<DOC>
[106th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:55149.wais]
REAUTHORIZATION OF THE NATURAL GAS PIPELINE SAFETY ACT AND THE
HAZARDOUS LIQUID PIPELINE SAFETY ACT
=======================================================================
HEARING
before the
SUBCOMMITTEE ON ENERGY AND POWER
of the
COMMITTEE ON COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
FEBRUARY 3, 1999
__________
Serial No. 106-11
__________
Printed for the use of the Committee on Commerce
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COMMITTEE ON COMMERCE
TOM BLILEY, Virginia, Chairman
W.J. ``BILLY'' TAUZIN, Louisiana JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas RALPH M. HALL, Texas
FRED UPTON, Michigan RICK BOUCHER, Virginia
CLIFF STEARNS, Florida EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio FRANK PALLONE, Jr., New Jersey
Vice Chairman SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania BART GORDON, Tennessee
CHRISTOPHER COX, California PETER DEUTSCH, Florida
NATHAN DEAL, Georgia BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma ANNA G. ESHOO, California
RICHARD BURR, North Carolina RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California BART STUPAK, Michigan
ED WHITFIELD, Kentucky ELIOT L. ENGEL, New York
GREG GANSKE, Iowa THOMAS C. SAWYER, Ohio
CHARLIE NORWOOD, Georgia ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma GENE GREEN, Texas
RICK LAZIO, New York KAREN McCARTHY, Missouri
BARBARA CUBIN, Wyoming TED STRICKLAND, Ohio
JAMES E. ROGAN, California DIANA DeGETTE, Colorado
JOHN SHIMKUS, Illinois THOMAS M. BARRETT, Wisconsin
BILL LUTHER, Minnesota
LOIS CAPPS, California
James E. Derderian, Chief of Staff
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Energy and Power
JOE BARTON, Texas, Chairman
MICHAEL BILIRAKIS, Florida RALPH M. HALL, Texas
CLIFF STEARNS, Florida KAREN McCARTHY, Missouri
Vice Chairman THOMAS C. SAWYER, Ohio
STEVE LARGENT, Oklahoma EDWARD J. MARKEY, Massachusetts
RICHARD BURR, North Carolina RICK BOUCHER, Virginia
ED WHITFIELD, Kentucky FRANK PALLONE, Jr., New Jersey
CHARLIE NORWOOD, Georgia SHERROD BROWN, Ohio
TOM A. COBURN, Oklahoma BART GORDON, Tennessee
JAMES E. ROGAN, California BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ALBERT R. WYNN, Maryland
HEATHER WILSON, New Mexico TED STRICKLAND, Ohio
JOHN B. SHADEGG, Arizona PETER DEUTSCH, Florida
CHARLES W. ``CHIP'' PICKERING, RON KLINK, Pennsylvania
Mississippi JOHN D. DINGELL, Michigan,
VITO FOSSELLA, New York (Ex Officio)
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland
TOM BLILEY, Virginia,
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Cook, Richard J., Vice President, Washington Gas............. 55
Coyner, Kelley S., Administrator of Research and Special
Programs; accompanied by Richard Felder, Associate
Administrator for Pipeline Safety, Department of
Transportation............................................. 14
Epstein, Lois N., Engineer, Pollution Prevention Alliance,
Environmental Defense Fund................................. 58
Holmes, Edward J., Vice Chairman, Kentucky Public Service
Commission, and Chair, Committee on Gas, National
Association of Regulatory Utility Commissioners............ 22
Wilson, C. Richard, Vice Chairman, Buckeye Partners Limited,
on behalf of the Association of Oil Pipelines and American
Petroleum Institute........................................ 65
Zurcher, John S., Manager, Pipeline Safety, Columbia Gas
Transmission Corporation................................... 46
Material submitted for the record by:
American Gas Association, responses for the record........... 101
Cooper, Benjamin S., Executive Director, Association of Oil
Pipelines:
Letter dated February 10, 1999, enclosing material for
the record............................................. 94
Letter dated March 5, 1999, enclosing response for the
record................................................. 94
Coyner, Kelley S., Administrator of Research and Special
Programs, Department of Transportation:
Letter dated March 17, 1999, enclosing response for the
record................................................. 103
Letter dated March 29, 1999, enclosing response for the
record................................................. 108
Epstein, Lois N., Engineer, Pollution Prevention Alliance,
Environmental Defense Fund:
Letter dated February 12, 1999, enclosing response for
the record............................................. 93
Letter dated March 25, 1999, enclosing additional
material for the record................................ 105
Holmes, Edward J., Vice Chairman, Kentucky Public Service
Commission, and Chair, Committee on Gas, National
Association of Regulatory Utility Commissioners, letter
dated March 4, 1999, enclosing response for the record..... 99
Zurcher, John S., Manager, Pipeline Safety, Columbia Gas
Transmission Corporation, responses for the record......... 90
(iii)
REAUTHORIZATION OF THE NATURAL GAS PIPELINE SAFETY ACT AND THE
HAZARDOUS LIQUID PIPELINE SAFETY ACT
----------
WEDNESDAY, FEBRUARY 3, 1999
House of Representatives,
Committee on Commerce,
Subcommittee on Energy and Power,
Washington, DC.
The subcommittee met, pursuant to notice, at 2 p.m., in
room 2322, Rayburn House Office Building, Hon. Joe Barton
(chairman) presiding.
Members present: Representatives Barton, Bilirakis,
Stearns, Largent, Whitfield, Norwood, Shimkus, Wilson, Shadegg,
Pickering, Bryant, Ehrlich, Bliley (ex officio), Hall, Sawyer,
Markey, Pallone, Wynn, and Dingell (ex officio).
Staff present: Cathy Van Way, majority counsel; Rick
Kessler, majority professional staff member, and Sue Sheridan,
minority counsel.
Mr. Barton. If the subcommittee could come to order. We do
not have a quorum, and we have no Democratic members, so we are
not going to start. But I wanted the record to show the
chairman was here on time and prepared to start on time, and,
hopefully, members will keep that in mind, so that we begin
these hearings on time.
So, I am going to recess until we get at least one Democrat
here.
But I want to welcome everybody to today's hearing, and I
will save my formal statement until we do get some other
members. But I wanted the record to show that the chairman was
here and ready to go at 2 o'clock.
We are in recess, subject to the call of the Chair.
[Brief recess.]
Mr. Barton. The subcommittee will come to order. A quorum
being present, the hearing of the Subcommittee on Energy and
Power of the Commerce Committee on the reauthorization of the
Pipeline Safety Act now commences.
I want to welcome everybody to the subcommittee. Obviously,
I am the new subcommittee chairman. I look forward to my new
position, and this is my first hearing as chairman of this
important subcommittee. I hope everyone understands that I plan
to conduct the business of the subcommittee in a very
bipartisan fashion and a very open and fair fashion, also.
We will have to address a number of important issues this
year and next year. The issue before us today is a very
important issue, the issue of pipeline safety. We will soon be
considering passing a bill for nuclear waste. We hope to hold a
hearing on the Exxon-Mobil merger, and we also plan to do a
series of hearings with the intent to do a restructuring of the
utility industry, or the electricity generation industry, in
this country. And I am sure hopeful that the bipartisan
cooperation will prevail on those issues as well as this issue.
The issue before us today, as I said earlier, is an
important issue. There are about 2 million miles of underground
pipelines in the United States made up approximately of 160,000
miles of liquid pipelines, 300,000 miles of gas transmission
pipelines, and 1.5 million miles of gas distribution pipelines.
With a network this large, obviously, some accidents have
occurred. The job of this Federal legislation is to put in
place a framework to minimize those accidents to the extent
that it is humanly possible, and, also, to make sure that we
have an assessment of incidents, when they occur so that, if
possible, a prospective action can be taken to prevent their
reoccurrence in the future.
The safety record is respectable, and I think we are going
to hear testimony today that that record has improved since the
act was reauthorized back in 1996.
There is an enormous potential for the loss of human life
and, also, for harm to the environment, and we cannot afford to
become complacent about pipeline safety. We have to--and it is
the role of this subcommittee--to ensure through legislation
that our pipeline system does operate and continues to operate
as safely as possible.
When the last pipeline safety reauthorization occurred in
1996, this subcommittee decided to break with the past and take
a new approach, instead of responding to specific accidents, by
creating inflexible one-size-fit-all mandates which did not
necessarily lead to improved safety and which in fact, in some
cases, may have diverted limited resources from more promising
safety proposals.
In 1996, this subcommittee, and later the full committee
and the Congress, decided to allow something called ``risk
management'' and ``risk assessment'' to be utilized at least on
a pilot basis.
Today's hearing is going to give the subcommittee an
opportunity to hear about how those changes have worked in the
marketplace and how they have been implemented. By most
accounts, these approaches have been successful. They have
allowed the Department of Transportation to implement
regulations and guidelines in a more timely fashion and to
better utilize their limited resources. But as always is the
case, we think that there may be room for additional
improvement, and that is the purpose of the hearing today.
As subcommittee chairman, I am going to be very interested
in suggestions that may be offered on how to improve the
overall effect of our current Pipeline Safety Program. Although
the authorization for the Pipeline Safety Program does not
expire until September of the year 2000, I hope today's hearing
will be the beginning of a fairly quick reauthorization
process. If we hear, as I expect to hear, the program is
improved since our last reauthorization and no major
modifications are needed, it is my intent to mark up a
subcommittee print in the very near future. This is an
important program and I would not like for our consideration of
it to wait until it is on the verge of expiring.
Now that my distinguished ranking member, Mr. Hall, is
here, I want to reiterate what I said in his absence. This is a
bipartisan subcommittee. We expect to work in a very
cooperative and bipartisan fashion with Mr. Hall and all the
members on his side, in addition to the members on the
Republican side of the aisle.
With that, I would be happy to recognize the distinguished
subcommittee ranking member, Mr. Hall, for an opening
statement, and then we will recognize Mr. Whitfield and then
Mr. Pallone.
Mr. Hall.
Mr. Hall. Thank you, Mr. Chairman. I am the Mr. Hall he was
talking about. And I was quickly reading my statement once to
myself before I would read it to you. But I will be very brief
because, Mr. Chairman, you adequately covered everything, and I
like the approach that you are taking about all these
agreements we are going to have and how we are going to get
along and how we are going to work together. It reminds me
somewhat of a statement made by a World War II veteran. They
wondered why all those World War II marriages lasted, you know,
40, 50, 60 years. And the guy answered; he said, ``Well, when
we got married, my wife and I agreed I would make all the big
decisions and she would make all the little decisions. Up to
this time, we have never had a big decision.'' That is the way
it could work, but I don't think so. I think we are going to be
able to work together. This committee has worked together
historically, and there is no reason that we won't.
And I thank you for the opportunity to have this discussion
on the status of pipeline safety as it relates to the
reauthorization to the Federal Pipeline Safety Program.
When we last acted to reauthorize the Pipeline Safety
Program, we were able to seize an opportunity at that time to
apply some what we thought were new and more cooperative and
less costly approaches to the very necessary task of
regulation. As you remember, the expectation was that these
tools would enhance the efficiency and the effectiveness of
regulation, which is our duty, while fostering more productive
relationships between the regulators and the industries that
they so vitally affect.
I am glad you decided to call this hearing today, and I
think it is getting us off to a good, early start which
indicates we are going to probably have our budget out timely
and be ahead of the other organizations here in the House. And
I look forward to working with you on this committee. I
certainly look forward to working with you on the deregulation
of electricity and the hearings that we will have there, and I
thank you for calling this hearing on pipeline safety
reauthorization, and as much as you did cover the waterfront
pretty well on it, I yield back my time.
Mr. Barton. We thank you, Congressman Hall.
I watched him not read any of that statement. Everything he
said was from his heart.
The written statement is excellent, but what he said I
think is an improvement even on the written statement.
The Chair would recognize the distinguished gentleman from
Kentucky, Mr. Whitfield, for a brief opening statement.
Mr. Whitfield. Mr. Chairman, thank you very much, and I am
delighted that I am here on the first hearing that you are the
chairman of the subcommittee. And, certainly, I always try to
attend hearings that Ralph Hall will be present because he
always has such amusing stories.
So I am delighted to be here.
But, in addition to that, we have a witness today from my
home State of Kentucky, and I would like to pay special thanks
to Mr. Ed Holmes, who is vice chairman of the Kentucky Public
Service Commission, for being here today. And I know that he is
representing NARUC and other organizations, so I am delighted
that he is here. We look forward to his testimony, and we look
forward to the testimony of all the witnesses, and thank you
very much, Mr. Chairman.
Mr. Barton. Well, we will make sure that your witness from
your State is the last to testify, so that you have to stay
here to introduce him.
So we may proceed out of order on that.
The Chair would recognize the distinguished gentleman from
New Jersey, Mr. Pallone, for a brief opening statement.
Mr. Pallone. Thank you, Mr. Chairman.
The last time the subcommittee considered the issue of
pipeline safety was shortly after the horrible natural gas
pipeline explosion in my district in Edison, New Jersey. And at
that time, I raised several concerns.
Fortunately, some of my safety and environmental concerns
have been addressed through One-Call legislation which, after 4
years, was successfully enacted into law last year as part of
the 6-year Transportation Equity Act of the 21st century.
However, I want to say that many of my concerns as a result
of that accident still remain. Mr. Chairman, in 1997 and 1998,
there were over 200 hazardous liquid pipeline incidents
resulting in over $40 million in property damage and
approximately 95 natural gas pipeline incidents during the same
period resulting in nearly $20 million in property damage. Ten
injuries and one fatality occurred from these accidents. And,
one person died from the pipeline disaster in my district in
Edison.
My point is that we need to ensure that the pipeline safety
program we have in place protects against such potentially
devastating outcomes. And the DOT was mandated to develop
environmental protection standards back in 1992 and is long
overdue in fulfilling this mandate. The current law, I would
also point out, weakened a previous mandate for regular
inspections of pipelines, including standards for inspecting
pipeline segments that run through environmentally sensitive
areas. Further, the DOT's Office of Pipeline Safety has not
prescribed any regulations in this regard.
Mr. Chairman, I just wanted to mention--if I could include
in the record two charts that I have here, which we could pass
out to the other members, which compare the status of the
National Transportation Safety Board recommendations issued to
various entities within the DOT.
[The information referred to follows:]
[GRAPHIC] [TIFF OMITTED] T5149.001
[GRAPHIC] [TIFF OMITTED] T5149.002
Mr. Pallone. And, regrettably, of all of the DOT
administrations, the Office of Pipeline Safety has the worst
acceptance rate of safety board recommendations, both by mode
and by administration, 68 percent compared to acceptance rates
that are 10 to 20 percent higher by most of the other
administrations within the Department.
For the accident that occurred in my district in 1994, for
example, the NTSB recommended that the RSPA expedite
requirements for installing automatic- or remote-operated
mainline valves on high-pressure pipelines in urban and
environmentally sensitive areas to provide for rapid shutdown
of failed pipeline segments. This recommendation is still
considered open or incomplete over 4 years after the
recommendation was originally made. I mention that as an
example. There are others, and I have consistently urged the
DOT to expedite the process in that case and others. I will
bring up some of these things during the questions, Mr.
Chairman, but I would just like to point out again that a lot
of the concerns that come from that Edison accident and a lot
of the recommendations are still out there and haven't actually
been accepted.
And I just would ask unanimous consent to be allowed to
submit these documents and others for the record from the NTSB
and the Interior Department.
Mr. Barton. If the gentleman from New Jersey would allow
the staff on the majority side, and if has not shown it to the
minority side, to take a look at those documents, I am sure at
the end of this hearing or sometime we will accept them, but we
would like to----
Mr. Pallone. Sure.
Mr. Barton. [continuing] look at them, and then at the
appropriate time, we will recognize you to put them into the
record.
Mr. Pallone. Thank you, Mr. Chairman.
[The prepared statement of Hon. Frank Pallone, Jr.,
follows:]
Prepared Statement of Hon. Frank Pallone, Jr., a Representative in
Congress from the State of New Jersey
Thank you, Mr. Chairman. The last time this subcommittee considered
the issue of pipeline safety was shortly after the horrible natural gas
pipeline explosion in Edison, NJ, which is in my district. At that
time, I raised several concerns regarding the proposed reauthorization
language and process. Although today's hearing is an oversight hearing,
presumably it serves as a prelude to a future reauthorization process
prior to the Pipeline Safety Act's expiration in 2000.
Fortunately, some of my safety and environmental concerns have been
addressed through ``one-call'' legislation, which, after four years of
hard work, was successfully enacted into law last year, as part of the
six-year Transportation Equity Act, or ``TEA-21.'' However, many of my
concerns still remain. I look forward to continuing to work with all
interested parties to make sure we make substantial improvements in
these areas.
I still have many concerns regarding environmental protection.
Accident data from the Transportation Department's Office of Pipeline
Safety (OPS) indicate that, on average, more than 6.3 million gallons
of oil and other hazardous liquids are released from pipelines each
year. In 1997 and 1998, over 200 hazardous liquid pipeline incidents
occurred, resulting in over $40 million in property damage.
Approximately 95 natural gas pipeline incidents during the same period
resulted in nearly $20 million in property damage. Ten injuries and one
fatality occurred from these accidents. And, 1 person died from the
pipeline disaster in my district. While these numbers may seem low, the
point is that the potential exists for thousands more deaths and far
greater damage to natural resources and property to occur. We need to
ensure that the pipeline safety program we have in place protects
against such potentially devastating outcomes.
I know industry favors a risk management/cost-benefit approach to
regulating pipeline safety and played a substantial role in crafting
and updating this program. But the DOT was mandated to develop
environmental protection standards back in 1992 and is long overdue in
fulfilling this mandate. I agree that a top-down, ``one size fits
all,'' regulatory approach is frequently not the most effective nor the
most efficient use of administrative resources. However, based on the
data I have seen, I am not convinced that the current approach
adequately protects the environment in the context of this program.
The current law also weakened a mandate for regular inspection of
pipelines, including standards for inspecting pipeline segments that
run through environmentally-sensitive areas. Further, the DOT's Office
of Pipeline Safety (OPS) has not prescribed any regulations in this
regard.
I would also like to draw your attention for a moment to some
information provided by the National Transportation Safety Board
(NTSB). I have two charts, which compare the status of safety board
recommendations issued to various entities within the Transportation
Department (DOT). Regrettably, of all of the DOT administrations, the
Office of Pipeline Safety (OPS) has the worst acceptance rate of safety
board recommendations, both by mode and by administration--68%,
compared to acceptance rates that are 10-20% higher by most of the
other administrations within the department.
Let me give you some examples of the types of recommendations the
NTSB has made. For the accident that occurred in my district in 1994,
for example, the NTSB made several recommendations and is still
awaiting response from the Research and Special Programs Administration
(RSPA), which oversees the OPS, on a recommendation to expedite the
completion of a study on methods to reduce public safety risks in the
siting and proximity of pipelines.
For the same accident, the NTSB also recommended that the RSPA
expedite requirements for installing automatic- or remote-operated
mainline valves on high-pressure pipelines in urban and environmentally
sensitive areas to provide for the rapid shutdown of failed pipeline
segments. This recommendation received an acceptable response but is
still considered ``open''--or incomplete--over four years after the
recommendation was originally made. I have consistently urged the DOT
to expedite this process.
Finally, I would like unanimous consent to be allowed to submit for
the record additional materials from the NTSB and the Interior
Department as part of my statement. Thank you, Mr. Chairman.
Mr. Barton. And we also want to say that the Chair is very
cognizant of some of the concerns that you have justifiably
raised, and the Chair shares those concerns, and that is the
reason that we are holding this hearing.
The Chair would recognize a new member of the full
committee, and obviously, of the subcommittee, Mr. Bryant, of
Tennessee, for a brief opening statement.
Mr. Bryant. I thank the chairman.
This is my first subcommittee hearing in which we have
actually had testimony, other than organizational meetings. And
I am excited about being on this committee, as well as this
subcommittee. I thank the chairman for holding this hearing.
It is certainly a very important issue, not only to my
State of Tennessee, but also to the entire country. And from
reviewing the list of witnesses, we appear to have a good list,
very eminently qualified people to talk about this issue, so I
look forward to being here today.
And I may have to leave just a little early, perhaps before
all the testimony is over, but I will be listening very
carefully, as well as reviewing very carefully the written
statements of the witnesses.
Thank you.
Mr. Barton. The Chair would now recognize the distinguished
ranking member of the full committee, the Honorable John
Dingell of Michigan, for a brief opening statement.
Mr. Dingell. Mr. Chairman, thank you. I commend you for
holding this hearing, and it is good that we are looking into
the substantially revised law we enacted late in 1996.
I also commend my good friend, Mr. Frank Pallone, for his
unceasing vigilance in his work on behalf of those who seek to
ensure that this industry adheres to the highest standards of
safety.
The pipeline industry, at least those who play by the
rules, has a very good record of safety, and my friends in the
industry know that I hold them in the highest regard. However,
there is an enormous threat to communities from unsafe
pipelines, and it is a very real one.
In 1994, a gas pipeline explosion destroyed an apartment
complex in Edison, New Jersey. In 1993, a leak in a Colonial
Oil pipeline in Fairfax County, Virginia, caused extensive
property and environmental damage. It is clear that we must all
do what we can to prevent similar unfortunate occurrences in
the future.
The 1996 legislation made many changes in the law,
including allowing the Department of Transportation to
substitute a voluntary demonstration project for regulatory
mandates like biannual inspections. I am told both DOT and
industry view the new pipeline program as more efficient and
effective than ever before, and perhaps that is so. If that is
the case, then there is much to be pleased about the new law.
However, I would submit to you that we really don't know
anything much for certain.
The law has only been in place for 2 years, and DOT has
recently approved some demonstration projects for oil pipelines
and a gas pipeline, too. But have any of these things been in
place long enough for us to learn anything useful? And what
monitoring has taken place to be assured that, in fact, they
are working? Proper understanding of practices and safety is
being looked at so that we can know whether or not our
handiwork is, in fact, good.
To my knowledge, this is the first hearing on the subject
since the passage in the 1996 act. I, indeed, have many
questions. How have the risk management demonstration projects
differed from existing regulation? Are enforcement actions up
or down since the passage of the 1996 act? Are these changes
due to better behavior by pipelines, or are the changes due to
less oversight by the agency? What is the status of OPS's
rulemaking on replacing pipelines to facilitate better safety
inspections? What is the status of rulemaking on
environmentally sensitive areas? And there are other questions,
Mr. Chairman.
Mr. Chairman, if we intend to reauthorize the law, we must
have a complete picture of the impact of the law on pipeline
safety. I think it may be wise to consider a 2-year
reauthorization in order to be sure that we are doing the right
thing by the public. I am quite certain that we do not have
enough knowledge to expand the risk demonstration provisions of
the law at this time, though I believe we should, and can,
leave the subject open for future consideration.
Mr. Chairman, we have almost a full 2 years to go before
authorizations in this law expire. And while I commend you for
the vigor-
ous way that you are taking leadership and interest in this
matter, I think it would be prudent, indeed, for us to use the
time that we have here to determine the extent to which this
law is, in fact, working so that we can pass a broadly
bipartisan bill at an appropriate time in the future that truly
addresses the needs of the industry, the environment, and the
public.
Mr. Chairman, I thank you for your kindness to me.
Mr. Barton. We thank you, Congressman Dingell.
The Chair wants to announce that, according to the rules of
the committee and the subcommittee, order of recognition is by
seniority, alternating by party, before the gavel and by order
of appearance after the gavel. According to the rules, the
Chair also has the power of recognition, and the Chair is going
to violate those rules right now by recognizing the full
committee chairman, the Honorable Tom Bliley of Virginia, for a
brief opening statement.
Chairman Bliley. Thank you, Mr. Chairman. And I want to
commend you for holding this timely hearing on the
reauthorization of the Natural Gas and Hazardous Liquid
Pipeline Safety Acts.
I am pleased to see the subcommittee get an early start on
some of the work it has before it in the 106th Congress. This
will be a very busy 2 years, and the subcommittee has a lot of
important and complicated issues ahead of it.
So with that, I want to thank you, Mr. Chairman, and I also
commend to your attention two other issues I view as priorities
for the subcommittee; restructuring the electric utility
industry to give consumers retail choice and enacting a solid
law when it comes to the disposal of high-level nuclear waste.
I look forward to working with you on these matters.
With respect to issues before us today, the Natural Gas and
Hazardous Liquid Pipeline Safety Acts, the subcommittee's
attention to this is essential to preserving the safety of our
community. Although the authorization for this program does not
end until September 2000, because of the importance of this
program, I believe we should begin the process of formulating
the reauthorizing legislation early. This hearing is the first
step in that process.
The safe operation of natural gas and hazardous liquid
pipelines is of serious concern to me. When pipelines are
operated in an unsafe manner, they not only pose a danger to
humans but also threaten the environment around them. Thus, it
is critically important that natural gas and liquid pipelines
are operated in a safe a manner as possible.
Today's hearing should be especially interesting because it
will be the first opportunity for us to learn how the changes
made in the 1996 reauthorization of this program are working.
Prior to 1996, Congress approached pipeline safety by requiring
the Department of Transportation to implement Federal minimum
standards which all pipelines were required to meet. In 1996,
we authorized the Department of Transportation and pipeline
operators to conduct a risk management demonstration project.
This program allows DOT and pipeline operators, on a voluntary
basis, to develop safety regimes tailored to the risks posed to
a particular pipeline or segment of pipeline. Four risk
management projects have been approved and more are in the
works. I look forward to hearing how the program is working.
Another change since 1996 is that the Department is now
taking a risk assessment approach to enacting new regulations
and guidelines. Apparently this approach is working well, the
amount of time it has taken to complete rulemakings has been
shortened, and stakeholders appear to be more satisfied with
the results. While I am sure that there is always room for
improvement, everyone seems more satisfied with the program
than when it was reauthorized in 1996.
And I look forward to hearing from the witnesses and
working toward reauthorization of this program in a
responsible, timely, and effective manner.
Thank you, Mr. Chairman.
Mr. Barton. We thank the distinguished full committee
chairman.
Before the Chair recognizes the distinguished gentleman
from Maryland for an opening statement, I would just make an
observation. All my Democratic friends are close to the Chair,
and all my Republican friends are as far away as possible.
I hope that is not a message that is being sent; maybe I
should. I wouldn't be the chairman, then, if I did that.
We would like to recognize the gentleman from Maryland for
a brief opening statement.
Mr. Wynn.
Mr. Wynn. Thank you, Mr. Chairman. I would defer an opening
statement at this time.
Mr. Barton. Okay. Then the Chair would recognize the
distinguished member from Arizona, a new member of the full
committee and the subcommittee, Mr. Shadegg, for a brief
opening statement.
Mr. Shadegg. Thank you, Mr. Chairman.
As my colleague, Mr. Bryant, I am new to the full committee
and new to the subcommittee. This is my first substantive
hearing, and I am looking forward to it.
I will keep my remarks short, other than to say that I
think this is an issue of great concern. I am pleased with the
progress that has been made in the past. I am also pleased that
the chairman has scheduled an early hearing on this so that we
can look into the issue at great depth. I am impressed with the
list of witnesses.
But, also, like my colleague, Mr. Bryant, I am going to
have to leave early. I regret that, but will pay attention
closely to the written testimony of those witnesses I am not
able to hear.
Thank you, Mr. Chairman.
Mr. Barton. The Chair would recognize the distinguished
member from Massachusetts, one of the brightest members of the
committee and the Congress, the Honorable Mr. Markey, for a
brief opening statement.
Mr. Markey. Thank you, Mr. Chairman, and I want to begin by
commending you for holding this afternoon's oversight hearing
on pipeline safety.
You know, back in the old days of Sam Rayburn and John
McCormick and Tip O'Neill and Jim Wright, it was often said
that there was an ``Austin to Boston'' access operating in
House leadership. Today, Mr. Chairman, with your accession to
the Chair, and Mr. Hall's continued service as ranking
Democrat, we now clearly have a ``Dallas-Fort Worth'' access on
this subcommittee.
As a result, I expect that we are going to be learning a
whole lot more about the Lone Star State's interest in energy
issues and we look forward to taking the entire course this
year.
Today we begin that process by examining the implementation
of the Natural Gas Pipeline Safety Act and the Hazardous Liquid
Pipeline Safety Act. All of us have a compelling interest in
ensuring that the nearly 160,000 miles of natural gas or oil
pipelines that are running through our communities are properly
safeguarded against explosions or leaks that would endanger
public safety or degrade our natural environment.
Last October's catastrophic pipeline explosion in Nigeria
which killed over 700 people underscores the terrible human
cost of failing to maintain safe and secure pipelines.
While the United States has largely avoided such disasters,
as one of the witnesses prepared testimony points out, each
year the amount of oil or other hazardous liquids released from
pipelines across America is equivalent to more than half of the
amount released from the Exxon Valdez disaster.
In response to concern about these releases, Congress over
the years has taken a number of steps to enhance environmental
protections and strengthen emergency response planning related
to pipeline operations. Unfortunately, the Department of
Transportation appears to have failed to carry out the intent
of these laws by not issuing implementing regulations.
Moreover, the Department has chosen to ignore a number of
proposed safety improvements recommended by the National
Transportation Safety Board over the years as a response to
specific accidents that have taken place at U.S. pipelines.
And to make matters worse, in 1995 and 1996, this
subcommittee considered and approved legislation which weakened
a number of the safety and environmental protections
established under pre-existing law. The so-called
``accountable'' Pipeline Safety Act of 1996 replaced these with
``paralysis by analysis,'' risk assessment, and cost benefit
analysis requirements, as well as a dubious risk management
demonstration program that allowed pipelines to be exempted
from Federal safety rules if they put in place their own risk
management programs.
A particular concern to me was a provision in the 1996 act
that permitted corporate insiders and lobbyists to serve on
peer-review panels that were empowered to review all proposed
DOT pipeline safety regulations. Under this provision,
individuals with financial or other conflicts of interest would
actually be allowed to serve as the peer reviewers. Such a
practice, in my view, undermines the creditability of peer
reviews and calls into questions the fundamental, scientific,
and technical creditability of the entire process.
In addition, the 1996 act actually decreased public
participation on technical safety standards committees from six
to five and increased industry representation from four to
five, thereby, assuring that the so-called ``public
representatives,'' at least some of whom appeared that would
never be able to outvote the industry representatives.
During the committee's markup, I offered an amendment which
was unfortunately rejected by the committee on a 19-23 party
line vote which would have allowed the Secretary of
Transportation discretion to exclude persons from serving as
peer reviewers if they have a conflict of interest that could
result in bias.
I think that this is a very important issue, Mr. Chairman.
I am glad that you are focusing upon it. As we review it, I am
going to keep an open mind in terms of provisions that perhaps
are working better than I thought. But I would hope, at the
same time, that other members would keep an open mind looking
at other provisions that perhaps should be modified as well.
I thank you, Mr. Chairman. I yield back the balance of my
time.
Mr. Barton. We think the distinguished gentleman for his
opening statement. I am always impressed by his performance,
and the ``paralysis by analysis'' is an excellent soundbite.
Mr. Markey. Thank you.
It is a ``golden oldie'' at this point.
Mr. Barton. Yes.
Mr. Markey. But----
Mr. Barton. Not having the benefit of knowing you were
going to use it, the best I can come up with on a short notice
is a move toward perfection by cooperation which is--it is in
the ballpark.
It is not a home run, but it is the same----
Mr. Markey. But not Fenwick Park----
Mr. Barton. No.
Mr. Markey. Maybe Yellowstone Park.
Mr. Barton. Yes.
Mr. Markey. I mean, it is a big park.
Mr. Barton. But I will get better as the year goes along.
And we look forward to working together on what is an important
issue. And I know that all minds on all sides will be open.
So, the Chair would like to recognize the distinguished
gentleman from Illinois, the powerful Illinois delegation, Mr.
Shimkus, for a brief opening statement.
Mr. Shimkus. I will pass, Mr. Chairman.
Mr. Barton. Okay.
Seeing no Democrats who have not yet been recognized, we
would like to recognize the winning pitcher of the
congressional baseball game last year, the Honorable Steve
Largent of Oklahoma, for a brief opening statement.
Mr. Largent. I would pass.
Mr. Barton. Okay.
Mr. Largent. Thank you.
Mr. Barton. Then we would recognize a new member of the
full committee and the subcommittee, the distinguished
gentleman from Maryland, Mr. Ehrlich, for a brief opening
statement.
Mr. Ehrlich. Pass.
Mr. Barton. Okay.
We see Mr. Norwood is arriving. Would he care to make a
brief opening statement, or would he yield?
Mr. Norwood. Very brief, Mr. Chairman.
Mr. Barton. All right. If you will be seated, then we will
recognize you, too, the gentleman from the great State of
Georgia, the Honorable Dr. Norwood, for a brief opening
statement.
Mr. Norwood. Well, Mr. Chairman, first, let me just simply
say how pleased I am to serve on your new subcommittee this
year, and I look forward to working with you. How pleased I am
you are having this hearing, and with that, I will add the
basis of my contents for the record.
Mr. Barton. Okay. The Chair would recognize the
distinguished gentleman, Mr. Sawyer, for a brief opening
statement, from the great State of Ohio.
Mr. Sawyer. Mr. Chairman, it is a pleasure to be here. I
will forego the rest of my statement and include it in the
record.
Mr. Barton. Okay.
We are going to have a good year if everybody keeps that
spirit.
The Chair would ask unanimous consent that all members not
present who have not yet made an opening statement be allowed
to submit a formal opening statement for the record.
Is there objection?
[No response.]
Hearing none, so ordered.
We would now like to call our first panel to the witness
table. We have the Honorable Ms. Kelley Coyner, the
Administrator of Research and Special Programs at the United
States Department of Transportation. If she would come forward.
We also, I am told now, have in the room the Honorable Ed
Holmes, who is the Commissioner and Chair of the NARUC
Committee on Gas, and he is a Commissioner of the Public
Service Commission in the great State of Kentucky. Would Mr.
Holmes come forward?
And before we recognize them, we would like to give Mr.
Whitfield of Kentucky an opportunity, if he so desires, to
introduce his member from his home State.
Mr. Whitfield. Mr. Chairman, thank you very much. I have
had the opportunity to work with Ed Holmes, and he does a great
job for the Public Service Commission of Kentucky, serving as
vice chairman, and today he is here representing NARUC. And I
wish he had been here earlier to have heard my wonderful
remarks about him before. I didn't recognize he was not here
then, but I am delighted that he made it. I know his airplane
was delayed, and we look forward to his testimony.
Mr. Barton. Thank you.
We have received your written testimony. We are going to
recognize you, Ms. Coyner.
And we are going to ask that you try to summarize it in
about 7 minutes. If you need a little more time, obviously, we
will give that, and then we will recognize Mr. Holmes.
So welcome to the subcommittee and the floor is yours.
STATEMENTS OF KELLEY S. COYNER, ADMINISTRATOR OF RESEARCH AND
SPECIAL PROGRAMS; ACCOMPANIED BY RICHARD FELDER, ASSOCIATE
ADMINISTRATOR FOR PIPELINE SAFETY, DEPARTMENT OF
TRANSPORTATION; AND EDWARD J. HOLMES, VICE CHAIRMAN, KENTUCKY
PUBLIC SERVICE COMMISSION, AND CHAIR, COMMITTEE ON GAS,
NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS
Ms. Coyner. Thank you, Chairman Barton.
I would like to thank you----
Mr. Barton. You need to speak into the microphone and----
Ms. Coyner. I will pull the microphone up a little bit.
Mr. Barton. Yes, make sure it is turned on.
Ms. Coyner. All right.
I appreciate the opportunity, Mr. Chairman, that you and
Mr. Hall have given me to join you today. And I would like to
note for the record that I, too, am a native Texan and share
your heritage in the Lone Star State.
Mr. Barton. Noted.
Ms. Coyner. I am Kelley Coyner, the Administrator of the
Research and Special Program Administration, and I am joined
today by Richard Felder, the Associate Administrator for
Pipeline Safety. I am pleased to represent the Department of
Transportation in discussing these important safety and
environmental challenges that we face in overseeing 2 million
miles of pipelines.
Under Secretary Slater's leadership, we are committed to
eliminating pipeline-related deaths and injuries and reducing
damage to the environment. Through vigilance over the years, we
have experienced a very low number of pipeline incidents in the
United States.
Today, however, we face a changing landscape. Because of
the growth of suburbs, pipelines that were once in rural areas
have new neighbors. Greater economic competitiveness raises
questions about the adequacy of safety resources. With growing
population, new construction, varying operating conditions, and
significant environmental issues, the challenge is to
continuously improve pipeline protections. The task is to focus
on those things which are most likely to cause pipeline
failure.
One way of achieving this is to forge partnerships. We have
done so with other Federal agencies such as the Environmental
Protection Agency and the Department of Interior; environmental
organizations like the Nature Conservancy, State Pipeline
Safety agencies, and industry trade associations, and
companies. It is also important to find ways for the public to
participate in a meaningful way. We do this by traditional
means, such as public meetings and Federal Register notices,
and by more innovative means, such as electronic town meetings,
communications targeted specifically at communities adjacent to
pipelines, and a very aggressive use of our web site.
The key challenges we face in the pipeline safety area are
the following: improving prevention of outside force damage,
developing safety solutions that address varying designs and
operating conditions of pipelines, enhancing protection of the
environment, strengthening State pipeline programs, and
ensuring year 2000 compliance.
Accidental damage to underground lines is far and away the
leading cause of accidents and service disruptions. Everyone
must accept that protecting underground facilities is a shared
responsibility.
Perhaps the most important development to ensure safety on
pipelines was last year's passage of One-Call legislation and
the implementation of that One-Call legislation.
Over 160 representatives of utilities, service providers,
contractors, railroads, One-Call centers, and highways have
joined with us as a team to study best practices for
underground damage prevention as provided for in the
Transportation Equity Act for the 21st Century. We are
identifying practices that address known risk factors, such as
the planning, design, and operation of One-Call systems,
mapping, and locating pipelines and excavation damage. The team
will hold an interim briefing via satellite on March 31 and
will complete its work by June.
To communicate the need for sharing responsibility for
damage prevention, we have worked closely with the pipeline
industries, State, and Federal Government, and the insurance
and construction industries on a novel public education
campaign. The campaign addresses the critical damage prevention
steps. Pilot results from Virginia, Georgia, and Tennessee
indicate increased use of One-Call systems and, most
importantly, decreased damage to pipelines from outside force
damage. As a result of this successful pilot, we will expand
the campaign nationwide this year.
