TRANSCRIPT (First broadcast on November 28, 2017)
Dennis J. Bernstein: Today on Flashpoints the Keystone pipeline and the safety PIG that was muzzled so it couldn’t squeal . We’ll be joined by Greg Palast and the PIG… No, we won’t have the PIG, but we’ll have Greg… Greg has been on a special investigation to do with the Keystone pipeline explosion. Greg, we’re going to play a piece that you did , but let’s talk a little bit about this PIG here. What the hell is going on with the PIG? Do they use PIGS to check the safety of pipelines?
Greg Palast: Yeah, they do. In fact the PR man for the Keystone pipeline, a guy named Mark Cooper, to everyone’s astonishment, he’s say’s the blowout at the pipeline shouldn’t have happened because “we sent actual pigs through out pipeline.” Well, you’re thinking of like these big porkers or maybe oil company executives. But actually a PIG is a pipeline inspection gauge  — P.I.G. These are robots that go through the pipeline with the oil.
By the way, they say there’s thousands of jobs on the Keystone pipeline; the current Keystone pipeline, which covers most of America, is run by only 50 people and a bunch of PIGs, these robots…You have a whole team, 24/7 watching these robots go through the pipe. They have little feelers, they can feel any bit of corrosion, any raw weld, any problem whatsoever. The PIG is monitoring every inch of that pipe so, he’s right, there shouldn’t be a crack, like the burst we just had.
There should not be bursts in any pipeline that now use what they call smart PIGs. This is very important, if you’re in the San Bruno area, and you know someone who was victimized by that gas explosion , listen up to this story. So why did the PIGs not warn of this impending burst? …Bursts don’t just suddenly happen.
Bernstein: How bad was the burst?
Palast: At least a quarter million gallons of oil burst out of the Keystone pipeline.
Bernstein: Big burst.
Palast: This was the pipeline they said don’t worry about… Well now there’s another burst, a quarter million gallons — the biggest yet. They’re right, it shouldn’t [burst]. The PIGs, if they find any little problem which will lead to such a burst, you see red on the computer screens. It’s supposed to be idiot proof. So why didn’t the PIGs squeal when it went through the pipeline? The answer is that the PIG, it’s a robot, and it was technologically muzzled. How do they do that? The PIGs are benign, they’re just sending out waves of billions of data points. You need sophisticated software to read it, interpret it, and say, oops there’s a problem near the North Dakota border right there with corrosion that could burst, there’s a change in pressure, whatever it is, it should have [flagged] it, and they’re correct.
What we’ve found out, and this is ugly, and this is frightening, and this is terrible, Dennis, three whistleblowers confirmed to me that as an industry practice in particular companies that provide this software that they deliberately turn down the PIGs’ squeal. That is, electronically they make the PIGs appear to be less sensitive than they should be. The sensitivity of these robots for warning is set by law, by regulation. You can’t just fake it. There are regulations as to when that PIG squeals, and they’ve been turned down. That’s why we’re having these so-called inexplicable explosions, and the most obvious one that was affected here [in California] was in San Bruno.
Bernstein: Well, let me guess Greg, that shall we say PIGing out… has something to do with saving money?
Palast: Oh, yes. Follow the money, Dennis. I knew you’d get there. Yeah, you can’t bribe a PIG, but you can certainly threaten workers who don’t go along. Why would they want to turn down their robots so that they don’t squeal? Why wouldn’t they want the warning? The answer is money, money. Every time that PIG squeals and the screen goes red, you’ve got to dig up the pipe. You’ve got to stop the flow of oil or natural gas. You’ve got to stop that flow, you’ve got to reroute the pipe, you’ve got to replace the pipe. It’s frankly, cheaper and easier to simply replace a pipe which has already burst. Because if every time the PIG found a problem, and you started replacing pipes around the US, that would cost the pipeline industry billions — and that’s with a B — billions of dollars more per year.
So it’s better to take the chance that they’ll fail. It’s an ugly truth, and I got to tell you Dennis, I first did an investigation of pipeline explosions before I was a journalist. I ran two pipeline explosion investigations for the Attorney General of Illinois. Eighteen people in Chicago were blown up  and I saw that the company knew exactly where their pipes could possibly blow. They could pinpoint them. You could almost buy the coffins in advance. It was ugly. But they paid off the victim’s families like three, four million dollars each. There were 18 people killed, and it’s cheaper than replacing miles of pipe, especially in urban areas like Chicago or San Bruno. This is a deadly problem, so when these guys, like the Koch Brothers  and others, tell you that the Keystone pipeline, or any pipeline, is safe because they’ve got these robots, so they can’t miss, they’re lying because they know that they’re muzzled.
Bernstein: Now that you’ve really laid it out nicely, let’s listen to the piece. You prepared a piece for Tom Hartman , is it okay if we give a listen to that? It really sort of lays it out so that people understand what we’re talking about.
