    [House Hearing, 106 Congress]
    [From the U.S. Government Publishing Office]

        REAUTHORIZATION OF THE NATURAL GAS PIPELINE SAFETY ACT AND THE
                      HAZARDOUS LIQUID PIPELINE SAFETY ACT

    =======================================================================

                                    HEARING

                                   before the

                        SUBCOMMITTEE ON ENERGY AND POWER

                                     of the

                             COMMITTEE ON COMMERCE
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED SIXTH CONGRESS

                                 FIRST SESSION

                                   __________

                                FEBRUARY 3, 1999

                                   __________

                               Serial No. 106-11

                                   __________

                Printed for the use of the Committee on Commerce

                          U.S. GOVERNMENT PRINTING OFFICE
     55-149CC                    WASHINGTON : 1999
    ------------------------------------------------------------------------------
                       For sale by the U.S. Government Printing Office
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                             COMMITTEE ON COMMERCE

                         TOM BLILEY, Virginia, Chairman

    W.J. ``BILLY'' TAUZIN, Louisiana     JOHN D. DINGELL, Michigan
    MICHAEL G. OXLEY, Ohio               HENRY A. WAXMAN, California
    MICHAEL BILIRAKIS, Florida           EDWARD J. MARKEY, Massachusetts
    JOE BARTON, Texas                    RALPH M. HALL, Texas
    FRED UPTON, Michigan                 RICK BOUCHER, Virginia
    CLIFF STEARNS, Florida               EDOLPHUS TOWNS, New York
    PAUL E. GILLMOR, Ohio                FRANK PALLONE, Jr., New Jersey
      Vice Chairman                      SHERROD BROWN, Ohio
    JAMES C. GREENWOOD, Pennsylvania     BART GORDON, Tennessee
    CHRISTOPHER COX, California          PETER DEUTSCH, Florida
    NATHAN DEAL, Georgia                 BOBBY L. RUSH, Illinois
    STEVE LARGENT, Oklahoma              ANNA G. ESHOO, California
    RICHARD BURR, North Carolina         RON KLINK, Pennsylvania
    BRIAN P. BILBRAY, California         BART STUPAK, Michigan
    ED WHITFIELD, Kentucky               ELIOT L. ENGEL, New York
    GREG GANSKE, Iowa                    THOMAS C. SAWYER, Ohio
    CHARLIE NORWOOD, Georgia             ALBERT R. WYNN, Maryland
    TOM A. COBURN, Oklahoma              GENE GREEN, Texas
    RICK LAZIO, New York                 KAREN McCARTHY, Missouri
    BARBARA CUBIN, Wyoming               TED STRICKLAND, Ohio
    JAMES E. ROGAN, California           DIANA DeGETTE, Colorado
    JOHN SHIMKUS, Illinois               THOMAS M. BARRETT, Wisconsin
                                         BILL LUTHER, Minnesota
                                         LOIS CAPPS, California

                       James E. Derderian, Chief of Staff
                       James D. Barnette, General Counsel
          Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                     ______

                        Subcommittee on Energy and Power

                          JOE BARTON, Texas, Chairman

    MICHAEL BILIRAKIS, Florida           RALPH M. HALL, Texas
    CLIFF STEARNS, Florida               KAREN McCARTHY, Missouri
      Vice Chairman                      THOMAS C. SAWYER, Ohio
    STEVE LARGENT, Oklahoma              EDWARD J. MARKEY, Massachusetts
    RICHARD BURR, North Carolina         RICK BOUCHER, Virginia
    ED WHITFIELD, Kentucky               FRANK PALLONE, Jr., New Jersey
    CHARLIE NORWOOD, Georgia             SHERROD BROWN, Ohio
    TOM A. COBURN, Oklahoma              BART GORDON, Tennessee
    JAMES E. ROGAN, California           BOBBY L. RUSH, Illinois
    JOHN SHIMKUS, Illinois               ALBERT R. WYNN, Maryland
    HEATHER WILSON, New Mexico           TED STRICKLAND, Ohio
    JOHN B. SHADEGG, Arizona             PETER DEUTSCH, Florida
    CHARLES W. ``CHIP'' PICKERING,       RON KLINK, Pennsylvania
    Mississippi                          JOHN D. DINGELL, Michigan,
    VITO FOSSELLA, New York                (Ex Officio)
    ED BRYANT, Tennessee
    ROBERT L. EHRLICH, Jr., Maryland
    TOM BLILEY, Virginia,
      (Ex Officio)

                                      (ii)

                                C O N T E N T S

                                   __________
                                                                       Page

    Testimony of:
        Cook, Richard J., Vice President, Washington Gas.............    55
        Coyner, Kelley S., Administrator of Research and Special
          Programs; accompanied by Richard Felder, Associate
          Administrator for Pipeline Safety, Department of
          Transportation.............................................    14
        Epstein, Lois N., Engineer, Pollution Prevention Alliance,
          Environmental Defense Fund.................................    58
        Holmes, Edward J., Vice Chairman, Kentucky Public Service
          Commission, and Chair, Committee on Gas, National
          Association of Regulatory Utility Commissioners............    22
        Wilson, C. Richard, Vice Chairman, Buckeye Partners Limited,
          on behalf of the Association of Oil Pipelines and American
          Petroleum Institute........................................    65
        Zurcher, John S., Manager, Pipeline Safety, Columbia Gas
          Transmission Corporation...................................    46
    Material submitted for the record by:
        American Gas Association, responses for the record...........   101
        Cooper, Benjamin S., Executive Director, Association of Oil
          Pipelines:
            Letter dated February 10, 1999, enclosing material for
              the record.............................................    94
            Letter dated March 5, 1999, enclosing response for the
              record.................................................    94
        Coyner, Kelley S., Administrator of Research and Special
          Programs, Department of Transportation:
            Letter dated March 17, 1999, enclosing response for the
              record.................................................   103
            Letter dated March 29, 1999, enclosing response for the
              record.................................................   108
        Epstein, Lois N., Engineer, Pollution Prevention Alliance,
          Environmental Defense Fund:
            Letter dated February 12, 1999, enclosing response for
              the record.............................................    93
            Letter dated March 25, 1999, enclosing additional
              material for the record................................   105
        Holmes, Edward J., Vice Chairman, Kentucky Public Service
          Commission, and Chair, Committee on Gas, National
          Association of Regulatory Utility Commissioners, letter
          dated March 4, 1999, enclosing response for the record.....    99
        Zurcher, John S., Manager, Pipeline Safety, Columbia Gas
          Transmission Corporation, responses for the record.........    90

                                     (iii)

        REAUTHORIZATION OF THE NATURAL GAS PIPELINE SAFETY ACT AND THE
                      HAZARDOUS LIQUID PIPELINE SAFETY ACT

                                  ----------

                          WEDNESDAY, FEBRUARY 3, 1999

                      House of Representatives,
                                 Committee on Commerce,
                              Subcommittee on Energy and Power,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 2 p.m., in
    room 2322, Rayburn House Office Building, Hon. Joe Barton
    (chairman) presiding.
        Members present: Representatives Barton, Bilirakis,
    Stearns, Largent, Whitfield, Norwood, Shimkus, Wilson, Shadegg,
    Pickering, Bryant, Ehrlich, Bliley (ex officio), Hall, Sawyer,
    Markey, Pallone, Wynn, and Dingell (ex officio).
        Staff present: Cathy Van Way, majority counsel; Rick
    Kessler, majority professional staff member, and Sue Sheridan,
    minority counsel.
        Mr. Barton. If the subcommittee could come to order. We do
    not have a quorum, and we have no Democratic members, so we are
    not going to start. But I wanted the record to show the
    chairman was here on time and prepared to start on time, and,
    hopefully, members will keep that in mind, so that we begin
    these hearings on time.
        So, I am going to recess until we get at least one Democrat
    here.
        But I want to welcome everybody to today's hearing, and I
    will save my formal statement until we do get some other
    members. But I wanted the record to show that the chairman was
    here and ready to go at 2 o'clock.
        We are in recess, subject to the call of the Chair.
        [Brief recess.]
        Mr. Barton. The subcommittee will come to order. A quorum
    being present, the hearing of the Subcommittee on Energy and
    Power of the Commerce Committee on the reauthorization of the
    Pipeline Safety Act now commences.
        I want to welcome everybody to the subcommittee. Obviously,
    I am the new subcommittee chairman. I look forward to my new
    position, and this is my first hearing as chairman of this
    important subcommittee. I hope everyone understands that I plan
    to conduct the business of the subcommittee in a very
    bipartisan fashion and a very open and fair fashion, also.
        We will have to address a number of important issues this
    year and next year. The issue before us today is a very
    important issue, the issue of pipeline safety. We will soon be
    considering passing a bill for nuclear waste. We hope to hold a
    hearing on the Exxon-Mobil merger, and we also plan to do a
    series of hearings with the intent to do a restructuring of the
    utility industry, or the electricity generation industry, in
    this country. And I am sure hopeful that the bipartisan
    cooperation will prevail on those issues as well as this issue.
        The issue before us today, as I said earlier, is an
    important issue. There are about 2 million miles of underground
    pipelines in the United States made up approximately of 160,000
    miles of liquid pipelines, 300,000 miles of gas transmission
    pipelines, and 1.5 million miles of gas distribution pipelines.
        With a network this large, obviously, some accidents have
    occurred. The job of this Federal legislation is to put in
    place a framework to minimize those accidents to the extent
    that it is humanly possible, and, also, to make sure that we
    have an assessment of incidents, when they occur so that, if
    possible, a prospective action can be taken to prevent their
    reoccurrence in the future.
        The safety record is respectable, and I think we are going
    to hear testimony today that that record has improved since the
    act was reauthorized back in 1996.
        There is an enormous potential for the loss of human life
    and, also, for harm to the environment, and we cannot afford to
    become complacent about pipeline safety. We have to--and it is
    the role of this subcommittee--to ensure through legislation
    that our pipeline system does operate and continues to operate
    as safely as possible.
        When the last pipeline safety reauthorization occurred in
    1996, this subcommittee decided to break with the past and take
    a new approach, instead of responding to specific accidents, by
    creating inflexible one-size-fit-all mandates which did not
    necessarily lead to improved safety and which in fact, in some
    cases, may have diverted limited resources from more promising
    safety proposals.
        In 1996, this subcommittee, and later the full committee
    and the Congress, decided to allow something called ``risk
    management'' and ``risk assessment'' to be utilized at least on
    a pilot basis.
        Today's hearing is going to give the subcommittee an
    opportunity to hear about how those changes have worked in the
    marketplace and how they have been implemented. By most
    accounts, these approaches have been successful. They have
    allowed the Department of Transportation to implement
    regulations and guidelines in a more timely fashion and to
    better utilize their limited resources. But as always is the
    case, we think that there may be room for additional
    improvement, and that is the purpose of the hearing today.
        As subcommittee chairman, I am going to be very interested
    in suggestions that may be offered on how to improve the
    overall effect of our current Pipeline Safety Program. Although
    the authorization for the Pipeline Safety Program does not
    expire until September of the year 2000, I hope today's hearing
    will be the beginning of a fairly quick reauthorization
    process. If we hear, as I expect to hear, the program is
    improved since our last reauthorization and no major
    modifications are needed, it is my intent to mark up a
    subcommittee print in the very near future. This is an
    important program and I would not like for our consideration of
    it to wait until it is on the verge of expiring.
        Now that my distinguished ranking member, Mr. Hall, is
    here, I want to reiterate what I said in his absence. This is a
    bipartisan subcommittee. We expect to work in a very
    cooperative and bipartisan fashion with Mr. Hall and all the
    members on his side, in addition to the members on the
    Republican side of the aisle.
        With that, I would be happy to recognize the distinguished
    subcommittee ranking member, Mr. Hall, for an opening
    statement, and then we will recognize Mr. Whitfield and then
    Mr. Pallone.
        Mr. Hall.
        Mr. Hall. Thank you, Mr. Chairman. I am the Mr. Hall he was
    talking about. And I was quickly reading my statement once to
    myself before I would read it to you. But I will be very brief
    because, Mr. Chairman, you adequately covered everything, and I
    like the approach that you are taking about all these
    agreements we are going to have and how we are going to get
    along and how we are going to work together. It reminds me
    somewhat of a statement made by a World War II veteran. They
    wondered why all those World War II marriages lasted, you know,
    40, 50, 60 years. And the guy answered; he said, ``Well, when
    we got married, my wife and I agreed I would make all the big
    decisions and she would make all the little decisions. Up to
    this time, we have never had a big decision.'' That is the way
    it could work, but I don't think so. I think we are going to be
    able to work together. This committee has worked together
    historically, and there is no reason that we won't.
        And I thank you for the opportunity to have this discussion
    on the status of pipeline safety as it relates to the
    reauthorization to the Federal Pipeline Safety Program.
        When we last acted to reauthorize the Pipeline Safety
    Program, we were able to seize an opportunity at that time to
    apply some what we thought were new and more cooperative and
    less costly approaches to the very necessary task of
    regulation. As you remember, the expectation was that these
    tools would enhance the efficiency and the effectiveness of
    regulation, which is our duty, while fostering more productive
    relationships between the regulators and the industries that
    they so vitally affect.
        I am glad you decided to call this hearing today, and I
    think it is getting us off to a good, early start which
    indicates we are going to probably have our budget out timely
    and be ahead of the other organizations here in the House. And
    I look forward to working with you on this committee. I
    certainly look forward to working with you on the deregulation
    of electricity and the hearings that we will have there, and I
    thank you for calling this hearing on pipeline safety
    reauthorization, and as much as you did cover the waterfront
    pretty well on it, I yield back my time.
        Mr. Barton. We thank you, Congressman Hall.
        I watched him not read any of that statement. Everything he
    said was from his heart.
        The written statement is excellent, but what he said I
    think is an improvement even on the written statement.
        The Chair would recognize the distinguished gentleman from
    Kentucky, Mr. Whitfield, for a brief opening statement.
        Mr. Whitfield. Mr. Chairman, thank you very much, and I am
    delighted that I am here on the first hearing that you are the
    chairman of the subcommittee. And, certainly, I always try to
    attend hearings that Ralph Hall will be present because he
    always has such amusing stories.
        So I am delighted to be here.
        But, in addition to that, we have a witness today from my
    home State of Kentucky, and I would like to pay special thanks
    to Mr. Ed Holmes, who is vice chairman of the Kentucky Public
    Service Commission, for being here today. And I know that he is
    representing NARUC and other organizations, so I am delighted
    that he is here. We look forward to his testimony, and we look
    forward to the testimony of all the witnesses, and thank you
    very much, Mr. Chairman.
        Mr. Barton. Well, we will make sure that your witness from
    your State is the last to testify, so that you have to stay
    here to introduce him.
        So we may proceed out of order on that.
        The Chair would recognize the distinguished gentleman from
    New Jersey, Mr. Pallone, for a brief opening statement.
        Mr. Pallone. Thank you, Mr. Chairman.
        The last time the subcommittee considered the issue of
    pipeline safety was shortly after the horrible natural gas
    pipeline explosion in my district in Edison, New Jersey. And at
    that time, I raised several concerns.
        Fortunately, some of my safety and environmental concerns
    have been addressed through One-Call legislation which, after 4
    years, was successfully enacted into law last year as part of
    the 6-year Transportation Equity Act of the 21st century.
        However, I want to say that many of my concerns as a result
    of that accident still remain. Mr. Chairman, in 1997 and 1998,
    there were over 200 hazardous liquid pipeline incidents
    resulting in over $40 million in property damage and
    approximately 95 natural gas pipeline incidents during the same
    period resulting in nearly $20 million in property damage. Ten
    injuries and one fatality occurred from these accidents. And,
    one person died from the pipeline disaster in my district in
    Edison.
        My point is that we need to ensure that the pipeline safety
    program we have in place protects against such potentially
    devastating outcomes. And the DOT was mandated to develop
    environmental protection standards back in 1992 and is long
    overdue in fulfilling this mandate. The current law, I would
    also point out, weakened a previous mandate for regular
    inspections of pipelines, including standards for inspecting
    pipeline segments that run through environmentally sensitive
    areas. Further, the DOT's Office of Pipeline Safety has not
    prescribed any regulations in this regard.
        Mr. Chairman, I just wanted to mention--if I could include
    in the record two charts that I have here, which we could pass
    out to the other members, which compare the status of the
    National Transportation Safety Board recommendations issued to
    various entities within the DOT.
        [The information referred to follows:]

        [GRAPHIC] [TIFF OMITTED] T5149.001

        [GRAPHIC] [TIFF OMITTED] T5149.002

        Mr. Pallone. And, regrettably, of all of the DOT
    administrations, the Office of Pipeline Safety has the worst
    acceptance rate of safety board recommendations, both by mode
    and by administration, 68 percent compared to acceptance rates
    that are 10 to 20 percent higher by most of the other
    administrations within the Department.
        For the accident that occurred in my district in 1994, for
    example, the NTSB recommended that the RSPA expedite
    requirements for installing automatic- or remote-operated
    mainline valves on high-pressure pipelines in urban and
    environmentally sensitive areas to provide for rapid shutdown
    of failed pipeline segments. This recommendation is still
    considered open or incomplete over 4 years after the
    recommendation was originally made. I mention that as an
    example. There are others, and I have consistently urged the
    DOT to expedite the process in that case and others. I will
    bring up some of these things during the questions, Mr.
    Chairman, but I would just like to point out again that a lot
    of the concerns that come from that Edison accident and a lot
    of the recommendations are still out there and haven't actually
    been accepted.
        And I just would ask unanimous consent to be allowed to
    submit these documents and others for the record from the NTSB
    and the Interior Department.
        Mr. Barton. If the gentleman from New Jersey would allow
    the staff on the majority side, and if has not shown it to the
    minority side, to take a look at those documents, I am sure at
    the end of this hearing or sometime we will accept them, but we
    would like to----
        Mr. Pallone. Sure.
        Mr. Barton. [continuing] look at them, and then at the
    appropriate time, we will recognize you to put them into the
    record.
        Mr. Pallone. Thank you, Mr. Chairman.
        [The prepared statement of Hon. Frank Pallone, Jr.,
    follows:]
      Prepared Statement of Hon. Frank Pallone, Jr., a Representative in
                     Congress from the State of New Jersey
        Thank you, Mr. Chairman. The last time this subcommittee considered
    the issue of pipeline safety was shortly after the horrible natural gas
    pipeline explosion in Edison, NJ, which is in my district. At that
    time, I raised several concerns regarding the proposed reauthorization
    language and process. Although today's hearing is an oversight hearing,
    presumably it serves as a prelude to a future reauthorization process
    prior to the Pipeline Safety Act's expiration in 2000.
        Fortunately, some of my safety and environmental concerns have been
    addressed through ``one-call'' legislation, which, after four years of
    hard work, was successfully enacted into law last year, as part of the
    six-year Transportation Equity Act, or ``TEA-21.'' However, many of my
    concerns still remain. I look forward to continuing to work with all
    interested parties to make sure we make substantial improvements in
    these areas.
        I still have many concerns regarding environmental protection.
    Accident data from the Transportation Department's Office of Pipeline
    Safety (OPS) indicate that, on average, more than 6.3 million gallons
    of oil and other hazardous liquids are released from pipelines each
    year. In 1997 and 1998, over 200 hazardous liquid pipeline incidents
    occurred, resulting in over $40 million in property damage.
    Approximately 95 natural gas pipeline incidents during the same period
    resulted in nearly $20 million in property damage. Ten injuries and one
    fatality occurred from these accidents. And, 1 person died from the
    pipeline disaster in my district. While these numbers may seem low, the
    point is that the potential exists for thousands more deaths and far
    greater damage to natural resources and property to occur. We need to
    ensure that the pipeline safety program we have in place protects
    against such potentially devastating outcomes.
        I know industry favors a risk management/cost-benefit approach to
    regulating pipeline safety and played a substantial role in crafting
    and updating this program. But the DOT was mandated to develop
    environmental protection standards back in 1992 and is long overdue in
    fulfilling this mandate. I agree that a top-down, ``one size fits
    all,'' regulatory approach is frequently not the most effective nor the
    most efficient use of administrative resources. However, based on the
    data I have seen, I am not convinced that the current approach
    adequately protects the environment in the context of this program.
        The current law also weakened a mandate for regular inspection of
    pipelines, including standards for inspecting pipeline segments that
    run through environmentally-sensitive areas. Further, the DOT's Office
    of Pipeline Safety (OPS) has not prescribed any regulations in this
    regard.
        I would also like to draw your attention for a moment to some
    information provided by the National Transportation Safety Board
    (NTSB). I have two charts, which compare the status of safety board
    recommendations issued to various entities within the Transportation
    Department (DOT). Regrettably, of all of the DOT administrations, the
    Office of Pipeline Safety (OPS) has the worst acceptance rate of safety
    board recommendations, both by mode and by administration--68%,
    compared to acceptance rates that are 10-20% higher by most of the
    other administrations within the department.
        Let me give you some examples of the types of recommendations the
    NTSB has made. For the accident that occurred in my district in 1994,
    for example, the NTSB made several recommendations and is still
    awaiting response from the Research and Special Programs Administration
    (RSPA), which oversees the OPS, on a recommendation to expedite the
    completion of a study on methods to reduce public safety risks in the
    siting and proximity of pipelines.
        For the same accident, the NTSB also recommended that the RSPA
    expedite requirements for installing automatic- or remote-operated
    mainline valves on high-pressure pipelines in urban and environmentally
    sensitive areas to provide for the rapid shutdown of failed pipeline
    segments. This recommendation received an acceptable response but is
    still considered ``open''--or incomplete--over four years after the
    recommendation was originally made. I have consistently urged the DOT
    to expedite this process.
        Finally, I would like unanimous consent to be allowed to submit for
    the record additional materials from the NTSB and the Interior
    Department as part of my statement. Thank you, Mr. Chairman.

        Mr. Barton. And we also want to say that the Chair is very
    cognizant of some of the concerns that you have justifiably
    raised, and the Chair shares those concerns, and that is the
    reason that we are holding this hearing.
        The Chair would recognize a new member of the full
    committee, and obviously, of the subcommittee, Mr. Bryant, of
    Tennessee, for a brief opening statement.
        Mr. Bryant. I thank the chairman.
        This is my first subcommittee hearing in which we have
    actually had testimony, other than organizational meetings. And
    I am excited about being on this committee, as well as this
    subcommittee. I thank the chairman for holding this hearing.
        It is certainly a very important issue, not only to my
    State of Tennessee, but also to the entire country. And from
    reviewing the list of witnesses, we appear to have a good list,
    very eminently qualified people to talk about this issue, so I
    look forward to being here today.
        And I may have to leave just a little early, perhaps before
    all the testimony is over, but I will be listening very
    carefully, as well as reviewing very carefully the written
    statements of the witnesses.
        Thank you.
        Mr. Barton. The Chair would now recognize the distinguished
    ranking member of the full committee, the Honorable John
    Dingell of Michigan, for a brief opening statement.
        Mr. Dingell. Mr. Chairman, thank you. I commend you for
    holding this hearing, and it is good that we are looking into
    the substantially revised law we enacted late in 1996.
        I also commend my good friend, Mr. Frank Pallone, for his
    unceasing vigilance in his work on behalf of those who seek to
    ensure that this industry adheres to the highest standards of
    safety.
        The pipeline industry, at least those who play by the
    rules, has a very good record of safety, and my friends in the
    industry know that I hold them in the highest regard. However,
    there is an enormous threat to communities from unsafe
    pipelines, and it is a very real one.
        In 1994, a gas pipeline explosion destroyed an apartment
    complex in Edison, New Jersey. In 1993, a leak in a Colonial
    Oil pipeline in Fairfax County, Virginia, caused extensive
    property and environmental damage. It is clear that we must all
    do what we can to prevent similar unfortunate occurrences in
    the future.
        The 1996 legislation made many changes in the law,
    including allowing the Department of Transportation to
    substitute a voluntary demonstration project for regulatory
    mandates like biannual inspections. I am told both DOT and
    industry view the new pipeline program as more efficient and
    effective than ever before, and perhaps that is so. If that is
    the case, then there is much to be pleased about the new law.
    However, I would submit to you that we really don't know
    anything much for certain.
        The law has only been in place for 2 years, and DOT has
    recently approved some demonstration projects for oil pipelines
    and a gas pipeline, too. But have any of these things been in
    place long enough for us to learn anything useful? And what
    monitoring has taken place to be assured that, in fact, they
    are working? Proper understanding of practices and safety is
    being looked at so that we can know whether or not our
    handiwork is, in fact, good.
        To my knowledge, this is the first hearing on the subject
    since the passage in the 1996 act. I, indeed, have many
    questions. How have the risk management demonstration projects
    differed from existing regulation? Are enforcement actions up
    or down since the passage of the 1996 act? Are these changes
    due to better behavior by pipelines, or are the changes due to
    less oversight by the agency? What is the status of OPS's
    rulemaking on replacing pipelines to facilitate better safety
    inspections? What is the status of rulemaking on
    environmentally sensitive areas? And there are other questions,
    Mr. Chairman.
        Mr. Chairman, if we intend to reauthorize the law, we must
    have a complete picture of the impact of the law on pipeline
    safety. I think it may be wise to consider a 2-year
    reauthorization in order to be sure that we are doing the right
    thing by the public. I am quite certain that we do not have
    enough knowledge to expand the risk demonstration provisions of
    the law at this time, though I believe we should, and can,
    leave the subject open for future consideration.
        Mr. Chairman, we have almost a full 2 years to go before
    authorizations in this law expire. And while I commend you for
    the vigor-