The wide variety of pipeline systems and the environments
in which they are located also warrant efforts to tailor safety
solutions. Our demonstration program will answer the question
whether using risk management results in greater safety and
stronger protection of the environment. We are encouraged by
the preliminary results, but we are not done yet with our work.
The greater regulatory process also benefits from
government and industries'--and by government, I mean both
Federal, State, and local governments--collective assessment of
risks. We are producing effective operator qualification
requirements using a negotiated process.
We have improved our understanding of what LNG and tank
safety requirements should be. Through wide consultation with
government agencies, industry, and independent economists, we
have built a new framework for performing cost-benefit analysis
which we are implementing program-wide.
To target important safety issues, we are testing a new
inspection approach, the System Integrity Inspection Pilot
Program. The pilot program will allow us to identify potential
problems earlier and move to correct them. I want to stress for
the record that participating companies must continue to comply
with all of our safety standards.
Efforts like risk management and damage prevention further
safety and protect the environment. To better protect areas
that are most unusually sensitive, RSPA is working with
industry and environmental organizations and other Federal and
State agencies. We are considering what additional protections
would be effective so that we can base a regulation on
practical experience. We are currently pilot testing this
process.
Because we require more detailed information, we have also
built a national pipeline mapping system. We undertook this
effort in concert with public-and private-sector stakeholders,
including States, the U.S. Geological Survey, the Federal
Energy Regulatory Commission, and the Department of Energy. The
mapping system not only helps our prevention strategy, but also
our work in oil spill response planning.
No depiction of the challenge of pipeline risks would be
complete without the recognition of the major role that State
agencies play in pipeline safety. States comprise 87 percent of
the national workforce of pipeline inspectors and each year
conduct over 8,000 inspections. State regulators actively
participate in all our regulatory and policy initiatives.
States assume the primary role in overseeing compliance on
intrastate transmission and distribution pipelines.
Over 85 percent of the incidents with fatalities occur on
those pipelines which are located in densely populated areas.
We have steadily increased our support for State programs
from $8 million in 1994 to $14.5 million in 1999, and we
continue to need strong support in that area.
We are all concerned about potential for disruption of oil
and gas and other services in the year 2000. We are working
with the President's counsel on Y2K conversions, specifically
the energy sector, on this issue. Our objectives are to
integrate public-and private-sector efforts to facilitate
solutions.
We are prepared to take what we have learned under the
current Pipeline Safety Act and work closely with Congress to
advance our safety and environmental goals. We are committed to
maintaining high levels of safety and environmental protection.
I would welcome any questions you may have, Mr. Chairman,
and others on the subcommittee.
[The prepared statement of Kelley S. Coyner follows:]
Prepared Statement of Kelley S. Coyner, Administrator, Research and
Special Programs Administration, Department of Transportation
I would like to thank Chairman Barton from Texas and Ranking
Minority Member Hall from Texas for the invitation to speak to the
Committee today. I am Kelley Coyner, Administrator of the Research and
Special Programs or RSPA. Appearing with me is Richard Felder,
Associate Administrator for Pipeline Safety. I am pleased to represent
the Department of Transportation (DOT) to describe the safety and
environmental challenges we face in our oversight of the national
pipeline system. Within the Department, the Research and Special
Programs Administration's (RSPA's) Office of Pipeline Safety (OPS) is
charged with regulating the safe and environmentally sound operation of
the national pipeline infrastructure. Pipelines transport natural gas
to 55 million residential and commercial customers. They also transport
60 percent of the crude oil and petroleum products that fuel our
industry, our economy and our households. We have responsibility for
over 2 million miles of pipelines and approximately 2200 operators. Our
regulations cover the design, construction, inspection, testing,
operation, and maintenance of pipeline systems. We achieve compliance
with our regulations through a partnership with state agencies, which
assume regulatory and enforcement functions primarily as they apply to
intrastate pipeline transportation, while the Federal government
assumes these responsibilities for interstate pipelines.
Our mission is to ensure the safe, reliable, and environmentally
sound operation of the Nation's pipeline transportation system.
Consistent with the Department's Strategic Plan, we strive to eliminate
pipeline-related deaths, injuries, and property damage, and reduce
pollution to the environment. Our top priorities are reducing to zero
the accidents caused by non-compliance with pipeline regulations and
working with operators to reduce threats to pipeline integrity.
As we prepare for reauthorizing the national pipeline program, it
is an opportune time to look at the safety record over the last ten
years. The number of incidents of all types is generally constant
despite growth. Incidents caused by corrosion and outside force are on
the gradual decline. Federal regulations, in conjunction with
historically good industry operating practices, have resulted in a
generally positive safety and environmental record. Compared to other
modes of transportation, pipelines have a very low incident rate per
miles of product transported.
As we face the beginning of the next century, however, we are
confronted by a changing landscape. With the growth of suburbs, the
pipelines that were placed in rural or sparsely populated areas have
new neighbors. Expanding population and environmental concerns are the
dominant features on today's pipeline maps. Greater economic
competitiveness drives corporate mergers and restructuring and raises
questions about adequacy of safety resources.
The era of buried pipelines operating out of sight and out of mind
is over. The challenge of the past two decades was assuring that
Federal minimum pipeline standards adequately addressed fundamental
requirements for pipeline systems that traverse many states and many
geographic and environmental conditions. With changing and diverse
population densities and environmental concerns, and widely varying
operating conditions, our concern now is how to maintain and improve
this safety record. Increased safety can only occur if we can recognize
and address system-unique conditions and concerns. Overseeing pipelines
is becoming an increasingly challenging task. To address these
challenges, we embarked on a course of applying risk-based approaches
to provide safety and environmental solutions.
The Accountable Pipeline Safety and Partnership Act was passed in
1996 to provide new ways to improve the pipeline safety record and to
increase the reliability and efficiency of pipeline systems. Knowing
that the majority of accidents were occurring in pipeline systems that
were fully compliant with regulations, Congress authorized risk
management demonstration projects and required risk assessments of all
new pipeline regulations. Our goal was to adopt a more comprehensive
approach to identifying risks and to improving the allocation of public
and private resources to the most important safety and environmental
issues.
We are pleased to report that we have aggressively implemented the
call for more effective regulation and proceeded in exploring the
potential for risk management as a permanent feature of the Federal
pipeline safety program. Using new approaches, we are attacking the
problem of population encroachment along pipelines that is resulting in
damage to pipelines and breaches of pipeline integrity. With the
knowledge that a more competitive economic environment is driving a
search for the most economical means of maintaining and enhancing aging
systems, we are finding the most effective means for addressing
increasing safety risks and devising new strategies for increasing
environmental protection.
risk management & risk based regulation
The Risk Management Demonstration Program is designed to test
whether or not the principles and processes of risk management could
provide effective alternative regulatory approaches for the pipeline
industry. The Department will exempt operators from regulations if they
can demonstrate alternatives that achieve superior safety performance.
The demonstration program will enable us to answer the following
questions:
<bullet> Does risk management result in greater safety, environmental
protection, and service reliability than would otherwise be
achieved through compliance with the safety regulations?
<bullet> Are resources being better prioritized and more effectively
applied under risk management?
<bullet> Does government have a better ability to influence a positive
safety and environmental outcome?
Government and industry realized that risk management requires
fundamental change--in the way that companies operate, in the processes
and information we use to ensure safety, in the ways and degrees to
which companies and regulators interact with each other, and in how the
public is involved in the regulatory process. Fundamental change does
not come easily or quickly.
The Department recognized that regulatory change that allows
companies greater flexibility to define pipeline-specific problems and
cost-effective solutions must be pursued in a prudent manner. We must
ensure that safety and environmental protections are maintained, that
we allow significant input from all affected parties on all
demonstration projects, and that we apply careful analysis and
judgement before we approve alternatives to the current regulations.
During 1998, the Department approved the Mobil, Phillips, Equilon,
and NGPL demonstration projects. We are currently awaiting public
comment on the Chevron project. The Columbia and Northwest projects are
in the final stages of review prior to soliciting public comment. We
are also working with Enron, Duke, and Tennessee Gas to meet program
requirements in 1999. We tailor our audit of each company's progress
against its risk management plan. To allow for public evaluation,
company commitments and project performance measures are included for
tracking in an internet-accessible information system.
As we approach the midpoint in the demonstration period,
preliminary findings suggest that operators are enhancing their
identification and resolution of pipeline risks through use of more
thorough evaluative techniques. The Department is observing and
documenting for public record how companies are performing more
comprehensive and integrated examination of risks and targeting their
prevention and mitigation strategies. We are observing the exploration
of new technologies and processes. We have seen an improved emergency
notification network to alert residents near pipelines about releases
and appropriate responses. We have witnessed better risk control
through management of the excavation process near pipelines, better
repair procedures, and better placement of valves to control potential
releases in environmentally sensitive areas. One company has revamped
its aerial assessment process to provide more rapid response to
concerns. We have seen improvement of safety practices for employees
who work in areas where exposure to risks is high. Across the board,
the consultation process has increased the Federal and state
governments' understanding of pipeline integrity issues specific to
locations and neighborhoods, as well as system wide.
As we improve our understanding of the variation in risk factors
along pipelines, we are more fully applying this understanding to our
regulatory process. We turned a ten-year struggle over prescriptive
regulations for testing and certifying pipeline employees into a
regulatory negotiation that produced an effective plan for a
performance-based operator qualification regulation. The negotiated
rule was the product of a team that included representatives from
government, industry, labor, state regulators, and the public.
We have accelerated regulatory development of more risk-based
safety and environmental protection standards by increased
participation in national consensus standards organizations and
adoption of industry standards. We have used this process to improve
our regulation of liquified natural gas (LNG) facilities, by adopting
standards of the National Fire Protection Association, and of breakout
tanks, by adopting standards of the American Petroleum Institute.
We have implemented the risk assessment provisions of our 1996
reauthorization. We formed a cost-benefit framework working group made
up of individual operators, the major pipeline trade organizations, and
economists familiar with cost-benefit analysis. The working group has
developed a framework for how we will perform future cost-benefit
analyses, and we are fully implementing the concepts and processes
within our program.
We are also testing a risk-based alternative approach to pipeline
inspection, via the System Integrity Inspection (SII) Pilot Program,
the goal of which is targeting important safety issues more
efficiently. The SII approach is based on the operator's presentation
of a System Integrity Plan to focus federal and state resources on the
most significant and potentially high impact safety, environmental, and
regulatory issues.
Traditionally, our inspections have focused strongly on ensuring
compliance with applicable pipeline safety regulations using a
checklist approach with certain guidelines. While this approach
provides assurance that operators are complying with all regulations,
there may be other opportunities to improve safety. The SII approach is
a more broad-based examination of integrity issues, including many
areas not covered during a standard inspection. It is important to note
that SII is a full compliance program, without exemptions from
regulation. We believe, however, that it will help us to improve
information exchange and system-side consideration of individual
operators' safety and environmental performance. The Department is now
soliciting applications from interested companies.
national damage prevention initiative
Accidental damage to underground lines is by far the leading cause
of accidents and service interruptions. A web of underground facilities
forms the unseen backbone of our national economy. Damage to pipelines,
telecommunications lines, and other buried utilities may be caused by
several factors. Damage to underground facilities may result in deaths,
injuries, and property and service losses.
The Department has vigorously tackled this challenge. In 1998,
Congress included comprehensive one-call damage prevention provisions
in the Transportation Equity Act for the 21st Century (TEA-21). This
law requires DOT to conduct a comprehensive study and publish a report
on one-call center best practices. OPS scheduled an initial public
meeting in August to solicit public input and participation in
addressing new requirements. Since August, we have numerous public
meetings to accomplish the work of the study. Over 160 representatives
of utilities, service providers, contractors, locators, and railroads,
and numerous federal, state and local government officials are
participating in study task teams. They are donating their time and
effort to find common solutions to a problem that previously divided
them and delayed passage of national legislation. They are identifying
best practices in the critical areas of one-call center operations,
planning and design, excavation, mapping, and locating underground
utilities. The best practices initiative is known as the One-Call
Systems Study, or ``Common Ground''.
The ``Common Ground'' steering team will hold an interim briefing
to report on its progress; a satellite broadcast is planned for March
31, 1999. Participants invited include representatives of organizations
of contractors, locators, gas and telecommunications utilities, one
call systems, railroads and the National Transportation Safety Board.
RSPA plans to complete the study and publish the report in June 1999.
Finally, following the completion of the study, we plan to hold a joint
public meeting on our findings with the National Transportation Safety
Board.
The Department will then proceed to finalize the criteria and
protocols for a new grant program to reduce damage to underground
facilities by improving the operational efficiency of one-call centers,
marking and locating techniques, design and planning practices and
other techniques identified as best practices in the study. TEA-21
authorizes grants of $1 million in fiscal year 2000 and $5 million in
fiscal year 2001.
The best practices study builds on the strength of earlier work by
the Department's joint government/industry damage prevention quality
action team (DAMQAT). The team's mission is to organize a national
education campaign to reduce damage to underground facilities. This
team's assessment of public education needs is available on our website
at www.rspa.dot.gov. The most significant finding is the need for
better communications among all who work in and around underground
facilities, including facility operators, private contractors and
public sector employees who excavate, locators, and one-call centers.
The campaign the team developed addresses the four critical damage
prevention steps: Call Before You Dig; Wait the Required Time; Observe
the Marks; and Dig With Care. We pilot-tested campaign materials in
Virginia, Georgia, and Tennessee from May to October. Initial results
are very encouraging. The volume of calls to one-call centers increased
significantly in all jurisdictions, and Virginia data shows a decline
in excavation damage to gas pipelines. We will work with the coalition
of one-call organizations, facility operators, and others to adopt and
distribute the campaign nationwide this year.
Risk-based technology is another weapon in our damage prevention
arsenal. A three-year research effort is underway to improve internal
pipeline inspection technology to locate mechanical damage and stress
corrosion cracking on pipelines. Since 1996, the Department has been
funding this ambitious research project to modify existing inspection
technology to be able to detect outside force damage. The consortium of
Battelle, the Southwest Research Institute, and Iowa State University
is performing the research. Pipeline companies will benefit from access
to inspection technologies for detecting critical mechanical damage and
cracks. Inspection vendors will acquire a better understanding of how
to improve their systems.
protection of the environment
Efforts like risk management and damage prevention further safety
and protect the environment. While it is true that operating safely by
keeping the product in the pipe protects the environment--that is not
the only issue. To enhance our protection, we are identifying those
geographic areas which are most critical to provide supplemental
protection beyond our existing requirements. We are considering what
additional protections would be effective, giving consideration to the
adverse impacts of construction. We are also considering the processes
that operators can use to perform risk assessment and make risk control
decisions and how we can oversee that process, in consultation with
other agencies and organizations.
We have extensively consulted with environmental experts and
industry about how to define areas unusually sensitive to environmental
damage (USAs) from hazardous liquid pipelines and have produced a model
to designate the areas accurately on maps. We intend to evaluate the
USA work to date through a field pilot test of the definition's
effectiveness and usability. We will work with the American Petroleum
Institute and Federal and state agencies to verify the appropriateness
of the model. This pilot testing will provide us with practical
experience on which to base a regulation on USAs. The Department will
announce the pilot and evaluation process in the Federal Register to
ensure public participation. Putting our conceptual model into actual
use in the hazardous liquid pipeline industry will result in additional
protections being afforded to critical environmental areas.
Mapping
The Department is building a National Pipeline Mapping System to
provide government and the public with the information it needs to help
manage pipeline risk, respond to pipeline incidents, and generally
improve protection of public safety and the environment. The
Department, with a government and industry team, has created the first
national pipeline locational standards for the National Pipeline
Mapping System. These are compatible with U. S. Geological Survey
standards. This standard was pilot-tested by 22 operators and 10
states. Pilot participants indicated the standard was understandable
and could be met with minimum burden. We have since begun to award
cooperative agreements to nine states to serve as data repositories as
part of the national mapping system. They will process the information
for pipelines and LNG facilities within their boundaries. We are
expecting that operators will submit their data on a voluntary basis.
We work with the Environmental Protection Agency, the Department of
the Interior and other Federal and state agencies to obtain or create
databases on environmental resources, population, natural disaster
probability, and national resources so that we can prioritize where
additional prevention actions should be taken. Once the Department has
defined what unusually sensitive areas are, they will be depicted
graphically in relation to pipelines, populated areas, political
boundaries, and other geographic features. This data will enable
government and industry to better evaluate what protections are needed
and appropriate responses to identified risks.
Our regional offices and headquarters are now equipped with the
best pipeline information available, natural disaster probability and
consequence data, environmental data, and other data to better inform
our deployment of resources for inspection, regulatory analysis, and
emergency response.
Breakout Tanks Project
Although the safety record of tanks used as part of pipeline
transportation systems has been good, we are intent on having our tank
standards reflect a risk-based safety and environmental approach. While
the failure of a pipeline breakout tank seems like a low probability,
the threat of leaks from the corrosion of tank bottoms may be more
likely. We have thoroughly evaluated the extent to which the pipeline
industry meets current industry standards and are confident that the
vast majority of operators do meet these standards. To upgrade the
protection afforded by Federal pipeline safety regulations for breakout
tanks, the Department is improving our regulations to the level of
standards currently applicable to steel petroleum tanks at tank farms
and refineries throughout the United States. We are working on a final
rule that will incorporate industry consensus standards for aboveground
storage tanks.
Oil Pollution Act (OPA) Program
In the event that the best of spill prevention strategies fail,
maintaining effective spill response plans and capabilities is
critical. Working together, government and industry are reducing the
environmental consequences of oil spills from pipelines. We work
closely with the U.S. Coast Guard and the Environmental Protection
Agency in the program. On a regular basis, we review and approve
pipeline facility response plans. More important, we work with
operators and response agencies to test these plans. We conduct two to
three area-wide full equipment deployment exercises each year, and 20
tabletop exercises to address issues at the strategic level. Improving
awareness of specific strategies to protect environmental areas,
improving communications between responders, and integrating all
responders understanding of command and control structures are critical
objectives of these exercises. State pipeline safety and environmental
agencies participate in all our exercises.
state programs
Since the inception of the pipeline safety program, Congress
intended a common stewardship of the protection of 2 million miles of
pipelines, shared between the Federal and state governments.We strive
for a perfect safety record.
States take jurisdiction over intrastate transmission and
distribution pipelines. Unfortunately, over 85 percent of incidents
involving fatalities occur in distribution pipelines, which are located
in densely populated areas. With our compliance program focused to
address the highest risks, oversight activities at the state level
become of critical importance. We must do everything possible to
provide adequate resources for state participation, and proper
direction to assure that state programs focus on high-risk areas along
intrastate pipelines. To provide proper direction, the Department
established performance factors to allocate grant funds to states.
In establishing authority for Federal regulation of pipelines,
Congress provided for states to assume these regulatory functions as
they apply to intrastate pipeline transportation. We have three
provisions for varying levels of state participation in these
regulatory functions--state certification, state agreement, and
interstate agent. Currently, for gas programs, 48 state agencies, the
District of Columbia, and Puerto Rico hold certifications, the more
active level of intrastate participation, and one state operates under
an agreement, and nine states act as interstate agents. For liquid
programs, 12 states hold certifications, three states operate under
agreements and four states serve as interstate agents.
It is in the interest of the Federal government to give the states
enough financial incentive to participate in the pipeline safety
program. States represent more than 90 percent of the total Federal/
state workforce that oversees pipelines nationwide. Grants are an
effective way to leverage resources and increase total inspection
capability since states match or exceed federal funding.
We want to strengthen the Federal/state partnership by assuring
appropriate focus on risk-based compliance efforts on all intrastate
pipelines. This effort would require states to exercise full
jurisdiction over pipelines in their states and a Federal commitment to
adequately fund state pipeline safety and environmental programs.
addressing y2k concerns
We all know that the year 2000 has the potential for serious
disruptions in the transportation of oil and gas and other services.
The scope of the problem necessitates that industry take the lead in
assessment of potential risk. Government, however, must ensure that
there is the appropriate level of industry/government cooperation,
public awareness, and sharing of information on issues and solutions.
We must ensure that companies are actively addressing identified
problems. We are working with the Energy Sector, Oil and Gas Workgroup
of the President's Council on Y2K Conversion to efficiently integrate
public and private sector efforts and to notify all pipeline operators
about Work Group activities. On a quarterly basis, the Work Group
provides industry status reports. Results of the first survey indicate
that pipeline failures related to the Y2K problem will be minimal and
local in nature. We also are coordinating with the Council Sectors on
Transportation, Environment and Emergency Services to share
information, facilitate solution and plan for contingencies. We have
distributed an advisory bulleting to the industry and our state
partners outlining the problem, the Work Group strategy, and government
contacts for companies needing advice. We also provide similar
information during our inspections.
conclusion
When we last approached reauthorizing the pipeline safety program,
there was general agreement that new approaches were needed. Congress
challenged us to take the lead in improving pipeline safety and
environmental protection. We forged partnerships with local, state and
federal governments, public interest and environmental organizations,
labor and industry. Together, we have created a risk-based program that
incorporates cost-effective regulation and targeted compliance
activities. We are prepared to take what we have learned and
accomplished in protecting people and the environment from pipeline
risks and work to further advance these goals.
As we continue to evaluate incorporating risk management as a
permanent feature of the pipeline program, we want to begin to build a
framework for a smooth transition from demonstration projects to an
operating program. In working with Congress on the next phase of risk
management, we want to maintain the high safety and environmental
standards we are applying today. We want to continue to meet the
public's need for superior results and at the same time address the
industry's need for flexibility to assure pipeline integrity with
maximum efficiency.
Thank you, and I would be pleased to answer any questions you might
have.
Mr. Barton. Thank you.
We would now like to recognize the distinguished Mr. Holmes
of Kentucky for an opening statement. A summary of his
testimony, the complete testimony, is in the record. We will
also recognize you for 7 minutes.
STATEMENT OF EDWARD J. HOLMES
Mr. Holmes. Thank you, Mr. Chairman. My name is Edward
Holmes. I serve as Vice Chairman of the Kentucky Public Service
Commission and also as chair of the Committee on Gas of the
National Association of Regulatory Utility Commissioners,
commonly known as NARUC.
I am pleased to be accompanied today by Bill Bouker, a
member of Kentucky's commission who oversees our pipeline
safety activities.
Thank you for inviting us to participate in today's
hearing.
NARUC is an organization of State agencies that regulate
energy and communication utility companies. In this role, NARUC
has been involved in the implementation of pipeline safety and
hazardous liquid safety programs since their inception.
Our members are of agencies that participate with the
Federal Office of Pipeline Safety, OPS, in inspecting and
enforcing the Nation's pipeline safety standards. As the local
officials are directly accountable to our citizens, State
commissioners and their staffs are on the frontlines in our
efforts to protect our citizens and environments against unsafe
practices.
As such, NARUC and its members are longstanding supporters
of both statutes under review here today.
Accordingly, we strongly support timely congressional
reauthorization of the Pipeline Safety and Hazardous Liquid
Pipeline Acts and see little need for wholesale revision at
this time.
In general, the State commissions have a good working
relationship with OPS, a relationship that we hope to continue
under reauthorized legislation.
Indeed, we believe that the regulatory structure that
Congress established in 1968, when it first enacted the Gas
Pipeline Safety Act, has been a model of Federal-State
partnership to protect the public interest.
This partnership places State and Federal Governments in a
relationship best suited to their respective roles. For its
part, OPS establishes, revises, and supervises the uniform
national safety standards. As part of its supervisory
responsibilities, OPS audits and evaluates the State safety
programs that are originally certified under those acts.
For our part, the State agencies conduct a monitoring and
inspection program in the field. State pipeline safety
personnel constitute 90 percent of the inspection force
conducting daily inspection activities for more than 10,000 gas
operators and 250 hazardous liquid operators nationwide. It is
not an overstatement to say that, without the commitment of the
States to this effort, these programs simply could not
function.
In exchange for this high level of effort by the State, the
act authorized the Federal Government to support individual
State programs by paying up to 50 percent of the State costs.
We believe this is a great deal for the Federal Government,
which is able to fund 90 percent of the inspection force at 50
percent of the costs. The States which are able, then, to
defray those individual costs of enforcing Federal regulatory
programs.
However, in recent years OPS has been unable to fully fund
the amounts requested by the States for their program. Attached
to my written statements are charts and graphs showing the
amounts requested by the States and funded by the Federal
Government from 1990 to 1997.
While funding has improved somewhat, it remains the case
that the State programs remain underfunded. We believe that is
unfair to the State for this situation to continue. In effect,
the States are being placed in the position of providing more
than 50 percent of the cost of the program. It is particularly
unfair given the new responsibilities and mandates that have
been imposed upon participating States in the recent years,
including inspections to determine operator compliance with
drug and alcohol regulations, guidelines for State adopted of
the One-Call Damage Prevention Program, master-metered systems,
offshore pipelines in State waters, gathering lines, intrastate
hazardous liquid pipelines, liquefied natural gas, and ever
increasing construction activities as operators expand their
service areas. Moreover, between 1990 and 1996, the number of
gas mains increased by 13 percent and local gas service
increased by 5 percent.
Accordingly, we urge the Congress to authorize and
appropriate sufficient funding for the State grant and aid
program. NARUC stands ready to work with the subcommittee, OPS,
and the rest of the administration to reach this goal. It is an
extremely sound investment for the Federal Government to make
to ensure that the level of safe, reliable, and efficient
services that our citizens so rightly demand.
In closing, I would again express our strong support for
reauthorization of the Natural Gas Pipeline Safety Act and
Hazardous Liquid Pipeline Safety Act. Through these important
statutes, Congress has established a workable system to bring
State and Federal agencies together to protect the public. We
urge you to act expeditiously to ensure that these programs
continue.
Thank you for your time and consideration.
[The prepared statement of Edward J. Holmes follows:]
Prepared Statement of Hon. Edward J. Holmes. Commissioner, Public
Service Commission of Kentucky
Mr. Chairman and Members of the Subcommittee on Energy and Power:
Thank you for the opportunity to participate in today's hearing on
the reauthorization of the Natural Gas Pipeline Safety Act and the
Hazardous Liquid Pipeline Safety Act (49 U.S.C. Section 60101 et.
seq.).
My name is Edward J. Holmes. I am Vice Chairman of the Public
Service Commission of Kentucky and Chair of the Committee on Gas of the
National Association of Regulatory Utility Commissioners (NARUC). I am
pleased to be here today representing NARUC, a nonprofit organization
representing all the state public utility commissioners throughout the
United States, and the National Association of Pipeline Safety
Representatives (NAPSR), which is comprised of the regulatory staff
members of our Commissions who focus specifically on natural gas and
hazardous liquid pipeline safety.
Because our members are primarily responsible for the enforcement
and monitoring of the Acts, NARUC has a strong interest in the
organization and operation of the Office of Pipeline Safety. Indeed, we
have a longstanding Subcommittee on Pipeline Safety comprized of
technical staff, which is solely committed to working for the success
of the Pipeline Safety Program established by the safety acts before
this Subcommittee here today.
NARUC has been a strong supporter of the Natural Gas Pipeline
Safety Act and the Hazardous Liquid Pipeline Safety Act--critical
legislation establishing for the first time a set of national standards
to be used by the natural gas and hazardous liquids industry in the
design, constructing, testing, operating and maintaining its
transmission and distribution facilities. As an alternative to federal
monitoring and enforcing of the program, the United States Department
of Transportation, Research and Special Programs Administration (RSPA),
Office of Pipeline Safety (OPS) offered to join with any interested
state in a federal-state partnership through which the appropriate
state agency would undertake monitoring and enforcement
responsibilities through annual certification agreements. A grant-in-
aid program was created by these Acts to provide up to 50% financial
support to those states accepting that responsibility. State programs
are audited and evaluated on an annual basis by field representatives
of the Office of Pipeline Safety.
The funds that the Acts provided allowed states to make that
commitment without unreasonably burdening their own customers and
contributed greatly to an improved public safety. The requirement that
each state provide at least 50% of its own monies to fund the program
assured that a reasonable perspective and partnership was built into
the funding process and made each state its own stakeholder in the
process.
As state utility regulators, we are charged by state statute with
requiring that local gas distribution companies (LDCs) provide safe and
adequate service at just and reasonable rates. We share with federal
regulators and the gas industry the responsibility to provide
reasonably safe and adequate service at reasonably just and fair rates.
The cost of pipeline safety is significant. The gas industry has
inherited, over a period of some 150 years, an infrastructure comprised
of a mixture of plastic, steel, ductile iron and cast iron mains which
in many cases needs to be refurbished. However, the industry provides
services in areas that in some cases are impractical or impossible to
replace and continue to serve their customers adequately and safely. It
is due to the standardization of performance standards by the Office of
Pipeline Safety that pipelines facing varying conditions and service
requirements are uniformly monitored, inspected and maintained. In our
view, customers and residents should take comfort in knowing that gas
delivery systems are safe and efficient.
The vast majority of pipeline safety inspections are performed by
the states under a partnership agreement with OPS under section 60105
of the Natural Gas Pipeline Safety Act. In exchange for this state
effort, which substantially reduces federal obligations in this area,
section 60107(a) authorizes grants to reimburse States for ``up to
50%'' of their program expenditures. The grant funds are now
distributed through a performance-based allocation process in which a
State's grant is reduced if federal performance standards are not met.
This allocation process was developed with representatives from OMB in
response Congress' requirement that States be more accountable to the
general public on federal funding.
As a result, the States share responsibility with the Congress and
the Administration to assure that adequate funds are available to
assure a safe gas pipeline industry while keeping in mind that the cost
of that safety is borne by ratepayers and taxpayers. In reauthorizing
these Acts, Congress should continue the federal-state fund sharing
philosophy that is now in place and states should reasonably be
expected to bear their fair share of the burden. We strongly recommend
that each State be assured its full 50% share of its inspection costs.
The State should not have to continue carrying more than the 50% fair
share that we have done in the absence of adequate Federal funding.
While the Pipeline Safety Act requires the federal government to
ensure pipeline safety throughout the United States, State pipeline
safety personnel represent more than 90% of the work force. The
individuals conduct daily inspection activities for more than 10,000
gas operators and 250 hazardous liquid operators nationwide to ensure
the safe transportation of product to consumers. The States are clearly
at the front lines in protecting consumers and the environment because
of their excellent relationships with their respective pipeline
operators and deserve 50% funding.
Moreover, the financial burden on the States is growing. State
pipeline safety responsibilities have continued to increase due to new
mandates, but grant fund dollars have not kept pace with these demands.
These new responsibilities include inspections to determine operator
compliance with drug and alcohol regulations [49 CFR Part 199 and Part
40], Guidelines for State adoption of the One-Call Damage Prevention
program [49 CFR Part 198], Master-Metered systems, Off-shore pipelines
in state waters, Gathering lines, Intrastate Hazardous Liquid
pipelines, Liquefied Natural Gas (LNG) storage and ever increasing
construction activities as operators expand their service areas.
On October 27, 1998, ``operator qualification'' programs were added
to the list of mandates for States to enforce this year if finalized.
This new rule will require State personnel to perform more in-depth
inspections without additional funding.
OPS requested 13.5 million dollars to fund base programs for 1999
only to have OMB cut the funding to 13 million dollars. Funding has
been made available for Risk Management feasibility studies ($500,000)
and for One-Call Damage Prevention ($1 million) for 1999.
We agree that risk management may play a key role in future
operator long-term planning and ``One-call'' has prevented underground
damage, but such programs should not escalate to the point that base or
core pipeline safety programs could be jeopardized.
Attached to our written statement for the Subcommittee's review are
charts and data showing the amounts requested by States for their gas
and liquid programs, amounts provided by the Department of
Transportation, and other relevant costs from 1990 to 1997. A quick
review of the States' programs costs indicate continued increases, in
some cases as much as 18-20%, for carrying out additional inspections
of pipeline facilities with limited funding. In addition to these
specific responsibilities, in 1996 there were 13 percent (115,584
miles) more intrastate gas mains and 5% (2.6 million services) more
local gas services as compared to 1990.
Federal funding is not providing adequate resources to meet the
needs of the States' actual costs. Therefore, a reduction of State
programs, or even their maintenance at existing levels, could threaten
the infrastructure of the Nation's pipeline system.
In conclusion, I would again express our strong support for
reauthorization of the Natural Gas Pipeline Safety Act and Hazardous
Liquid Pipeline Safety Act. Through these important statutes, Congress
has established a workable system to bring State and Federal agencies
together to protect the public. While these laws may benefit from minor
refinements for clarity and ease of interpretation, we see no need for
substantial revisions at this time.
Thank you for your time and attention.
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Mr. Barton. Thank you, Mr. Holmes.
The Chair will now recognize himself for 5 minutes in the
question period, and we will alternate between the majority and
minority in 5-minute questions periods.
Ms. Coyner, my first question is to you. As I looked at the
testimony last evening, I looked at a chart that was presented
from your office that summarizes the number of accidents and
the incidents in fatalities and injuries, by year, from 1984 to
1998. And I noticed that, in general, the number of incidents
averaged, over the last 15 years, about 200 a year. But in
1998, that number fell to 26; the number of fatalities in 1998
fell to 0, and it was also 0 in 1997, thankfully, and the
number of injuries in 1997 was 5, and the number of injuries
for 1998 was 0.
Are your 1998 numbers final, or are they still subject to
reevaluation? And, if they are not final, are there some
incidents that haven't yet been put in the statistics that are
going to significantly change the trend, which is a very
positive trend of less incidents and zero fatalities and fewer
injuries?
Ms. Coyner. Mr. Chairman, I believe that the statistics you
are referring to are ones that are for hazardous liquids----
Mr. Barton. That is correct.
Ms. Coyner. [continuing] accidents only.
Mr. Barton. Right.
Ms. Coyner. And we actually have enjoyed a lower rate of
fatalities in that area, generally. Those statistics do not
include the end of the year information. But on the liquid
side, that doesn't have a large variation.
On the gas side, you tend to see a larger number of
incidents in the winter months, and fatalities rise
accordingly. And that is because you have counted in that
figures that involve house fire related kind of activities, and
you have a higher usage of natural gas.
Mr. Barton. Well, you are----
Ms. Coyner. I don't think we will see a dramatic decline,
although I do think that we will see a decline on the hazardous
liquid side for 1998. It indicates overall better safety
practices.
Richard, do you want to elaborate on that at all?
Mr. Felder. No, I think that is a very accurate
presentation of where we are. We are in a declining trend. We
always see slightly larger numbers on the gas distribution side
than we would on the liquid side.
Mr. Barton. Well, the gas pipeline number--the number
incidents in 1997 was 74. So far, in 1998 it was 19. The
fatality was 1 in 1997, 0 in 1998. The injuries, 5 in 1997, 9
in 1998 so far.
And then for the natural gas pipeline operators, incidents
was 29 in 1998, 2 fatalities, 15 injuries.
So, all three charts show a downward trend.
Ms. Coyner. Well----
Mr. Barton. And I think that is positive if----
Ms. Coyner. Then----
Mr. Barton. [continuing] it is actually a consequence of
conscious efforts.
Ms. Coyner. I think that we need to highlight that there
were several accidents at the end of the year involving local
distribution companies.
Mr. Barton. In 1998?
Ms. Coyner. In 1998 that involved several fatalities, and
those were outside force damages. The kind of accident that is
involved in not only the use of a One-Call system, but also the
kinds of things we are doing in our public education campaign
on safe practices involving excavation. Those accidents were
fairly recent; they were December accidents--are still under
investigation by the NTSB--but you will see a higher fatality
rate for 1998 than what you would see in----
Mr. Barton. But by a significant number?
Ms. Coyner. Well, I think so, because a couple of them had
multiple fatalities in the accident.
Mr. Barton. So----
Ms. Coyner. What are we talking about?
Mr. Barton. Five to ten? Two to three?
Mr. Felder. Oh, 5 to 10.
Mr. Barton. But not hundreds? Not----
Ms. Coyner. Five to 10.
Mr. Felder. Oh, no. No big numbers. And the transmission
numbers are better this year, and they will remain that way,
even when the year-end factors come in. As Kelley has said, it
is really gas distribution, and it is not accidents that are
related to material failure or to operator error or that type
of thing. It is really outside force--someone hitting the line
and then fatalities result.
Mr. Barton. Well, could it be--I know that honorable people
can disagree. I mean that is the whole reason we have a
Congress is to mediate disagreements. But is it a possible
conclusion that some of the changes that have been made that
allow for risk assessment and cost analysis and cooperation in
putting together the rulemakings with the industry and the
regulators could be one reason that some of these trends are
positive?
Ms. Coyner. I think that we will enjoy positive trends over
the duration of the regulations that have come into place under
this regime. The risk management project is really too new for
us to be able to tell you definitely, but we look at it and we
think we are going to see positive results as well.
I would note that most of the risk management demonstration
projects have not asked for relief from our regulations. They
are taking additional steps on top of what the regulations
require, and so we think that is also a very positive
development.
Mr. Barton. Okay. In establishing another tradition, the
Chair is not going to violate the 5-minute rule.
So, we are going to recognize the distinguished gentleman
from Texas for 5 minutes, Mr. Hall.
Mr. Hall. Thank you, Mr. Chairman.
When we debated Pipeline Safety Act reauthorization in
1996, there was a great deal of concern about the involvement
of the public in the risk assessment plans and, I think, in the
approval process. And I note from the testimony that five risk
management plans have been approved by the Department, and some
others are on the eve, maybe, of being approved.
Is there a limitation or a quota or a goal or--what were
you shooting for? You have five plans approved now.
Ms. Coyner. When the President signed the Pipeline Safety
Act in 1996, he also had a signing directive which governed how
we went forward on the risk management demonstration projects.
And one of the limitations was that we only do 10 demonstration
projects over this period of time. We have been very cautious
as we move forward on this, rather than taking projects
prematurely that are not ready. We have gone slowly. I mean six
is not, obviously, the full complement.
I would like to address, if I might, Representative Hall,
your question about public participation. I think that is a key
aspect of how we looked at these demonstration projects and
also helped us think about how we involved the public in the
rest of our program as well.
