<DOC>
[109th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:31361.wais]
DISCUSSION DRAFT ON THE
PIPELINE SAFETY IMPROVEMENT
ACT REAUTHORIZATION AND
H.R. 5782, THE PIPELINE SAFETY
IMPROVEMENT ACT OF 2006
HEARING
BEFORE THE
SUBCOMMITTEE ON ENEGY AND AIR QUALITY
OF THE
COMMITTEE ON ENERGY AND
COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
JULY 27, 2006
Serial No. 109-133
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/house
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COMMITTEE ON ENERGY AND COMMERCE
JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida Ranking Member
Vice Chairman HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, JR., New Jersey
ED WHITFIELD, Kentucky SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia BART GORDON, Tennessee
BARBARA CUBIN, Wyoming BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
HEATHER WILSON, New Mexico BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona ELIOT L. ENGEL, New York
CHARLES W. "CHIP" PICKERING, Mississippi ALBERT R. WYNN, Maryland
Vice Chairman GENE GREEN, Texas
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DEGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania JIM DAVIS, Florida
MARY BONO, California JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon HILDA L. SOLIS, California
LEE TERRY, Nebraska CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey JAY INSLEE, Washington
MIKE ROGERS, Michigan TAMMY BALDWIN, Wisconsin
C.L. "BUTCH" OTTER, Idaho MIKE ROSS, Arkansas N, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee
BUD ALBRIGHT, Staff Director
DAVID CAVICKE, General Counsel
REID P. F. STUNTZ, Minority Staff Director and Chief Counsel
SUBCOMMITTEE ON ENERGY AND AIR QUALITY
RALPH M. HALL, Texas, Chairman
MICHAEL BILIRAKIS, Florida RICK BOUCHER, Virginia
ED WHITFIELD, Kentucky Ranking Member
CHARLIE NORWOOD, Georgia MIKE ROSS, Arkansas
BARBARA CUBIN, Wyoming HENRY A. WAXMAN, California
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
HEATHER WILSON, New Mexico ELIOT L. ENGEL, New York
JOHN B. SHADEGG, Arizona ALBERT R. WYNN, Maryland
CHARLES W. "CHIP" PICKERING, Mississippi GENE GREEN, Texas
VITO FOSSELLA, New York TED STRICKLAND, Ohio
GEORGE RADANOVICH, California LOIS CAPPS, California
MARY BONO, California MIKE DOYLE, Pennsylvania
GREG WALDEN, Oregon TOM ALLEN, Maine
MIKE ROGERS, Michigan JIM DAVIS, Florida
C.L. "BUTCH" OTTER, Idaho HILDA L. SOLIS, California
JOHN SULLIVAN, Oklahoma CHARLES A. GONZALEZ, Texas
TIM MURPHY, Pennsylvania JOHN D. DINGELL, Michigan
MICHAEL C. BURGESS, Texas (EX OFFICIO)
JOE BARTON, Texas
(EX OFFICIO)
CONTENTS
Page
Testimony of:
Barrett, Hon. Thomas J., Administrator, Pipeline and Hazardous
Materials Administration, U.S. Department of Transportation 11
Mason, Hon. Donald L., Commissioner, Public Utilities Commission
of Ohio, on behalf of National Association of Regulatory Utility
Commissioners 16
Jibson, Ronald W., Vice President, Operations, Questar Gas
Company, on behalf of American Gas Association 32
Mohn, Jeryl L., Senior Vice President, Operations and Engineering,
Panhandle Energy, on behalf of Interstate Natural Gas Association
of America 38
Felt, Timothy C., President & CEO, Explorer Pipeline Company, on
behalf of Association of Oil Pipe Lines 45
Epstein, Lois N., P.E., Senior Engineer, Oil and Gas Industry
Specialist, Cook Inletkeeper, on behalf of Pipeline Safety Trust 52
Additional material submitted for the record:
Siggerud, Katherine, Director, Physical Infrastructure Issues,
United States Government Accountability Office, prepared statement
of 62
DISCUSSION DRAFT ON THE PIPELINE
SAFETY IMPROVEMENT ACT
REAUTHORIZATION AND
H.R. 5782, THE PIPELINE SAFETY
IMPROVEMENT ACT OF 2006
THURDAY, JULY 27, 2006
HOUSE OF REPRESENTATIVES,
COMMITTEE ON ENERGY AND COMMERCE,
SUBCOMMITTEE ON ENERGY AND AIR QUALITY,
Washington, DC.
The subcommittee met, pursuant to notice, at 11:46 a.m., in Room
2322 of the Rayburn House Office Building, Hon. Ralph M. Hall
(Chairman) presiding.
Members present: Representatives Shimkus, Sullivan, Murphy,
Boucher, Green, and Hall.
Staff present: Tom Hassenboehler, Counsel; David McCarthy, Chief
Counsel for Energy and Environment; Elizabeth Stack, Policy
Coordinator; Peter Kielty, Legislative Clerk; Bruce Harris, Minority
Professional Staff Member; and Sue Sheridan, Minority Senior Counsel.
MR. HALL. The hearing will come to order.
Without objection, the Chair will proceed pursuant to Committee
rule 4E and recognize members for 3 minutes for opening statements. If
they defer, this time will be added to their opening round of questions.
Today, we meet to discuss two bills relating to pipeline safety
reauthorization, one being a committee discussion draft that was put
together in a bipartisan fashion, and another, H.R. 5782, that was
recently reported out of the Transportation Committee. Pipeline safety
reauthorization is a priority for this committee to get done this year, and I
am hopeful that our efforts are going to move this bill forward when we
return from the August recess. Hopefully we will not only be fruitful in
the House, but I also have hopes for the Senate.
The drafts that we are here to discuss today are, in my opinion,
attempts to make improvements to an already fairly good product that
was signed into law in 2002. In addition to it being a good product, I am
happy to know that the Pipeline and Hazardous Materials Safety
Administration, PHMSA, has succeeded in achieving nearly all of the
mandates set forth in the Pipeline Safety Improvement Act of 2002, and
that the agency has done so in what I think is a timely manner. Because
of this hard work, we have more information and statistics on causes of
accidents, more information on integrity management, more information
on what States are successfully doing to bring down damages from
excavation, and more information on how PHMSA is working to
complete upcoming regulations.
The committee discussion draft sets forth several new provisions that
have been proposed by PHMSA, that pipeline industry safety advocates
and the States, that reauthorizes the program through 2010, adds new
one-call requirements for States to enforce, authorizes additional grants
for States to set up damage prevention programs, requires the DOT to
finalize regulations already underway concerning low-stress pipelines,
addressing the Alaska BP incident, and further addressing enforcement
transparency. In addition, the bill incorporates a proposal from Dr.
Murphy to further enhance one-call requirements and emergency
notification.
I am also glad to see that the draft addresses the 7-year gas
transmission integrity management assessment interval. And I look
forward to being updated for the record by GAO after the hearing on
their continuing efforts to finalize their work in recommendations
regarding the 7-year interval that we asked them to do in 2002. I look
forward to hearing any comments or concerns about the drafts from the
witnesses today in trying to address any outstanding issues before we
introduce the bill when we return in September.
[The prepared statement of Hon. Ralph M. Hall follows:]
PREPARED STATEMENT OF THE HON. RALPH M. HALL, CHAIRMAN, SUBCOMMITTEE ON
ENERGY AND AIR QUALITY
This hearing will come to order. Without objection, the Chair will proceed pursuant
to Committee Rule 4(e) and recognize Members for 3 minutes for opening statements. If
they defer, this time will be added to their opening round of questions. Today we meet to
discuss two bills relating to pipeline safety reauthorization, one being a Committee
discussion draft that was put together in a bipartisan fashion and another, HR 5782, that
was recently reported out of the Transportation Committee. Pipeline safety
reauthorization is a priority for this Committee to get done this year and I am hopeful that
our efforts to move this bill forward when we return from August recess will not only be
fruitful in the House but also the Senate.
The drafts that we are here to discuss today are, in my opinion, attempts to make
improvements to an already pretty good product that was signed into law in 2002. In
addition to it being a good product, I am happy to know that the Pipeline and Hazardous
Materials Safety Administration or PHMSA (FIM-sa) has succeeded in achieving nearly
all of the mandates set forth in the Pipeline Safety Improvement Act (PSIA) of 2002, and
that the agency has done so in a timely manner. Because of this hard work, we have
more information and statistics on causes of accidents, more information on integrity
management, more information on what states are successfully doing to bring down
damages from excavation and more information on how the PHMSA (FIM-sa) is working
to complete upcoming regulations.
The Committee discussion draft sets forth several new provisions that have been
proposed by PHMSA (FIM-sa), the pipeline industry, safety advocates, and the states. It
reauthorizes the program through 2010; adds new one call requirements for states to
enforce; authorizes additional grants for states to set up damage prevention programs;
requires the DOT to finalize regulations already underway concerning low stress
pipelines, addressing the Alaska BP incident; and further addresses enforcement
transparency. In addition, the bill incorporates a proposal from Mr. Murphy to further
enhance one call requirements and emergency notification.
I am also glad to see that the draft addresses the 7 year gas transmission integrity
management assessment interval, and I look forward to being updated for the record by
GAO after the hearing on their continuing efforts to finalize their work and
recommendations regarding the 7 year interval that we asked them to do in 2002.
I look forward to hearing the any comments or concerns about the drafts from the
witnesses today and trying to address any outstanding issues before we introduce a bill
when we return in September. At this point I recognize the Ranking Member of the
Subcommittee, Mr. Boucher, for purposes of an opening statement.
MR. HALL. At this point, I recognize the Honorable Ranking
Member of the Subcommittee, Mr. Boucher, for purposes of an opening
statement.
MR. BOUCHER. Thank you very much, Mr. Chairman.
I want to commend you for convening today's hearing on legislative
proposals to reauthorize the Pipeline Safety Act. This issue is both
important and timely.
In 2002, this committee worked in a bipartisan manner to achieve
enactment of a consensus pipeline safety law. In April, this
subcommittee conducted a hearing at which we gained valuable advice
from interested parties about the effectiveness of the 2002 law as well as
receiving suggestions from those witnesses for improvements that can
now be made. Today, we focus on legislation that we believe builds on
the success that has been demonstrated for the 2002 law and would make
recommended improvements.
For example, the draft bill encourages States to develop strong
excavation damage prevention programs as a condition of being certified
by the U.S. Department of Transportation to regulate and enforce within
their State's pipeline safety standards. The draft specifies that the State
programs should include the nine components which are largely
recognized as the formula for the most successful prevention programs.
The bill further incentivizes the development of a vigorous damage
prevention program by creating a new grant program for States which
fully develop and implement a damage prevention program, including
these nine elements.
These provisions are designed to encourage widespread
implementation of damage prevention programs, such as the one that has
been successfully deployed in my home State of Virginia. Since
implementation of its program, Virginia has witnessed a dramatic
reduction in the incidents of damage caused by excavation, and we think
it is appropriate to encourage other States to adopt programs that are
modeled on that very successful experience.
In addition, I was pleased that the 2002 law included a section
authorizing technical assistance grants for communities, but I was
somewhat disappointed to note that no grants have been awarded through
that program by the Department of Transportation. I continue to think
that providing assistance to local communities for technical assistance on
local pipeline issues is a necessity, and I am pleased that the draft bill
includes a provision that would require the Department of Transportation
to publish criteria for the grants and to award at least three demonstration
program grants. These requirements are in furtherance of the intent of
our 2002 law and will ensure that the Technical Assistance Grant
Program is, in fact, utilized.
One item, which is not contained within the draft but which I would
like to see included as our bill moves forward, is a provision relating to
the implementation of an Integrity Management Plan for natural gas
distribution lines. During a hearing before this subcommittee 2 years
ago, a Department of Transportation official testified that the Department
was planning to develop such a plan for distribution lines, which account
for more than 85 percent of all natural gas pipelines nationwide, but at
that time, the idea of a comprehensive Integrity Management Plan for
those distribution systems was merely a recommendation.
I am pleased that the Office of Pipeline Safety is moving ahead with
the establishment of an Integrity Management Plan for these critical
distribution lines and that OPS expects to publish a distribution integrity
management rule in early 2007. This effort marks the first
comprehensive and consensus-based attempt to develop an Integrity
Management Plan for natural gas distribution lines, and I commend this
effort. What I would like to see is a provision included in the bill that
simply sets a deadline for the establishment of this rule so as to ensure
that the progress that has been made to date continues.
There are other areas that I would hope to hear more about from our
witnesses this morning. For example, the recent failure and subsequent
crude oil leak from a low-pressure transmission line in Alaska highlights
the need for regulation of low-pressure pipelines. And the draft
legislation contains a provision that would require that minimum
standards be established for regulation of those lines. I applaud that
provision.
The consensus 2002 Act has produced positive results with an
increased emphasis on safety and on accident prevention, both by the
agencies of enforcement and by the industry. The discussion draft that is
before us today builds upon that success, and I look forward to a
continuation of the bipartisan effort that we have on this committee that
has produced that discussion draft as we proceed in September to
approval of this bill in subcommittee and hopefully rapid approval of the
measure in the House as well.
Thank you very much, Mr. Chairman, for scheduling a timely
hearing.
I look forward to hearing from the witnesses.
MR. HALL. I thank you, Mr. Boucher.
The Chair recognizes the gentleman from Pennsylvania, Dr. Murphy.
MR. MURPHY. Thank you, Mr. Chairman.
We have a lot to hear about with the complex but valuable bill, and I
will leave some of those things to more in the category of listening to the
comments to be made.
But I would like to say this.
I came before this committee 2 years ago with some ideas to help
protect our communities and increase pipeline safety for the sake of our
homes and our families. I came with a personal story that affected a
family in my district. I went and I visited their home. I met with their
children. They came to me not for themselves but with the idea of
preventing families around this country from having tragedies or
problems that potentially could come with pipeline problems. We were
able to work out a method that is in this bill that simply responds in an
efficient way with any potential emergency situations that will prevent
potential problems from becoming tragic problems.
And I want to thank you, Mr. Chairman, for listening, you and your
staff. I am very grateful, but more importantly, the family is grateful and
our Nation's families are grateful and our Nation's communities are
grateful for some of the elements in this bill, which will increase pipeline
safety.
I thank you, and I yield back.
MR. HALL. Thank you, Dr. Murphy.
The gentleman from Texas, Mr. Green.
MR. GREEN. Thank you, Mr. Chairman, and I will ask unanimous
consent to place my full statement in the record.
I want to welcome Admiral Barrett. Thank you for your previous
service with the Coast Guard and also now at DOT. I have a district in
Houston in the petrochemical area, and we have pipelines everywhere.
We also have a lot of Coast Guard personnel in the Houston ship
channel. And compared to 4 years ago, this legislation is much easier to
deal with. Those of us who have lived and worked along pipelines for
our whole lives, obviously, want the safety, but we also know we need
new product.
So Mr. Chairman, I will yield back my time, and again ask that my
statement be placed in the record, because I look forward to the
testimony today and the markup on this hopefully in September.
MR. HALL. Without objection it will be placed into the record.
Mr. Boucher.
MR. BOUCHER. Mr. Chairman, I ask unanimous consent that
Ranking Member Dingell's statement be placed in the record.
MR. HALL. Without objection it will be placed in the record.
[The prepared statement of Hon. John Dingell follows:]
PREPARED STATEMENT OF THE HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF MICHIGAN
Mr. Chairman, thank you for holding this important hearing today. I want to also
thank Chairman Barton for his contributions, as well. I believe this discussion draft is a
good first step towards reauthorizing our pipeline safety laws and I hope that we can
continue to work together as these bills move forward.
One of the reasons that the discussion on reauthorization has been so civil this year
is that we did so much hard work in writing the 2002 Pipeline Safety Act. It represented
hard-fought compromises, both in this Committee and with our colleagues on the
Committee on Transportation and Infrastructure. It made substantial improvements in the
law that have yielded tangible benefits. For example, the requirement for natural gas
transmission operators to conduct baseline assessments of their pipelines has been praised
for helping detect and repair pipeline anomalies before they turn deadly. The
establishment and continued promotion of a three-digit nationwide number that can be
used prior to excavation activities will help us to prevent one of the leading causes of
pipeline accidents.
While this discussion draft does not make sweeping changes to our work from 2002,
it does offer some modest and important improvements, including the following:
Enforcement transparency: The Department of Transportation's (DOT) enforcement
of pipeline safety regulations has long been a concern of mine. In the past, a lack of
clarity and direction characterized the Department's approach to enforcement, an
assessment supported by the Government Accountability Office (GAO) in its 2004 report
entitled "Management of the Office of Pipeline Safety's Enforcement Program Needs
Further Strengthening." Although the GAO reports that the situation has improved, my
concerns remained as recently as this March, when Ranking Member Boucher and I sent
a letter to DOT on its enforcement strategy. I believe the transparency requirement in the
draft will benefit all parties involved in pipeline safety, be they energy companies or
safety advocates, who want to understand how DOT is applying its enforcement
authority. In addition, DOT's enforcement authority is enhanced in several other
important areas such as one-call and integrity management.
Low-Stress Pipelines: When a British Petroleum (BP) pipeline ruptured in March of
this year, spilling over 250,000 gallons of crude oil on Alaska's North Slope, the long-
held conventional wisdom that "low-stress" equaled "no-risk" was turned on its head.