    ous way that you are taking leadership and interest in this
    matter, I think it would be prudent, indeed, for us to use the
    time that we have here to determine the extent to which this
    law is, in fact, working so that we can pass a broadly
    bipartisan bill at an appropriate time in the future that truly
    addresses the needs of the industry, the environment, and the
    public.
        Mr. Chairman, I thank you for your kindness to me.
        Mr. Barton. We thank you, Congressman Dingell.
        The Chair wants to announce that, according to the rules of
    the committee and the subcommittee, order of recognition is by
    seniority, alternating by party, before the gavel and by order
    of appearance after the gavel. According to the rules, the
    Chair also has the power of recognition, and the Chair is going
    to violate those rules right now by recognizing the full
    committee chairman, the Honorable Tom Bliley of Virginia, for a
    brief opening statement.
        Chairman Bliley. Thank you, Mr. Chairman. And I want to
    commend you for holding this timely hearing on the
    reauthorization of the Natural Gas and Hazardous Liquid
    Pipeline Safety Acts.
        I am pleased to see the subcommittee get an early start on
    some of the work it has before it in the 106th Congress. This
    will be a very busy 2 years, and the subcommittee has a lot of
    important and complicated issues ahead of it.
        So with that, I want to thank you, Mr. Chairman, and I also
    commend to your attention two other issues I view as priorities
    for the subcommittee; restructuring the electric utility
    industry to give consumers retail choice and enacting a solid
    law when it comes to the disposal of high-level nuclear waste.
    I look forward to working with you on these matters.
        With respect to issues before us today, the Natural Gas and
    Hazardous Liquid Pipeline Safety Acts, the subcommittee's
    attention to this is essential to preserving the safety of our
    community. Although the authorization for this program does not
    end until September 2000, because of the importance of this
    program, I believe we should begin the process of formulating
    the reauthorizing legislation early. This hearing is the first
    step in that process.
        The safe operation of natural gas and hazardous liquid
    pipelines is of serious concern to me. When pipelines are
    operated in an unsafe manner, they not only pose a danger to
    humans but also threaten the environment around them. Thus, it
    is critically important that natural gas and liquid pipelines
    are operated in a safe a manner as possible.
        Today's hearing should be especially interesting because it
    will be the first opportunity for us to learn how the changes
    made in the 1996 reauthorization of this program are working.
    Prior to 1996, Congress approached pipeline safety by requiring
    the Department of Transportation to implement Federal minimum
    standards which all pipelines were required to meet. In 1996,
    we authorized the Department of Transportation and pipeline
    operators to conduct a risk management demonstration project.
    This program allows DOT and pipeline operators, on a voluntary
    basis, to develop safety regimes tailored to the risks posed to
    a particular pipeline or segment of pipeline. Four risk
    management projects have been approved and more are in the
    works. I look forward to hearing how the program is working.
        Another change since 1996 is that the Department is now
    taking a risk assessment approach to enacting new regulations
    and guidelines. Apparently this approach is working well, the
    amount of time it has taken to complete rulemakings has been
    shortened, and stakeholders appear to be more satisfied with
    the results. While I am sure that there is always room for
    improvement, everyone seems more satisfied with the program
    than when it was reauthorized in 1996.
        And I look forward to hearing from the witnesses and
    working toward reauthorization of this program in a
    responsible, timely, and effective manner.
        Thank you, Mr. Chairman.
        Mr. Barton. We thank the distinguished full committee
    chairman.
        Before the Chair recognizes the distinguished gentleman
    from Maryland for an opening statement, I would just make an
    observation. All my Democratic friends are close to the Chair,
    and all my Republican friends are as far away as possible.
        I hope that is not a message that is being sent; maybe I
    should. I wouldn't be the chairman, then, if I did that.
        We would like to recognize the gentleman from Maryland for
    a brief opening statement.
        Mr. Wynn.
        Mr. Wynn. Thank you, Mr. Chairman. I would defer an opening
    statement at this time.
        Mr. Barton. Okay. Then the Chair would recognize the
    distinguished member from Arizona, a new member of the full
    committee and the subcommittee, Mr. Shadegg, for a brief
    opening statement.
        Mr. Shadegg. Thank you, Mr. Chairman.
        As my colleague, Mr. Bryant, I am new to the full committee
    and new to the subcommittee. This is my first substantive
    hearing, and I am looking forward to it.
        I will keep my remarks short, other than to say that I
    think this is an issue of great concern. I am pleased with the
    progress that has been made in the past. I am also pleased that
    the chairman has scheduled an early hearing on this so that we
    can look into the issue at great depth. I am impressed with the
    list of witnesses.
        But, also, like my colleague, Mr. Bryant, I am going to
    have to leave early. I regret that, but will pay attention
    closely to the written testimony of those witnesses I am not
    able to hear.
        Thank you, Mr. Chairman.
        Mr. Barton. The Chair would recognize the distinguished
    member from Massachusetts, one of the brightest members of the
    committee and the Congress, the Honorable Mr. Markey, for a
    brief opening statement.
        Mr. Markey. Thank you, Mr. Chairman, and I want to begin by
    commending you for holding this afternoon's oversight hearing
    on pipeline safety.
        You know, back in the old days of Sam Rayburn and John
    McCormick and Tip O'Neill and Jim Wright, it was often said
    that there was an ``Austin to Boston'' access operating in
    House leadership. Today, Mr. Chairman, with your accession to
    the Chair, and Mr. Hall's continued service as ranking
    Democrat, we now clearly have a ``Dallas-Fort Worth'' access on
    this subcommittee.
        As a result, I expect that we are going to be learning a
    whole lot more about the Lone Star State's interest in energy
    issues and we look forward to taking the entire course this
    year.
        Today we begin that process by examining the implementation
    of the Natural Gas Pipeline Safety Act and the Hazardous Liquid
    Pipeline Safety Act. All of us have a compelling interest in
    ensuring that the nearly 160,000 miles of natural gas or oil
    pipelines that are running through our communities are properly
    safeguarded against explosions or leaks that would endanger
    public safety or degrade our natural environment.
        Last October's catastrophic pipeline explosion in Nigeria
    which killed over 700 people underscores the terrible human
    cost of failing to maintain safe and secure pipelines.
        While the United States has largely avoided such disasters,
    as one of the witnesses prepared testimony points out, each
    year the amount of oil or other hazardous liquids released from
    pipelines across America is equivalent to more than half of the
    amount released from the Exxon Valdez disaster.
        In response to concern about these releases, Congress over
    the years has taken a number of steps to enhance environmental
    protections and strengthen emergency response planning related
    to pipeline operations. Unfortunately, the Department of
    Transportation appears to have failed to carry out the intent
    of these laws by not issuing implementing regulations.
    Moreover, the Department has chosen to ignore a number of
    proposed safety improvements recommended by the National
    Transportation Safety Board over the years as a response to
    specific accidents that have taken place at U.S. pipelines.
        And to make matters worse, in 1995 and 1996, this
    subcommittee considered and approved legislation which weakened
    a number of the safety and environmental protections
    established under pre-existing law. The so-called
    ``accountable'' Pipeline Safety Act of 1996 replaced these with
    ``paralysis by analysis,'' risk assessment, and cost benefit
    analysis requirements, as well as a dubious risk management
    demonstration program that allowed pipelines to be exempted
    from Federal safety rules if they put in place their own risk
    management programs.
        A particular concern to me was a provision in the 1996 act
    that permitted corporate insiders and lobbyists to serve on
    peer-review panels that were empowered to review all proposed
    DOT pipeline safety regulations. Under this provision,
    individuals with financial or other conflicts of interest would
    actually be allowed to serve as the peer reviewers. Such a
    practice, in my view, undermines the creditability of peer
    reviews and calls into questions the fundamental, scientific,
    and technical creditability of the entire process.
        In addition, the 1996 act actually decreased public
    participation on technical safety standards committees from six
    to five and increased industry representation from four to
    five, thereby, assuring that the so-called ``public
    representatives,'' at least some of whom appeared that would
    never be able to outvote the industry representatives.
        During the committee's markup, I offered an amendment which
    was unfortunately rejected by the committee on a 19-23 party
    line vote which would have allowed the Secretary of
    Transportation discretion to exclude persons from serving as
    peer reviewers if they have a conflict of interest that could
    result in bias.
        I think that this is a very important issue, Mr. Chairman.
    I am glad that you are focusing upon it. As we review it, I am
    going to keep an open mind in terms of provisions that perhaps
    are working better than I thought. But I would hope, at the
    same time, that other members would keep an open mind looking
    at other provisions that perhaps should be modified as well.
        I thank you, Mr. Chairman. I yield back the balance of my
    time.
        Mr. Barton. We think the distinguished gentleman for his
    opening statement. I am always impressed by his performance,
    and the ``paralysis by analysis'' is an excellent soundbite.
        Mr. Markey. Thank you.
        It is a ``golden oldie'' at this point.
        Mr. Barton. Yes.
        Mr. Markey. But----
        Mr. Barton. Not having the benefit of knowing you were
    going to use it, the best I can come up with on a short notice
    is a move toward perfection by cooperation which is--it is in
    the ballpark.
        It is not a home run, but it is the same----
        Mr. Markey. But not Fenwick Park----
        Mr. Barton. No.
        Mr. Markey. Maybe Yellowstone Park.
        Mr. Barton. Yes.
        Mr. Markey. I mean, it is a big park.
        Mr. Barton. But I will get better as the year goes along.
    And we look forward to working together on what is an important
    issue. And I know that all minds on all sides will be open.
        So, the Chair would like to recognize the distinguished
    gentleman from Illinois, the powerful Illinois delegation, Mr.
    Shimkus, for a brief opening statement.
        Mr. Shimkus. I will pass, Mr. Chairman.
        Mr. Barton. Okay.
        Seeing no Democrats who have not yet been recognized, we
    would like to recognize the winning pitcher of the
    congressional baseball game last year, the Honorable Steve
    Largent of Oklahoma, for a brief opening statement.
        Mr. Largent. I would pass.
        Mr. Barton. Okay.
        Mr. Largent. Thank you.
        Mr. Barton. Then we would recognize a new member of the
    full committee and the subcommittee, the distinguished
    gentleman from Maryland, Mr. Ehrlich, for a brief opening
    statement.
        Mr. Ehrlich. Pass.
        Mr. Barton. Okay.
        We see Mr. Norwood is arriving. Would he care to make a
    brief opening statement, or would he yield?
        Mr. Norwood. Very brief, Mr. Chairman.
        Mr. Barton. All right. If you will be seated, then we will
    recognize you, too, the gentleman from the great State of
    Georgia, the Honorable Dr. Norwood, for a brief opening
    statement.
        Mr. Norwood. Well, Mr. Chairman, first, let me just simply
    say how pleased I am to serve on your new subcommittee this
    year, and I look forward to working with you. How pleased I am
    you are having this hearing, and with that, I will add the
    basis of my contents for the record.
        Mr. Barton. Okay. The Chair would recognize the
    distinguished gentleman, Mr. Sawyer, for a brief opening
    statement, from the great State of Ohio.
        Mr. Sawyer. Mr. Chairman, it is a pleasure to be here. I
    will forego the rest of my statement and include it in the
    record.
        Mr. Barton. Okay.
        We are going to have a good year if everybody keeps that
    spirit.
        The Chair would ask unanimous consent that all members not
    present who have not yet made an opening statement be allowed
    to submit a formal opening statement for the record.
        Is there objection?
        [No response.]
        Hearing none, so ordered.
        We would now like to call our first panel to the witness
    table. We have the Honorable Ms. Kelley Coyner, the
    Administrator of Research and Special Programs at the United
    States Department of Transportation. If she would come forward.
        We also, I am told now, have in the room the Honorable Ed
    Holmes, who is the Commissioner and Chair of the NARUC
    Committee on Gas, and he is a Commissioner of the Public
    Service Commission in the great State of Kentucky. Would Mr.
    Holmes come forward?
        And before we recognize them, we would like to give Mr.
    Whitfield of Kentucky an opportunity, if he so desires, to
    introduce his member from his home State.
        Mr. Whitfield. Mr. Chairman, thank you very much. I have
    had the opportunity to work with Ed Holmes, and he does a great
    job for the Public Service Commission of Kentucky, serving as
    vice chairman, and today he is here representing NARUC. And I
    wish he had been here earlier to have heard my wonderful
    remarks about him before. I didn't recognize he was not here
    then, but I am delighted that he made it. I know his airplane
    was delayed, and we look forward to his testimony.
        Mr. Barton. Thank you.
        We have received your written testimony. We are going to
    recognize you, Ms. Coyner.
        And we are going to ask that you try to summarize it in
    about 7 minutes. If you need a little more time, obviously, we
    will give that, and then we will recognize Mr. Holmes.
        So welcome to the subcommittee and the floor is yours.

     STATEMENTS OF KELLEY S. COYNER, ADMINISTRATOR OF RESEARCH AND
      SPECIAL PROGRAMS; ACCOMPANIED BY RICHARD FELDER, ASSOCIATE
           ADMINISTRATOR FOR PIPELINE SAFETY, DEPARTMENT OF
     TRANSPORTATION; AND EDWARD J. HOLMES, VICE CHAIRMAN, KENTUCKY
        PUBLIC SERVICE COMMISSION, AND CHAIR, COMMITTEE ON GAS,
        NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS

        Ms. Coyner. Thank you, Chairman Barton.
        I would like to thank you----
        Mr. Barton. You need to speak into the microphone and----
        Ms. Coyner. I will pull the microphone up a little bit.
        Mr. Barton. Yes, make sure it is turned on.
        Ms. Coyner. All right.
        I appreciate the opportunity, Mr. Chairman, that you and
    Mr. Hall have given me to join you today. And I would like to
    note for the record that I, too, am a native Texan and share
    your heritage in the Lone Star State.
        Mr. Barton. Noted.
        Ms. Coyner. I am Kelley Coyner, the Administrator of the
    Research and Special Program Administration, and I am joined
    today by Richard Felder, the Associate Administrator for
    Pipeline Safety. I am pleased to represent the Department of
    Transportation in discussing these important safety and
    environmental challenges that we face in overseeing 2 million
    miles of pipelines.
        Under Secretary Slater's leadership, we are committed to
    eliminating pipeline-related deaths and injuries and reducing
    damage to the environment. Through vigilance over the years, we
    have experienced a very low number of pipeline incidents in the
    United States.
        Today, however, we face a changing landscape. Because of
    the growth of suburbs, pipelines that were once in rural areas
    have new neighbors. Greater economic competitiveness raises
    questions about the adequacy of safety resources. With growing
    population, new construction, varying operating conditions, and
    significant environmental issues, the challenge is to
    continuously improve pipeline protections. The task is to focus
    on those things which are most likely to cause pipeline
    failure.
        One way of achieving this is to forge partnerships. We have
    done so with other Federal agencies such as the Environmental
    Protection Agency and the Department of Interior; environmental
    organizations like the Nature Conservancy, State Pipeline
    Safety agencies, and industry trade associations, and
    companies. It is also important to find ways for the public to
    participate in a meaningful way. We do this by traditional
    means, such as public meetings and Federal Register notices,
    and by more innovative means, such as electronic town meetings,
    communications targeted specifically at communities adjacent to
    pipelines, and a very aggressive use of our web site.
        The key challenges we face in the pipeline safety area are
    the following: improving prevention of outside force damage,
    developing safety solutions that address varying designs and
    operating conditions of pipelines, enhancing protection of the
    environment, strengthening State pipeline programs, and
    ensuring year 2000 compliance.
        Accidental damage to underground lines is far and away the
    leading cause of accidents and service disruptions. Everyone
    must accept that protecting underground facilities is a shared
    responsibility.
        Perhaps the most important development to ensure safety on
    pipelines was last year's passage of One-Call legislation and
    the implementation of that One-Call legislation.
        Over 160 representatives of utilities, service providers,
    contractors, railroads, One-Call centers, and highways have
    joined with us as a team to study best practices for
    underground damage prevention as provided for in the
    Transportation Equity Act for the 21st Century. We are
    identifying practices that address known risk factors, such as
    the planning, design, and operation of One-Call systems,
    mapping, and locating pipelines and excavation damage. The team
    will hold an interim briefing via satellite on March 31 and
    will complete its work by June.
        To communicate the need for sharing responsibility for
    damage prevention, we have worked closely with the pipeline
    industries, State, and Federal Government, and the insurance
    and construction industries on a novel public education
    campaign. The campaign addresses the critical damage prevention
    steps. Pilot results from Virginia, Georgia, and Tennessee
    indicate increased use of One-Call systems and, most
    importantly, decreased damage to pipelines from outside force
    damage. As a result of this successful pilot, we will expand
    the campaign nationwide this year.
        The wide variety of pipeline systems and the environments
    in which they are located also warrant efforts to tailor safety
    solutions. Our demonstration program will answer the question
    whether using risk management results in greater safety and
    stronger protection of the environment. We are encouraged by
    the preliminary results, but we are not done yet with our work.
        The greater regulatory process also benefits from
    government and industries'--and by government, I mean both
    Federal, State, and local governments--collective assessment of
    risks. We are producing effective operator qualification
    requirements using a negotiated process.
        We have improved our understanding of what LNG and tank
    safety requirements should be. Through wide consultation with
    government agencies, industry, and independent economists, we
    have built a new framework for performing cost-benefit analysis
    which we are implementing program-wide.
        To target important safety issues, we are testing a new
    inspection approach, the System Integrity Inspection Pilot
    Program. The pilot program will allow us to identify potential
    problems earlier and move to correct them. I want to stress for
    the record that participating companies must continue to comply
    with all of our safety standards.
        Efforts like risk management and damage prevention further
    safety and protect the environment. To better protect areas
    that are most unusually sensitive, RSPA is working with
    industry and environmental organizations and other Federal and
    State agencies. We are considering what additional protections
    would be effective so that we can base a regulation on
    practical experience. We are currently pilot testing this
    process.
        Because we require more detailed information, we have also
    built a national pipeline mapping system. We undertook this
    effort in concert with public-and private-sector stakeholders,
    including States, the U.S. Geological Survey, the Federal
    Energy Regulatory Commission, and the Department of Energy. The
    mapping system not only helps our prevention strategy, but also
    our work in oil spill response planning.
        No depiction of the challenge of pipeline risks would be
    complete without the recognition of the major role that State
    agencies play in pipeline safety. States comprise 87 percent of
    the national workforce of pipeline inspectors and each year
    conduct over 8,000 inspections. State regulators actively
    participate in all our regulatory and policy initiatives.
    States assume the primary role in overseeing compliance on
    intrastate transmission and distribution pipelines.
        Over 85 percent of the incidents with fatalities occur on
    those pipelines which are located in densely populated areas.
        We have steadily increased our support for State programs
    from $8 million in 1994 to $14.5 million in 1999, and we
    continue to need strong support in that area.
        We are all concerned about potential for disruption of oil
    and gas and other services in the year 2000. We are working
    with the President's counsel on Y2K conversions, specifically
    the energy sector, on this issue. Our objectives are to
    integrate public-and private-sector efforts to facilitate
    solutions.
        We are prepared to take what we have learned under the
    current Pipeline Safety Act and work closely with Congress to
    advance our safety and environmental goals. We are committed to
    maintaining high levels of safety and environmental protection.
        I would welcome any questions you may have, Mr. Chairman,
    and others on the subcommittee.
        [The prepared statement of Kelley S. Coyner follows:]
      Prepared Statement of Kelley S. Coyner, Administrator, Research and
         Special Programs Administration, Department of Transportation
        I would like to thank Chairman Barton from Texas and Ranking
    Minority Member Hall from Texas for the invitation to speak to the
    Committee today. I am Kelley Coyner, Administrator of the Research and
    Special Programs or RSPA. Appearing with me is Richard Felder,
    Associate Administrator for Pipeline Safety. I am pleased to represent
    the Department of Transportation (DOT) to describe the safety and
    environmental challenges we face in our oversight of the national
    pipeline system. Within the Department, the Research and Special
    Programs Administration's (RSPA's) Office of Pipeline Safety (OPS) is
    charged with regulating the safe and environmentally sound operation of
    the national pipeline infrastructure. Pipelines transport natural gas
    to 55 million residential and commercial customers. They also transport
    60 percent of the crude oil and petroleum products that fuel our
    industry, our economy and our households. We have responsibility for
    over 2 million miles of pipelines and approximately 2200 operators. Our
    regulations cover the design, construction, inspection, testing,
    operation, and maintenance of pipeline systems. We achieve compliance
    with our regulations through a partnership with state agencies, which
    assume regulatory and enforcement functions primarily as they apply to
    intrastate pipeline transportation, while the Federal government
    assumes these responsibilities for interstate pipelines.
        Our mission is to ensure the safe, reliable, and environmentally
    sound operation of the Nation's pipeline transportation system.
    Consistent with the Department's Strategic Plan, we strive to eliminate
    pipeline-related deaths, injuries, and property damage, and reduce
    pollution to the environment. Our top priorities are reducing to zero
    the accidents caused by non-compliance with pipeline regulations and
    working with operators to reduce threats to pipeline integrity.
        As we prepare for reauthorizing the national pipeline program, it
    is an opportune time to look at the safety record over the last ten
    years. The number of incidents of all types is generally constant
    despite growth. Incidents caused by corrosion and outside force are on
    the gradual decline. Federal regulations, in conjunction with
    historically good industry operating practices, have resulted in a
    generally positive safety and environmental record. Compared to other
    modes of transportation, pipelines have a very low incident rate per
    miles of product transported.
        As we face the beginning of the next century, however, we are
    confronted by a changing landscape. With the growth of suburbs, the
    pipelines that were placed in rural or sparsely populated areas have
    new neighbors. Expanding population and environmental concerns are the
    dominant features on today's pipeline maps. Greater economic
    competitiveness drives corporate mergers and restructuring and raises
    questions about adequacy of safety resources.
        The era of buried pipelines operating out of sight and out of mind
    is over. The challenge of the past two decades was assuring that
    Federal minimum pipeline standards adequately addressed fundamental
    requirements for pipeline systems that traverse many states and many
    geographic and environmental conditions. With changing and diverse
    population densities and environmental concerns, and widely varying
    operating conditions, our concern now is how to maintain and improve
    this safety record. Increased safety can only occur if we can recognize
    and address system-unique conditions and concerns. Overseeing pipelines
    is becoming an increasingly challenging task. To address these
    challenges, we embarked on a course of applying risk-based approaches
    to provide safety and environmental solutions.
        The Accountable Pipeline Safety and Partnership Act was passed in
    1996 to provide new ways to improve the pipeline safety record and to
    increase the reliability and efficiency of pipeline systems. Knowing
    that the majority of accidents were occurring in pipeline systems that
    were fully compliant with regulations, Congress authorized risk
    management demonstration projects and required risk assessments of all
    new pipeline regulations. Our goal was to adopt a more comprehensive
    approach to identifying risks and to improving the allocation of public
    and private resources to the most important safety and environmental
    issues.
        We are pleased to report that we have aggressively implemented the
    call for more effective regulation and proceeded in exploring the
    potential for risk management as a permanent feature of the Federal
    pipeline safety program. Using new approaches, we are attacking the
    problem of population encroachment along pipelines that is resulting in
    damage to pipelines and breaches of pipeline integrity. With the
    knowledge that a more competitive economic environment is driving a
    search for the most economical means of maintaining and enhancing aging
    systems, we are finding the most effective means for addressing
    increasing safety risks and devising new strategies for increasing
    environmental protection.
                    risk management & risk based regulation
        The Risk Management Demonstration Program is designed to test
    whether or not the principles and processes of risk management could
    provide effective alternative regulatory approaches for the pipeline
    industry. The Department will exempt operators from regulations if they
    can demonstrate alternatives that achieve superior safety performance.
    The demonstration program will enable us to answer the following
    questions:

     Does risk management result in greater safety, environmental
            protection, and service reliability than would otherwise be
            achieved through compliance with the safety regulations?
     Are resources being better prioritized and more effectively
            applied under risk management?
     Does government have a better ability to influence a positive
            safety and environmental outcome?
        Government and industry realized that risk management requires
    fundamental change--in the way that companies operate, in the processes
    and information we use to ensure safety, in the ways and degrees to
    which companies and regulators interact with each other, and in how the
    public is involved in the regulatory process. Fundamental change does
    not come easily or quickly.
        The Department recognized that regulatory change that allows
    companies greater flexibility to define pipeline-specific problems and
    cost-effective solutions must be pursued in a prudent manner. We must
    ensure that safety and environmental protections are maintained, that
    we allow significant input from all affected parties on all
    demonstration projects, and that we apply careful analysis and
    judgement before we approve alternatives to the current regulations.
        During 1998, the Department approved the Mobil, Phillips, Equilon,
    and NGPL demonstration projects. We are currently awaiting public
    comment on the Chevron project. The Columbia and Northwest projects are
    in the final stages of review prior to soliciting public comment. We
    are also working with Enron, Duke, and Tennessee Gas to meet program
    requirements in 1999. We tailor our audit of each company's progress
    against its risk management plan. To allow for public evaluation,
    company commitments and project performance measures are included for
    tracking in an internet-accessible information system.
        As we approach the midpoint in the demonstration period,
    preliminary findings suggest that operators are enhancing their
    identification and resolution of pipeline risks through use of more
    thorough evaluative techniques. The Department is observing and
    documenting for public record how companies are performing more
    comprehensive and integrated examination of risks and targeting their
    prevention and mitigation strategies. We are observing the exploration
    of new technologies and processes. We have seen an improved emergency
    notification network to alert residents near pipelines about releases
    and appropriate responses. We have witnessed better risk control
    through management of the excavation process near pipelines, better
    repair procedures, and better placement of valves to control potential
    releases in environmentally sensitive areas. One company has revamped
    its aerial assessment process to provide more rapid response to
    concerns. We have seen improvement of safety practices for employees
    who work in areas where exposure to risks is high. Across the board,
    the consultation process has increased the Federal and state
    governments' understanding of pipeline integrity issues specific to
    locations and neighborhoods, as well as system wide.
        As we improve our understanding of the variation in risk factors
    along pipelines, we are more fully applying this understanding to our
    regulatory process. We turned a ten-year struggle over prescriptive
    regulations for testing and certifying pipeline employees into a
    regulatory negotiation that produced an effective plan for a
    performance-based operator qualification regulation. The negotiated
    rule was the product of a team that included representatives from
    government, industry, labor, state regulators, and the public.
        We have accelerated regulatory development of more risk-based
    safety and environmental protection standards by increased
    participation in national consensus standards organizations and
    adoption of industry standards. We have used this process to improve
    our regulation of liquified natural gas (LNG) facilities, by adopting
    standards of the National Fire Protection Association, and of breakout
    tanks, by adopting standards of the American Petroleum Institute.
        We have implemented the risk assessment provisions of our 1996
    reauthorization. We formed a cost-benefit framework working group made
    up of individual operators, the major pipeline trade organizations, and
    economists familiar with cost-benefit analysis. The working group has
    developed a framework for how we will perform future cost-benefit
    analyses, and we are fully implementing the concepts and processes
    within our program.
        We are also testing a risk-based alternative approach to pipeline
    inspection, via the System Integrity Inspection (SII) Pilot Program,
    the goal of which is targeting important safety issues more
    efficiently. The SII approach is based on the operator's presentation
    of a System Integrity Plan to focus federal and state resources on the
    most significant and potentially high impact safety, environmental, and
    regulatory issues.
        Traditionally, our inspections have focused strongly on ensuring
    compliance with applicable pipeline safety regulations using a
    checklist approach with certain guidelines. While this approach
    provides assurance that operators are complying with all regulations,
    there may be other opportunities to improve safety. The SII approach is
    a more broad-based examination of integrity issues, including many
    areas not covered during a standard inspection. It is important to note
    that SII is a full compliance program, without exemptions from
    regulation. We believe, however, that it will help us to improve
    information exchange and system-side consideration of individual
    operators' safety and environmental performance. The Department is now
    soliciting applications from interested companies.
                     national damage prevention initiative
        Accidental damage to underground lines is by far the leading cause
    of accidents and service interruptions. A web of underground facilities
    forms the unseen backbone of our national economy. Damage to pipelines,
    telecommunications lines, and other buried utilities may be caused by
    several factors. Damage to underground facilities may result in deaths,
    injuries, and property and service losses.
        The Department has vigorously tackled this challenge. In 1998,
    Congress included comprehensive one-call damage prevention provisions
    in the Transportation Equity Act for the 21st Century (TEA-21). This
    law requires DOT to conduct a comprehensive study and publish a report
    on one-call center best practices. OPS scheduled an initial public
    meeting in August to solicit public input and participation in
    addressing new requirements. Since August, we have numerous public
    meetings to accomplish the work of the study. Over 160 representatives
    of utilities, service providers, contractors, locators, and railroads,
    and numerous federal, state and local government officials are
    participating in study task teams. They are donating their time and
    effort to find common solutions to a problem that previously divided
    them and delayed passage of national legislation. They are identifying
    best practices in the critical areas of one-call center operations,
    planning and design, excavation, mapping, and locating underground
    utilities. The best practices initiative is known as the One-Call
    Systems Study, or ``Common Ground''.
        The ``Common Ground'' steering team will hold an interim briefing
    to report on its progress; a satellite broadcast is planned for March
    31, 1999. Participants invited include representatives of organizations
    of contractors, locators, gas and telecommunications utilities, one
    call systems, railroads and the National Transportation Safety Board.
    RSPA plans to complete the study and publish the report in June 1999.
    Finally, following the completion of the study, we plan to hold a joint
    public meeting on our findings with the National Transportation Safety
    Board.
        The Department will then proceed to finalize the criteria and
    protocols for a new grant program to reduce damage to underground
    facilities by improving the operational efficiency of one-call centers,
    marking and locating techniques, design and planning practices and
    other techniques identified as best practices in the study. TEA-21
    authorizes grants of $1 million in fiscal year 2000 and $5 million in
    fiscal year 2001.
        The best practices study builds on the strength of earlier work by
    the Department's joint government/industry damage prevention quality
    action team (DAMQAT). The team's mission is to organize a national
    education campaign to reduce damage to underground facilities. This
    team's assessment of public education needs is available on our website
    at www.rspa.dot.gov. The most significant finding is the need for
    better communications among all who work in and around underground
    facilities, including facility operators, private contractors and
    public sector employees who excavate, locators, and one-call centers.
        The campaign the team developed addresses the four critical damage
    prevention steps: Call Before You Dig; Wait the Required Time; Observe
    the Marks; and Dig With Care. We pilot-tested campaign materials in
    Virginia, Georgia, and Tennessee from May to October. Initial results
    are very encouraging. The volume of calls to one-call centers increased
    significantly in all jurisdictions, and Virginia data shows a decline
    in excavation damage to gas pipelines. We will work with the coalition
    of one-call organizations, facility operators, and others to adopt and
    distribute the campaign nationwide this year.
        Risk-based technology is another weapon in our damage prevention
    arsenal. A three-year research effort is underway to improve internal
    pipeline inspection technology to locate mechanical damage and stress
    corrosion cracking on pipelines. Since 1996, the Department has been
    funding this ambitious research project to modify existing inspection
    technology to be able to detect outside force damage. The consortium of
    Battelle, the Southwest Research Institute, and Iowa State University
    is performing the research. Pipeline companies will benefit from access
    to inspection technologies for detecting critical mechanical damage and
    cracks. Inspection vendors will acquire a better understanding of how
    to improve their systems.
                         protection of the environment
        Efforts like risk management and damage prevention further safety
    and protect the environment. While it is true that operating safely by
    keeping the product in the pipe protects the environment--that is not
    the only issue. To enhance our protection, we are identifying those
    geographic areas which are most critical to provide supplemental
    protection beyond our existing requirements. We are considering what
    additional protections would be effective, giving consideration to the
    adverse impacts of construction. We are also considering the processes
    that operators can use to perform risk assessment and make risk control
    decisions and how we can oversee that process, in consultation with
    other agencies and organizations.
        We have extensively consulted with environmental experts and
    industry about how to define areas unusually sensitive to environmental
    damage (USAs) from hazardous liquid pipelines and have produced a model
    to designate the areas accurately on maps. We intend to evaluate the
    USA work to date through a field pilot test of the definition's
    effectiveness and usability. We will work with the American Petroleum
    Institute and Federal and state agencies to verify the appropriateness
    of the model. This pilot testing will provide us with practical
    experience on which to base a regulation on USAs. The Department will
    announce the pilot and evaluation process in the Federal Register to
    ensure public participation. Putting our conceptual model into actual
    use in the hazardous liquid pipeline industry will result in additional
    protections being afforded to critical environmental areas.
    Mapping
        The Department is building a National Pipeline Mapping System to
    provide government and the public with the information it needs to help
    manage pipeline risk, respond to pipeline incidents, and generally
    improve protection of public safety and the environment. The
    Department, with a government and industry team, has created the first
    national pipeline locational standards for the National Pipeline
    Mapping System. These are compatible with U. S. Geological Survey
    standards. This standard was pilot-tested by 22 operators and 10
    states. Pilot participants indicated the standard was understandable
    and could be met with minimum burden. We have since begun to award
    cooperative agreements to nine states to serve as data repositories as
    part of the national mapping system. They will process the information
    for pipelines and LNG facilities within their boundaries. We are
    expecting that operators will submit their data on a voluntary basis.
        We work with the Environmental Protection Agency, the Department of
    the Interior and other Federal and state agencies to obtain or create
    databases on environmental resources, population, natural disaster
    probability, and national resources so that we can prioritize where
    additional prevention actions should be taken. Once the Department has
    defined what unusually sensitive areas are, they will be depicted
    graphically in relation to pipelines, populated areas, political
    boundaries, and other geographic features. This data will enable
    government and industry to better evaluate what protections are needed
    and appropriate responses to identified risks.
        Our regional offices and headquarters are now equipped with the
    best pipeline information available, natural disaster probability and
    consequence data, environmental data, and other data to better inform
    our deployment of resources for inspection, regulatory analysis, and
    emergency response.
    Breakout Tanks Project
        Although the safety record of tanks used as part of pipeline
    transportation systems has been good, we are intent on having our tank
    standards reflect a risk-based safety and environmental approach. While
    the failure of a pipeline breakout tank seems like a low probability,
    the threat of leaks from the corrosion of tank bottoms may be more
    likely. We have thoroughly evaluated the extent to which the pipeline
    industry meets current industry standards and are confident that the
    vast majority of operators do meet these standards. To upgrade the
    protection afforded by Federal pipeline safety regulations for breakout
    tanks, the Department is improving our regulations to the level of
    standards currently applicable to steel petroleum tanks at tank farms
    and refineries throughout the United States. We are working on a final
    rule that will incorporate industry consensus standards for aboveground
    storage tanks.
    Oil Pollution Act (OPA) Program
        In the event that the best of spill prevention strategies fail,
    maintaining effective spill response plans and capabilities is
    critical. Working together, government and industry are reducing the
    environmental consequences of oil spills from pipelines. We work
    closely with the U.S. Coast Guard and the Environmental Protection
    Agency in the program. On a regular basis, we review and approve
    pipeline facility response plans. More important, we work with
    operators and response agencies to test these plans. We conduct two to
    three area-wide full equipment deployment exercises each year, and 20
    tabletop exercises to address issues at the strategic level. Improving
    awareness of specific strategies to protect environmental areas,
    improving communications between responders, and integrating all
    responders understanding of command and control structures are critical
    objectives of these exercises. State pipeline safety and environmental
    agencies participate in all our exercises.
                                 state programs
        Since the inception of the pipeline safety program, Congress
    intended a common stewardship of the protection of 2 million miles of
    pipelines, shared between the Federal and state governments.We strive
    for a perfect safety record.
        States take jurisdiction over intrastate transmission and
    distribution pipelines. Unfortunately, over 85 percent of incidents
    involving fatalities occur in distribution pipelines, which are located
    in densely populated areas. With our compliance program focused to
    address the highest risks, oversight activities at the state level
    become of critical importance. We must do everything possible to
    provide adequate resources for state participation, and proper
    direction to assure that state programs focus on high-risk areas along
    intrastate pipelines. To provide proper direction, the Department
    established performance factors to allocate grant funds to states.
        In establishing authority for Federal regulation of pipelines,
    Congress provided for states to assume these regulatory functions as
    they apply to intrastate pipeline transportation. We have three
    provisions for varying levels of state participation in these
    regulatory functions--state certification, state agreement, and
    interstate agent. Currently, for gas programs, 48 state agencies, the
    District of Columbia, and Puerto Rico hold certifications, the more
    active level of intrastate participation, and one state operates under
    an agreement, and nine states act as interstate agents. For liquid
    programs, 12 states hold certifications, three states operate under
    agreements and four states serve as interstate agents.
        It is in the interest of the Federal government to give the states
    enough financial incentive to participate in the pipeline safety
    program. States represent more than 90 percent of the total Federal/
    state workforce that oversees pipelines nationwide. Grants are an
    effective way to leverage resources and increase total inspection
    capability since states match or exceed federal funding.
        We want to strengthen the Federal/state partnership by assuring
    appropriate focus on risk-based compliance efforts on all intrastate
    pipelines. This effort would require states to exercise full
    jurisdiction over pipelines in their states and a Federal commitment to
    adequately fund state pipeline safety and environmental programs.
                            addressing y2k concerns
        We all know that the year 2000 has the potential for serious
    disruptions in the transportation of oil and gas and other services.
    The scope of the problem necessitates that industry take the lead in
    assessment of potential risk. Government, however, must ensure that
    there is the appropriate level of industry/government cooperation,
    public awareness, and sharing of information on issues and solutions.
    We must ensure that companies are actively addressing identified
    problems. We are working with the Energy Sector, Oil and Gas Workgroup
    of the President's Council on Y2K Conversion to efficiently integrate
    public and private sector efforts and to notify all pipeline operators
    about Work Group activities. On a quarterly basis, the Work Group
    provides industry status reports. Results of the first survey indicate
    that pipeline failures related to the Y2K problem will be minimal and
    local in nature. We also are coordinating with the Council Sectors on
    Transportation, Environment and Emergency Services to share
    information, facilitate solution and plan for contingencies. We have
    distributed an advisory bulleting to the industry and our state
    partners outlining the problem, the Work Group strategy, and government
    contacts for companies needing advice. We also provide similar
    information during our inspections.
                                   conclusion
        When we last approached reauthorizing the pipeline safety program,
    there was general agreement that new approaches were needed. Congress
    challenged us to take the lead in improving pipeline safety and
    environmental protection. We forged partnerships with local, state and
    federal governments, public interest and environmental organizations,
    labor and industry. Together, we have created a risk-based program that
    incorporates cost-effective regulation and targeted compliance
    activities. We are prepared to take what we have learned and
    accomplished in protecting people and the environment from pipeline
    risks and work to further advance these goals.
        As we continue to evaluate incorporating risk management as a
    permanent feature of the pipeline program, we want to begin to build a
    framework for a smooth transition from demonstration projects to an
    operating program. In working with Congress on the next phase of risk
    management, we want to maintain the high safety and environmental
    standards we are applying today. We want to continue to meet the
    public's need for superior results and at the same time address the
    industry's need for flexibility to assure pipeline integrity with
    maximum efficiency.
        Thank you, and I would be pleased to answer any questions you might
    have.

        Mr. Barton. Thank you.
        We would now like to recognize the distinguished Mr. Holmes
    of Kentucky for an opening statement. A summary of his
    testimony, the complete testimony, is in the record. We will
    also recognize you for 7 minutes.

                     STATEMENT OF EDWARD J. HOLMES

        Mr. Holmes. Thank you, Mr. Chairman. My name is Edward
    Holmes. I serve as Vice Chairman of the Kentucky Public Service
    Commission and also as chair of the Committee on Gas of the
    National Association of Regulatory Utility Commissioners,
    commonly known as NARUC.
        I am pleased to be accompanied today by Bill Bouker, a
    member of Kentucky's commission who oversees our pipeline
    safety activities.
        Thank you for inviting us to participate in today's
    hearing.
        NARUC is an organization of State agencies that regulate
    energy and communication utility companies. In this role, NARUC
    has been involved in the implementation of pipeline safety and
    hazardous liquid safety programs since their inception.
        Our members are of agencies that participate with the
    Federal Office of Pipeline Safety, OPS, in inspecting and
    enforcing the Nation's pipeline safety standards. As the local
    officials are directly accountable to our citizens, State
    commissioners and their staffs are on the frontlines in our
    efforts to protect our citizens and environments against unsafe
    practices.
        As such, NARUC and its members are longstanding supporters
    of both statutes under review here today.
        Accordingly, we strongly support timely congressional
    reauthorization of the Pipeline Safety and Hazardous Liquid
    Pipeline Acts and see little need for wholesale revision at
    this time.
        In general, the State commissions have a good working
    relationship with OPS, a relationship that we hope to continue
    under reauthorized legislation.
        Indeed, we believe that the regulatory structure that
    Congress established in 1968, when it first enacted the Gas
    Pipeline Safety Act, has been a model of Federal-State
    partnership to protect the public interest.
        This partnership places State and Federal Governments in a
    relationship best suited to their respective roles. For its
    part, OPS establishes, revises, and supervises the uniform
    national safety standards. As part of its supervisory
    responsibilities, OPS audits and evaluates the State safety
    programs that are originally certified under those acts.
        For our part, the State agencies conduct a monitoring and
    inspection program in the field. State pipeline safety
    personnel constitute 90 percent of the inspection force
    conducting daily inspection activities for more than 10,000 gas
    operators and 250 hazardous liquid operators nationwide. It is
    not an overstatement to say that, without the commitment of the
    States to this effort, these programs simply could not
    function.
        In exchange for this high level of effort by the State, the
    act authorized the Federal Government to support individual
    State programs by paying up to 50 percent of the State costs.
    We believe this is a great deal for the Federal Government,
    which is able to fund 90 percent of the inspection force at 50
    percent of the costs. The States which are able, then, to
    defray those individual costs of enforcing Federal regulatory
    programs.
        However, in recent years OPS has been unable to fully fund
    the amounts requested by the States for their program. Attached
    to my written statements are charts and graphs showing the
    amounts requested by the States and funded by the Federal
    Government from 1990 to 1997.
        While funding has improved somewhat, it remains the case
    that the State programs remain underfunded. We believe that is
    unfair to the State for this situation to continue. In effect,
    the States are being placed in the position of providing more
    than 50 percent of the cost of the program. It is particularly
    unfair given the new responsibilities and mandates that have
    been imposed upon participating States in the recent years,
    including inspections to determine operator compliance with
    drug and alcohol regulations, guidelines for State adopted of
    the One-Call Damage Prevention Program, master-metered systems,
    offshore pipelines in State waters, gathering lines, intrastate
    hazardous liquid pipelines, liquefied natural gas, and ever
    increasing construction activities as operators expand their
    service areas. Moreover, between 1990 and 1996, the number of
    gas mains increased by 13 percent and local gas service
    increased by 5 percent.
        Accordingly, we urge the Congress to authorize and
    appropriate sufficient funding for the State grant and aid
    program. NARUC stands ready to work with the subcommittee, OPS,
    and the rest of the administration to reach this goal. It is an
    extremely sound investment for the Federal Government to make
    to ensure that the level of safe, reliable, and efficient
    services that our citizens so rightly demand.
        In closing, I would again express our strong support for
    reauthorization of the Natural Gas Pipeline Safety Act and
    Hazardous Liquid Pipeline Safety Act. Through these important
    statutes, Congress has established a workable system to bring
    State and Federal agencies together to protect the public. We
    urge you to act expeditiously to ensure that these programs
    continue.
        Thank you for your time and consideration.
        [The prepared statement of Edward J. Holmes follows:]
       Prepared Statement of Hon. Edward J. Holmes. Commissioner, Public
                         Service Commission of Kentucky
        Mr. Chairman and Members of the Subcommittee on Energy and Power:
        Thank you for the opportunity to participate in today's hearing on
    the reauthorization of the Natural Gas Pipeline Safety Act and the
    Hazardous Liquid Pipeline Safety Act (49 U.S.C. Section 60101 et.
    seq.).
        My name is Edward J. Holmes. I am Vice Chairman of the Public
    Service Commission of Kentucky and Chair of the Committee on Gas of the
    National Association of Regulatory Utility Commissioners (NARUC). I am
    pleased to be here today representing NARUC, a nonprofit organization
    representing all the state public utility commissioners throughout the
    United States, and the National Association of Pipeline Safety
    Representatives (NAPSR), which is comprised of the regulatory staff
    members of our Commissions who focus specifically on natural gas and
    hazardous liquid pipeline safety.
        Because our members are primarily responsible for the enforcement
    and monitoring of the Acts, NARUC has a strong interest in the
    organization and operation of the Office of Pipeline Safety. Indeed, we
    have a longstanding Subcommittee on Pipeline Safety comprized of
    technical staff, which is solely committed to working for the success
    of the Pipeline Safety Program established by the safety acts before
    this Subcommittee here today.
        NARUC has been a strong supporter of the Natural Gas Pipeline
    Safety Act and the Hazardous Liquid Pipeline Safety Act--critical
    legislation establishing for the first time a set of national standards
    to be used by the natural gas and hazardous liquids industry in the
    design, constructing, testing, operating and maintaining its
    transmission and distribution facilities. As an alternative to federal
    monitoring and enforcing of the program, the United States Department
    of Transportation, Research and Special Programs Administration (RSPA),
    Office of Pipeline Safety (OPS) offered to join with any interested
    state in a federal-state partnership through which the appropriate
    state agency would undertake monitoring and enforcement
    responsibilities through annual certification agreements. A grant-in-
    aid program was created by these Acts to provide up to 50% financial
    support to those states accepting that responsibility. State programs
    are audited and evaluated on an annual basis by field representatives
    of the Office of Pipeline Safety.
        The funds that the Acts provided allowed states to make that
    commitment without unreasonably burdening their own customers and
    contributed greatly to an improved public safety. The requirement that
    each state provide at least 50% of its own monies to fund the program
    assured that a reasonable perspective and partnership was built into
    the funding process and made each state its own stakeholder in the
    process.
        As state utility regulators, we are charged by state statute with
    requiring that local gas distribution companies (LDCs) provide safe and
    adequate service at just and reasonable rates. We share with federal
    regulators and the gas industry the responsibility to provide
    reasonably safe and adequate service at reasonably just and fair rates.
        The cost of pipeline safety is significant. The gas industry has
    inherited, over a period of some 150 years, an infrastructure comprised
    of a mixture of plastic, steel, ductile iron and cast iron mains which
    in many cases needs to be refurbished. However, the industry provides
    services in areas that in some cases are impractical or impossible to
    replace and continue to serve their customers adequately and safely. It
    is due to the standardization of performance standards by the Office of
    Pipeline Safety that pipelines facing varying conditions and service
    requirements are uniformly monitored, inspected and maintained. In our
    view, customers and residents should take comfort in knowing that gas
    delivery systems are safe and efficient.
        The vast majority of pipeline safety inspections are performed by
    the states under a partnership agreement with OPS under section 60105
    of the Natural Gas Pipeline Safety Act. In exchange for this state
    effort, which substantially reduces federal obligations in this area,
    section 60107(a) authorizes grants to reimburse States for ``up to
    50%'' of their program expenditures. The grant funds are now
    distributed through a performance-based allocation process in which a
    State's grant is reduced if federal performance standards are not met.
    This allocation process was developed with representatives from OMB in
    response Congress' requirement that States be more accountable to the
    general public on federal funding.
        As a result, the States share responsibility with the Congress and
    the Administration to assure that adequate funds are available to
    assure a safe gas pipeline industry while keeping in mind that the cost
    of that safety is borne by ratepayers and taxpayers. In reauthorizing
    these Acts, Congress should continue the federal-state fund sharing
    philosophy that is now in place and states should reasonably be
    expected to bear their fair share of the burden. We strongly recommend
    that each State be assured its full 50% share of its inspection costs.
    The State should not have to continue carrying more than the 50% fair
    share that we have done in the absence of adequate Federal funding.
        While the Pipeline Safety Act requires the federal government to
    ensure pipeline safety throughout the United States, State pipeline
    safety personnel represent more than 90% of the work force. The
    individuals conduct daily inspection activities for more than 10,000
    gas operators and 250 hazardous liquid operators nationwide to ensure
    the safe transportation of product to consumers. The States are clearly
    at the front lines in protecting consumers and the environment because
    of their excellent relationships with their respective pipeline
    operators and deserve 50% funding.
        Moreover, the financial burden on the States is growing. State
    pipeline safety responsibilities have continued to increase due to new
    mandates, but grant fund dollars have not kept pace with these demands.
    These new responsibilities include inspections to determine operator
    compliance with drug and alcohol regulations [49 CFR Part 199 and Part
    40], Guidelines for State adoption of the One-Call Damage Prevention
    program [49 CFR Part 198], Master-Metered systems, Off-shore pipelines
    in state waters, Gathering lines, Intrastate Hazardous Liquid
    pipelines, Liquefied Natural Gas (LNG) storage and ever increasing
    construction activities as operators expand their service areas.
        On October 27, 1998, ``operator qualification'' programs were added
    to the list of mandates for States to enforce this year if finalized.
    This new rule will require State personnel to perform more in-depth
    inspections without additional funding.
        OPS requested 13.5 million dollars to fund base programs for 1999
    only to have OMB cut the funding to 13 million dollars. Funding has
    been made available for Risk Management feasibility studies ($500,000)
    and for One-Call Damage Prevention ($1 million) for 1999.
        We agree that risk management may play a key role in future
    operator long-term planning and ``One-call'' has prevented underground
    damage, but such programs should not escalate to the point that base or
    core pipeline safety programs could be jeopardized.
        Attached to our written statement for the Subcommittee's review are
    charts and data showing the amounts requested by States for their gas
    and liquid programs, amounts provided by the Department of
    Transportation, and other relevant costs from 1990 to 1997. A quick
    review of the States' programs costs indicate continued increases, in
    some cases as much as 18-20%, for carrying out additional inspections
    of pipeline facilities with limited funding. In addition to these
    specific responsibilities, in 1996 there were 13 percent (115,584
    miles) more intrastate gas mains and 5% (2.6 million services) more
    local gas services as compared to 1990.
        Federal funding is not providing adequate resources to meet the
    needs of the States' actual costs. Therefore, a reduction of State
    programs, or even their maintenance at existing levels, could threaten
    the infrastructure of the Nation's pipeline system.
        In conclusion, I would again express our strong support for
    reauthorization of the Natural Gas Pipeline Safety Act and Hazardous
    Liquid Pipeline Safety Act. Through these important statutes, Congress
    has established a workable system to bring State and Federal agencies
    together to protect the public. While these laws may benefit from minor
    refinements for clarity and ease of interpretation, we see no need for
    substantial revisions at this time.
        Thank you for your time and attention.