We have required the companies to develop, along with other
stakeholders, a very comprehensive communication plan to
involve local government officials and the public in the
discussion of how these plans are put together. But we have
also made use of some innovative means for involving people. We
have all this information up on our web site; it is changed
continuously, and we have a very high number of hits, if you
will, people who are accessing and who are from the general
public, as well as having electronic town meetings that make it
so that someone can participate in a discussion about this
program without having to travel to a distant location.
Mr. Hall. The chairman mentioned statistics a moment ago
and made some inquiry of you.
It is my recollection, and I have recently had my memory
jogged on the two deaths that we had in Texas back a couple of
years ago. I think there you had the HVL line that was
liquified in the pipe but then became gaseous when it escaped
or there was a fracture or something. And then somehow a spark
and explosion--it killed two teenagers. They were just nearby
or not very far from the explosion.
What have you learned from that, and what steps have been
taken since that time to preclude something like that? I guess
what type of precautions have you put in place, if any?
Ms. Coyner. There are really two issues in terms of the
lessons learned from that incident. They fall in two
categories. One, is how do you stop the accident in the first
place? And, in that case, it was caused by corrosion that
caused the pipeline to fail. We have required Koch to review
the integrity of the rest of their line, and we are also in the
process of implementing new regulations to deal with corrosion
issues on these lines as well. So, it is not only a solution
that will make sure that this pipeline is safe, but that we
raise the standard for other pipelines as well.
Another issue is, when you have a failure, what can you do
to mitigate to, hopefully, avoid the kind of situation you saw
here? Because, as you mentioned, we had a particularly tragic
situation where a couple of teenagers--who we believe were
probably going for help--caused ignition of this vapor cloud by
turning the key in their vehicle.
What we have done in the case of Koch is that we have
required them to upgrade both materials they use to educate
people who are adjacent to the pipeline, but also how they go
out and reach those individuals. Not only about how to avoid
damaging the pipeline, which is a central focus of public
education efforts, but also what to do if you encounter such a
situation, because what may seem to be intuitive at the moment
may not be the right safety measure to take. And it is a
problem with HVL incidents where you have a vapor cloud, but it
is also a bigger problem in a natural gas area.
The NTSB this summer issued a series of recommendations
that followed these incidents. These were--actually, it wasn't
even the summer, it was last fall--and we are working with them
to respond to them. But I think that on each one of those that
we will be, in a large measure, in agreement on the safety
issues that are involved in those recommendations.
Mr. Hall. A lot of those pipes were put in the ground a
long, long time ago. Do you make weekly, monthly, quarterly,
annual inspections of those?
Ms. Coyner. The inspections really fall into----
Mr. Hall. Briefly, if you can.
Ms. Coyner. I will.
Mr. Hall. I would not like to break the chairman's rules--
--
Ms. Coyner. The answer is that we don't have a----
Mr. Hall. [continuing] the very first day.
Ms. Coyner. We don't have a fixed cycle for our
inspections, but we do require some very frequent aerial
inspections which give us a good indicator whether or not there
are leaks. They have inspections at varying intervals,
depending on what the likelihood of a problem is. In some
areas, the nature of the soil means there are going to be
greater corrosion problems, and we require more frequent
inspections in those areas.
Mr. Hall. I thank you.
I yield back my time.
Mr. Barton. I thank the ranking member.
I am going to recognize Mr. Whitfield of Kentucky, he was
here before the gavel, and the rules say, members that are here
before we convene are recognized in order of seniority. And
then after, it is in order of appearance. So, I have got some
senior members who have appeared--Mr. Bilirakis and Mr.
Stearns, the vice chairman--but Mr. Whitfield was here, and so
that is the reason that he is going to be recognized for 5
minutes right now.
Mr. Whitfield. Thank you, Mr. Chairman. I really appreciate
your rules for the subcommittee this year.
Mr. Barton. I am just using the rules of the full committee
actually using them, though.
Mr. Whitfield. Mr. Holmes, in your testimony, one of the
things that you touched on was that States received grants of
up to 50 percent of their cost for various inspection programs.
And I noticed, also, that you said that grant funds are
distributed through a performance-based allocation process in
which a State's grant is reduced if Federal performance
standards are not met.
Now, are you basically saying that even when the
performance standards are met, many States do not receive the
50 percent that they are entitled to?
Mr. Holmes. Yes. As I understand, on the scoring system,
you can score the highest, you know, points on the system and
you still--because of funding--you don't receive the maximum 50
percent.
I think in Kentucky we scored the maximum points allowed,
and I think our average is about 40 plus percent of what we
receive in actual funding. So it varies on the availability of
funds and scoring that is coinciding with it.
Mr. Whitfield. So, basically, there is an appropriation
shortfall at the----
Mr. Holmes. Yes.
Mr. Whitfield. [continuing] Federal level, then?
And how much is that shortfall? Do we have an idea?
Mr. Felder?
Mr. Felder. Yes. The shortfall has varied from year to
year, but it has grown from about $1 million to about $3
million at this point.
Mr. Whitfield. Okay.
And how many different grant programs are there to the
States for pipeline safety purposes?
Ms. Coyner. There is one now. There is one pipeline safety
grant program that we have had, but the new One-Call
legislation would authorize grants for One-Call systems that
would go through the States for damage prevention efforts, and
that would be an additional grant. This is not referred to in
what Mr. Holmes is talking about.
Mr. Felder. Right. I would also add, there are a couple
of--as Mr. Holmes has said--we cooperate with the States on a
number of programs. So, for example, as we have been
implementing risk management, we have actually received
$500,000 in the budget to work with States and bring States in
as reviewers of risk management plans, so that as that
demonstration goes through, they get the same education that
our inspectors get. So, there is a category there for risk
grants and, as Kelley has mentioned, there is also One-Call
grants.
Mr. Whitfield. One of you had mentioned the System
Integrity Inspection Pilot Program in your testimony, the goal
of which is targeting important safety issues more efficiently.
And then later on it talks about, ``the Department is now
soliciting applications from interested companies.''
I was wondering what incentives are there for companies to
apply to participate in that program?
Ms. Coyner. The approach is to look cooperatively with the
company at what the highest risk safety issues are in a
particular system and really focus our auditing of them in that
regard. The traditional inspection is a checklist which may or
may not be relevant to that particular system. It is a one-
size-fits-all, if you will, approach to inspections, whether
the system is in an area such as the Alyeska pipeline in Alaska
which has unique corrosion problems or it is in an arid
environment in Arizona. And so the idea is that we are looking
for a handful of companies really to see if we might do that.
The other idea is to look at a system-based inspection
rather than a segment-based inspection, so that we look a
pipeline from its beginning to its end, rather than looking at
just a piece of it that happens to fall in one our regions.
Mr. Whitfield. Now, as an administrator responsible for
this type of activity, what do you view as your major obstacle
in providing as safe a system as possible? Can you give a
generic answer to that?
Ms. Coyner. The biggest obstacle is getting a real handle
on how you deal with outside force damage because it is a
complicated area that involves not only getting people to use
One-Call system, but to use proper excavation techniques when
they have the system marked. That is the single biggest
obstacle.
Mr. Barton. Mr. Whitfield, do you yield back?
Mr. Whitfield. Yes, I thought the buzzer went off.
Mr. Barton. It did, but----
Mr. Whitfield. Oh, okay. I yield back the balance of my
time.
Mr. Barton. I am not used to such polite subcommittee
members.
Before we recognize Mr. Pallone, for the record, we need to
note that Mr. Richard B. Felder is the Associate Administrator
for Pipeline Safety, and he has been answering questions, and
we want the recording clerk to know that that is the gentleman
and that is his title, for the record.
I would recognize for 5 minutes the gentleman----
Mr. Sawyer. Chairman, may I be excused?
Mr. Barton. We would love to have you stay, Mr. Sawyer so
we may not excuse you. But we can't compel you to stay.
Mr. Pallone is recognized for 5 minutes.
Mr. Pallone. Thank you, Mr. Chairman. Again, if I could
renew my unanimous consent request with regard to those
documents.
Mr. Barton. The Chair and the staff have looked at the
documents, and we think that they help build the record for
this hearing, and, without objection, they are put into the
record with your opening statement.
Mr. Pallone. Thank you, Mr. Chairman.
I wanted to ask Ms. Coyner, in the previous authorization
of the Pipeline Safety Act, there was language that was
supported by myself and Senator Lautenberg with regard to a
study and then, I guess, eventual rulemaking relative to the
automatic shutoff valves and the remotely controlled valves
that I made reference to in my opening statement, and I just
wondered what the status of that is. Is that study complete?
Are there rulemakings that will be suggested?
Ms. Coyner. As you know, the statute calls for a rulemaking
if warranted by, I believe, June 1, 1999. We have conducted a
workshop; we have conducted a survey that was called for, and
we are in the process of putting the report together. We are a
little bit behind on getting the report done, but I do not
anticipate that we will be behind in issuing the rulemaking, if
we need to go forward on it, by June 1, 1999.
But one of the things that I--because I know of your
concerns in Edison--we have certainly worked on them over the
years--is that it is important to note that a number of
companies are putting in remote-controlled valves. And in New
Jersey, in particular, they have put in 35 remote-controlled
valves on that system that was so critical where Edison was
concerned. And, in fact, we have continued to work very, very
closely with the New Jersey officials in making sure that their
concerns about those valves were met. We have a meeting coming
up in the next couple of weeks to, again, meet with them in
Princeton to review the plan there. And we are also working
with them on encroachment issues which was the key issue in
that incident.
Mr. Pallone. I thank you.
Now following up on Mr. Hall's question--I think it was Mr.
Hall that talked about the possibility of expanding these 10
demonstration projects. Is it your intention, or are you
interested in, expanding these 10 demonstration projects, you
know, going beyond that at this point? Is that the DOT's
intention?
Ms. Coyner. The direction that we have from the President--
which we agree with--is that we need to look at the 10
demonstration projects and determine whether or not the risk
management approach strengthens safety and environment above
what the minimum standards are. The initial information that we
have, which is very preliminary, indicate that that is the
case. But we are not at a place where we can say definitively
what the outcome would be.
I think it is important that we continue to look at risk
management as an alternative, but I don't think that we are in
a position to make a determination today, firmly, about what
direction we would want to take in reauthorization. We are only
about, at most, 18 months into this particular process.
But one thing that I want to underscore again is that in
these projects--there are six of them--most of them are not
deviating from the regulatory standard, and I think that is
really critical to know. What it is, it is taking a different
approach to dealing with systems-specific issues that we are
concerned about. In some cases, it may be damage prevention; it
may be a corrosion issue in another project.
Mr. Pallone. Well, let me just ask Mr. Holmes the same
thing basically. I know that you state, or that NARUC has
stated, that this program should not escalate to the point that
base or core pipeline safety programs could be jeopardized.
Could you elaborate on that? I mean are you concerned that if
they go beyond this 10, that that, in fact, will be the case?
Mr. Holmes. Well, obviously, I think we at NARUC have some
concerns if it goes beyond that, that there will be some
critical issues there that needs to be addressed. So, yes, we
do have concerns there.
Mr. Pallone. The other thing I want to ask, Mr. Chairman,
if I could is, you know, I was concerned in the last
reauthorization about funding levels. And I guess I wanted to
know if you felt there was sufficient funding, either Federal
funding for oversight, particularly with regard to States, to
effectively implement and enforce the pipelines safety
programs, including the One-Call, because in previous
Congresses, I have been involved in trying to get more money
through appropriations for that. How are we doing, funding
wise, either Federal or State? Federal for State programs or
just the Federal programs, in general, for enforcement.
Ms. Coyner. I think that we need to continue to strive for
moving to the 50 percent funding for the State programs. It has
not been one that we have met in the past, and that is
critical, because we really leverage the State programs to make
sure that we have the adequate inspection resources and the
adequate inputs from the States' programs where they really
know the pipeline systems.
The second issue I think is really important--and I want to
take a moment to congratulate you on your leadership in getting
the One-Call legislation passed last year--is that it is
critical that we get the funding for the new One-Call Grants
Program being something that is in addition to the funding that
we have already for the State grant programs.
Mr. Pallone. Thank you.
Thank you, Mr. Chairman.
Mr. Barton. Thank you, Mr. Pallone. We are only going to
have one round of questions for this panel, but my guess is
that you have got some other questions, so we will submit those
in writing----
Mr. Pallone. Thanks.
Mr. Barton. [continuing] and make sure that we get a timely
response.
The Chair would now recognize Mr. Shadegg of Arizona for 5
minutes of questions.
Mr. Shadegg. Thank you, Mr. Chairman. I will endeavor not
to take all my time.
Ms. Coyner, I want to begin by just clarifying, at least
for myself, the answer you gave with regard to the number in
the chart we have that shows a significant reduction in
incidents and fatalities and injuries for the 1998 period. As I
understood your testimony, those numbers are not yet complete
for either chart, that is for gas or for other hazardous
liquids?
Ms. Coyner. Let me clarify something, Congressman.
Mr. Shadegg. Please do.
Ms. Coyner. That is actually not a chart that was attached
to my testimony.
Mr. Shadegg. Right.
Ms. Coyner. I believe it was attached to API's testimony,
and I have not physically seen that particular chart. But based
on the information that the chairman indicated, those are not
complete for the year.
Mr. Shadegg. Not final numbers for 1998?
Ms. Coyner. But based on what we know about the incidents,
the area that we would expect a change is in the local
distribution line numbers, both in terms of numbers of
incidents and fatalities.
Mr. Shadegg. Okay. I just wanted to try to clarify that. My
understanding from our staff is that those numbers came from a
DOT web site, and maybe we ought to double-check it so they get
it clear so we all understand.
It is true, however, you believe that we are witnessing
improvements in safety----
Ms. Coyner. Yes.
Mr. Shadegg. [continuing] in both categories. Is that
right?
Ms. Coyner. If you really divide them into three
categories. I would divide the gas into transmission and local
distribution companies, we are definitely seeing improvements
on the transmission lines, and in the liquid side, we are also
seeing improvement.
Mr. Shadegg. Okay.
Let me turn to a separate topic where I, again, just kind
of want to clarify for myself, for my understanding--being new
to the committee.
As I understood what you said a few moments ago--and maybe
I was partially listening and partially not--you currently base
your analysis on risk as it is. That is, you look at the most
dangerous--you work with the companies to establish the most
dangerous exposure, whether it is a particular pipeline or
section of pipeline or type of material that is being
transmitted or whatever it is, and make your evaluation based
on the highest risk exposures under the current structure. Is
that correct?
Ms. Coyner. There are really three basic ways that we are
using risk tools.
Mr. Shadegg. Okay.
Ms. Coyner. And I think that what you are referring to is
something that we call the demonstration program.
Mr. Shadegg. Okay. That is what I wanted to find out,
whether that was everything or----
Ms. Coyner. The 10 projects.
Mr. Shadegg. [continuing] whether that was the
demonstration projects.
Ms. Coyner. The program allows 10 companies to come in and
if they wish to ask for regulatory relief--they have not in
some cases--but to come in and say, ``We want to address a
particular problem, and here is why we find this to be the
highest risk.'' And they have to come in with one of the
generally accepted approaches to doing risk assessments and
risk management to evaluate it. It has been a very labor-
intensive process because we have done a lot of parallel
training for the State inspectors and for the Federal
inspectors.
The second way that we are using risk as a tool is in the
manner that Congressman Whitfield was referring to, which is in
the System Integrity Inspection Pilot Program. And that is
designed to focus on compliance issues and what areas can we
find where we don't have any deviation from the regulatory
standards, but where we can highlight our inspection approach
to be more effective.
The third way that we are using risk is in how we
prioritize the allocation of our resources so that we are
putting the programs' resources to the most important risks,
and we are also making sure that our regulations address the
most important risks.
Mr. Shadegg. Is it your sense--and I take it, it is--that
generally, the new statute is working and is working well?
Ms. Coyner. Yes.
Mr. Shadegg. Mr. Holmes, I want to go to your testimony.
The National Association of--what is it?
Mr. Holmes. Regulatory Utility.
Mr. Shadegg. Regulatory Utility.
Mr. Holmes. NARUC.
Mr. Shadegg. Commissioners--in Arizona, I guess it would be
our corporation commission.
Mr. Holmes. Yes.
Mr. Shadegg. Has taken a position that you think the act
should be modified? It should be reauthorized without
significant modification?
Mr. Holmes. Yes, we support the act for reauthorization.
Once again, we would like to reach that level of 50 percent
funding.
Mr. Shadegg. Funding is the big issue you seem to touch
upon.
Mr. Holmes. Yes, that is----
Mr. Shadegg. The overall structure--looking at the way the
law works, you think it is working?
Mr. Holmes. Yes; the overall structure works well, and we
support that. Our working relationship with the Office of
Pipeline Safety is a good relationship. So, overall the
structure works, and we are able to provide, through the State,
the necessary inspectors to provide the inspection services.
Mr. Shadegg. Second issue I want to talk about is the 10
experimental programs that are ongoing. I want to understand--
did I understand you to say, Mr. Holmes, that you would not
want that program expanded?
Mr. Holmes. I am not that familiar with that. We will have
to----
Mr. Shadegg. Perhaps there is a better way----
Mr. Holmes. I will have to get something in writing. Yes.
Mr. Shadegg. Later on?
Mr. Holmes. I will follow up in writing on that on the 10
demonstration programs.
Mr. Shadegg. Thank you for your testimony, and I yield back
the remainder of my non-time.
Mr. Barton. Thank you, Congressman Shadegg.
We recognize the gentleman from Illinois, Mr. Shimkus, for
5 minutes for questions.
Mr. Shimkus. Thank you, Mr. Chairman.
Ms. Coyner, on the President's recent budget submission,
does he include the deficit in this program? The underfunding
of the 50 percent match to the States?
Ms. Coyner. No. It is at about 43 percent.
Mr. Shimkus. So even the President----
Ms. Coyner. That is correct.
Mr. Shimkus. The President's plan underfunds the program?
And just to help with vocabulary, second term here--outside
force damage is really backhoes digging in the pipes. Is that
right?
Ms. Coyner. Thank you for saying that so clearly.
Backhoes and people. It is interesting; even people digging
in their yards to plant a tree can hit a line.
Mr. Shimkus. And that is the importance of the One-Call?
Ms. Coyner. That is right.
Mr. Shimkus. And I think we talked last year on legislation
of a--I don't know, maybe my staff and I talked about it--about
a national One-Call proposal. What would be the Department's
position on that?
Ms. Coyner. Last year you, in fact, included that in the T-
21----
Mr. Shimkus. Okay.
Ms. Coyner. [continuing] legislation.
Mr. Shimkus. Right.
Ms. Coyner. So it calls upon us to establish what the best
practices are for One-Call programs.
Mr. Shimkus. What does that mean, best practices?
Ms. Coyner. Best practices would be, what are the best ways
for a One-Call system to be designed and operated? What kind of
mapping information do they need to be able to deal with all
the multiple utilities that they are dealing with? What are the
best approaches for ensuring that people use the system? What
are the best practices in terms of enforcement activity and
ensuring that people are complying with the One-Call
requirements?
Mr. Shimkus. So DOT is----
Ms. Coyner. We have put together a team of about 160
representatives from across the board--from the railroads, the
highways, the telecommunications business, the people who are
involved, who go out and mark lines, the locators, and the
like--who have been working since August last year. We have an
interim report that we will present in a nationally broadcast
teleconference on in March. We expect the final report to go
out in June in time for us to, hopefully, implement a grants
program beginning next fiscal year.
Mr. Shimkus. And that is part of your, I think, full
statement----
Ms. Coyner. It is part of the written statement; that is
correct.
Mr. Shimkus. [continuing] that I was reviewing.
The grants program will be designed to encourage States
that do not have a program to develop one? Many States have
one, currently?
Ms. Coyner. Most States have some programs. The idea is to
encourage them to bring their standards up a great deal. And so
it is incentivized better practices by One-Call systems and the
State agencies that support this system.
Mr. Shimkus. So other than outside force damage, what other
pipeline deficiencies are there that cause deaths?
Ms. Coyner. Well deaths are caused, of course, when the
pipeline fails. And there are a couple of----
Mr. Shimkus. I mean do we have a record of failures?
Ms. Coyner. Right. The other factor----
Mr. Shimkus. Proportionally, what is the percentage?
Ms. Coyner. The percentage is 80 percent of the fatalities
are caused by outside force damage on natural gas pipelines. It
is very disproportionate. Now on the liquid side, they have a
very low rate of fatalities, so you really can't tie it that
way. Outside force damage rates about three or four on liquid
lines, with corrosion being, I think, at the top of the list.
Is that correct, Rich?
Mr. Felder. That has been true traditionally. This last
year of numbers, we actually flipped those a little bit, and we
actually ended up with outside force damage on the top, even
for liquid lines. Those are the latest API numbers. So, you are
really talking outside force, then corrosion, and then you move
down the scale to much smaller numbers.
Mr. Shimkus. And DOT does research on pipelines? Do you
have research funds for pipeline safety?
Ms. Coyner. We have some research funds, and what we have
done in order to leverage those is to work cooperatively with
others. One of the particular areas we have been working on in
the last several years is developing better what we call
``pigging tech-
nology.'' Those are the internal inspection devices which are
nondestructive ways to evaluate pipelines.
Mr. Shimkus. When you said, ``with others,'' who is
``others?''
Ms. Coyner. That one in particular is with the Gas Research
Institute.
Rich----
Mr. Shimkus. It could be industry, itself?
Mr. Felder. Right. Well, and it is also the academic
community on that particular piece. We have Southwest Research
Institute, Battelle Memorial Laboratories and Iowa State
involved, also. But we have a broad spectrum.
Mr. Shimkus. Thank you, Mr. Chairman.
Mr. Barton. Thank you, Congressman Shimkus.
We will recognize the distinguished gentleman from Georgia,
Mr. Norwood, for 5 minutes.
Mr. Norwood. Thank you very much, Mr. Chairman.
Ms. Coyner?
Ms. Coyner. Yes.
Mr. Norwood. I think before--I am sorry I can't see very
well--I think before we end the day, we will probably have some
suggestions that hazardous liquid releases are on the increase.
And I would like to know if you think that is the case.
Mr. Felder. Well, I think it depends on what level you are
measuring. Reportable incidents for hazardous liquids are down
under our statistics. We capture everything that is 50 barrels
and up.
Mr. Norwood. Let me----
Mr. Felder. There are liquid releases that are outside of
our jurisdiction that might happen in waters of the United
States, and so forth. I would have to look at the numbers that
you have. But according to what we regulate and what we have,
our liquid releases are decreasing.
Mr. Norwood. Not increasing?
Mr. Felder. Not increasing.
Mr. Norwood. And it isn't hard to--all I am simply asking
you, is there more happening in this year and predictable in
the next year than happened last year and the year before that?
Is there more rather than less? And you are saying it is less
rather than more?
Mr. Felder. Yes.
Mr. Norwood. Ms. Coyner, who has the primary responsibility
for pipeline safety? Is it DOT or is it industry? Or is it the
pipeline people? Who is the major person responsible for
safety?
Ms. Coyner. The industry is responsible for ensuring that
it meets safety standards. At a minimum, the Federal safety
standards, but also there may be State regulations that they
also have to comply with. And it is their responsibility to
meet those standards. Now it is our responsibility to have
oversight over the pipelines and over the State pipeline safety
programs.
Mr. Norwood. Well, let us follow in to that a little bit
and just help me a little bit. Why don't you explain a little
bit to me how the Federal and the State partnership works in
this area.
Ms. Coyner. We have a system whereby we have jurisdiction
over different kinds of pipelines--those that are interstate
and those that are intrastate--and we have encouraged States to
par-
ticipate in our national gas and our hazardous liquid programs
so that we can fund their programs and to expand them. We work
very closely with them.
Mr. Norwood. Well, explain that. What do you mean
participate in your program?
Ms. Coyner. I am going to ask, actually, for the expert
here----
Mr. Norwood. That is fine.
Ms. Coyner. [continuing] to give you the ``nitty-gritty''
on this.
Mr. Felder. The Federal program, under the Gas Act and the
Hazardous Liquid Act, we have jurisdiction over pipeline safety
for the United States. State programs come into being under
State law, and they come to us for certification, that they
meet the minimum Federal standards. And if they do, we can fund
up to 50 percent of their efforts. And their efforts are to
oversee intrastate pipelines. It is our responsibility to
oversee interstate pipelines. It is an outstanding partnership,
as Ed Holmes was saying. For your up to 50 percent funding, you
get about 90 percent of the inspections done around the
country. Most of the distribution system mileage is intrastate;
it is within States. It is inspected by State pipeline safety
programs. And the lion's share of the States are involved in
our program. There are just a couple of States that do not
participate.
Mr. Norwood. Mr. Holmes, how do you feel about that
relationship, other than the fact that you are not getting paid
properly?
Mr. Holmes. Well, like I said earlier, you know, we
obviously, given that the fact that we have several inspectors
throughout the States committed to inspecting the pipelines and
we would like to see the 50 percent funding. But we don't want
to see that funding level diminished as a result of the One-
Call system or some other pipeline safety issues.
Our responsibility is on the inspection side, and we just
want to continue to see that level enhanced.
Mr. Norwood. Do you feel, Mr. Holmes, that had not the
Federal Government become involved in this and dangle that 50
percent, that your inspection system might be different than
the one that the DOT would have you do? Is there any excesses
in it?
Mr. Holmes. I don't feel that there are any excesses in it,
Congressman.
But we do think it is necessary.
Mr. Norwood. In other words, if the DOT wasn't involved,
you would want your State to write the same regulations as DOT
as?
Mr. Holmes. Yes. Obviously, we would have those concerns.
Mr. Norwood. Is the answer you would want your State to or
you wouldn't?
Mr. Holmes. I would have to get back with you on that.
Mr. Norwood. Mr. Chairman, that is acceptable.
Mr. Barton. The Chair would recognize the distinguished
subcommittee chairman of the Health and Environment
Subcommittee of the full Energy and Commerce Committee, the
Honorable Michael Bilirakis, from the great State of Florida,
for 5 minutes.
Mr. Bilirakis. Thank you, thank you, Mr. Chairman.
I welcome Ms. Coyner and Commissioner Holmes.
I was very much involved in this subcommittee a few years
ago when we had this question of pipeline safety, and it was
something that I really was concerned with then. I just wish I
could have been here at the beginning of the hearing, but we
had two Veteran's organizational meetings over in one of the
other buildings. I got here when I could.
Well, let us just go into the breakout tanks just very
quickly. Currently, at I understand it, the regulation of
petroleum storage tanks, also known as breakout tanks--has
historically been done by DOT. Recently, though, the EPA has
asserted jurisdiction over these same tanks. That results, as I
understand it, in tank operators having to meet the different
and conflicting regulatory requirements of two different
Federal agencies.
This is really a question to Ms. Coyner, but I would say we
need your perspective on this, too, Mr. Holmes.
So, having to meet the requirements of two different
Federal agencies results in additional costs, I would imagine?
Maybe inefficiencies for the operator and the Federal
Government? I would like to know your--what you think about
this potential conflict and, also, if there are any steps being
taken to resolve the problem? Or should there be maybe steps
taken by the Congress to resolve the problem, if you see it as
a problem as I stated?
Ms. Coyner. I have seen it as a problem. It has been a
significant issue, not only with the industry concerns that you
have just mentioned, but it is also one of the areas that is
really critical on environmental issues in terms of making sure
that we protect the environment and to make sure that we have
integrity of these breakout tanks.
Last spring, we issued a notice of proposed rulemaking on
this issue, and we actually expect to have a final rule on this
that will help address those jurisdictional issues in the next
several weeks.
Mr. Bilirakis. But this is being issued by DOT?
Ms. Coyner. DOT.
And it will help address the jurisdictional issues with
respect to EPA, by improving where we are in terms of the
standards that we have for breakout tanks. I think what is
important is that we have involved a broad range of interest in
this discussion--not only our colleagues at the Environmental
Protection Agency, but also representatives of the
environmental community and as well as industry--in reaching a
resolution I think that we can all ultimately live with.
Mr. Bilirakis. Well, do you feel that you are receiving
proper cooperation from EPA? Is this a partnership-type of a
thing you are working it work out? And do you feel that they
are being reasonable? Do they feel you are being reasonable?
And when might we expect this to be resolved?
Ms. Coyner. We expect to issue a rule in the next several
weeks. That does not mean that we have agreed on every single
issue with respect to our colleagues, but we are satisfied that
we will be able to make the rule final by the beginning of
March. There are always healthy disagreements between different
agencies and different stakeholders of the Office of Pipeline
Safety, and I don't have any problem with that. I think that we
have reached a good resolution that will both be economically
efficient and protect the environment.
Mr. Bilirakis. Will this rule be a DOT rule, or will it be
a----
Ms. Coyner. It will be a DOT rule.
Mr. Bilirakis. [continuing] DOT rule. All right. How does
this resolve, then, the potential to conflict with EPA that
sometimes takes place?
Mr. Felder. Yes. I think on the jurisdictional issue, as
Kelley has said, we have moved ahead to strengthen our tank
standards. And we feel that they are at a level that should be
acceptable to Environmental Protection Agency as well. And we
are, as Kelley said, we are working with EPA, and our goal is
for both the agencies to have comparable standards so that when
you look at that kind of a jurisdictional issue, does it make
any difference who the regulator is in that circumstance? The
answer should be, ``No.'' The answer should be, ``You have got
good strong protective standards that apply at both agencies.''
They are harmonized, and we would be able to end that dispute
that has bubbled up. So, it is a concern of ours. We have moved
forward to engage with the Environmental Protection Agency. I
think we have done our part in terms of----
Mr. Bilirakis. And that is working well?
Mr. Felder. [continuing] strengthening our standards.
Mr. Bilirakis. [continuing] you feel in your discussions
with them in trying to work out the differences?
Mr. Felder. Well, we are making progress.
Mr. Bilirakis. You are making progress.
Mr. Felder. We have held a number of meetings with them,
and we would like to bring it to a conclusion.
Mr. Bilirakis. Can you keep this committee advised----
Ms. Coyner. We would be delighted to.
Mr. Bilirakis. [continuing] as to what progress is----
Mr. Felder. We will.
Mr. Bilirakis. Thank you.
Thank you, Mr. Chairman.
Mr. Barton. Thank you, Congressman Bilirakis.
The Chair would now recognize the distinguished gentlelady
from the great State of New Mexico, Congresswoman Wilson, for 5
minutes.
Ms. Wilson. Thank you, Mr. Chairman. I am glad you have got
the ``great.'' I appreciate that.
I have been reading over your testimony here, and I
apologize for being late. I had two subcommittees at the same
time.
I have a particular interest in your risk assessment
process, and particularly the interrelationships of various
systems here with respect to safety and also maintenance of
critical infrastructure. And I don't know, Ms. Coyner, if this
comes under your purview. If it doesn't, send me somewhere
else; that is fine. But, does the Department of Transportation
participate in any modeling and simulation activities with
other parts of Government about the vulnerability of the gas
system?
Ms. Coyner. That is an appropriate question for two
reasons. One, the Pipeline Safety Program has been involved in
the Department's recent vulnerability assessment of all surface
transportation systems, which we would include the gas system.
What we have done is to look at what are the places where it
would be most vulnerable and ways that we can address that. The
other reason it is appropriate is that, as the Administrator of
the Research and Spe-
cial Programs Administration, through our research activities,
we have headed up this activity for the entire Department. I
think what might be useful is to supply you with what--we will
have the assessment done and public in the next couple of
weeks.
The second thing I would note, in terms of beyond the
modeling questions, which is really what the study addresses--
it puts the first comprehensive model for looking at how do we
assess the vulnerabilities of this kind of system--is that we
have also tried to strengthen dealing with things on a more, if
you might, ad hoc or incident-by-incident type of situation.
And, so that as information becomes available through the law
enforcement community, we have worked with the industry to
provide them information so that they can change what they are
doing in terms of security that might be involved at a
particular facility.
Ms. Wilson. Let me ask you, how do you do that? Do you have
a group of folks working with modeling computers? I mean, how
do you go about assessing vulnerability?
Ms. Coyner. There are several ways. One, is that we have
participated in the President's Critical Infrastructure
Commission in terms of the modeling kinds of activities that
they have been involved in with the energy sector, generally.
The second way is that we have put together a data base
approach to doing simulations of what would happen in
particular situations. This particular assessment is really the
first time that we have undertaken this kind of a approach to
putting together a complete model. We did not do what you might
consider extensive modeling or runs of the data for the gas
distribution systems, but more looked at the interfaces of
where a gas system comes into another transportation facility.
Ms. Wilson. Okay. And one final question--you may have
already answered this; someone else may have asked it--but,
with respect to both the hazardous liquids and natural gas,
what kinds of technologies are becoming available to reduce the
cost and increase the reliability of our pipelines? And either
Mr. Holmes or Ms. Coyner, or both?
Ms. Coyner. I think there are a number of them. I think two
critical areas are materials and non-destructive testing of
materials. And the latter is probably the one where we have had
the most promising breakthroughs. Those particularly different
kinds of what we call ``pigs'' or ``pig devices'' or internal
inspection devices--and I refuse to wear my ``pig'' button that
someone sent me to wear today. But, those devices allow
pipeline companies to inspect their lines for anomalies in the
pipeline without causing damage to it, and that is important,
in terms of an alternative to hydrostatic testing which can
actually damage a line. It is important because it will also--
hopefully, it will lead to a cheaper way of more frequently
inspecting these lines, as well as a way that protects the
environment, because hydrostatic testing can actually cause the
failure of a line.
Ms. Wilson. Yes.
Mr. Holmes. Yes. I would just add, possibly an electronic
mapping of the pipelines so we would have a better idea of
where the pipelines are actually located and that they are
located within the right-of-ways they were designed for. So, a
better mapping system would help.
Ms. Wilson. Thank you.
Mr. Barton. Is that all your questions?
Ms. Wilson. Yes, sir.
Mr. Barton. Well, we are going to excuse this panel. We
want to thank you for your attendance and your cooperation. We
had several pages of questions that we provided to the members
to ask, which they tended to ignore because they had better
questions. So, you are going to have some written questions for
the record to submit to you. And I am sure that our
distinguished friends that are disguised as empty chairs to my
left also will have some questions. I know Mr. Markey and Mr.
Pallone and Mr. Dingell will, so we will keep the record open.
We will send you some written questions and hope that you can
comply as cooperatively as you have in your verbal answers with
your written answers.
Ms. Coyner. Thank you, Mr. Chairman.
Mr. Holmes. Thank you, Mr. Chairman.
Mr. Barton. Thank you for your attendance.
The Chair would now like to call our second panel. And I am
told that all are in attendance.
We have Mr. John Zurcher, who is the Manager for Pipeline
Safety with Columbia Gas Transmission Corporation. We have Mr.
Richard Cook, who is the Vice President for Washington Gas. We
have Ms. Lois Epstein, who is with the Environmental Defense
Fund, and we have Mr. Richard Wilson, who is the Vice Chairman
for Buckeye Partners Limited, and he is representing the
Association of Oil Pipelines and the American Petroleum
Institute.
So if you four witnesses could come forward--we want to
welcome you on behalf of the subcommittee and the full
committee. Your entire testimony is in the record in its
entirety. We are going to start with Mr. Zurcher.
STATEMENTS OF JOHN S. ZURCHER, MANAGER, PIPELINE SAFETY,
COLUMBIA GAS TRANSMISSION CORPORATION; RICHARD J. COOK, VICE
PRESIDENT, WASHINGTON GAS; LOIS N. EPSTEIN, ENGINEER, POLLUTION
PREVENTION ALLIANCE, ENVIRONMENTAL DEFENSE FUND; AND C. RICHARD
WILSON, VICE CHAIRMAN, BUCKEYE PARTNERS LIMITED, ON BEHALF OF
THE ASSOCIATION OF OIL PIPELINES AND AMERICAN PETROLEUM
INSTITUTE
Mr. Zurcher. Thank you, Mr. Chairman.
Mr. Barton. And we will just go right down the line, Mr.
Zurcher, Mr. Cook, Ms. Epstein, and then Mr. Wilson.
We will recognize each of you for 5 minutes to summarize
your testimony, and if you need a little extra time we will
obviously give you that opportunity.
Mr. Zurcher.
Mr. Zurcher. Thank you, Mr. Chairman, and thank you,
members of the subcommittee, for listening to us. And, good
afternoon.
My name is John Zurcher; I am Manager of Pipeline Safety
for Columbia Gas Transmission, which is part of the Columbia
Energy Group.
Columbia Gas Transmission is a major natural gas
transmission company serving the eastern part of the United
States. We have over 12,000 miles of interstate transmission
pipe in service today.
I am also here on behalf of the Interstate Natural Gas
Association of America, INGAA, and INGAA is a trade association
which represents virtually all the major natural gas
transmission pipelines in North America which collectively
transport over 90 percent of the natural gas consumed in the
United States. And I am currently the Chair of the Pipeline
Safety Committee for the INGAA organization.
Natural gas transmission pipelines are remarkably safe, and
I know you have seen the statistics. But the industry is always
looking for ways to improve protection to the public,
protection to the environment, and protection to our own
employees. We feel that we just cannot rest on our good safety
record, that our industry actually needs to continue to look
toward the future and how new technology can increase safety
even more.
Congress passed its last reauthorization, the Pipeline
Safety Act of 1996, and that act incorporated two important new
concepts. The first one is the risk assessment and cost benefit
analysis that deals with new safety regulations. The second one
is a voluntary risk management demonstration project. And we
know that the act is due for reauthorization at the end of
fiscal year 2000.
The Office of Pipeline Safety, or OPS, has recently
completed its guidelines for the risk assessment cost benefit
process. New rules have been created in a more consensus,
oriented, and timely manner. While the risk assessment process
itself has not been completely implemented yet, we believe that
it will this year. In the meantime, due to the flexibility
which Congress gave us in this process, OPS has done a very
good job of moving new rules through their approval process.
The risk management demonstration project, the other risk,
is a voluntary effort, whereby companies can tailor their
safety efforts to address the specific risks along their
pipeline system.
Each risk management plan is subject to review and approval
by the Office of Pipeline Safety, and we must ensure that our
plans provide a superior level of safety compared to the
existing regulations. And through this process, OPS solicits
public and stakeholder involvement in each of these proposals.
This is not a cost-cutting technique. In fact, costs actually
go up for the companies that participate. However, the risk
management process does allow us to spend our resources more
wisely and more effectively.