Investigative work by the Democratic staff of the Committee has shown that a lack of
oversight by the company and a lack of regulation by DOT contributed to this situation.
The requirement in the discussion draft that DOT issue minimum operating standards for
low-stress lines will begin to address this issue. Whether that will resolve the problem
remains to be seen, but I can assure my colleagues that I will be keeping a close eye on
the situation.
Damage Prevention Programs: One of the leading causes of pipeline accidents and
damage is the direct result of errors made in excavation. The discussion draft addresses
this issue by encouraging States to develop their own damage prevention programs and
by awarding grant money to those States that take action.
In sum, Mr. Chairman, I believe we are on the path to producing good legislation
and I look forward to the testimony of the witnesses here today.
MR. HALL. The Chair recognizes Mr. Sullivan from Oklahoma.
MR. SULLIVAN. Thank you, Mr. Chairman, for holding this
important hearing today on the draft bill and Pipeline Safety
Improvement Act Reauthorization and H.R. 5782, the Pipeline Safety
Improvement Act of 2006.
I am also pleased to welcome Mr. Timothy C. Felt, the President and
CEO of Explorer Pipeline Company in Tulsa, Oklahoma, who is
testifying on the second panel on behalf of the Association of Oil
Pipelines.
Explorer Pipeline operates a 1,400 mile pipeline system that
transports gasoline, diesel fuel, and jet fuel from the Gulf Coast to the
Midwest, serving Tulsa, Houston, Dallas, Fort Worth, St. Louis, and
Chicago.
Nearly half a million miles of crude oil, petroleum products, and
natural gas transmission pipelines cross the United States. These
pipelines are vital to U.S. energy supply, and have important links to
other infrastructure. The 107th Congress passed the Pipeline Safety
Improvement Act to improve pipeline safety and security practices and to
provide Federal oversight of pipeline operators' security programs and to
provide for pipeline safety education programs.
The pipeline industry and the Department of Transportation have
cooperated to achieve significant improvement in pipeline safety, and
this improvement is demonstrated by the industry's record. I am glad
that Mr. Felt is here to share his insight in pipeline safety.
Thank you, again, for holding this important hearing, Mr. Chairman.
MR. HALL. I thank you.
[Additional statements submitted for the record follows:]
PREPARED STATEMENT OF THE HON. JOE BARTON, CHAIRMAN, COMMITTEE ON ENERGY
AND COMMERCE
Thank you, Mr. Chairman, for holding this hearing on the Committee's discussion
draft on pipeline safety reauthorization and the Transportation Committee's recently
reported bill, HR 5782. Continuing the Committee's tradition regarding this Act, the
Subcommittee has worked in bipartisan fashion to put together this draft. I hope that
after this hearing we will introduce a bill and move to markup soon after Congress
returns in September.
Reauthorization of the Pipeline Safety Improvement Act is an important effort that should
be completed this year, and I am hopeful that our friends in the other body share our
desire to enact this legislation.
The draft we are discussing today incorporates several new provisions and
amendments to the existing law that have been proposed by various stakeholders,
including the Administration, industry, and safety advocates. It also incorporates some
legislative language that was introduced by Mr. Murphy.
The bill strengthens state one-call requirements for excavation damage, provides
new authority and grant money to the states to develop their own damage prevention
programs modeled after the successful programs already in place, and puts some sunshine
on enforcement actions.
The draft also addresses the pending GAO study and the seven year reassessment
interval, as well as addresses a clarification in the law to direct-sales laterals. I thank the
witness for appearing before the Subcommittee today and I look forward to hearing their
comments and testimony. I yield back the balance of my time.
PREPARED STATEMENT OF THE HON. MICHAEL G. BURGESS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Thank you, Mr. Chairman for holding this important hearing.
When our constituents think of the movement of products and goods across the
country -- most of them think about large trucks on the highway carrying everything from
ice cream to new cars.
Some think of the railroads and others think about the barges that traverse the
Mississippi. But few think of the interstate transmission pipelines that transport huge
volumes of crude oil, refined products including gasoline and natural gas; unless
something goes wrong.
Congress last updated the federal pipeline safety law in 2002. Among other things,
the bill required operators of regulated gas pipelines in densely populated areas to
conduct risk analysis and periodic inspections, and to strengthen public education
regarding pipeline safety.
The good news is that the provisions adopted as part of this legislation are working -
- safety has improved and lives have been saved. But we can always do better, and I am
hopeful that this year's reauthorization will yield continued improvements in safety.
I am looking forward to hearing from the witnesses today about the discussion draft
before us today, as well as H.R. 5782, considered by the Transportation and
Infrastructure committee last week.
With that, Mr. Chairman, I yield back.
MR. HALL. And I apologize to our witnesses and to those in
attendance, and I thank Mr. Boucher for allowing us to delay this
hearing. We had what was termed an emergency calling of one of the
parties here in Congress that Mr. Boucher was not a member of, and he
allowed me to go. But we are sorry for the delay.
But let's get underway. Admiral Barrett, we are honored to
recognize you from, the Pipeline Hazardous Materials Administration,
the Department of Transportation. If you could, summarize, and we will
get around to getting into your statement with the question-and-answer
period, if you don't mind.
Thank you, sir.
STATEMENTS HON. THOMAS J. BARRETT, ADMINISTRATOR, PIPELINE AND HAZARDOUS
MATERIALS SAFETY ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION; AND HON.
DONALD L. MASON, COMMISSIONER, PUBLIC UTILITIES COMMISSION OF OHIO, ON BEHALF
OF NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS
ADMIRAL BARRETT. Mr. Chairman, thank you, and Ranking
Member Boucher, and members of the committee.
I appreciate the opportunity to discuss your draft proposal to
reauthorize the pipeline safety program.
Mr. Chairman, I also truly appreciate your leadership and the
subcommittee's stewardship on pipeline safety. I am pleased to provide
my first testimony before this subcommittee on ways to improve an
already forward-leaning and positive program and build upon the
progress that has been made to date. And frankly, that has been
achieved, I believe, because of the cooperation and leadership by the
Congress, the Administration, the Pipeline Safety Administration, and
also the pipeline industry, States and local authorities, the public, and the
first responder community working together effectively toward a
common goal.
I also want to thank and acknowledge Ms. Stacey Gerard, who is
with me here this morning. She has been instrumental in moving the
agency forward on these programs over the last several years since 2002.
And I would also like to note that I have just appointed her to be the
Assistant Administrator of the Office of Pipeline Safety and Hazardous
Materials and the Chief Safety Officer on a permanent basis.
So Stacey, thank you. And she is here this morning.
And with her is Dr. Ted Wilke, who will step up and become the
Acting Chief of the Office of Pipeline Safety. And Dr. Wilke is also here
this morning.
The Department and PHMSA are committed, like you, to
strengthening the pipeline safety program. We welcome your very
strong proposal and its key concepts, and I believe they will clearly help
us reach our goal of eliminating pipeline incidents and providing a
foundation for energy transportation infrastructure needs and also the
economic growth that our country depends on. And reauthorization now
will help us achieve that.
The 2002 reauthorization, which you sponsored and the President
signed into law, introduced the Integrity Management Program, a key
concept and a key component of a systems-based approach to managing
and reducing pipeline risks. In turn, as you noted, we have seen a steady
decline in the number of pipeline accidents that cause serious harm to
people or our environment, and we need to stay the course and step up
our efforts as we look to achieve further success in this area.
The Pipeline Safety Improvement Act of 2006 will be another
important milestone for the safety program. Based on the data we have
and experience under the 2002 law, the proposal places more emphasis
on damage prevention, enhancing State program oversight of distribution
pipelines, and clarifies our responsibility and emergency waiver
authority during natural disasters and other emergencies.
Managing pipeline safety based on system risk clearly suggests we
must minimize damage to pipelines associated with construction damage.
Several States, including Virginia, as Mr. Boucher noted, and Minnesota,
have led the way in developing strong damage prevention programs, and
we have seen up to 50 percent reductions in damages to pipelines from
construction-related activities. We would expect similar results from
other States if we can ensure our State partners have more resources and
authority and share responsibility with us in getting this job done. The
committee's proposal recognizes this need and adopts important
concepts, which the Administration forwarded, including new civil
enforcement authority, incentive for States to improve their programs,
technology grants to advance the safety and efficiency of the one-call
notification process, and more funding for State programs.
State partners oversee over 90 percent of operator compliance with
pipeline safety regulations. This proposal would also raise the cap on
grants provided to State agencies over 6 years from 50 percent to 80
percent to offset the increasing costs of the programs they execute
consistent with the programs of the Department. We, frankly, need
them, and they need our help to be more effective.
We also learned a great deal from last year's devastating Gulf Coast
storms on the vulnerabilities that exist within the pipeline infrastructure
to natural and manmade disasters. The Administration's proposal
provides specific authority for emergency waivers when necessary to
help operators anticipate or respond expeditiously to national or regional
disasters at the earliest possible time. We believe this can help minimize
pipeline safety disruption while maintaining safe operations.
And like you, Mr. Chairman, I strongly favor a systems-based
approach to assessing and managing risk, especially as risks to large
infrastructure systems, like pipelines, change over time. And an
effective systems risk management approach, which this subcommittee
helped devise, is getting positive results. Integrity Management
Programs focus operators on making the best use of information as it
becomes available. This is a dynamic process to enable an operator to
deploy attention and resources against the greatest risks, the worst first.
Reliance on stipulated retesting intervals, as established in the
current law, seems a disincentive to continuous evaluation and
adjustment of a dynamic systems approach, in effect, a whole health
review of pipeline systems. Our goal should be to regularly and
systematically utilize the most current information about the system so
that they can be maintained to operate in the best condition for the
longest amount of time.
These reauthorization concepts have been generally supported across
our stakeholder communities, including the Federal and State family, and
we are pleased to see many of the same priorities reflected in the
committee's draft.
Mr. Chairman, like you, Acting Secretary of Transportation, Maria
Cino, and PHMSA are wholly dedicated to ensuring the safe operation of
our pipeline transportation system under both normal and emergent
conditions. We understand how important this is to the safety and
security of our citizens and the continued growth of America's economy.
Thank you very much. I would be pleased to answer any questions
and ask that my full statement be inserted in the record.
[The prepared statement of Hon. Thomas J. Barrett follows:]
PREPARED STATEMENT OF THE HON. THOMAS J. BARRETT, ADMINISTRATOR, PIPELINE AND
HAZARDOUS MATERIALS ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION
I. INTRODUCTION
Chairman Hall, Ranking Member Boucher, members of the Subcommittee, thank
you for the invitation to appear to discuss your draft proposal to reauthorize the pipeline
safety program. I appreciate the Subcommittee's stewardship on pipeline safety and I am
pleased to provide my first testimony before this subcommittee on ways to improve an
already forward leaning safety program, and to build upon PHMSA's progress to date.
I believe your proposal embodies key concepts that will help us reach our goal of
eliminating pipeline safety incidents and provide a foundation for the energy
transportation infrastructure we need to continue our strong economic growth into the
future.
Americans depend on pipeline transportation for the safe movement of critical
energy supplies. This dependence makes it crucial to keep the system safe and reliable.
Over 97 percent of the nation's transportation energy needs are met by petroleum
products, and 64 percent of these energy products are moved through America's pipeline
networks. The system is near capacity all the time. In times of emergencies, this lack of
redundancy and system capacity makes it important for PHMSA to work along with our
state partners to assure that energy product transportation is not interrupted. In the years
to come, we hope to contribute to increasing the resiliency of this infrastructure.
"The Pipeline Safety Improvement Act of 2002" which you sponsored and the
President signed into law was a most important milestone. The Act reinforced the
importance of integrity management, operator qualification, public education, research,
mapping, construction damage prevention and other initiatives, including one national
number for One-Call. Most importantly in my view, the Act set the stage in law for a
systems approach to managing and reducing pipeline risks. Over the past five years we
have seen a steady decline in the leading causes of pipeline failures and the serious
accidents in which people are injured or the environment is harmed. We need to stay the
course and step up our efforts.
In the past few years, PHMSA has taken a hard look at incidents, their causes and
what can be done to prevent them. One thing is crystal clear-the leading cause of
incidents in which people are hurt or killed is construction-related damage causing an
immediate rupture or damage which later grows to failure. This occurs most often on the
distribution systems which run through the neighborhoods where people live and work.
This part of the pipeline system, the distribution network, is almost entirely under the
jurisdiction of states, our foremost partners in pipeline safety.
II. ADMINISTRATION PROPOSAL
The Secretary of Transportation recently submitted to Congress the Administration's
legislative proposal to reauthorize and improve pipeline safety and protection for the
environment, and also to enhance infrastructure reliability. The proposal, the "Pipeline
Safety and Reliability Improvement Act of 2006" looks to build on our progress in
achieving the mandates of the 2002 Act by placing more emphasis on damage prevention,
enhancing state programs' oversight of pipelines, and clarifying our responsibilities and
emergency waiver authority during natural disasters and other emergencies.
Managing pipeline safety based on system risk clearly suggests we must minimize
damage to pipelines associated with construction-damage. Construction damage is almost
always preventable and we have worked to find practices that will eliminate this problem.
The challenge is managing this activity without damaging a very crowded underground
infrastructure - one that gets more crowded every day, not just with pipelines but new
telecommunications, electric, water and sewer, and other infrastructure.
Several states including Virginia and Minnesota have led the way with strong
damage prevention programs and seen up to 50% reductions in this type of damage. We
need to prioritize the resources for pipeline safety to be sure that our state partners have
more resources to share responsibility with us in getting this job done. The Committee's
proposal recognizes this need by adopting important concepts which the Administration
forwarded, including new civil enforcement authority, incentives for states to improve
their damage prevention programs, technology grants to advance the safety and efficiency
of the one call notification process, and more funding for state pipeline safety programs.
The following chart from a PHMSA report gives a picture of the progress possible
with a strong enforcement program. There are degrees of success with enforcement and
two model states, Virginia and Minnesota both have fewer than 3 damages per 1,000 one
call tickets by enforcing the practice of calling before digging.
<GRAPHICS NOT AVAILABLE IN TIFF FORMAT>
Our proposal addresses this concern by establishing a state grant program to provide
more incentives to states to develop effective damage prevention programs. State
agencies and PHMSA would also gain authority to conduct civil enforcement actions
against anyone who fails to contact "One-Call" prior to digging, with our focus being on
state enforcement.
Ensuring the safety of 2.3 million miles of pipelines is an enormous task. Our state
partners oversee 90 percent of operator compliance with pipeline safety regulations. We
seek to raise the cap on grants provided to state pipeline agencies over 6 years from 50
percent to 80 percent to offset the increasing cost of the programs they execute,
consistent with the programs of the Department. State agencies do utilize PHMSA's
national regulatory pipeline safety standards to inspect the majority of the pipeline
infrastructure and we increasingly invest in state training and decision support as we
function as a coordinated workforce. We need them and they need our help to be most
effective.
Last year's devastating Gulf Coast storms also taught us lessons about the
vulnerability of pipelines to natural and man-made disasters. In the wake of last years
storms, PHMSA's inspectors deployed to State emergency operations centers, operator
control rooms, and to critical pumping stations across Louisiana and Mississippi to
monitor operator efforts to work to keep energy moving without standard electric power.
To assist with recovery of the pipeline infrastructure during future emergency
events, the Administration's proposal provides for specific regulatory authority to use
emergency waivers when necessary to help operators anticipate or respond expeditiously
to national or regional disasters at the earliest possible time. We believe this can help to
minimize pipeline system disruption while maintaining safe operations.
Like you, I strongly favor a systems-based approach to assessing and managing risk,
especially as the risks to large infrastructure systems like pipelines often change over
time. I expect to see an effective systems risk management approach, which this
subcommittee helped devise, getting positive results for pipeline safety. The integrity
management program has focused operators on making the best use of information as it
becomes available. But this must be a dynamic process in which the operator is able to
deploy attention and resources against the greatest risks, worst first. Reliance on
stipulated retesting intervals, as established in current law, is inconsistent with a systems
approach and a disincentive to continuous reevaluation and readjustment.
Reliance on stipulated retesting intervals as established in current law seems a
disincentive to the continuous evaluation and readjustment of a dynamic systems
approach. It is a basic element of an ongoing "whole-health" review of a pipeline
system. The goal is to regularly and systematically utilize the most current information
about the pipeline system so that it may be maintained to operate safely in the best
condition for the longest amount of time.
These reauthorization concepts have been generally supported across our
stakeholder community, including the federal and state family, and we are pleased to see
many of the same priorities reflected in the Committee's proposal.
III. CONCLUSION
I assure the members of this Subcommittee, that the Administration, Acting
Secretary Cino, and the dedicated men and women of PHMSA share your strong
commitment to improving safety, reliability, and public confidence in our Nation's
pipeline infrastructure.
Like you, we understand the importance of our mission to the safety of our citizens
and the energy security and continued economic growth of our great Nation.
Thank you.
I would be pleased to answer any questions you may have.
MR. HALL. Thank you, sir.
We have a vote on, and we would like to go ahead and let Mr. Mason
give his 5-minute presentation, if you would, and then we will recess for
probably 20 minutes. We have two votes: a 15-minute vote and a 5-
minute vote. We will probably be back in 30 minutes when we leave.
