President Barack Obama's long delay in making a decision about the Keystone XL pipeline. I don't like it, either: I wish he'd just tell TransCanada to shove their pipeline up their own backcountry.

But could the President's delay be clever cowardice?

Every day the President leaves the Keystone XL case open is another day that some other political entity may do his job for him and block the pipeline. Just a couple weeks ago, a Nebraska District Court judge ruled unconstitutional a Nebraska law allowing the Governor and TransCanada to use eminent domain for Keystone XL, effectively blocking the pipeline unless a higher court or the Nebraska Legislature takes action. This morning, Peter Marriman reports that TransCanada's authorization to build Keystone XL in South Dakota runs out in June. If the President and Nebraska don't clear the way for Keystone XL by June, TransCanada would have seek approval from our Public Utilities Commission all over again. If that happens, PUC Commissioner Gary Hanson promises due diligence and predicts "protracted" hearings.

By delaying the federal green light, President Obama gives anti-pipeline activists more time and more targets. U.S. Senate candidate David Domina can fight in the Nebraska courts. Lakota tribes, ranchers, and the Sierra Club can lobby the South Dakota PUC and DENR. And if those opponents manage to succeed in any state, the President doesn't have to take the heat for stopping Keystone XL.

The President's Keystone delay also serves the interest of long-term conservation. I look at our oil supply the same way I look at our coal supply. Back in 2009, while discussing clean energy legislation, I argued that we should conserve coal so future generations will have more coal available:

I like to believe in technological progress. I like to believe that if we just keep thinking and tinkering, someone will come up with fusion in a jar or anti-matter engines that will light cities and launch spaceships on a few drops of water.

But suppose we don't. Suppose we can't overcome the limitations of earthly materials and energy inputs to make fusion or other alternatives affordable and scalable by 2143. Our descendants look up from the flickering screens on their computers and see that last pile of coal being shoveled into Big Stone XVI. What do they do... besides curse us? "Dang it!" they'll grumble over candlelit dinners. "We were getting close on fusion. If we just had 20 more years of coal, we could have completed that work and built some reactors. Now we've got to spend all day digging for peat. But our ancestors in 2009 couldn't sacrifice a little bit of GDP to help us out. They just had to have their plasma screen TVs and leave their computers plugged in while they slept" [Cory Allen Heidelberger, "Vote for the Future: Cap Carbon, Cut Coal, Conserve for Great-Great-Great Grandkids," Madville Times, 2009.08.13].

We can make the same argument for the tar sands oil Keystone XL will ship. Just as every passing day gives the Nebraska courts or the SDPUC a chance to raise a legal roadblock to Keystone XL, each passing day also gives inventors and dreamers a chance to come up with that jar fusion or water-drop alchemizer or natural-gas car to render Keystone XL financially uncompetitive, if not technologically unnecessary. And if we don't develop better alternatives, taking longer to build Keystone XL still enforces restraint in our energy consumption, giving our descendants more time (hey, every year helps!) to fall back on fossil fuels.

I can't fully defend President Obama from the charges my columnizing (though rarely calumnifying) colleague Ken Blanchard would level, that the President's Keystone XL delay is cowardly do-nothingness. I also can't defend conservation as an absolute principle: conservation in the extreme would mean using zero energy, and the engine of progress doesn't run on empty.

But I don't share Blanchard's economic fatalism. If Keystone XL can be stopped, President Obama's delay maximizes the opportunity for states, activists, technology, and even the market to stop it. He also cleverly keeps TransCanada on the hook: had the President nixed Keystone XL back in 2011, the oil interests would have turned immediately to alternative pipeline routes. As it is, we wait, and waiting on shipping all the tar sands to China to burn is fine with me.


The Mitchell Daily Republic almost gets the Keystone XL pipeline. In this morning's editorial, the paper acknowledges that burning Canadian tar sands oil makes a messier planet. They admit the jobs created by the pipeline number only 2,000 and will last only a couple of years. (Remember: investing in water and gas infrastructure would create more jobs and do more good.) They acknowledge that China and India are driving demand and that Alberta's oil will be distributed around the world.

But the Mitchell paper still tangles itself in imperfection and says it's time to build the pipeline:

A recent report by the U.S. State Department highlights the jobs the pipeline would produce and characterizes its environmental risks as effectively neutral. Republicans and Democrats are joining across the aisle in support of the project.

It's time to stop haggling and let it happen [editorial, Mitchell Daily Republic, 2014.02.12].

Never mind that the State Department got its Keystone XL report from folks who've worked for pipeline builder TransCanada. Never mind that we are not obliged to give in to other countries' energy demands at the expense of our environmental security. Never mind that the southern leg of Keystone XL is already raising oil prices and that the pipeline through West River will raise them more. We just shrug our Midwestern shoulders and give in to a bad idea, hoping someday, somewhere, someone will invent something better and clean up the mess we chose to make.