Five risk management plans have been approved thus far,
with several close to approval. The project has helped to bring
out about a better understanding among industry and government,
which ultimately benefits everyone. Our relationship with OPS,
while not perfect, has improved as a result of this increased
understanding.
INGAA believes that the current Federal Pipeline Safety
Program is effective and benefits the general public. As such,
we respectfully ask Congress to continue the program as it now
stands. INGAA also wants to see pipeline safety user fees which
fund almost the entire OPS budget held at current levels.
I want to thank you, Chairman Barton, and the subcommittee
for allowing me to testify today and for inviting me. And we
really do appreciate the swift attention that you are paying to
our legislation.
[The prepared statement of John S. Zurcher follows:]
Prepared Statement of John S. Zurcher, Manager, Pipeline Safety,
Columbia Gas Transmission Corporation, on Behalf of the Interstate
Natural Gas Association of America
Mr. Chairman and members of the Subcommittee, I am John S. Zurcher,
Manager of Pipeline Safety for Columbia Gas Transmission Corporation,
and Chairman of the INGAA Pipeline Safety Committee. I am speaking
today on behalf of The Columbia Energy Group and the Interstate Natural
Gas Association of America (or INGAA).
By way of introduction, the Columbia Gas Transmission is a wholly
owned subsidiary of The Columbia Energy Group, a Fortune 500 and S&P
500 company located in Fairfax, Virginia and Charleston, West Virginia.
Columbia is one of the nation's largest natural gas companies, with
assets of about $6 billion. Its operating companies are engaged in all
phases of the gas business, plus marketing, fuel management services
and electric power generation. Columbia companies directly or
indirectly serve more than 7 million natural gas customers--12 percent
of the nation's total--in 15 States and the District of Columbia, and
have 53,000 miles of pipeline systems.
INGAA is the trade association that represents virtually all of the
interstate natural gas transmission pipeline companies operating in the
U.S., as well as comparable companies in Canada and Mexico. Its thirty-
four members transport over 90 percent of the nation's natural gas.
I join you today with a positive story to tell. First, natural gas
transmission pipelines are an extremely safe mode of transportation for
energy; in fact we are unsurpassed in our safety record. Second,
government and industry can, and in our case, do work well together in
improving public safety. And third, the risk-based regulatory framework
that Congress created in the 1996 Pipeline Safety Act reauthorization
is an efficient and effective alternative to traditional regulation.
First let me talk about this industry's safety record. Safety is a
top priority for our industry. As I have already mentioned, natural gas
transmission pipelines, which transport over one/third of the nation's
energy, have an excellent safety record. In 1997, the last full year of
statistics, there were five injuries and one fatality associated with
natural gas transmission lines, and almost all of these were the result
of a third party hitting a pipeline with heavy excavation machinery.
These figures are encouraging when you consider that there are over
300,000 miles of natural gas transmission pipeline in the U.S. As you
can see from the appendix to this testimony, an individual is far more
likely to die from lightning or a bee sting, than from a natural gas
transmission line accident.
However, we want to continue to improve this record. One fatality
is still one too many. That is why a flexible, evolving federal
pipeline safety effort is so important. We cannot rest on a good
record, and we cannot always look to the problems of the past if we
want to avoid accidents in the future.
Let me expand further on that point. Until recent years, the
federal pipeline safety program evolved from minimum safety standards
coupled with numerous prescriptive mandates. Individual regulations
were, in many cases, a response to particular incidents, with little
consideration given to overall risk. In other words, the federal
pipeline safety program was stuck reacting, instead of studying and
ranking the risks that pipeline face.
As a result of P.L. 104-304, reauthorizing the Pipeline Safety Act
in 1996, the Department of Transportation's Office of Pipeline Safety
(OPS) has joined with industry in exploring ways in which resources--
public and private--could be used most effectively to enhance public
safety. We both agreed that a risk-based approach to regulation was the
key. Together, government and industry worked with Congress for passage
of the Accountable Pipeline Safety and Partnership Act of 1996. The
term ``partnership'' in the title is key, because that is exactly what
has resulted. The forward-looking leadership at OPS has taken this
legislation and created a spirit of cooperation not seen since the
first Pipeline Safety Act was passed more than thirty years ago--all
with the goal of protecting the public, the environment and industry
employees.
The 1996 Act contains two important elements. First, it requires
(with exceptions) new safety regulations to undergo a risk assessment/
cost-benefit analysis prior to final approval. Based largely on
President Clinton's Executive Order 12866, this provision is consistent
with the ``reinventing government'' ideal of smarter, more effective
regulation. It is important to note, however, that not all new
regulations are required to undergo this analysis. The risk assessment/
cost-benefit requirement is waived if a rule is the product of a
negotiated rulemaking, a consensus rule, the adoption of industry
standards, or with the consent of standing advisory boards within OPS.
When this provision was debated several years ago, some expressed
concern that this would lead to ``analysis paralysis.'' However, this
provision has not brought the regulatory process to a screeching halt.
OPS has continued to move rules through their process, and in fact the
time it takes to get new rules through OPS has decreased. One major
rule, dealing with pipeline operator qualification, had languished at
OPS since 1992 amidst gridlock. When the 1996 Pipeline Safety Act
reauthorization passed, however, OPS decided to pursue a negotiated
rulemaking. We anticipate that this rule will be successfully concluded
this spring. Other rules have been adopted through consensus or
embracing industry standards. The trains have not only kept running,
they are running better.
I know that OPS is considering at least one rule this year which
will require a cost-benefit analysis. We all need to participate in
this process in a positive way.
The other important element of the 1996 reauthorization is the Risk
Management Demonstration Project. This should not be confused with the
risk assessment provision. The risk assessment/cost-benefit analysis
looks at new safety regulations which are applicable across the entire
industry. Under the Risk Management Demonstration Project, pipelines
can voluntarily create their own safety programs, subject of course to
OPS review and approval, which would tailor each pipeline's efforts to
address the specific risks along its system. As a hypothetical example,
consider a rule which would require a pipeline to inspect its
facilities once a month in order to look for construction activity that
might accidentally lead to a rupture. The rule does not distinguish
between areas with different population densities and different levels
of construction activity. Therefore, the pipeline is required to
inspect their right-of-way in areas where the risk is low just as often
as those areas where the risk is high. This situation does not lead to
the best allocation of resources.
Under a risk management plan, a pipeline might want to inspect
right-of-way in urban areas, where construction activity is greater,
once a week, and inspect right-of-way in rural areas on a less frequent
basis. In this hypothetical situation, the pipeline is now spending its
limited resources in a more effective manner, based on the potential
safety risk to its system.
The 1996 Act established a voluntary demonstration project for risk
management. Individual pipeline companies have the option of submitting
a risk management plan for some or all of their systems. The Department
of Transportation must review each application and certify that it
provides a ``equal or greater level'' of safety as compared to
compliance under existing minimum standards. In addition, based on a
directive from President Clinton, each risk management project must
provide ``superior safety'' in order to gain Departmental approval. The
President also directed that OPS provide meaningful public
communication on specific risk management proposals, and that a maximum
of ten projects be approved prior to the Department making its report
to Congress on the progress of the demonstration project.
To date, the department has approved four risk management projects.
Another three are pending approval with more at various stages in the
process. One of those three pending proposals is one which Columbia Gas
Transmission and Columbia Gulf Transmission submitted to DOT last year.
The Office of Pipeline Safety has taken a phased approach to
working on and approving individual companies' risk management
projects. The first plans approved all involved hazardous liquid
pipelines. Very few items in these plans involved alternatives to
regulations, but instead they are testing the risk management premise
of providing superior safety, environmental protection and service
reliability.
The plans involving natural gas pipelines are taking longer to
approve. Most items in these plans involve alternatives to current
pipeline safety regulations. It is taking longer than expected to work
through the technical arguments for these items primarily due to the
fact that the existing regulations were often not based on technical
justifications.
Columbia is in the final phase of project approval with our
``Order'' expected in the April, 1999 timeframe. We are looking at a
system-wide application of the risk management program which we expect
will allow us to better allocate resources to those areas that have the
greatest risk, while not compromising safety to the public, the
environment or our employees. Columbia's project does involve
alternatives to existing regulations, such as: basing inspection and
testing of certain facilities on actual performance rather than the
calendar; use of inspection and testing techniques that are more in
line with today's technology; and providing additional services to our
customers while maintaining reliability.
In concluding my remarks on risk management, let me say that
industry and government are learning a great deal, especially about
each other. Where prescriptive-type regulations are a ``snapshot'' of
what might be good for safety, risk manage-
ment allows safety efforts to evolve and change with new technologies.
The general public gets a better product--increased safety--as a
result.
Before I talk about what we think should be in a new
reauthorization bill, I first want to thank the Congress for passing
the Comprehensive One-Call Notification Act last year. I have just been
talking about risk, and certainly there is no greater risk to natural
gas transmission pipelines than unintentional third-party damage. Many
of these accidents can be avoided through better communication between
pipeline operators and excavators. That is exactly what the legislation
passed last year is designed to do. Without mandates, and without
heavy-handed regulations, the One-Call Act creates incentives for
states to adopt more inclusive and more effective one-call programs.
This is perhaps the single most important pipeline safety measure
Congress can enact, because it attacks the greatest cause of pipeline
accidents.
The Office of Pipeline Safety has been leading discussions across
different industries, trying to identify ways to improve safe
excavation procedures. The spirit of cooperation has been terrific. We
thank Congress for getting the ball rolling.
Now on to what we would like to see in the next reauthorization. We
have an excellent program, and an excellent staff at the Office of
Pipeline Safety. INGAA strongly supports the risk assessment/cost-
benefit review for new regulations. We want to see it continue.
In regards to the risk management demonstration project, INGAA
respectfully request that it also be extended. The Department is
preparing its risk management report to Congress now, pursuant to the
1996 Act. We all agree that the concept has merit and deserves to
continue. Unfortunately, the approval of risk management plans has
taken longer than expected. This is due primarily to the fact that risk
management regulation is a new concept, and therefore it has taken time
to develop the procedures, and the level of mutual trust, needed to
carry the program forward. In addition, the requirement for meaningful
public communication has necessitated many public meetings and ways to
solicit public input. With so much already invested, we need to
continue our good efforts.
As a final note, I want to discuss the OPS budget. The natural gas
and petroleum transmission pipelines fund almost 100 percent of the OPS
budget through user fees. These user fees are assessed on companies
based on the mileage of transmission pipeline in their systems. Because
we pay the bill, we have a keen interest in the OPS budget. Based on
our safety record, INGAA believes that OPS has the resources it needs
to fulfil its mission. Accordingly, we support funding levels which
would maintain staffing and program operations at their current level.
To close, I want to thank you, Mr. Chairman, for moving quickly to
examine reauthorization of the Accountable Pipeline Safety and
Partnership Act. We believe this Act has lived up to its name in
creating a true partnership between industry and government. As I have
described here today, our spirit of cooperation has enabled us not only
to take some important initial steps to implement the Act, but has
carried over to our work on one-call damage prevention as well. We feel
that the current public/private partnership for pipeline safety is an
excellent one. INGAA is proud of our record of achievement in
protecting the public, but we are always trying to improve. We believe
the flexible and evolutionary pipeline safety program now in place
gives us to tools to do so.
Thanks again, and I would be pleased to answer your questions at
the appropriate time.
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Mr. Barton. Thank you, Mr. Zurcher.
We would recognize Mr. Cook now for 5 minutes.
STATEMENT OF RICHARD J. COOK
Mr. Cook. Yes, if I may, my name is Richard J. Cook, and I
am Vice President of Construction and Technical Support of
Washington Gas.
And, Mr. Chairman, if I may, Ms. Coyner used a word that,
we, who were who were from agricultural areas, would think as
an oxymoron, and that is a smart pig. But, in the industry, it
has a meaning that is understood. Also----
Mr. Barton. That is not as bad as a ``smart Congressman.''
Some people think that is an oxymoron.
Mr. Cook. Let me say that I am here to represent the
American Gas Association, AGA, and Washington Gas. Washington
Gas is a local distribution company serving approximately
820,000 meters in the Washington, DC metropolitan area and the
surrounding region. Our service area covers 6,648 square miles
in Maryland, Virginia, West Virginia, and the District of
Columbia. We have approximately 22,000 miles of gas lines.
I am here this afternoon--and I am kind of one of these
bottom-line people; we are here to support this
reauthorization. And, as is the American Gas Association
representing 189 LDC's, local distribution companies, that
deliver gas to almost 60 million homes and businesses in all 50
States.
We are literally the gas company, because we are at the end
of the line. In other words, if you look at the production
fields, the interstate transmission, the intrastate
transmission, and to the burner tip, LDC's represent that face
of the gas industry to the public. The delivery of safe,
reliable service at a reasonable cost is paramount to
maintaining and growing our business.
The safety record of the gas industry I think is exemplary.
With an estimated 1.5 million miles of distribution lines
nationwide and serving approximately 60 million customers, our
accident rates are extremely low.
Last year Congress gave us another means of lowering this
number by enacting the legislation to improve the One-Call
system. The One-Call is our principal tool in combating
unintentional dig-ins by third parties, the No. 1 cause of
accidents on natural gas pipelines. Thank you for strengthening
the One-Call system, and thanks to DOT for moving expeditiously
to implementing that act.
AGA and Washington Gas, respectfully, urge Congress to
reauthorize for another 4 years the current pipeline safety
statute. We ask that you allow the initiatives created by this
law--risk assessment, cost-benefit analysis, and the
establishment of risk management demonstration projects--be
continued. With regard to authorization levels, we believe the
funding levels approved for fiscal year 2000 should be
sufficient to carry this through the next 4 years.
The 1996 law, including a new section modeled after
President Clinton's reinventing Government initiatives for risk
assessment and cost-benefits, we think is important. This
initiative allows the application of flexible risk assessment
and cost-benefit analysis to new pipeline safety standards in
order to gather as much information as possible prior to
issuing the rule. This analysis is waived if OPS elects to
utilize alternatives such as a negotiated rulemaking or
consensus rule.
The front-end loading of information and discussion of
issues at the beginning of the process leads to better workable
rules in the end. Using this approach, OPS has been able to
dramatically reduce the time it takes to issue final rules.
Furthermore, working with stakeholders throughout the process
should result in fewer legal challenges. The Government
actually realizes a saving in time, personal resources, and
money.
The new approach has neither diminished OPS's ability to
issue new regulations nor resulted in rules that do not protect
the public or the environment. Experience, to date, has shown
that regulators and industry can work together to reach safety
objectives. We don't always agree, but we continue to share
information and ideas. This leads to a better understanding of
differing viewpoints which leads to better results.
I will give you an example of that type of activity that I
am discussing. OPS's operator qualification rule is a product
of successful negotiated rulemaking. Prior to using the
negotiated approach, this rule has been under consideration
since 1992. A 1994 DOT proposal suggested the initial
compliance costs alone would exceed in excess of $500 million
and operators with successful programs in place would have to
change them.
Under the new approach, this was achieved much more
quickly, and the final rule will be issued this spring with
agreement with virtually all the parties.
We also support the risk assessment and find that, in fact,
the local LDC's would like to participate in that.
So I am cutting my discussion short.
Mr. Barton. We appreciate it.
Mr. Cook. You have my written statement. But again, coming
to the bottom line, we support the reauthorization of this
bill.
Thank you.
[The prepared statement of Richard J. Cook follows:]
Prepared Statement of Richard J. Cook, Vice President, Construction and
Technical Support, Washington Gas and Representing the American Gas
Association
Good afternoon, Mr. Chairman and members of the Subcommittee.
My name is Richard J. Cook and I am Vice President of Construction
and Technical Support for Washington Gas here in Washington, D.C. Thank
you for this opportunity to appear before the Subcommittee in regard to
reauthorization of the pipeline safety statute.
Washington Gas is a natural gas local distribution company (LDC)
serving customers through nearly 820,000 meters in the Washington, D.C.
metropolitan area and the surrounding region. Our service area covers
6,648 square miles in Maryland, Virginia, West Virginia and the
District of Columbia. Our system contains nearly 22,000 miles of
natural gas lines.
I am also here this afternoon representing the member companies of
the American Gas Association (A.G.A.). A.G.A. represents 189 LDCs that
deliver natural gas to almost 60 million homes and businesses in all 50
states.
LDCs comprise that segment of the natural gas industry that
delivers natural gas to homes and businesses. We are at the end of a
line stretching from the producing fields, through the interstate and
intrastate pipeline system to the natural gas burner tip. We are, to
the general public, the face of natural gas. The delivery of safe,
reliable service at a reasonable cost to our customers is paramount to
maintaining and growing our business.
Although each State utility commission has primary regulatory
authority over LDCs, federal pipeline safety regulations also have an
impact on our operations. States adopt the federal safety rules as
minimum requirements and receive grants of up to fifty percent (50%) of
their pipeline safety enforcement costs from the Department of
Transportation's (DOT) Office of Pipeline Safety (OPS) each year. This
system has worked well and has provided a level of consistency from
State to State. Nevertheless, we are always interested in finding
better ways to provide safe, reliable service.
Our safety record is exemplary. With an estimated 1.5 million miles
of distribution lines nationwide and serving approximately sixty
million customers, our accident rate is extremely low. We are grateful
that last year Congress gave us another means of lowering that number
by, enacting legislation to improve the one-call system. One-call is
our principal tool in combating unintentional dig-ins by third
parties--the number one cause of accidents on natural gas pipelines.
Thank you for recognizing the importance of strengthening the one-call
system. And thanks to DOT for moving expeditiously to implement the
act. Your actions will result in improved coverage by state one-call
laws and assist in the prevention of future accidents.
reauthorization for the 106th congress
A.G.A. and Washington Gas respectfully urge Congress to reauthorize
for another four years the current pipeline safety statute and allow
the initiatives created by the 1996 reauthorization--risk assessment,
cost/benefit analysis and the establishment of risk management
demonstration projects--to continue to unfold. The risk assessment and
cost/benefit requirements have been applied to several rules, both
final and pending. To date, four risk management demonstration projects
have been approved for liquid pipelines and one for a natural gas line,
with three more close to approval. With regard to authorization levels,
we believe the funding level approved for FY 2000 should be sufficient
to carry the program forward for another four years.
update on the implementation of the 1996 reauthorization statute
Risk Assessment and Cost Benefit
The policy and regulatory changes imposed by the 1996 pipeline
safety reauthorization bill are working well and moving forward
smoothly. The 1996 law included a new section modeled after President
Clinton's ``Reinventing Government'' initiatives outlined in Executive
Order 12866. This initiative allows the application of flexible risk
assessment and cost/benefit analysis to new pipeline safety standards
in order to gather as much information as possible prior to issuing a
rule. The analysis is waived if OPS elects to utilize alternatives such
as a negotiated rulemaking, consensus rule or simply adoption of
industry standards if no party objects.
This ``front-end loading'' of information and discussion of issues
at the beginning of the process leads to better, workable rules in the
end. Using this approach, OPS has been able to drastically reduce the
time it takes to issue final rules. The initial information gathering
and analysis takes substantial time, to be sure, but once done OPS is
able to move much more rapidly through the formal rulemaking process.
Furthermore, working with the stakeholders throughout the process
should result in fewer legal challenges. The government will realize
savings in time, personnel resources and money.
Of major concern was the suggestion that the new approach would
either diminish OPS' ability to issue new regulations, or result in
rules that did not protect the public or the environment. This has not
proven to be the case. Experience to date has shown that regulators and
the regulated industry can work together to reach safety objectives. We
don't always agree but we continue to share information and ideas. This
leads to a better understanding of differing viewpoints, which can only
lead to better results.
Two of OPS' recent implementation activities have had a direct
impact on operations at Washington Gas:
<bullet> OPS' Operator Qualification rule is the product of a
successful negotiated rulemaking. The final rule should be issued this
spring.
<bullet> OPS is in the process of adopting a consensus plastic pipe
standard that has been developed through months of work by
stakeholders. OPS is also working with stakeholders to develop
consensus corrosion standards.
Case Study: Operator Qualification
In the 1992 reauthorization, DOT was required to issue new
regulations that would have required an operator to test and certify
individuals who work on pipelines. Under DOT's 1994 proposal the
initial compliance costs of this regulation alone would have exceeded
$500 million. Every natural gas utility would have been forced to adopt
the one-size-fits all Federal program and operators with successful
programs in place would have been required to make changes.
In the 1996 reauthorization, Congress amended its directive and DOT
changed its focus. All the affected stakeholders were brought together
to discuss their interests and concerns. Through this approach, a rule
was crafted that achieves Congress' original objective while minimizing
the impact on operators. The process has not been easy, but the result
will be a final rule issued with the agreement of all parties. We
commend DOT's approach to resolve this controversial issue and their
commitment to implementing and utilizing, the guidelines and principles
adopted in the 1996 reauthorization.
Risk Management
The 1996 law also authorized OPS to work with companies on a
voluntary basis to develop customized safety plans that may or may not
strictly comply with existing safety regulations. These are called risk
management demonstration projects. The initial projects are limited to
interstate liquid and natural gas pipelines and I understand other
witnesses will cover this subject.
Some LDC's, including Washington Gas, are also interested in
exploring this concept. Approximately one-half of the average LDC's
safety budget is spent in complying with federal and state regulations.
The other half is frequently allocated using some type of internal risk
assessment tools. Companies have developed expertise in employing these
risk assessment methodologies and have developed confidence in them. It
seems logical to apply these tools to compliance activities to
critically assess whether they truly provide an additional margin of
safety.
A.G.A. is participating on a team organized by DOT comprised of
A.G.A. member companies and state regulatory and DOT representatives.
Their mission is to examine whether risk management is feasible and
appropriate for LDCS. We expect a report by year-end and look forward
to the study's results.
Fundingfor OPS
Funding for OPS' safety program comes from user fees assessed on
transmission pipelines. A portion of the fees assessed on natural gas
interstate transmission lines is passed through to the LDC. This in
turn is passed on to the consumer. Congress should, therefore, ensure
that the funding level for OPS is both adequate and proper.
During negotiations for the 1996 law, the natural gas industry
agreed that OPS needed funding to develop guidelines and protocols for
the new initiatives. OPS also needed to be able to clear its backlog of
pending regulations and provide adequate inspectors in the field. We
believe OPS is well on the way to accomplishing these objectives and
urge that funding remain at the FY2000 level for the next four years.
If Congress decides to increase the authorization, the additional
funds should come from OPS' reserve. This reserve contains previously
collected but as yet unused pipeline safety user fees. It seems
appropriate that these monies be used for OPS activities until entirely
drawn down.
conclusion
Congress should retain the provisions of the 1996 pipeline safety
law and extend the risk management demonstration program. The processes
created by Congress in 1996 are working; we ask that they be allowed to
continue. OPS has not been hampered by the new requirements of the 1996
law. In fact, the knowledge and expertise of OPS inspectors and
personnel have been increased to the benefit of public safety.
Continuation of these programs will bring about greater knowledge
and understanding for all parties, leading to better rules and programs
in the future. Initiatives such as these represent a real reinventing
of government by allowing innovative processes to improve public safety
as well as providing a systemic change in the way industry is
regulated.
I appreciate the opportunity to appear before you today, and look
forward to answering any questions that you may have. Thank you.
Mr. Barton. Thank you, Mr. Cook.
Now I will recognize Ms. Epstein for 5 minutes.
STATEMENT OF LOIS N. EPSTEIN
Ms. Epstein. Thank you.
Good afternoon. My name is Lois Epstein, and I am a
licensed engineer with the Environmental Defense Fund in
Washington, DC. EDF is a non-profit environmental research and
advocacy organization with nearly 300,000 members nationwide.
Previous to EDF, I was an environmental consultant and I worked
for U.S. EPA. Since 1995, I have been a member of the advisory
committee which oversees the Department of Transportation's
Office of Pipeline Safety's work on hazardous liquid pipelines
such as those that carry crude oil and gasoline.
My testimony today is on behalf of EDF and its members. EDF
also is a co-founder and member of the National Pipeline Reform
Coalition, a multi-stakeholder network whose goal is to protect
the environment, property, and public safety from pipeline
releases.
In my testimony, I will provide you with EDF's analysis and
views on the activities of the Office of Pipeline Safety, or
OPS, which impact the environment, the existing pipelines
safety law, and recommendations for congressional action.
To begin, I refer you to Figure 1, on page 2, of my written
testimony which shows annual releases to the environment from
hazardous liquid pipelines using OPS's data from 1990 through
1998. I have to respectfully disagree with Assistant
Administrator Felder's answer to Congressman Norwood's
question, as this figure shows that since 1995, the amount
released to the environment has increased annually, including
since the 1996 reauthorization. And I did download the data for
all of 1998.
Mr. Barton. Good.
Ms. Epstein. Figure 2 shows that the amount of oil released
per incident has been increasing since 1993, indicating that
releases may be becoming more serious over time. That is, there
were fewer reports in 1998, but the size of the release was
increasing.
Mr. Barton. Would the gentlelady suspend?
I notice you are speaking almost faster than I can listen.
We are going to give you sufficient time.
Ms. Epstein. Thank you very much.
There is an oil pipeline spill of tens of thousands of
gallons approximately every other day. As oil pipeline releases
can and do contaminate drinking water supplies, crops, and
residential lands, generate greenhouse gases, kill fish, and
cause deaths and injuries from explosions and fires, these two
upward trends in annual releases and release size clearly need
to be reversed.
Note that for hazardous liquid pipelines, not for gas
pipelines, various studies have shown that outside force is not
the primary cause of accidents.
While there are undoubtedly some pipeline companies that
are effectively preventing releases and protecting the
environment, there are others that are not, as shown by the
data of transfer oil pipelines.
The Pipeline Safety Act of 1992 gave OPS the mandate to
develop pipeline standards that protect the environment. OPS
has not, however, issued any environmental protection
regulations to date. There simply is no excuse for OPS's
complete failure to meet congressional deadlines for
environmental protection standards.
Additionally, OPS has an extremely poor record of enforcing
existing and developing new safety requirements. On the
enforcement side, the OPS web site shows that the civil
penalties OPS proposes to collect in 1997 and 1998 are less
than half of what the Office proposed to collect in 1994.
As for developing new safety standards, the National
Transportation Safety Board has recommended numerous changes in
the oil pipeline program, but OPS has not acted on many
recommendations.
The November 1998 NTSB meeting on the investigation of two
serious oil pipeline accidents in Texas and South Carolina
resulted in strong criticism of OPS by board chairman James
Hall. Chairman Hall stated his willingness to raise to Congress
the issue of OPS's unresponsiveness. Had NTSB's recommendations
been followed OPS might have prevented the deaths of two
teenagers in Texas in 1996, as NTSB first recommended improving
the corrosion protection standards in 1987.
Given this background, EDF sees the need for four
significant amendments to the current pipeline safety law.
First, remove the State preemption language to allow States
to exceed Federal requirements for interstate pipelines. And
that is a strategy that is used in environmental laws quite
commonly. I don't know any statute that doesn't include that.
Second, require that OPS delegate enforcement for
interstate pipelines to qualified State agencies.
Third, add release liability provisions as a non-regulatory
incentive for improved pipeline performance.
And, four, amend the citizen suit provisions to facilitate
private enforcement actions.
These amendments are all discussed in greater detail in
EDF's written testimony.
As for implementation issues associated with the existing
pipeline safety statute, EDF continues to have significant
concerns with the risk management provisions and the
extraordinary cost benefit analysis procedures added to the law
when it was last reauthorized.
EDF's primary concerns with the risk management
demonstration projects are that they do not provide the public
with additional information about pipeline risks. And while OPS
is using a large proportion of its limited resources for risk
management, OPS is not carrying out its congressional mandates
and NTSB recommendations to develop standards that would apply
to all pipelines except the minuscule mileage currently in the
risk management program.
In conclusion, EDF strongly urges Congress to: one, amend
the pipeline safety law in the manner discussed to improve
environmental protection; two, conduct an oversight hearing on
OPS's performance, including how it compares to State
performance. Examine if there is a culture at OPS that will not
address pipeline and environmental issues effectively. Three,
request that the General Accounting Office study the resources
OPS devotes to risk management versus other activities, OPS's
enforcement record compared to that of other Federal regulatory
agencies, and the ability of States now and in the future to
take over some of OPS's current responsibilities.
The oil pipeline program offers an excellent opportunity
for Congress to be proactive on the environment.
Thank you very much for inviting me to testify today. I
hope this information proves helpful in your deliberations.
[The prepared statement of Lois N. Epstein follows:]
Prepared Statement of Lois N. Epstein, Senior Engineer, Environmental
Defense Fund
Good afternoon. My name is Lois Epstein, and I am a licensed
engineer with the Environmental Defense Fund in Washington, DC. EDF is
a non-profit environmental research and advocacy organization with
nearly 300,000 members nationwide. Previous to EDF, I worked as an
environmental consultant for two firms, and for the U.S. Environmental
Protection Agency. Since 1995, I have been a member of the advisory
committee which oversees the U.S. Department of Transportation Office
of Pipeline Safety's work on pipelines transporting hazardous liquids
such as crude oil and gasoline.\1\
---------------------------------------------------------------------------
\1\ The U.S. DOT's Technical Hazardous Liquid Pipeline Safety
Standards Committee.
---------------------------------------------------------------------------
My testimony today is on behalf of EDF and its members. EDF also is
a co-founder and member of the National: Pipeline Reform Coalition, a
newly-formed network of environmental organizations, local government,
industry, and labor unions whose goal is to protect the environment,
property, and public safety from releases from hazardous liquid and
natural gas pipelines.
In my testimony, I will provide you with EDF's analysis of and
views on: 1. the activities of the Office of Pipeline Safety (OPS)
which impact the environment, 2. the existing pipeline safety law, and
3. recommendations for Congressional action.
The Office of Pipeline Safety's Record on the Environment
To begin, I refer you to Figure 1, which shows ``Annual Releases to
the Environment from Hazardous Liquid Pipelines'' from 1990 through
1998 using OPS accident data. These data show that over 6.3 million
gallons of oil and other hazardous liquids are reported released from
pipelines on average each year,\2\ more than half the amount released
from the Exxon Valdez disaster. Note that Figure I shows that since
1995, the amount released to the environment has increased each year.
---------------------------------------------------------------------------
\2\ The OPS accident database contains estimates of release size
from those reporting the incidents. This database contains both under-
reporting and over-reporting of accidents (the latter through redundant
reports). Only releases of at least 2,100 gallons or at least $50,000
in property damage, or which cause a death or serious injury, are
required to be reported (see 49 CFR 195.50 for more details).
[GRAPHIC] [TIFF OMITTED] T5149.011
Figure 2 shows that the amount of oil and other hazardous liquids
released per incident has been increasing since 1993, indicating that
releases may be becoming more serious over time. The average amount
released in 1998 was over 45,000 gallons. Annual reporting in the 1990s
ranges from 170 to 236 incidents per year, with an average of 200,
meaning that there is a pipeline release of tens of thousands of
gallons approximately every other day.
[GRAPHIC] [TIFF OMITTED] T5149.012
As hazardous liquid pipeline releases can and do contaminate
drinking water supplies, crops, and residential lands, generate
greenhouse gases, kill fish, and cause deaths and injuries from
explosions and fires, these two upward trends in aggregate annual
releases and release size clearly need to be reversed. The following
table lists some of the most serious releases from hazardous liquid
pipelines and their tank farms in recent years:
----------------------------------------------------------------------------------------------------------------
Company Date Location Gallons Released Comments
----------------------------------------------------------------------------------------------------------------
Shell Pipeline April 1998........ St. James, LA..... 748,000........... Crude oil release
Corporation. at tank farm
caused by
operational
problems.
All American Pipeline Company... December 1997..... CA (city not 540,000........... Corrosion failure
reported to OPS' in pipeline.
database).
Williams Pipeline Company....... March 1997........ Des Moines, IA.... 1.26 million...... Gasoline leak(s)
from corrosion at
a pipeline-
related tank
farm, causing
extensive
property damage
Colonial, Exxon, October 1996...... Houston, TX....... 1.47 million...... Pipelines broke
Texaco, Valero. under pressure
from severe
flooding,
spilling oil into
the San Jacinto
River.
Koch Pipeline................... August 1996....... Lively, TX........ Gaseous release Pressurized liquid
from a pipeline. butane escaped
from a corroded
section of the
liquid pipeline,
killing two
teenagers.
Colonial Pipeline............... June 1996......... Greenville, SC.... 957,600........... Diesel fuel
spilled into the
Reedy River,
killing 35,000
fish. Rupture
caused by
inadequate
management
controls and
training.
Colonial Pipeline............... March 1993........ Reston, VA........ 408,000........... Fuel spilled into
Sugarland Run, a
tributary of the
Potomac River.
Water supplies in
the area were
shut down for
several days,
accompanied by
air pollution.
----------------------------------------------------------------------------------------------------------------
OPS data also show reported property damage from hazardous liquid
pipeline releases averaged over $39 million in the 1990s, with an
average property damage cost per incident of over $194,000 (median cost
is $20,000). Based on an analysis by Battelle National Laboratory,\3\
and EDF's analysis of OPS accident data for 1990-1998, it appears that
no more than 20-30% of hazardous liquid pipeline releases are caused by
``outside forces,'' or entities sometimes beyond the control of
pipeline companies. The most common causes of releases from hazardous
liquid pipelines are corrosion, operational incidents, and material
defects.
---------------------------------------------------------------------------
\3\ Causes of Pipeline Incidents, Effect of the Aging
Infrastructure On Incidents, and Areas of Technology Development,''
Robert J. Eiber, Battelle National Laboratory, published in the
National Pipeline Safety Summit, Newark, New Jersey, June 20, 1994
proceedings, U.S. Department of Transportation, Office of Pipeline
Safety.
---------------------------------------------------------------------------
While there undoubtedly are some pipeline companies that are
effectively preventing releases and protecting the environment, there
are others that are not, as shown by OPS accident data. This situation
is analogous to the environmental protection efforts by non-
transportation companies, e.g., petrochemical companies, in the 1960s,
prior to passage of the Clean Air Act, the Clean Water Act, and the
Resource Conservation and Recovery Act in the 1970s. It took passage of
these laws and subsequent development of regulations by the U.S.
Environmental Protection Agency to ensure that laggard companies and
plants met minimal levels of environmental protection. Just like those
environmental laws, the Pipeline Safety Act of 1992 gave OPS the
mandate to develop pipeline standards that protect the environment--OPS
has not, however, issued any environmental protection regulations to
date.
Of particular significance and despite an October 1994
Congressional deadline, OPS has not even proposed a rule under section
60109 of the Pipeline Safety Act that identifies areas ``unusually
sensitive to environmental damage'' if there is a hazardous liquid
pipeline accident. OPS also was instructed by Congress to prescribe
regulations by October 1995 requiring periodic inspections of pipeline
infrastructure in such areas to ensure they have adequate integrity to
continue operations. There is no excuse for OPS' complete failure to
meet these deadlines.
Additionally, OPS has an extremely poor record of enforcing
existing and developing new safety requirements. On the enforcement
side, the OPS web-site shows that the civil penalties OPS proposes to
collect in 1997 and 1998 are less than half what the office proposed to
collect in 1994 ($0.5 million in 1997-8, down from $1.14 million in
1994). Because the penalties for violations and releases are likely to
be so minimal, it frequently can be cheaper for pipeline companies to
pay fines and cleanup costs than to prevent pollution.
As for developing new safety standards, based on its investigations
of pipeline accidents, the National Transportation Safety Board (NTSB)
has recommended, but OPS has not implemented, the following changes in
its hazardous liquid pipelines program: \4\
---------------------------------------------------------------------------
\4\ ``Evaluation of Accident Data and Federal Oversight of
Petroleum Product Pipelines,'' National Transportation Safety Board,
NTSB/SIR-96/02, Adopted: January 23, 1996.
<bullet> require hazardous liquid pipeline operators to assess the
adequacy of their pipelines to operate at maximum allowable
operating pressures on a periodic basis (emphasis added);
<bullet> revise hazardous liquid pipeline regulations to include
criteria similar to the regulations in place for natural gas
pipelines to evaluate the adequacy of cathodic protection
(i.e., a common type of corrosion protection) systems--first
recommended by NTSB in 1987 and again in 1998 after the deaths
of two teenagers in Texas in 1996;
<bullet> modify the hazardous liquid pipeline accident data collected
in a manner that would allow OPS to perform methodologically
sound accident trend analyses and to evaluate pipeline operator
performance using normalized accident data.
EDF research has identified several additional deficiencies in the
OPS regulatory program which likely result in unnecessary environmental
pollution. At a minimum, OPS needs to:
<bullet> establish performance standards for leak detection systems, so
that each hazardous liquid pipeline utilizes adequate leak
detection;
<bullet> address pipelines that transport liquefied gases (rather than
the oil they previously carried), including notification to OPS
and the public of the change in service and appropriate design
and operating standards;
<bullet> require that pipeline breakout tanks, which store hazardous
liquids and are an integral part of the transportation of
hazardous liquids by pipelines, be designed and operated in a
manner that prevents contamination of the environment (e.g.,
requiring corrosion protection for all breakout tanks and
attached piping, double-bottoms for new breakout tanks to
contain leaks, etc.);
<bullet> require reporting of spills or leaks of at least one barrel
(42 gallons) rather than 50 barrels, releases where
estimated,property damages are at least $5,000 (as was true in
the past) rather than $50,000, and leaks that pollute
groundwater in addition to those that pollute surface water;
and
<bullet> address the significant methane emissions from natural gas
pipeline compressor stations, high-bleed pneumatic devices,
pipeline maintenance, dehydrators, and fugitive emissions using
existing technologies,\5\ as methane is a strong greenhouse gas
that contributes to climate change.
---------------------------------------------------------------------------
\5\ ``Opportunities to Reduce Anthropogenic Methane Emissions in
the United States: Report to Congress,'' Office of Air and Radiation,
EPA 430-R-93-012, October 1993.
---------------------------------------------------------------------------
EDF research also has identified the Y2K computer and embedded chip
problem as a significant issue for the pipeline industry. Gas and oil
pipelines are highly computerized, with numerous embedded chips
monitoring and controlling operations. Based on the latest data from a
September 1998 governmental survey which includes responses from
companies representing approximately 70% of oil pipeline deliveries,
only 12-35% of the companies had completed Y2K compliance testing for
their critical operations.