All right. I recognize you for your preliminary statement.
Thank you.
COMMISSIONER MASON. Thank you, Mr. Chairman, Ranking
Member Boucher, and members of the subcommittee.
I am Don Mason, Public Utilities Commissioner, State of Ohio, but I
am also here to represent the National Association of Regulatory Utility
Commissioners where I am the Chairman of the Gas Committee. And
we prepared our testimony in conjunction with NAPSR, which is the
National Association of Pipeline Safety Representatives, which are
people who actually have their boots on the ground doing the inspection
of the pipe.
Again, NARUC is a quasi-governmental, non-profit organization as
well as NAPSR, so we do; in fact, represent the State partnership to the
Federal agencies.
I will focus in on the four key points we would like to bring to the
table at this point. We do strongly support the funding provisions found
in the discussion draft, and we appreciate the efforts to up the funding to
80 percent for State funding, but we do remind all that in all likelihood,
the actual funding is probably going to be around 55 percent when all is
said and done with regard to how much the States end up spending. The
States are still a major partner in our endeavors.
But State pipeline safety program funding is heavily dependent upon
PHMSA's proper sharing of the user fees. State pipeline safety programs
represent approximately 80 percent of the Federal/State inspector
workforce that oversees pipeline inspections nationwide, as also
indicated by the Admiral. Without adequate funding, States would not
be able to conduct the required inspections of the existing pipeline
facilities or new pipeline construction projects, and we do hope there are
new projects helping to bring more competitive cost natural gas to the
market.
I will just briefly touch upon the issue of certification. We do have
some concerns in the way the certification language could possibly be
read, not that it is necessarily being read this way, but we want to ensure
that the States have flexibility in moving forward aggressively, even
though they may not, in fact, meet all nine conditions as indicated. The
theory being is that those might be some of the States we want to help
move forward eventually hitting all nine elements.
Also, it is key to say that it is our understanding that the intent of the
subsections 601 through 604 in H.R. 5782, when taken together, give the
Secretary the discretion to make damage prevention program grants to
States not only to support an existing damage prevention program, but
also to provide an incentive to improve programs that currently may not
be able to meet all of the elements outlined in legislation. However, with
additional assistance, we think we can implement and maintain effective
programs as contemplated by the bill.
And moving on to, perhaps, the fourth point, I would like to say, are
damage prevention grants. Our last concern is contained in the draft
discussion, as well as H.R. 5782. There is prohibition against lobbying,
which we, of course, understand, but there is presently a prohibition
against using funding for litigation. And we might remind that one of the
elements is having civil penalties in place. So basically, to have civil
penalties in place, but not allow funding of litigation, actually is
discouraging and perhaps may be construed to be an unfunded mandate.
Additionally, I think those in the Congress recognize that if we have the
authority to have civil penalties, there will be a percent of the population
out there that will, in fact, litigate. So we do need to be armed when we
go against them.
That will be my summary, and I am available, of course, after the
break, Mr. Chairman and Members of Congress.
[The prepared statement of Commissioner Donald L. Mason
follows:]
PREPARED STATEMENT OF THE HON. DONALD L. MASON, COMMISSIONER, PUBLIC
UTILITIES COMMISSION OF OHIO, ON BEHALF OF NATIONAL ASSOCIATION OF REGULATORY
UTILITY COMMISSIONERS
<bullet> Grant funding must increase to meet resource requirements of State pipeline
safety programs. States strongly support the provisions found in both the
Discussion Draft and HR 5782 that would provide up to 80% funding for State
pipeline safety programs.
<bullet> The language amending Section 60105(b)(4) as proposed in both the
Discussion Draft and HR 5782 will encourage the States to establish
effective damage prevention programs without creating a certification criteria
that a State may not be able to meet due to reasons outside the control of the
State's pipeline safety agency. We believe that the language contained in the
Discussion Draft is more beneficial to the State programs.
<bullet> States should be able to access damage prevention program grants to begin,
maintain and/or improve their damage prevention programs.
<bullet> States should be able to use grants for litigation. States are mandated in both
the Discussion Draft and HR 5782 to use civil penalties, if necessary, therefore
litigation could be necessary as well.
Good Morning Mr. Chairman, Ranking Member Boucher and Members of the
Subcommittee.
I am Donald L. Mason, a commissioner at the Public Utilities Commission of Ohio
(PUCO). I have served in that capacity since 1998. I also serve as the Chair of the
Committee on Gas for the National Association of Regulatory Utility Commissioners
(NARUC). As Chairman of the NARUC Committee on Gas, I am testifying today on
behalf of that organization and the National Association of Pipeline Safety
Representatives (NAPSR). In addition, my testimony reflects my own views and those of
the PUCO. On behalf of NARUC, NAPSR and the PUCO, I very much appreciate the
opportunity to appear before you this morning.
NARUC is a quasi-governmental, non-profit organization founded in 1889. Its
membership includes the State public utility commissions serving all States and
territories. NARUC's mission is to serve the public interest by improving the quality and
effectiveness of public utility regulation. NARUC's members regulate the retail rates and
services of electric, gas, water, and telephone utilities. We are obligated under the laws
of our respective States to ensure the establishment and maintenance of such utility
services as may be required by the public convenience and necessity and to ensure that
such services are provided under rates and subject to terms and conditions of service that
are just, reasonable, and non-discriminatory. NAPSR is a non-profit organization of
State pipeline safety directors, mangers, inspectors and technical personnel who serve to
support, encourage, develop and enhance pipeline safety.
We greatly appreciate your efforts, Mr. Chairman, as well as the members and staff
of the Subcommittee on Energy and Air Quality, to make this legislation helpful and
useful to the State agencies that are charged with ensuring the public safety with regard to
pipelines. Additionally, we greatly appreciate the efforts of your colleagues and staff on
the Transportation and Infrastructure Committee for their assistance to the States. Today,
I would like to bring your attention to four issues found in both the Discussion Draft and
HR 5782.
1. Funding
States strongly support the provisions found in both the Discussion Draft and HR
5782 that would provide up to 80% funding for State pipeline safety programs. The rapid
expansion of federal pipeline safety initiatives in recent years (such as operator
qualification, public awareness, integrity management, homeland security) has greatly
increased the cost and resource demands of State participation. However, the grants
authorized to be appropriated under both the Discussion Draft and HR 5782 are not
adequate to move the States anywhere close to the 80 percent, even by 2010 or 2012. As
an example, if the States' pipeline safety costs remain the same as the amount projected
for 2006, even the 2010 authorization for pipeline safety ($25,855,000 - $2,000,000) is
only 54.8% of the cost of the State pipeline safety programs.
State pipeline safety program funding is heavily dependent upon Pipeline Hazardous
Material Safety Administration (PHMSA) proper sharing of these user fees. State
pipeline safety programs represent approximately 80 percent of the federal/State
inspector work force that oversees pipelines nationwide. Without adequate funding,
States will not be able to conduct the required inspections of the existing pipeline
facilities or new pipeline construction projects, and encourage compliance with new and
existing safety regulations. Grant funds are an effective way to leverage resources and
increase total inspection capability since States match or exceed federal funding provided
for pipeline safety.
2. Certification
The language amending Section 60105(b)(4) as proposed in both the Discussion
Draft and HR 5782 will encourage the States to establish effective damage prevention
programs without creating a certification criteria that a State may not be able to meet due
to reasons outside the control of the State's pipeline safety agency. The States agree that
this is necessary language to include in this legislation and we support the provisions
found in both the Discussion Draft and HR 5782, however we believe that the language
contained in the Discussion Draft is more beneficial to the State programs.
3. State Damage Prevention Programs
It is our understanding that the intent of subsections (a)(2), (c), and (e) of Section
60134 of HR 5782, taken together, gives the Secretary the discretion to make damage
prevention program grants to States not only to support an existing damage prevention
program but also to provide an incentive to improve a program that currently may not be
able to meet all elements outlined in the legislation; however, with additional assistance
can attain and maintain an effective program as contemplated in the bill. Additionally, it
is our understanding that the intent of subsection (c) of Section 60134 of the Discussion
Draft is to provide the Secretary with the same discretion found in HR 5782 and outlined
above.
Provided our interpretation of the language found in the referenced sections and
subsections is correct, we believe that both bills are moving in the right direction.
However, we also believe that both bills, with regard to the damage prevention program
grants, contain a large degree of ambiguity and therefore leave much up to the
interpretation of these subsections.
If the intent is indeed to enable the States to receive damage prevention program
grants so that their programs can meet and exceed all the Damage Prevention Program
Elements, we would suggest that language be added to both measures that clearly state
that the States shall receive damage prevention program grants for the purpose of
meeting, maintaining, or exceeding any or all the Damage Prevention Program Elements,
thereby encouraging the States to work to establish the effective damage prevention
programs envisioned by the Discussion Draft and HR 5782.
We bring this issue to your attention because it is our opinion that under the Discussion
Draft language and HR 5782 an argument can be made that a State must be found to have
an effective program in order to be awarded a grant. Therefore, a State that has
implemented some, but not all, of the effective program elements may not be eligible to
obtain grant support for action it is currently taking, or for improving its existing
program. If the intent of this legislation is to encourage States to adopt effective damage
prevention programs, it seems counterproductive for States that have progressed in that
area, or that could make progress if funds were available, to be ineligible for any funding
at all.
4. Damage Prevention Grants to States
Our last concern is contained in both the Discussion Draft and HR 5782. Subsection
60134(c)(2) APPLICATION of the Discussion Draft a and subsection 60134(g)
NONAPPLICABILITY OF LIMITATION of HR 5782 both stipulate that damage
prevention grant funds cannot be used for lobbying or in direct support of litigation. The
Lobbying prohibition is understandable; however, "litigation" could include State
enforcement actions or State defense of actions taken under its damage prevention
program. Additionally, under the Damage Prevention Program Elements in element
seven of both pieces of legislation, the language makes reference to the fact that in order
for a State to have a "effective" program, the program must include ".the use of civil
penalties.." If the State authority is mandated under federal law to enforce states'
damage prevention laws which could include civil penalties, it must be contemplated that
these penalties may be appealed and that the State would need to litigate. We therefore
respectfully suggest that "in direct support of litigation" be deleted, or the intent of this
language clarified.
Mr. Chairman, that concludes my remarks and I am available to answer any
questions that you or the Subcommittee members may have. Thank you again for that
opportunity to appear before you today.
MR. HALL. All right. Thank you very much.
We will take a break now. We will pick up again at, say, 12:30.
[Recess.]
MR. HALL. All right. We will get underway.
I have some questions now, if you gentlemen would.
And without objection, we will put into the record the Pipeline
Safety Improvement Act Reauthorization Statement from the National
Utility Contractor Association.
Without objection, it is admitted.
[The information follows:]
<GRAPHICS NOT AVAILABLE IN TIFF FORMAT>
MR. HALL. And the statement of Steven Sandhur, CEO on behalf of
the American General Contractors, offered for the record.
Without objection, it is entered into the record.
[The information follows:]
<GRAPHICS NOT AVAILABLE IN TIFF FORMAT>
MR. HALL. At this time, we will start visiting with you gentlemen
about your opening statements.
Admiral, with your background as a risk manager from the first order
of the United States Coast Guard, can you lend us some of your
experience regarding managing pipeline safety based on system risk and
how this risk system lends its application to the current 7-year
reassessment interval under discussion?
ADMIRAL BARRETT. Thank you, Mr. Chairman.
As you know, with your experience, these pipeline systems are very
long-life systems. They are going to be in place for 10, 20, 30, 40, or
even 50 years. And approaching risk management from a systems
perspective allows you to concentrate on the most serious risks, which is
always essential. And one of the issues you have on long-lived systems
is those risks change over time. They can change because of the nature
of the product that goes through the system. They can change from just
fatigue. They can change from development coming in around the lines.
But fundamentally, the risk profile may change. And an effective system
risk management perspective is dynamic. It has to constantly reassess
and direct its attention at the most serious concerns at any point in time.
And I frankly believe a fixed interval mandate for re-inspection, as it is
in the law now, at a fixed point in time, detracts from that systematic,
continuous updating type of thing. You may have a need to re-inspect in
2 or 3 years, based on certain conditions. On other lines or in other
segments, frankly, you may not need to do it for 10 or 15 years,
depending on what your current information is showing you.
And the other thing, aside from the changing conditions,
fundamentally, there is only so much time and attention and resources
that you can direct at issues. You always want to direct it at the most
important ones, and putting it against something that may not be the most
important, frankly, I think just takes your eye off the ball. That is a
general perspective, sir.
MR. HALL. Could you explain the current draft? It contains a
deadline for low-stress pipelines, like the BP line that was involved in an
accident up on the North Slope a few weeks back, and I understand there
was a public meeting on this proposed rule. When will that be released
for comment, if you can tell us? And can you describe for us how the
meeting went and what issues were raised?
ADMIRAL BARRETT. Sure. We had a public hearing to address
regulation, or potential regulation, of low-stress lines. We are actively
working on a Notice of Proposed Rulemaking that we would expect to
have out early this fall. It would address situations like the BP lines and
other low-stress lines. Our approach would look at things like corrosion
control, damage prevention programs, operator qualifications, the types
of things integrity assessments, integrity management that go to an
overall systems look at these things and bring them under the Federal
umbrella. And I think you will see better results, particularly in areas
where, again, there are unusually sensitive areas or high-consequence
areas where the risks from low-pressure lines, although they are lower
than they are with other types of lines, frankly are just simply not going
to be acceptable anymore. This was an issue the Administration and the
agency was working on. It was not, unfortunately, at the top of our list
prior to the BP incident, but it is clear we need to move that forward
quickly, and we are doing so, sir.
MR. HALL. What other issues were raised, then, and discarded or
considered and accepted?
ADMIRAL BARRETT. In terms of the hearing or in terms of the low-
pressure lines?
MR. HALL. The hearing.
ADMIRAL BARRETT. I think we covered many of the items that we
are talking about in the reauthorization, the types of approaches we are
taking here with respect to damage prevention programs, with respect to
the technical criteria for integrity assessment, operator qualifications and
a broad range of technical issues getting at some of the corrosion control
issues, pretty broad-ranging set of topics, of which low pressure was just
one.
MR. HALL. I thank you.
Mr. Mason, regarding the certification of State programs that are
encouraging and promoting effective State damage-prevention programs
and the actual awarding of grant money, the States that have effective
State damage prevention programs, why should we, as Congress,
authorize additional money for grant programs to States that might not be
engaged in an effective damage prevention program, and there are some?
COMMISSIONER MASON. Thank you, Mr. Chairman.
What it goes to the heart of is some States may not presently have all
nine elements, but may be working towards it. As many Members of
Congress know, who may have been State legislators in the past, many
State general assemblies meet every other year for a limited time period,
and so it might take a period of a couple biannual budgets of that State
government in order to get them to a stage where they actually meet all
nine elements. And what we would like to see is the discretion in the
Department that they can evaluate if that agency is headed in the right
direction, perhaps has language proposed or is introduced that, again, is
taking the agency towards having all nine elements. Therefore the
Secretary would have that discretion of giving grants in that case. But if
it is absolutely in place, you must have these nine before you get one
dollar, that is almost like saying if you are a sinner, you are not allowed
into church.
I thought I would throw that in there.
ADMIRAL BARRETT. Mr. Chairman, I agree with that, by the way.
MR. HALL. We had a preacher one time that said he had good news
and bad news for us. He said, "The good news is, there is enough money
in the church right now to pay off all of our debt. The bad news is, it is
still in your pockets."
All right. My time is up. I recognize Mr. Boucher.
MR. BOUCHER. Why thank you, Mr. Chairman.
Mr. Mason, if a State can show that it is well on the way toward
implementing the nine-point program, what does that mean? If you are
going to implement something, why not just do all nine points and have
that done at the outset? And then you could comply with the bright-line
standard that says no money unless you have done it. I mean, we know it
works. We know what they are. What is wrong with simply saying, "Go
on and do it, if you want the funds."?
COMMISSIONER MASON. Congressman, I represent 50 State
commissions and 50 State pipeline administrations in today's testimony,
and I think everybody has their heart in the right place and is focused on
this, but again, when they go back to their general assemblies, sometimes
they get more authority in order to actually have all nine elements, they
are competing against everything from healthcare costs to education to
transportation within their own State general assembly's time. And so,
again, they might be headed in the right direction, they just might not be
there yet.
MR. BOUCHER. You are saying there are some States that might not
have adequate statutory authority to implement by rulemaking the nine-
point program and they would have to get the statute amended to do that,
and that necessarily takes time.
COMMISSIONER MASON. Yes, sir.
MR. BOUCHER. That is the source of your suggestion?
COMMISSIONER MASON. Yes, sir.
MR. BOUCHER. Okay. Mr. Barrett, do you have anything to add to
that?
ADMIRAL BARRETT. No, sir. I agree it is an issue and one we
should address.
MR. BOUCHER. Mr. Barrett, let me ask you this question.
The Administration had proposed to us that we include a change in
the pipeline safety law regarding safety orders. And you may notice that
our bill incorporates your recommendation. We have a provision in our
bill that very closely reflects what you had suggested. Could you please
tell us why the Administration needs this authority and how you would
implement the authority and what kind of context would it be applied?