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        Mr. Barton. Thank you, Mr. Holmes.
        The Chair will now recognize himself for 5 minutes in the
    question period, and we will alternate between the majority and
    minority in 5-minute questions periods.
        Ms. Coyner, my first question is to you. As I looked at the
    testimony last evening, I looked at a chart that was presented
    from your office that summarizes the number of accidents and
    the incidents in fatalities and injuries, by year, from 1984 to
    1998. And I noticed that, in general, the number of incidents
    averaged, over the last 15 years, about 200 a year. But in
    1998, that number fell to 26; the number of fatalities in 1998
    fell to 0, and it was also 0 in 1997, thankfully, and the
    number of injuries in 1997 was 5, and the number of injuries
    for 1998 was 0.
        Are your 1998 numbers final, or are they still subject to
    reevaluation? And, if they are not final, are there some
    incidents that haven't yet been put in the statistics that are
    going to significantly change the trend, which is a very
    positive trend of less incidents and zero fatalities and fewer
    injuries?
        Ms. Coyner. Mr. Chairman, I believe that the statistics you
    are referring to are ones that are for hazardous liquids----
        Mr. Barton. That is correct.
        Ms. Coyner. [continuing] accidents only.
        Mr. Barton. Right.
        Ms. Coyner. And we actually have enjoyed a lower rate of
    fatalities in that area, generally. Those statistics do not
    include the end of the year information. But on the liquid
    side, that doesn't have a large variation.
        On the gas side, you tend to see a larger number of
    incidents in the winter months, and fatalities rise
    accordingly. And that is because you have counted in that
    figures that involve house fire related kind of activities, and
    you have a higher usage of natural gas.
        Mr. Barton. Well, you are----
        Ms. Coyner. I don't think we will see a dramatic decline,
    although I do think that we will see a decline on the hazardous
    liquid side for 1998. It indicates overall better safety
    practices.
        Richard, do you want to elaborate on that at all?
        Mr. Felder. No, I think that is a very accurate
    presentation of where we are. We are in a declining trend. We
    always see slightly larger numbers on the gas distribution side
    than we would on the liquid side.
        Mr. Barton. Well, the gas pipeline number--the number
    incidents in 1997 was 74. So far, in 1998 it was 19. The
    fatality was 1 in 1997, 0 in 1998. The injuries, 5 in 1997, 9
    in 1998 so far.
        And then for the natural gas pipeline operators, incidents
    was 29 in 1998, 2 fatalities, 15 injuries.
        So, all three charts show a downward trend.
        Ms. Coyner. Well----
        Mr. Barton. And I think that is positive if----
        Ms. Coyner. Then----
        Mr. Barton. [continuing] it is actually a consequence of
    conscious efforts.
        Ms. Coyner. I think that we need to highlight that there
    were several accidents at the end of the year involving local
    distribution companies.
        Mr. Barton. In 1998?
        Ms. Coyner. In 1998 that involved several fatalities, and
    those were outside force damages. The kind of accident that is
    involved in not only the use of a One-Call system, but also the
    kinds of things we are doing in our public education campaign
    on safe practices involving excavation. Those accidents were
    fairly recent; they were December accidents--are still under
    investigation by the NTSB--but you will see a higher fatality
    rate for 1998 than what you would see in----
        Mr. Barton. But by a significant number?
        Ms. Coyner. Well, I think so, because a couple of them had
    multiple fatalities in the accident.
        Mr. Barton. So----
        Ms. Coyner. What are we talking about?
        Mr. Barton. Five to ten? Two to three?
        Mr. Felder. Oh, 5 to 10.
        Mr. Barton. But not hundreds? Not----
        Ms. Coyner. Five to 10.
        Mr. Felder. Oh, no. No big numbers. And the transmission
    numbers are better this year, and they will remain that way,
    even when the year-end factors come in. As Kelley has said, it
    is really gas distribution, and it is not accidents that are
    related to material failure or to operator error or that type
    of thing. It is really outside force--someone hitting the line
    and then fatalities result.
        Mr. Barton. Well, could it be--I know that honorable people
    can disagree. I mean that is the whole reason we have a
    Congress is to mediate disagreements. But is it a possible
    conclusion that some of the changes that have been made that
    allow for risk assessment and cost analysis and cooperation in
    putting together the rulemakings with the industry and the
    regulators could be one reason that some of these trends are
    positive?
        Ms. Coyner. I think that we will enjoy positive trends over
    the duration of the regulations that have come into place under
    this regime. The risk management project is really too new for
    us to be able to tell you definitely, but we look at it and we
    think we are going to see positive results as well.
        I would note that most of the risk management demonstration
    projects have not asked for relief from our regulations. They
    are taking additional steps on top of what the regulations
    require, and so we think that is also a very positive
    development.
        Mr. Barton. Okay. In establishing another tradition, the
    Chair is not going to violate the 5-minute rule.
        So, we are going to recognize the distinguished gentleman
    from Texas for 5 minutes, Mr. Hall.
        Mr. Hall. Thank you, Mr. Chairman.
        When we debated Pipeline Safety Act reauthorization in
    1996, there was a great deal of concern about the involvement
    of the public in the risk assessment plans and, I think, in the
    approval process. And I note from the testimony that five risk
    management plans have been approved by the Department, and some
    others are on the eve, maybe, of being approved.
        Is there a limitation or a quota or a goal or--what were
    you shooting for? You have five plans approved now.
        Ms. Coyner. When the President signed the Pipeline Safety
    Act in 1996, he also had a signing directive which governed how
    we went forward on the risk management demonstration projects.
    And one of the limitations was that we only do 10 demonstration
    projects over this period of time. We have been very cautious
    as we move forward on this, rather than taking projects
    prematurely that are not ready. We have gone slowly. I mean six
    is not, obviously, the full complement.
        I would like to address, if I might, Representative Hall,
    your question about public participation. I think that is a key
    aspect of how we looked at these demonstration projects and
    also helped us think about how we involved the public in the
    rest of our program as well.
        We have required the companies to develop, along with other
    stakeholders, a very comprehensive communication plan to
    involve local government officials and the public in the
    discussion of how these plans are put together. But we have
    also made use of some innovative means for involving people. We
    have all this information up on our web site; it is changed
    continuously, and we have a very high number of hits, if you
    will, people who are accessing and who are from the general
    public, as well as having electronic town meetings that make it
    so that someone can participate in a discussion about this
    program without having to travel to a distant location.
        Mr. Hall. The chairman mentioned statistics a moment ago
    and made some inquiry of you.
        It is my recollection, and I have recently had my memory
    jogged on the two deaths that we had in Texas back a couple of
    years ago. I think there you had the HVL line that was
    liquified in the pipe but then became gaseous when it escaped
    or there was a fracture or something. And then somehow a spark
    and explosion--it killed two teenagers. They were just nearby
    or not very far from the explosion.
        What have you learned from that, and what steps have been
    taken since that time to preclude something like that? I guess
    what type of precautions have you put in place, if any?
        Ms. Coyner. There are really two issues in terms of the
    lessons learned from that incident. They fall in two
    categories. One, is how do you stop the accident in the first
    place? And, in that case, it was caused by corrosion that
    caused the pipeline to fail. We have required Koch to review
    the integrity of the rest of their line, and we are also in the
    process of implementing new regulations to deal with corrosion
    issues on these lines as well. So, it is not only a solution
    that will make sure that this pipeline is safe, but that we
    raise the standard for other pipelines as well.
        Another issue is, when you have a failure, what can you do
    to mitigate to, hopefully, avoid the kind of situation you saw
    here? Because, as you mentioned, we had a particularly tragic
    situation where a couple of teenagers--who we believe were
    probably going for help--caused ignition of this vapor cloud by
    turning the key in their vehicle.
        What we have done in the case of Koch is that we have
    required them to upgrade both materials they use to educate
    people who are adjacent to the pipeline, but also how they go
    out and reach those individuals. Not only about how to avoid
    damaging the pipeline, which is a central focus of public
    education efforts, but also what to do if you encounter such a
    situation, because what may seem to be intuitive at the moment
    may not be the right safety measure to take. And it is a
    problem with HVL incidents where you have a vapor cloud, but it
    is also a bigger problem in a natural gas area.
        The NTSB this summer issued a series of recommendations
    that followed these incidents. These were--actually, it wasn't
    even the summer, it was last fall--and we are working with them
    to respond to them. But I think that on each one of those that
    we will be, in a large measure, in agreement on the safety
    issues that are involved in those recommendations.
        Mr. Hall. A lot of those pipes were put in the ground a
    long, long time ago. Do you make weekly, monthly, quarterly,
    annual inspections of those?
        Ms. Coyner. The inspections really fall into----
        Mr. Hall. Briefly, if you can.
        Ms. Coyner. I will.
        Mr. Hall. I would not like to break the chairman's rules--
    --
        Ms. Coyner. The answer is that we don't have a----
        Mr. Hall. [continuing] the very first day.
        Ms. Coyner. We don't have a fixed cycle for our
    inspections, but we do require some very frequent aerial
    inspections which give us a good indicator whether or not there
    are leaks. They have inspections at varying intervals,
    depending on what the likelihood of a problem is. In some
    areas, the nature of the soil means there are going to be
    greater corrosion problems, and we require more frequent
    inspections in those areas.
        Mr. Hall. I thank you.
        I yield back my time.
        Mr. Barton. I thank the ranking member.
        I am going to recognize Mr. Whitfield of Kentucky, he was
    here before the gavel, and the rules say, members that are here
    before we convene are recognized in order of seniority. And
    then after, it is in order of appearance. So, I have got some
    senior members who have appeared--Mr. Bilirakis and Mr.
    Stearns, the vice chairman--but Mr. Whitfield was here, and so
    that is the reason that he is going to be recognized for 5
    minutes right now.
        Mr. Whitfield. Thank you, Mr. Chairman. I really appreciate
    your rules for the subcommittee this year.
        Mr. Barton. I am just using the rules of the full committee
    actually using them, though.
        Mr. Whitfield. Mr. Holmes, in your testimony, one of the
    things that you touched on was that States received grants of
    up to 50 percent of their cost for various inspection programs.
    And I noticed, also, that you said that grant funds are
    distributed through a performance-based allocation process in
    which a State's grant is reduced if Federal performance
    standards are not met.
        Now, are you basically saying that even when the
    performance standards are met, many States do not receive the
    50 percent that they are entitled to?
        Mr. Holmes. Yes. As I understand, on the scoring system,
    you can score the highest, you know, points on the system and
    you still--because of funding--you don't receive the maximum 50
    percent.
        I think in Kentucky we scored the maximum points allowed,
    and I think our average is about 40 plus percent of what we
    receive in actual funding. So it varies on the availability of
    funds and scoring that is coinciding with it.
        Mr. Whitfield. So, basically, there is an appropriation
    shortfall at the----
        Mr. Holmes. Yes.
        Mr. Whitfield. [continuing] Federal level, then?
        And how much is that shortfall? Do we have an idea?
        Mr. Felder?
        Mr. Felder. Yes. The shortfall has varied from year to
    year, but it has grown from about $1 million to about $3
    million at this point.
        Mr. Whitfield. Okay.
        And how many different grant programs are there to the
    States for pipeline safety purposes?
        Ms. Coyner. There is one now. There is one pipeline safety
    grant program that we have had, but the new One-Call
    legislation would authorize grants for One-Call systems that
    would go through the States for damage prevention efforts, and
    that would be an additional grant. This is not referred to in
    what Mr. Holmes is talking about.
        Mr. Felder. Right. I would also add, there are a couple
    of--as Mr. Holmes has said--we cooperate with the States on a
    number of programs. So, for example, as we have been
    implementing risk management, we have actually received
    $500,000 in the budget to work with States and bring States in
    as reviewers of risk management plans, so that as that
    demonstration goes through, they get the same education that
    our inspectors get. So, there is a category there for risk
    grants and, as Kelley has mentioned, there is also One-Call
    grants.
        Mr. Whitfield. One of you had mentioned the System
    Integrity Inspection Pilot Program in your testimony, the goal
    of which is targeting important safety issues more efficiently.
    And then later on it talks about, ``the Department is now
    soliciting applications from interested companies.''
        I was wondering what incentives are there for companies to
    apply to participate in that program?
        Ms. Coyner. The approach is to look cooperatively with the
    company at what the highest risk safety issues are in a
    particular system and really focus our auditing of them in that
    regard. The traditional inspection is a checklist which may or
    may not be relevant to that particular system. It is a one-
    size-fits-all, if you will, approach to inspections, whether
    the system is in an area such as the Alyeska pipeline in Alaska
    which has unique corrosion problems or it is in an arid
    environment in Arizona. And so the idea is that we are looking
    for a handful of companies really to see if we might do that.
        The other idea is to look at a system-based inspection
    rather than a segment-based inspection, so that we look a
    pipeline from its beginning to its end, rather than looking at
    just a piece of it that happens to fall in one our regions.
        Mr. Whitfield. Now, as an administrator responsible for
    this type of activity, what do you view as your major obstacle
    in providing as safe a system as possible? Can you give a
    generic answer to that?
        Ms. Coyner. The biggest obstacle is getting a real handle
    on how you deal with outside force damage because it is a
    complicated area that involves not only getting people to use
    One-Call system, but to use proper excavation techniques when
    they have the system marked. That is the single biggest
    obstacle.
        Mr. Barton. Mr. Whitfield, do you yield back?
        Mr. Whitfield. Yes, I thought the buzzer went off.
        Mr. Barton. It did, but----
        Mr. Whitfield. Oh, okay. I yield back the balance of my
    time.
        Mr. Barton. I am not used to such polite subcommittee
    members.
        Before we recognize Mr. Pallone, for the record, we need to
    note that Mr. Richard B. Felder is the Associate Administrator
    for Pipeline Safety, and he has been answering questions, and
    we want the recording clerk to know that that is the gentleman
    and that is his title, for the record.
        I would recognize for 5 minutes the gentleman----
        Mr. Sawyer. Chairman, may I be excused?
        Mr. Barton. We would love to have you stay, Mr. Sawyer so
    we may not excuse you. But we can't compel you to stay.
        Mr. Pallone is recognized for 5 minutes.
        Mr. Pallone. Thank you, Mr. Chairman. Again, if I could
    renew my unanimous consent request with regard to those
    documents.
        Mr. Barton. The Chair and the staff have looked at the
    documents, and we think that they help build the record for
    this hearing, and, without objection, they are put into the
    record with your opening statement.
        Mr. Pallone. Thank you, Mr. Chairman.
        I wanted to ask Ms. Coyner, in the previous authorization
    of the Pipeline Safety Act, there was language that was
    supported by myself and Senator Lautenberg with regard to a
    study and then, I guess, eventual rulemaking relative to the
    automatic shutoff valves and the remotely controlled valves
    that I made reference to in my opening statement, and I just
    wondered what the status of that is. Is that study complete?
    Are there rulemakings that will be suggested?
        Ms. Coyner. As you know, the statute calls for a rulemaking
    if warranted by, I believe, June 1, 1999. We have conducted a
    workshop; we have conducted a survey that was called for, and
    we are in the process of putting the report together. We are a
    little bit behind on getting the report done, but I do not
    anticipate that we will be behind in issuing the rulemaking, if
    we need to go forward on it, by June 1, 1999.
        But one of the things that I--because I know of your
    concerns in Edison--we have certainly worked on them over the
    years--is that it is important to note that a number of
    companies are putting in remote-controlled valves. And in New
    Jersey, in particular, they have put in 35 remote-controlled
    valves on that system that was so critical where Edison was
    concerned. And, in fact, we have continued to work very, very
    closely with the New Jersey officials in making sure that their
    concerns about those valves were met. We have a meeting coming
    up in the next couple of weeks to, again, meet with them in
    Princeton to review the plan there. And we are also working
    with them on encroachment issues which was the key issue in
    that incident.
        Mr. Pallone. I thank you.
        Now following up on Mr. Hall's question--I think it was Mr.
    Hall that talked about the possibility of expanding these 10
    demonstration projects. Is it your intention, or are you
    interested in, expanding these 10 demonstration projects, you
    know, going beyond that at this point? Is that the DOT's
    intention?
        Ms. Coyner. The direction that we have from the President--
    which we agree with--is that we need to look at the 10
    demonstration projects and determine whether or not the risk
    management approach strengthens safety and environment above
    what the minimum standards are. The initial information that we
    have, which is very preliminary, indicate that that is the
    case. But we are not at a place where we can say definitively
    what the outcome would be.
        I think it is important that we continue to look at risk
    management as an alternative, but I don't think that we are in
    a position to make a determination today, firmly, about what
    direction we would want to take in reauthorization. We are only
    about, at most, 18 months into this particular process.
        But one thing that I want to underscore again is that in
    these projects--there are six of them--most of them are not
    deviating from the regulatory standard, and I think that is
    really critical to know. What it is, it is taking a different
    approach to dealing with systems-specific issues that we are
    concerned about. In some cases, it may be damage prevention; it
    may be a corrosion issue in another project.
        Mr. Pallone. Well, let me just ask Mr. Holmes the same
    thing basically. I know that you state, or that NARUC has
    stated, that this program should not escalate to the point that
    base or core pipeline safety programs could be jeopardized.
    Could you elaborate on that? I mean are you concerned that if
    they go beyond this 10, that that, in fact, will be the case?
        Mr. Holmes. Well, obviously, I think we at NARUC have some
    concerns if it goes beyond that, that there will be some
    critical issues there that needs to be addressed. So, yes, we
    do have concerns there.
        Mr. Pallone. The other thing I want to ask, Mr. Chairman,
    if I could is, you know, I was concerned in the last
    reauthorization about funding levels. And I guess I wanted to
    know if you felt there was sufficient funding, either Federal
    funding for oversight, particularly with regard to States, to
    effectively implement and enforce the pipelines safety
    programs, including the One-Call, because in previous
    Congresses, I have been involved in trying to get more money
    through appropriations for that. How are we doing, funding
    wise, either Federal or State? Federal for State programs or
    just the Federal programs, in general, for enforcement.
        Ms. Coyner. I think that we need to continue to strive for
    moving to the 50 percent funding for the State programs. It has
    not been one that we have met in the past, and that is
    critical, because we really leverage the State programs to make
    sure that we have the adequate inspection resources and the
    adequate inputs from the States' programs where they really
    know the pipeline systems.
        The second issue I think is really important--and I want to
    take a moment to congratulate you on your leadership in getting
    the One-Call legislation passed last year--is that it is
    critical that we get the funding for the new One-Call Grants
    Program being something that is in addition to the funding that
    we have already for the State grant programs.
        Mr. Pallone. Thank you.
        Thank you, Mr. Chairman.
        Mr. Barton. Thank you, Mr. Pallone. We are only going to
    have one round of questions for this panel, but my guess is
    that you have got some other questions, so we will submit those
    in writing----
        Mr. Pallone. Thanks.
        Mr. Barton. [continuing] and make sure that we get a timely
    response.
        The Chair would now recognize Mr. Shadegg of Arizona for 5
    minutes of questions.
        Mr. Shadegg. Thank you, Mr. Chairman. I will endeavor not
    to take all my time.
        Ms. Coyner, I want to begin by just clarifying, at least
    for myself, the answer you gave with regard to the number in
    the chart we have that shows a significant reduction in
    incidents and fatalities and injuries for the 1998 period. As I
    understood your testimony, those numbers are not yet complete
    for either chart, that is for gas or for other hazardous
    liquids?
        Ms. Coyner. Let me clarify something, Congressman.
        Mr. Shadegg. Please do.
        Ms. Coyner. That is actually not a chart that was attached
    to my testimony.
        Mr. Shadegg. Right.
        Ms. Coyner. I believe it was attached to API's testimony,
    and I have not physically seen that particular chart. But based
    on the information that the chairman indicated, those are not
    complete for the year.
        Mr. Shadegg. Not final numbers for 1998?
        Ms. Coyner. But based on what we know about the incidents,
    the area that we would expect a change is in the local
    distribution line numbers, both in terms of numbers of
    incidents and fatalities.
        Mr. Shadegg. Okay. I just wanted to try to clarify that. My
    understanding from our staff is that those numbers came from a
    DOT web site, and maybe we ought to double-check it so they get
    it clear so we all understand.
        It is true, however, you believe that we are witnessing
    improvements in safety----
        Ms. Coyner. Yes.
        Mr. Shadegg. [continuing] in both categories. Is that
    right?
        Ms. Coyner. If you really divide them into three
    categories. I would divide the gas into transmission and local
    distribution companies, we are definitely seeing improvements
    on the transmission lines, and in the liquid side, we are also
    seeing improvement.
        Mr. Shadegg. Okay.
        Let me turn to a separate topic where I, again, just kind
    of want to clarify for myself, for my understanding--being new
    to the committee.
        As I understood what you said a few moments ago--and maybe
    I was partially listening and partially not--you currently base
    your analysis on risk as it is. That is, you look at the most
    dangerous--you work with the companies to establish the most
    dangerous exposure, whether it is a particular pipeline or
    section of pipeline or type of material that is being
    transmitted or whatever it is, and make your evaluation based
    on the highest risk exposures under the current structure. Is
    that correct?
        Ms. Coyner. There are really three basic ways that we are
    using risk tools.
        Mr. Shadegg. Okay.
        Ms. Coyner. And I think that what you are referring to is
    something that we call the demonstration program.
        Mr. Shadegg. Okay. That is what I wanted to find out,
    whether that was everything or----
        Ms. Coyner. The 10 projects.
        Mr. Shadegg. [continuing] whether that was the
    demonstration projects.
        Ms. Coyner. The program allows 10 companies to come in and
    if they wish to ask for regulatory relief--they have not in
    some cases--but to come in and say, ``We want to address a
    particular problem, and here is why we find this to be the
    highest risk.'' And they have to come in with one of the
    generally accepted approaches to doing risk assessments and
    risk management to evaluate it. It has been a very labor-
    intensive process because we have done a lot of parallel
    training for the State inspectors and for the Federal
    inspectors.
        The second way that we are using risk as a tool is in the
    manner that Congressman Whitfield was referring to, which is in
    the System Integrity Inspection Pilot Program. And that is
    designed to focus on compliance issues and what areas can we
    find where we don't have any deviation from the regulatory
    standards, but where we can highlight our inspection approach
    to be more effective.
        The third way that we are using risk is in how we
    prioritize the allocation of our resources so that we are
    putting the programs' resources to the most important risks,
    and we are also making sure that our regulations address the
    most important risks.
        Mr. Shadegg. Is it your sense--and I take it, it is--that
    generally, the new statute is working and is working well?
        Ms. Coyner. Yes.
        Mr. Shadegg. Mr. Holmes, I want to go to your testimony.
    The National Association of--what is it?
        Mr. Holmes. Regulatory Utility.
        Mr. Shadegg. Regulatory Utility.
        Mr. Holmes. NARUC.
        Mr. Shadegg. Commissioners--in Arizona, I guess it would be
    our corporation commission.
        Mr. Holmes. Yes.
        Mr. Shadegg. Has taken a position that you think the act
    should be modified? It should be reauthorized without
    significant modification?
        Mr. Holmes. Yes, we support the act for reauthorization.
    Once again, we would like to reach that level of 50 percent
    funding.
        Mr. Shadegg. Funding is the big issue you seem to touch
    upon.
        Mr. Holmes. Yes, that is----
        Mr. Shadegg. The overall structure--looking at the way the
    law works, you think it is working?
        Mr. Holmes. Yes; the overall structure works well, and we
    support that. Our working relationship with the Office of
    Pipeline Safety is a good relationship. So, overall the
    structure works, and we are able to provide, through the State,
    the necessary inspectors to provide the inspection services.
        Mr. Shadegg. Second issue I want to talk about is the 10
    experimental programs that are ongoing. I want to understand--
    did I understand you to say, Mr. Holmes, that you would not
    want that program expanded?
        Mr. Holmes. I am not that familiar with that. We will have
    to----
        Mr. Shadegg. Perhaps there is a better way----
        Mr. Holmes. I will have to get something in writing. Yes.
        Mr. Shadegg. Later on?
        Mr. Holmes. I will follow up in writing on that on the 10
    demonstration programs.
        Mr. Shadegg. Thank you for your testimony, and I yield back
    the remainder of my non-time.
        Mr. Barton. Thank you, Congressman Shadegg.
        We recognize the gentleman from Illinois, Mr. Shimkus, for
    5 minutes for questions.
        Mr. Shimkus. Thank you, Mr. Chairman.
        Ms. Coyner, on the President's recent budget submission,
    does he include the deficit in this program? The underfunding
    of the 50 percent match to the States?
        Ms. Coyner. No. It is at about 43 percent.
        Mr. Shimkus. So even the President----
        Ms. Coyner. That is correct.
        Mr. Shimkus. The President's plan underfunds the program?
        And just to help with vocabulary, second term here--outside
    force damage is really backhoes digging in the pipes. Is that
    right?
        Ms. Coyner. Thank you for saying that so clearly.
        Backhoes and people. It is interesting; even people digging
    in their yards to plant a tree can hit a line.
        Mr. Shimkus. And that is the importance of the One-Call?
        Ms. Coyner. That is right.
        Mr. Shimkus. And I think we talked last year on legislation
    of a--I don't know, maybe my staff and I talked about it--about
    a national One-Call proposal. What would be the Department's
    position on that?
        Ms. Coyner. Last year you, in fact, included that in the T-
    21----
        Mr. Shimkus. Okay.
        Ms. Coyner. [continuing] legislation.
        Mr. Shimkus. Right.
        Ms. Coyner. So it calls upon us to establish what the best
    practices are for One-Call programs.
        Mr. Shimkus. What does that mean, best practices?
        Ms. Coyner. Best practices would be, what are the best ways
    for a One-Call system to be designed and operated? What kind of
    mapping information do they need to be able to deal with all
    the multiple utilities that they are dealing with? What are the
    best approaches for ensuring that people use the system? What
    are the best practices in terms of enforcement activity and
    ensuring that people are complying with the One-Call
    requirements?
        Mr. Shimkus. So DOT is----
        Ms. Coyner. We have put together a team of about 160
    representatives from across the board--from the railroads, the
    highways, the telecommunications business, the people who are
    involved, who go out and mark lines, the locators, and the
    like--who have been working since August last year. We have an
    interim report that we will present in a nationally broadcast
    teleconference on in March. We expect the final report to go
    out in June in time for us to, hopefully, implement a grants
    program beginning next fiscal year.
        Mr. Shimkus. And that is part of your, I think, full
    statement----
        Ms. Coyner. It is part of the written statement; that is
    correct.
        Mr. Shimkus. [continuing] that I was reviewing.
        The grants program will be designed to encourage States
    that do not have a program to develop one? Many States have
    one, currently?
        Ms. Coyner. Most States have some programs. The idea is to
    encourage them to bring their standards up a great deal. And so
    it is incentivized better practices by One-Call systems and the
    State agencies that support this system.
        Mr. Shimkus. So other than outside force damage, what other
    pipeline deficiencies are there that cause deaths?
        Ms. Coyner. Well deaths are caused, of course, when the
    pipeline fails. And there are a couple of----
        Mr. Shimkus. I mean do we have a record of failures?
        Ms. Coyner. Right. The other factor----
        Mr. Shimkus. Proportionally, what is the percentage?
        Ms. Coyner. The percentage is 80 percent of the fatalities
    are caused by outside force damage on natural gas pipelines. It
    is very disproportionate. Now on the liquid side, they have a
    very low rate of fatalities, so you really can't tie it that
    way. Outside force damage rates about three or four on liquid
    lines, with corrosion being, I think, at the top of the list.
        Is that correct, Rich?
        Mr. Felder. That has been true traditionally. This last
    year of numbers, we actually flipped those a little bit, and we
    actually ended up with outside force damage on the top, even
    for liquid lines. Those are the latest API numbers. So, you are
    really talking outside force, then corrosion, and then you move
    down the scale to much smaller numbers.
        Mr. Shimkus. And DOT does research on pipelines? Do you
    have research funds for pipeline safety?
        Ms. Coyner. We have some research funds, and what we have
    done in order to leverage those is to work cooperatively with
    others. One of the particular areas we have been working on in
    the last several years is developing better what we call
    ``pigging tech-

    nology.'' Those are the internal inspection devices which are
    nondestructive ways to evaluate pipelines.
        Mr. Shimkus. When you said, ``with others,'' who is
    ``others?''
        Ms. Coyner. That one in particular is with the Gas Research
    Institute.
        Rich----
        Mr. Shimkus. It could be industry, itself?
        Mr. Felder. Right. Well, and it is also the academic
    community on that particular piece. We have Southwest Research
    Institute, Battelle Memorial Laboratories and Iowa State
    involved, also. But we have a broad spectrum.
        Mr. Shimkus. Thank you, Mr. Chairman.
        Mr. Barton. Thank you, Congressman Shimkus.
        We will recognize the distinguished gentleman from Georgia,
    Mr. Norwood, for 5 minutes.
        Mr. Norwood. Thank you very much, Mr. Chairman.
        Ms. Coyner?
        Ms. Coyner. Yes.
        Mr. Norwood. I think before--I am sorry I can't see very
    well--I think before we end the day, we will probably have some
    suggestions that hazardous liquid releases are on the increase.
    And I would like to know if you think that is the case.
        Mr. Felder. Well, I think it depends on what level you are
    measuring. Reportable incidents for hazardous liquids are down
    under our statistics. We capture everything that is 50 barrels
    and up.
        Mr. Norwood. Let me----
        Mr. Felder. There are liquid releases that are outside of
    our jurisdiction that might happen in waters of the United
    States, and so forth. I would have to look at the numbers that
    you have. But according to what we regulate and what we have,
    our liquid releases are decreasing.
        Mr. Norwood. Not increasing?
        Mr. Felder. Not increasing.
        Mr. Norwood. And it isn't hard to--all I am simply asking
    you, is there more happening in this year and predictable in
    the next year than happened last year and the year before that?
    Is there more rather than less? And you are saying it is less
    rather than more?
        Mr. Felder. Yes.
        Mr. Norwood. Ms. Coyner, who has the primary responsibility
    for pipeline safety? Is it DOT or is it industry? Or is it the
    pipeline people? Who is the major person responsible for
    safety?
        Ms. Coyner. The industry is responsible for ensuring that
    it meets safety standards. At a minimum, the Federal safety
    standards, but also there may be State regulations that they
    also have to comply with. And it is their responsibility to
    meet those standards. Now it is our responsibility to have
    oversight over the pipelines and over the State pipeline safety
    programs.
        Mr. Norwood. Well, let us follow in to that a little bit
    and just help me a little bit. Why don't you explain a little
    bit to me how the Federal and the State partnership works in
    this area.
        Ms. Coyner. We have a system whereby we have jurisdiction
    over different kinds of pipelines--those that are interstate
    and those that are intrastate--and we have encouraged States to
    par-