The Federal Pipeline Safety Law
EDF sees the need for four significant amendments to the current
pipeline safety law:
1. Remove the state preemption language;
2. Require that OPS delegate enforcement for interstate pipelines to
qualified state agencies;
3. Add release liability provisions; and,
4. Amend the citizen suit provisions to facilitate private enforcement
actions.
First, because states differ in their environmental protection
needs and because the regulatory and enforcement records of OPS are
inadequate as discussed above, EDF sees an urgent need for a change in
section 60104(c) of the pipeline safety law to allow states to exceed
federal safety and environmental protection standards. Such a change
would enable states to address their need for more stringent safety and
environmental standards whenever appropriate (e.g., more closely spaced
valves to protect certain areas, increased or different inspection
requirements, etc.), and would make the pipeline statute consistent
with an aspect of the major federal environmental protection laws that
works quite well. Notably, the language used for such a change should
ensure that state standards are ``compatible'' with federal pipeline
safety and environmental protection standards (the statute now contains
such language for intrastate pipelines), so as not to inhibit
transportation at state boundaries in any way.
Second, the current pipeline safety statute needs amendment to
ensure that qualified state agencies become the federal government's
``agents'' to inspect and enforce regulations for interstate pipelines.
Like the preemption issue, this change allows states to step in when
they find the efforts of the federal government to be inadequate. I
understand that the Subcommittee Chair will receive a letter for the
hearing record on this topic from City Attorney James Pates of
Fredericksburg, Virginia.
Third, EDF proposes that Congress add significant release liability
provisions to the pipeline safety law, modeled on those in the Oil
Pollution Act of 1990 (OPA), as a strong incentive to prevent releases
and reduce their size. U.S. Environmental Protection Agency data show
that spills over 200,000 gallons have been reduced by over 60% since
OPA's enactment.\6\
---------------------------------------------------------------------------
\6\ ``ERNS and OPA 90: Emergency Response Notification System
(ERNS) Fact Sheet,'' Office of Solid Waste and Emergency Response, U.S.
Environmental Protection Agency, EPA 540-F-97-012, April 1997.
---------------------------------------------------------------------------
Last, section 60121, ``Actions by private persons,'' needs to be
amended to facilitate private enforcement. First, section 60121 only
allows citizens to file suit for violations of OPS requirements, not
for posing ``imminent and substantial endangerment to health or the
environment,'' as is allowable under section 7002(a)(1)(B) of the
Resource Conservation and Recovery Act of 1976 (RCRA). This change
would enable those affected by pipeline releases to file suit even if
the release occurred as a result of regulatory gaps. Second, section
60121 currently prevents citizens from proceeding with litigation if
OPS is pursuing administrative proceedings, and should be amended to
allow citizens to proceed unless OPS or the appropriate state authority
``is diligently prosecuting a civil or criminal action in a court of
the United States or a State'' (emphasis added, from RCRA section
7002(b)(1)(B)), as environmental laws allow. Third, the statute should
permit citizen plaintiffs to seek imposition of civil penalties on
violators of requirements rather than merely injunctive relief, to
increase the incentive for compliance.
As for implementation issues associated with the existing pipeline
safety statute, EDF continues to have significant concerns with the
risk management provisions in section 60126, and with the extraordinary
cost-benefit analysis procedures added to the law when it was last re-
authorized in 1996. The following subsections describe EDF's concerns.
Risk Management Demonstration Projects. Since enactment of the 1996
law, OPS has spent significant resources on the Risk Management
Demonstration Project program, which come at the expense of OPS' other
regulatory development and enforcement responsibilities. EDF also is
concerned that the public gains little from this program because it
(and all the involved states) are not part of the decision-making
process and do not have access to the risk information identified by
the companies involved.
Additionally, OPS may be approving projects for companies that have
less than adequate safety and environmental records, and OPS does not
have a plan for how the lessons learned will translate to the industry
as a whole. While it may be argued by the companies involved and OPS
that the program is the best way to make company-specific regulatory
decisions, without an enormous infusion of resources to OPS and the
state pipeline agencies, such an individualized oversight program could
not possibly be carried out for the over 3,000 operators of gas and
hazardous liquid pipelines with their approximately 2 million miles of
pipelines.
During the two year period of this program, OPS only has approved
four of these projects and granted only one regulatory exemption. To
the public, it appears that this program might be useful in building
business-to-government relationships, but it in no way provides the
public with additional information about pipeline risks, nor does it
demonstrate problems with existing standards that need to be overcome
through an individualized process. In fact, because companies can
undertake nearly all these actions without the formal involvement of
OPS (e.g., implementing environmental management systems), it is
unclear why this program even needs to be part of the statute.
Cost-Benefit Analysis Procedures. Cost-benefit analysis is a
limited and imperfect tool. Costs tend to be overstated and benefits
understated for a variety of methodological reasons, and such analyses
are very resource-intensive to conduct. In light of these problems, EDF
has three specific and ongoing concerns with the provisions in the
current law: 1) There is no dollar threshold in the law for regulatory
costs under which these complex, uncertain, and time-consuming analyses
do not have to be performed, thus providing limited benefit in some
cases while using extensive OPS resources; 2) The statutory language
places far too much weight on this inherently limited and uncertain
process, requiring its use as a decision rule rather than as a decision
tool. In other words, it requires that any new standard demonstrate
that benefits justify costs, so each new regulation can be interminably
litigated on these grounds; and 3) Despite EDF's efforts, OPS staff
have not included language covering environmental benefits into any of
its draft documents on performing cost-benefit analyses.
Recommendations for Congressional Action
Given the increasing trends for oil pipeline releases, OPS's
excessive focus on Risk Management Demonstration projects at the
expense of Congressionally-mandated regulatory development and
enforcement, and the inability of states to act when the federal
government fails in its responsibilities, EDF strongly urges Congress
to:
1. Conduct an oversight hearing on OPS' performance, including how it
compares to state performance on intrastate pipelines,
2. Request that the General Accounting Office study the resources OPS
is devoting to risk management versus other activities, OPS'
enforcement record compared to that of other federal regulatory
agencies, OPS' actions with respect to National Transportation
Safety Board recommendations compared to the actions of other
transportation agencies to NTSB recommendations, and the
ability of states now and in the future to take over some of
OPS' current responsibilities.
3. Amend the pipeline safety law in the manner discussed in the
previous section.
Thank you very much for inviting me to testify today. I hope this
information proves helpful in your deliberations.
Mr. Barton. Thank you, and it has proved helpful.
We will now recognize Mr. Richard Wilson. Again, your
testimony is in the record; it is in its entirety. And we will
recognize you for 5 minutes.
STATEMENT OF C. RICHARD WILSON
Mr. Wilson. Thank you. Mr. Chairman, it is my impression
that your subcommittee desires to take an earlier and effective
look at the reauthorization of pipeline safety standards, and I
wanted to put right up front, with respect to the comment of
the oil pipeline industry, that we support your interest in an
expedited reauthorization of the pipeline safety program.
Recent pipeline safety legislation, which includes the One-
Call bill last year and reauthorization in 1996, has been
highly success-
ful in broadening the scope of protection and increasing the
resources applied to safety in our business.
My remarks today are presented on behalf of the Association
of Oil Pipelines and the American Petroleum Institute. These
two organizations represent the vast majority of the oil
pipeline industry.
I am Dick Wilson, vice chairman of Buckeye Pipeline
Company, and my purpose today is to give you the perspective of
a chief operating officer with over 10 years experience in my
company and my impression of the attitudes and the opinions of
my industry colleagues.
The oil pipeline industry delivers over 700 million gallons
of petroleum fuel per day. In terms of gasoline alone, this
represents more than 25 million vehicle fill-ups per day. This
volume of petroleum is based on the demand of the American
people. Our families depend on petroleum for mobility, for
heat, and the very strength of the U.S. economy.
The oil pipeline industry has a vested interest in safety.
No release of petroleum into the environment is acceptable.
Although we look to OPS as a yardstick for our performance, the
responsibility is ours.
Recently, the industry has voluntarily undertaken a
comprehensive review of data concerning pipeline accidents and
spills to better understand our performance. We cannot manage
what we don't know.
One of the things that we would like to have is even better
data. Accordingly, the oil pipeline industry has begun a new,
aggressive program of tracking safety and environmental
performance. Under this program, and among other things, the
industry will track releases down to the level of five gallons
per occurrence.
Given the cost of failure, this industry has a vested
interest in positive performance, adhering to standards, and
pushing its own envelope for the installation of safe equipment
and operating procedures.
I have been at spill sites; I have been appalled at their
consequences. I have talked to the people, and I have paid the
bills. We want no more of it.
Thank you.
[The prepared statement of C. Richard Wilson follows:]
Prepared Statement of C. Richard Wilson, Vice Chairman, Buckeye
Partners, L.P. on Behalf of the Association of Oil Pipe Lines and the
American Petroleum Institute
I am C. Richard Wilson, Vice Chairman of Buckeye Partners, L.P.
Buckeye operates, through wholly owned subsidiaries, 3,500 miles of
pipelines carrying refined petroleum products, including gasoline, jet
fuel, diesel fuel, heating oil and kerosene. Our facilities connect
delivery locations in Illinois, Indiana, Michigan, Ohio, Pennsylvania,
New York, New Jersey, Connecticut and Massachusetts. I am here today
representing the Association of Oil Pipe Lines and the American
Petroleum Institute.
The Association of Oil Pipe Lines (AOPL) is an unincorporated trade
association representing 57 common carrier oil pipelines companies.
AOPL members carry nearly 80 percent of the crude oil and refined
petroleum products moved by pipelines in the United States. The
American Petroleum Institute (API) represents over 400 companies
involved in all aspects of the oil and natural gas industry, including
exploration, production, transportation, refining and marketing.
Together, these two organizations represent the vast majority of the
U.S. pipeline transporters of petroleum and petroleum products.
introduction
Pipeline safety and pipeline integrity are top priorities for our
industry. The emphasis on safety and integrity is woven into the fabric
of our corporate decision making and the industry-driven initiatives
undertaken by our trade organizations. This emphasis has made pipelines
the safest mode for moving petroleum and petroleum products and one we
are constantly striving to make safer.
We understand that the government has a duty to the public to
assure the safety of the transportation systems in this country. Thus,
we appreciate the work of this Committee and the important and positive
role played by the Department of Transportation's Office of Pipeline
Safety (OPS) in providing this assurance. We especially appreciate
OPS's ability to bring industry and other affected interests together
to work cooperatively to raise the overall level of safety. OPS has
been an ally in our pursuit of excellence, particularly in the last
three years.
However, it is important for the Committee to understand that our
industry can not depend solely on the federal government or the Office
of Pipeline Safety to tell us how to operate our pipelines in a safe
and environmentally responsible manner. Compliance with OPS rules and
regulations is only a subpart of our constant concern with effective
management of safety and environmental risks. We view ourselves as the
stewards of our industry. We take responsibility for operating our
pipelines safely and with respect for the environment. If you think
about it, it should be obvious that this would be the case. We work in
the oil pipeline industry, but we are also citizens. We care about the
environment. Like the rest of the country, our sensitivity to our
environmental impact has grown steadily over the years. We are
determined to operate the safest possible pipeline systems.
A breach in pipeline integrity is a fundamental threat to our
stewardship of this enterprise and its assets. A pipeline accident is
expensive, and we quickly lose the ability to influence the cost.
Further, a pipeline accident is enormously disruptive. It threatens the
loss, for an unknown period of time, of our ability to control our
business. We simply must avoid these situations. We would do our best
to avoid them under any program of safety regulation.
summary
With that introduction, I'd like to leave you with four principal
points in my testimony today:
1. The public-private partnership approach of the OPS is working and
should be continued and strengthened.
2. The OPS Risk Management Demonstration program is successful and
promises safety and environmental results exceeding those
available from existing regulations. Congress should find a way
to allow risk management to be more broadly adopted in the OPS
pipeline safety program.
3. The oil pipeline industry is moving forward with initiatives of its
own to enhance safety and environmental protection results.
4. The current OPS program is making good progress under current law
and at existing funding levels, which should be extended in
real terms.
Congress and OPS should continue the good work already in progress and
strengthen the public-partnership in our federal pipeline
safety program.
Congress has done an excellent job with the two most recent pieces
of pipeline safety legislation that have become law. Both these efforts
had strong bipartisan support. Most recently, in the 105th Congress,
the Comprehensive One-Call Notification legislation was enacted as part
of the Transportation Equity Act for the 21st Century. The One-Call
provisions you enacted address the leading cause of large volume
releases from pipelines--inadvertent damage during excavation. The law
is less than a year old, but it has already brought together a broad
spectrum of public and private stakeholders to deal with this problem.
The participants, working on a voluntary basis, are developing a
comprehensive report on best practices in underground damage
prevention. These participants come from a number of industries and
jurisdictions, many of whom are not subject to direct federal
regulation. OPS is using an open, consensus process to create a
government-private partnership that has the affected groups checking
their differences at the door and working together. This is an
excellent initiative, and you should be proud of it.
The willingness to work together we are seeing in implementing the
One-Call bill follows naturally from its predecessor, the Accountable
Pipeline Safety and Partnership Act of 1996. Both these laws stress
cooperation between government and industry rather than command and
control. Since enactment of the 1996 amendments a regulatory logjam has
broken. Rulemakings that were languishing have moved forward. New
initiatives are making progress rather than bogging down in fights
among constituencies. We believe the record shows that the cooperative
model works. The 106th Congress should continue to support and
strengthen partnership and cooperation in the federal pipeline safety
program.
The Risk Management Demonstration program you authorized in 1996 is a
success, and the 106th Congress should find a way to permit
application of these powerful principles more broadly in the
program.
Four oil pipeline risk management demonstration projects are in
operation or near approval. Each project is described in the testimony
below. OPS is carrying out these projects in a completely open fashion.
Anyone with access to the internet can find all the detail they want on
the OPS website http://ops.dot.gov under PRIMIS (Pipeline Risk
Management Information System). The bottom line is that these are good
nuts-and-bolts projects that offer the regulator the chance to really
learn how pipeline systems operate and what the risks are. All are
providing enhanced protection above that required by existing
regulations. We believe these improvements could be spread throughout
the OPS program with your help. We also believe systematic and
widespread recognition by federal regulators of risk management would
lead to a far more effective and efficient regulatory program.
The oil pipeline industry is moving forward with initiatives of its own
to enhance safety and environmental protection results.
Our industry has a number of self-generated initiatives aimed at
raising the performance bar for our companies. One such program is a
joint AOPL/API initiative on environmental protection launched last
year. We have undertaken a comprehensive review of available federal
data on past pipeline spills to determine what this data can teach us
about pipeline accidents. We hope to mine this database to better
understand what determined past safety and environmental performance.
Looking forward, our companies have begun an ambitious program to
voluntarily report to API internal data that will focus on a wider
range of accidents and the causes and frequency of smaller spills--
including those that are not required to be reported to either the
federal or state governments. You cannot manage what you don't measure.
We are investing resources to create a more comprehensive database
because we believe we will be able to use it ourselves to help our
companies to reduce the number, size and impacts of spills.
We do not recommend major change in the pipeline safety program in the
106th Congress. We just need to keep the progress coming in
what is basically a well-run program.
We pay for OPS through user fees. We think the current level of
authorization for the OPS program is about right and should be extended
in real terms for at least four more years.
discussion
With that summary, the remainder of my testimony will further
describe the interaction between the pipeline safety program and our
companies' own programs to manage safety and environmental risks. I
will also include remarks on our efforts to address the Y2K issue.
cooperation between industry and ops
Under current law, current practice and under the current
management at the Department of Transportation, the Office of Pipeline
Safety is a positive force in our efforts to ensure safety and
protection of the environment in oil pipeline operations. Often working
in consultation with OPS, the industry has developed programs, training
and operational standards designed to avoid spills. The Office of
Pipeline Safety has recognized the effectiveness of these standards by
adopting and incorporating them into OPS regulations.
It has been very helpful to have the Office of Pipeline Safety
working with us in our safety efforts. OPS has been willing to provide
guidance and recommendations on how to make industry's programs more
effective. Congress facilitated this cooperative approach with the
changes made to the Pipeline Safety Act through the 1996
reauthorization. We are here to congratulate you on these changes and
to tell you that they are working. The changes you made have had a very
positive effect on safety and environmental protection.
The 1996 reauthorization added two important new elements to the
pipeline safety program. First, it enhanced the effectiveness of
pipeline safety regulation by requiring new safety regulations to
undergo a risk assessment and cost benefit analysis based largely on
President Clinton's Executive Order 12866. Second, Congress authorized
OPS to carry out a Pipeline Risk Management Demonstration Project.
Under this program, OPS could approve new company-designed processes to
manage safety and environmental risks. As a result of an Administration
directive, these risk management processes would be designed to achieve
superior results, significantly exceeding the level of safety that
would be gained by compliance with existing standards. The goal was to
enable the pipelines to use risk management tools to address the
greatest threats to pipeline integrity on a specific segment of
pipeline and to learn from these efforts how to better manage risks
across pipeline systems.
impact on ops regulations
The ideal of the risk assessment and cost benefit analysis is to
achieve smarter, more effective regulations at a lower cost. In
addition, Congress encouraged OPS and its stakeholders to work together
to develop alternatives to traditional regulatory rulemaking by waiving
the risk assessment and cost benefit requirement if a rule
--is developed through negotiated rulemaking,
--is a consensus rule,
--adopts industry standards, or
--is adopted with the consent of OPS technical advisory boards.
To their credit, OPS seized this opportunity to reach out to all
stakeholders, including pipelines, on a number of regulatory mandates
that had been languishing. By working together with the stakeholders
using these alternatives to traditional rulemaking, a lot of good work
has been done and a veritable logjam of initiatives that will promote
safety and environmental protection has broken loose. More importantly,
the stakeholders like the results. And they are good results.
examples
Excavation Damage Prevention
One of the greatest risks facing pipelines is encroachment from
expanding urban populations. Pipelines laid in the '50s and '60s in
largely rural areas are now part of our suburban landscape. The largest
source of large volume pipeline releases are accidents caused by
construction crews digging into the ground and inadvertently damaging
the pipe with a mechanized auger, post hole digger, backhoe, or other
excavation equipment. Even a nick in the specially coated pipes can
lead to corrosion causing leaks years down the road. Despite
conspicuous pipeline markers and regular mailings by pipeline
operators, many people are not really aware of their pipeline
neighbors. In an effort to educate communities about pipelines, the OPS
and industry have worked jointly on a more effective outreach effort.
The OPS and industry sponsored damage prevention quality action
team (DAMQAT) included stakeholders from OPS, the pipeline industry,
the states, the contractor community, the insurance industry and the
general public. They have worked together to develop a new campaign
aimed at increasing awareness of pipelines in the excavator community
and to increase community awareness of the presence of pipelines. Most
pipeline operators already significantly exceed the minimum
requirements for public education programs. We recognize the value of
an educated citizenry both as pipeline facility neighbors and sources
of valuable information about activities along pipeline right-of-ways,
including potential or actual emergencies. The DAMQAT educational
program is testing new outreach methods and messages. The program is
being pilot tested in three states--Virginia, Georgia and Tennessee.
Both pre-program and post-program surveys are being conducted to help
judge the effectiveness of the program. While the pilot program has not
yet run its full term, calls to damage prevention centers in the pilot
states are up and incidents are down.
Mapping Initiative
OPS and industry conducted a similar outreach effort to develop a
national pipeline mapping system. OPS brought all the stakeholders to
the table to form the Mapping Quality Action Team. The Mapping Team
first developed requirements for a system of national maps useful to
multiple members of the federal family without costing any party an
inordinate amount of money. Using standards built on those of the U.S.
Geological Survey, the Team developed standards for national and state
repositories of pipeline maps and other location information. The
system, when complete, will show the location and selected attributes
of all major pipelines. OPS then intends to add data layers to the
mapping system. These layers could include population, unusually
sensitive areas, natural disaster probability and high consequence
areas, hydrography, and transportation networks.
Unusually Sensitive Areas
In implementing its responsibilities to identify areas along
pipeline rights-of-way that may be especially sensitive to oil in the
environment, OPS brought all stakeholders together to develop a set of
guiding principles. These areas include drinking water resources and
significant ecological resources. OPS conducted a series of meetings
and workshops to develop criteria to identify those resources that
constitute an ``area unusually sensitive to environmental damage''
(USA). The pipeline industry helped to sponsor these workshops. The OPS
was successful in developing criteria for determining a drinking-water
USA and has a proposed set of criteria for ecological resources.
Because several federal agencies have oversight over the environment, a
consensus definition of USAs has been difficult to achieve. It is
particularly difficult to predict the impact such a definition might
have once it is in place.
In an effort to move the process forward, and to test the
definition developed through the workshop process, the pipeline
industry, under the umbrella of the API, has developed an industry
guidance document on the definition and its initial use. This guidance
document will be published in the next few months and industry will
begin a voluntary effort to use the definition and develop an
understanding of its impact on risk assessment and risk management
efforts. Feedback will be shared with OPS as it develops the USA
definition further and incorporates the definition into regulations.
Operator Qualification
Little progress was made on DOT's operator qualification rule
until, following the 1996 amendments, the OPS initiated a negotiated
rulemaking. OPS brought all stakeholders, including interstate and
intrastate carriers, state safety officials, unions representing
pipeline workers and standards organizations to the table for a
negotiated rulemaking. A proposed rule was issued last October and a
final rule is expected shortly. As a result of the negotiation process,
a good result was achieved in much less time than a traditional
rulemaking takes.
Corrosion Rulemaking
Last August, the OPS initiated a consensus rulemaking with the
National Association of Corrosion Engineers, pipelines, state safety
inspectors and the public. By December, the group had developed a draft
rule that was widely circulated. Based on comments received, the group
met again and is expected to have a proposed rule by mid-year. To move
from initiation of the rulemaking process to a proposed rule with buy-
in from the major stakeholders in six months demonstrates how far the
pipeline safety program has come. It shows how effective the new
approach has been to moving the program forward to achieve an even
greater level of safety in what has been a very effective program.
risk management demonstration program
In an era when every dollar must count to its fullest potential,
all of our companies have moved towards use of comprehensive risk
management systems that continuously monitor the thousands of factors
affecting pipeline operations and integrity to focus on the greatest
risks. Many of these efforts go way beyond anything being requested or
required by our safety partners in state and federal government.
The Office of Pipeline Safety has supported and encouraged these
industry initiatives. Congress too recognized the potential
effectiveness of these programs when it authorized the risk management
pilot project in the 1996 reauthorization act. Four oil pipeline risk
management demonstration proposals to the Department of Transportation
are approved or are near approval. Each of these is summarized below.
Details are available on the OPS website http://ops.dot.gov under
PRIMIS (Pipeline Risk Management Information System).
oil pipeline risk management demonstration projects
Equilon Pipeline (formerly Shell Pipeline)
This project was originally submitted by Shell Pipeline and has
been continued after Shell and Texaco joined to form Equilon in 1998.
The project would develop and evaluate a pilot Risk Management Program
for Equilon with the goal of future expansion and integration company-
wide. The 4-year demonstration project embodies a multi-faceted
approach to enhancing Damage Prevention and Emergency Response on both
a 260-mile segment of a 502-mile CO2 pipeline from Cortez, CO to Denver
City, TX and a 205-mile segment of a 250-mile pipeline transporting
ethylene from Deer Park, TX to Napoleonville, LA. Consistent with
improved management of the risk of external damage, heightened
emergency preparedness, and appropriate technical assurance, OPS will
allow Equilon to operate a 25-mile por-
tion of the CO2 pipeline demonstration segment at a slightly higher
pressure, achieving an approximate 20% increase in throughput, without
constructing a new mid-line pump station.
Mobil Pipe Line
Mobil will work with OPS to demonstrate application of Mobil's
Environmental, Health and Safety Management System to achieve enhanced
release prevention and tank integrity at Mobil's crude oil storage
facility at Patoka, IL. OPS will get first-hand experience with how
aboveground storage tank standards address the most important risks at
tank facilities. These same standards are proposed for adoption into
the pipeline safety regulations.
Phillips Pipe Line
The project will use Phillips' risk management system to enhance
protection in connection with all company and third-party excavations
along a 60 mile-long segment of both a 12'' and an 18'' refined
products pipeline connecting Phillips Sweeny Refinery to its Pasadena,
TX terminal.
Chevron Pipe Line
The goal of this project is to demonstrate that application of
Chevron's risk management program to two 330-mile-long 8'' pipelines
provides superior protection for the system. The Salt Lake Products
Pipeline System carries refined products from Salt Lake City, UT to
Boise, ID.
Each risk management demonstration project provides enhanced protection
above that provided by existing regulations.
The Chevron, Phillips and Mobil projects involve no exemption from
existing regulations. Equilon's plan provides for an exemption from
existing OPS regulations to accomplish the pressure increase on the 25-
mile portion of the CO2 line. Equilon and OPS both believe the risk
control activities proposed under the project provide superior safety
for both lines.
The primary benefit of these projects is the knowledge gained by
OPS about how to achieve protection in excess of that provided by
current regulations in specific real world situations. For example, in
the Mobil project, the OPS will learn lessons about storage tank
standards that can benefit the entire program when standards are made
final. An additional benefit for our companies is that we obtain
validation from our regulators that the application of the risk
management techniques we use and believe in provide enhanced protection
according to the regulators' metrics.
reauthorization
The liquid industry believes the Office of Pipeline Safety has an
excellent program. Since the program is primarily funded with user
fees, this is not lightly stated. The industry believes the current
level of staffing is appropriate for the responsibilities of that
office and support continuation of the program at the present level.
The risk assessment and cost benefit analysis and the regulatory
alternatives created under the last reauthorization have revitalized
the pipeline safety program and offer the promise of making it much
more efficient and effective in using resources made available to OPS.
The regulators are talking to all parties affected and the response has
been overwhelming. Communication has become a real dialogue that is
truly moving the safety program forward.
The risk management demonstration project is still in a fairly
nascent stage but initial results appear to be positive. The OPS has
been cautious in moving the program forward, which is probably
appropriate at this stage. As the public becomes more comfortable with
the program and the parties learn more about each other, we expect the
benefit to far exceed the cost. We need to continue these good efforts.
The bulk of the OPS program is funded through user fees paid by the
gas transmission and liquid pipeline industry. The user fee is assessed
based on mileage of pipeline. We have a keen interest in keeping the
OPS program as efficient as possible. The current program is working
well. The oil pipeline industry supports continuing the current funding
levels in real terms.
y2k compliance
As the world moves towards the year 2000 and concern grows over the
ability of the industrial community to function due to the ``millenium
bug,'' the pipeline industry and the OPS have been in the forefront in
addressing the problem. Last summer, the President's Council of Y2K
Compliance tasked the Federal Energy Regulatory Commission with the job
of assessing the oil and gas industries' state of readiness. By August,
the industries, the FERC and the OPS had developed and agreed upon a
survey best aimed at achieving that answer. John Koskinen, who leads
the Presidents Council, has referred to the oil and gas working group
as the Council's best example of a successful working group. Working as
one and sharing mailing lists to achieve the greatest level of
dissemination, the industry survey went out. We now have two quarters
of the survey under our belt. The results can be viewed on the website
http:// www.api.org. The bottom line for us is that we believe that our
survey results, coupled with what we know intuitively about our own
industry, justify confidence that oil pipelines will meet the Y2K
challenge. However, this is not a cause for complacency. Rather, we
need to accelerate efforts to be sure that the interdependent systems--
including, for example, telecommunications, electric power, police and
fire protection, finance and other services we take for granted--are
simultaneously Y2K compliant.
closing
I want to thank the Subcommittee for moving the reauthorization of
this vital program so expeditiously. We want to work with you to
achieve a successful, bipartisan reauthorization. The public-private
partnership for safety and environmental protection developed under the
1996 amendments to the Pipeline Safety Act has made valuable
contributions to public policy. If we work together we can make these
benefits much more widely available.
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Mr. Barton. Thank you, Mr. Wilson.
The Chair will now recognize himself for 5 minutes in the
question period.
Mr. Zurcher, I believe you were one of the ones who talked
about the user fee or the assessments that are made on the
pipelines to fund some of these programs. I was going to ask
this question to Ms. Coyner but my time expired. Could you
explain the formula that is used to determine the assessment
that is made on your pipeline and others like you?
Mr. Zurcher. Yes, sir, thank you.
Every year the Office of Pipeline Safety determines what
their budget requirements are. Every year all transmission
pipelines send in a total mileage statement, how many miles
they operated during the year. DOT takes their total budget
amount, divides it by the mileage, and then they assess to the
transmission industry the transmission individual companies'
proportion. Last year it was about $70 per mile to fund OPS's
budget. But it is funds that are paid for by the transmission
industry.
Mr. Barton. Okay. Is there any input before the fact on
what their budget requirements are?
Mr. Zurcher. Not officially, sir.
Mr. Barton. Not officially.
Well, is the industry generally satisfied with that
approach?
Mr. Zurcher. I would like to say that the transmission
industry is very pleased right now with the level of programs
that OPS has undertaken, as well as their level of staffing.
Mr. Barton. That could not be 5 minutes.
As slow as I speak even, it couldn't be 5 minutes. I think
we got the last of Mr. Wilson's 5 minutes.
Go ahead.
Mr. Zurcher. I just wanted to say that our industry is very
pleased with the level of programs that OPS has undertaken and
with their current level of staffing.
Mr. Barton. Well, is there any discussion about an
alternative funding mechanism other than what you just
described to me?
Mr. Zurcher. We have on numerous occasions discussed other
funding mechanisms. Unfortunately, the administration of most
of the alternatives does not necessarily make it feasible. The
other alternative would be to go back to general revenues.
Mr. Barton. Okay.
Mr. Cook and Mr. Wilson, there has been some discussion at
the earlier panel about the demonstration program that has been
underway. The groups that you represent, are they reasonably
satisfied with the demonstration program as it is being
implemented? And, if so, is there any interest in expanding
those demonstration programs?
Mr. Cook. If I may, I will go first, for LDC's, local
distributions companies have not been a part of the
demonstration projects to date, but we are very interested in
it, both as Washington Gas, individually, plus, the LDC
industry's 88 member companies are also very interested.
Mr. Barton. Okay.
Mr. Wilson?
Mr. Wilson. Both of my associations are very supportive of
going forward. And I know there has been a lot of talk about
trying to define either what these are, or what they are
supposed to do, or how they work. I would point out that these
programs and the risk management principal, in general, merely
attempt to use practical and logical thinking by placing the
maximum effort where reasonable people think the most need is.
And that is all these programs are doing; they are in a
formative stage. I think they are exciting. We anticipate that
they will appear to be useful in connection with future
legislation.
Mr. Barton. Okay.
Ms. Epstein, first of all we appreciate you being here, and
the EDF being a part of our hearing. I think you can go back
and report that even somebody like me who probably has a
``zero'' rating with your association is open-minded and is
going to work with you.
I read your association's recommendations for congressional
action. First one is for an oversight hearing, and I am not the
chairman of the Oversight Subcommittee anymore, but I
personally think that would be a positive thing to do, and I
will encourage Chairman Upton to put that on his agenda.
Ms. Epstein. Thank you.
Mr. Barton. You are welcome.
Your second recommendation, I am intrigued by it. You want
a General Accounting Office study, the resources the OPS is
devoting to risk management versus other activities and also a
study of their record as compared to State transportation
agencies. Have your association, your organization, or others
of similar views had discussions with OPS on that
recommendation?
Ms. Epstein. I have raised concerns with OPS about the
resource issue on the risk management projects because what I
see is an enormous amount of resources for a lot of activities
that could have been undertaken by companies without any sort
of legislation or Federal involvement. And so my question is,
what is the overall industry and the public getting out of
these individualized projects, given all the amount of
resources?
Mr. Barton. But you have not really had any in-depth
discussions or series of discussions?
Ms. Epstein. No, not yet.
Mr. Barton. Okay.
Well my time has expired. I will have some additional
questions for the record.
I am going to recognize Mr. Shimkus for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman.
Mr. Zurcher, when we were talking about the cost and how it
is calculated, you do admit, though, that the cost really goes
all the way down to the consumer who pays for the, you know,
the fuel as it comes to the home, because that cost is passed
on?
Mr. Zurcher. Yes, sir, in our rates that cost is passed on.
Mr. Shimkus. I always like to give the consumer credit.
Ms. Epstein, a lot of your testimony was based upon the
liquid fuel issue. Do you have any specific comments on the
natural gas side?
Ms. Epstein. Well, gas typically has fewer environmental
issues than the liquid pipeline. And I have also, in my
experience, seen that the requirements and standards on the gas
side tend to be a little more specific and stringent than on
the liquid side. Therefore, there were fewer issues that our
organization has had.
Mr. Shimkus. So, your organization is not as concerned with
natural gas and the way that OPS is managing it through the
States, the natural gas side of the pipeline?
Ms. Epstein. At this point, that is correct.
Mr. Shimkus. Okay, good.
I want to fall back--and Mr. Holmes has left, but I want to
address the issue on this regulation debate that we had with
Congressman Norwood earlier, because we really didn't get an
answer from Mr. Holmes who kind of chuckled, which made me
think on the regulation of pipelines and the Federal guidelines
which are--Ms. Epstein, you mentioned that the State cannot add
to the Federal guidelines for interstate facilities?
Ms. Epstein. That is right.
Mr. Shimkus. But they can add to the regulations for
intrastate lines?
Ms. Epstein. Right. In fact, I spoke to the Pipeline
Association for States, NAPSA, about this particular issue and
what they are doing at the intrastate level. And there are some
things that are being done that go beyond the Federal
requirements. And I raised the question about would it be
desirable to have something similar for interstate pipelines.
Mr. Shimkus. Let me ask the spokesmen for the industries:
Do you see differing regulations in the interstate versus the
intrastate lines?
Mr. Zurcher. I will take that question, if you don't mind,
sir.
For interstate transmission pipelines dealing with natural
gas, there is a few things that happened. Prior to 1968, States
did have jurisdiction over interstate facilities. The
regulations were very varied, and Congress saw fit in 1968 to
pull that jurisdiction away from the States for the interstate
operators. There are a number of issues that come up and so
forth, but one of the biggest ones is that a State somewhere on
the upstream side could impose regulations that add significant
cost, and the person receiving the gas on the downstream side
would not have an opportunity to object to those costs. So as a
long-haul interstate transmission company, in my opinion, sir,
it is much better to leave it with Federal oversight.
Mr. Shimkus. And I have--and I am sure if members evaluate
their districts--I am just amazed at the pipelines that run as
much as I drive. And it is probably the ninth wonder of the
world when you figure all that stuff that is underneath the
ground.
I guess the last question I really want to get answered is,
are there regulations at the OPS that, at the users' level,
that you see are not productive and are costly?
Mr. Holmes really didn't want to answer that question. And
I guess I would like to throw that question open to the people
in industry. And then if I have time, Ms. Epstein, if you want
to be a responder to that, then I will finish with that.
Mr. Zurcher. I would be happy----
Mr. Shimkus. Why don't we just go--yes. Mr. Zurcher, why
don't you start first. Or whoever wants to jump in first.
Mr. Zurcher. Your question is, as I understand is, are
there regulations that may not be appropriate in today's
environment? Very difficult question. Pipeline facilities were
designed over many years; they were constructed over many
years. They have very many different operating parameters that
surround them. Our biggest problem is that the regulations are
not necessarily bad or inefficient or anything like that, it is
just that they do not provide much flexibility. And I think
that is our key point, more flexibility. I would liken it to an
automobile that you bought in 1968 where you had to do a tune-
up on it once a year. But I just saw Chrysler advertise a new
vehicle that you can go 100,000 miles without a tune-up. Well,
we shouldn't be stuck with a 1968 tune-up once a year.
Mr. Barton. I want everybody to have an opportunity to
answer Mr. Shimkus' question.
Mr. Cook. Being a local distribution company, we feel that
it is imperative that, with the reauthorization, some of the
things that are in this bill are extremely important that focus
dollars and attention where the risks are. So risk assessment--
and I mention that LDC's would like to be involved in these
kind of demonstrations, because on a daily basis, as an
example, in my business and what I am accountable for, which
deals with complying with the codes, we make our decisions
based upon risk assessment every day. Where do you put your
dollars? You put them where you get, you know, the most out of
the money you invest.
When you have rulemaking that is negotiated, it is far
better and more successful in getting industry-wide cooperation
and compliance, and it is acceptable. I mean it is not throwing
money away. And when we have performance-based type
regulations, it is much better than specific regulations that
tell you how many times you crank a nut tight, if you know what
I mean.
So I think this reauthorization of this bill goes a long
way to continue and improve the safety.
Ms. Epstein. And I don't actually disagree with what the
two gentlemen to the right of me said.
We are in favor of flexible but accountable requirements so
that performance is measured and performance is on the track of
improvement. If it is not, our position is always that you need
to go back and see why that is. And we believe in the hazardous
liquid pipeline area, there are some serious deficiencies in
the current regulations, and many of those have been pointed
out by NTSB.
Mr. Wilson. Let me say, for the sake of unanimity, that I
agree with most of what has been said, too. I think I am going
to take exception with the notion that there are great
deficiencies. But moving on, I would remind that the vast
majority of oil pipeline movements, as well as trunkline gas
movements, are interstate, and it just seems to me that it is
reasonable to have a single Federal authority taking
jurisdiction. For the benefit of those who are regulated, we
then have consistent regulation. We can train and perform and
keep records in a singular fashion. We achieve a kind of scale
in doing that. We also have a level playing field, to the ex-
tent that differences in cost from the result of regulation may
occur if it were applied State to State.
And so from an operating manager's perspective, I think in
every respect that Federal regulation, basically, makes sense.
Mr. Shimkus. Thank you, Mr. Chairman.
Mr. Barton. Thank the gentleman from Illinois.
I would recognize the distinguished gentleman from Florida
for 5 minutes.
Mr. Bilirakis. Thank you, Mr. Chairman.
Mr. Wilson, let me, initially at least, stay on the
regulation of petroleum storage tanks, breakout tanks, as I
referred to them. And you were in the room, I believe, when I
addressed my question to----
Mr. Wilson. I was.
Mr. Bilirakis. [continuing] Ms. Coyner. So, without my
having to repeat that question, what is your response to what
is happening, what is supposedly happening, and that sort of
thing to hopefully try to clear up this area of conflicts and
what not because of two different regulatory agencies somewhat
disagreeing?