And the reason I ask you this is because some of our witnesses will
testify later in opposition to this and will say that it is overly broad and
that, just to quote one of the witnesses, it "would eliminate the due
process benefit by practically abolishing any threshold or burden of proof
for DOT in triggering a safety order." So I would like to give you an
opportunity to respond to that criticism before it is formally lodged with
us.
ADMIRAL BARRETT. Thank you, sir. As you know, the 2002 Act
actually has a provision that would allow us to issue this type of order
and really does not have much in the way of criteria for it. And our
intent, frankly, was to provide a little more due process in that to allow
people to come in. And the type of order we are talking about here is
where there is not an imminent hazard yet. There is not a good long-
term solution in place. Something needs to be done within some
responsible timeline: 60 days or 6 months or what have you. And these
are safety-related conditions that we are talking about, not just anything.
But clearly our intent is to do that in a way that is tied to a specific
concern that is identified as a safety-related problem on a particular line
and to issue an order that the operator or the industry can come in and get
an opportunity to contest before we would put something out firmly.
And that dialogue process, my experience has been, frankly, wrings out
most of the problems in terms of the agency doing something untoward
or, I don't want to say irresponsible, but whimsical, if you will. And I
think that our intent was to actually tighten the process up, because there
is authority in the existing law, and we would like to be a little more
specific and provide for that opportunity for due process a little more,
quite frankly.
MR. BOUCHER. Okay. Thank you.
Two other questions to you.
With respect to the Technical Assistance Grant provision, you may
have noted, from my opening statement, that I was a major proponent of
including the opportunity for Technical Assistance Grants in 2002 and
have some measure of disappointment that grants have not been made.
Not only have grants not been made, but your office has not actually
published the criteria that would be utilized in determining the kinds of
grants that would be made, giving guidance to applicants as to how their
applications should be structured. Can you talk a little bit about your
intention in terms of publishing the criteria that would govern the grant-
making process for the Technical Assistance Grants?
ADMIRAL BARRETT. I think we would have no problem with
identifying those criteria a little more clearly so that people know what
we are about.
MR. BOUCHER. Would you publish a set of guidelines?
ADMIRAL BARRETT. I would have no objection to doing that, a
broad set of guidelines. Yes, sir.
MR. BOUCHER. So the answer is yes?
ADMIRAL BARRETT. Yes, sir.
MR. BOUCHER. All right. Thank you.
Can you give us a timeframe within which you might be able to do
that?
ADMIRAL BARRETT. I could, but I don't want to speculate here.
MR. BOUCHER. You could, but you would rather not.
ADMIRAL BARRETT. I think responsibly, we are probably talking 3
to 6 months. That would be about the timeline we would be looking at
there.
MR. BOUCHER. That is great. We will start the clock.
ADMIRAL BARRETT. Yes, sir. We have no problem with that.
MR. BOUCHER. All right. Thank you.
Second question.
I know that you have a rulemaking underway with respect to
Integrity Management Plans for natural gas distribution lines. This is a
provision that we strongly support, and we have duly noted your progress
in this regard and commend you for it. My question to you is this.
Would you be able to accept, would you be amenable to a reasonable
deadline contained in the statute by which your rulemaking would have
to be completed? And we could talk with you about what a reasonable
amount of time is and reflect that, but would such a deadline in the
statute be acceptable to you?
ADMIRAL BARRETT. Under the conditions you raise there, that we
would work to get something that takes into account the type of process
we have to deal with, no, sir, I would have no objection to that.
MR. BOUCHER. Thank you very much.
Mr. Chairman, that concludes my questions.
MR. HALL. The Chair recognizes Mr. Sullivan.
MR. SULLIVAN. Thank you, Mr. Chairman.
Admiral, how does the PHMSA envision the enforcement
transparency authority to work that is contained in this discussion draft?
Would allowing companies who are parties to the enforcement action to
also post their side of the story be something you are open to? Would a
rulemaking be appropriate to make sure due process and ongoing dispute
resolution processes are not compromised?
ADMIRAL BARRETT. Sir, I think that is two different pieces. One, I
am an absolute proponent of transparency in the enforcement process and
generally. And I would tell you quite frankly, I believe that transparency
breeds self-corrective behavior. I think most people out there, in this
industry in particular, are generally trying to do the right thing, and so
are we, and so are the other folks involved in this process. And so the
more transparent we are about this, I think the less, frankly, we have to
regulate. The more you get consensus standards, the more you get
agreed-to practices. So I absolutely would have no problem whatsoever
with doing this in a way that allows industry to come in with their
position or their statement or their response on some process or some
action that we are taking.
In terms of the second half of your question, I am sensitive. There is
a formal process involved when we assess or take a penalty action of
some type. There is opportunity for notice and a hearing and stuff like
that. And many times, for example, there are settlement discussions or
agreements that we look to reach. And we, obviously, would have to
have measures in place to protect the ability to do that in a way that is
fair to everybody. But in terms of the generic type of information we are
posting and allowing people to put their side or their comment up, I have
absolutely no problem at all with that. I would encourage it, quite
frankly.
MR. SULLIVAN. Thank you, sir.
MR. HALL. All right. Do you have follow-up questions? I have no
follow-up questions.
ADMIRAL BARRETT. Thank you, sir.
MR. HALL. Thank you very much, and thank you for the time,
preparation, time you have attended, and the time it takes away from
you. I appreciate both of you, and I thank you very much.
ADMIRAL BARRETT. Thank you, Mr. Chairman, and I look forward
to continuing to work with the committee.
MR. HALL. Yes, sir.
ADMIRAL BARRETT. Thank you, sir.
MR. HALL. If we have the second panel: Ronald Jibson, Jeryl Mohn,
Timothy Felt, and Lois Epstein.
All right. We have Mr. Jibson, Vice President of Operations,
Questar Gas Company on behalf of the American Gas Association. We
recognize you for 5 minutes. If you would, summarize, and then we will
ask you questions.
Thank you, sir.
STATEMENTS OF RONALD W. JIBSON, VICE PRESIDENT, OPERATIONS, QUESTAR GAS
COMPANY, ON BEHALF OF AMERICAN GAS ASSOCIATION; JERYL MOHN, SENIOR VICE
PRESIDENT; OPERATIONS AND ENGINEERING, PANHANDLE ENERGY, ON BEHALF OF
INTERSTATE NATURAL GAS ASSOCIATION OF AMERICA; TIMOTHY C. FELT, PRESIDENT &
CEO, EXPLORER PIPELINE COMPANY, ON BEHALF OF ASSOCIATION OF OIL PIPE LINES;
AND LOIS N. EPSTEIN, P.E., SENIOR ENGINEER, OIL AND GAS INDUSTRY SPECIALIST,
COOK INLETKEEPER, ON BEHALF OF PIPELINE SAFETY TRUST
MR. JIBSON. Thank you, Mr. Chairman, and good morning.
I would like to thank the committee for convening this hearing on
this important topic of pipeline safety. My name is Ron Jibson. I am
Vice President of Operations at Questar Gas Company. Questar Gas
provides natural gas service to approximately 850,000 customers in
Utah, southwestern Wyoming, and a small portion of southeastern Idaho.
I am testifying today on behalf of the American Gas Association, or
AGA, and also the American Public Gas Association, or APGA.
Together, AGA and APGA represent more than 850 local natural gas
utilities serving almost 56 million customers nationwide.
I would like to begin my testimony by first commending the
committee, in particular Chairman Hall and Ranking Member Boucher
and their staffs, as well as Congressmen Barton and Ranking Member
Dingell, for putting together what we believe is overall a good legislative
proposal. We believe the draft bill represents a positive first step and
provides good foundation for moving the ball forward on pipeline safety.
In our opinion, the 2002 Act has been working well, and only minor
adjustments should be considered at this point, with one possible
exception. Our companies have identified one major area that we believe
requires considerable improvement, that area being excavation damage
prevention.
Congressional attention to more effective State excavation damage
programs can and will result in real measurable decreases in the number
of instances occurring on natural gas distribution pipelines each year.
Excavation damage is the single cause of a majority of natural gas
distribution pipeline incidents, and we are very pleased that the
committee's draft addresses this very important issue.
What are some of the facts about most gas distribution safety
incidents?
During last week's Transportation and Infrastructure Committee's
markup of H.R. 5782, two members of the committee stated that between
2002 and 2005, the greatest number of pipeline incidents occurred in the
Nation's gas distribution systems and that such incidents were on the
increase. Any conclusions on relative safety between gas distribution,
gas distribution on hazardous liquid pipelines must be tempered by the
fact that distribution has almost four times the miles of pipe as both gas
transmission and liquids combined.
Where do these distribution incidents come from?
Really, there are two types of incidents that involve natural gas
distribution systems, and we have got charts depicting this. I think also
in your packet, but first of all, there are those incidents that are caused by
factors the pipeline operator, to some extent, have control, such as
improper welds, material defects, incorrect operation, corrosion, or
excavation damage by a utility contractor; and secondly, those caused by
external forces, which are due to factors the pipeline has little or limited
ability to control. Those would be cases such as excavation damage by a
third party, earth movement, floods, vandalism, structure fires, and
lightening.
The term excavation, as I have used it here today, is intended to
include demolition, excavation, tunneling, or construction activities as
presented in the bill being considered today by this committee.
[Chart.]
As you can see by the blue area in the chart, utilities do a very good
job at minimizing instances that they have control over. The record
shows that between 2002 and 2005, 82 percent of all reported instances
were the result of excavation damage by a third party or other factors the
utility company has little control over. In many cases, the typical little-
or no-control area involves a party outside the jurisdiction of authorities
overseeing pipeline safety.
[Chart.]
Furthermore, as shown in the second chart, you can see that during
the same 4-year period, instances due to third-party excavation more than
doubled. Excavation damage thus represents the single greatest threat to
distribution system safety, reliability, and integrity.
Efforts by the Common Ground Alliance damage prevention
organization and the nationwide education program on the three-digit,
one-call, 8-1-1 dialing system to prevent excavation damage are great
steps in the right direction, but more is needed.
AGA and APGA support the proposal before the committee to
outline the required nine elements of an effective State damage
prevention program in the legislation and to provide for additional
funding for State implementation of the program.
Just a couple of other quick issues I would like to highlight for the
committee.
First of all, funding for one-call grants and the Common Ground
Alliance. AGA and APGA urge Congress to provide continued funding
authority over the upcoming reauthorization period for grants to States to
support one-call programs and the Common Ground Alliance.
In regards to instant response protocols, AGA and APGA also
commend this committee for including language within the draft bill to
establish protocols for post-incident activity. The language requiring a
call to the operator any time a pipeline is damaged, regardless of
severity, is a critically-important addition to the bill. Likewise, the
requirement to call 9-1-1 and the utility operator whenever the substance
being carried by the pipeline is escaping from the pipeline is a positive
addition and consistent with current best practices established by
consensus of all stakeholders in the Common Ground Alliance.
It is important that calls to 9-1-1 and the resulting mobilization of
extremely busy emergency response personnel occur only when a
substance is escaping from the pipeline. In those situations, as well as
when a pipeline is damaged without leakage, a call to the owner-operator
of the pipeline will also help more quickly and effectively mitigate
potential hazard.
Regarding the issue of safety orders, we are pleased to see that the
committee recognizes the importance of being accorded due process with
regards to safety orders. However, it is important that there is some
definitive guidance on when such a safety order is warranted.
Regarding enforcement transparency, we support the idea of
transparency so long as the normal due process is preserved and
confidentiality during negotiation and settlement of individual cases is
protected.
Regarding transmission integrity assessment reassessment time
interval, we are pleased that the committee recognizes the importance of
letting the U.S. Government Accountability Office complete its report. It
is our hope that in evaluating the appropriateness of the 7-year
inspection, the GAO will cover all of the pertinent facts and then, based
on the facts, Congress will consider allowing the Secretary of
Transportation to change the interval or pursue another remedy. This
will allow operators to continue to deliver natural gas safely and
affordably.
In summary, AGA and APGA believe that congressional passage of
pipeline safety reauthorization this year will result in timely and
significant distribution system safety improvements. We commend the
committee for putting together a solid discussion draft to address this
important issue and commit to working with you to secure passage of
this final bill this year.
The members of AGA and APGA emphatically support the
recommendation that Congress enact legislation that gives States an
incentive to adopt stronger damage prevention programs.
Thank you for the opportunity to appear today.
[The prepared statement of Ronald W. Jibson follows:]
PREPARED STATEMENT OF RONALD W. JIBSON, VICE PRESIDENT, OPERATIONS, QUESTAR
GAS COMPANY, ON BEHALF OF AMERICAN GAS ASSOCIATION
I would like to thank the Committee for convening this hearing on the important
topic of pipeline safety. My name is Ron Jibson. I am Vice President of Operations at
Questar Gas Company. Questar Gas provides retail natural gas-distribution service to
more than 800,000 customers in Utah, southwestern Wyoming and a small portion of
southeastern Idaho.
I am testifying on behalf of the American Gas Association (AGA) and the American
Public Gas Association (APGA). AGA represents 197 local energy utility companies
that deliver natural gas to more than 56 million homes, businesses and industries
throughout the United States. AGA member companies account for roughly 83 percent
of all natural gas delivered by the nation's local natural gas distribution companies. AGA
is an advocate for local natural gas utility companies and provides a broad range of
programs and services for member natural gas pipelines, marketers, gatherers,
international gas companies and industry associates.
APGA is the national, non-profit association of publicly owned natural gas
distribution systems. APGA was formed in 1961, as a non-profit and non-partisan
organization, and currently has 655 members in 36 states. Overall, there are
approximately 950 municipally owned systems in the U.S. serving nearly five million
customers. Publicly owned gas systems are not-for-profit retail distribution entities that
are owned by, and accountable to, the citizens they serve. They include municipal gas
distribution systems, public utility districts, county districts, and other public agencies
that have natural gas distribution facilities.
The Pipeline and Hazardous Materials Safety Administration (PHMSA) and the
industry have made significant progress on the initiatives mandated by the 2002 pipeline
safety act.
In our opinion only minor adjustments should be considered at this point, with one
exception: Our companies have identified one major area we believe requires
considerable improvement: excavation damage prevention. Congressional attention to
more effective state excavation damage programs can, and will, result in real, measurable
decreases in the number of incidents occurring on natural gas distribution pipelines each
year. Excavation damage is the single cause of a majority of natural gas distribution
pipeline incidents.
Distribution pipelines are operated by natural gas utilities, sometimes called "local
distribution companies" or LDCs. The gas utility's distribution pipes are the last, critical
link in the natural gas delivery chain. Gas distribution utilities bring natural gas service to
customers' front doors. To most customers, their local utilities are the "face of the
industry". Our customers see our name on their bills, our trucks in the streets and our
company sponsorship of many civic initiatives. We live in the communities we serve
and interact daily with our customers and with the state regulators who oversee pipeline
safety. Consequently, we take very seriously the responsibility of continuing to deliver
natural gas to our communities safely, reliably and affordably.
Our industry's commitment to safety is borne out each year through the federal
Bureau of Transportation Statistics' annual figures comparing modes of transportation.
Indeed, delivery of energy by pipeline is consistently the safest mode of energy
transportation.
The Difference in "Pipelines"
Understandably, most customers link all "pipelines" together, however there are
indeed significant differences between the liquid transmission systems, natural gas
transmission systems and the natural gas distribution systems operated by local gas
utilities. Each type of pipeline system faces different challenges, operating conditions and
consequences of incidents.
Interstate transmission systems are generally made up of long, straight runs of large
diameter steel pipelines, operated at high volumes and high pressures. These larger
transmission lines feed natural gas to the gas distribution utility systems.
Gas distribution utility systems, in contrast, are configured like spider webs, operate
at much lower volumes and pressures and always carry gas that has been odorized for
easy leak detection. Distribution pipeline systems exist in populated areas, which are
predominantly urban or suburban.
Distribution pipelines are generally smaller in diameter (as small as 1/2 inch),
operate at pressures ranging upward from under one pound per square inch, and are
constructed of several kinds of materials including a large amount (over 40 percent) of
non-corroding plastic pipe. Distribution pipelines also have frequent branch connections,
since most customers require individual service lines. Most distribution systems are
located under streets, roads, and sidewalks and when working on them, care must be
taken not to unnecessarily disrupt the flow of traffic and of commerce. Because
distribution pipelines provide a direct feed to customers, the use of in-pipe inspection
tools usually requires natural gas service to customers to be interrupted for a period of
time.
Federal regulations recognize the differences between these types of pipelines, and
different sets of rules have been created for each. 49 CFR Part 192 sets out the
regulations for natural gas transmission and distribution pipelines and the rules
discriminate between the two, while 49 CFR Part 195 sets out the regulations for liquid
transmission lines.
Regulatory Authority
As part of an agreement with the federal government, in most states, state pipeline
safety authorities have primary responsibility to regulate natural gas utilities as well as
intrastate pipeline companies. However, state governments are encouraged to adopt as
minimum standards the federal safety standards promulgated by the U.S. Department of
Transportation (DOT.) In exchange, presently DOT reimburses the state for up to 50% of
its pipeline safety enforcement costs. Therefore, the actions of Congress affect state
regulations and our companies. The states may also choose to adopt standards that are
more stringent than the federal ones, and many have done so. Questar and many other
distribution system operators report being in close contact with state pipeline safety
inspectors. As a result of these interactions, distribution operator facilities are subject to
more frequent and closer inspections than required by the pipeline safety regulations.