Palast: Yeah, there’s no question and Keystone’s already lying… Because they already said there was only two hundred thousand gallons of oil — but that’s what’s coming up to the surface, the break was below. And, you have to understand, this is industry endemic. I know that this software, for example, is being used on the Alaska pipeline. This software which is wrong, which is dangerous.
I’m really glad I’m speaking to a Northern California audience, because I do know that in the case of San Bruno… and again I’ve done these investigations for government. I was looking at the San Bruno case, the federal government believed that maybe they just didn’t set the PIGs sensitivity to make it sensitive [enough], that the regulations were not strong enough, and that’s why San Bruno exploded . Because a PIG had just gone through a couple weeks before. It shouldn’t have happened if the PIG was squealing as it should. But what the feds do not understand is the problem is not in their regulations, the problem is in the millions of lines of software code. They have to accept these companies’ honesty. [But there were] millions of lines of software code which, in fact, didn’t adhere to the legal standards. And, by the way, this whistleblower came to me right after the San Bruno explosion. He did not want to be on camera, even in shadow. It’s very dangerous to deal with this industry as a whistleblower, you get ruined. But after he saw the deaths in San Bruno, he said to him this went from a technical dispute with a client to something that kills people and he had to come forward. So it was [because of] San Bruno, the deaths there, he said he had to speak out.
Bernstein: We’re going to watch the story very closely… Greg, I want to talk to you [about] this so-called tax reform bill. General thoughts?
Palast: Well, I want to talk to you about another pig who didn’t squeal. Donald Trump had said that, when he was running for President, big headlines in The New York Times, that he was adopting Bernie Sanders’ position that they should close the biggest loophole for Wall Street speculators. It’s called carried interest , and for the ten-month budget period it’s going to cost the US Treasury $170 billion that will go to a few speculators.
The number-one user of this tax loophole in America, who personally gained at least a billion dollars in his pocket from it, is Robert Mercer — the number-one donor to Donald Trump. The head of his advisory committee, and Steve Mnuchin’s partner, John Paulson, aka JP “The Foreclosure King,” personally saved over a billion dollars using this carried interest loophole. Paul “The Vulture” Singer, we’ve talked about him before, he’s another guy who has his snout in the carried interest trough.
Trump made a big, big deal, he is going to end this Wall Street loophole. There no economic value to it to the country, and he said, and I quote: “It’s so unfair, it’s so unfair.” And yet, in this tax bill, “so unfair” — it’s still there. And no one has called him out on it. Unfortunately, you say, well what about the Democrats? That’s $170 billion that could save, for example, the California local tax deduction. So why don’t the Democrats bring it up? Well, once again, because they’ve got their Wall Street speculator’s, Mercer’s partner Jim Simons is the other big user of this tax loophole, and he’s one of Hillary’s top donors. So, we’ve got the problem that there’s two parties who have their pigs in the carried interest loophole trough — $170 billion — and no one’s done anything. I noticed that the financial press, everyone is pretty much silent. Like, what happened to this promise of Donald Trump’s? We bring it up in our film, The Best Democracy Money Can Buy . I knew this was going to happen , because Trump made this big statement, and right after he made it suddenly these billionaires are backing him. I said well why are billionaires backing him if he’s going to slap a $170 billion tax on them? The answer is, if they can get him off it and redirect him. And they did.
Bernstein: So this is in the bill now…?
Palast: Well, what it is, is what it isn’t. In other words, it’s not in the bill. After this big, big deal, it’s the number one tax savings he could make. $170 billion. And yet, you have a House proposal that would raise taxes on teachers — you’re not allowed to take off crayons that you buy for your kindergarten classes anymore. Crazy stuff like that . All for the purpose of paying off these loopholes for billionaires. And yet, here’s this giant loophole that Donald Trump made a big deal about. He’s, in a dozen speeches, complaining about this tax loophole for Wall Street. And, I would note, it’s one of the only loopholes for rich guys he doesn’t use. It’s purely for the Wall Street speculators.
There’s no value in it. It doesn’t encourage investment. It encourages the worst speculation. His biggest donors are the biggest abusers, and he won’t touch it. So what I wanted to do — and I’m glad you gave me the platform — is to point out, everyone’s talking about what the tax bill does and I think it’s very important to discuss what the tax bill doesn’t do. Because if you’re going to reform the tax law, you start with a billionaire’s loophole: $170 billion for carried interest.
This is how Romney was able to protect most of his money from being taxed. And, by the way, Obama promised in that election in ’12 that he was going to close that loophole. He got in and never proposed closing the loophole once he got in.
Bernstein: But Penny Pritzker became Secretary of Commerce .
Palast: Yeah. So it’s like a two party party.
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