Mr. Wilson. Yes. My feeling is that it is basically
intramural in the Federal Government. Second, that for the
purposes of operation and the maintenance of our assets, the
Office of Oil Pipeline Safety has the vast preponderance of
jurisdiction. For basically the same reasons that I just stated
in favor of single Federal regulation, I would favor single OPS
regulation of pipelines.
Now with that said, with the intention that was stated to
your question earlier, that these regulations might be highly
conformed, I would have to say from an operator's perspective
that if they are, in fact, conformed, we don't care that much.
Rest assured that we are committed to the maintenance of safe
tankage in the absence of accidents or spills from them, so we
don't mind any responsible legislation.
Mr. Bilirakis. Well, what is your actual real-world
experience in having to--in dealing with DOT, OPS, if you will,
on one hand and then having EPA--and I am not trying to put one
agency----
Mr. Wilson. Yes.
Mr. Bilirakis. [continuing] in a bad light. I hope I am not
coming across that way. But we are talking about two different
agencies, two different conflicting regulatory requirements.
What is your experience there?
Mr. Wilson. Yes.
Mr. Bilirakis. Can you share real-world experience.
Mr. Wilson. Well, in my own experience, there is very
little EPA experience, and the reason is that in my company,
Buckeye, all of our tankage is operated as what we call
``breakout tankage'' in the furtherance of pipeline operations.
And accordingly, it has been DOT regulation that we have dealt
with. You know, in being around the industry and talking to my
colleagues, their view is for simplification and a unification
where we have ``one-stop shopping,'' where we have one
promulgator, we have one regulator to satisfy because,
otherwise, invariably we will be talking about duplication.
Accordingly, I think our industry perspective would be for as
much as possible to rely on OPS rulemaking.
Mr. Bilirakis. Do you think OPS does a good job?
Mr. Wilson. I think they do a very good job. We are doing
more for tankage as a result of kind of current regulation than
we used to do, and that is neither to defend, you know, the
past or the current practice. But tankage, to be sure, has
received a lot of attention. And I can tell you there has been
one hell of lot of money in capital spending plowed into
tankage on the pipeline and terminal side in the last 5 years.
Mr. Bilirakis. What is your reaction to the figure 1
statistics that Ms. Epstein referred to when she sort of
admonished Mr. Norwood saying that his information was
incorrect because figure 1 shows annual releases to the
environment----
Mr. Wilson. Yes.
Mr. Bilirakis. [continuing] as does liquid pipelines, have
gone up. What is your reaction to that? Have you seen that
figure?
Mr. Wilson. Not until now. My reaction is a safe harbor for
myself. I am not a statistician or a data keeper. I can assure
you that both API and AOPL is taking a hard and vigorous look
at statistics, and I sense from this meeting today that,
clearly, this subcommittee is going to be interested in having
as clear a picture of operating statistics as you can receive.
And from our side, I assure you that we will supply them.
Mr. Bilirakis. All right. Now, what would be the result?
Ms. Epstein referred to the citizen supervision should be
modified. It is one of your recommendations, if I can call it
that. It said to facilitate private enforcement actions. Maybe
we can get at least one of your gentleman to respond to that.
What would be the result of that if we saw fit to do it?
Mr. Wilson. Maybe for a layman and non-lawyer you can tell
me what that means. If that means that anybody and everybody is
just going sue us, kind of in the shoes of an OPS or some other
regulatory agency, I think it is a disaster. This is a highly
technical business that has been around for a long time, and on
the other hand, its technology is not changing very fast. It
seems to me that in this program, on the concepts that I have
already given you of economy, non-redundancy, the ability to
deal with technical subjects, I think that current regulation
has been working. That is the thrust of my testimony, in
particular. To throw this open, to, you know, enumerable
parties to weigh in, become overnight pipeline experts, I think
is a waste of our time.
Mr. Bilirakis. Thank you, Mr. Chairman.
Mr. Barton. Let us give Ms. Epstein a chance to rebut what
Mr. Wilson just said.
Mr. Bilirakis. By all means.
Mr. Barton. Since it is her suggestion----
Ms. Epstein. Actually, the----
Mr. Barton. [continuing] or her group's.
Ms. Epstein. [continuing] information included about the
citizen supervision comes from a city attorney from
Fredericksburg, Virginia, who was faced with losing their city
water supply twice. And he found that since it wasn't as a
result of a violation of the regulations, there should be a
provision as there are in environmental statutes that allow
some sort of challenge based on imminent and substantial
endangerment and cost recovery. The community paid a tremendous
amount of money to develop a new water supply because they lost
it twice.
And I should add that the existing law does have a citizen
supervision, it just happens to not be effective in its
implementation because OPS can then open an administrative
action which can go on for years and not result in much of a
penalty, and, therefore, the citizens would not be carried
forward. What this change, as I suggested, would require OPS to
develop a court case instead of having the citizens go forward,
and that is just a check to make sure that if there is an
action that needs to be taken that it is done effectively.
Mr. Barton. The Chair would ask unanimous consent that the
record be kept open for some additional material. We do have
that letter from the city of Fredericksburg, and we will,
without objection, put that particular letter into the record.
Hearing no objection, so ordered.
[The information referred to follows:]
City of Fredericksburg, Virginia
February 3, 1999
Hon. Joe L. Barton, Chair
Subcommittee on Energy & Power
House Committee on Commerce
2264 Rayburn House Office BuildingU.S. House of Representatives
Washington, D.C. 20515
RE: Pipeline Safety Act Oversight and Reauthorization
Dear Chairman Barton: On behalf of the City of Fredericksburg, I am
writing to submit written comments in connection with the hearing your
subcommittee has scheduled for today regarding oversight of the Office
of Pipeline Safety, U.S. Department of Transportation (``OPS''), and
its administration of the Pipeline Safety Act (``Act''). We would
respectfully request that this letter be included as part of the
hearing record.
Introduction and Background
It is the City's understanding that the Subcommittee on Energy and
Power is conducting today's hearing in anticipation of Congressional
reauthorization of the Act later this year. We applaud the
Subcommittee's interest in studying the current federal pipeline safety
program and hope that you can glean a more accurate picture of the
program from this hearing. As part of the process, we would encourage
you to solicit input from a broad range of stakeholders in the pipeline
safety program, including the victims of pipeline accidents, the
environmental community, and state and local governments.
As you may be aware, the City of Fredericksburg has had a
longstanding interest in pipeline safety issues. We have had the
unfortunate distinction of having twice lost our entire public water
supply due to accidents involving an interstate oil pipeline owned by
Colonial Pipeline Company. First in 1980 and then again in 1989, a 32-
inch interstate pipeline owned by Colonial that runs from Texas to New
York ruptured in rural Orange County, 20 miles west of Fredericksburg.
Each time, thousands of gallons of petroleum spilled into the
Rappahannock River, contaminating the City's raw water supply. Each
time, the City was forced to shut down its water treatment plant for
more than a week and to haul water from neighboring jurisdictions. I am
sure you can imagine the pain and hardship that these accidents caused
our citizens and the long-lasting effects they have had on Virginia's
environment.
In the aftermath of the 1989 accident, the City took it upon itself
to undertake a thorough examination of pipeline safety issues generally
and to learn more about the responsibilities of various state and
federal agencies in preventing similar accidents in the future.
Unfortunately, this study and our own first-hand experience with OPS
over the past 10 years have provided us with little comfort. Time and
again, we have found that OPS has taken a backseat to Congress in
pushing for pipeline safety reforms, that the agency has often failed
to promulgate much-needed safety standards, that it has ignored its
1993 Congressional mandate to protect the environment, and that it has
consistently failed to take strong enforcement action against pipeline
operators who flout federal law.
The City of Fredericksburg does not make these charges lightly or
with any relish. After years of trying unsuccessfully to get OPS to
take effective enforcement action against Colonial, we have reluctantly
come to the conclusion that OPS will never require Colonial to take the
necessary steps to render its pipeline safe within our watershed.
Unfortunately, we have learned that our experience has been shared by
many other communities throughout the country that have suffered
similar accidents. These allegations are nothing new. In fact, they
have been repeated and supported on numerous occasions by GAO and the
National Transportation Safety Board.
The Federal-State Partnership for Pipeline Safety
Although the City would urge you to look at these and many other
serious problems at OPS, we are writing today regarding one particular
issue that warrants immediate Congressional attention. This involves
OPS' recent efforts to discourage state governments from taking an
active role in the regulation of interstate pipelines.
When the Natural Gas Pipeline Safety Act and the Hazardous Liquid
Pipeline Safety Act were enacted years ago, they were heralded as a
federal-state partnership in which OPS would assume primary
jurisdiction over pipeline safety standards but the states would be
encouraged to assist in the inspection of new and existing pipelines,
to conduct routine accident investigations, and to develop their own
standards and to enforce state and federal laws for intrastate
pipelines. OPS was authorized to make grants to states to reimburse
them for up to 50% of their administrative costs. In addition, states
could adopt user fees to help defray their remaining costs.
OPS and the states have traditionally operated this program under a
two-tiered system of delegated authority. Under 49 USCS Sec. 60105, OPS
has the authority to ``certify'' states that prove themselves qualified
to assume control over intrastate pipelines, provided they perform
their duties in accordance with federal regulations. In addition, under
49 USCS Sec. 60117(c), OPS may appoint qualified states as its
``agents'' to inspect interstate pipelines, with OPS reserving all
enforcement authority over such facilities. These two separate
delegation programs have been utilized by OPS for many years to
administer the natural gas and the liquid pipeline programs in all 50
states.
This system, however, has resulted in a confusing patchwork of
state and federal regulatory authority. According to our most recent
information, 48 states are currently certified to implement the
intrastate gas program, 12 serve as agents to administer the interstate
gas program, 2 are permitted to inspect intrastate gas or liquid
facilities but not to enforce federal standards, 12 are certified to
implement the intrastate liquid program, and 4 serve as agents to
administer the interstate liquid program. The system has proven
confusing and overly bureaucratic, not only for the regulators but for
the public and the operators as well.
In the aftermath of our two accidents, we became convinced that OPS
lacked the resources and the resolve to take meaningful action to
enhance pipeline safety in Virginia. At that time, OPS only had three
inspectors to cover 14 Eastern states. We discovered that even though
OPS had jurisdiction over all intrastate liquid pipelines in Virginia,
the agency had never conducted an accurate inventory of these
facilities, could not provide us with a map or tell us where they were
located, and apparently had never inspected many of them. In essence,
there was no intrastate liquid pipeline program in Virginia. As for the
interstate pipelines in Virginia, we knew from first-hand experience
that OPS was unwilling to take strong enforcement action against
hazardous oil pipeline facilities, such as Colonial's 32-inch line that
traverses the City's watershed.
On the other hand, we were impressed with the job that Virginia's
own State Corporation Commission (``SCC'') had been doing for many
years in administering the pipeline safety program for intrastate gas
facilities. We learned that the SCC was recognized as a national leader
among state pipeline regulators, that it was developing one of the best
``One Call'' programs in the country, and that it had a proven track
record for taking strong enforcement action against unsafe pipeline
operators. Finally, we found the agency to be responsive to accident
victims and was willing to work closely with local governments such as
Fredericksburg.
For these reasons, the City led a successful effort in 1993 to
secure passage of the Virginia Hazardous Liquid Pipeline Safety Act
(Attachment 1), which authorized the SCC to seek intrastate
certification and interstate agent status from OPS and to administer a
hazardous liquid pipeline safety program in Virginia. At the time the
Virginia General Assembly was considering this legislation, the Eastern
Regional Director of OPS, Mr. Bill Gute, testified on behalf of the
City's bill and led us and state officials to believe that OPS would
welcome the assistance of the SCC in administering this program in
Virginia.
Following the adoption of this legislation, the SCC worked
diligently over a five-year period to develop a top-notch certified
intrastate liquid program, hired and trained the necessary staff to
conduct inspections, and prepared itself to become a full partner with
OPS in the liquid pipeline arena. Just as the SCC was preparing to
assume this major new responsibility, OPS announced that it was
reversing its former policy and would no longer encourage states to
become interstate agents. This meant that the interstate agent program
would be restricted nationally to the 12 states that currently enjoyed
that status for gas pipelines and to the 4 states that inspected liquid
pipelines (Attachment 2).
Several weeks ago, OPS formally notified the State Corporation
Commission that it was unwilling to consider an exception to this new
policy for Virginia, despite its previous support for the Virginia
legislation and the SCC's efforts, stating that ``the benefits of the
SCC becoming a permanent interstate agent for hazardous liquid
pipelines are no longer obvious to us'' (Attachment 3). The only reason
cited by OPS for this policy reversal was the institution of its new
``system-wide approach'' for inspecting interstate pipelines, which the
agency now claimed it had sufficient staff to conduct on its own. While
there is certainly merit in conducting system-wide inspections for
certain interstate pipelines, particularly those of companies like
Colonial with unusually serious spill records, it remains highly
doubtful whether this new policy should replace the interstate agent
program or whether it will result in a higher overall level of pipeline
safety, particularly if state involvement is simultaneously being
reduced. In fact, the City suspects that this new ``policy'' is simply
an excuse for excluding states such as Virginia that have become more
committed in recent years to the need for stronger pipeline regulation.
By letter dated January 25, 1999, the Chairman of the SCC responded
to OPS (Attachment 4), charging that Virginia's preparatory efforts
over the past five years ``have apparently been a waste of time, money
and human resources.'' Chairman Miller expressed a deep frustration
with OPS that we know is shared by regulators in many other states. We
understand that several other states have been rebuffed recently in
their efforts to assume a more active role in the interstate program,
including Texas and Oklahoma.
In many cases, state regulators are reluctant to speak out on this
sensitive issue since they feel compelled to maintain cordial day-to-
day working relationships with OPS. But if you speak to them privately,
they will tell you that this policy reversal by OPS is compromising
public safety and environmental protection and that OPS is attempting,
for political reasons, to reduce their role in the entire pipeline
safety program. The City believes that the Subcommittee should take
immediate action to express its concerns about this policy change and
to restore a proper balance to the federal-state regulatory
relationship.
Recommendations
We would recommend that the Commerce Committee take two steps.
First, we would encourage the Committee to conduct an oversight hearing
devoted primarily to an examination of the present federal-state
relationship regarding pipeline safety. Such a hearing should focus on
the history, effectiveness, and scope of the state certification and
interstate agent programs. Are state regulators being effectively
utilized? Does ``one size fit all'' when it comes to pipeline safety
and environmental standards or should states be empowered to develop
their own standards that complement federal efforts? Is complete
federal preemption of the interstate pipeline program really in the
best interests of the nation?
Second, when Congress considers reauthorization of the Act, it
should amend the Act to establish an interstate agent certification
program that parallels the current process for intrastate certification
and that encourages states to assume this responsibility. Such an
amendment would also necessarily need to address the issue of
preemption. As you know, current law allows certified states to
promulgate their own safety standards for intrastate facilities,
provided they are ``compatible with the minimum standards prescribed''
by OPS (49 USCS Sec. 60104(c)). This same authority and preemption
standard could be safely applied to the interstate program, since it
would not compromise the primacy of federal regulations.
As a local government, the City is particularly sensitive to the
preemption issue. We fully support the notion that the federal
government needs to maintain a coherent, streamlined, national system
for pipeline regulation that does not impede interstate commerce.
Nobody wants to create a system under which 50 states promulgate 50
different sets of interstate pipeline safety standards, all going in
different directions. We are not advocating such a system. But we would
encourage you to take a hard look at this issue and to determine
whether preemption should be relaxed in this situation.
In conclusion, the City hopes that you will take the opportunity
this year to scrutinize more closely the recent efforts of OPS to
reduce the states' role in the pipeline safety program, to conduct
additional oversight hearings, and to enact legislative amendments
aimed at empowering states to become more active in all aspects of
pipeline safety. State and local governments offer tremendous resources
that should be harnessed by OPS to improve pipeline safety throughout
the country.
Thank you again for allowing us to share with you our experiences
and thoughts on this issue. We look forward to working with you and
your staff as you work to strengthen this important federal program.
Sincerely,
James M. Pates
City Attorney
Enclosures
cc: Mayor Greenup
Members of City Council
Marvin S. Bolinger, City Manager
Commissioners, State Corporation Commission
Mr. Frank Shafroth, National League of Cities
Hon. Herbert Bateman, U.S. House of Representatives
Richard B. Felder, Director, OPS
[GRAPHIC] [TIFF OMITTED] T5149.015
[GRAPHIC] [TIFF OMITTED] T5149.016
[GRAPHIC] [TIFF OMITTED] T5149.017
[GRAPHIC] [TIFF OMITTED] T5149.018
[GRAPHIC] [TIFF OMITTED] T5149.019
[GRAPHIC] [TIFF OMITTED] T5149.020
Mr. Barton. There may be other materials that other members
not currently in attendance have, and we will put those into
the record if the minority and the majority staff approve.
We will also have additional questions for this panel.
There are obviously a number of members who are not here, and
we will give them that opportunity.
We would hope that you would give your responses as quickly
as possible because we plan to move very quickly. I am tempted
to ask unanimous consent to change the date and reauthorize the
bill right here.
But that would not be in the spirit of bipartisanship that
I just announced at the beginning of this hearing. There was a
possibility we could mark this reauthorization bill up next
week. Now that is unlikely, given that there were some
substantive issues put on the table at this hearing, which is
the purpose of the hearing. And, also, Mr. Pallone and Mr.
Markey, and to some extent Mr. Dingell had some issues that
they raised in their opening statements. So it is unlikely that
we will do a markup next week on this bill, but it is very
likely that we will have a reauthorization markup within the
next month.
And so I would encourage both our panelists, our
Administration officials on the previous panel, and members of
the audience who have stayed in rapt attention for the last
2\1/2\ hours if you have suggestions, ideas, things that you
wish to be put on the table, please approach the relevant
member of the subcommittee on either side of the aisle you feel
most comfortable with so that we can get those issues into
play.
Mr. Bilirakis, do you have a closing comment?
Mr. Bilirakis. I do not, Mr. Chairman. I suppose what we
have done is working. It seems to--I guess Ms. Epstein wouldn't
agree with maybe that statement, I don't know. But----
Mr. Barton. She was more positive than negative.
Mr. Bilirakis. There always can be----
Mr. Barton. She just has some concerns.
Mr. Bilirakis. Yes. And there always can be some
improvements made, I suppose, and we want to take a look at
those rather than maybe reauthorize it exactly as it is.
Basically, I guess I have repeated what you have just said.
Mr. Barton. Okay.
Well, we want to again thank this panel, thank the audience
for your attention, thank the members who were here.
This hearing is adjourned.
[Whereupon, at 4:30 p.m., the subcommittee was adjourned.]
[Additional material submitted for the record follows:]
Responses to Questions for the Record of John S. Zurcher, Manager,
Pipeline Safety, Columbia Gas Transmission Corporation
Question 1. Do you believe that the 1996 amendments which allowed
the Department of Transportation to employ risk assessment and risk
management approaches have resulted in pipeline safety regulations
which work better and cost less? Why or why not?
Response. The development of the risk management pilot program has
significantly increased the understanding by regulators and the
industry of the causes, prevention, and consequences of natural gas
pipeline incidents. This has resulted in a positive culture shift aimed
at lowering the risk to the public and the environment rather than
simply following command and control recommendations. This philosophy
motivated the efforts to enact the Comprehensive One-Call Notification
Act last spring, which addresses the cause of the greatest risk to the
public--unintentional third-part damage.
Similarly, the development of the risk assessment/cost benefit
process has helped industry and regulatory communities identify
regulatory solutions that bring about the greatest increase in safety
for each dollar spent.
We do not believe that the program has reduced costs for industry,
and in fact we do not think that was a goal of the 1996 Act. Rather,
risk assessment and risk management are designed to take the dollars
which are already being spent and employ them in the most effective
manner from a public safety standpoint. Companies which have stepped
forward to participate in the risk management demonstration project
have spent a great deal of time and effort to put forward their own
unique safety plans. The participants decide to get involved in the
belief that a more focused and effective safety program will be the
result.
Question 2. What level of resources is appropriate for
reauthorizing legislation?
Response. The shift of the focus in the industry and regulatory
community to process management and auditing will result in increased
efficiency and will help focus resources on high-risk areas. While this
requires an increase in the qualifications of regulatory auditors and
improvements in auditing procedures, it should result in a reduction of
some redundant inspections.
The development of new regulations and regulatory alternatives will
require more focused resources within the Office of Pipeline Safety
(OPS) and the industry as a result of the new processes. This will be
counterbalanced by the elimination of less effective regulatory
initiatives. Overall INGAA believes that this will result in a leveling
of resource requirements at OPS. Accordingly, INGAA feels that Congress
should provide authorization levels sufficient to maintain current
staffing and program functions.
Question 3. The pipeline safety program is paid for through user
fees. Who ultimately bears those costs? With the restructuring of the
pipeline industry, are those costs still passed through on a full
basis?
Response. Under the present pipeline user fee collection system,
transmission pipelines (both interstate and intrastate) are assessed a
fee based on the total number of miles of transmission pipe in their
respective systems. Prior to the restructuring of the natural gas
pipeline industry, such user fees were readily passed along to the
ultimate consumers of natural gas through the rates which pipelines
charged. Much has changed, however. Restructuring of the industry in
the 1980's and early 90's resulted in the ``unbundling'' of the
commodity (natural gas) from the transportation function, in order to
give customers greater choice and spur competition within the pipeline
industry. Individual pipelines have been forced, in many cases, to
discount their transportation rates below traditional levels in order
to retain existing customers and gain new ones. This discounting calls
into question whether all costs the pipeline incurs are simply passed
along to the ultimate customer.
Question 4. The law currently requires OPS to fund ``up to 50
percent'' of state pipeline safety efforts. The States have argued the
OPS needs to be funding a greater share of state pipeline safety
programs. Should interstate pipelines, which aren't regulated at the
state level, pay a greater share of state regulatory efforts?
Response. The current law does indeed authorize OPS to fund ``not
more than 50 percent'' of state pipeline safety programs. This
provision (49 USC 60107) was included in the law to: 1) encourage
States to adopt the federal minimum safety standards, and 2) reimburse
those States which acted as agents for the U.S. Department of
Transportation in inspecting interstate natural gas or hazardous liquid
pipeline facilities. Some State officials have argued that the language
in the Act should be interpreted to mean that OPS should set a 50
percent funding level as an ultimate goal. However, INGAA views the
``not more than 50 percent'' provision as a ceiling for State grants,
not a floor.
About 90 percent of the OPS budget is provided through pipeline
safety user fees. While intrastate transmission pipelines are assessed
the fee, the vast majority of fees are collected on interstate
pipelines. As your question suggests, interstate pipelines are not
regulated by the States, and yet these interstate pipelines are asked
to fund a significant share of the cost associated with operating State
programs. In addition, since the creation of Section 60107, the Office
of Pipeline Safety has acquired a sufficient number of in-house
inspectors to perform the required interstate pipeline inspections
without assistance from State government personnel. Nonetheless, States
still receive a substantial percentage of their pipeline safety budgets
from OPS user fees. This results in a cross subsidization of the state
pipeline safety offices by interstate transmission pipeline operators
who are not regulated by State officials.
INGAA questions the rationale for increasing OPS grants to States.
State governments have the ability to raise funds within their own
jurisdictions. Indeed, States have primary responsibility for
regulating the safety of local gas distribution companies (LDCs) and
intrastate pipelines. In the past, it was assumed that interstate
pipelines would simply pass all costs along in the rates they charged
to LDCs and others. As discussed in the previous question, however,
those assumptions no longer apply to our restructured industry. We
believe the majority of State pipeline safety efforts should be funded
by State revenues and/or by those entities which are regulated by the
States.
Question 5. What would be the result if the citizen suit provisions
were modified to facilitate private enforcement actions?
Response. A citizens suit provision already exists in current law
(49 USC 60121). The law allows a citizen to bring suit for injunctive
relief if the citizen: 1) gives 60 day notice to the Department of
Transportation and the entity alleged to have committed the violation;
2) the Department has not ``begun and is diligently pursuing an
administrative proceeding;'' and 3) the Attorney General or a
comparable state officer has not ``begun and diligently is pursuing a
judicial proceeding for the violation.''
At the Subcommittee's February 3rd hearing, the witness
representing the Environmental Defense Fund advocated a number of
changes to Section 60121 which INGAA believes are unnecessary and
overreaching. The current law provides the proper role for private
enforcement actions if the Department or federal/state law enforcement
officers are not acting on a particular problem. However, the most
efficient and timely way to address pipeline safety is through the
regulatory--not the legal--process. INGAA feels that a focused, risk-
based regulatory program is the most effective way to protect the
public. We support a pipeline safety program which is administered by
the Department of Transportation, not by the court system.
Question 6. Should the risk management concept be applied more
broadly? Are legislative changes needed to have a broader application
of risk management principles?
Response. INGAA is confident that the risk management philosophy is
beneficial for protection of the public and the environment. The new
concepts which the 1996 Act engendered are still under development and
implementation at the Office of Pipeline Safety. We believe more time
and effort is needed in order for business and government to digest all
the new changes. If OPS wants to expand the risk management concept in
the future, it can do so administratively, without changes to existing
law.
Question 7. How is the risk assessment approach to regulation
working with respect to pipeline safety? Are legislative changes needed
to improve how it is applied?
Response. The formalized risk assessment process at OPS is just
getting established. As I mentioned before, the development of this
process has permanently changed the mindset of the regulatory process.
It has already caused the reprioritization of efforts within OPS.
At this time, we would not recommend any legislative changes.
Congress can revisit this issue in 2004, when the next reauthorization
discussions are underway. By that time,there should be a wealth of
experience with which to evaluate the program.
Question 8. How has the risk assessment approach improved the
amount of time it takes to complete a pipeline safety rulemaking? Do
you feel that the Department of Transportation is enacting better
regulations as a result of using a risk assessment approach?
Response. Risk assessment is not, as some have argued, ``analysis
paralysis.'' OPS has continued to move rules through their process, and
in fact the time it takes to get new rules through OPS has decreased.
One controversial proposed rule, dealing with pipeline operator
qualification, had languished at OPS since 1992. When the 1996 Pipeline
Safety Act reauthorization passed, however, OPS decided to pursue a
negotiated rulemaking. We anticipate that this rule will be
successfully concluded this spring. Other rules have been adopted
through consensus or embracing industry standards. The trains have not
only kept running, they are running better.
The risk assessment approach will, we believe, lead to better
regulations, because it ``front-loads'' the regulatory process with the
analysis needed to make better decisions. The Department has placed an
emphasis on working with industry to improve safety, with the result
being a faster process and more rational standards.
Question 9. What is the status of the oil and gas pipeline
community's Y2K preparedness efforts?
Response. The interstate natural gas transmission companies have
been working on diligently resolving the Y2K issue in systems within
the natural gas transmission industry. These suspect systems can be
lumped into three general categories: operational systems (embedded
processors), business systems (accounting and billing), and supplier
interface (utilities, communications and supply). Each of these
categories of systems goes through an extensive process of resolving
the Y2K issue through the steps of planning, inventory assessment,
remediation, and validation. In addition, an extensive customized and
coordinated contingency plan effort is being established for the
unlikely situation that remediation efforts fail to mitigate these
situations. This new plan is being built off the present contingency
plans for natural and manmade disasters that have made natural gas the
most reliable energy source in the US.
INGAA helped initiate an effort to disseminate the progress of
those efforts to government and general public through the President's
Council on Y2K Conversion and the Federal Energy Regulatory Commission.
This communication is accomplished primarily through a quarterly survey
that updates key variables that measure the progress of efforts to
manage this issue.
The last quarterly update was released on February 18th, 1999. The
survey covers about 1,000 companies from all sectors of the gas and oil
industries, whose customers represent 88 percent of the consumption of
those fuels in the U.S. Almost all the respondents--94 percent--
indicated they will be ``Y2K Ready'' by September 30, 1999. Additional
results from the survey include the following:
<bullet> More than four-fifths of the combined oil and gas industry
companies, 86 percent, are in the final stages of fixing and
testing business information systems to accommodate the Y2K
date. That compares with 55 percent of the companies in a
September 1998 survey.
<bullet> As for the embedded hardware systems that must be corrected,
78 percent of respondents said they are in the final stages of
fixing and testing hardware and embedded systems for their
operational integrity. The response in the September 1998
survey was 46 percent.
<bullet> Nearly all respondents, 97 percent, said they expect to have
their Y2K contingency plans in place and tested by the end of
the third quarter.
To further ensure the smooth operation of their industries, oil and
gas companies and associations have coordinated their Y2K efforts
through the Natural Gas Council and the American Petroleum Institute.
They share information on technical issues, testing and contingency
planning; identify and resolve legal issues, including legislation; and
communicate within the industries and with the public on their work. We
have also reached out to coordinate our activities with the
telecommunications and electric utility industries.
Question 10. As the Department of Transportation has moved from a
minimum standards approach to a risk based approach, are there some
existing pipeline safety regulations that are no longer necessary?
We believe that risk management demonstration project gives the
Department, and those pipelines that volunteer to participate, greater
flexibility to meet and exceed minimum safety standards. Pipeline
companies have a choice to either comply with the existing minimum
safety standards, or develop their own safety plan with the approval of
the Department. INGAA does not advocate the removal of any minimum
safety standards at this time.
______
Environmental Defense Fund
February 12, 1999
The Honorable Joe Barton, Chairman
The Honorable Ralph Hall, Ranking Democratic Member
Subcommittee on Energy and Power
Committee on Commerce
U.S. House of Representatives
Washington, D.C. 20515
Dear Congressmen Barton and Hall: Thank you very much for holding
the February 3, 1999 hearing on the pipeline safety. I greatly
appreciate Chairman Barton's comment that he will speak to Congressman
Upton about holding an oversight hearing on pipeline safety prior to
reauthorization of the Natural Gas Pipeline Safety Act and the
Hazardous Liquid Pipeline Safety Act (49 USC 60101 et seq.).
I am writing to follow-up on the hearing statement of Associate
Administrator for Pipeline Safety Richard Felder that the annual trend
in hazardous liquid pipeline releases was downward. I believe that
statement is inaccurate, particularly during Mr. Felder's tenure. To
develop my testimony, I used Office of Pipeline Safety data and found
the following reported release quantities:
[In Millions]
------------------------------------------------------------------------
Gallons
Year Released
------------------------------------------------------------------------
1990........................................................ 6.44
1991........................................................ 7.84
1992........................................................ 6.55
1993........................................................ 4.61
1994........................................................ 6.24
1995........................................................ 5.67
1996........................................................ 5.78
1997........................................................ 6.21
1998........................................................ 7.70
------------------------------------------------------------------------
Average..................................................... 6.34
------------------------------------------------------------------------
As you can see, since 1995 the trend has been increased reported
releases each year. In fact, 1998 shows the greatest releases from
hazardous liquid pipelines since 1991. This nine year analysis of
pipeline performance represents the most recent and relevant data, and
is much more reflective of the reality of pipeline releases than a
longer-term analysis which might show an overall downward trend.
Additionally, most of the data for the 1990s do not include smaller
spills, which were reported previously, but which are no longer
required to be reported.
Finally, please note that in the testimony presented by C. Richard
Wilson on behalf of the Association of Oil Pipe Lines and the American
Petroleum Institute, the pie-chart showing the percentage causes of oil
pipeline releases, 1992-97, is based on volume released and not the
number of incidents. This distinction is important because a single
large-volume release can greatly distort the analysis of causes of
releases. A more appropriate analysis of where prevention opportunities
lie would examine the percentage of the total number of releases by
cause, with follow-up to identify the causes of incidents reported as
``other,'' since many of these should have been reported as pipeline
failures caused by incorrect operation, materials defects, etc.
I would greatly appreciate it if you would include this
communication and any responsive information you might receive from
Associate Administrator Felder in the record of the February 3 hearing.
Thank you very much.
Sincerely,
Lois N. Epstein, P.E.
Senior Engineer
cc: Richard Felder, Associate Administrator, Office of Pipeline Safety
Members of the Subcommittee
______
Association of Oil Pipe Lines
February 10, 1999
RE: PIPELINE SAFETY
The Honorable Joe Barton
Chairman
Subcommittee on Energy and Power
Committee on Commerce
U.S. House of Representatives
Washington, D.C. 20515
Dear Mr. Chairman: Thank you for the opportunity you provided the
Association of Oil Pipe Lines to appear before the Subcommittee at your
February 3 hearing on pipeline safety. We appreciate the fair and
cooperative spirit with which the Subcommittee is approaching this
issue.
The purpose of this letter is to correct any impression that may
have been left at the hearing that the releases from oil pipelines are
on a rising trend. In fact the long-term trend in oil pipeline releases
is downward and significantly so. As the attached fact sheet shows,
six-year average release volumes exhibit a steady downward progression
for the past 30 years, with a 60 percent reduction in the volume
released. Moreover, the volume of these annual releases is actually
quite small in relation to the enormous volume of oil moved by the
industry--currently about one one-thousandth of a percent.
However, we do not consider the current level acceptable. We are
working as an industry to limit releases, and we hope to accelerate the
downward trend. No release is acceptable. As we indicated in our
testimony, the Office of Pipeline Safety is a positive force in working
with us to limit both the occurrences of releases and their size and
impact.
I request that you include this communication and the attached fact
sheet in the record of the February 3 hearing. I hope this information
will be useful to you as you move forward with reauthorization of the
pipeline safety program.
We very much appreciate your timely efforts to address this issue.
Any questions you or your staff may have about this information can be
directed to me at (202) 408-7970.
Yours truly,
Benjamin S. Cooper
Executive Director
cc: The Honorable Ralph Hall, Ranking Minority Member.
Members of the Subcommittee.
______
Association of Oil Pipe Lines
March 5, 1999
The Honorable Joe Barton
Chairman
Subcommittee on Energy and Power
Committee on Commerce
U.S. House of Representatives
Washington, D.C. 20515
Dear Mr. Chairman: Thank you for the opportunity provide answers to
the Subcommittee's post-hearing questions on the reauthorization of
pipeline safety programs. We appreciated the opportunity to have C.
Richard Wilson, Vice-Chairman of Buckeye Partners, L.P. appear at the
hearing February 3 to represent the views of the American Petroleum
Institute and the Association of Oil Pipe Lines. I am transmitting
these answers to you on his behalf.
I understand that you will include this communication in the record
of the February 3 hearing. I hope this information will be useful to
you as you move forward with reauthorization of the pipeline safety
program.
We very much appreciate your timely efforts to address this issue.
Any questions you or your staff may have about this information can be
directed to me at (202) 408-7970.
Yours truly,
Benjamin S. Cooper
Executive Director
cc: The Honorable Ralph Hall, Ranking Minority Member.
Members of the Subcommittee.
Follow-up Questions for C. Richard Wilson, Vice Chairman, Buckeye
Partners, L.P.
Question 1. Do you believe that the 1996 amendments which allowed
the Department of Transportation to employ risk assessment and risk
management approaches have resulted in pipeline safety regulations
which work better and cost less? Why or why not?
Response. The 1996 amendments significantly improved the rulemaking
process at the Department of Transportation, and, as a result, we are
getting regulations that work better and cost less. The 1996 amendments
and the administration of these amendments by the current management at
the Research and Special Programs Administration and the Office of
Pipeline Safety broke a logjam in pipeline regulation. Regulations that
for far too long had been bogged down in controversy and
misunderstanding of industry practice are now moving forward. In
particular, substitution of a model of communication and cooperation
with industry and other stakeholders has been successful where the
previously-used model of command and control was not. We are getting
results, we are getting these results sooner, and they are better
results. We are seeking better results under 1996 amendments, not
necessarily less short run cost or even fewer regulations. We believe
the main goal is to see that resources being applied where they have
the most effect mitigating risk. OPS is making excellent progress
towards this goal, and the 1996 amendments deserve much of the credit.
It is important for the Subcommittee to understand that the risk
management demonstration projects authorized by the 1996 amendments
have given the Office of Pipeline Safety and the industry an important
new way to get better results by working together. We believe this new
approach ultimately will significantly enhance pipeline safety and
protection of the environment above and beyond the protection available
under existing regulations. We are in the initial phase of a learning
process. The early risk management projects are the basis for important
training and education by both industry participants and regulatory
staff. This involves both book learning and detailed on the job
experience with all the parameters involved in oil pipeline operations.
The learning curve will take time. But we believe we'll achieve much
better understanding by both sides of how best to operate pipeline
systems. We are already experiencing far better communication between
our companies and our regulators. The lessons of this communication are
not unique to individual facilities. These benefits can be applied
throughout the industry to enhance the effectiveness of OPS regulation
across the board. There are significant benefits in mutual
understanding now. We expect the benefits from the process started by
the 1996 amendments to increase steadily in the future.
Question 2. What level of resources is appropriate for
reauthorizing legislation?
Response. We believe the current resources available to the Office
of Pipeline Safety are adequate. Funding for the OPS is provided
through the pipeline user fee by the oil and natural gas pipeline
companies that OPS regulates. We believe that the current level of
resources (represented by the appropriations enacted by the 105th
Congress) is about right and should be extended in real terms for the
next four years--fiscal years 2001-2004. This would mean adjusting the
numbers in the current law for fiscal year 2000 using an inflation
index approved by the Office of Management and Budget.
Question 3. The pipeline safety program is paid for through user
fees. Who ultimately bears those costs?
Response. Pipeline companies write the checks that pay the fees,
but it is not obvious how these costs are borne. Oil pipeline companies
may or may not be able to recover the cost of the user fee from
customers. Federal oil pipeline user fees are a cost of doing business
for U.S. oil pipeline companies. Each company tries to obtain the
revenues from its customers to cover today's costs, to provide returns
on the capital it uses and to invest to manage the risks that the
future holds. However, our companies operate in a highly competitive
market, and it is not guaranteed we will stay in business. Oil pipeline
rates are subject to regulation by the Federal Energy Regulatory
Commission, and rate changes generally are capped by an index. This
index currently requires us to reduce rates. We have no government-
granted right to pass costs on to our customers. There is fierce
competition in the oil industry. Each of us must manage his or her
company to compete with other oil pipelines, with other modes of oil
transportation, with refineries situated to reach the markets we serve
and with the ever-present possibility of commodity exchanges that could
bypass our pipelines entirely. The competitive pressures for improved
economic, environmental and safety performance apparent in the oil
industry generally also operate on the management of oil pipeline
companies. We are doing our best to balance these pressures.