    ticipate in our national gas and our hazardous liquid programs
    so that we can fund their programs and to expand them. We work
    very closely with them.
        Mr. Norwood. Well, explain that. What do you mean
    participate in your program?
        Ms. Coyner. I am going to ask, actually, for the expert
    here----
        Mr. Norwood. That is fine.
        Ms. Coyner. [continuing] to give you the ``nitty-gritty''
    on this.
        Mr. Felder. The Federal program, under the Gas Act and the
    Hazardous Liquid Act, we have jurisdiction over pipeline safety
    for the United States. State programs come into being under
    State law, and they come to us for certification, that they
    meet the minimum Federal standards. And if they do, we can fund
    up to 50 percent of their efforts. And their efforts are to
    oversee intrastate pipelines. It is our responsibility to
    oversee interstate pipelines. It is an outstanding partnership,
    as Ed Holmes was saying. For your up to 50 percent funding, you
    get about 90 percent of the inspections done around the
    country. Most of the distribution system mileage is intrastate;
    it is within States. It is inspected by State pipeline safety
    programs. And the lion's share of the States are involved in
    our program. There are just a couple of States that do not
    participate.
        Mr. Norwood. Mr. Holmes, how do you feel about that
    relationship, other than the fact that you are not getting paid
    properly?
        Mr. Holmes. Well, like I said earlier, you know, we
    obviously, given that the fact that we have several inspectors
    throughout the States committed to inspecting the pipelines and
    we would like to see the 50 percent funding. But we don't want
    to see that funding level diminished as a result of the One-
    Call system or some other pipeline safety issues.
        Our responsibility is on the inspection side, and we just
    want to continue to see that level enhanced.
        Mr. Norwood. Do you feel, Mr. Holmes, that had not the
    Federal Government become involved in this and dangle that 50
    percent, that your inspection system might be different than
    the one that the DOT would have you do? Is there any excesses
    in it?
        Mr. Holmes. I don't feel that there are any excesses in it,
    Congressman.
        But we do think it is necessary.
        Mr. Norwood. In other words, if the DOT wasn't involved,
    you would want your State to write the same regulations as DOT
    as?
        Mr. Holmes. Yes. Obviously, we would have those concerns.
        Mr. Norwood. Is the answer you would want your State to or
    you wouldn't?
        Mr. Holmes. I would have to get back with you on that.
        Mr. Norwood. Mr. Chairman, that is acceptable.
        Mr. Barton. The Chair would recognize the distinguished
    subcommittee chairman of the Health and Environment
    Subcommittee of the full Energy and Commerce Committee, the
    Honorable Michael Bilirakis, from the great State of Florida,
    for 5 minutes.
        Mr. Bilirakis. Thank you, thank you, Mr. Chairman.
        I welcome Ms. Coyner and Commissioner Holmes.
        I was very much involved in this subcommittee a few years
    ago when we had this question of pipeline safety, and it was
    something that I really was concerned with then. I just wish I
    could have been here at the beginning of the hearing, but we
    had two Veteran's organizational meetings over in one of the
    other buildings. I got here when I could.
        Well, let us just go into the breakout tanks just very
    quickly. Currently, at I understand it, the regulation of
    petroleum storage tanks, also known as breakout tanks--has
    historically been done by DOT. Recently, though, the EPA has
    asserted jurisdiction over these same tanks. That results, as I
    understand it, in tank operators having to meet the different
    and conflicting regulatory requirements of two different
    Federal agencies.
        This is really a question to Ms. Coyner, but I would say we
    need your perspective on this, too, Mr. Holmes.
        So, having to meet the requirements of two different
    Federal agencies results in additional costs, I would imagine?
    Maybe inefficiencies for the operator and the Federal
    Government? I would like to know your--what you think about
    this potential conflict and, also, if there are any steps being
    taken to resolve the problem? Or should there be maybe steps
    taken by the Congress to resolve the problem, if you see it as
    a problem as I stated?
        Ms. Coyner. I have seen it as a problem. It has been a
    significant issue, not only with the industry concerns that you
    have just mentioned, but it is also one of the areas that is
    really critical on environmental issues in terms of making sure
    that we protect the environment and to make sure that we have
    integrity of these breakout tanks.
        Last spring, we issued a notice of proposed rulemaking on
    this issue, and we actually expect to have a final rule on this
    that will help address those jurisdictional issues in the next
    several weeks.
        Mr. Bilirakis. But this is being issued by DOT?
        Ms. Coyner. DOT.
        And it will help address the jurisdictional issues with
    respect to EPA, by improving where we are in terms of the
    standards that we have for breakout tanks. I think what is
    important is that we have involved a broad range of interest in
    this discussion--not only our colleagues at the Environmental
    Protection Agency, but also representatives of the
    environmental community and as well as industry--in reaching a
    resolution I think that we can all ultimately live with.
        Mr. Bilirakis. Well, do you feel that you are receiving
    proper cooperation from EPA? Is this a partnership-type of a
    thing you are working it work out? And do you feel that they
    are being reasonable? Do they feel you are being reasonable?
    And when might we expect this to be resolved?
        Ms. Coyner. We expect to issue a rule in the next several
    weeks. That does not mean that we have agreed on every single
    issue with respect to our colleagues, but we are satisfied that
    we will be able to make the rule final by the beginning of
    March. There are always healthy disagreements between different
    agencies and different stakeholders of the Office of Pipeline
    Safety, and I don't have any problem with that. I think that we
    have reached a good resolution that will both be economically
    efficient and protect the environment.
        Mr. Bilirakis. Will this rule be a DOT rule, or will it be
    a----
        Ms. Coyner. It will be a DOT rule.
        Mr. Bilirakis. [continuing] DOT rule. All right. How does
    this resolve, then, the potential to conflict with EPA that
    sometimes takes place?
        Mr. Felder. Yes. I think on the jurisdictional issue, as
    Kelley has said, we have moved ahead to strengthen our tank
    standards. And we feel that they are at a level that should be
    acceptable to Environmental Protection Agency as well. And we
    are, as Kelley said, we are working with EPA, and our goal is
    for both the agencies to have comparable standards so that when
    you look at that kind of a jurisdictional issue, does it make
    any difference who the regulator is in that circumstance? The
    answer should be, ``No.'' The answer should be, ``You have got
    good strong protective standards that apply at both agencies.''
    They are harmonized, and we would be able to end that dispute
    that has bubbled up. So, it is a concern of ours. We have moved
    forward to engage with the Environmental Protection Agency. I
    think we have done our part in terms of----
        Mr. Bilirakis. And that is working well?
        Mr. Felder. [continuing] strengthening our standards.
        Mr. Bilirakis. [continuing] you feel in your discussions
    with them in trying to work out the differences?
        Mr. Felder. Well, we are making progress.
        Mr. Bilirakis. You are making progress.
        Mr. Felder. We have held a number of meetings with them,
    and we would like to bring it to a conclusion.
        Mr. Bilirakis. Can you keep this committee advised----
        Ms. Coyner. We would be delighted to.
        Mr. Bilirakis. [continuing] as to what progress is----
        Mr. Felder. We will.
        Mr. Bilirakis. Thank you.
        Thank you, Mr. Chairman.
        Mr. Barton. Thank you, Congressman Bilirakis.
        The Chair would now recognize the distinguished gentlelady
    from the great State of New Mexico, Congresswoman Wilson, for 5
    minutes.
        Ms. Wilson. Thank you, Mr. Chairman. I am glad you have got
    the ``great.'' I appreciate that.
        I have been reading over your testimony here, and I
    apologize for being late. I had two subcommittees at the same
    time.
        I have a particular interest in your risk assessment
    process, and particularly the interrelationships of various
    systems here with respect to safety and also maintenance of
    critical infrastructure. And I don't know, Ms. Coyner, if this
    comes under your purview. If it doesn't, send me somewhere
    else; that is fine. But, does the Department of Transportation
    participate in any modeling and simulation activities with
    other parts of Government about the vulnerability of the gas
    system?
        Ms. Coyner. That is an appropriate question for two
    reasons. One, the Pipeline Safety Program has been involved in
    the Department's recent vulnerability assessment of all surface
    transportation systems, which we would include the gas system.
    What we have done is to look at what are the places where it
    would be most vulnerable and ways that we can address that. The
    other reason it is appropriate is that, as the Administrator of
    the Research and Spe-

    cial Programs Administration, through our research activities,
    we have headed up this activity for the entire Department. I
    think what might be useful is to supply you with what--we will
    have the assessment done and public in the next couple of
    weeks.
        The second thing I would note, in terms of beyond the
    modeling questions, which is really what the study addresses--
    it puts the first comprehensive model for looking at how do we
    assess the vulnerabilities of this kind of system--is that we
    have also tried to strengthen dealing with things on a more, if
    you might, ad hoc or incident-by-incident type of situation.
    And, so that as information becomes available through the law
    enforcement community, we have worked with the industry to
    provide them information so that they can change what they are
    doing in terms of security that might be involved at a
    particular facility.
        Ms. Wilson. Let me ask you, how do you do that? Do you have
    a group of folks working with modeling computers? I mean, how
    do you go about assessing vulnerability?
        Ms. Coyner. There are several ways. One, is that we have
    participated in the President's Critical Infrastructure
    Commission in terms of the modeling kinds of activities that
    they have been involved in with the energy sector, generally.
    The second way is that we have put together a data base
    approach to doing simulations of what would happen in
    particular situations. This particular assessment is really the
    first time that we have undertaken this kind of a approach to
    putting together a complete model. We did not do what you might
    consider extensive modeling or runs of the data for the gas
    distribution systems, but more looked at the interfaces of
    where a gas system comes into another transportation facility.
        Ms. Wilson. Okay. And one final question--you may have
    already answered this; someone else may have asked it--but,
    with respect to both the hazardous liquids and natural gas,
    what kinds of technologies are becoming available to reduce the
    cost and increase the reliability of our pipelines? And either
    Mr. Holmes or Ms. Coyner, or both?
        Ms. Coyner. I think there are a number of them. I think two
    critical areas are materials and non-destructive testing of
    materials. And the latter is probably the one where we have had
    the most promising breakthroughs. Those particularly different
    kinds of what we call ``pigs'' or ``pig devices'' or internal
    inspection devices--and I refuse to wear my ``pig'' button that
    someone sent me to wear today. But, those devices allow
    pipeline companies to inspect their lines for anomalies in the
    pipeline without causing damage to it, and that is important,
    in terms of an alternative to hydrostatic testing which can
    actually damage a line. It is important because it will also--
    hopefully, it will lead to a cheaper way of more frequently
    inspecting these lines, as well as a way that protects the
    environment, because hydrostatic testing can actually cause the
    failure of a line.
        Ms. Wilson. Yes.
        Mr. Holmes. Yes. I would just add, possibly an electronic
    mapping of the pipelines so we would have a better idea of
    where the pipelines are actually located and that they are
    located within the right-of-ways they were designed for. So, a
    better mapping system would help.
        Ms. Wilson. Thank you.
        Mr. Barton. Is that all your questions?
        Ms. Wilson. Yes, sir.
        Mr. Barton. Well, we are going to excuse this panel. We
    want to thank you for your attendance and your cooperation. We
    had several pages of questions that we provided to the members
    to ask, which they tended to ignore because they had better
    questions. So, you are going to have some written questions for
    the record to submit to you. And I am sure that our
    distinguished friends that are disguised as empty chairs to my
    left also will have some questions. I know Mr. Markey and Mr.
    Pallone and Mr. Dingell will, so we will keep the record open.
    We will send you some written questions and hope that you can
    comply as cooperatively as you have in your verbal answers with
    your written answers.
        Ms. Coyner. Thank you, Mr. Chairman.
        Mr. Holmes. Thank you, Mr. Chairman.
        Mr. Barton. Thank you for your attendance.
        The Chair would now like to call our second panel. And I am
    told that all are in attendance.
        We have Mr. John Zurcher, who is the Manager for Pipeline
    Safety with Columbia Gas Transmission Corporation. We have Mr.
    Richard Cook, who is the Vice President for Washington Gas. We
    have Ms. Lois Epstein, who is with the Environmental Defense
    Fund, and we have Mr. Richard Wilson, who is the Vice Chairman
    for Buckeye Partners Limited, and he is representing the
    Association of Oil Pipelines and the American Petroleum
    Institute.
        So if you four witnesses could come forward--we want to
    welcome you on behalf of the subcommittee and the full
    committee. Your entire testimony is in the record in its
    entirety. We are going to start with Mr. Zurcher.

       STATEMENTS OF JOHN S. ZURCHER, MANAGER, PIPELINE SAFETY,
     COLUMBIA GAS TRANSMISSION CORPORATION; RICHARD J. COOK, VICE
    PRESIDENT, WASHINGTON GAS; LOIS N. EPSTEIN, ENGINEER, POLLUTION
    PREVENTION ALLIANCE, ENVIRONMENTAL DEFENSE FUND; AND C. RICHARD
     WILSON, VICE CHAIRMAN, BUCKEYE PARTNERS LIMITED, ON BEHALF OF
        THE ASSOCIATION OF OIL PIPELINES AND AMERICAN PETROLEUM
                               INSTITUTE

        Mr. Zurcher. Thank you, Mr. Chairman.
        Mr. Barton. And we will just go right down the line, Mr.
    Zurcher, Mr. Cook, Ms. Epstein, and then Mr. Wilson.
        We will recognize each of you for 5 minutes to summarize
    your testimony, and if you need a little extra time we will
    obviously give you that opportunity.
        Mr. Zurcher.
        Mr. Zurcher. Thank you, Mr. Chairman, and thank you,
    members of the subcommittee, for listening to us. And, good
    afternoon.
        My name is John Zurcher; I am Manager of Pipeline Safety
    for Columbia Gas Transmission, which is part of the Columbia
    Energy Group.
        Columbia Gas Transmission is a major natural gas
    transmission company serving the eastern part of the United
    States. We have over 12,000 miles of interstate transmission
    pipe in service today.
        I am also here on behalf of the Interstate Natural Gas
    Association of America, INGAA, and INGAA is a trade association
    which represents virtually all the major natural gas
    transmission pipelines in North America which collectively
    transport over 90 percent of the natural gas consumed in the
    United States. And I am currently the Chair of the Pipeline
    Safety Committee for the INGAA organization.
        Natural gas transmission pipelines are remarkably safe, and
    I know you have seen the statistics. But the industry is always
    looking for ways to improve protection to the public,
    protection to the environment, and protection to our own
    employees. We feel that we just cannot rest on our good safety
    record, that our industry actually needs to continue to look
    toward the future and how new technology can increase safety
    even more.
        Congress passed its last reauthorization, the Pipeline
    Safety Act of 1996, and that act incorporated two important new
    concepts. The first one is the risk assessment and cost benefit
    analysis that deals with new safety regulations. The second one
    is a voluntary risk management demonstration project. And we
    know that the act is due for reauthorization at the end of
    fiscal year 2000.
        The Office of Pipeline Safety, or OPS, has recently
    completed its guidelines for the risk assessment cost benefit
    process. New rules have been created in a more consensus,
    oriented, and timely manner. While the risk assessment process
    itself has not been completely implemented yet, we believe that
    it will this year. In the meantime, due to the flexibility
    which Congress gave us in this process, OPS has done a very
    good job of moving new rules through their approval process.
        The risk management demonstration project, the other risk,
    is a voluntary effort, whereby companies can tailor their
    safety efforts to address the specific risks along their
    pipeline system.
        Each risk management plan is subject to review and approval
    by the Office of Pipeline Safety, and we must ensure that our
    plans provide a superior level of safety compared to the
    existing regulations. And through this process, OPS solicits
    public and stakeholder involvement in each of these proposals.
    This is not a cost-cutting technique. In fact, costs actually
    go up for the companies that participate. However, the risk
    management process does allow us to spend our resources more
    wisely and more effectively.
        Five risk management plans have been approved thus far,
    with several close to approval. The project has helped to bring
    out about a better understanding among industry and government,
    which ultimately benefits everyone. Our relationship with OPS,
    while not perfect, has improved as a result of this increased
    understanding.
        INGAA believes that the current Federal Pipeline Safety
    Program is effective and benefits the general public. As such,
    we respectfully ask Congress to continue the program as it now
    stands. INGAA also wants to see pipeline safety user fees which
    fund almost the entire OPS budget held at current levels.
        I want to thank you, Chairman Barton, and the subcommittee
    for allowing me to testify today and for inviting me. And we
    really do appreciate the swift attention that you are paying to
    our legislation.
        [The prepared statement of John S. Zurcher follows:]
       Prepared Statement of John S. Zurcher, Manager, Pipeline Safety,
      Columbia Gas Transmission Corporation, on Behalf of the Interstate
                       Natural Gas Association of America
        Mr. Chairman and members of the Subcommittee, I am John S. Zurcher,
    Manager of Pipeline Safety for Columbia Gas Transmission Corporation,
    and Chairman of the INGAA Pipeline Safety Committee. I am speaking
    today on behalf of The Columbia Energy Group and the Interstate Natural
    Gas Association of America (or INGAA).
        By way of introduction, the Columbia Gas Transmission is a wholly
    owned subsidiary of The Columbia Energy Group, a Fortune 500 and S&P
    500 company located in Fairfax, Virginia and Charleston, West Virginia.
    Columbia is one of the nation's largest natural gas companies, with
    assets of about $6 billion. Its operating companies are engaged in all
    phases of the gas business, plus marketing, fuel management services
    and electric power generation. Columbia companies directly or
    indirectly serve more than 7 million natural gas customers--12 percent
    of the nation's total--in 15 States and the District of Columbia, and
    have 53,000 miles of pipeline systems.
        INGAA is the trade association that represents virtually all of the
    interstate natural gas transmission pipeline companies operating in the
    U.S., as well as comparable companies in Canada and Mexico. Its thirty-
    four members transport over 90 percent of the nation's natural gas.
        I join you today with a positive story to tell. First, natural gas
    transmission pipelines are an extremely safe mode of transportation for
    energy; in fact we are unsurpassed in our safety record. Second,
    government and industry can, and in our case, do work well together in
    improving public safety. And third, the risk-based regulatory framework
    that Congress created in the 1996 Pipeline Safety Act reauthorization
    is an efficient and effective alternative to traditional regulation.
        First let me talk about this industry's safety record. Safety is a
    top priority for our industry. As I have already mentioned, natural gas
    transmission pipelines, which transport over one/third of the nation's
    energy, have an excellent safety record. In 1997, the last full year of
    statistics, there were five injuries and one fatality associated with
    natural gas transmission lines, and almost all of these were the result
    of a third party hitting a pipeline with heavy excavation machinery.
    These figures are encouraging when you consider that there are over
    300,000 miles of natural gas transmission pipeline in the U.S. As you
    can see from the appendix to this testimony, an individual is far more
    likely to die from lightning or a bee sting, than from a natural gas
    transmission line accident.
        However, we want to continue to improve this record. One fatality
    is still one too many. That is why a flexible, evolving federal
    pipeline safety effort is so important. We cannot rest on a good
    record, and we cannot always look to the problems of the past if we
    want to avoid accidents in the future.
        Let me expand further on that point. Until recent years, the
    federal pipeline safety program evolved from minimum safety standards
    coupled with numerous prescriptive mandates. Individual regulations
    were, in many cases, a response to particular incidents, with little
    consideration given to overall risk. In other words, the federal
    pipeline safety program was stuck reacting, instead of studying and
    ranking the risks that pipeline face.
        As a result of P.L. 104-304, reauthorizing the Pipeline Safety Act
    in 1996, the Department of Transportation's Office of Pipeline Safety
    (OPS) has joined with industry in exploring ways in which resources--
    public and private--could be used most effectively to enhance public
    safety. We both agreed that a risk-based approach to regulation was the
    key. Together, government and industry worked with Congress for passage
    of the Accountable Pipeline Safety and Partnership Act of 1996. The
    term ``partnership'' in the title is key, because that is exactly what
    has resulted. The forward-looking leadership at OPS has taken this
    legislation and created a spirit of cooperation not seen since the
    first Pipeline Safety Act was passed more than thirty years ago--all
    with the goal of protecting the public, the environment and industry
    employees.
        The 1996 Act contains two important elements. First, it requires
    (with exceptions) new safety regulations to undergo a risk assessment/
    cost-benefit analysis prior to final approval. Based largely on
    President Clinton's Executive Order 12866, this provision is consistent
    with the ``reinventing government'' ideal of smarter, more effective
    regulation. It is important to note, however, that not all new
    regulations are required to undergo this analysis. The risk assessment/
    cost-benefit requirement is waived if a rule is the product of a
    negotiated rulemaking, a consensus rule, the adoption of industry
    standards, or with the consent of standing advisory boards within OPS.
        When this provision was debated several years ago, some expressed
    concern that this would lead to ``analysis paralysis.'' However, this
    provision has not brought the regulatory process to a screeching halt.
    OPS has continued to move rules through their process, and in fact the
    time it takes to get new rules through OPS has decreased. One major
    rule, dealing with pipeline operator qualification, had languished at
    OPS since 1992 amidst gridlock. When the 1996 Pipeline Safety Act
    reauthorization passed, however, OPS decided to pursue a negotiated
    rulemaking. We anticipate that this rule will be successfully concluded
    this spring. Other rules have been adopted through consensus or
    embracing industry standards. The trains have not only kept running,
    they are running better.
        I know that OPS is considering at least one rule this year which
    will require a cost-benefit analysis. We all need to participate in
    this process in a positive way.
        The other important element of the 1996 reauthorization is the Risk
    Management Demonstration Project. This should not be confused with the
    risk assessment provision. The risk assessment/cost-benefit analysis
    looks at new safety regulations which are applicable across the entire
    industry. Under the Risk Management Demonstration Project, pipelines
    can voluntarily create their own safety programs, subject of course to
    OPS review and approval, which would tailor each pipeline's efforts to
    address the specific risks along its system. As a hypothetical example,
    consider a rule which would require a pipeline to inspect its
    facilities once a month in order to look for construction activity that
    might accidentally lead to a rupture. The rule does not distinguish
    between areas with different population densities and different levels
    of construction activity. Therefore, the pipeline is required to
    inspect their right-of-way in areas where the risk is low just as often
    as those areas where the risk is high. This situation does not lead to
    the best allocation of resources.
        Under a risk management plan, a pipeline might want to inspect
    right-of-way in urban areas, where construction activity is greater,
    once a week, and inspect right-of-way in rural areas on a less frequent
    basis. In this hypothetical situation, the pipeline is now spending its
    limited resources in a more effective manner, based on the potential
    safety risk to its system.
        The 1996 Act established a voluntary demonstration project for risk
    management. Individual pipeline companies have the option of submitting
    a risk management plan for some or all of their systems. The Department
    of Transportation must review each application and certify that it
    provides a ``equal or greater level'' of safety as compared to
    compliance under existing minimum standards. In addition, based on a
    directive from President Clinton, each risk management project must
    provide ``superior safety'' in order to gain Departmental approval. The
    President also directed that OPS provide meaningful public
    communication on specific risk management proposals, and that a maximum
    of ten projects be approved prior to the Department making its report
    to Congress on the progress of the demonstration project.
        To date, the department has approved four risk management projects.
    Another three are pending approval with more at various stages in the
    process. One of those three pending proposals is one which Columbia Gas
    Transmission and Columbia Gulf Transmission submitted to DOT last year.
        The Office of Pipeline Safety has taken a phased approach to
    working on and approving individual companies' risk management
    projects. The first plans approved all involved hazardous liquid
    pipelines. Very few items in these plans involved alternatives to
    regulations, but instead they are testing the risk management premise
    of providing superior safety, environmental protection and service
    reliability.
        The plans involving natural gas pipelines are taking longer to
    approve. Most items in these plans involve alternatives to current
    pipeline safety regulations. It is taking longer than expected to work
    through the technical arguments for these items primarily due to the
    fact that the existing regulations were often not based on technical
    justifications.
        Columbia is in the final phase of project approval with our
    ``Order'' expected in the April, 1999 timeframe. We are looking at a
    system-wide application of the risk management program which we expect
    will allow us to better allocate resources to those areas that have the
    greatest risk, while not compromising safety to the public, the
    environment or our employees. Columbia's project does involve
    alternatives to existing regulations, such as: basing inspection and
    testing of certain facilities on actual performance rather than the
    calendar; use of inspection and testing techniques that are more in
    line with today's technology; and providing additional services to our
    customers while maintaining reliability.
        In concluding my remarks on risk management, let me say that
    industry and government are learning a great deal, especially about
    each other. Where prescriptive-type regulations are a ``snapshot'' of
    what might be good for safety, risk manage-

    ment allows safety efforts to evolve and change with new technologies.
    The general public gets a better product--increased safety--as a
    result.
        Before I talk about what we think should be in a new
    reauthorization bill, I first want to thank the Congress for passing
    the Comprehensive One-Call Notification Act last year. I have just been
    talking about risk, and certainly there is no greater risk to natural
    gas transmission pipelines than unintentional third-party damage. Many
    of these accidents can be avoided through better communication between
    pipeline operators and excavators. That is exactly what the legislation
    passed last year is designed to do. Without mandates, and without
    heavy-handed regulations, the One-Call Act creates incentives for
    states to adopt more inclusive and more effective one-call programs.
    This is perhaps the single most important pipeline safety measure
    Congress can enact, because it attacks the greatest cause of pipeline
    accidents.
        The Office of Pipeline Safety has been leading discussions across
    different industries, trying to identify ways to improve safe
    excavation procedures. The spirit of cooperation has been terrific. We
    thank Congress for getting the ball rolling.
        Now on to what we would like to see in the next reauthorization. We
    have an excellent program, and an excellent staff at the Office of
    Pipeline Safety. INGAA strongly supports the risk assessment/cost-
    benefit review for new regulations. We want to see it continue.
        In regards to the risk management demonstration project, INGAA
    respectfully request that it also be extended. The Department is
    preparing its risk management report to Congress now, pursuant to the
    1996 Act. We all agree that the concept has merit and deserves to
    continue. Unfortunately, the approval of risk management plans has
    taken longer than expected. This is due primarily to the fact that risk
    management regulation is a new concept, and therefore it has taken time
    to develop the procedures, and the level of mutual trust, needed to
    carry the program forward. In addition, the requirement for meaningful
    public communication has necessitated many public meetings and ways to
    solicit public input. With so much already invested, we need to
    continue our good efforts.
        As a final note, I want to discuss the OPS budget. The natural gas
    and petroleum transmission pipelines fund almost 100 percent of the OPS
    budget through user fees. These user fees are assessed on companies
    based on the mileage of transmission pipeline in their systems. Because
    we pay the bill, we have a keen interest in the OPS budget. Based on
    our safety record, INGAA believes that OPS has the resources it needs
    to fulfil its mission. Accordingly, we support funding levels which
    would maintain staffing and program operations at their current level.
        To close, I want to thank you, Mr. Chairman, for moving quickly to
    examine reauthorization of the Accountable Pipeline Safety and
    Partnership Act. We believe this Act has lived up to its name in
    creating a true partnership between industry and government. As I have
    described here today, our spirit of cooperation has enabled us not only
    to take some important initial steps to implement the Act, but has
    carried over to our work on one-call damage prevention as well. We feel
    that the current public/private partnership for pipeline safety is an
    excellent one. INGAA is proud of our record of achievement in
    protecting the public, but we are always trying to improve. We believe
    the flexible and evolutionary pipeline safety program now in place
    gives us to tools to do so.
        Thanks again, and I would be pleased to answer your questions at
    the appropriate time.