Natural Gas Utilities Are Committed to Safety
Our commitment to safety extends beyond government oversight. Indeed, safety is
our top priority -- a source of pride and a matter of corporate policy for every company.
These policies are carried out in specific and unique ways. Each company employs
safety professionals, provides on-going employee evaluation and safety training,
conducts rigorous system inspections, testing, and maintenance, repair and replacement
programs, distributes public safety information, and complies with a wide range of
federal and state safety regulations and requirements. Individual company efforts are
supplemented by collaborative activities in the safety committees of regional and national
trade organizations. Examples of these groups include the American Gas Association,
the American Public Gas Association and the Interstate Natural Gas Association of
America.
We continually refine our safety practices. Natural gas utilities spend an estimated
$6.4 billion each year in safety-related activities. Approximately half of this money is
spent in compliance with federal and state regulations. The other half is spent, as part of
our companies' voluntary commitment to ensure that our systems are safe and that the
communities we serve are protected.
What Are The Facts About Most Gas Distribution Safety Incidents?
During last week's Transportation and infrastructure Committee's mark-up of H.R.
5782, two members of the committee stated that between 2002 and 2005 the greatest
number of pipeline incidents occurred in the nation's gas distribution systems, and that
such incidents were on the increase. For clarification sake, I would like to qualify this
statement. Any conclusions on relative safety between gas distribution, gas transmission
and hazardous liquids must be tempered by the fact that distribution has almost 4 times
the miles of pipe than gas transmission and liquids combined
So, where do these distribution incidents come from?
There are two kinds of incidents involving natural gas distribution systems, depicted
in the attached chart titled: "Most Distribution Incidents Caused by External Forces": (1)
Those caused by factors the pipeline operator can to some extent control, such as
improper welds, material defects, incorrect operation, corrosion or excavation damage by
a utility contractor; and (2) those caused by External Forces, which are due to factors the
pipeline has little or limited ability to control, such as excavation damage by a third party,
earth movement, structure fires, floods, vandalism and lightning.
The term "excavation" is intended to include demolition, excavation, tunneling or
construction activities as presented in the bill being considered today by this committee.
As you can see by the blue area in the chart, utilities do a good job in minimizing
incidents that they can control.
The record shows that between 2002 and 2005, 82 percent of all reported incidents
were the result of excavation damage by a third party or other factors the utility company
had little or no control over. In many cases, the typical "little or no control" incident
involves a party outside the jurisdiction of authorities overseeing pipeline safety.
Furthermore, as shown by the second attached chart titled: "Incidents Caused by
Excavators Have More than Doubled Since 2002", during the same four-year period,
incidents due to 3rd party excavation more than doubled. Excavation damage thus
represents the single greatest threat to distribution system safety, reliability and integrity.
Efforts by the Common Ground Alliance (CGA) damage prevention organization
and the nationwide education program on the three-digit One Call 811 dialing to prevent
excavation damage are steps in the right direction. But more is needed.
AGA and APGA support the proposal before this committee to outline the required
nine elements of an effective state damage prevention program in the legislation and to
provide for additional funding for state implementation of the program. Data from the
last five years demonstrates that states that have stringent enforcement programs
experienced a much lower rate of excavation damage to pipeline facilities than states that
do not have stringent enforcement powers.
AGA and APGA urge Congress to provide continued funding authority over the
upcoming reauthorization period for grants to the CGA and to the states to support One
Call programs.
The statistics are clear. Excavation damage prevention presents the single greatest
opportunity for distribution safety enhancements, and we urge Congress to take decisive
action on this front.
AGA and APGA also commend this committee for including language within its
draft bill to address the issue raised by Congressman Murphy during an earlier pipeline
safety oversight hearing, regarding establishing protocols for post-incident activity. The
language requiring a call to the operator anytime a pipeline is damaged, regardless of
severity is a critically important addition to the bill. Likewise, the requirement to call
911 and the facility operator whenever the substance being carried by the pipeline is
escaping from the pipeline is a positive addition, and consistent with a current best
practice established by consensus of all stakeholders in the CGA. It is important that
calls to 911 and the resulting mobilization of extremely busy emergency response
personnel, occur only when the substance is escaping from the pipeline. In those
situations, as well as when a pipeline is damaged without leakage, a call to the owner or
operator of the pipeline will also help more quickly and effectively mitigate the potential
hazard.
Gas Transmission Integrity Reassessment Time Interval
It is our hope that in evaluating the appropriateness of the 7-year re-inspection
requirement, the U.S. Government Accountability Office (GAO) will uncover all of the
pertinent facts and, that based on the GAO findings, Congress will consider options for
allowing the Secretary of Transportation to change the interval, consistent with the GAO
findings. This will allow operators to continue to deliver natural gas safely and
affordably. Consequently, AGA and APGA support the provision for the seven-year re-
inspection proposed in the committee's draft bill.
Summary
AGA and APGA believe that Congressional passage of pipeline safety
reauthorization this year will result in timely and significant distribution system safety
improvements.
The members of AGA and APGA emphatically support the recommendation that
Congress enact legislation that gives states an incentive to adopt stronger damage
prevention programs. We look forward to working with you to secure passage of
legislation this year.
MR. HALL. Thank you, Mr. Jibson.
Mr. Mohn, we recognize you for 5 minutes. Stay as close as you
can. Thank you.
MR. MOHN. I will do so.
Thank you, Mr. Chairman.
Good afternoon. I am Jeryl Mohn from Panhandle Energy.
Today, I am speaking on behalf of the Interstate Natural Gas
Association of America, or INGAA. INGAA is the trade association that
represents virtually all of the interstate and interprovincial natural gas
pipelines in North America.
In April, I testified before the subcommittee on progress being made
in gas transmission integrity management programs, and I suggested
some relatively modest improvements in the current Federal Pipeline
Safety Program. Today, I will focus my comments on a few of the
specific legislative proposals that you are considering.
The first item is the 7-year reassessment interval for gas transmission
pipelines. I testified in April that the 7-year interval was not based upon
any engineering or risk analysis, but rather a compromise between House
and Senate negotiators. In reaching this agreement in 2002, however,
Congress recognized and required that GAO prepare an analysis on the
reassessment interval in time for you to consider options for this year's
reauthorization.
INGAA has been one of the stakeholders working with GAO over
the last year to develop this report. However, we understand that it will
be released after the August congressional recess. We don't know
precisely what GAO will say, but our impression in talking to them is
that they will indeed recommend to Congress that DOT be directed to
develop an alternative to the 7-year mandate that instead employs best
engineering practices. The committee discussion draft includes a
placeholder provision on this issue requiring the DOT send Congress any
legislative recommendation once the GAO report is complete. This
provision does not otherwise change the reassessment interval, however.
Mr. Chairman, we appreciate that the discussion draft references this
issue; however, the provision does not direct DOT to make any further
change without further congressional action. Absent the reauthorization
bill before us today, such additional action would be unlikely for another
4 years.
Therefore, we ask that the subcommittee do as I believe you intend
to do and collect the views of GAO prior to marking up a bill. If GAO
views support of such an action, we urge you to adopt the provision that
has already been recommended by DOT as recognized in H.R. 5678.
This would keep the 7-year reassessment interval in place unless or until
DOT completes the rulemaking on an alternative based on technical data,
risk factors, and engineering analysis.
Another issue I would like to address is the regulation of pipelines
we call direct sales laterals. A direct sales lateral is typically short in
length, connecting one of our interstate pipelines to a large single
customer, such as a power plant or industrial facility. Under current law,
these lines are regulated for safety purposes at the State level even
though they are owned by interstate pipeline to which they are
connected. A Federal agency, namely FERC, already has Federal
authority to regulate these direct sales laterals for economic purposes.
We believe Congress should also clarify that these laterals be regulated
by DOT in the same way other interstate pipeline facilities are
conducted. This would provide consistent regulation for all of the
pipeline facilities owned by our interstate systems. The discussion draft
does make this change, which has also been recommended by DOT, and
we certainly appreciate that and endorse that provision.
And last, Mr. Chairman, but not least, I want to focus on damage
prevention. Mr. Jibson did a good job in explaining to you the exposure
faced by distribution companies. For gas transmission companies, it is
not much different.
In 1998, this committee approved legislation that was part of the T-
21 highway bill to encourage improvement in State damage prevention
programs. The programs are often referred to as one-call or call-before-
you-dig programs. The 1998 legislation accomplished a great deal to
enable improvement in these programs, but we believe now is the time
for another substantial improvement. INGAA strongly supports the
damage prevention provisions proposed by DOT that are incorporated in
the discussion draft. The development of national standards, along with
modest grant funds for States that meet those standards, is an excellent
proposal. You heard testimony in April to support our belief that these
efforts will result in reducing a significant number of accidents.
My written testimony includes some additional comments on several
other issues, and, Mr. Chairman, I would be happy to answer further
questions for you at the appropriate time.
[The prepared statement of Jeryl L. Mohn follows:]
PREPARED STATEMENT OF JERYL L. MOHN, SENIOR VICE PRESIDENT, OPERATIONS AND
ENGINEERING, PANHANDLE ENERGY, ON BEHALF OF INTERSTATE NATURAL GAS
ASSOCIATION OF AMERICA
Mr. Chairman and Members of the Subcommittee:
Good morning. My name is Jeryl Mohn, and I am Senior Vice President of
Operations and Engineering for Panhandle Energy. I am testifying today on behalf of the
Interstate Natural Gas Association of America (INGAA). INGAA represents the
interstate and interprovencial natural gas pipeline industry in North America. INGAA's
members transport over 90 percent of the natural gas consumed in the United States
through a network of approximately 200,000 miles of transmission pipeline. These
transmission pipelines are analogous to the interstate highway system - in other words,
large capacity systems spanning multiple states or regions.
Panhandle Energy, headquartered in Houston, Texas, is a subsidiary of the Southern
Union Company and owns or holds a major ownership interest in five interstate pipelines
and a liquefied natural gas import terminal. Our pipelines serve a significant share of
markets in the Midwest, the Southwest including California, and Florida. In addition, our
Trunkline LNG terminal in Lake Charles, Louisiana is one of the nation's largest LNG
import facilities.
Mr. Chairman, I submitted extensive testimony in April on the reauthorization of the
Pipeline Safety Act, including information on the natural gas transmission Integrity
Management Program (IMP) and the safety of gas pipelines. My comments today will
focus on several specific legislative proposals, but I would refer the Committee back to
my earlier testimony for more general background on this topic.
REASSESSMENT INTERVALS
As you know, the Pipeline Safety Improvements Act of 2002 mandated a natural gas
transmission integrity management program pursuant to which the industry would
undertake a 10-year baseline inspection program to ensure the safety of all gas
transmission pipeline segments located in populated areas. Three years into this program,
the inspections are progressing well, and the industry is generally on track for meeting
the 10-year baseline requirement.
The 2002 Act also included the requirement that these pipeline segments be
reassessed every seven years thereafter. It is fair to say that the seven-year number was
not based on any engineering analysis; instead, it represented a political compromise
between the Senate position favoring five-year re-assessment interval and the House
position favoring a 10 -year interval. Sixty years of operational experience in pipeline
industry strongly suggested that, for most pipelines, anything shorter than ten years was
both unnecessary and a waste of resources. Nonetheless, Congress settled on the seven-
year interval as a compromise between the two positions. In recognition of this,
however, the 2002 Act also required the Government Accountability Office to analyze
the re-assessment question and to report to the Congress in time for the next
reauthorization debate.
Mr. Chairman, that debate is today. The GAO has been working on a report for
almost a year now, and we understand that it will be completed soon - probably by the
middle of September. The Administration's bill (HR 5678) already includes a provision
addressing the issue by retaining the seven-year requirement unless and until the
Department of Transportation promulgates an alternative requirement based on
engineering and risk analysis. INGAA strongly supports this provision.
Why not just stick with the current requirement for another reauthorization period?
There are several reasons for a change now. First, the DOT has interpreted the seven-
year reassessment requirement to begin after each individual segment is first inspected,
rather than once the 10 -year baseline period is complete. This means that segments first
inspected in years 2003, 2004 and 2005 must be reassessed in years 2010 through 2012,
while the first battery of baseline inspections is still ongoing. This overlap of baseline
inspections and re-inspections could create pipeline capacity constraints that would have
the potential to result in higher natural gas prices for American consumers than would
otherwise be the case. Inspection and maintenance work reduces pipeline operational
capacity, and some inspections even require complete system shutdowns for weeks at a
time. Getting these requirements right, so that inspection work is rational and justified, is
critical to minimizing the likelihood of gas supply problems attributable to integrity
management work.
Next, the internal pipeline inspections covered in the IMP program primarily
addresses one type of pipeline integrity threat - corrosion. Corrosion causes about 25
percent of all gas transmission lines accidents. While this is the largest single cause of
accidents on gas transmission pipelines, it is not the only cause. For example, excavation
damage is the leading cause of accidents associated with fatalities and injuries. Focusing
scarce resources on a single cause of accidents, without looking at other areas where
other safety improvements can be made, will not provide the best level of overall safety.
Finally, there is the one-size-fits-all nature of the current seven-year requirement.
The best method for improving safety, however, is to weigh risks and prioritize work
based on those potential risks. Some pipeline segments may, in fact, need to be inspected
more often than every seven years due to their inherent risk, while others do not need to
be re-inspected for 10 to 15 years (once the baseline is complete) due to their low risk.
We will end up with an even safer pipeline system if the focus is on reducing risks to the
public, rather than just compliance with a mandated set of requirements that may bear
little relation to actual risk.
The Committee's Discussion Draft includes a "placeholder" provision on this issue,
wherein the Secretary of Transportation would be required to report back to Congress
with any legislative recommendations once the GAO report is complete. We would
simply note that the Secretary has already provided a legislative recommendation on this
matter, which is included in HR 5678. The placeholder provision in the discussion draft
would not allow the Secretary to initiate any change in the seven-year requirement
without further action by Congress - action that would be unlikely to occur again for the
next four years. INGAA therefore urges the Committee to adopt the provision from HR
5678, which allows the Secretary to initiate a rulemaking on this matter and make a
change based upon "technical data, risk factors, and engineering analyses."
DIRECT SALES LATERALS
As part of its earlier testimony, INGAA provided the Committee with a history on
the safety regulation of direct sales laterals. Suffice it to say here that continued state
regulation of sales laterals owned by interstate pipelines is anachronistic and unnecessary.
It also diverts resources away from what should be the states' primary focus on intrastate
pipeline facilities, including distribution lines.
The Discussion Draft includes a provision to move the safety regulation of direct
sales lateral pipelines owned by interstate pipelines from states to the Pipeline and
Hazardous Materials Safety Administration within DOT. This would be consistent with
the existing economic regulation of these pipelines at the federal level. The Federal
Energy Regulatory Commission regulates a direct sales lateral owned by an interstate
pipeline as a part of the interstate pipeline, a result that is backed by judicial precedent.
There is no legitimate reason why safety regulation should be treated any differently.
States that are "interstate agents" on behalf of DOT would be able to oversee and audit
the regulation of direct sales laterals owned by an interstate pipeline as part of the
interstate agent function.
The language in the Discussion Draft does not affect direct sales laterals owned
either by a customer (such as a power plant or factory) or by an intrastate pipeline. These
direct sales laterals still would be regulated by the states.
INGAA strongly supports the provisions in the discussion draft and in the
Administration bill on this matter.
OTHER ISSUES IN HR 5782 AND THE DISCUSSION DRAFT
One-Call Civil Enforcement
One-call damage prevention systems are created, and managed, at the state level.
INGAA believes that enforcement of these state programs, including civil penalty
enforcement, should also be at the state level. Consequently, INGAA has some concern
about the federal Department of Transportation enforcing state one-call laws. Damage
prevention requires cooperation between both underground utility owners and excavators.
Enforcement is best handled by the regulator that has responsibility for administering the
one-call programs, i.e., the state regulators, so that enforcement strategy can be
coordinated achieving the private sector participation and cooperation that is essential for
success.
If Congress feels strongly about civil penalties for one-call enforcement, then we
urge you to review the approach taken by the Transportation and Infrastructure
Committee, whereby federal enforcement would only be permitted in those states that
have not adopted civil penalty authority on their own. We believe the end-goal should be
effective state enforcement of one-call laws, not the preemption of state one-call law
enforcement by the federal government.
State Damage Prevention Programs
The goals behind this program - the further improvement in state damage prevention
laws - have been an INGAA priority for many years. From the standpoint of reducing
pipeline accidents, this is the single most important issue in the 2006 reauthorization bill.
INGAA strongly supports this provision.
Grants to States and State Pipeline Safety Grants
These two provisions provide additional federal grant funds to the states, for both
improving state one-call programs and assisting in the regulation and enforcement of
safety standards for intrastate pipelines and natural gas distribution lines.
Natural gas and hazardous liquid transmission lines are under federal safety
jurisdiction while natural gas distribution lines (LDCs) and intrastate pipelines are under
state jurisdiction. Transmission line operators - and only transmission line operators -
pay the annual user fees to PHMSA that fund the federal pipeline safety program and all
of the associated grants to the states.