Question 4. What do you think of the suggestion that release
liability provisions be added to the reauthorizing legislation?
Response. We oppose adding language to the reauthorization
legislation relating to oil spill liability. In general, adequate
causes of action are available to address damages caused by an oil
pipeline spill. The liability for an oil pipeline spill onto land is
currently determined under state law. Pipeline spills onto water are
subject to both state liability law and to the federal Clean Water Act
for spills onto navigable waters. We would oppose a proposal to further
federalize the determination of oil pipeline spill liability unless and
until study and analysis shows that the potential additional benefits
over the status quo of such a proposal are justified. We don't believe
current law puts those damaged by an oil pipeline spill at an unfair
disadvantage in assigning liability for the spill. Pipeline companies
carry adequate insurance to cover these risks, and, to our knowledge,
have been able to cover their obligations under the judgments entered.
We also would not favor delaying the reauthorization of this important
program while we and the Subcommittee became entangled in the
difficulties that have plagued congressional consideration of proposals
to federalize liability rules in other sectors of the economy.
Question 5. What would be the result if the citizen suit provisions
were modified to facilitate private enforcement actions?
Response. Increasing the number of private enforcement actions will
mean more litigation costs, but we do not believe this will improve
pipeline safety. Current law governing federal pipeline safety programs
contains a citizen suit provision. That provision has the basic
elements of citizen suit provisions generally. Any person may bring a
suit against another person for violation of a law or regulation or
against the agency for failure to perform its duty under the law. The
agency must be given advance notice of intent to file the citizen suit,
and the citizen suit may not proceed if the agency is engaged in
ongoing action to enforce or carry out its own responsibilities under
the law. We would oppose attempts to modify these provisions to make it
easier to take management of pipeline safety out of the Office of
Pipeline Safety and put it in the courts. We can think of little
justification for believing that judicial involvement in pipeline
safety issues will settle these issues sooner or, more importantly,
will achieve better results than we are seeing under the very promising
initiatives the OPS currently has under way. We expect that additional
litigation will only divert time and resources that could far more
productively be used to address safety issues directly.
Question 6. Do you agree with the conclusion that hazardous liquid
releases are going up? Why or why not? What can be done to counter this
trend?
Response. These releases are not going up. They are going down. Oil
pipeline releases are on a long-term trend downward, as we indicated in
our letter of February 10, 1999 to Chairman Barton. A copy of that
letter is attached. This is a real trend in environmental improvement,
not a function of reporting protocols. It represents progress, but is
not a reason for complacency or self-congratulation. Oil pipeline
spills are rare events, given the volume of petroleum delivered by the
U.S. system. The volume of releases varies from year to year, and can
increase in a year when there is an unusual large spill, influenced,
for example, by the size of the pipe involved. A significant portion of
spills, particularly the larger spills, are caused by events--weather
and third-party damage--over which the responsible parties are able to
exercise only limited influence. However, no release is acceptable. We
are working very hard as individual companies and as an industry to use
advanced technology and improved methods to reduce the number and
impact of spills where we do have some control. The long-term trend
downward in releases is evidence that this work pays off.
We are also working to limit the impact of formerly unpredictable
events on pipeline integrity. Three of the oil pipeline risk management
demonstration projects include a focus on preventing third party damage
as part of providing protection superior to that achievable under
existing OPS regulations. A comprehensive public education initiative
developed with OPS through a public-private partnership is currently
undergoing pilot testing in three states. This initiative is designed
to make the key members of the public much more aware of the risks to
pipeline integrity of certain activities. Last year's new one-call
notification legislation has provided a number of opportunities to
address even more directly the problems of third-party damage to
pipelines. Under this law, we are working cooperatively with OPS, the
excavation community, operators of other underground facilities, one-
call center operators and other stakeholders to significantly improve
the effectiveness of underground damage prevention. We believe these
efforts offer promise that the downward trend in pipeline releases will
continue and, we hope, accelerate.
Question 7. Should the risk management concept be applied more
broadly? Are legislative changes needed to have a broader application
of risk management principles?
Response. The 1996 amendments to the pipeline safety statutes
provide sufficient authority for OPS to incorporate risk management
principles into its regulatory program. Oil pipeline companies
currently rely on risk management principles to design the programs
they themselves use to improve safety and limit environmental impact.
We rely on these principles because they work. We would support
increased recognition by government regulators of the power of these
principles. The OPS Risk Management Demonstration Program is a good way
for Congress and regulators to obtain practical experience with the
application of risk management techniques. We would do more in the area
of demonstrating the power of risk management if this were possible.
However, we are confident that the record of the currently authorized
demonstration projects will clearly exhibit the value of using risk
management to enhance pipeline safety and increase the level of comfort
with this approach in designing regulations.
Question 8. How is the risk management approach to regulation
working with respect to pipeline safety? Are legislative changes needed
to improve how it is applied?
Response. The risk management approach to regulation is making good
progress with respect to pipeline safety. We believe the OPS staff
understands the concepts and is committed to learning the best way to
apply these principles. We do not recommend legislative change in the
risk management provisions at this time.
Question 9. How has the risk assessment approach affected the
amount of time it takes to complete a pipeline safety rulemaking? Do
you feel that the Department of Transportation is enacting better
regulations as a result of using a risk assessment approach?
Response. As we said in answering a previous question, we have seen
significantly more progress in developing new rules at the Office of
Pipeline Safety since the enactment of the 1996 amendments. The 1996
amendments encourage OPS to use consensus processes and to work with
all interested parties. This effort has led to regulatory solutions
that work and are implemented much quicker than was possible in the
past when regulatory proposals were developed by OPS in isolation. In
sum, better regulations are being enacted in a much more timely
fashion.
Question 10. What is the status of the oil and gas pipeline
community's Y2K preparedness efforts?
Response. The oil and natural gas pipeline is on target to resolve
year-2000-related computer problems before the end of this year. The
oil pipeline industry will be prepared for the year 2000 changeover,
and we are investing tens of millions of dollars to ensure this result.
This is an industry that uses computing and remotely-operated
technology extensively and has done so for many years. We were aware of
the Y2K problem as early as almost any industry in the nation and were
working to solve it before the recent attention to the issue. We are
cooperating fully with the Federal Energy Regulatory Commission, which
is leading the Oil & Gas Working Group of the President's Council on
Year 2000 Convergence. Official estimates and statistics on oil and gas
industry Y2K preparedness are available from the Working Group.
Information is also available at the FERC website: www.ferc.fed.us/y2k.
The President's Council is playing a useful role in helping to
demonstrate not only internal readiness within a company, or an
industry, but also readiness in the reliability of interconnections to
essential services supplied externally, such as electric power, police
and fire safety response and telecommunications. Ensuring these
services is a concern for us as well, but we have less control over
their reliability than we do for our own operations.
Question 11. As the Department of Transportation has moved from a
minimum standards approach to a risk based approach, are there some
existing pipeline safety regulations that are no longer necessary?
Response. The current leaders of the Department of Transportation,
the Research and Special Programs Administration and the Office of
Pipeline Safety, are sensitive to the need to remove or update any
obsolete requirements so as to streamline and improve the efficiency of
the pipeline safety regulatory program. For instance, we applaud recent
efforts by RSPA to update industry standards and incorporate them into
OPS regulations. Currently, we believe the reform of OPS rules is being
carried out at an appropriate pace.
Fact Sheet on the Oil Pipeline Spill Record
Oil pipelines move about 12.5 billion barrels of crude oil and
refined petroleum products annually. Pipelines distribute about 60% of
the oil transported in the United States, as measured in barrel-miles.
(One barrel, transported one mile, equals one barrel-mile.)
The oil pipeline industry's record of spills and reportable events
\1\ has improved substantially over the last 30 years, with the annual
number of spills falling by nearly 40% and the volume of oil spilled
falling by about 60%. In the six years from 1969 through 1974, the
pipeline system experienced 318 spills per year, for an average annual
volume of 352,000 barrels. In the most recent six years, 1993-1998, the
number of spills has averaged 197 per year, and the annual volume,
143,000 barrels.
---------------------------------------------------------------------------
\1\ The Office of Pipeline Safety publishes data from the
Department of Transportation's Form 7000, required to be filed for
incidents meeting any of the following criteria: loss of 50 barrels or
more of liquid, escape of 5 barrels per day of highly volatile liquid,
explosion, fire, death, bodily harm or estimated property damage
exceeding $50,000. The 1993-1998 data discussed here reflect
information available in February 1999.
[GRAPHIC] [TIFF OMITTED] T5149.021
In the years that stand out as peaks, a few very large spills
pushed volumes higher. The largest spill in the database, for instance,
occurred in 1970 at a pipeline company's tank farm; it incurred no
property damage beyond company property. That spill accounted for more
than 40% of the volume released in that year. In 1987, one large spill
accounted for more than 30% of the volume. In 1998, one large spill
accounted for 25% of the volume. Of particular note, however, was that
1998's largest spill was about \1/4\ the size of 1987's and about 15%
the volume of the 1970's largest.
The median spill size (half the spills are smaller, half are
larger) has been dropping over the period, an indication that improved
overall performance is not just a matter of reducing those infrequent
large spills. In the first six years of the period, the median spill
size was 290 barrels. In the latest six years, it was 100 barrels.
The volume of oil spilled from pipelines is equal to about one
gallon (\24/1000\ths of a barrel) for every million barrel-miles of oil
transported. In common household measures, this equates to less than
one teaspoon per thousand barrel-miles.
The most important cause of spills from pipeline systems is
``outside force damage,'' including so-called ``third-party damage.''
(See table.) Outside force damage accounted for 38% of the 1993-98
volume overall and more than half of the volume spilled from line pipe
in the system.
Releases from Liquids Pipelines, by Cause of Incident, 1993-98
------------------------------------------------------------------------
Avg. Annual
Cause Volume Share
(Barrels) (%)
------------------------------------------------------------------------
Outside Force Damage............................ 53991 38
Corrosion....................................... 30759 21
Other........................................... 23957 17
Failed Weld..................................... 10651 7
Incorrect Operation By Operator Personnel....... 10286 7
Malfunction Of Control Or Relief Equipment...... 6888 5
Failed Pipe..................................... 6514 5
Total........................................... 143072 100
------------------------------------------------------------------------
Note: Reflects data available from DOT's Office of Pipeline Safety's
Internet site as of 2/1/99
The second largest cause of spills from pipeline systems over the
1993-98 period was corrosion, accounting for 21% of the volume lost.
The industry and its suppliers are constantly struggling to identify
technologies, construction methods and inspection tools that will
eliminate the risk of a pipeline failure due to corrosion. While one
year does not constitute a ``trend,'' the latest data \2\ on 1998
spills due to corrosion are promising: the volume, at about 10,000
barrels, was one-third of the multi-year average, and accounted for
less than 8% of the total.
---------------------------------------------------------------------------
\2\ As of January 27, 1999.
---------------------------------------------------------------------------
The Office of Pipeline Safety's data reflects estimates of liquids
recovered directly, during the first clean-up phase in the immediate
period following an event. The data exclude remediation and other
recovery techniques that may take longer to complete. Even so,
according to data available from the Office of Pipeline Safety Internet
site as of February 1, 1999, initial recovery of spilled liquids
equaled 57% of the gross loss over the 1993-98 period. For tank farms
and pump stations, the initial, or direct, recovery was equal to almost
75% of the gross loss. Estimated direct recovery on the largest spill
in 1998 was 99%, for example. In fact, estimated direct recovery from
all liquids releases in 1998, from line pipe as well as tank farms and
pump stations, was equal to nearly 75% of the initial volume lost.
______
Commonwealth of Kentucky
Public Service Commission
March 4, 1999
Honorable Joe Barton
Chairman
Subcommittee on Energy and Power
2125 Rayburn H.O.B.
Washington, DC 20515
Dear Mr. Barton: Enclosed, please find my responses to the follow-
up questions concerning my testimony before the Energy and Power
Subcommittee on February 3, 1999.
I appreciated the opportunity to appear before the Subcommittee to
express the concerns of Kentucky and the National Association of
Regulatory Utility Commissioners relating to reauthorization of the
natural gas and hazardous liquid pipeline safety programs.
If there are further questions, or if I may be of further
assistance to the work of the Subcommittee, please do not hesitate to
contact me.
Sincerely,
Edward J. Holmes
Vice Chairman, Kentucky Public Service Commission
Chairman, Committee on Gas,
National Association of Regulatory Utility Commissioners
Enclosure (1)
cc: Representative Markey
Question 1. What portion of State pipeline safety programs are
funded through the Department of Transportation?
Answer. States are certified to carry out certain pipeline safety
functions. These are funded up to 50 percent by the U.S. Department of
Transportation.
Question. How is the remainder funded?
Answer. The remainder of the funds for the pipeline safety programs
comes in most cases from the states' general funds allocated to the
state regulatory agency. In some states, Public Utility Commissions are
funded in total or in part through assessments on utilities.
Question 2. Who decides how much a State is going to spend on
pipeline safety efforts?
Answer. Typically, the state regulatory agency submits a budget
proposal in the same manner as other State executive agencies. The
State regulatory agency submits the budget proposal to the U.S.
Department of Transportation (DOT) for 50 percent funding. DOT awards
funds up to 50 percent depending on availability of funds and on State
scores in a DOT grant allocation formula. The DOT grant allocation
formula factors in the state score on its annual evaluation, and
certain information from the State Certification Agreement including
the extent of state jurisdiction, inspector qualifications, number of
inspection person-days, state adoption of maximum civil penalty
requirement, state adoption of applicable federal regulations, One-Call
system minimum requirements, state attendance at state/federal regional
meetings, and meeting various deadlines.
Question 3. Approximately how much does a State Pipeline Safety
program cost?
Answer. State programs will vary according to certified
responsibilities, staffing quality, territory, cost of living, and
staffing level. The staffing levels are based on responsibilities and a
recommended staffing level. The U.S. DOT will likely have listings of
State program costs according to the types of responsibilities.
Question. What types of activities do the State programs support?
Answer. State activities vary according to the type of Certificate
of Agreement filed with the U.S. Secretary of Transportation. A state
could implement an inspection program to include but not be limited to
comprehensive evaluations, construction project reviews, follow-up
inspections, specialized audits, and incident investigations. The types
of operators being regulated could vary from local distribution
companies, intrastate transmission companies, master meter facilities,
liquefied natural gas facilities, liquefied petroleum gas facilities,
hazardous liquids pipelines, offshore gas and liquid transmission,
direct sales connections, and gathering facilities.
Question 4. What level of resources is appropriate for
reauthorizing legislation?
Answer. The amount required to actually provide 50 percent funding
in support of the State partnership programs.
Question 5. Can the Risk Management Demonstration Program be
applied on intrastate lines or is it only useful for interstate
facilities?
Answer. At present, the Risk Management demonstration program is
applicable only to approved interstate pipeline operators. If the
project is successful, the Risk Management approach will, in all
likelihood, be offered to intrastate pipeline facilities and even to
local distribution companies.
Question 6. (From Mr. Markey) Considering how slow OPS has been in
issuing regulations, do you think states should be able to set safety
and environmental protection standards more stringent than federal
standards?
Answer. It certainly does seem that states should have the
opportunity to set standards that improve the minimum safety standards
in the Code of Federal Regulations. This would seem to be a matter for
each states' legislative or regulatory processes. I would think that
most states have the ability to set such standards if desired.
As for the pace of OPS in issuing regulations, I am told that this
is far better now than in past years and seems to be steadily improving
as OPS/State working relationships mature further.
Question. Do you think state governments should be able to conduct
inspections and enforce regulations for interstate pipelines that run
through the state?
Answer. States may become certified to act as agents of the U.S.
Department of Transportation with respect to interstate pipelines.
Typically, such states conduct inspections and report their findings to
the DOT for enforcement action by DOT. State regulatory agencies are
not of one mind concerning whether states should be able to enforce
regulations as well as to inspect. Some believe that it might be very
confusing for an interstate pipeline to be subject to enforcement
actions of several states. Others believe that state enforcement could
be positive and should be done.
Question 7. (From Mr. Markey) In your prepared testimony you
mention that while states are receiving inadequate funding, half a
million dollars are earmarked for Risk Management feasibility studies.
Do you think these feasibility studies are taking away from basic
inspection and enforcement activities directed at safety and
environmental protection?
Answer. As I stated in my testimony on behalf of NARUC, state
regulatory agencies appear to agree that the pilot programs relating to
risk management may show these to be valuable tools for ensuring
safety. Our concern is that the development and expansion of such
programs should not unduly draw funds or attention away from the core
pipeline safety programs conducted under State/OPS partnerships. We do
not have data that indicate that such diversion or attention has
occurred. However, we believe that care must be taken to ensure that
the core programs continue undiminished as the basic guarantors of
public safety concerning pipelines. And it is important to note that,
at present, the risk management studies apply only to interstate
operators.
______
Follow-up Questions for The American Gas Association
Question 1. Do you believe that the 1996 amendments which allowed
the Department of Transportation to employ risk assessment and risk
management approaches have resulted in pipeline safety regulations
which work better and cost less? Why or why not
Response. A.G.A. believes that the 1996 Pipeline Safety Amendments
for risk assessment and risk management approaches have resulted in
better regulations being promulgated by DOT. ``Front-end'' loading the
process by gathering information and hearing from stakeholders prior to
entering the formal rulemaking process has enabled DOT to promulgate
rules much more quickly than in the past. Furthermore, the rules issued
after 1996 have been not been subject to court challenges resulting in
even greater savings in outlays and personnel resources for the federal
government. Finally, by working to understand the decision making
process of pipeline operators through the risk management demonstration
project, federal and state safety regulators are gaining additional
knowledge that makes them more effective.
Question 2. What level of resources is appropriate for
reauthorizing legislation?
Response. A.G.A. supports keeping funding levels through FY2004
level with FY2000 levels. An annual inflation adjustment for years
2001-2004 is acceptable. The Office of Pipeline Safety has largely
completed several one-time initiatives to enable them to implement the
1996 pipeline safety act, i.e. developing protocols for cost-benefit
and risk assessment analyses and a framework for risk management
demonstration projects.
Question 3. The pipeline safety program is paid for through user
fees. Who ultimately bears those costs? With the restructuring of the
pipeline industry, are those costs still passed through on a full
basis?
Response. Interstate pipeline operators initially pay the user fee
costs. In the past these costs flowed to the ultimate consumer.
However, with increased competition and unbundling of service the
situation has changed. Although transmission operators frequently
discount their charges to compete it is unclear how much of the user
fee assessment they are absorbing. The amount varies from customer to
customer depending on the circumstances. However, it is very likely
that some part of these costs are passed through to local distribution
companies (LDCs) who pass through all or part of these costs to their
customers. Industrial and commercial customers of both interstate
pipelines and LDC also share in the costs.
Question 4. The law currently requires OPS to fund ``up to 50
percent'' of safety pipeline safety efforts. The States have argued
that OPS needs to be funding a greater share of state pipeline safety
programs. Should interstate pipelines, which aren't regulated at the
state level, pay a greater share of state regulatory efforts?
Response. DOT provides a portion of its user fees to states to
offset up to 50% of the states pipeline safety program. States in turn
agree to adopt the federal pipeline safety standards as minimum
standards for their programs. Congress set up this partnership to
ensure a consistent basis for providing for the public's safety in
every State. This arrangement has worked well in the past and should be
continued.
Each year States submit a form to DOT outlining their safety budget
and their compliance with certain DOT performance standards. If the
State meets these standards DOT may grant them up to 50% of their
safety budget costs. Last year, States received 42% of these cost on
average. The total funds provided to States under this program
represent less than half of OPS' annual user fee assessment. At least
half of all transmission user fees are either passed through to (LDCs)
or borne directly by (intrastate transmission) entities regulated by
the State. The current system of user fee assessments is both equitable
and simple to implement. A.G.A. does not believe that interstate
pipelines are subsidizing state regulatory efforts.
Question 5. What would be the result if the citizen suit provisions
were modified to facilitate private enforcement actions?
Response. The result would likely be an increase in lawsuits
without a corresponding increase in public safety or the protection of
the environment. Under current law, citizens can sue when the
government fails to act on enforcement in a reasonable timeframe.
Congress crafted this system to allow the regulators the opportunity to
do their jobs while giving citizens the right to seek injunctive relief
on their own if the system did not work properly. While some
``citizens'' may not agree with an enforcement decision, it does not
follow that government enforcers are not acting properly or
expeditiously. No modifications to the existing provisions of the law
are justified.
Question 6. Should the risk management concept be applied more
broadly? Are legislative changes needed to have a broader application
of risk management principles?
Response. No legislative changes are needed at this time. A.G.A.
believes that DOT presently has adequate authority to broaden the
application of risk management principles. The key at this juncture is
to thoroughly understand the principles and to work to identify areas
of regulation where the application of risk management principles might
be most effective. It is important to note that these pipelines and
LDCs have been using some form of risk management analysis for many
years. They use it to allocate resources expended over and above that
necessary for compliance with regulations. In general companies spend
twice as much on safety and maintenance as is required by strict
compliance.
Question 7. How is the risk assessment approach to regulation
working with respect to pipeline safety? Are legislative changes needed
to improve how it is applied?
Response. The flexible risk assessment provisions of 1996 were
modeled after President Clinton's ``Reinventing Government'' executive
order 12866. They appear to be working very well. The most immediate
result has been greater communication and information sharing between
DOT and the regulated industry. DOT has worked with a stakeholder team
to develop guidelines for applying risk assessment to new regulations
and should begin this application in the near future. DOT also has
utilized alternatives that the 1996 statute created that avoid do not
require a risk assessment such as the negotiated rulemaking for
operator qualification, adoption of industry standards for updating the
LNG rules and pending consensus rules on corrosion and plastic piping.
Question 8. How has the risk assessment approach improved the
amount of time it takes to complete a pipeline safety rulemaking? Do
you feel that the Department Of Transportation is enacting better
regulations as a result of using a risk assessment approach?
Response. The overall time to complete a rule is coming down. While
the process is still lengthy, the approach of ``front-end'' loading has
shown to result in more carefully crafted, consensus rules that are not
challenged in court. Further, the official process from Notice of
Proposed Rule to Final Rule has been significantly streamlined. Many of
the issues before OPS are complex and necessitate the gathering of
significant amounts of data. The process will never be fast enough for
some but improvements are real.
Question 9. What is the status of the oil and gas pipeline
community's Y2K preparedness efforts?
Response. Natural gas utilities are making substantial progress
toward being ready to deliver gas into the Year 2000 and beyond,
according to the American Gas Association (A.G.A.). According to the
oil and natural gas industry survey, as of January 1999:
<bullet> More than four-fifths (86 percent) of the combined oil and gas
industry companies indicated they are in the final stages of
fixing and testing business information systems, such as
software, to accommodate the Y2K date. That compares with 55
percent of the companies in the industry's September 1998
survey, cited by today's Senate report.
<bullet> Embedded chips do not pose a significant problem for the
industries, as had previously been thought, according to the
survey. The January survey found that 78 percent of all
respondents said they are in the final stages of fixing and
testing hardware and embedded systems for their operational
integrity. This is far higher than the 46 percent response
reported last September.
<bullet> Nearly all respondents (97 percent) said they expect to have
Y2K contingency plans in place and tested by Sept. 30.
Question 10. As the Department of Transportation has moved from a
minimum standards approach to a risk based approach, are there some
existing pipeline safety regulations that are no longer necessary?
Response. It is not entirely accurate to state that DOT has moved
to a risk based approach. DOT's program is actually a combination of
both minimum standards and a risk-based approach. Existing regulations
are not required to be reassessed using risk assessment but it may
prove useful to do so in order to make sure the regulations provide
safety in the most effective and efficient manner.
______
U.S. Department of Transportation
Research and Special Programs Administration
March 17, 1999
The Honorable Joe Barton
House of Representatives
Washington, DC 20515-2017
Dear Mr. Barton: Respectfully submitted for the record is the
Research and Special Programs Administration's Office of Pipeline
Safety's responses to Edward J. Markey's questions resulting from the
February 3, 1999, subcommittee hearing on pipeline safety. A copy of
this letter and the responses have been directly faxed to Lowell Ungar
per Congressman Markey's request.
If you have any questions or concerns, please contact me or
Patricia Klinger, Acting Director, Office of Policy and Program
Support, at (202) 366-4831.
Sincerely,
Kelley S. Coyner
Enclosure
cc: Edward J. Markey
Responses to Questions from Representative Edward J. Markey
Question 1: The Pipeline Safety Act of 1992 required OPS to develop
pipeline standards to protect the environment, specifically requiring
OPS to identify areas ``unusually sensitive to environmental damage''
by October 1994 and to require periodic inspections of pipeline
infrastructure in those areas by October 1995. Why has OPS still not
issued these environmental regulations four years after the first
deadline? When can we expect these rules to be issued?
Answer: After extensive consultation with numerous federal and
state agencies, environmental groups and academia, RSPA developed a USA
conceptual model that focuses on drinking water and ecological
resources. The drinking water resources include public water systems,
wellhead protection areas and sole source aquifers. The ecological
resources include the following: threatened and endangered, critically
imperiled, and imperiled species; depleted marine mammals; and areas
containing a large percentage of the world's population of a migratory
waterbird species.
OPS is currently pilot testing this USA conceptional model, using
drinking water and ecological data created and maintained by other
government agencies and environmental organizations like The Nature
Conservancy. During the pilot test period from March through June of
this year, Federal and States agencies will be considering the model's
adequacy in identifying the most important environmental areas in
California, Texas and Louisiana, and the appropriateness and
accessibility of environmental data to support this decision making.
OPS is asking Federal, state and other water and ecological experts to
verify that the USAs identified by the model are unusually sensitive
areas, and that the model has not missed other USAS. This pilot testing
provides a needed basis for regulation on USAS.
A Federal Register notice that will seek comments on the evaluation
of the USA conceptional model will be published in March 1999. This
experience will lay the groundwork for regulatory action in fiscal year
2000.
Question 2: In 1996 Congress added requirements for cost-benefit
analyses of regulations. Has this added burden taxed your staff
resources or slowed issuance of the regulations? Why are environmental
effects of pipeline accidents not included in the cost-benefit
analyses?
Answer: The Accountable Pipeline Safety Act of 1996 included a
provision requiring peer review for cost-benefit analyses of pipeline
safety regulations. OPS was already preparing cost-benefit analyses
under Executive Order 12866 and the Department's policy. Thus, the
statutory requirement was not an added burden to our regulatory
process.
n response to the 1996 mandate, OPS has worked with a government/
industry task group to develop a risk assessment/cost-benefit framework
during the past 18 months. We provided a draft of this framework to our
two pipeline safety advisory committees and briefed both committees on
the work of the task group. We will be seeking public comment and then
finalizing the document. The final framework document will be provided
to the pipeline safety advisory committees this summer.
Environmental effects of pipeline accidents are included in cost-
benefit analysis. Complete and precise estimates of monetary damage
from pipeline spills are often difficult or impossible to quantify.
Therefore, environmental damage from pipeline spills is often described
qualitatively rather than quantitatively.
Question 3: According to the National Transportation Safety Board,
the Office of Pipeline Safety has only accepted 68% of NTSB
recommendations, the worst accept-
ance rate of any Department of Transportation administration. Why has
OPS failed to follow so many NTSB recommendations?
Answer: DOT and the NTSB both have important roles to play in
pipeline safety. NTSB investigates pipeline accidents and makes
recommendations; RSPA evaluates their recommendations. We believe that
OPS and NTSB are in agreement on key safety issues, but sometimes
differ on the way to resolve those issues. Often, the disagreement is
over the OPS selection of a non regulatory solution.
RSPA is making every effort to work more closely with the NTSB.
Areas of particular collaboration are improvements to corrosion
regulation, damage prevention, data improvements and investigation of
human factors' impact on safety. At RSPA's initiative, we established
meetings with NTSB staff every six months to discuss all open
recommendations and RSPA's response to each of them. We do this in
addition to the written responses and follow-ups that are required for
every NTSB recommendation. We also coordinate informally with NTSB
staff on the nature and status of our response to each recommendation.
We have included NTSB experts in ongoing efforts to address
pipeline safety problems, even without any recommendation from NTSB.
For example, we have met with state governments, standards groups, and
gas pipeline groups to discuss how underground clearances for utilities
are addressed in various laws, regulations, and standards.
The NTSB statement that OPS has only accepted 68% of NTSB
recommendations includes all recommendations issued to OPS since the
early 1970s. Of all recommendations closed by the NTSB during the last
ten years, 83% were classified by NTSB as acceptable. Of the NTSB
recommendations that are currently classified as open, 14 are
classified as acceptable and seven as unacceptable. OPS continues to
work to allow NTSB to close these recommendations as acceptable. In
1998, OPS updated NTSB on actions being taken to address each open
recommendation.
In addition, the 27 NTSB recommendations issued in the last two
years have not been classified by NTSB as either acceptable or
unacceptable because OPS is now in the process of providing initial
responses or because NTSB has yet to issue a classification
determination.
Question 4: Since the 1996 amendments, OPS has approved six
demonstration projects among the 2,200 regulated operators. How much
OPS staff time has gone into those six projects? Has the staff time
used in these projects reduced OPS ability to issue regulations
mandated by the Congress? Since the projects directly affect only a
small percentage of operators, how has the information teamed from the
projects affected generic regulations?
Answer: OPS has allotted two full-time engineers to risk
management, and regional staff and other experts are used on an as-
needed basis. To date, this amounts to approximately five person-years
annually. This allocation of staff resources has not reduced OPS's
ability to issue regulations mandated by the Congress. OPS augments in-
house risk management capability by contracting with risk management
experts and consulting with representatives from state agencies.
The Demonstration Program represents OPS's most ambitious test of
risk-based approaches to improve safety, environmental protection, and
service reliability. While risk management may not be the appropriate
regulatory alternative for every operator, it has provided information
and techniques that OPS is already using with other operators in the
compliance program and in shaping new regulations.
n the compliance area, our experience in the Demonstration Program
has influenced us to move away from a piecemeal inspection process to a
system-based approach. Using this approach on Alyeska Pipeline, we are
conducting a risk-based review of all the valves on the system
resulting in repair and replacement of valves in environmentally
sensitive areas. Using this approach on Colonial Pipeline, we have
worked with the Department of Justice to order system wide evaluation
of all water crossings on a risk basis.
To extend the risk assessment process outside the pipeline
companies, OPS now routinely uses internet-accessible information
systems, electronic town meetings, and other approaches that solicit
and incorporate broad-based public input into the Risk Management
Demonstration Programs. In addition, we now solicit involvement on
other programs such as damage prevention, mapping and system integrity,
using techniques that were first developed for the Demonstration
Program.
Question 5: In 1996 we assigned peer review of risk assessment to
the existing advisory committees. What risk assessments have been peer
revised by the advisory committees? What changes have been made in
response to the committee reviews? One-third of these committees are
composed of industry representatives. What steps have you taken to
ensure that conflicts of interest do not color their reviews.
Answer: A table of rulemaking projects for which risk assessments
were reviewed by the advisory committee is attached. To the extent that
any changes are made in a rule because of advisory committee comments,
these are noted in the rulemaking documents published in the Federal
Register. To date, there has been only one significant change to a
proposed rule because of the peer review. After providing risk
assessment information to the advisory committee and a full discussion
of our proposed requirement, in 1998, RSPA added an environmental
factor to the hydrostatic pressure testing requirement for hazardous
liquid pipelines.
Although one-third of the advisory committee membership is composed
of representatives from industry, two-thirds are derived from the
public and state and federal agencies with expertise in issues relevant
to pipeline safety and environmental protection. RSPA has been
successful in its effort to include government and public members with
environmental interests and expertise as well as a broad range of
engineering and safety expertise. The full and open discussion of the
advisory committee process provides the necessary balance between
interests.
Table of Rules Reviewed by the Technical Pipeline Safety Standards
Committee (TPSSC) and the Technical Hazardous Liquid Pipeline Safety
Standards Committee (THLPSSC) Since 1996
------------------------------------------------------------------------
Rulemaking Topics Committee Status
------------------------------------------------------------------------
Leak Detection and Emergency THLPSSC........... Final rule
Flow Restriction Devices. published
governing
computerized leak
detection
methods. Further
action pending
development of
``unusually
sensitive area''
definition
Risk-Based Approach to THLPSSC........... Final rule
Hydrostatic Testing. published
allowing
operators to
exclude certain
low risk
pipelines and
certain pipelines
in which an
instrumented pig
is run from the
requirement to
hydrostatically
test older
hazardous liquid
pipelines
Excess Flow Valve Performance TPSSC............. Final rules
Standards and Customer published
Notification. establishing
standards for the
performance of
excess flow
valves installed
in gas pipelines,
and for notifying
gas customers of
the availability
of such valves
Low-stress Hazardous Liquid THLPSSC........... Final rule
Pipelines. published
excluding certain
short, low risk
pipelines from
the hazardous
liquid pipeline
safety standards
Standards for Breakout Tanks.... THLPSSC........... Notice of proposed
rulemaking (NPRM)
published to seek
comments on new
design,
construction, and
maintenance
standards for
certain hazardous
liquid storage
tanks
Siting, Design, and Construction TPSSC............. NPRM published
Standards for Liquefied Natural proposing revised
Gas Plants. standards for
liquefied natural
gas plants
associated with
gas pipelines
Metrication..................... TPSSC and......... Final rule was
THLPSSC........... issued adding
metric
measurements to
the gas and
hazardous liquid
pipeline safety
standards
------------------------------------------------------------------------
______
Environmental Defense Fund
Washington, DC 20009
March 25, 1999
The Honorable Joe Barton, Chairman
Subcommittee on Energy and Power
Committee on Commerce
Room 2125, Rayburn House Office Building
Washington, DC 20515-6115
Dear Congressman Barton: Thank you once again for holding a hearing
on February 3, 1999 on reauthorization of the natural gas and hazardous
liquid pipeline safety programs, and for inviting testimony from the
Environmental Defense Fund (EDF). The following are EDF's responses to
the Questions posed in your February 19, 1999 letter:
Question #1: Do you believe that the 1996 amendments which allowed
the Department of Transportation to employ risk assessment and risk
management approaches have resulted in pipeline safety regulations
which work better and cost less? Why or why not?
Answer #1: The risk assessment provisions of the 1996 amendments
have not yet been fully implemented for any proposed or final
regulation for natural gas or hazardous liquid pipelines, and the cost-
benefit analysis protocol is still under development. Thus, there is
currently no basis for assessing whether the risk assessment provisions
have resulted in better or cheaper pipeline safety regulations. Note
that the examples of recent regulatory improvement given by John
Zurcher in his testimony representing the Interstate Natural Gas
Association of America, are unrelated to the risk assessment provisions
of the amended pipeline safety statute. The mandatory risk assessment
provisions of the law have, if anything, slowed down regu-
latory development by the Office of Pipeline Safety (OPS) in the over
two year period since the law's passage.
The risk management provisions of the 1996 amendments have not
resulted in any improvements to the pipeline safety regulations, as no
new regulations or initiatives, nor changes to existing regulations,
have been proposed by OPS based on knowledge gained through the risk
management demonstration projects.
Question #2: What level of resources is appropriate for
reauthorizing legislation?
Answer #2: EDF agrees with the testimony of state pipeline
officials that the annual appropriation levels should be sufficient to
cover 50% of states' costs, since state officials perform the vast
majority of pipeline safety inspections. Section 60107(a) of the
pipeline safety law authorizes federal grants to reimburse states for
``up to 50 percent'' of their costs.
Additionally, EDF believes Congress should be concerned that OPS
may be devoting too much of its annual appropriations to the Risk
Management Demonstration project program, while simultaneously not
meeting Congressionally-mandated deadlines for standards needed to
protect the environment. These deadlines include the 1994 deadline to
identify environmentally sensitive areas (Section 60109), and the 1995
deadline for companies to periodic inspect pipelines in such areas
(Section 60102(f)(2)). Some language ensuring that OPS meets these
deadlines expeditiously should accompany Congressional appropriations.
Question #3: Should the risk management concept be applied more
broadly? Are legislative changes needed to have a broader application
of risk management principles?
Answer #3: To date, there is no evidence of superior pipeline
performance for pipelines participating in the risk management program
than would otherwise have been the case. Moreover, as stated in my
February 3 testimony:
During the two year period of this program, OPS only has approved
four of these projects and granted only one regulatory
exemption . . . [the risk management program] in no way
provides the public with additional information about pipeline
risks, nor does it demonstrate problems with existing standards
that need to be overcome through an individualized process. In
fact, because companies can undertake nearly all these actions
without the formal involvement of OPS (e.g., implementing
environmental management systems), it is unclear why this
program even needs to be part of the statute.
Before expanding this program, there needs to be conclusive
evidence of its benefits. There are extensive costs to government for
the risk management program, and these costs come at the expense of
other important federal activities such as meeting Congressional
deadlines for environmental protection standards.
Question #4: How is the risk assessment approach to regulation
working with respect to pipeline safety? Are legislative changes needed
to improve how it is applied?
Answer #4: See the answer to Question 1. Additionally, as noted in
my February 3 testimony, ``despite EDF's efforts, OPS staff have not
included language covering environmental benefits into any of its draft
documents on performing cost-benefit analyses.'' Such language is
essential to ensure development of regulations that adequately protect
human health and the environment.
Question #5: How has the risk assessment approach affected the
amount of time it takes to complete a pipeline safety rulemaking? Do
you feel that the Department of Transportation is enacting better
regulations as a result of using a risk assessment approach?
Answer #5: See the answers to Questions 1 and 4.
Question #6: As the Department of Transportation has moved from a
minimum standards approach to a risk based approach, are there some
existing pipeline safety regulations that are no longer necessary?
Answer #6: As discussed in my February 3 testimony, the trend for
releases from hazardous liquid pipelines has been upward since 1995, or
around the time OPS began moving toward a risk based approach. For this
reason, and the lack of evidence that a risk based approach has
resulted in superior performance for the overall pipeline universe, EDF
observes that the greater problem appears to be regulatory deficiencies
rather than over-regulation of natural gas and hazardous liquid
pipelines. As the attached article from the March 8, 1999 Boston Globe
states, National Transportation Safety Board chairman Jim Hall gives
the federal Office of Pipeline Safety a ``big fat F'' on its
performance in overseeing pipelines.
