Controversial Keystone Pipeline Shows Good Taste: Rejects EB-5 Funding

By David North on April 28, 2014

I am personally not a big supporter of the controversial Keystone Pipeline, which will run from the oil sands of Canada to our southern states, but I must say that the project's operators have excellent taste in one thing: they flatly rejected the prospect of EB-5 funding.

It was going to be funneled to them through the much-investigated South Dakota Regional Center (SDRC), a USCIS-licensed entity.

One cannot tell from a recent AP story on the subject whether the pipeline operators objected to the immigrant investor (EB-5) program per se, which would make sense, or whether they had specific problems with the SDRC, which would make even more sense, or maybe it was the doubly difficult combination of both that caused the rejection.

TransCanada spokesman Davis Sheremata said that Joop Bollen, the SDRC boss who never talks to the press, had sought to steer EB-5 funding to the pipeline, but the operators politely declined, saying, according to the AP: "We ... opted not to pursue funding through the EB-5 program. Keystone XL is a $5.3 billion project that is completely privately funded."

There is so much to be said about this decision.

First, it is yet another demonstration that Canada handles its finances so much better than we do. While the Bush and Obama administrations poured oodles of billions of taxpayer money into Wall Street in 2008-2010, nothing like that was needed up north because our neighbors simply regulate banks better than we do.

But to return to the specifics of financing the pipeline. The EB-5, or immigrant investor program, provides a family-sized set of green cards to alien investors who invest half a million dollars in investments ruled acceptable by regional centers who, in turn, have been approved by USCIS.

In South Dakota, all EB-5 investments flow through the SDRC, which in turn has generated massive press coverage because tens of millions of investor dollars it handled were lost because of the bankruptcy of several projects there, notably the Northern Beef Packers' slaughterhouse in Aberdeen. There were also at least two big EB-5 dairy farm failures, one of which we reported in an earlier blog.

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And then there was the mysterious death, ruled a suicide by the state's GOP Attorney General, of GOP politician Richard Benda, a major EB-5 fund-raiser and former SDRC official. The AG said Benda shot himself in the stomach with a full-length shotgun, which many in the local media regarded as an unlikely feat.

No wonder TransCanada steered away from this source of funding!

But then big development projects rarely use EB-5 money; those funds are mostly steered to smaller and more marginal activities, usually real estate deals like condo, mall, and hotel construction.

While there has been little national coverage of the multiple EB-5 scandals in the state, many South Dakota publications have dug into the case, such as the Sioux Falls Argus Leader, whose Jonathan Ellis broke the story on the TransCanada rejection of EB-5 money the other day.

My own personal objections to the pipeline project are those of an environmentalist: I would rather see billions invested in alternative energy projects, not a risky and expensive pipeline devoted to yesterday's atmosphere-abusing technology.

But even within the old energy business, there are standards, and in this case, they exclude the use of SDRC and the EB-5 program.