HR 5782 and the Discussion Draft both anticipate significant increases in grants to
the states. Still, based on the current regime for collecting user fees, federally-regulated
pipelines would fund an increasing share of the cost of regulating of intrastate pipelines at
the state level. This would include the costs of developing and implementing the
Distribution Integrity Management Program, which is focused on reducing accidents
involving state-regulated gas distribution lines.
INGAA accepts the premise that transmission line operators should contribute to the
cost of programs the directly benefit transmission lines, such as the damage prevention
program. INGAA also believes that distribution line operators should contribute a fair
share of the cost of this program as well, because a national damage prevention initiative
would be a central part of the distribution integrity management program. If Congress
increases the matching funds for state pipeline safety grants as well, from "up to 50
percent" to "up to 80 percent," distribution operators regulated by the states should also
help to offset the additional cost of these grants. There is no justifiable reason why
interstate transmission pipeline operators - regulated at the federal level - should
continue to subsidize state-regulated entities. DOT should consider a new user fee
formula that includes gas distribution lines in federal user fee collections, and if
necessary, Congress should authorize user fees to be collected from distribution
operators.
Safety Orders
Both the Discussion Draft and the Administration Bill propose modifying the
existing statute with respect to the issuance of safety orders. The first change to existing
law would be a requirement that any safety orders be issued only after notice and
opportunity for a hearing. This is an excellent change that INGAA supports. The
provision, however, also would expand the conditions for which a safety order could be
issued from the current "potential safety-related condition" to "any condition that could
affect public safety, property, or the environment." This would be an overly-broad
expansion of authority. The considerations in (2) are also vague and overly-broad, except
for (2)(A), which is specific and understandable. A standard that could lead to shutting
down a pipeline delivering energy on a real-time basis to millions of consumers must be
specific in order to avoid unnecessary (and to consumers, costly) disruptions.
Technical Assistance Grants
This provision in the Discussion Draft extends the authorization of the "technical
assistance grant to communities" that was part of the 2002 Act. INGAA supports this
provision, with a request that pipeline operators also be eligible for grants to fund
activities that an operator might undertake to educate local communities about pipelines
or improve safety communications targeted at communities located near pipelines. Such
education and/or communication efforts would be consistent with the spirit of what was
authorized in 2002.
Enforcement Transparency
INGAA generally supports increased enforcement transparency, and therefore
supports this provision, with the following suggestions. First, we believe that companies
involved in enforcement proceedings should be allowed to provide information "telling
their side of the story" to DOT for inclusion in any electronic posting. This would be
optional, but it would possibly provide a more balanced view of a pending action. In
addition, we urge the Committee to include language protecting due process and the
confidentiality of parties engaged in settlement proceedings.
INCIDENT REPORTING
INGAA would like to highlight one final issue that is not part of either bill, but that
was raised in its earlier testimony. This is the manner in which accident data is collected
for natural gas transmission lines. The current criteria result in an inaccurate measure of
accidents on natural gas transmission pipelines and thereby provide the Congress and the
public with a misleading impression about accident trends.
The tally of natural gas transmission accidents reported by DOT annually is based
on the number of "reportable incidents." "Reportable incidents" are defined as those
which: 1) cause a fatality, 2) cause an injury, or 3) result in property damage of $50,000
or more. These criteria create a misleading impression, because the value of property
damage includes the dollar value of the natural gas lost as a result of the accident.
During the last six years, natural gas commodity prices have increased more than
300 percent. Prices that were approximately $2 per mcf in 2000 now fluctuate between
$5.50 and $10 per mcf. These higher natural gas commodity prices, which are a function
of market forces, have greatly increased the number of "reportable incidents" for gas
transmission lines, since the $50,000 threshold has remained constant. This is skewing
accident data and giving the impression that accidents are increasing, when in fact they
are not. Accident criteria and subsequent data analyses and conclusions should not be
based on the market price of natural gas, which in recent years has been extremely
volatile. Instead, such data should be based on a constant measurement, such as the
volume of gas lost, etc. We ask that the Committee consider a requirement that DOT
initiate a rulemaking to change the criteria for property damage.
CONCLUSION
Mr. Chairman, I again want to thank you for the opportunity to testify today.
INGAA hopes the Committee marks up this legislation soon, so that a final bill can be
enacted before the adjournment of the 109th Congress. We stand ready to work with you
on completion of a bill in 2006.
Witness Contact Information:
Jeryl L. Mohn
Senior Vice President, Operations and Engineering
Panhandle Energy
5444 Westheimer Road
Houston, Texas 77056
713-989-7410
INGAA Contact Information
Martin E. Edwards III
Vice President, Legislative Affairs
Interstate Natural Gas Association of America
10 G Street, NE, Suite 700
Washington, DC 20002
202-216-5910
Summary of Testimony
INGAA appreciates the opportunity to testify on reauthorization of the Pipeline Safety
Act. We support the timely reauthorization of the Act, and want to provide some specific
comments on the key bills that have been introduced. Our recommendations for
legislation to reauthorize the Act in 2006 include:
<bullet> Re-examination of the seven-year reassessment interval that was part of the gas
integrity management requirement in the 2002 legislation. We recommend a
reassessment interval based on scientific and/or engineering criteria. The
provision contained in the Administration bill (HR 5678) accomplishes this
objective and has INGAA's support.
<bullet> Incentives to further improve state damage prevention programs nationwide.
<bullet> Amend the definition of "direct sales lateral" pipelines in the Pipeline Safety
Act to make those owned by interstate pipelines jurisdictional to federal, rather
than state, oversight.
<bullet> Amend natural gas transmission accident reporting criteria to remove the
linkage to the cost of natural gas lost, since this value fluctuates significantly
over time and therefore provides misleading data.
MR. HALL. Well, thank you, sir.
Mr. Felt.
MR. FELT. Mr. Chairman, members of the subcommittee, my name
is Tim Felt. I am President and CEO of Explorer Pipeline Company
headquartered in Tulsa, Oklahoma.
As Mr. Sullivan graciously acknowledged earlier, Explorer operates
1,400 miles of petroleum products pipeline, serving 16 States extending
from the Gulf Coast throughout the Midwestern United States.
I appreciate the opportunity to appear today on behalf of API and
AOPL. Together, API and AOPL represent the companies responsible
for the vast majority of U.S. oil pipeline transportation.
I will summarize my written testimony and ask that the full text and
attachments be included in the record of this hearing for the
subcommittee's consideration.
Mr. Chairman, the Pipeline Safety Improvement Act of 2002 is a
success. Industry and DOT have cooperated to achieve significant
improvement in pipeline safety, and this improvement is demonstrated
by our industry's record. This record is reflected on the charts that
accompany my testimony.
The oil pipeline industry plans to invest over $1 billion in pipeline
safety improvements over the next 5 years. Because of this, it is very
important that Congress reauthorize the DOT Pipeline Safety Program in
2006 to send a clear signal that these investments are appropriate and
DOT is on the right track in implementing the Pipeline Safety
Improvement Act of 2002.
We suggest extending the Act at least 5 years to guarantee as much
certainty as possible to DOT, the affected industry, and the public
regarding the rules governing the safety oversight of our national
pipeline infrastructure.
The prospects for a single, widely-supported pipeline safety
reauthorization bill are excellent. The three proposals before us have a
number of elements in common and address, for the most part, the same
issues. The parties with an interest in pipeline safety ought to be able to
work together to achieve a compromise that has very broad support. Our
goal of passage of legislation this year is within reach.
In these short remarks, I will only address the key provisions of these
various proposals. We urge the Energy and Commerce Committee to act
promptly on these issues, reconcile any differences of the Transportation
and Infrastructure Committee's version, and move to passage by the full
House.
At the center of both bills are similar provisions that will strengthen
enforcement of State laws designed to prevent underground damage. All
include a comprehensive list of the elements, including effective
enforcement, that characterize successful State underground damage
prevention programs. We strongly support these provisions and urge the
committees to build the final legislative product around underground
damage prevention.
I serve on the Common Ground Alliance as a Board Member for the
oil pipeline industry. The CGA is one of the best things that has
happened to pipeline safety in many years. CGA provides a forum to
work underground damage prevention issues that simply don't exist
anywhere else. One of CGA's current roles is to lead the public
awareness campaign to promote use of the nationwide, toll-free, 8-1-1
telephone number for one-call notification. It actually originated in this
committee and then became required by the 2002 Act. We believe the
legislation you are considering should reauthorize Section 6105 of Title
49, which authorizes funds that could be used to support CGA and the 8-
1-1 campaign.
As Mr. Boucher mentioned earlier, I would like to address the
provision that modifies DOT's current authority to issue mandatory
orders to pipeline operators.
Current law allows DOT to issue a safety order to an individual
operator in situations that appear to require action, but do not rise to the
level of danger implied in a hazardous facility designation. As we
understand it, the intent is to provide DOT with an enforcement tool with
a lower threshold that would not require DOT to first declare that an
operator's facility is or would be hazardous before actions would be
required of the operator that could be documented in the public record.
The discussion draft adds to current law a welcome notice requirement
and opportunity for a hearing at DOT before any such safety order could
be issued. However, the draft goes on, in effect, to eliminate this due
process benefit by practically abolishing any threshold or burden of proof
for DOT in triggering a safety order.
The Secretary of Transportation may order an operator to make
possibly extensive expenditures on all or a portion of the operator's
system to address any condition that poses a risk based on any factors the
Secretary considers appropriate.
We appreciate DOT's desire to develop an enforcement tool to
document and address situations where DOT and the operator can
identify conditions that are not yet severe, but may become so.
However, the proposal in the discussion draft goes too far in the direction
of preventing the possibility of arbitrary action against an individual
operator who has violated no DOT regulation. Under these provisions,
an operator would be virtually powerless to contest effectively any DOT
requirement to make what the operator believes an unnecessary
expenditure of scarce resources to address questionable risks.
We would like to work with this subcommittee to develop a
provision that provides Mr. Barrett and the DOT what it needs in terms
of documentation of its interactions with operators about needed safety
improvements, but which contains the proper protections to ensure that
all actions ordered, in fact, are justified, prudent, and represent real
safety improvements.
In summary, current pipeline safety law is working, and working
very well. Improvements can be made, particularly in strengthening the
underground damage prevention, but fundamental changes are not
needed. The legislative proposals before the House all seek to make
improvements in the fundamentally-sound DOT Pipeline Safety Program
based on the Pipeline Safety Improvement Act of 2002. We need to
move promptly to agree on the improvements that can gain broad support
and incorporate these improvements into a Pipeline Safety
Reauthorization Bill that can be enacted this year.
The oil pipeline industry stands ready to help in any way we can to
achieve this worthy goal.
Thank you.
[The prepared statement of Timothy C. Felt follows:]
PREPARED STATEMENT OF TIMOTHY C. FELT, PRESIDENT & CEO, EXPLORER PIPELINE
COMPANY, ON BEHALF OF ASSOCIATION OF OIL PIPE LINES
Mr. Chairman, Members of the Subcommittee, my name is Tim Felt. I am President
and CEO of Explorer Pipeline, headquartered in Tulsa, Oklahoma. Explorer operates
1,400 miles of petroleum products pipeline serving 16 states extending from the Gulf
Coast throughout the mid-western United States.
I am a member of the API Pipeline Committee, vice-chairman and treasurer elect of
the Association of Oil Pipe Lines, and the board member representing the oil pipeline
industry's interests in the Common Ground Alliance, a voluntary, private sector
organization composed of the key stakeholders in the prevention of excavation damage to
underground facilities. I appreciate the opportunity to appear today on behalf of API and
AOPL. Together, API and AOPL represent the companies responsible for the vast
majority of U.S. oil pipeline transportation.
As the Subcommittee reviews the current state of pipeline safety and the progress
that has been made since the 2002 Act, these are the main points I would like to
emphasize:
<bullet> The Pipeline Safety Improvement Act of 2002 is a success. Industry and DOT
have cooperated to achieve significant improvement in pipeline safety, and this
improvement is demonstrated by our industry's record. This record is reflected
on the charts that accompany my testimony.
<bullet> The oil pipeline industry is making the investments that are required to fully
comply with the law and in many cases to exceed the law's requirements. The
oil pipeline industry plans to invest over $1 billion in pipeline safety
improvements over the next five years. Because of this it is very important that
Congress reauthorize the DOT pipeline safety program in 2006 to send a clear
signal that these investments are appropriate and DOT is on the right track in
implementing the 2002 Act.
<bullet> There are three principal legislative proposals to discuss, and, the prospects for
a single, widely-supported bill are excellent. Earlier this year, the Bush
Administration transmitted proposed reauthorization legislation, introduced as
HR 5678. Last week the Transportation and Infrastructure Committee
unanimously reported HR 5782, a bill that our industry can wholeheartedly
support. HR 5782 has been re-referred to the Energy and Commerce
Committee, which last week released its own discussion draft for comment.
These proposals have a number of elements in common and address, for the
most part, the same issues. The parties with an interest in pipeline safety and
pipeline infrastructure ought to be able to work together to achieve a
compromise that has very broad support. Our goal of passage of legislation this
year is within reach.
My testimony will discuss the provisions of these various proposals that we think
need the most focus in working towards this compromise. We urge the Energy and
Commerce Committee to act promptly to mark up HR 5782, reconcile any differences
with the Transportation and Infrastructure Committee's version and move to passage by
the full House.
The Role of Pipelines in Petroleum Supply
As we begin discussion of pipeline safety legislation, it is useful to remind the
Subcommittee of the role oil pipelines play in energy supply. An understanding of this
role leads to appreciation of the need for effective and workable policies to provide the
certainty that this key part of the petroleum distribution system can carry out its role
efficiently and safely.
About 40 percent of the total U.S. energy supply comes from petroleum, but the
transportation sector depends on petroleum for 96 percent of its energy. Two-thirds of
domestic crude oil and refined products transportation is provided by pipeline. Pipelines
do this safely and efficiently. The cost to transport a gallon of petroleum by pipeline is
very low, typically 2-3 cents per gallon. Transportation in the US would quickly come to
a halt without pipelines to deliver crude oil to refineries and petroleum fuels to consumers
in various parts of the country.
Oil pipelines are common carriers whose rates are controlled by the Federal Energy
Regulatory Commission. Oil pipeline income is driven only by the volume transported
and does not depend on the price of the products transported. In fact, high oil prices have
a negative impact on oil pipeline income by raising power costs and reducing demand for
petroleum.
Progress in Pipeline Safety
Oil pipeline operators have been subject to the DOT's pipeline integrity
management regulations since March 2001, before enactment of the 2002 Act. DOT's
inspections of operators' plans show that integrity testing will eventually cover
approximately 82 percent of the nation's oil pipeline infrastructure. The oil pipeline
industry is past the halfway point in the implementation of integrity management. Large
oil pipeline operators (greater than 500 miles of pipeline) completed the required 50
percent of their baseline testing of the highest risk segments prior to the September 30,
2004 deadline set by the regulations. DOT has audited each of these operators under
these regulations at least two times - an initial "quick hit" audit and one subsequent full
audit. Many are involved in a third audit cycle. Although operating under a different
deadline, similar progress towards their requirements has been achieved by the small
operators.
Operators are repairing conditions in need of repair and less serious conditions that
are found in the course of investigating defects. Operators are fixing what they find,
often going beyond the requirements of the law.
Improved spill record
As a result of this program, the oil pipeline spill record has improved dramatically in
the last five years, as the exhibits show. The data for these exhibits comes from a
voluntary industry program that since 1999 has collected extensive data on oil pipeline
performance. These figures represent line pipe releases, which are those that occur
outside the company's facilities and are the releases most likely to impact the public and
the environment.
The trend is down for each cause category. The number of total releases dropped 51
percent, releases due to corrosion dropped 67 percent, and releases due to operator error
dropped by 63 percent. Finally, releases from third party damage from excavation
dropped 37 percent.
The safety improvement has been dramatic even though the data only covers half the
7-year baseline assessment period for oil pipelines. We expect this trend to continue as
we complete the first full cycle and begin the reassessment intervals. This provides a
clear indication that the federal pipeline safety program is working.
This background underscores the importance of using this reauthorization cycle to
endorse and, where appropriate, strengthen DOT's current pipeline safety program.
Legislation
The legislative proposals under consideration in the House - HR 5678, HR 5782 and
the Energy and Commerce discussion draft - all assume continuation of this good
program and seek to make it better. I would like to highlight the provisions of these
proposals that we believe are the most significant and deserve the most attention by the
Subcommittee.
Underground Damage Prevention
Pipeline releases caused by excavation damage are the most traumatic, the largest,
and are the most likely to threaten the public and the environment. At the center of HR
5678, HR 5782 and the discussion draft are similar provisions that will strengthen
enforcement of state laws designed to prevent underground damage, and all include a
comprehensive list of the elements, including effective enforcement, that characterize
successful state underground damage prevention programs. These elements were
developed with the assistance of the Common Ground Alliance. We strongly support
these provisions and urge the committees to build their final legislative product around
underground damage prevention.
HR 5678, HR 5782 and the discussion draft all make it a federal crime to ignore
state underground damage prevention laws. We believe this expression of the
seriousness the federal government attaches to damage prevention is one of the most
important safety advances proposed in these bills. HR 5782 structures this authority to
encourage states to become effective in enforcing their damage prevention laws.