We can do better, MDR editors. We don't need Keystone XL.


Why would South Dakotans want to let TransCanada run another tar sands pipeline through their backyard, when even a federal pipeline safety official says he wouldn't buy or build a house along the pipeline route?

The official, Bill Lowery, is responsible for community assistance and technical services for the southwest region of the Pipeline and Hazardous Materials Safety Administration (PHMSA).

At a Public Safety Trust conference on Nov. 21, Lowery was asked, "Knowing what you know about the problems in the Keystone XL's construction, what would you do if your house was in its path?"

His answer:  "Here is what I did when I bought my house — I looked on all the maps, I looked for all the well holes. I found there is nothing around me but dry holes and no pipelines. And it's not because I'm afraid of pipelines, it's not because I think something will happen. It's because something could happen. ... You're always better off, if you have a choice...."

He trailed off before finishing his sentence, but added that, "If I was building a house, I wouldn't build it on a refinery, ... I wouldn't build it on a pipeline, because they're all industrial facilities. That's just the reality" [Julie Dermansky, "'Just the Reality:' Pipeline Safety Official Admits He’d Avoid Buying A Home Near Pipelines Like Keystone XL," DeSmog Blog, 2013.12.03].

Come on, Bill! Why worry? I'm sure all those dents and patches on the Keystone XL are just signs of TransCanada's master craftsmanship.

TransCanada plans to open the spigot on the southern leg of Keystone XL on January 3. No word on housing prices along that route in Oklahoma and Texas... but the mere announcement that Keystone XL South is ready to go is causing oil prices to rise:

“With the pipeline up and running, you are going to see drops in Cushing inventories,” saidMichael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “It drives up WTI prices far more than Brent. You are going to see a narrowing of the Brent-WTI differential” [Moming Zhou and Mark Shenk, "Oil Surges on Planned Start of Keystone Pipeline," Bloomberg via SFGate, 2013.12.03].

That oil price hike is a shocker if you've been trusting Rep. Kristi Noem and Sen. John Thune, but that's no surprise if you read the Madville Times.


Rep. Kristi Noem voted for more bad legislation yesterday. Joining a nearly unanimous Republican caucus against a just slightly less unanimous Democratic caucus, Rep. Noem voted for the Federal Lands Jobs and Energy Security Act.

Two reasons Noem voted wrong:

  1. The bill would give the Department of Interior only 60 days to act on applications to drill for oil or gas on public lands. Absent action, the drilling applications would receive automatic approval. If I'm a smart oil company, I get my lawyers to draw up 1,000 applications with lots of documentation, submit them all on April 1, hope Interior can only process 10 apps a day, and start drilling like crazy at 400 sites on May 31. Giving a federal agency only 60 days to analyze an issue is like saying to the FBI, "Sure, you can investigate South Dakota's EB-5 program, but if you can't find anything actionable in 60 days, then there must not be any corruption in the program." Some issues are more complicated than an arbitrary deadline set by Republican legislators as a favor to Big Oil.
  2. The bill includes a requirement that anyone filing a formal protest to a drilling application must pay a $5,000 fee. Imagine if folks opposed to the Powertech uranium mining permit in the Black Hills had to pay a fee like that to file for official intervenor status in the mining permit hearings. Imagine if the veterans who spoke at last week's Sioux Falls school board meeting had to buy a ticket at the door to protest the board's Pledge of Allegiance policy. Requiring folks who want to challenge government action to pay a fee for exercising their rights flies in the face of the First Amendment. But Rep. Noem votes to make the Constitution a pay-to-play document, open only to the highest bidders.

President Obama has said he'll veto this bill. If we send him a good Democrat in Rep. Noem's place next year, he won't have to work his veto pen so hard.


Two reasons to hope the geologists are right and that fracking the Bakken won't expand from North Dakota to South Dakota:

1. The feds just designated Williams County, at the heart of the North Dakota oil patch as a "High Intensity Drug Trafficking Area."

Williams County Sheriff Scott Busching said he’s “cautiously optimistic” the designation will mean more resources to fight drug trafficking, which he says has increased “simply because we have more population” and more people from out-of-state coming and going, some of them bringing drugs to the area.

Busching said the FBI already has two agents spending time in the county. The bureau has indicated it would like to station two agents there permanently, but a lack of office space and housing and the area’s high rental rates are barriers, he said.

The number of sworn deputies in the sheriff’s office has more than doubled in the past five years, and Busching said there are times when he could use more. The increase in calls for service hasn’t left much time for routine beat checks, working with schools or other proactive measures, he said.

