Obama Administration Reviews Pipeline Proposal Amid Claims of Corruption in Vetting Process

Nov. 6, 2011: Demonstrators gather during a protest against the Keystone XL Pipeline outside the White House.

Nov. 6, 2011: Demonstrators gather during a protest against the Keystone XL Pipeline outside the White House.  (AP)

As the Obama administration weighs the demands of environmental groups who oppose the Keystone XL Pipeline project against labor unions who want the jobs it would produce, there's a new twist: Following allegations of bias and corruption in the vetting process, the Office of Inspector General at the State Department has indicated it will launch a "special review" into the matter.

In a memo dated Nov 4, Inspector General Harold W. Geisel said the primary objective of the review is "to determine to what extent the Department ... complied with Federal laws and regulations."

That review could buy more time for the administration as it remains caught between two key constituencies: environmentalists and labor unions.

Thousands showed up to protest at the White House on Sunday, including Courtney Hight, who says she worked for the Obama White House.

"I left because it was clear to me that climate change was not a top priority to the administration," Hight lamented.

The groups strongly supported Obama as a candidate in 2008, but many say that he hasn't lived up to their hopes and that their enthusiasm is waning.

If approved, the pipeline would run about 1,700 miles from Canada to the Texas Gulf Coast. Critics say it would do irreparable harm to the environment, though the State Department's Environmental Impact Review concluded it would not.

Supporters point to the jobs that would be created by the project. Mark Ayers of the AFL-CIO estimates it could generate about 20,000 jobs directly, along with another 500,000 jobs indirectly.

"As President Obama has rightfully declared when it comes to the creation of jobs, 'We can't wait,'" Ayers said.

Matthew Koch of the U.S. Chamber of Commerce hopes the administration will conclude that the benefits clearly outweigh any downside.

"This is a private-sector job investment that is a tremendous benefit to this country and to workers," Koch said, adding, "It would be to the Obama administration as well."

White House Press Secretary Jay Carney said again Monday the ultimate decision rests with the State Department. However, Obama has made numerous public statements about the fact that he is the one reviewing reports and weighing a number of factors when it comes to the pipeline project.

In Monday's White House briefing, Carney acknowledged, "In the end we fully expect that the decision ... will reflect the president's views."

A decision is due by Dec. 31, but supporters of the project fear that the IG review could cause a delay of several months. Some even speculate the decision could be punted until after the 2012 election, meaning the administration could avoid weighing in on the controversial topic while courting key portions of its base.