Effective state enforcement of these laws is the most efficient approach to damage
prevention and ought to be the goal of federal policy. We urge the Subcommittee to give
serious consideration to directing DOT to forgo federal action where DOT determines
state laws are being adequately enforced.
There are three distinct steps in damage prevention: notification, prompt and
accurate marking, and careful digging with due regard for the markings. HR 5782 and
the discussion draft both provide for a balanced federal enforcement impact on the
damage prevention process in the sense that both create, with slightly different drafting
solutions, a federal cause of action against an operator who fails to respond to a location
request or fails to accurately mark the location of a pipeline as well as against an
excavator who fails to notify the one-call system or disregards location information or
markings. We support this balance.
Common Ground Alliance
As noted at the beginning of my testimony, I serve as the Common Ground Alliance
Board member for the oil pipeline industry. The CGA is one of the best things that has
happened in pipeline safety in many years. Industry stakeholders support the CGA
financially and in return receive value that couldn't be purchased. CGA provides a forum
to work underground damage prevention issues that simply doesn't exist anywhere else.
DOT and other federal agencies with an interest in the underground infrastructure receive
value as well, because CGA brings solutions to the table instead of problems. One of
CGA's current roles is to lead the public awareness campaign to promote use of the
nationwide, toll-free 811 telephone number for one-call notification that was required by
the 2002 Act. We believe the legislation you are considering should reauthorize section
6105 of title 49, which authorizes funds that could be used to support CGA and its 811
campaign.
Low Stress Pipelines
Earlier this year there was a significant leak from a BP Alaska crude oil pipeline on
the North Slope operating at or less than 20% of specified minimum yield strength -- low
stress. Crude oil from this release covered an approximately two-acre area. Based on
API's Pipeline Performance Tracking System, our industry's internal data library on oil
pipeline spills, this leak is a statistical anomaly in its size and is not at all typical of
releases from low stress pipelines. Nevertheless, this leak shows that anomalies do occur
and must be considered in managing the risks pipelines present. That pipeline was
regulated by the Alaska Department of Environmental Conservation at the time of the
accident but was exempt from DOT oversight because it was operating at low stress, did
not cross a navigable waterway, was in a rural area and did not transport highly volatile
liquids.
HR 5782 and the discussion draft both direct DOT to develop regulations to address
low stress pipelines by a date certain. We support these provisions. Each allows DOT
the flexibility to craft regulation that addresses risks appropriately. Pipelines operated at
low stress are inherently less risky relative to the high stress transmission lines that are
the proper principal focus of DOT's pipeline safety program. We would recommend that
DOT's regulation of low stress pipelines
<bullet> apply to low stress pipelines carrying high volume, as in the case of the line on
the North Slope that leaked,
<bullet> follow the DOT's consistent risk-based policy of focusing an appropriate level
of protection on areas where the consequences of a spill are high,
<bullet> choose measures of protection that address the actual risks presented and
<bullet> take care to balance costs and benefits.
We have provided DOT with an outline describing a structure for regulating low stress
pipelines. DOT can put low stress pipeline regulations in place using elements its
successful integrity management regulations, and has begun the administrative process to
do this. Existing legislative authority is adequate, but the setting of a date for completion
of the process in legislation will ensure all interested parties that DOT will act in a timely
manner.
Safety Orders
The Subcommittee draft contains a provision similar to one in the Administration's
bill, HR 5678, that modifies DOT's current authority to issue mandatory orders to
pipeline operators. Subsection (l) was added to section 60117 of title 49 by the Pipeline
Safety Improvement Act of 2002 to allow DOT to issue a "safety order" to an individual
operator in situations that appear to require action, but do not rise to the level of danger
implied in a "hazardous facility" designation under section 60112, the principal authority
available to DOT to order actions by an operator. The intent in 2002, as we understand it,
was to provide DOT with an enforcement tool with a lower threshold that would not
require DOT to first declare that an operator's facility "is or would be hazardous" before
actions would be required of the operator that could be documented in the public record.
The discussion draft and HR 5678 both add to section 60117(l) a welcome notice
requirement and opportunity for a hearing at DOT before any order could be issued.
Ensuring a modicum of due process addresses a significant omission in the 2002 Act.
However, both provisions go on, in effect, to eliminate the due process benefit by
practically abolishing any threshold or burden of proof for DOT in triggering a safety
order. The Secretary of Transportation may order an operator to make possibly
extensive expenditures on all or a portion of the operator's system to address "any
condition that poses a risk" based on any "factors the Secretary considers appropriate".
We appreciate DOT's desire to develop an enforcement tool to document and
address situations where DOT and the operator can identify conditions that are not yet
severe but may become so. However, the proposal in HR 5678 and the discussion draft
goes too far in the direction of permitting the possibility of arbitrary action against an
individual operator who has violated no DOT regulation. Under these provisions an
operator would be virtually powerless to contest effectively any DOT requirement to
make what the operator believes to be unnecessary expenditures of scarce resources to
address questionable risks.
We would like to work with the Subcommittee to develop a provision that provides
DOT what it needs in terms of documentation of its interactions with operators about
needed safety improvements, but which contains the proper protections to ensure that any
actions ordered in fact are justified, prudent and represent real safety improvements. We
would also want to be sure that such orders to individual operators do not become a
substitute for appropriately crafted regulations that apply to all operators.
Enforcement Transparency
Section 2(j) of the discussion draft requires DOT to post on a website monthly
information about pipeline enforcement actions taken by the Secretary or the Pipeline and
Hazardous Materials Safety Administration. Enforcement information is made publicly
available by DOT for other modes regulated by the Department. We have no objection to
this proposal as long as the normal due process and confidentiality attaching to
negotiation and settlement of cases is preserved.
Other Provisions
My comments today have not addressed every provision of every proposal. Most of
the provisions I have not discussed appear acceptable or do not directly affect the oil
pipeline industry. We will continue to analyze the legislation and make our views
available to those working on the legislation. The oil pipeline industry wants to work
constructively with Congress, DOT and interested parties to achieve a compromise
among the various legislative approaches that are offered that can achieve the broadest
possible support. Our goal should be enactment of a bill this year that will reauthorize
the pipeline safety program for several years - we suggest at least 5 years -- to guarantee
as much certainty as possible to DOT, the affected industry and the public regarding the
rules governing the safety oversight of our national pipeline infrastructure. That goal is
within our reach if we all can continue to work together.
Closing
In summary, current pipeline safety law is working, and working very well.
Improvements can be made, particularly in strengthening underground damage
prevention, but fundamental changes are not needed. The legislative proposals before
the House all seek to make improvements in the fundamentally sound DOT pipeline
safety program based on the Pipeline Safety Improvement Act of 2002. We need to
move promptly to agree on the improvements that can gain broad support and incorporate
these improvements in a pipeline safety reauthorization bill that can be enacted this year.
The oil pipeline industry stands ready to help in any way we can in the achievement of
this worthy goal.
This concludes my remarks, I will be happy to respond to questions.
MR. HALL. Thank you.
Ms. Epstein, we recognize you for 5 minutes.
MS. EPSTEIN. Thank you, Chairman Hall, Mr. Boucher, and other
members of the subcommittee.
My name is Lois Epstein, and I am an Alaska and Maryland licensed
engineer, and an oil and gas industry specialist with Cook Inletkeeper in
Anchorage, Alaska, and a consultant to the Bellingham-based Pipeline
Safety Trust.
My testimony today reflects both Cook Inletkeeper and the Pipeline
Safety Trust's views.
My background in pipeline safety includes membership since 1995
on the U.S. Department of Transportation's Technical Hazardous Liquid
Pipeline Safety Standards Committee and testifying before Congress in
1999, 2002, 2004, and 2006 on pipeline safety.
The safety and environmental constituents I represent commend the
committee staff from both parties for an excellent discussion draft which
should, with a minor change in the enforcement transparency section,
proceed toward swift passage at the committee level and in the U.S.
House of Representatives. These organizations are particularly
supportive of the provisions in the discussion draft addressing technical
assistance grants, enforcement, and enforcement transparency, and low-
stress pipeline regulation, though we are disappointed that the bill does
not include a mandate for public dissemination of pipeline maps.
Section 2(i) of the discussion draft reauthorizes a provision of the
Pipeline Safety Improvement Act of 2002 on technical assistance grants,
which has not been implemented by PHMSA to date, and which is the
number-one priority of the safety and environmental protection
communities in this bill. This provision, when implemented, will
promote better technical policy decisions and will increase
communication between diverse members of the public, governmental
decision makers, and members of the pipeline industry. Technical
assistance grants will allow members of the public to hire independent
experts to explain, analyze, and interpret operator and policy-related
data.
The language of Section 2(i) of the discussion draft ensures that there
will be at least three demonstration grants not exceeding $25,000 for the
purpose of demonstrating and evaluating the utility of grants under this
section. And the language ensures broad dissemination of the grant's
technical findings. Both organizations are confident that there will be
widespread support for continuing these grants, which is why we are not
concerned that there likely will be only three demonstration grants with a
maximum value of $25,000 per grant, as compared to the $50,000 per
grant and an open-ended number of grants allowed in the 2002 statute.
Both organizations support the provisions of the discussion draft
granting PHMSA additional enforcement authorities. Section 2(e)
covering safety orders and Section 2(f) covering integrity program
enforcement.
The enforcement transparency provision, Section 2(j) of the
discussion draft, is a strong step forward. To date, PHMSA has not
provided timely information to the public, State, local government, or
industry on its enforcement activities. To ensure greater trust in this
Nation's pipeline safety programs, it is important for stakeholders to be
aware of the enforcement activities taking place by having the Federal
government post the enforcement documents it issues, such as orders,
letters, and any applicable industry responses to those documents.
Enforcement transparency begins when enforcement actions are first
proposed, continues with regular updates for each stage of the process as
developments occur, and ends when cases are closed. The discussion
draft language is close to this concept, but needs to make clear that
PHMSA would make enforcement information available as cases
progress, not only when cases are finalized.
The organizations I represent today support regulating low-stress
pipelines to prevent releases to the environment, such as this winter's
release of approximately 200,000 gallons of crude oil from a BP low-
stress transmission line on the North Slope of Alaska. Regulation of
low-stress pipelines should be based on the data compiled by PHMSA
and others, and regulatory definitions and thresholds should not be set by
Congress.
Both organizations support the language of Section 2(k) of the
discussion draft, which gives PHMSA the discretion it needs to develop a
technically-sound rule, which by the way, H.R. 5782 does not do because
of its specificity.
We also support Sections 2(a) through 2(d), 2(h), 2(k), and 2(l) of the
discussion draft and the 4-year reauthorization period.
In areas where H.R. 5782 differs from the discussion draft, the
organizations provide the following comments.
On Section 2, covering damage prevention and State damage
prevention programs, based on our contacts with State pipeline safety
regulators, both organizations prefer the language in the discussion draft
to the language in H.R. 5782.
On Section 3, covering the distribution integrity management
program rulemaking issue, both organizations support the 1-year
rulemaking deadline and accept the language contained in Section 2(e)
on standards for distribution integrity management programs.
On Section 4, covering pipeline control management, both
organizations support the Section 4(a) language requiring standards to
reduce the risks associated with human factors, including fatigue.
On Section 7, covering standards to implement NTSB
recommendations, both organizations support inclusion of the three
mandates to PHMSA to develop new regulatory standards. In addition,
we support and have been working to ensure that PHMSA implements
NTSB recommendation P-05, which would require "computer-based leak
detection systems on all lines unless engineering analysis determines that
such a system is not necessary." This important recommendation should
not be ignored by Congress and PHMSA.
Thank you very much for your interest in pipeline safety and
environmental protection. Please feel free to contact me or Carl Weimer
of the Pipeline Safety Trust at any time.
[The prepared statement of Lois N. Epstein, P.E. follows:]
PREPARED STATEMENT OF LOIS N. EPSTEIN, P.E., SENIOR ENGINEER, OIL AND GAS
INDUSTRY SPECIALIST, COOK INLETKEEPER, ON BEHALF OF PIPELINE SAFETY TRUST
The Discussion Draft
Cook Inletkeeper and the Pipeline Safety Trust are particularly supportive of the
provisions in the Discussion Draft addressing Technical Assistance Grants, Enforcement
and Enforcement Transparency, and Low-Stress Pipeline Regulation. The Technical
Assistance Grants provision is the number one priority of the safety and environmental
protection communities. On enforcement transparency, Congress needs to direct the
Pipeline and Hazardous Materials Safety Administration (PHMSA) to provide all official
documentation to the public from the start of enforcement actions until cases are closed.
With respect to low-stress pipeline regulation, the Discussion Draft language gives
PHMSA the discretion it needs to develop a technically-sound rule (which H.R. 5782
does not).
H.R. 5782
Cook Inletkeeper and the Pipeline Safety Trust prefer the language in the Discussion
Draft to the language in H.R. 5782 on damage prevention and state damage prevention
programs, and H.R. 5782 does not contain important provisions covering Technical
Assistance Grants and Enforcement and Enforcement Transparency. Both organizations
support the one year rulemaking deadline for distribution integrity management programs
and the Section 4 language on reducing the risks associated with human factors.
Both Cook Inletkeeper and the Pipeline Safety Trust support a four-year
reauthorization period.
Good morning. My name is Lois Epstein and I am an Alaska- and Maryland-
licensed engineer and an oil and gas industry specialist with Cook Inletkeeper in
Anchorage, Alaska. Cook Inletkeeper is a nonprofit, membership organization dedicated
to protecting Alaska's 47,000 square mile Cook Inlet watershed, and a member of the
Waterkeeper Alliance of 150+ organizations headed by Bobby Kennedy, Jr. My
background in pipeline safety includes membership since 1995 on the U.S. Department of
Transportation's Technical Hazardous Liquid Pipeline Safety Standards Committee
which oversees the Pipeline and Hazardous Materials Safety Administration's
(PHMSA's) oil pipeline activities and rule development, testifying before Congress in
1999, 2002, 2004, and 2006 on pipeline safety, and researching and analyzing the
performance of Cook Inlet's 1000+ miles of pipeline infrastructure by pipeline operator
and type. I have worked on environmental and safety issues for over 20 years for two
private consultants, the U.S. Environmental Protection Agency, Environmental Defense,
and Cook Inletkeeper.
Additionally, I am a part-time consultant for the Pipeline Safety Trust, located in
Bellingham, Washington, and my testimony today reflects both Cook Inletkeeper and the
Pipeline Safety Trust's views. The Pipeline Safety Trust came into being after the 1999
Olympic Pipe Line tragedy in Bellingham, Washington which left three young people
dead, wiped out every living thing in a beautiful salmon stream, and caused millions of
dollars of economic disruption to the region. After investigating this tragedy, the U.S.
Department of Justice (DOJ) recognized the need for an independent organization which
would provide informed comment and advice to both pipeline companies and
government regulators and would provide the public with an independent clearinghouse
of pipeline safety information. The federal trial court agreed with DOJ's recommendation
and awarded the Pipeline Safety Trust $4 million that was used as an initial endowment
for the long-term continuation of the Trust's mission.
For more details on many of the issues discussed below, please see my U.S. House
of Representatives testimony on March 16, 2006 before the Highway, Transit, and
Pipelines Subcommittee of the Committee on Transportation and Infrastructure and on
April 27, 2006 before the Subcommittee on Energy and Air Quality of the Committee on
Energy and Commerce.
The Discussion Draft
The safety and environmental protection constituents I represent commend the
committee staff from both parties for an excellent Discussion Draft which should - with a
minor change - proceed toward swift passage at the committee level and in the U.S.
House of Representatives. The organizations I represent are particularly supportive of
the provisions in the Discussion Draft addressing Technical Assistance Grants,
Enforcement and Enforcement Transparency, and Low-Stress Pipeline Regulation. I first
will discuss these provisions, then will cover other provisions of the Discussion Draft,
and last will address H.R. 5782 - the bill marked-up on July 19 in the Committee on
Transportation and Infrastructure of the U.S. House of Representatives.
Technical Assistance Grants. Section 2(i) of the Discussion Draft reauthorizes a
provision of the Pipeline Safety Improvement Act of 2002 which has not been
implemented to date and which is the number one priority of the safety and
environmental protection communities. This provision, when implemented, will promote
better technical and policy decisions, and will increase communication between diverse
members of the public, governmental decision-makers, and members of the pipeline
industry. These technical assistance grants will allow members of the public to hire
independent experts to explain, analyze, and interpret technical data.
The grants can be used to: 1) analyze operator-reported data on integrity
management (e.g., to compare operations of similar pipelines), 2) interpret (for the
public) operator studies on right-of-way selection and operational decisions, 3) assist
community organizations and local governments to comment on regulations or industry
standards in areas where they wouldn't otherwise have the resources to do so, and 4)
provide effective public input to government and industry in ways not now foreseeable.
Examples of public organizations that could benefit from such grants include the
Washington City and County Pipeline Safety Consortium and the Kentucky Pipeline
Safety Advisory Committee, which each formed after major pipeline failures and include
a broad spectrum of stakeholders interested in ways to avoid additional pipeline accidents
in their states. Note that the 2002 statute requires that these grants not be used for
lobbying or in direct support of litigation.