I apologize for the delay in sending these responses to you but, as
your staff was aware, your letter arrived at my office during the
beginning of a multi-week vacation.
Please let me know if I can be of any further assistance. Thank you
very much for this opportunity to respond to your questions.
Sincerely,
Lois N. Epstein, P.E.
Senior Engineer
cc: The Honorable Ralph Hall, Ranking Democratic Member
Attachment
[Monday, March 8, 1999--The Boston Globe]
`Big Fat F' on Pipeline Safety
[By Scott Allen--Globe Staff]
Avila Beach, Calif.--This used to be Hollywood's idea of a funky
beach town, a sunbaked row of businesses sandwiched between green hills
and endless Pacific surf. The poster from a 1978 movie filmed here,
``California Dreaming,'' still hangs proudly in the Custom House
restaurant.
But that was before a clothing shop owner ``struck oil'' when she
tried to expand a few years ago. Now, bulldozers are demolishing most
of downtown to clean up massive oil contamination from leaking
pipelines that went undetected for years.
``This town used to have its own hip atmosphere,'' said a disgusted
Lindsey Olsen, looking at the metal sheeting that encloses the land
where her favorite nightclub once stood. ``Now look at it. It's ugly.''
While the United States has taken strides in reducing tanker spills
since the Exxon Valdez accident of 10 years ago, the country has made
less progress against other dangerous spills, especially pipeline
leaks. Nearly 8 million gallons of hazardous liquids escaped US
pipelines in 1998, the most since 1991.
Though pipeline leaks don't get the attention of tanker accidents
they are nearly as destructive. Unocal Corp. spilled at least 8.5
million gallons of petroleum products from pipelines in a fragile dune
area near Avila Beach as well as more than 400,000 gallons that flowed
under the village.
The National Transportation Safety Board, which investigates
pipeline accidents, has warned for years that many pipelines are old,
poorly maintained, and operated by underqualified people--sometimes
with deadly results. Two teenagers in Lively, Texas, were killed in
1996 when liquid butane escaped from a corroded pipe, causing an
explosion.
But the National Transportation Safety Board chairman, Jim Hall,
complains that the US Department of Transportation office in charge of
regulating the nation's 157,000 miles of pipeline hasn't been
listening.
``The Office of Pipeline Safety has just had a pretty terrible
track record for a number of years,'' Hall said, adding that the office
adopts significantly fewer Safety Board recommendations than federal
agencies such as the Federal Aviation Administration. He said he'd give
the Office of Pipeline Safety ``a big fat F on everything they've
done.''
Few believe that better regulation would have helped at Avila
Beach, where the leaks began decades ago and where the state accused
Unocal of withholding information about the spill outside of town.
However, Safety Board officials say other spills could be avoided with
tougher regulation.
In particular, Hall wants tougher rules to prevent corrosion, the
cause of the Texas explosion as well as a major fuel oil spill in South
Carolina's Reedy River in 1996.
Hall also believes lax employee training requirements have
contributed to accidents such as the propane explosion in San Juan that
killed 38 people in 1996. Gas company workers failed to find the leak
despite repeated efforts.
Department of Transportation officials say they agree with the
Safety Board's general concerns, but disagree that their agency isn't
making pipelines safer. They say the Office of Pipeline Safety adopts
far more Safety Board recommendations now than in the past and that the
volume of spills in the 1990s is less than in previous decades.
``We've made tremendous strides in improving pipeline safety,''
said Kelley F. Coyner, administrator of the Research and Special
Programs Administration, which oversees the Office of Pipeline Safety.
She said the office recently worked with industry, state
regulators, and others to come up with stronger pipeline worker
qualifications, though the Safety Board criticized the proposals as
weak. Also, Coyner said that new rules on leak detection will go into
effect in July and that her agency is experimenting with education
programs to reduce construction accidents.
That's not enough for the National Pipeline Reform Coalition, a
group of environmentalists as well as labor unions and business and
government leaders who are pushing for tougher laws and pipeline safety
enforcement.
Lois Epstein of the Environmental Defense Fund, a member of the
coalition, told a congressional committee last month that the Office of
Pipeline Safety has not identified environmentally valuable areas near
pipelines, despite a 1992 law to do so. And she said the agency's fines
are so low that it may be cheaper for pipeline operators to pay rather
than prevent leaks.
At Avila Beach, about to virtually shut down for 18 months for the
oil cleanup, Tony Quale doesn't have to be convinced that pipelines are
dangerous. As the cleanup project rumbled behind him, he said
nostalgically, ``The loudest sound used to be the crashing of the
waves.''
______
U.S. Department of Transportation
Research and Special Programs Administration
March 29, 1999
The Honorable Joe Barton
Chairman, Subcommittee on Energy and Power
Committee on Commerce
House of Representatives
Washington, DC 20515-2017
Dear Mr. Barton: Respectfully submitted for the record is the
Research and Special Programs Administration's consolidated response to
follow-up questions from the February 3, 1999, subcommittee hearing on
pipeline safety. Although questions 17 through 21 were previously
forwarded under separate cover to Mr. Markey, they are also included
for your convenience.
If you have any questions or concerns, please contact me or
Patricia Klinger, Acting Director, Office of Policy and Program
Support, at (202) 366-4831.
Sincerely,
Kelley S. Coyner
Enclosure
Responses to Questions from Chairman Joe Barton
Question 1: Could you please explain how the risk assessment
provisions from the 1996 reauthorization are being implemented?
Answer: We have developed a policy framework to address the risk
assessment provisions from the Accountable Pipeline Safety and
Partnership Act of 1996 and the cost-benefit provisions of E.O. 12866.
First, both the Technical Hazardous Liquid Pipeline Safety Standards
Committee (hazardous liquid pipelines) and the Technical Pipeline
Safety Standards Committee (gas pipelines) have been briefed on the
risk assessment and cost-benefit requirements that must guide the
preparation and presentation of regulatory proposals. Each committee
has five public members, five government members and five industry
members.
Second, RSPA has worked with a government/industry task group to
develop a risk assessment/cost-benefit framework during the past 18
months. The framework is a guidance document that establishes the steps
to follow in identifying and evaluating cost and benefits of proposed
initiatives affecting regulated pipelines. We provided a draft of this
framework to our two pipeline safety advisory committees and briefed
both committees on the work of the task group. Shortly, we will be
seeking public comment and then finalizing the document. The final
framework document will be provided to the pipeline safety advisory
committees this summer.
Third, RSPA is now providing risk assessment and cost-benefit
analyses with each proposed rule submitted to the advisory committees
for voting via the mail or at semi-annual meetings. The advisory
committees also receive full briefings by RSPA staffers on all
proposals at the semiannual pipeline safety advisory committee
briefings. The advisory committees must vote on all proposed
regulations after a review of the risk assessment and cost-benefit
information. RSPA makes adjustments to the proposals based on the input
of the committee members.
Question 2: How has it affected the amount of time it takes to
complete a rulemaking?
Answer: It has had little effect on the amount of time required to
process a rulemaking. Analysis of costs and benefits and of risks was
already being done for pipeline safety standards under DOT policy and
Executive Order 12866. Submitting the risk assessment information to
our technical advisory committees, the Technical Hazardous Liquid
Pipeline Safety Standards Committee or the Technical Pipeline Safety
Standards Committee, has not required any more time since the
committees already are required to judge the technical feasibility,
reasonableness, and practicability of all of our proposed rulemakings
before the rules are issued. In other words, RSPA practice was codified
and no delays have been experienced in providing risk assessment
information or processing votes by mail ballot or at semiannual
meetings of the committees.
Question 3: Are modifications to the risk assessment portion of the
statute needed to make it work more effectively?
Answer: Based on our experience modification to the statute is not
needed.
Question 4: There are three rulemakings that the Department of
Transportation is required to complete under prior reauthorizations
which have not yet been completed. Could you please explain the status
of those rulemakings and when they are likely to be completed?
Answer: The three rulemakings follow:
Emergency Flow Restricting Devices (Docket No PS-133). Under 49
U.S.C. 60102(j), we are required to survey and assess the effectiveness
of emergency flow restricting devices (EFRD) and other procedures,
systems, and equipment used to detect and locate hazardous liquid
pipeline ruptures and minimize product releases. Further, we are
required to prescribe standards on the circumstances under which an
operator of a hazardous liquid pipeline facility must use an EFRD or
another procedure, system, or equipment.
In January 1994, we issued an advance notice of proposed rulemaking
to obtain information about the performance of EFRDs and leak detection
systems now in service (59 FR 2802). We also investigated the use of
computerized systems to collect pipeline operational data and detect
leaks. On September 29, 1995, we published a report of the results.
And, in October 1995, we held a public workshop on issues involved in
regulating the use of EFRDs. Then on July 6, 1998, we published rules
on using software-based systems to detect leaks on hazardous liquid
pipelines (63 FR 36373). The rules require that operators who use these
systems must design, operate, and maintain them in accordance with the
consensus standard, ``API 1130, Computational Pipeline Monitoring,''
published by the American Petroleum Institute. These rules were needed
to advance the industry's acceptance of the technology, and to reap the
safety and environmental advantages inherent in API 1130, which are
accelerated leak detection and response. We plan to conduct further
rulemaking on EFRDs and leak detection systems after completion of a
separate proceeding now underway to define areas that are unusually
sensitive to environmental damage in the event of a hazardous liquid
pipeline accident (see below). We recognize that these areas are
leading candidates for the use of EFRDs and leak detection systems.
Areas Unusually Sensitive to Environmental Damage (Docket No. PS-
140.) The pipeline safety laws (49 U.S.C. 60100 et seq) require the DOT
to define areas unusually sensitive to environmental damage in the
event of a hazardous liquid pipeline accident and to prescribe
regulations that establish criteria for identifying each hazardous
liquid pipeline facility and gathering line located in these unusually
sensitive areas (USAs). RSPA has sought public participation through
six public workshops and a series of technical meetings.
RSPA developed a USA conceptual model that focuses on drinking
water and ecological resources. The drinking water resources include
public water systems, wellhead protection areas and sole source
aquifers. The ecological resources include threatened and endangered;
critically imperiled and imperiled species; depleted marine mammals;
and areas containing a large percentage of the world's population of
migratory waterbird species. We are currently pilot testing this model
in California, Texas and Louisiana, using data created and maintained
by other government agencies and environmental organizations like The
Nature Conservancy. During the pilot, RSPA is asking Federal, state and
other water and ecological experts to verify the adequacy of the model.
The pilot testing will provide us practical experience on which to base
a regulation on USAs.
We are planning to issue an NPRM on defining and identifying USAs
in late 1999 (fiscal year 2000). The definition will provide a basis
for associated rulemaking actions Congress has called for on EFRDs and
increased inspections.
Increased Inspection Requirements (Docket No. PS-141). Under 49
U.S.C. 60102(f)(2), we are to prescribe, if necessary, additional
standards requiring the periodic inspection of certain pipelines
located in high-density population areas, in areas unusually sensitive
to environmental damage, and in crossings of commercially navigable
waterways. The standards must include any circumstances under which an
inspection must be conducted with an instrumented internal inspection
device and, if the device is not required, use of an inspection method
that is at least as effective as using the device in providing for the
safety of the pipeline.
Regardless of their location, all gas and hazardous liquid
pipelines are subject to inspection requirements under DOT's pipeline
safety standards (49 CFR Parts 192 and 195). We began investigating the
need for additional inspection requirements for pipelines in the areas
described above by holding a public workshop in Washington, DC, on
October 19, 1995. The purpose of the workshop was to exchange
information with the public on various issues associated with requiring
additional inspections, including whether present inspection
requirements are sufficient, the effectiveness of instrumented internal
inspection devices, the circumstances that might demand additional
inspections, and the costs involved. We will take further action to
assess the need for additional inspection requirements after defining
areas that are unusually sensitive to environmental damage in the event
of a hazardous liquid pipeline accident, as discussed above.
Question 5: As the Department of Transportation has moved from a
minimum standards approach to a risk-based approach, are there some
existing pipeline safety regulations that are no longer necessary?
Answer: The risk-based approach we are implementing addresses the
most safety sensitive matters on a priority basis. We do not anticipate
abandoning the minimum standards approach, but rather improving it by
using explicitly risk-based criteria to ensure that each pipeline
company, whether large or small, can select the set of safety solutions
that are appropriate to individual circumstances.
A report is due to Congress on March 31, 2000, documenting the
results of the risk management demonstration program. While this report
will evaluate whether or not application of risk management should be
incorporated in the pipeline safety program on a permanent basis, it
may identify circumstances when certain existing safety regulations may
no longer be necessary.
Question 6: What portion of State pipeline safety programs are
funded through the Department of Transportation? How is the remainder
funded?
Answer: In 1998, the Federal pipeline safety grant allocations
represented 41 percent of the estimated State requests in both the
natural gas and hazardous liquid programs. Most states fund their
pipeline safety programs through a `gross receipts' assessment of the
utilities. There are a few states that have a user fee assessment on
pipeline facilities. Generally, these assessments complement the
funding they get from the pipeline safety grant program.
Question 7: What level of resources is the Office of Pipeline
Safety requesting for FY 2000?
Answer: We have requested $38,187,000 and 105 FTE.
Question 8: Should the risk management concept be applied more
broadly? Are legislative changes needed to have a broader application
of risk management principles?
Answer: Because we are just beginning to evaluate the application
of risk management in our oversight of operators' programs, an
assessment of whether to extend risk management principles would be
premature. Based on what we have seen, the concept is promising.
Question 9: What is the status of the Office of Pipeline Safety and
the oil and gas pipeline community's Y2K preparedness efforts?
Answer: RSPA is working collaboratively with government and
industry through the President's Council on Y2K Conversion Energy
Sector Oil and Gas Workgroup. Working with the Council Oil and Gas Work
Group, RSPA participated in creation of a comprehensive industry survey
to assess industry readiness and contingency planning. The survey will
be updated quarterly and is our primary means of tracking and
monitoring industry Y2K progress. The survey indicates a high degree of
awareness throughout industry and demonstrates that an effort is
underway to assure a high level of readiness. The results of the Work
Group's first survey are cautiously optimistic, projecting that
pipeline Y2K failures will be minimal.
We are working to promote industry and government cooperation,
public awareness, coordination of potential issues and solutions, and
companies active resolution of identified problems. We are coordinating
our efforts with the Council Sectors on Transportation, Environment,
and Emergency Services to facilitate solutions and contingency
planning. We serve as a critical link between state pipeline safety
agencies, state utility commissions, and the oil and gas industry. We
work with state programs to keep them informed of Y2K developments and
to encourage their monitoring of companies they regulate.
Last year, we sent an advisory bulletin to industry and our state
partners that outlined the problem, the Work Group's strategy, and
identified industry and government contacts for companies needing
advice. We also provide advice and assistance to companies during
inspections.
During 1999, we will encourage the pipeline industry to conduct
testing after taking steps to protect the public and the environment
from possible failures during testing. We are about to issue a Federal
Register notice encouraging testing by operators and informing them of
our enforcement policy for companies which do not take appropriate
planning actions. RSPA has authority to inspect records as needed to
enforce the pipeline safety statutes. If a Y2K related safety risk were
identified through inspection, further Y2K compliance information could
be requested. If pipeline facilities operations are determined to pose
a hazard to life, property, or the environment, RSPA can issue a
corrective action order after providing notice and an opportunity for a
hearing. Notice and hearing may be waived if a situation presents an
imminent threat to life, property, or the environment.
Existing regulations already address many of the potential failure
areas of Y2K. For example, in the event of failure of SCADA systems,
telecommunications, or electricity, operators already are required to
have contingency plans including preparation for manual operations. As
operators progress with their Year 2000 assessments, the industry is
generally moving at a fast pace to replace old potentially vulnerable
systems with new Year 2000 compliant systems. We feel that the industry
will be safer as a whole as a result of the massive effort underway to
assure Y2K compliance.
Question 10: Recently, both the Department of Transportation and
the Environmental Protection Agency have begun to assert jurisdiction
over petroleum storage tanks (breakout tanks). As a result, tank
operators are being asked to meet different and conflicting regulatory
requirements. What efforts are being taken to resolve this situation?
When is a resolution likely to occur?
Answer: RSPA and Environmental Protection Agency (EPA) Region and
Headquarters representatives are working to resolve and clarify
jurisdictional issues regarding storage tanks, particularly those that
serve both pipelines and other modes of transportation. We will
hopefully reach agreement on the best way for each agency to exercise
its regulatory authority without creating undue burdens on industry. In
this regard, we are working to (1) clarify each agency's jurisdiction
to issue pollution prevention and response planning regulations, and
define which facilities are jointly regulated and which are exclusively
subject to EPA or RSPA regulations; (2) develop a way to resolve site-
specific jurisdictional disputes; (3) develop information that explains
each agency's jurisdiction at intermodal facilities; (4) jointly
oversee operator compliance; (5) address response preparedness issues
at certain facilities; and (6) commit additional resources to regional
response activities. RSPA and EPA staff will meet again in March to
continue their discussions.
Question 11: (From Mr. Dingell) In its testimony, the Department
discusses its formation of a cost-benefit framework working group that
will establish the framework for future cost-benefit analysis.
(a) When does DOT expect to complete this framework?
(b) How will this framework differ from the Clinton
Administration's Executive Order on Risk Assessment?
Answer: (a) We have developed a policy framework to address the
risk assessment provisions from the Accountable Pipeline Safety and
Partnership Act of 1996 and the cost-benefit provisions of E.O. 12866.
We provided a draft of this framework to our two pipeline safety
advisory committees and briefed both committees on the work of the task
group. Shortly we will be seeking public comment and then finalizing
the document. The final framework document will be provided the
pipeline safety advisory committees this summer. We expect to have a
completed product for the November, 1999 committee meetings.
(b) This framework does not substantially differ from that provided
for by Executive Order on Regulatory Planning and Review, E.O. 12866.
We created the framework to the advisory committees who are now changed
by law to review risk assessment information for each proposed
regulation. The framework elaborates on the steps to follow in
identifying and evaluating information on costs and benefits.
Question 12: (From Mr. Dingell) What is the status of OPS action
under Sec. 60102(f) regarding standards for the replacement of pipeline
to accommodate internal inspection devices and periodic inspection of
pipelines?
Answer: A final rule amending the gas and hazardous liquid pipeline
safety regulations to require that certain new and replaced pipelines
be designed and constructed to accommodate the passage of instrumented
internal inspection devices was issued on April 12, 1994 (59 FR 17275).
All new gas transmission and all new and replaced hazardous liquid
pipelines must now accommodate internal inspection devices. However,
because of two petitions for reconsideration and extensive public
comment and advisory committee recommendations, the requirements have
been stayed with respect to certain replaced sections of gas
transmission and all offshore gas pipelines. We expect to complete
rulemaking on these last issues in 1999.
Question 13: (From Mr. Dingell) Has OPS issued standards designed
to identify pipelines in high density population areas pursuant to Sec.
60109?
Answer: Both the gas and hazardous liquid pipeline safety
regulations were written prior to enactment of that section in 1996 and
contain requirements for pipelines located in high density populated
areas and these areas are defined. In the gas pipeline safety
regulations they are referred to by class location and in the hazardous
liquid pipeline safety regulations they are referred to by definition.
High density population areas are identified in the national
pipeline mapping system which is being created now based on voluntary
operator participation. We expect 75% of operators to provide
information for the system by the end of year 2000. The system will
accurately depict pipelines in relation to people and environmentally
important areas. RSPA has issued mapping standards for collection of
data in the national and state repositories. These standards have been
coordinated with the Department's Bureau of Transportation Statistics
and comply with Federal Geographic Data Standards for spacial data. Ten
state agencies, six pipeline mapping vendors, and 22 pipeline companies
pilot tested the national pipeline mapping system and we are actively
soliciting data now from all hazardous liquid and natural gas
transmission operators.
Question 14: (From Mr. Dingell) In addition to the previously
referenced OPS activity, the Pipeline Safety Act requires DOT to
promulgate a number of regulations and standards. Please provide an
inventory on DOT's progress to date in fulfilling these requirements.
(a) For completed actions, please provide the date on which the action
was finalized. (b) For pending actions, please provide an expected
completion date. (c) For actions that required completion by a
statutory date certain, please reference the required statutory
deadline in your response.
Answer: The chart below describes all outstanding mandated pipeline
safety rulemakings and those completed since 1998.
----------------------------------------------------------------------------------------------------------------
Docket No. Title Current Phase Schedule
----------------------------------------------------------------------------------------------------------------
PS-94................................ Qualification of Final Rule being Final Rule 8/99
Pipeline Personnel. prepared.
PS-118............................... Excess Flow Valve (EFV) Final Rule published 2/ .......................
Customer Notification. 98.
PS-126............................... Passage of Internal Final Rule for gas Final Rule 6/99
Inspection Devices. pipeline
``replacement''
sections being
prepared.
PS-133............................... Emergency Flow NPRM awaiting NPRM 12/00 \1\ Final
Restricting Devices definition for Rule not yet scheduled
(EFRDs). unusually sensitive
areas.
PS-140............................... Areas Unusually NPRM being prepared.... NPRM 12/99 Final Rule
Sensitive to not yet scheduled
Environmental Damage
(USAs).
PS-141............................... Increased Inspection NPRM awaiting NPRM 12/00 \2\ Final
Requirements. definition for Rule not yet scheduled
unusually sensitive
areas.
RSPA-97-2094......................... Underwater Abandoned NPRM being prepared.... NPRM 5/00 \3\ Final
Pipeline Facilities. Rule not yet scheduled
RSPA-97-3001......................... Periodic Underwater NPRM being prepared.... NPRM 6/01 \4\ Final
Inspections. Rule not yet scheduled
RSPA-98-4868......................... Gas Gathering Line Preparing for an Meeting 7/00 \5\ Final
Definition. electronic public Rule not yet scheduled
meeting in April 1999.
----------------------------------------------------------------------------------------------------------------
\1\ Statutory deadline 10/96
\2\ Statutory deadline 10/95
\3\ Statutory deadline 4/94
\4\ Statutory deadline 10/95
\5\ Statutory deadline 10/94
Question 15: Please provide a history of all federal enforcement
actions related to the Colonial Pipeline System since enactment of the
Hazardous Liquid Pipeline Safety Act of 1968.
Answer: The tables below provide a listing of open and of closed
enforcement cases relating to Colonial Pipeline as of January 25, 1999.
Colonial Pipeline--Open Enforcement Cases as of 1/25/99
------------------------------------------------------------------------
Date Brief Summary
CPF Opened Type of Case of Case
------------------------------------------------------------------------
10504A...................... 8/24/90 Agreement...... This case was
initiated
after a
December 18,
1989 fatigue
failure in
Orange County,
VA, on the
operator's 32-
inch pipeline.
This case
requires the
operator to
conduct an ORA
on the 32-inch
pipeline. See
CPF # 14501H.
13503H...................... 3/30/93 Hazardous Initiated
Facility Order following a
(3/30/93). March 28, 1993
pipeline
rupture near
Reston, VA,
this case
requires the
operator to
expose
portions of a
36-inch
pipeline to
determine if
dents or
gouges are
present and
make repairs
where
appropriate.
Additionally,
the operator
is required to
internally
inspect and
repair the
pipeline to
ensure its
integrity. See
CPF # 14501H.
14501H...................... 5/16/94 Consent Order This case was
(8/15/95). initiated as a
proposed
hazardous
facility order
following
evaluation of
the
information
generated by
CPF # 13503H.
This case
incorporated
certain
requirements
from two other
previous cases
CPF # 13503H
and 10504A in
an expanded
integrity
verification
program. The
operator is
required to
internally
inspect (and
in some cases,
reinspect) or
hydrostaticall
y test
portions of
the pipeline
system. All
anomalies are
to be
evaluated and
repairs made
where
appropriate.
All three
cases remain
open until all
of the items
in CPF 14501H
are completed.
26503H...................... 7/31/96 Consent Order Initiated as a
(7/3/97). hazardous
facility order
following the
June 26, 1996
pipeline
failure near
Simpsonville,
South
Carolina, this
case was later
modified to a
Consent Order.
The operator
is required to
internally
inspect
certain pipe
segments and
complete work
on pressure
controlling
switches.
27501....................... 12/5/97 Final Order (3/ This case found
8/99). several
violations and
requires the
operator to:
<bullet> implem
ent a
refresher
training
program;
<bullet> evalua
te the
adequacy of
post accident
alcohol
testing
procedures;
<bullet> conduc
t a
comprehensive
survey for
pipelines
exposed to the
atmosphere;
and
<bullet> conduc
t an ORA which
will consider
internal
inspection
results, over
pressure
protection
devices,
overall system
integrity and
the
practicality
of future re-
hydratesting
and/or
repeated
internal
inspection of
certain
pipeline
segments.
The case
remains open
pending
completion of
these items.
28501....................... 1/15/98 NOPV & PCP of This case
$45,000. alleges
several
probable
violations
including
isolation of
thermal relief
devices,
improper set
points for
relief valves,
and inadequate
maintenance
inspections.
The case
proposes a
civil penalty
of $45,000.
The operator
has requested
a hearing.
28502....................... 3/13/98 NOPV & PCP of This case
$5,000. alleges the
operator
failed to file
an accident
report in a
timely manner
and proposes a
civil penalty
assessment of
$5,000. The
operator paid
the civil
penalty before
issuance of a
final order
and has taken
steps to
prevent
recurrence.
28505....................... 8/20/98 NOPV & PCO..... Initiated
following a
March 30, 1998
pipeline
failure in the
Morgan Falls
landfill near
Atlanta, GA,
this case
alleges
several
probable
violations
including
inadequate
pipe support,
failure to
follow
procedures,
and record-
keeping
errors. The
case proposes
to issue a
compliance
order
requiring the
operator to
identify
pipeline
segments
crossing
landfill
areas,
evaluate
stresses
placed on the
segments and
re-evaluate
internal
inspection
results of
certain areas.
Additionally,
the case
requires the
operator to
modify its
right-of-way
inspection
procedures and
record-
keeping. The
operator has
requested a
hearing.
28506M...................... 8/20/98 NOA............ This case
requires the
operator to
amend its
patrolling
procedures and
emergency
response plan.
The operator
is revising
the
procedures.
------------------------------------------------------------------------
CPF--Compliance Progress File; PCP--Proposed Civil Penalty; NOPV--Notice
of Probable Violation; NOA--Notice of Amendment; PCO--Proposed
Compliance Order; ORA--Operation Reliability Assessment.
Colonial Pipeline--Closed Enforcement Cases as of 1/25/99
----------------------------------------------------------------------------------------------------------------
Date
CPF # Opened Type of Case Date Closed
----------------------------------------------------------------------------------------------------------------
4WO300................................... 4/13/84 Warning Letter.............. 4/13/84
2WO123................................... 4/23/84 Warning Letter.............. 4/23/84
2WO143................................... 3/1/85 Warning Letter.............. 3/1/85
2510..................................... 7/7/88 NOPV & PCP of $25,000 & NOA. 4/10/89 Final civil penalty
assessment of $15,000.
2WO267................................... 6/5/89 Warning Letter.............. 6/5/89
1094..................................... 9/20/88 NOPV & PCP of $10,500....... 8/29/89 Final civil penalty
assessment of $10,500
1103..................................... 11/27/89 NOPV & PCP of $5,000........ 3/4/91 Final civil penalty
assessment of $5,000
21502.................................... 11/7/91 NOPV & PCP of $5,000........ 7/27/92 Final civil penalty
assessment of $3,000
21505H................................... 12/20/91 Hazardous Facility Order.... 5/29/92
22506W................................... 8/31/92 Warning Letter.............. 8/31/92
22501.................................... 3/11/92 NOPV & PCP of $1,500........ 5/12/93 No civil penalty
assessed
23501W................................... 2/3/93 Warning Letter.............. 2/3/93
44508.................................... 5/2/94 NOPV & PCP of $25,000....... 11/4/97 Final civil penalty
assessment of $5,000
25505W................................... 4/17/95 Warning Letter.............. 4/17/95
25506W................................... 6/16/95 Warning Letter.............. 6/16/95
26500.................................... 3/7/96 NOPV & PCP of $8,500 & NOA.. 3/25/97 Final civil penalty
assessment of $8,500
26505.................................... 10/17/96 NOPV & PCP of $1,250........ 6/24/98 Final civil penalty
assessment of $1,250
26506.................................... 11/8/96 NOPV & PCP of $25,000 & PCO. 7/27/98 Final civil penalty
assessment of $25,000
28500C................................... 1/15/98 Letter of Concern........... 1/15/98
28504C................................... 7/21/98 Letter of Concern........... 7/21/98
28507C................................... 8/20/98 Letter of Concern........... 8/20/98
----------------------------------------------------------------------------------------------------------------
CPF--Compliance Progress File; PCP--Proposed Civil Penalty; NOPV--Notice of Probable Violation; NOA--Notice of
Amendment; PCO--Proposed Compliance Order; ORA--Operation Reliability Assessment.
Warning Letters--Warning Letters are the least serious enforcement actions issued. The operator is warned to
correct circumstances leading to probable violations but no final determination of violation is made. The
operator is advised that enforcement action may be initiated in the future if it is found that corrective
action has not been taken.
Letter of Concern--Letters of Concern are not considered enforcement actions. These documents are used to bring
areas of concern to the operator's attention.
Question 16: Has OPS ever removed a state's authority to regulate
intrastate pipelines?
Answer: Yes, the State of Hawaii was decertified in 1993 under the
Natural Gas Pipeline Safety Program as a result of the state
experiencing a revenue shortfall causing the state to not be able to
provide adequate technical staff. At that time, safety jurisdiction for
Hawaii intrastate pipelines reverted to the Federal government.
Question 17: (From Mr. Markey) The Pipeline Safety Act of 1992
required OPS to develop pipeline standards to protect the environment,
specifically requiring OPS to identify areas ``unusually sensitive to
environmental damage'' by October 1994 and to require periodic
inspections of pipeline infrastructure in those areas by October 1995.
Why has OPS still not issued these environmental regulations four years
after the first deadline? When can we expect these rules to be issued?
Answer: After extensive consultation with numerous federal and
state agencies, environmental groups and academia we have developed a
USA conceptual model that focuses on drinking water and ecological
resources. The drinking water resources include public water systems,
wellhead protection areas and sole source aquifers. The ecological
resources include the following: threatened and endangered, critically
imperilled, and imperilled species; depleted marine mammals; and areas
containing a large percentage of the world's population of a migratory
waterbird species.
OPS, in cooperation with the American Petroleum Institute (API),
state and federal government agencies, environmental groups, and
academia will pilot test a USA conceptional model. The pilot will
provide the opportunity to consider the model's adequacy, its
effectiveness as a basis for operator decision making, and the
appropriateness and accessibility of environmental data to support this
decision making. We plan to ask water and ecological experts to verify
that the USAs identified by the model are unusually sensitive areas,
and that the model has not missed other USAs. This pilot testing will
provide us with practical experience prior to creating a regulation on
USAs.
A Federal Register notice that will seek comments on the USA
conceptional model is expected to be published in March 1999. The pilot
testing will begin soon after and is expected to take about a year.
This experience will lay the groundwork for regulatory action in fiscal
year 2000.
Question 18: (From Mr. Markey) In 1996 Congress added requirements
for cost-benefit analyses of regulations. Has this added burden taxed
your staff resources or slowed issuance of the regulations? Why are
environmental effects of pipeline accidents not included in the cost-
benefit analyses?
Answer: The Accountable Pipeline Safety Act of 1996 included a
provision requiring peer review for cost-benefit analyses of pipeline
safety regulations. OPS was already preparing cost-benefit analyses
under Executive Order 12866 and the Department's policy. Thus, the
statutory requirement was not an added burden to our regulatory
process.
In response to the 1996 mandate, RSPA has worked with a government/
industry task group to develop a risk assessment/cost-benefit framework
during the past 18 months. We provided a draft of this framework to our
two pipeline safety advisory committees and briefed both committees on
the work of the task group. We will be seeking public comment and then
finalizing the document. The final framework document will be provided
to the pipeline safety advisory committees this summer.
Environmental effects of pipeline accidents are included in cost-
benefit analysis. Complete and precise estimates of monetary damage
from pipeline spills are often difficult or impossible to quantify.
Therefore, environmental damage from pipeline spills is often described
qualitatively rather than quantitatively.
Question 19: (From Mr. Markey) According to the National
Transportation Safety Board, the Office of Pipeline Safety has only
accepted 68% of NTSB recommendations, the worst acceptance rate of any
Department of Transportation administration. Why has OPS failed to
follow so many NTSB recommendations?
Answer: The OPS acceptance rate for NTSB recommendations is at 68%
for two reasons. First, we sometimes disagree with the NTSB
recommendation. Second, we often implement safety actions that the NTSB
rates as unacceptable despite the fact that the action is one we
believe addresses NTSB's safety concern. In other words, we believe
that OPS and NTSB are in agreement on key safety issues but sometimes
differ on the way to resolve these issues.
It is worth noting that of all pipeline safety recommendations
issued to OPS in the last 10 years, 83% were classified acceptable by
the NTSB. A recent spate of unacceptable closings of older
recommendations drove OPS from the middle of the Department's ratings
to the bottom. We regret this action and are working with NTSB to
respond more favorably to the safety actions we are taking in 21
pending and 27 as yet unclassified recommendations.
Question 20: (From Mr. Markey) Since the 1996 amendments, OPS has
approved six demonstration projects among the 2200 regulated operators.
How much OPS staff time has gone into those six projects? Has the staff
time used in these projects reduced OPS ability to issue regulations
mandated by the Congress? Since the projects directly affect only a
small percentage of operators, how has the information learned from the
projects affected generic regulations?
Answer: OPS has allotted two full-time engineers to risk
management, and regional staff and other experts are used on an as-
needed basis. To date, this amounts to approximately five person-years
annually. This allocation of staff resources has not reduced OPS's
ability to issue regulations mandated by the Congress. OPS augments in-
house risk management capability by contracting with risk management
experts and consulting with representatives from state agencies.
The Demonstration Program represents OPS's most ambitious test of
risk-based approaches to improve safety, environmental protection, and
service reliability. While risk management may not be the appropriate
regulatory alternative for every operator, it has provided information
and techniques that OPS is already using with other operators in the
compliance program and in shaping new regulations.
In the compliance area, our experience in the Demonstration Program
has influenced us to move away from a piecemeal inspection process to a
system-based approach. Using this approach on Alyeska Pipeline, we are
conducting a risk-based review of all the valves on the system
resulting in repair and replacement of valves in environmentally
sensitive areas. Using this approach on Colonial Pipeline, we have
worked with the Department of Justice to order system wide evaluation
of all water crossings on a risk basis.
In the regulatory area, the Demonstration Program has influenced
our rewrite of corrosion standards to include options for addressing
the highest risk areas in a way that addresses system specific safety
issues. In other words, operators will be able to prevent and fix
corrosion problems on a risk basis. We also issued a risk-based
regulation requiring testing and evaluation of older liquid pipelines.
This action will prevent spills and ruptures in high risk areas.
To extend the risk assessment process outside the pipeline
companies, OPS now routinely uses internet-accessible information
systems, electronic town meetings, and other approaches that solicit
and incorporate broad-based public input into the Risk Management
Demonstration Programs. In addition, we now solicit involvement on
other programs such as damage prevention, mapping and system integrity,
using techniques that were first developed for the Demonstration
Program.
Question 21: (From Mr. Markey) In 1996 we assigned peer review of
risk assessment to the existing advisory committees. What risk
assessments have been peer revised by the advisory committees? What
changes have been made in response to the committee reviews? One-third
of these committees are composed of industry representatives. What
steps have you taken to ensure that conflicts of interest do not color
their reviews.
Answer: A table of rulemaking projects for which risk assessments
were reviewed by the advisory committee is attached. To the extent that
any changes are made in a rule because of advisory committee comments,
these are noted in the rulemaking documents published in the Federal
Register. To date, there has been only one significant change to a
proposed rule because of the peer review. This was the addition of an
environmental factor to the rule providing a risk-based alternative to
pressure testing hazardous liquid pipelines issued in 1998.
Although one-third of the advisory committee membership is composed
of representatives from industry, two-thirds are derived from the
public and state and federal agencies with expertise in issues relevant
to pipeline safety and environmental protection. RSPA has been
successful in its effort to include government and public members with
environmental interests and expertise as well as a broad range of
engineering and safety expertise. Although the industry representatives
are concerned with the economics of safety and environmental
protection, RSPA believes that this interest is not inconsistent with
either safety or environmental protection. The dynamics of the advisory
committee process provides the necessary balance of interests.
Table of Rules Reviewed by the Technical Pipeline Safety Standards
Committee (TPSSC) and the Technical Hazardous Liquid Pipeline Safety
Standards Committee (THLPSSC) Since 1996
------------------------------------------------------------------------
Rulemaking Topics Committee Status
------------------------------------------------------------------------
Leak Detection and Emergency THLPSSC........... Final rule
Flow Restriction Devices. published
governing
computerized leak
detection
methods. Further
action pending
development of
``unusually
sensitive area''
definition
Risk-Based Approach to THLPSSC........... Final rule
Hydrostatic Testing. published
allowing
operators to
exclude certain
low risk
pipelines and
certain pipelines
in which an
instrumented pig
is run from the
requirement to
hydrostatically
test older
hazardous liquid
pipelines
Excess Flow Valve Performance TPSSC............. Final rules
Standards and Customer published
Notification. establishing
standards for the
performance of
excess flow
valves installed
in gas pipelines,
and for notifying
gas customers of
the availability
of such valves
Low-stress Hazardous Liquid THLPSSC........... Final rule
Pipelines. published
excluding certain
short, low risk
pipelines from
the hazardous
liquid pipeline
safety standards
Standards for Breakout Tanks.... THLPSSC........... Notice of proposed
rulemaking (NPRM)
published to seek
comments on new
design,
construction, and
maintenance
standards for
certain hazardous
liquid storage
tanks
Siting, Design, and Construction TPSSC............. NPRM published
Standards for Liquefied Natural proposing revised
Gas Plants. standards for
liquefied natural
gas plants
associated with
gas pipelines
Metrication..................... TPSSC and THLPSSC. Final rule was
issued adding
metric
measurements to
the gas and
hazardous liquid
pipeline safety
standards
------------------------------------------------------------------------