“We’ve become a reaction force where we’re just chasing calls, wrecks and fights,” he said [Mike Nowatzki, "Feds to Designate Oil Patch County as High-Intensity Drug Trafficking Area," Grand Forks Herald, 2013.11.14].

Figure all those police costs into your next gallon of gasoline.

2. The Pope says fracking is bad... or at least the t-shirts he's posing with say so:

Pope Francis No Fracking1 Pope Francis No Fracking2

Put that in your orthodoxy, Catholic conservatives: no fracking! Water is worth more than gold... and uranium, right, Your Holiness?

1 comment

The Mercatus Center updates its politically agendafied Freedom Index to find that South Dakota has dropped from freest to second-freest state in the Union. Here's their video explaining our second-place ranking:

We have great fiscal policy (i.e., low taxes), budget responsibility, but personal freedom score stinks. We rank 46th, thanks to high asset forfeiture and high arrest and incarceration rates, particularly for victimless crimes (victimless crimes sounds like code for legalize drugs!).

As South Dacola and I noted the last time Mercatus published this propaganda, this Freedom Index seems to focus a lot more on political conditions preferred by business rather than practical results for working people. Mercatus thinks we're free because we don't pay high state taxes, but they ignore the impact of having to pay higher local taxes to keep schools afloat, or having to depend on federal funding to build important infrastructure.

Consider the state of freedom in Mercatus's new fredom champion, North Dakota. The joys of low regulation there mean oil companies are free to keep oil spills secret from the public. When Tesoro's pipeline broke and spilled 20,000 barrels of oil over once-useful farmland in North Dakota last month, the company kept mum about the damage for eleven days, and North Dakota state government helped Tesoro keep the story quiet. It's nice to have the freedom to make mistakes without public scrutiny, but it's not so great for neighbors' freedom to have Big Oil and state government working together to hide threats to their health and their environment.

I still feel freer in South Dakota than I do anywhere else, but that's largely because of personal history (grow up in a place, know a place, you're going to feel more comfortable and in command of your surroundings), culture, and geography. South Dakotans live in a good place, but Mercatu's Freedom Indexs doesn't accurately measure that goodness or the investments we need to make to improve it.


Consumer Watchdog posts a new report confirming pretty much everything I've told you about the Keystone XL pipeline: it will send North American tar sands oil overseas, raise our oil prices, and boost Big Oil profits at our expense.

Long-time Los Angeles Times journalist Judy Dugan and independent petroleum analyst Tim Hamilton authored the report for Consumer Watchdog. They confirm that Keystone XL's business case revolves around putting Canada's currently landlocked oil on the international market—i.e., selling it to China, not the United States. Alberta energy minister Ken Hughes, whose province depends on growing oil royalties, says exporting that tar sands oil is in his province's interest:

If TransCanada’s Keystone XL pipeline to the Gulf Coast were approved, that would be “an important step” to connect Alberta to international markets.... said Ken Hughes, Alberta’s energy minister. “[I]t is a strategic imperative, it is in Alberta’s interest, in Canada’s interest, that we get access to tidewater... to diversify away from the single continental market and be part of the global market” [J. Van Loon, quoted in Judy Dugan and Tim Hamilton, "Keystone XL: Oil Industry Cash Machine," Consumer Watchdog, 2013.07.16, p. 7].

Dugan and Hamilton note that tar sands oil has consistently sold for $30 less per barrel, due to the lack of access to the export market. Build Keystone XL, let the Gulf refineries take that 900,000-barrel-per-day slurp of Alberta's milkshake, and that price discount shrinks, meaning the Koch Brothers, Exxon, Shell, and the Chinese, Korean, and Russian tar sands investors make a whole lot more money.

Dugan and Hamilton also conclude that Keystone XL is the only immediately viable way for the Kochs et al. to realize that windfall. The report says provincial opposition to a tar sands pipeline running west through the Rockies and British Columbia to the Pacific is too strong for Big Oil to prevail, at least in the near term. Block Keystone XL, and you keep the tar sands oil cheap on on the U.S. market for some time.

Build Keystone XL, and the tar sands profits come at America's and especially the Midwest's expense. Reducing our regional oil supply naturally raises our prices, wiping out the economic benefits TransCanada promises us from building Keystone XL:

In the Midwest alone, each year of only a 20-cent-a-gallon increase could rip $3 billion to $4 billion from more productive spending. The up to $4 billion in Midwest economic loss is close to the amount that TransCanada would spend on the pipeline project, canceling a major claim of U.S. economic benefit. While the company says it will spend $7 billion, some of that will be spent in Canada and some has already been spent, so it is has no future
economic effect [Dugan and Hamilton, 2013].

Keystone XL offers South Dakota and the United States little to gain and much to lose. Let's not play patsies to Big Oil. Say no to Keystone XL.


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