    [GRAPHIC] [TIFF OMITTED] T5149.007

    [GRAPHIC] [TIFF OMITTED] T5149.008

    [GRAPHIC] [TIFF OMITTED] T5149.009

    [GRAPHIC] [TIFF OMITTED] T5149.010

        Mr. Barton. Thank you, Mr. Zurcher.
        We would recognize Mr. Cook now for 5 minutes.

                      STATEMENT OF RICHARD J. COOK

        Mr. Cook. Yes, if I may, my name is Richard J. Cook, and I
    am Vice President of Construction and Technical Support of
    Washington Gas.
        And, Mr. Chairman, if I may, Ms. Coyner used a word that,
    we, who were who were from agricultural areas, would think as
    an oxymoron, and that is a smart pig. But, in the industry, it
    has a meaning that is understood. Also----
        Mr. Barton. That is not as bad as a ``smart Congressman.''
    Some people think that is an oxymoron.
        Mr. Cook. Let me say that I am here to represent the
    American Gas Association, AGA, and Washington Gas. Washington
    Gas is a local distribution company serving approximately
    820,000 meters in the Washington, DC metropolitan area and the
    surrounding region. Our service area covers 6,648 square miles
    in Maryland, Virginia, West Virginia, and the District of
    Columbia. We have approximately 22,000 miles of gas lines.
        I am here this afternoon--and I am kind of one of these
    bottom-line people; we are here to support this
    reauthorization. And, as is the American Gas Association
    representing 189 LDC's, local distribution companies, that
    deliver gas to almost 60 million homes and businesses in all 50
    States.
        We are literally the gas company, because we are at the end
    of the line. In other words, if you look at the production
    fields, the interstate transmission, the intrastate
    transmission, and to the burner tip, LDC's represent that face
    of the gas industry to the public. The delivery of safe,
    reliable service at a reasonable cost is paramount to
    maintaining and growing our business.
        The safety record of the gas industry I think is exemplary.
    With an estimated 1.5 million miles of distribution lines
    nationwide and serving approximately 60 million customers, our
    accident rates are extremely low.
        Last year Congress gave us another means of lowering this
    number by enacting the legislation to improve the One-Call
    system. The One-Call is our principal tool in combating
    unintentional dig-ins by third parties, the No. 1 cause of
    accidents on natural gas pipelines. Thank you for strengthening
    the One-Call system, and thanks to DOT for moving expeditiously
    to implementing that act.
        AGA and Washington Gas, respectfully, urge Congress to
    reauthorize for another 4 years the current pipeline safety
    statute. We ask that you allow the initiatives created by this
    law--risk assessment, cost-benefit analysis, and the
    establishment of risk management demonstration projects--be
    continued. With regard to authorization levels, we believe the
    funding levels approved for fiscal year 2000 should be
    sufficient to carry this through the next 4 years.
        The 1996 law, including a new section modeled after
    President Clinton's reinventing Government initiatives for risk
    assessment and cost-benefits, we think is important. This
    initiative allows the application of flexible risk assessment
    and cost-benefit analysis to new pipeline safety standards in
    order to gather as much information as possible prior to
    issuing the rule. This analysis is waived if OPS elects to
    utilize alternatives such as a negotiated rulemaking or
    consensus rule.
        The front-end loading of information and discussion of
    issues at the beginning of the process leads to better workable
    rules in the end. Using this approach, OPS has been able to
    dramatically reduce the time it takes to issue final rules.
    Furthermore, working with stakeholders throughout the process
    should result in fewer legal challenges. The Government
    actually realizes a saving in time, personal resources, and
    money.
        The new approach has neither diminished OPS's ability to
    issue new regulations nor resulted in rules that do not protect
    the public or the environment. Experience, to date, has shown
    that regulators and industry can work together to reach safety
    objectives. We don't always agree, but we continue to share
    information and ideas. This leads to a better understanding of
    differing viewpoints which leads to better results.
        I will give you an example of that type of activity that I
    am discussing. OPS's operator qualification rule is a product
    of successful negotiated rulemaking. Prior to using the
    negotiated approach, this rule has been under consideration
    since 1992. A 1994 DOT proposal suggested the initial
    compliance costs alone would exceed in excess of $500 million
    and operators with successful programs in place would have to
    change them.
        Under the new approach, this was achieved much more
    quickly, and the final rule will be issued this spring with
    agreement with virtually all the parties.
        We also support the risk assessment and find that, in fact,
    the local LDC's would like to participate in that.
        So I am cutting my discussion short.
        Mr. Barton. We appreciate it.
        Mr. Cook. You have my written statement. But again, coming
    to the bottom line, we support the reauthorization of this
    bill.
        Thank you.
        [The prepared statement of Richard J. Cook follows:]
    Prepared Statement of Richard J. Cook, Vice President, Construction and
      Technical Support, Washington Gas and Representing the American Gas
                                  Association
        Good afternoon, Mr. Chairman and members of the Subcommittee.
        My name is Richard J. Cook and I am Vice President of Construction
    and Technical Support for Washington Gas here in Washington, D.C. Thank
    you for this opportunity to appear before the Subcommittee in regard to
    reauthorization of the pipeline safety statute.
        Washington Gas is a natural gas local distribution company (LDC)
    serving customers through nearly 820,000 meters in the Washington, D.C.
    metropolitan area and the surrounding region. Our service area covers
    6,648 square miles in Maryland, Virginia, West Virginia and the
    District of Columbia. Our system contains nearly 22,000 miles of
    natural gas lines.
        I am also here this afternoon representing the member companies of
    the American Gas Association (A.G.A.). A.G.A. represents 189 LDCs that
    deliver natural gas to almost 60 million homes and businesses in all 50
    states.
        LDCs comprise that segment of the natural gas industry that
    delivers natural gas to homes and businesses. We are at the end of a
    line stretching from the producing fields, through the interstate and
    intrastate pipeline system to the natural gas burner tip. We are, to
    the general public, the face of natural gas. The delivery of safe,
    reliable service at a reasonable cost to our customers is paramount to
    maintaining and growing our business.
        Although each State utility commission has primary regulatory
    authority over LDCs, federal pipeline safety regulations also have an
    impact on our operations. States adopt the federal safety rules as
    minimum requirements and receive grants of up to fifty percent (50%) of
    their pipeline safety enforcement costs from the Department of
    Transportation's (DOT) Office of Pipeline Safety (OPS) each year. This
    system has worked well and has provided a level of consistency from
    State to State. Nevertheless, we are always interested in finding
    better ways to provide safe, reliable service.
        Our safety record is exemplary. With an estimated 1.5 million miles
    of distribution lines nationwide and serving approximately sixty
    million customers, our accident rate is extremely low. We are grateful
    that last year Congress gave us another means of lowering that number
    by, enacting legislation to improve the one-call system. One-call is
    our principal tool in combating unintentional dig-ins by third
    parties--the number one cause of accidents on natural gas pipelines.
    Thank you for recognizing the importance of strengthening the one-call
    system. And thanks to DOT for moving expeditiously to implement the
    act. Your actions will result in improved coverage by state one-call
    laws and assist in the prevention of future accidents.
                     reauthorization for the 106th congress
        A.G.A. and Washington Gas respectfully urge Congress to reauthorize
    for another four years the current pipeline safety statute and allow
    the initiatives created by the 1996 reauthorization--risk assessment,
    cost/benefit analysis and the establishment of risk management
    demonstration projects--to continue to unfold. The risk assessment and
    cost/benefit requirements have been applied to several rules, both
    final and pending. To date, four risk management demonstration projects
    have been approved for liquid pipelines and one for a natural gas line,
    with three more close to approval. With regard to authorization levels,
    we believe the funding level approved for FY 2000 should be sufficient
    to carry the program forward for another four years.
        update on the implementation of the 1996 reauthorization statute
    Risk Assessment and Cost Benefit
        The policy and regulatory changes imposed by the 1996 pipeline
    safety reauthorization bill are working well and moving forward
    smoothly. The 1996 law included a new section modeled after President
    Clinton's ``Reinventing Government'' initiatives outlined in Executive
    Order 12866. This initiative allows the application of flexible risk
    assessment and cost/benefit analysis to new pipeline safety standards
    in order to gather as much information as possible prior to issuing a
    rule. The analysis is waived if OPS elects to utilize alternatives such
    as a negotiated rulemaking, consensus rule or simply adoption of
    industry standards if no party objects.
        This ``front-end loading'' of information and discussion of issues
    at the beginning of the process leads to better, workable rules in the
    end. Using this approach, OPS has been able to drastically reduce the
    time it takes to issue final rules. The initial information gathering
    and analysis takes substantial time, to be sure, but once done OPS is
    able to move much more rapidly through the formal rulemaking process.
    Furthermore, working with the stakeholders throughout the process
    should result in fewer legal challenges. The government will realize
    savings in time, personnel resources and money.
        Of major concern was the suggestion that the new approach would
    either diminish OPS' ability to issue new regulations, or result in
    rules that did not protect the public or the environment. This has not
    proven to be the case. Experience to date has shown that regulators and
    the regulated industry can work together to reach safety objectives. We
    don't always agree but we continue to share information and ideas. This
    leads to a better understanding of differing viewpoints, which can only
    lead to better results.
        Two of OPS' recent implementation activities have had a direct
    impact on operations at Washington Gas:
         OPS' Operator Qualification rule is the product of a
    successful negotiated rulemaking. The final rule should be issued this
    spring.
         OPS is in the process of adopting a consensus plastic pipe
    standard that has been developed through months of work by
    stakeholders. OPS is also working with stakeholders to develop
    consensus corrosion standards.
    Case Study: Operator Qualification
        In the 1992 reauthorization, DOT was required to issue new
    regulations that would have required an operator to test and certify
    individuals who work on pipelines. Under DOT's 1994 proposal the
    initial compliance costs of this regulation alone would have exceeded
    $500 million. Every natural gas utility would have been forced to adopt
    the one-size-fits all Federal program and operators with successful
    programs in place would have been required to make changes.
        In the 1996 reauthorization, Congress amended its directive and DOT
    changed its focus. All the affected stakeholders were brought together
    to discuss their interests and concerns. Through this approach, a rule
    was crafted that achieves Congress' original objective while minimizing
    the impact on operators. The process has not been easy, but the result
    will be a final rule issued with the agreement of all parties. We
    commend DOT's approach to resolve this controversial issue and their
    commitment to implementing and utilizing, the guidelines and principles
    adopted in the 1996 reauthorization.
    Risk Management
        The 1996 law also authorized OPS to work with companies on a
    voluntary basis to develop customized safety plans that may or may not
    strictly comply with existing safety regulations. These are called risk
    management demonstration projects. The initial projects are limited to
    interstate liquid and natural gas pipelines and I understand other
    witnesses will cover this subject.
        Some LDC's, including Washington Gas, are also interested in
    exploring this concept. Approximately one-half of the average LDC's
    safety budget is spent in complying with federal and state regulations.
    The other half is frequently allocated using some type of internal risk
    assessment tools. Companies have developed expertise in employing these
    risk assessment methodologies and have developed confidence in them. It
    seems logical to apply these tools to compliance activities to
    critically assess whether they truly provide an additional margin of
    safety.
        A.G.A. is participating on a team organized by DOT comprised of
    A.G.A. member companies and state regulatory and DOT representatives.
    Their mission is to examine whether risk management is feasible and
    appropriate for LDCS. We expect a report by year-end and look forward
    to the study's results.
    Fundingfor OPS
        Funding for OPS' safety program comes from user fees assessed on
    transmission pipelines. A portion of the fees assessed on natural gas
    interstate transmission lines is passed through to the LDC. This in
    turn is passed on to the consumer. Congress should, therefore, ensure
    that the funding level for OPS is both adequate and proper.
        During negotiations for the 1996 law, the natural gas industry
    agreed that OPS needed funding to develop guidelines and protocols for
    the new initiatives. OPS also needed to be able to clear its backlog of
    pending regulations and provide adequate inspectors in the field. We
    believe OPS is well on the way to accomplishing these objectives and
    urge that funding remain at the FY2000 level for the next four years.
        If Congress decides to increase the authorization, the additional
    funds should come from OPS' reserve. This reserve contains previously
    collected but as yet unused pipeline safety user fees. It seems
    appropriate that these monies be used for OPS activities until entirely
    drawn down.
                                   conclusion
        Congress should retain the provisions of the 1996 pipeline safety
    law and extend the risk management demonstration program. The processes
    created by Congress in 1996 are working; we ask that they be allowed to
    continue. OPS has not been hampered by the new requirements of the 1996
    law. In fact, the knowledge and expertise of OPS inspectors and
    personnel have been increased to the benefit of public safety.
        Continuation of these programs will bring about greater knowledge
    and understanding for all parties, leading to better rules and programs
    in the future. Initiatives such as these represent a real reinventing
    of government by allowing innovative processes to improve public safety
    as well as providing a systemic change in the way industry is
    regulated.
        I appreciate the opportunity to appear before you today, and look
    forward to answering any questions that you may have. Thank you.

        Mr. Barton. Thank you, Mr. Cook.
        Now I will recognize Ms. Epstein for 5 minutes.

                      STATEMENT OF LOIS N. EPSTEIN

        Ms. Epstein. Thank you.
        Good afternoon. My name is Lois Epstein, and I am a
    licensed engineer with the Environmental Defense Fund in
    Washington, DC. EDF is a non-profit environmental research and
    advocacy organization with nearly 300,000 members nationwide.
    Previous to EDF, I was an environmental consultant and I worked
    for U.S. EPA. Since 1995, I have been a member of the advisory
    committee which oversees the Department of Transportation's
    Office of Pipeline Safety's work on hazardous liquid pipelines
    such as those that carry crude oil and gasoline.
        My testimony today is on behalf of EDF and its members. EDF
    also is a co-founder and member of the National Pipeline Reform
    Coalition, a multi-stakeholder network whose goal is to protect
    the environment, property, and public safety from pipeline
    releases.
        In my testimony, I will provide you with EDF's analysis and
    views on the activities of the Office of Pipeline Safety, or
    OPS, which impact the environment, the existing pipelines
    safety law, and recommendations for congressional action.
        To begin, I refer you to Figure 1, on page 2, of my written
    testimony which shows annual releases to the environment from
    hazardous liquid pipelines using OPS's data from 1990 through
    1998. I have to respectfully disagree with Assistant
    Administrator Felder's answer to Congressman Norwood's
    question, as this figure shows that since 1995, the amount
    released to the environment has increased annually, including
    since the 1996 reauthorization. And I did download the data for
    all of 1998.
        Mr. Barton. Good.
        Ms. Epstein. Figure 2 shows that the amount of oil released
    per incident has been increasing since 1993, indicating that
    releases may be becoming more serious over time. That is, there
    were fewer reports in 1998, but the size of the release was
    increasing.
        Mr. Barton. Would the gentlelady suspend?
        I notice you are speaking almost faster than I can listen.
    We are going to give you sufficient time.
        Ms. Epstein. Thank you very much.
        There is an oil pipeline spill of tens of thousands of
    gallons approximately every other day. As oil pipeline releases
    can and do contaminate drinking water supplies, crops, and
    residential lands, generate greenhouse gases, kill fish, and
    cause deaths and injuries from explosions and fires, these two
    upward trends in annual releases and release size clearly need
    to be reversed.
        Note that for hazardous liquid pipelines, not for gas
    pipelines, various studies have shown that outside force is not
    the primary cause of accidents.
        While there are undoubtedly some pipeline companies that
    are effectively preventing releases and protecting the
    environment, there are others that are not, as shown by the
    data of transfer oil pipelines.
        The Pipeline Safety Act of 1992 gave OPS the mandate to
    develop pipeline standards that protect the environment. OPS
    has not, however, issued any environmental protection
    regulations to date. There simply is no excuse for OPS's
    complete failure to meet congressional deadlines for
    environmental protection standards.
        Additionally, OPS has an extremely poor record of enforcing
    existing and developing new safety requirements. On the
    enforcement side, the OPS web site shows that the civil
    penalties OPS proposes to collect in 1997 and 1998 are less
    than half of what the Office proposed to collect in 1994.
        As for developing new safety standards, the National
    Transportation Safety Board has recommended numerous changes in
    the oil pipeline program, but OPS has not acted on many
    recommendations.
        The November 1998 NTSB meeting on the investigation of two
    serious oil pipeline accidents in Texas and South Carolina
    resulted in strong criticism of OPS by board chairman James
    Hall. Chairman Hall stated his willingness to raise to Congress
    the issue of OPS's unresponsiveness. Had NTSB's recommendations
    been followed OPS might have prevented the deaths of two
    teenagers in Texas in 1996, as NTSB first recommended improving
    the corrosion protection standards in 1987.
        Given this background, EDF sees the need for four
    significant amendments to the current pipeline safety law.
        First, remove the State preemption language to allow States
    to exceed Federal requirements for interstate pipelines. And
    that is a strategy that is used in environmental laws quite
    commonly. I don't know any statute that doesn't include that.
        Second, require that OPS delegate enforcement for
    interstate pipelines to qualified State agencies.
        Third, add release liability provisions as a non-regulatory
    incentive for improved pipeline performance.
        And, four, amend the citizen suit provisions to facilitate
    private enforcement actions.
        These amendments are all discussed in greater detail in
    EDF's written testimony.
        As for implementation issues associated with the existing
    pipeline safety statute, EDF continues to have significant
    concerns with the risk management provisions and the
    extraordinary cost benefit analysis procedures added to the law
    when it was last reauthorized.
        EDF's primary concerns with the risk management
    demonstration projects are that they do not provide the public
    with additional information about pipeline risks. And while OPS
    is using a large proportion of its limited resources for risk
    management, OPS is not carrying out its congressional mandates
    and NTSB recommendations to develop standards that would apply
    to all pipelines except the minuscule mileage currently in the
    risk management program.
        In conclusion, EDF strongly urges Congress to: one, amend
    the pipeline safety law in the manner discussed to improve
    environmental protection; two, conduct an oversight hearing on
    OPS's performance, including how it compares to State
    performance. Examine if there is a culture at OPS that will not
    address pipeline and environmental issues effectively. Three,
    request that the General Accounting Office study the resources
    OPS devotes to risk management versus other activities, OPS's
    enforcement record compared to that of other Federal regulatory
    agencies, and the ability of States now and in the future to
    take over some of OPS's current responsibilities.
        The oil pipeline program offers an excellent opportunity
    for Congress to be proactive on the environment.
        Thank you very much for inviting me to testify today. I
    hope this information proves helpful in your deliberations.
        [The prepared statement of Lois N. Epstein follows:]
     Prepared Statement of Lois N. Epstein, Senior Engineer, Environmental
                                  Defense Fund
        Good afternoon. My name is Lois Epstein, and I am a licensed
    engineer with the Environmental Defense Fund in Washington, DC. EDF is
    a non-profit environmental research and advocacy organization with
    nearly 300,000 members nationwide. Previous to EDF, I worked as an
    environmental consultant for two firms, and for the U.S. Environmental
    Protection Agency. Since 1995, I have been a member of the advisory
    committee which oversees the U.S. Department of Transportation Office
    of Pipeline Safety's work on pipelines transporting hazardous liquids
    such as crude oil and gasoline.\1\
    ---------------------------------------------------------------------------
        \1\ The U.S. DOT's Technical Hazardous Liquid Pipeline Safety
    Standards Committee.
    ---------------------------------------------------------------------------
        My testimony today is on behalf of EDF and its members. EDF also is
    a co-founder and member of the National: Pipeline Reform Coalition, a
    newly-formed network of environmental organizations, local government,
    industry, and labor unions whose goal is to protect the environment,
    property, and public safety from releases from hazardous liquid and
    natural gas pipelines.
        In my testimony, I will provide you with EDF's analysis of and
    views on: 1. the activities of the Office of Pipeline Safety (OPS)
    which impact the environment, 2. the existing pipeline safety law, and
    3. recommendations for Congressional action.
    The Office of Pipeline Safety's Record on the Environment
        To begin, I refer you to Figure 1, which shows ``Annual Releases to
    the Environment from Hazardous Liquid Pipelines'' from 1990 through
    1998 using OPS accident data. These data show that over 6.3 million
    gallons of oil and other hazardous liquids are reported released from
    pipelines on average each year,\2\ more than half the amount released
    from the Exxon Valdez disaster. Note that Figure I shows that since
    1995, the amount released to the environment has increased each year.
    ---------------------------------------------------------------------------
        \2\ The OPS accident database contains estimates of release size
    from those reporting the incidents. This database contains both under-
    reporting and over-reporting of accidents (the latter through redundant
    reports). Only releases of at least 2,100 gallons or at least $50,000
    in property damage, or which cause a death or serious injury, are
    required to be reported (see 49 CFR 195.50 for more details).

    [GRAPHIC] [TIFF OMITTED] T5149.011

        Figure 2 shows that the amount of oil and other hazardous liquids
    released per incident has been increasing since 1993, indicating that
    releases may be becoming more serious over time. The average amount
    released in 1998 was over 45,000 gallons. Annual reporting in the 1990s
    ranges from 170 to 236 incidents per year, with an average of 200,
    meaning that there is a pipeline release of tens of thousands of
    gallons approximately every other day.

    [GRAPHIC] [TIFF OMITTED] T5149.012

        As hazardous liquid pipeline releases can and do contaminate
    drinking water supplies, crops, and residential lands, generate
    greenhouse gases, kill fish, and cause deaths and injuries from
    explosions and fires, these two upward trends in aggregate annual
    releases and release size clearly need to be reversed. The following
    table lists some of the most serious releases from hazardous liquid
    pipelines and their tank farms in recent years:

    ----------------------------------------------------------------------------------------------------------------
                 Company                     Date              Location        Gallons Released        Comments
    ----------------------------------------------------------------------------------------------------------------
    Shell Pipeline                    April 1998........  St. James, LA.....  748,000...........  Crude oil release
      Corporation.                                                                                 at tank farm
                                                                                                   caused by
                                                                                                   operational
                                                                                                   problems.
    All American Pipeline Company...  December 1997.....  CA (city not        540,000...........  Corrosion failure
                                                           reported to OPS'                        in pipeline.
                                                           database).
    Williams Pipeline Company.......  March 1997........  Des Moines, IA....  1.26 million......  Gasoline leak(s)
                                                                                                   from corrosion at
                                                                                                   a pipeline-
                                                                                                   related tank
                                                                                                   farm, causing
                                                                                                   extensive
                                                                                                   property damage
    Colonial, Exxon,                  October 1996......  Houston, TX.......  1.47 million......  Pipelines broke
      Texaco, Valero.                                                                              under pressure
                                                                                                   from severe
                                                                                                   flooding,
                                                                                                   spilling oil into
                                                                                                   the San Jacinto
                                                                                                   River.
    Koch Pipeline...................  August 1996.......  Lively, TX........  Gaseous release     Pressurized liquid
                                                                               from a pipeline.    butane escaped
                                                                                                   from a corroded
                                                                                                   section of the
                                                                                                   liquid pipeline,
                                                                                                   killing two
                                                                                                   teenagers.
    Colonial Pipeline...............  June 1996.........  Greenville, SC....  957,600...........  Diesel fuel
                                                                                                   spilled into the
                                                                                                   Reedy River,
                                                                                                   killing 35,000
                                                                                                   fish. Rupture
                                                                                                   caused by
                                                                                                   inadequate
                                                                                                   management
                                                                                                   controls and
                                                                                                   training.
    Colonial Pipeline...............  March 1993........  Reston, VA........  408,000...........  Fuel spilled into
                                                                                                   Sugarland Run, a
                                                                                                   tributary of the
                                                                                                   Potomac River.
                                                                                                   Water supplies in
                                                                                                   the area were
                                                                                                   shut down for
                                                                                                   several days,
                                                                                                   accompanied by
                                                                                                   air pollution.
    ----------------------------------------------------------------------------------------------------------------

        OPS data also show reported property damage from hazardous liquid
    pipeline releases averaged over $39 million in the 1990s, with an
    average property damage cost per incident of over $194,000 (median cost
    is $20,000). Based on an analysis by Battelle National Laboratory,\3\
    and EDF's analysis of OPS accident data for 1990-1998, it appears that
    no more than 20-30% of hazardous liquid pipeline releases are caused by
    ``outside forces,'' or entities sometimes beyond the control of
    pipeline companies. The most common causes of releases from hazardous
    liquid pipelines are corrosion, operational incidents, and material
    defects.
    ---------------------------------------------------------------------------
        \3\ Causes of Pipeline Incidents, Effect of the Aging
    Infrastructure On Incidents, and Areas of Technology Development,''
    Robert J. Eiber, Battelle National Laboratory, published in the
    National Pipeline Safety Summit, Newark, New Jersey, June 20, 1994
    proceedings, U.S. Department of Transportation, Office of Pipeline
    Safety.
    ---------------------------------------------------------------------------
        While there undoubtedly are some pipeline companies that are
    effectively preventing releases and protecting the environment, there
    are others that are not, as shown by OPS accident data. This situation
    is analogous to the environmental protection efforts by non-
    transportation companies, e.g., petrochemical companies, in the 1960s,
    prior to passage of the Clean Air Act, the Clean Water Act, and the
    Resource Conservation and Recovery Act in the 1970s. It took passage of
    these laws and subsequent development of regulations by the U.S.
    Environmental Protection Agency to ensure that laggard companies and
    plants met minimal levels of environmental protection. Just like those
    environmental laws, the Pipeline Safety Act of 1992 gave OPS the
    mandate to develop pipeline standards that protect the environment--OPS
    has not, however, issued any environmental protection regulations to
    date.
        Of particular significance and despite an October 1994
    Congressional deadline, OPS has not even proposed a rule under section
    60109 of the Pipeline Safety Act that identifies areas ``unusually
    sensitive to environmental damage'' if there is a hazardous liquid
    pipeline accident. OPS also was instructed by Congress to prescribe
    regulations by October 1995 requiring periodic inspections of pipeline
    infrastructure in such areas to ensure they have adequate integrity to
    continue operations. There is no excuse for OPS' complete failure to
    meet these deadlines.
        Additionally, OPS has an extremely poor record of enforcing
    existing and developing new safety requirements. On the enforcement
    side, the OPS web-site shows that the civil penalties OPS proposes to
    collect in 1997 and 1998 are less than half what the office proposed to
    collect in 1994 ($0.5 million in 1997-8, down from $1.14 million in
    1994). Because the penalties for violations and releases are likely to
    be so minimal, it frequently can be cheaper for pipeline companies to
    pay fines and cleanup costs than to prevent pollution.
        As for developing new safety standards, based on its investigations
    of pipeline accidents, the National Transportation Safety Board (NTSB)
    has recommended, but OPS has not implemented, the following changes in
    its hazardous liquid pipelines program: \4\
    ---------------------------------------------------------------------------
        \4\ ``Evaluation of Accident Data and Federal Oversight of
    Petroleum Product Pipelines,'' National Transportation Safety Board,
    NTSB/SIR-96/02, Adopted: January 23, 1996.