The language of Section 2(i) of the Discussion Draft ensures that there will be at
least three demonstration grants not exceeding $25,000 "for the purpose of demonstrating
and evaluating the utility of grants under this section" and ensures broad dissemination of
the grant's technical findings. Both organizations I represent are confident that there will
be widespread support for continuing these grants, which is why these organizations are
not concerned that there likely will be only three demonstration grants with a maximum
value of $25,000 - as compared to the $50,000 allowed in the 2002 statute and an
unspecified number of grants - during this reauthorization period.
Enforcement and Enforcement Transparency. Both of the organizations I represent
support the provisions in the Discussion Draft granting PHMSA additional enforcement
authorities - Section 2(e) covering Safety Orders and Section 2(f) covering Integrity
Program Enforcement.
The Enforcement Transparency provision, Section 2(j) of the Discussion Draft, is a
strong step forward. To date, PHMSA has not provided timely information to the public,
state and local government, or industry on its enforcement activities. To ensure greater
trust in this nation's pipeline safety programs, it is important for stakeholders to be aware
of the enforcement activities taking place by having the federal government post the
enforcement documents it issues (e.g., orders and letters) and any applicable industry
responses to those documents. Enforcement transparency begins when enforcement
actions are first proposed, continues with regular updates for each stage of the process as
developments occur, and ends when cases are closed. Our organizations ask that the
subcommittee make the following minor wording change (or equivalent) to Section
2(j)(1)(a) of the Discussion Draft to make it clear the intent of this section:
(a) IN GENERAL.-Not later than 12 months after the date of enactment of this
section, the Secretary shall begin to provide a monthly summary to the public of all
gas and hazardous liquid pipeline enforcement actions taken by the Secretary or the
Pipeline and Hazardous Materials Safety Administration, from the time
enforcement actions are proposed until enforcement actions are finalized.
Each summary shall include information on the operator involved in the
enforcement activity, the type of violation that necessitated the enforcement
activity, the penalty or penalties proposed, any changes in status since the
previous summary, the final assessment amount of each penalty, and the reasons
for a reduction in the proposed penalty, if appropriate.
Low-Stress Pipeline Regulation. The organizations I represent support regulating
low-stress pipelines to prevent releases to the environment such as this winter's release of
approximately 200,000 gallons of crude oil from a BP low-stress transmission pipeline on
the North Slope of Alaska. Regulation of low-stress pipelines should be based on the
data compiled by PHMSA and others, and regulatory definitions and thresholds should
not be set by Congress. Both organizations support the language of Section 2(k) of the
Discussion Draft, which gives PHMSA the discretion it needs to develop a technically-
sound rule (which H.R. 5782 does not do).
Other Provisions of the Discussion Draft. The organizations I represent support the
following provisions of the Discussion Draft:
<bullet> One Call Civil Enforcement (Section 2(a)),
<bullet> State Damage Prevention Programs (Section 2(b)),
<bullet> State Pipeline Safety Grants (Section 2(c)),
<bullet> Damage Prevention Technology Development (Section 2(d)),
<bullet> Seven Year Reinspection (Section 2(h)), since this section incorporates the
findings of the upcoming Comptroller General report into policy-making as our
organizations testified previously should be done,
<bullet> Cost Reimbursements, covering Design Reviews (Section 2(k)),
<bullet> Direct Line Sales (Section 2(l)), and
<bullet> The Four-Year Reauthorization period (Section 3).
H.R. 5782
In areas where H.R. 5782 differs from the Discussion Draft, the organizations I
represent provide the following comments:
On Section 2 covering damage prevention and state damage prevention
programs, based on our contacts with state pipeline safety regulators, both organizations
prefer the language in the Discussion Draft to the language in H.R. 5782. Most notably,
in section (b) of both draft bills, the Discussion Draft language "encouraging and
promoting the establishment of a [state] program designed to prevent damage" (emphasis
added) is far superior to H.R. 5782's language, i.e., the state "has agreed to take actions
toward establishing a program designed to prevent damage" (emphasis added), because
the former allow allows federal funding to continue prior to passage of state legislation.
On Section 3 covering the distribution integrity management program rulemaking
issues, both organizations support the one year rulemaking deadline and accept the
language contained in Section 2(e) on standards for Distribution Integrity Management
Programs.
On Section 4 covering pipeline control management, both organizations support the
Section 4(a) language requiring standards to reduce the risks associated with human
factors, including fatigue.
On Section 5 covering low-stress pipelines, both organizations believe the language
contained in H.R. 5782 unnecessarily and inappropriately limits PHMSA's technical
discretion in low-stress pipeline rulemaking. This language limits regulation of
currently-unregulated low-stress pipelines to certain locations (despite the need for at
least corrosion prevention for all currently-unregulated low-stress pipelines) and sets the
minimum diameter for PHMSA-regulated low-stress pipelines. Such language intrudes
upon PHMSA's ability to regulate pipelines based on technical data. As discussed above,
the language in the Discussion Draft on low-stress pipelines provides PHMSA with
needed discretion for its regulatory decisions.
On Section 6 covering appropriations, as noted above, both organizations support a
four-year reauthorization period.
On Section 7 covering standards to implement National Transportation Safety Board
(NTSB) recommendations, both organizations support inclusion of the three mandates to
PHMSA to develop new regulatory standards (NTSB recommendations P-05-1, 2, and 3).
In addition, both organizations support - and have been working to ensure that - PHMSA
implements NTSB recommendation P-05-5 which would require "computer-based leak
detection systems on all lines unless engineering analysis determines that such a system
is not necessary." This important recommendation should not be ignored by Congress
and PHMSA.
Last, disappointingly, H.R. 5782 does not address Technical Assistance Grants and
Enforcement and Enforcement Transparency, which are high priorities for safety and
environmental protection organizations.
Thank you very much for your interest in pipeline safety and environmental
protection. Please feel free to contact me or Carl Weimer of the Pipeline Safety Trust at
any time with your questions or comments.
MR. HALL. Thank you very much.
All right. That concludes their opening statements.
Mr. Mohn, can you explain the process operators undergo when
applying industry science and risk-based best practices to their own
monitoring of their pipelines for reassessment intervals, both before the
7-year requirement and after the 7-year requirement?
MR. MOHN. I would be happy to.
In fact, there is a framework that was developed in a consensus
standard following the 2002 Act in the regulatory framework put in place
by OPS that is our guide in doing so. That guide broadly defines threats
to our pipeline anywhere from internal to external corrosion to
metallurgy issues to damage from third parties and forces us to go
through an analysis, making an assessment of how we are going to
mitigate each one of those threats. Then, as we look at all of our
thousands of miles of pipelines, we develop a relative risk ranking, if you
will, as to those pipelines that have the greatest probability of a failure
and then apply appropriate mitigative measures. For external corrosion,
we will use and do extensively use, smart pigs to assess metal loss and
then remediate any unacceptable wall loss, again, in a very prescriptive
process that is defined in the consensus standard we call B-31-8. It is an
ANSI standard.
The way we would conduct the analysis if we didn't have the 7-year
prescriptive standard, will again be guided by whatever standard is put in
place by PHMSA. I would expect, again, a similar rigorous, risk-based
process where we assess each threat and determine what the mitigated
measures are and the timeframe within which we would apply those
mitigative measures.
I would just note that we have said many times in our testimony, and
you heard Admiral Barrett say again today, that there are some pipes
that, because of specific circumstances, that we do assess more
frequently. We have some pipes today that we assess every 3 years,
some pipes we assess every 5 years in applying the current B-31-8
standards.
MR. HALL. Mr. Jibson, how do utilities respond when notified of
damage to pipelines? And how prompt is that response? And how does
mandating utility notification of pipeline damage help ensure better
pipeline safety, if it does?
MR. JIBSON. Yes. First of all, the first question in regards to your
question--
MR. HALL. How do you respond?
MR. JIBSON. Okay. On the response, we have right now a system
where we have 24/7 dispatching, emergency numbers that are posted on
all of our pipelines and available. That information comes into us. We
immediately have people who respond to those emergencies, and we get
out on them. Different States have different requirements. In our
particular State, we have a requirement where we respond within 1 hour
of that emergency call. Now that is what we consider actually getting to
the site and taking care of the immediate danger. We also have
relationships with our local authorities, the emergency response groups,
who know where to call and immediately take care of some of the initial
dangers of having the public in a safe situation so that we can go in and
then rectify the problem and take care of that immediately.
Enhanced procedures, as we talked about with the 9-1-1 call, we
believe that will only enhance our ability to respond to safety issues. The
9-1-1 call is very imperative, especially if there would be substance
escaping from the pipeline. In the cases where there is not an actual
release of the substance from the pipeline, we feel like the 9-1-1 call may
not be necessary, but it does not alleviate the need for the call to come
into the operator. And any enhanced enforcement or enhanced
provisions that would facilitate us getting the calls sooner and more
directly would certainly help us in the safety issue.
MR. HALL. My time is up.
The Chair recognizes Mr. Boucher.
MR. BOUCHER. Well, thank you, Mr. Chairman. And I want to
thank each of our witnesses for being here today. This is a hearing
where I think we have had reflected on both panels a very broad
consensus, that the discussion draft moves in the right direction and
should be moved forward from this subcommittee for further legislative
consideration. And, Mr. Chairman, I would very much hope that we
could do that early in the month of September.
Let me just ask a couple of questions focused on the discussion draft,
and this would be for each of you.
One of the major subjects we are addressing is excavation damage
prevention. Would you agree that the provisions in the discussion draft
would effectively discourage that damage by setting in place a program
that would be designed to prevent it? So this can be a very short answer,
hopefully, because I do have some follow-ups for each of you with
regards to the effectiveness of our excavation damage prevention
measures.
MR. JIBSON. I think I could answer very quickly that yes, we
certainly agree that the bill would enhance that. I think we would just
rely on experience with what has taken place in Virginia, Minnesota,
Georgia, Tennessee, and others who have enhanced programs. The
numbers don't lie. It has proven to be a very effective program, and I
think that we would see that throughout the United States.
MR. BOUCHER. All right.
Mr. Mohn?
MR. MOHN. I would simply say yes, I agree with Mr. Jibson.
MR. BOUCHER. All right. Thank you.
Mr. Felt?
MR. FELT. We strongly support the provisions. Thank you.
MR. BOUCHER. Thank you.
Ms. Epstein?
MS. EPSTEIN. Yes.
MR. BOUCHER. Excellent. You are all terrific witnesses.
We have heard a recommendation from the representative of
NARUC this afternoon that a modification be made in the discussion
draft to the rather firm tie between grants that would be to the benefit of
the States and the presence in those States of the excavation damage
prevention safety guidelines, this nine-point program. And the draft
basically says you have to have the guidelines in place before the grants
can be provided. The representative from NARUC said, well, it may
take some time for us to get our State legislative bodies to give us the
statutory authority necessary in order to be able to implement the nine-
point program, and therefore, once we have demonstrated that we are
really trying hard, maybe we should get the grant. My initial response to
that, although I didn't say this to our representative when he was here,
but I will say it now, is that it seems to me that we ought to keep this
firm tie in place and require that the program actually be implemented
before the money is provided. Let that be an incentive. And perhaps the
award of this money could be used as leverage by the regulatory agency
in order to get the State legislature to grant the authority to implement
the rules much more quickly.
So you have heard what he said. You have heard what I have had to
say. What do you think?
MR. MOHN. I would be glad to go first.
We all use performance incentives with our children and in our
businesses that are financially based. The production of results and the
award of those financial incentives should follow in that order. So I
personally believe, and I think generally if you look at the way our
company and most of our interstate companies administer those
programs, once results are produced, the reward or the acknowledgement
of that and the award of the grant in this case should be made.
MR. BOUCHER. So you would agree with me?
MR. MOHN. Yes.
MR. BOUCHER. Thank you.
Mr. Jibson?
MR. JIBSON. Very quickly, I believe that the success of any program
is inherent on the participation and support of all of the stakeholders
involved. The nine-point program involves many stakeholders, and I
think that I would agree with Mr. Mohn that the incentives are certainly
there to have the components in place at the time of receiving the
funding, but maybe there is some middle ground, and I will take maybe a
middle-road position here, because I believe that we do need some
funding to assist in getting the nine points going and get those in place in
many States.
MR. BOUCHER. Well, now there is other funding that flows that
could be used for that purpose.
MR. JIBSON. Right. And maybe that is that middle area. Maybe that
could be channeled that way and this be specific for--
MR. BOUCHER. That could be done at the discretion of the State, if
they choose to do so.
MR. JIBSON. Right. I agree the incentive is there, but I also agree
that some States will need that supportive funding from some
mechanism.
MR. BOUCHER. All right. All right. That is a carefully calibrated
statement.
Mr. Felt?
MR. FELT. Sir, I guess I am not familiar with all of the intricacies
that the 50 States have to deal with, and I might defer to your judgment
on that aspect of it. But I would say that anything we can do to get the
damage prevention programs installed at the highest level as soon as
possible benefits any operator and the public, in general, I would
wholeheartedly support that.
MR. BOUCHER. Thank you. That is very diplomatic, also.
Ms. Epstein?
MS. EPSTEIN. I have communicated with several of those States on
this exact question, and actually, I think they have made a persuasive
case to me, and these are some very dedicated pipeline safety officials,
that the language in the discussion draft, which was discussed with these
State officials, where it talks about encouraging and promoting the
establishment of a State program, is far superior to the language in H.R.
5782 where the State has already agreed to take actions, for the reasons
that we heard today that why delay and, as you said, there could be some
way of providing some of the funding. And the States have agreed that it
is something to strive towards, but things sometimes happen slower at
the legislative level and at the appropriations level as well than they can
always hope for.
MR. BOUCHER. Right. So the financial reward should follow the
complete performance?
MS. EPSTEIN. That is right.
MR. BOUCHER. Thank you.
Those are all of the questions I have, Mr. Chairman.
I want to thank these witnesses. And again, I would hope that we
could move to markup at the earliest possible time.
MR. HALL. You liked these witnesses, didn't you?
MR. BOUCHER. I did. I thought they were great.
MR. HALL. You like witnesses that agree with you, don't you, Mr.
Boucher?
MR. BOUCHER. I vastly prefer those, yes.
MR. HALL. Well, they did a good job.
MR. BOUCHER. They did.
MR. HALL. The Chair recognizes Mr. Sullivan.
MR. SULLIVAN. Thank you, Mr. Chairman.
This is for Mr. Felt from Tulsa. This is our other West Point guy
right here.
You state in your testimony that your industry supports the low-
stress transmission deadline required in the base text. How has your
industry been engaged on the issue since the BP incident and at the
public meeting PHMSA had to discuss the rule?
MR. FELT. I am not sure what our involvement was at the public
meeting, but I do know that the industry, as a whole, has got a team of
people working together to try to come up with a provision that will be
fair to the industry and also be fair to the Government and to the public.
So we have got an active team that is working with the Government on
that.
MR. SULLIVAN. Okay. And one more question.
Your testimony raised some concern with the safety orders language
in the discussion draft and the scope that it is intended to cover. Can you
further explain what type of new authorities, if any, you think would be
appropriate? And do you think a rulemaking process would help address
some of these concerns? Would a consent-based process be more
appropriate here?
MR. FELT. I am not sure what you mean by the consent-based
process, sir.
MR. SULLIVAN. Which one do you think would be better?
MR. FELT. I guess we feel like we could work with the DOT in the
language that they need to get the tools that they need in place. When
Mr. Barrett testified, he talked about it being focused on safety, and we
agree with that. We thought that maybe the language that was in there
opened it a little bit too broadly. I am not opposed to the order, so if they
feel that that is necessary, I mean, it is already in there. We just want to
make sure that the boundaries are clear and that the protections are in
place. And so our industry is having discussions with PHMSA on
working out the differences that we can both support. So I think we are
on our way to getting there.
MR. SULLIVAN. Okay. Well, thank you very much.
MR. HALL. Mr. Shimkus, the Chair recognizes you for 5 minutes.
MR. SHIMKUS. Mr. Chairman, I don't have any questions at this
time.
MR. HALL. Well, you might submit them later.
All right. Do you have any second questions? You got such good
answers before, you don't want to ruin your record now.
MR. BOUCHER. No.
MR. HALL. Well, you have been a really good panel and a very
informative group, and we thank you. And thank you for the time it
took.
And don't have any dismay over the fact that there are so many
empty chairs here. This is probably the last day we will be here for the
next 4 or 5 weeks, and there is a lot to do, and they are doing things. But
each one of them has someone here that is better for them to hear it than
it is for us, because they do most of the work. It will also be submitted to
everybody, copies of your testimony. It is not wasted on empty chairs,
and we want to really thank you for it.
All right. Is there anything further for the good of the committee? If
not, we are adjourned.
[Whereupon, at 1:45 p.m., the subcommittee was adjourned.]
SUBMISSION FOR THE RECORD OF KATHERINE SIGGERUD, DIRECTOR, PHYSICAL
INFRASTRUCTURE ISSUES, UNITED STATES GOVERNMENT ACCOUNTABILITY OFFICE
<GRAPHICS NOT AVAILABLE IN TIFF FORMAT>
See Lurking Below: Oil and Gas Pipeline Problems in the Cook Inlet Watershed, 28 pp. plus
appendices, 2002, and follow-up reports in 2003 and 2005. www.inletkeeper.org/pipelines.htm