     require hazardous liquid pipeline operators to assess the
            adequacy of their pipelines to operate at maximum allowable
            operating pressures on a periodic basis (emphasis added);
     revise hazardous liquid pipeline regulations to include
            criteria similar to the regulations in place for natural gas
            pipelines to evaluate the adequacy of cathodic protection
            (i.e., a common type of corrosion protection) systems--first
            recommended by NTSB in 1987 and again in 1998 after the deaths
            of two teenagers in Texas in 1996;
     modify the hazardous liquid pipeline accident data collected
            in a manner that would allow OPS to perform methodologically
            sound accident trend analyses and to evaluate pipeline operator
            performance using normalized accident data.
        EDF research has identified several additional deficiencies in the
    OPS regulatory program which likely result in unnecessary environmental
    pollution. At a minimum, OPS needs to:

     establish performance standards for leak detection systems, so
            that each hazardous liquid pipeline utilizes adequate leak
            detection;
     address pipelines that transport liquefied gases (rather than
            the oil they previously carried), including notification to OPS
            and the public of the change in service and appropriate design
            and operating standards;
     require that pipeline breakout tanks, which store hazardous
            liquids and are an integral part of the transportation of
            hazardous liquids by pipelines, be designed and operated in a
            manner that prevents contamination of the environment (e.g.,
            requiring corrosion protection for all breakout tanks and
            attached piping, double-bottoms for new breakout tanks to
            contain leaks, etc.);
     require reporting of spills or leaks of at least one barrel
            (42 gallons) rather than 50 barrels, releases where
            estimated,property damages are at least $5,000 (as was true in
            the past) rather than $50,000, and leaks that pollute
            groundwater in addition to those that pollute surface water;
            and
     address the significant methane emissions from natural gas
            pipeline compressor stations, high-bleed pneumatic devices,
            pipeline maintenance, dehydrators, and fugitive emissions using
            existing technologies,\5\ as methane is a strong greenhouse gas
            that contributes to climate change.
    ---------------------------------------------------------------------------
        \5\ ``Opportunities to Reduce Anthropogenic Methane Emissions in
    the United States: Report to Congress,'' Office of Air and Radiation,
    EPA 430-R-93-012, October 1993.
    ---------------------------------------------------------------------------
        EDF research also has identified the Y2K computer and embedded chip
    problem as a significant issue for the pipeline industry. Gas and oil
    pipelines are highly computerized, with numerous embedded chips
    monitoring and controlling operations. Based on the latest data from a
    September 1998 governmental survey which includes responses from
    companies representing approximately 70% of oil pipeline deliveries,
    only 12-35% of the companies had completed Y2K compliance testing for
    their critical operations.
    The Federal Pipeline Safety Law
        EDF sees the need for four significant amendments to the current
    pipeline safety law:

    1. Remove the state preemption language;
    2. Require that OPS delegate enforcement for interstate pipelines to
            qualified state agencies;
    3. Add release liability provisions; and,
    4. Amend the citizen suit provisions to facilitate private enforcement
            actions.
        First, because states differ in their environmental protection
    needs and because the regulatory and enforcement records of OPS are
    inadequate as discussed above, EDF sees an urgent need for a change in
    section 60104(c) of the pipeline safety law to allow states to exceed
    federal safety and environmental protection standards. Such a change
    would enable states to address their need for more stringent safety and
    environmental standards whenever appropriate (e.g., more closely spaced
    valves to protect certain areas, increased or different inspection
    requirements, etc.), and would make the pipeline statute consistent
    with an aspect of the major federal environmental protection laws that
    works quite well. Notably, the language used for such a change should
    ensure that state standards are ``compatible'' with federal pipeline
    safety and environmental protection standards (the statute now contains
    such language for intrastate pipelines), so as not to inhibit
    transportation at state boundaries in any way.
        Second, the current pipeline safety statute needs amendment to
    ensure that qualified state agencies become the federal government's
    ``agents'' to inspect and enforce regulations for interstate pipelines.
    Like the preemption issue, this change allows states to step in when
    they find the efforts of the federal government to be inadequate. I
    understand that the Subcommittee Chair will receive a letter for the
    hearing record on this topic from City Attorney James Pates of
    Fredericksburg, Virginia.
        Third, EDF proposes that Congress add significant release liability
    provisions to the pipeline safety law, modeled on those in the Oil
    Pollution Act of 1990 (OPA), as a strong incentive to prevent releases
    and reduce their size. U.S. Environmental Protection Agency data show
    that spills over 200,000 gallons have been reduced by over 60% since
    OPA's enactment.\6\
    ---------------------------------------------------------------------------
        \6\ ``ERNS and OPA 90: Emergency Response Notification System
    (ERNS) Fact Sheet,'' Office of Solid Waste and Emergency Response, U.S.
    Environmental Protection Agency, EPA 540-F-97-012, April 1997.
    ---------------------------------------------------------------------------
        Last, section 60121, ``Actions by private persons,'' needs to be
    amended to facilitate private enforcement. First, section 60121 only
    allows citizens to file suit for violations of OPS requirements, not
    for posing ``imminent and substantial endangerment to health or the
    environment,'' as is allowable under section 7002(a)(1)(B) of the
    Resource Conservation and Recovery Act of 1976 (RCRA). This change
    would enable those affected by pipeline releases to file suit even if
    the release occurred as a result of regulatory gaps. Second, section
    60121 currently prevents citizens from proceeding with litigation if
    OPS is pursuing administrative proceedings, and should be amended to
    allow citizens to proceed unless OPS or the appropriate state authority
    ``is diligently prosecuting a civil or criminal action in a court of
    the United States or a State'' (emphasis added, from RCRA section
    7002(b)(1)(B)), as environmental laws allow. Third, the statute should
    permit citizen plaintiffs to seek imposition of civil penalties on
    violators of requirements rather than merely injunctive relief, to
    increase the incentive for compliance.
        As for implementation issues associated with the existing pipeline
    safety statute, EDF continues to have significant concerns with the
    risk management provisions in section 60126, and with the extraordinary
    cost-benefit analysis procedures added to the law when it was last re-
    authorized in 1996. The following subsections describe EDF's concerns.
        Risk Management Demonstration Projects. Since enactment of the 1996
    law, OPS has spent significant resources on the Risk Management
    Demonstration Project program, which come at the expense of OPS' other
    regulatory development and enforcement responsibilities. EDF also is
    concerned that the public gains little from this program because it
    (and all the involved states) are not part of the decision-making
    process and do not have access to the risk information identified by
    the companies involved.
        Additionally, OPS may be approving projects for companies that have
    less than adequate safety and environmental records, and OPS does not
    have a plan for how the lessons learned will translate to the industry
    as a whole. While it may be argued by the companies involved and OPS
    that the program is the best way to make company-specific regulatory
    decisions, without an enormous infusion of resources to OPS and the
    state pipeline agencies, such an individualized oversight program could
    not possibly be carried out for the over 3,000 operators of gas and
    hazardous liquid pipelines with their approximately 2 million miles of
    pipelines.
        During the two year period of this program, OPS only has approved
    four of these projects and granted only one regulatory exemption. To
    the public, it appears that this program might be useful in building
    business-to-government relationships, but it in no way provides the
    public with additional information about pipeline risks, nor does it
    demonstrate problems with existing standards that need to be overcome
    through an individualized process. In fact, because companies can
    undertake nearly all these actions without the formal involvement of
    OPS (e.g., implementing environmental management systems), it is
    unclear why this program even needs to be part of the statute.
        Cost-Benefit Analysis Procedures. Cost-benefit analysis is a
    limited and imperfect tool. Costs tend to be overstated and benefits
    understated for a variety of methodological reasons, and such analyses
    are very resource-intensive to conduct. In light of these problems, EDF
    has three specific and ongoing concerns with the provisions in the
    current law: 1) There is no dollar threshold in the law for regulatory
    costs under which these complex, uncertain, and time-consuming analyses
    do not have to be performed, thus providing limited benefit in some
    cases while using extensive OPS resources; 2) The statutory language
    places far too much weight on this inherently limited and uncertain
    process, requiring its use as a decision rule rather than as a decision
    tool. In other words, it requires that any new standard demonstrate
    that benefits justify costs, so each new regulation can be interminably
    litigated on these grounds; and 3) Despite EDF's efforts, OPS staff
    have not included language covering environmental benefits into any of
    its draft documents on performing cost-benefit analyses.
    Recommendations for Congressional Action
        Given the increasing trends for oil pipeline releases, OPS's
    excessive focus on Risk Management Demonstration projects at the
    expense of Congressionally-mandated regulatory development and
    enforcement, and the inability of states to act when the federal
    government fails in its responsibilities, EDF strongly urges Congress
    to:

    1. Conduct an oversight hearing on OPS' performance, including how it
            compares to state performance on intrastate pipelines,
    2. Request that the General Accounting Office study the resources OPS
            is devoting to risk management versus other activities, OPS'
            enforcement record compared to that of other federal regulatory
            agencies, OPS' actions with respect to National Transportation
            Safety Board recommendations compared to the actions of other
            transportation agencies to NTSB recommendations, and the
            ability of states now and in the future to take over some of
            OPS' current responsibilities.
    3. Amend the pipeline safety law in the manner discussed in the
            previous section.
        Thank you very much for inviting me to testify today. I hope this
    information proves helpful in your deliberations.

        Mr. Barton. Thank you, and it has proved helpful.
        We will now recognize Mr. Richard Wilson. Again, your
    testimony is in the record; it is in its entirety. And we will
    recognize you for 5 minutes.

                     STATEMENT OF C. RICHARD WILSON

        Mr. Wilson. Thank you. Mr. Chairman, it is my impression
    that your subcommittee desires to take an earlier and effective
    look at the reauthorization of pipeline safety standards, and I
    wanted to put right up front, with respect to the comment of
    the oil pipeline industry, that we support your interest in an
    expedited reauthorization of the pipeline safety program.
        Recent pipeline safety legislation, which includes the One-
    Call bill last year and reauthorization in 1996, has been
    highly success-

    ful in broadening the scope of protection and increasing the
    resources applied to safety in our business.
        My remarks today are presented on behalf of the Association
    of Oil Pipelines and the American Petroleum Institute. These
    two organizations represent the vast majority of the oil
    pipeline industry.
        I am Dick Wilson, vice chairman of Buckeye Pipeline
    Company, and my purpose today is to give you the perspective of
    a chief operating officer with over 10 years experience in my
    company and my impression of the attitudes and the opinions of
    my industry colleagues.
        The oil pipeline industry delivers over 700 million gallons
    of petroleum fuel per day. In terms of gasoline alone, this
    represents more than 25 million vehicle fill-ups per day. This
    volume of petroleum is based on the demand of the American
    people. Our families depend on petroleum for mobility, for
    heat, and the very strength of the U.S. economy.
        The oil pipeline industry has a vested interest in safety.
    No release of petroleum into the environment is acceptable.
    Although we look to OPS as a yardstick for our performance, the
    responsibility is ours.
        Recently, the industry has voluntarily undertaken a
    comprehensive review of data concerning pipeline accidents and
    spills to better understand our performance. We cannot manage
    what we don't know.
        One of the things that we would like to have is even better
    data. Accordingly, the oil pipeline industry has begun a new,
    aggressive program of tracking safety and environmental
    performance. Under this program, and among other things, the
    industry will track releases down to the level of five gallons
    per occurrence.
        Given the cost of failure, this industry has a vested
    interest in positive performance, adhering to standards, and
    pushing its own envelope for the installation of safe equipment
    and operating procedures.
        I have been at spill sites; I have been appalled at their
    consequences. I have talked to the people, and I have paid the
    bills. We want no more of it.
        Thank you.
        [The prepared statement of C. Richard Wilson follows:]
        Prepared Statement of C. Richard Wilson, Vice Chairman, Buckeye
     Partners, L.P. on Behalf of the Association of Oil Pipe Lines and the
                          American Petroleum Institute
        I am C. Richard Wilson, Vice Chairman of Buckeye Partners, L.P.
    Buckeye operates, through wholly owned subsidiaries, 3,500 miles of
    pipelines carrying refined petroleum products, including gasoline, jet
    fuel, diesel fuel, heating oil and kerosene. Our facilities connect
    delivery locations in Illinois, Indiana, Michigan, Ohio, Pennsylvania,
    New York, New Jersey, Connecticut and Massachusetts. I am here today
    representing the Association of Oil Pipe Lines and the American
    Petroleum Institute.
        The Association of Oil Pipe Lines (AOPL) is an unincorporated trade
    association representing 57 common carrier oil pipelines companies.
    AOPL members carry nearly 80 percent of the crude oil and refined
    petroleum products moved by pipelines in the United States. The
    American Petroleum Institute (API) represents over 400 companies
    involved in all aspects of the oil and natural gas industry, including
    exploration, production, transportation, refining and marketing.
    Together, these two organizations represent the vast majority of the
    U.S. pipeline transporters of petroleum and petroleum products.
                                  introduction
        Pipeline safety and pipeline integrity are top priorities for our
    industry. The emphasis on safety and integrity is woven into the fabric
    of our corporate decision making and the industry-driven initiatives
    undertaken by our trade organizations. This emphasis has made pipelines
    the safest mode for moving petroleum and petroleum products and one we
    are constantly striving to make safer.
        We understand that the government has a duty to the public to
    assure the safety of the transportation systems in this country. Thus,
    we appreciate the work of this Committee and the important and positive
    role played by the Department of Transportation's Office of Pipeline
    Safety (OPS) in providing this assurance. We especially appreciate
    OPS's ability to bring industry and other affected interests together
    to work cooperatively to raise the overall level of safety. OPS has
    been an ally in our pursuit of excellence, particularly in the last
    three years.
        However, it is important for the Committee to understand that our
    industry can not depend solely on the federal government or the Office
    of Pipeline Safety to tell us how to operate our pipelines in a safe
    and environmentally responsible manner. Compliance with OPS rules and
    regulations is only a subpart of our constant concern with effective
    management of safety and environmental risks. We view ourselves as the
    stewards of our industry. We take responsibility for operating our
    pipelines safely and with respect for the environment. If you think
    about it, it should be obvious that this would be the case. We work in
    the oil pipeline industry, but we are also citizens. We care about the
    environment. Like the rest of the country, our sensitivity to our
    environmental impact has grown steadily over the years. We are
    determined to operate the safest possible pipeline systems.
        A breach in pipeline integrity is a fundamental threat to our
    stewardship of this enterprise and its assets. A pipeline accident is
    expensive, and we quickly lose the ability to influence the cost.
    Further, a pipeline accident is enormously disruptive. It threatens the
    loss, for an unknown period of time, of our ability to control our
    business. We simply must avoid these situations. We would do our best
    to avoid them under any program of safety regulation.
                                    summary
        With that introduction, I'd like to leave you with four principal
    points in my testimony today:

    1. The public-private partnership approach of the OPS is working and
            should be continued and strengthened.
    2. The OPS Risk Management Demonstration program is successful and
            promises safety and environmental results exceeding those
            available from existing regulations. Congress should find a way
            to allow risk management to be more broadly adopted in the OPS
            pipeline safety program.
    3. The oil pipeline industry is moving forward with initiatives of its
            own to enhance safety and environmental protection results.
    4. The current OPS program is making good progress under current law
            and at existing funding levels, which should be extended in
            real terms.
    Congress and OPS should continue the good work already in progress and
            strengthen the public-partnership in our federal pipeline
            safety program.
        Congress has done an excellent job with the two most recent pieces
    of pipeline safety legislation that have become law. Both these efforts
    had strong bipartisan support. Most recently, in the 105th Congress,
    the Comprehensive One-Call Notification legislation was enacted as part
    of the Transportation Equity Act for the 21st Century. The One-Call
    provisions you enacted address the leading cause of large volume
    releases from pipelines--inadvertent damage during excavation. The law
    is less than a year old, but it has already brought together a broad
    spectrum of public and private stakeholders to deal with this problem.
    The participants, working on a voluntary basis, are developing a
    comprehensive report on best practices in underground damage
    prevention. These participants come from a number of industries and
    jurisdictions, many of whom are not subject to direct federal
    regulation. OPS is using an open, consensus process to create a
    government-private partnership that has the affected groups checking
    their differences at the door and working together. This is an
    excellent initiative, and you should be proud of it.
        The willingness to work together we are seeing in implementing the
    One-Call bill follows naturally from its predecessor, the Accountable
    Pipeline Safety and Partnership Act of 1996. Both these laws stress
    cooperation between government and industry rather than command and
    control. Since enactment of the 1996 amendments a regulatory logjam has
    broken. Rulemakings that were languishing have moved forward. New
    initiatives are making progress rather than bogging down in fights
    among constituencies. We believe the record shows that the cooperative
    model works. The 106th Congress should continue to support and
    strengthen partnership and cooperation in the federal pipeline safety
    program.
    The Risk Management Demonstration program you authorized in 1996 is a
            success, and the 106th Congress should find a way to permit
            application of these powerful principles more broadly in the
            program.
        Four oil pipeline risk management demonstration projects are in
    operation or near approval. Each project is described in the testimony
    below. OPS is carrying out these projects in a completely open fashion.
    Anyone with access to the internet can find all the detail they want on
    the OPS website http://ops.dot.gov under PRIMIS (Pipeline Risk
    Management Information System). The bottom line is that these are good
    nuts-and-bolts projects that offer the regulator the chance to really
    learn how pipeline systems operate and what the risks are. All are
    providing enhanced protection above that required by existing
    regulations. We believe these improvements could be spread throughout
    the OPS program with your help. We also believe systematic and
    widespread recognition by federal regulators of risk management would
    lead to a far more effective and efficient regulatory program.
    The oil pipeline industry is moving forward with initiatives of its own
            to enhance safety and environmental protection results.
        Our industry has a number of self-generated initiatives aimed at
    raising the performance bar for our companies. One such program is a
    joint AOPL/API initiative on environmental protection launched last
    year. We have undertaken a comprehensive review of available federal
    data on past pipeline spills to determine what this data can teach us
    about pipeline accidents. We hope to mine this database to better
    understand what determined past safety and environmental performance.
    Looking forward, our companies have begun an ambitious program to
    voluntarily report to API internal data that will focus on a wider
    range of accidents and the causes and frequency of smaller spills--
    including those that are not required to be reported to either the
    federal or state governments. You cannot manage what you don't measure.
    We are investing resources to create a more comprehensive database
    because we believe we will be able to use it ourselves to help our
    companies to reduce the number, size and impacts of spills.
    We do not recommend major change in the pipeline safety program in the
            106th Congress. We just need to keep the progress coming in
            what is basically a well-run program.
        We pay for OPS through user fees. We think the current level of
    authorization for the OPS program is about right and should be extended
    in real terms for at least four more years.
                                   discussion
        With that summary, the remainder of my testimony will further
    describe the interaction between the pipeline safety program and our
    companies' own programs to manage safety and environmental risks. I
    will also include remarks on our efforts to address the Y2K issue.
                      cooperation between industry and ops
        Under current law, current practice and under the current
    management at the Department of Transportation, the Office of Pipeline
    Safety is a positive force in our efforts to ensure safety and
    protection of the environment in oil pipeline operations. Often working
    in consultation with OPS, the industry has developed programs, training
    and operational standards designed to avoid spills. The Office of
    Pipeline Safety has recognized the effectiveness of these standards by
    adopting and incorporating them into OPS regulations.
        It has been very helpful to have the Office of Pipeline Safety
    working with us in our safety efforts. OPS has been willing to provide
    guidance and recommendations on how to make industry's programs more
    effective. Congress facilitated this cooperative approach with the
    changes made to the Pipeline Safety Act through the 1996
    reauthorization. We are here to congratulate you on these changes and
    to tell you that they are working. The changes you made have had a very
    positive effect on safety and environmental protection.
        The 1996 reauthorization added two important new elements to the
    pipeline safety program. First, it enhanced the effectiveness of
    pipeline safety regulation by requiring new safety regulations to
    undergo a risk assessment and cost benefit analysis based largely on
    President Clinton's Executive Order 12866. Second, Congress authorized
    OPS to carry out a Pipeline Risk Management Demonstration Project.
    Under this program, OPS could approve new company-designed processes to
    manage safety and environmental risks. As a result of an Administration
    directive, these risk management processes would be designed to achieve
    superior results, significantly exceeding the level of safety that
    would be gained by compliance with existing standards. The goal was to
    enable the pipelines to use risk management tools to address the
    greatest threats to pipeline integrity on a specific segment of
    pipeline and to learn from these efforts how to better manage risks
    across pipeline systems.
                           impact on ops regulations
        The ideal of the risk assessment and cost benefit analysis is to
    achieve smarter, more effective regulations at a lower cost. In
    addition, Congress encouraged OPS and its stakeholders to work together
    to develop alternatives to traditional regulatory rulemaking by waiving
    the risk assessment and cost benefit requirement if a rule

    --is developed through negotiated rulemaking,
    --is a consensus rule,
    --adopts industry standards, or
    --is adopted with the consent of OPS technical advisory boards.
        To their credit, OPS seized this opportunity to reach out to all
    stakeholders, including pipelines, on a number of regulatory mandates
    that had been languishing. By working together with the stakeholders
    using these alternatives to traditional rulemaking, a lot of good work
    has been done and a veritable logjam of initiatives that will promote
    safety and environmental protection has broken loose. More importantly,
    the stakeholders like the results. And they are good results.
                                    examples
    Excavation Damage Prevention
        One of the greatest risks facing pipelines is encroachment from
    expanding urban populations. Pipelines laid in the '50s and '60s in
    largely rural areas are now part of our suburban landscape. The largest
    source of large volume pipeline releases are accidents caused by
    construction crews digging into the ground and inadvertently damaging
    the pipe with a mechanized auger, post hole digger, backhoe, or other
    excavation equipment. Even a nick in the specially coated pipes can
    lead to corrosion causing leaks years down the road. Despite
    conspicuous pipeline markers and regular mailings by pipeline
    operators, many people are not really aware of their pipeline
    neighbors. In an effort to educate communities about pipelines, the OPS
    and industry have worked jointly on a more effective outreach effort.
        The OPS and industry sponsored damage prevention quality action
    team (DAMQAT) included stakeholders from OPS, the pipeline industry,
    the states, the contractor community, the insurance industry and the
    general public. They have worked together to develop a new campaign
    aimed at increasing awareness of pipelines in the excavator community
    and to increase community awareness of the presence of pipelines. Most
    pipeline operators already significantly exceed the minimum
    requirements for public education programs. We recognize the value of
    an educated citizenry both as pipeline facility neighbors and sources
    of valuable information about activities along pipeline right-of-ways,
    including potential or actual emergencies. The DAMQAT educational
    program is testing new outreach methods and messages. The program is
    being pilot tested in three states--Virginia, Georgia and Tennessee.
    Both pre-program and post-program surveys are being conducted to help
    judge the effectiveness of the program. While the pilot program has not
    yet run its full term, calls to damage prevention centers in the pilot
    states are up and incidents are down.
    Mapping Initiative
        OPS and industry conducted a similar outreach effort to develop a
    national pipeline mapping system. OPS brought all the stakeholders to
    the table to form the Mapping Quality Action Team. The Mapping Team
    first developed requirements for a system of national maps useful to
    multiple members of the federal family without costing any party an
    inordinate amount of money. Using standards built on those of the U.S.
    Geological Survey, the Team developed standards for national and state
    repositories of pipeline maps and other location information. The
    system, when complete, will show the location and selected attributes
    of all major pipelines. OPS then intends to add data layers to the
    mapping system. These layers could include population, unusually
    sensitive areas, natural disaster probability and high consequence
    areas, hydrography, and transportation networks.
    Unusually Sensitive Areas
        In implementing its responsibilities to identify areas along
    pipeline rights-of-way that may be especially sensitive to oil in the
    environment, OPS brought all stakeholders together to develop a set of
    guiding principles. These areas include drinking water resources and
    significant ecological resources. OPS conducted a series of meetings
    and workshops to develop criteria to identify those resources that
    constitute an ``area unusually sensitive to environmental damage''
    (USA). The pipeline industry helped to sponsor these workshops. The OPS
    was successful in developing criteria for determining a drinking-water
    USA and has a proposed set of criteria for ecological resources.
    Because several federal agencies have oversight over the environment, a
    consensus definition of USAs has been difficult to achieve. It is
    particularly difficult to predict the impact such a definition might
    have once it is in place.
        In an effort to move the process forward, and to test the
    definition developed through the workshop process, the pipeline
    industry, under the umbrella of the API, has developed an industry
    guidance document on the definition and its initial use. This guidance
    document will be published in the next few months and industry will
    begin a voluntary effort to use the definition and develop an
    understanding of its impact on risk assessment and risk management
    efforts. Feedback will be shared with OPS as it develops the USA
    definition further and incorporates the definition into regulations.
    Operator Qualification
        Little progress was made on DOT's operator qualification rule
    until, following the 1996 amendments, the OPS initiated a negotiated
    rulemaking. OPS brought all stakeholders, including interstate and
    intrastate carriers, state safety officials, unions representing
    pipeline workers and standards organizations to the table for a
    negotiated rulemaking. A proposed rule was issued last October and a
    final rule is expected shortly. As a result of the negotiation process,
    a good result was achieved in much less time than a traditional
    rulemaking takes.
    Corrosion Rulemaking
        Last August, the OPS initiated a consensus rulemaking with the
    National Association of Corrosion Engineers, pipelines, state safety
    inspectors and the public. By December, the group had developed a draft
    rule that was widely circulated. Based on comments received, the group
    met again and is expected to have a proposed rule by mid-year. To move
    from initiation of the rulemaking process to a proposed rule with buy-
    in from the major stakeholders in six months demonstrates how far the
    pipeline safety program has come. It shows how effective the new
    approach has been to moving the program forward to achieve an even
    greater level of safety in what has been a very effective program.
                     risk management demonstration program
        In an era when every dollar must count to its fullest potential,
    all of our companies have moved towards use of comprehensive risk
    management systems that continuously monitor the thousands of factors
    affecting pipeline operations and integrity to focus on the greatest
    risks. Many of these efforts go way beyond anything being requested or
    required by our safety partners in state and federal government.
        The Office of Pipeline Safety has supported and encouraged these
    industry initiatives. Congress too recognized the potential
    effectiveness of these programs when it authorized the risk management
    pilot project in the 1996 reauthorization act. Four oil pipeline risk
    management demonstration proposals to the Department of Transportation
    are approved or are near approval. Each of these is summarized below.
    Details are available on the OPS website http://ops.dot.gov under
    PRIMIS (Pipeline Risk Management Information System).
              oil pipeline risk management demonstration projects
    Equilon Pipeline (formerly Shell Pipeline)
        This project was originally submitted by Shell Pipeline and has
    been continued after Shell and Texaco joined to form Equilon in 1998.
    The project would develop and evaluate a pilot Risk Management Program
    for Equilon with the goal of future expansion and integration company-
    wide. The 4-year demonstration project embodies a multi-faceted
    approach to enhancing Damage Prevention and Emergency Response on both
    a 260-mile segment of a 502-mile CO2 pipeline from Cortez, CO to Denver
    City, TX and a 205-mile segment of a 250-mile pipeline transporting
    ethylene from Deer Park, TX to Napoleonville, LA. Consistent with
    improved management of the risk of external damage, heightened
    emergency preparedness, and appropriate technical assurance, OPS will
    allow Equilon to operate a 25-mile por-

    tion of the CO2 pipeline demonstration segment at a slightly higher
    pressure, achieving an approximate 20% increase in throughput, without
    constructing a new mid-line pump station.
    Mobil Pipe Line
        Mobil will work with OPS to demonstrate application of Mobil's
    Environmental, Health and Safety Management System to achieve enhanced
    release prevention and tank integrity at Mobil's crude oil storage
    facility at Patoka, IL. OPS will get first-hand experience with how
    aboveground storage tank standards address the most important risks at
    tank facilities. These same standards are proposed for adoption into
    the pipeline safety regulations.
    Phillips Pipe Line
        The project will use Phillips' risk management system to enhance
    protection in connection with all company and third-party excavations
    along a 60 mile-long segment of both a 12'' and an 18'' refined
    products pipeline connecting Phillips Sweeny Refinery to its Pasadena,
    TX terminal.
    Chevron Pipe Line
        The goal of this project is to demonstrate that application of
    Chevron's risk management program to two 330-mile-long 8'' pipelines
    provides superior protection for the system. The Salt Lake Products
    Pipeline System carries refined products from Salt Lake City, UT to
    Boise, ID.
    Each risk management demonstration project provides enhanced protection
            above that provided by existing regulations.
        The Chevron, Phillips and Mobil projects involve no exemption from
    existing regulations. Equilon's plan provides for an exemption from
    existing OPS regulations to accomplish the pressure increase on the 25-
    mile portion of the CO2 line. Equilon and OPS both believe the risk
    control activities proposed under the project provide superior safety
    for both lines.
        The primary benefit of these projects is the knowledge gained by
    OPS about how to achieve protection in excess of that provided by
    current regulations in specific real world situations. For example, in
    the Mobil project, the OPS will learn lessons about storage tank
    standards that can benefit the entire program when standards are made
    final. An additional benefit for our companies is that we obtain
    validation from our regulators that the application of the risk
    management techniques we use and believe in provide enhanced protection
    according to the regulators' metrics.
                                reauthorization
        The liquid industry believes the Office of Pipeline Safety has an
    excellent program. Since the program is primarily funded with user
    fees, this is not lightly stated. The industry believes the current
    level of staffing is appropriate for the responsibilities of that
    office and support continuation of the program at the present level.
        The risk assessment and cost benefit analysis and the regulatory
    alternatives created under the last reauthorization have revitalized
    the pipeline safety program and offer the promise of making it much
    more efficient and effective in using resources made available to OPS.
    The regulators are talking to all parties affected and the response has
    been overwhelming. Communication has become a real dialogue that is
    truly moving the safety program forward.
        The risk management demonstration project is still in a fairly
    nascent stage but initial results appear to be positive. The OPS has
    been cautious in moving the program forward, which is probably
    appropriate at this stage. As the public becomes more comfortable with
    the program and the parties learn more about each other, we expect the
    benefit to far exceed the cost. We need to continue these good efforts.
        The bulk of the OPS program is funded through user fees paid by the
    gas transmission and liquid pipeline industry. The user fee is assessed
    based on mileage of pipeline. We have a keen interest in keeping the
    OPS program as efficient as possible. The current program is working
    well. The oil pipeline industry supports continuing the current funding
    levels in real terms.
                                 y2k compliance
        As the world moves towards the year 2000 and concern grows over the
    ability of the industrial community to function due to the ``millenium
    bug,'' the pipeline industry and the OPS have been in the forefront in
    addressing the problem. Last summer, the President's Council of Y2K
    Compliance tasked the Federal Energy Regulatory Commission with the job
    of assessing the oil and gas industries' state of readiness. By August,
    the industries, the FERC and the OPS had developed and agreed upon a
    survey best aimed at achieving that answer. John Koskinen, who leads
    the Presidents Council, has referred to the oil and gas working group
    as the Council's best example of a successful working group. Working as
    one and sharing mailing lists to achieve the greatest level of
    dissemination, the industry survey went out. We now have two quarters
    of the survey under our belt. The results can be viewed on the website
    http:// www.api.org. The bottom line for us is that we believe that our
    survey results, coupled with what we know intuitively about our own
    industry, justify confidence that oil pipelines will meet the Y2K
    challenge. However, this is not a cause for complacency. Rather, we
    need to accelerate efforts to be sure that the interdependent systems--
    including, for example, telecommunications, electric power, police and
    fire protection, finance and other services we take for granted--are
    simultaneously Y2K compliant.
                                    closing
        I want to thank the Subcommittee for moving the reauthorization of
    this vital program so expeditiously. We want to work with you to
    achieve a successful, bipartisan reauthorization. The public-private
    partnership for safety and environmental protection developed under the
    1996 amendments to the Pipeline Safety Act has made valuable
    contributions to public policy. If we work together we can make these
    benefits much more widely available.

    [GRAPHIC] [TIFF OMITTED] T5149.013

    [GRAPHIC] [TIFF OMITTED] T5149.014

        Mr. Barton. Thank you, Mr. Wilson.
        The Chair will now recognize himself for 5 minutes in the
    question period.
        Mr. Zurcher, I believe you were one of the ones who talked
    about the user fee or the assessments that are made on the
    pipelines to fund some of these programs. I was going to ask
    this question to Ms. Coyner but my time expired. Could you
    explain the formula that is used to determine the assessment
    that is made on your pipeline and others like you?
        Mr. Zurcher. Yes, sir, thank you.
        Every year the Office of Pipeline Safety determines what
    their budget requirements are. Every year all transmission
    pipelines send in a total mileage statement, how many miles
    they operated during the year. DOT takes their total budget
    amount, divides it by the mileage, and then they assess to the
    transmission industry the transmission individual companies'
    proportion. Last year it was about $70 per mile to fund OPS's
    budget. But it is funds that are paid for by the transmission
    industry.
        Mr. Barton. Okay. Is there any input before the fact on
    what their budget requirements are?
        Mr. Zurcher. Not officially, sir.
        Mr. Barton. Not officially.
        Well, is the industry generally satisfied with that
    approach?
        Mr. Zurcher. I would like to say that the transmission
    industry is very pleased right now with the level of programs
    that OPS has undertaken, as well as their level of staffing.
        Mr. Barton. That could not be 5 minutes.
        As slow as I speak even, it couldn't be 5 minutes. I think
    we got the last of Mr. Wilson's 5 minutes.
        Go ahead.
        Mr. Zurcher. I just wanted to say that our industry is very
    pleased with the level of programs that OPS has undertaken and
    with their current level of staffing.
        Mr. Barton. Well, is there any discussion about an
    alternative funding mechanism other than what you just
    described to me?
        Mr. Zurcher. We have on numerous occasions discussed other
    funding mechanisms. Unfortunately, the administration of most
    of the alternatives does not necessarily make it feasible. The
    other alternative would be to go back to general revenues.
        Mr. Barton. Okay.
        Mr. Cook and Mr. Wilson, there has been some discussion at
    the earlier panel about the demonstration program that has been
    underway. The groups that you represent, are they reasonably
    satisfied with the demonstration program as it is being
    implemented? And, if so, is there any interest in expanding
    those demonstration programs?
        Mr. Cook. If I may, I will go first, for LDC's, local
    distributions companies have not been a part of the
    demonstration projects to date, but we are very interested in
    it, both as Washington Gas, individually, plus, the LDC
    industry's 88 member companies are also very interested.
        Mr. Barton. Okay.
        Mr. Wilson?
        Mr. Wilson. Both of my associations are very supportive of
    going forward. And I know there has been a lot of talk about
    trying to define either what these are, or what they are
    supposed to do, or how they work. I would point out that these
    programs and the risk management principal, in general, merely
    attempt to use practical and logical thinking by placing the
    maximum effort where reasonable people think the most need is.
    And that is all these programs are doing; they are in a
    formative stage. I think they are exciting. We anticipate that
    they will appear to be useful in connection with future
    legislation.
        Mr. Barton. Okay.
        Ms. Epstein, first of all we appreciate you being here, and
    the EDF being a part of our hearing. I think you can go back
    and report that even somebody like me who probably has a
    ``zero'' rating with your association is open-minded and is
    going to work with you.
        I read your association's recommendations for congressional
    action. First one is for an oversight hearing, and I am not the
    chairman of the Oversight Subcommittee anymore, but I
    personally think that would be a positive thing to do, and I
    will encourage Chairman Upton to put that on his agenda.
        Ms. Epstein. Thank you.
        Mr. Barton. You are welcome.
        Your second recommendation, I am intrigued by it. You want
    a General Accounting Office study, the resources the OPS is
    devoting to risk management versus other activities and also a
    study of their record as compared to State transportation
    agencies. Have your association, your organization, or others
    of similar views had discussions with OPS on that
    recommendation?
        Ms. Epstein. I have raised concerns with OPS about the
    resource issue on the risk management projects because what I
    see is an enormous amount of resources for a lot of activities
    that could have been undertaken by companies without any sort
    of legislation or Federal involvement. And so my question is,
    what is the overall industry and the public getting out of
    these individualized projects, given all the amount of
    resources?
        Mr. Barton. But you have not really had any in-depth
    discussions or series of discussions?
        Ms. Epstein. No, not yet.
        Mr. Barton. Okay.
        Well my time has expired. I will have some additional
    questions for the record.
        I am going to recognize Mr. Shimkus for 5 minutes.
        Mr. Shimkus. Thank you, Mr. Chairman.
        Mr. Zurcher, when we were talking about the cost and how it
    is calculated, you do admit, though, that the cost really goes
    all the way down to the consumer who pays for the, you know,
    the fuel as it comes to the home, because that cost is passed
    on?
        Mr. Zurcher. Yes, sir, in our rates that cost is passed on.
        Mr. Shimkus. I always like to give the consumer credit.
        Ms. Epstein, a lot of your testimony was based upon the
    liquid fuel issue. Do you have any specific comments on the
    natural gas side?
        Ms. Epstein. Well, gas typically has fewer environmental
    issues than the liquid pipeline. And I have also, in my
    experience, seen that the requirements and standards on the gas
    side tend to be a little more specific and stringent than on
    the liquid side. Therefore, there were fewer issues that our
    organization has had.
        Mr. Shimkus. So, your organization is not as concerned with
    natural gas and the way that OPS is managing it through the
    States, the natural gas side of the pipeline?
        Ms. Epstein. At this point, that is correct.
        Mr. Shimkus. Okay, good.
        I want to fall back--and Mr. Holmes has left, but I want to
    address the issue on this regulation debate that we had with
    Congressman Norwood earlier, because we really didn't get an
    answer from Mr. Holmes who kind of chuckled, which made me
    think on the regulation of pipelines and the Federal guidelines
    which are--Ms. Epstein, you mentioned that the State cannot add
    to the Federal guidelines for interstate facilities?
        Ms. Epstein. That is right.
        Mr. Shimkus. But they can add to the regulations for
    intrastate lines?
        Ms. Epstein. Right. In fact, I spoke to the Pipeline
    Association for States, NAPSA, about this particular issue and
    what they are doing at the intrastate level. And there are some
    things that are being done that go beyond the Federal
    requirements. And I raised the question about would it be
    desirable to have something similar for interstate pipelines.
        Mr. Shimkus. Let me ask the spokesmen for the industries:
    Do you see differing regulations in the interstate versus the
    intrastate lines?
        Mr. Zurcher. I will take that question, if you don't mind,
    sir.
        For interstate transmission pipelines dealing with natural
    gas, there is a few things that happened. Prior to 1968, States
    did have jurisdiction over interstate facilities. The
    regulations were very varied, and Congress saw fit in 1968 to
    pull that jurisdiction away from the States for the interstate
    operators. There are a number of issues that come up and so
    forth, but one of the biggest ones is that a State somewhere on
    the upstream side could impose regulations that add significant
    cost, and the person receiving the gas on the downstream side
    would not have an opportunity to object to those costs. So as a
    long-haul interstate transmission company, in my opinion, sir,
    it is much better to leave it with Federal oversight.
        Mr. Shimkus. And I have--and I am sure if members evaluate
    their districts--I am just amazed at the pipelines that run as
    much as I drive. And it is probably the ninth wonder of the
    world when you figure all that stuff that is underneath the
    ground.
        I guess the last question I really want to get answered is,
    are there regulations at the OPS that, at the users' level,
    that you see are not productive and are costly?
        Mr. Holmes really didn't want to answer that question. And
    I guess I would like to throw that question open to the people
    in industry. And then if I have time, Ms. Epstein, if you want
    to be a responder to that, then I will finish with that.
        Mr. Zurcher. I would be happy----
        Mr. Shimkus. Why don't we just go--yes. Mr. Zurcher, why
    don't you start first. Or whoever wants to jump in first.
        Mr. Zurcher. Your question is, as I understand is, are
    there regulations that may not be appropriate in today's
    environment? Very difficult question. Pipeline facilities were
    designed over many years; they were constructed over many
    years. They have very many different operating parameters that
    surround them. Our biggest problem is that the regulations are
    not necessarily bad or inefficient or anything like that, it is
    just that they do not provide much flexibility. And I think
    that is our key point, more flexibility. I would liken it to an
    automobile that you bought in 1968 where you had to do a tune-
    up on it once a year. But I just saw Chrysler advertise a new
    vehicle that you can go 100,000 miles without a tune-up. Well,
    we shouldn't be stuck with a 1968 tune-up once a year.
        Mr. Barton. I want everybody to have an opportunity to
    answer Mr. Shimkus' question.
        Mr. Cook. Being a local distribution company, we feel that
    it is imperative that, with the reauthorization, some of the
    things that are in this bill are extremely important that focus
    dollars and attention where the risks are. So risk assessment--
    and I mention that LDC's would like to be involved in these
    kind of demonstrations, because on a daily basis, as an
    example, in my business and what I am accountable for, which
    deals with complying with the codes, we make our decisions
    based upon risk assessment every day. Where do you put your
    dollars? You put them where you get, you know, the most out of
    the money you invest.
        When you have rulemaking that is negotiated, it is far
    better and more successful in getting industry-wide cooperation
    and compliance, and it is acceptable. I mean it is not throwing
    money away. And when we have performance-based type
    regulations, it is much better than specific regulations that
    tell you how many times you crank a nut tight, if you know what
    I mean.
        So I think this reauthorization of this bill goes a long
    way to continue and improve the safety.
        Ms. Epstein. And I don't actually disagree with what the
    two gentlemen to the right of me said.
        We are in favor of flexible but accountable requirements so
    that performance is measured and performance is on the track of
    improvement. If it is not, our position is always that you need
    to go back and see why that is. And we believe in the hazardous
    liquid pipeline area, there are some serious deficiencies in
    the current regulations, and many of those have been pointed
    out by NTSB.
        Mr. Wilson. Let me say, for the sake of unanimity, that I
    agree with most of what has been said, too. I think I am going
    to take exception with the notion that there are great
    deficiencies. But moving on, I would remind that the vast
    majority of oil pipeline movements, as well as trunkline gas
    movements, are interstate, and it just seems to me that it is
    reasonable to have a single Federal authority taking
    jurisdiction. For the benefit of those who are regulated, we
    then have consistent regulation. We can train and perform and
    keep records in a singular fashion. We achieve a kind of scale
    in doing that. We also have a level playing field, to the ex-

    tent that differences in cost from the result of regulation may
    occur if it were applied State to State.
        And so from an operating manager's perspective, I think in
    every respect that Federal regulation, basically, makes sense.
        Mr. Shimkus. Thank you, Mr. Chairman.
        Mr. Barton. Thank the gentleman from Illinois.
        I would recognize the distinguished gentleman from Florida
    for 5 minutes.
        Mr. Bilirakis. Thank you, Mr. Chairman.
        Mr. Wilson, let me, initially at least, stay on the
    regulation of petroleum storage tanks, breakout tanks, as I
    referred to them. And you were in the room, I believe, when I
    addressed my question to----
        Mr. Wilson. I was.
        Mr. Bilirakis. [continuing] Ms. Coyner. So, without my
    having to repeat that question, what is your response to what
    is happening, what is supposedly happening, and that sort of
    thing to hopefully try to clear up this area of conflicts and
    what not because of two different regulatory agencies somewhat
    disagreeing?
        Mr. Wilson. Yes. My feeling is that it is basically
    intramural in the Federal Government. Second, that for the
    purposes of operation and the maintenance of our assets, the
    Office of Oil Pipeline Safety has the vast preponderance of
    jurisdiction. For basically the same reasons that I just stated
    in favor of single Federal regulation, I would favor single OPS
    regulation of pipelines.
        Now with that said, with the intention that was stated to
    your question earlier, that these regulations might be highly
    conformed, I would have to say from an operator's perspective
    that if they are, in fact, conformed, we don't care that much.
    Rest assured that we are committed to the maintenance of safe
    tankage in the absence of accidents or spills from them, so we
    don't mind any responsible legislation.
        Mr. Bilirakis. Well, what is your actual real-world
    experience in having to--in dealing with DOT, OPS, if you will,
    on one hand and then having EPA--and I am not trying to put one
    agency----
        Mr. Wilson. Yes.
        Mr. Bilirakis. [continuing] in a bad light. I hope I am not
    coming across that way. But we are talking about two different
    agencies, two different conflicting regulatory requirements.
    What is your experience there?
        Mr. Wilson. Yes.
        Mr. Bilirakis. Can you share real-world experience.
        Mr. Wilson. Well, in my own experience, there is very
    little EPA experience, and the reason is that in my company,
    Buckeye, all of our tankage is operated as what we call
    ``breakout tankage'' in the furtherance of pipeline operations.
    And accordingly, it has been DOT regulation that we have dealt
    with. You know, in being around the industry and talking to my
    colleagues, their view is for simplification and a unification
    where we have ``one-stop shopping,'' where we have one
    promulgator, we have one regulator to satisfy because,
    otherwise, invariably we will be talking about duplication.
    Accordingly, I think our industry perspective would be for as
    much as possible to rely on OPS rulemaking.
        Mr. Bilirakis. Do you think OPS does a good job?
        Mr. Wilson. I think they do a very good job. We are doing
    more for tankage as a result of kind of current regulation than
    we used to do, and that is neither to defend, you know, the
    past or the current practice. But tankage, to be sure, has
    received a lot of attention. And I can tell you there has been
    one hell of lot of money in capital spending plowed into
    tankage on the pipeline and terminal side in the last 5 years.
        Mr. Bilirakis. What is your reaction to the figure 1
    statistics that Ms. Epstein referred to when she sort of
    admonished Mr. Norwood saying that his information was
    incorrect because figure 1 shows annual releases to the
    environment----
        Mr. Wilson. Yes.
        Mr. Bilirakis. [continuing] as does liquid pipelines, have
    gone up. What is your reaction to that? Have you seen that
    figure?
        Mr. Wilson. Not until now. My reaction is a safe harbor for
    myself. I am not a statistician or a data keeper. I can assure
    you that both API and AOPL is taking a hard and vigorous look
    at statistics, and I sense from this meeting today that,
    clearly, this subcommittee is going to be interested in having
    as clear a picture of operating statistics as you can receive.
    And from our side, I assure you that we will supply them.
        Mr. Bilirakis. All right. Now, what would be the result?
    Ms. Epstein referred to the citizen supervision should be
    modified. It is one of your recommendations, if I can call it
    that. It said to facilitate private enforcement actions. Maybe
    we can get at least one of your gentleman to respond to that.
    What would be the result of that if we saw fit to do it?
        Mr. Wilson. Maybe for a layman and non-lawyer you can tell
    me what that means. If that means that anybody and everybody is
    just going sue us, kind of in the shoes of an OPS or some other
    regulatory agency, I think it is a disaster. This is a highly
    technical business that has been around for a long time, and on
    the other hand, its technology is not changing very fast. It
    seems to me that in this program, on the concepts that I have
    already given you of economy, non-redundancy, the ability to
    deal with technical subjects, I think that current regulation
    has been working. That is the thrust of my testimony, in
    particular. To throw this open, to, you know, enumerable
    parties to weigh in, become overnight pipeline experts, I think
    is a waste of our time.
        Mr. Bilirakis. Thank you, Mr. Chairman.
        Mr. Barton. Let us give Ms. Epstein a chance to rebut what
    Mr. Wilson just said.
        Mr. Bilirakis. By all means.
        Mr. Barton. Since it is her suggestion----
        Ms. Epstein. Actually, the----
        Mr. Barton. [continuing] or her group's.
        Ms. Epstein. [continuing] information included about the
    citizen supervision comes from a city attorney from
    Fredericksburg, Virginia, who was faced with losing their city
    water supply twice. And he found that since it wasn't as a
    result of a violation of the regulations, there should be a
    provision as there are in environmental statutes that allow
    some sort of challenge based on imminent and substantial
    endangerment and cost recovery. The community paid a tremendous
    amount of money to develop a new water supply because they lost
    it twice.
        And I should add that the existing law does have a citizen
    supervision, it just happens to not be effective in its
    implementation because OPS can then open an administrative
    action which can go on for years and not result in much of a
    penalty, and, therefore, the citizens would not be carried
    forward. What this change, as I suggested, would require OPS to
    develop a court case instead of having the citizens go forward,
    and that is just a check to make sure that if there is an
    action that needs to be taken that it is done effectively.
        Mr. Barton. The Chair would ask unanimous consent that the
    record be kept open for some additional material. We do have
    that letter from the city of Fredericksburg, and we will,
    without objection, put that particular letter into the record.
        Hearing no objection, so ordered.
        [The information referred to follows:]

                               City of Fredericksburg, Virginia
                                                       February 3, 1999
    Hon. Joe L. Barton, Chair
    Subcommittee on Energy & Power
    House Committee on Commerce
    2264 Rayburn House Office BuildingU.S. House of Representatives
    Washington, D.C. 20515

    RE: Pipeline Safety Act Oversight and Reauthorization

        Dear Chairman Barton: On behalf of the City of Fredericksburg, I am
    writing to submit written comments in connection with the hearing your
    subcommittee has scheduled for today regarding oversight of the Office
    of Pipeline Safety, U.S. Department of Transportation (``OPS''), and
    its administration of the Pipeline Safety Act (``Act''). We would
    respectfully request that this letter be included as part of the
    hearing record.
    Introduction and Background
        It is the City's understanding that the Subcommittee on Energy and
    Power is conducting today's hearing in anticipation of Congressional
    reauthorization of the Act later this year. We applaud the
    Subcommittee's interest in studying the current federal pipeline safety
    program and hope that you can glean a more accurate picture of the
    program from this hearing. As part of the process, we would encourage
    you to solicit input from a broad range of stakeholders in the pipeline
    safety program, including the victims of pipeline accidents, the
    environmental community, and state and local governments.
        As you may be aware, the City of Fredericksburg has had a
    longstanding interest in pipeline safety issues. We have had the
    unfortunate distinction of having twice lost our entire public water
    supply due to accidents involving an interstate oil pipeline owned by
    Colonial Pipeline Company. First in 1980 and then again in 1989, a 32-
    inch interstate pipeline owned by Colonial that runs from Texas to New
    York ruptured in rural Orange County, 20 miles west of Fredericksburg.
    Each time, thousands of gallons of petroleum spilled into the
    Rappahannock River, contaminating the City's raw water supply. Each
    time, the City was forced to shut down its water treatment plant for
    more than a week and to haul water from neighboring jurisdictions. I am
    sure you can imagine the pain and hardship that these accidents caused
    our citizens and the long-lasting effects they have had on Virginia's
    environment.
        In the aftermath of the 1989 accident, the City took it upon itself
    to undertake a thorough examination of pipeline safety issues generally
    and to learn more about the responsibilities of various state and
    federal agencies in preventing similar accidents in the future.
    Unfortunately, this study and our own first-hand experience with OPS
    over the past 10 years have provided us with little comfort. Time and
    again, we have found that OPS has taken a backseat to Congress in
    pushing for pipeline safety reforms, that the agency has often failed
    to promulgate much-needed safety standards, that it has ignored its
    1993 Congressional mandate to protect the environment, and that it has
    consistently failed to take strong enforcement action against pipeline
    operators who flout federal law.
        The City of Fredericksburg does not make these charges lightly or
    with any relish. After years of trying unsuccessfully to get OPS to
    take effective enforcement action against Colonial, we have reluctantly
    come to the conclusion that OPS will never require Colonial to take the
    necessary steps to render its pipeline safe within our watershed.
    Unfortunately, we have learned that our experience has been shared by
    many other communities throughout the country that have suffered
    similar accidents. These allegations are nothing new. In fact, they
    have been repeated and supported on numerous occasions by GAO and the
    National Transportation Safety Board.
    The Federal-State Partnership for Pipeline Safety
        Although the City would urge you to look at these and many other
    serious problems at OPS, we are writing today regarding one particular
    issue that warrants immediate Congressional attention. This involves
    OPS' recent efforts to discourage state governments from taking an
    active role in the regulation of interstate pipelines.
        When the Natural Gas Pipeline Safety Act and the Hazardous Liquid
    Pipeline Safety Act were enacted years ago, they were heralded as a
    federal-state partnership in which OPS would assume primary
    jurisdiction over pipeline safety standards but the states would be
    encouraged to assist in the inspection of new and existing pipelines,
    to conduct routine accident investigations, and to develop their own
    standards and to enforce state and federal laws for intrastate
    pipelines. OPS was authorized to make grants to states to reimburse
    them for up to 50% of their administrative costs. In addition, states
    could adopt user fees to help defray their remaining costs.
        OPS and the states have traditionally operated this program under a
    two-tiered system of delegated authority. Under 49 USCS Sec. 60105, OPS
    has the authority to ``certify'' states that prove themselves qualified
    to assume control over intrastate pipelines, provided they perform
    their duties in accordance with federal regulations. In addition, under
    49 USCS Sec. 60117(c), OPS may appoint qualified states as its
    ``agents'' to inspect interstate pipelines, with OPS reserving all
    enforcement authority over such facilities. These two separate
    delegation programs have been utilized by OPS for many years to
    administer the natural gas and the liquid pipeline programs in all 50
    states.
        This system, however, has resulted in a confusing patchwork of
    state and federal regulatory authority. According to our most recent
    information, 48 states are currently certified to implement the
    intrastate gas program, 12 serve as agents to administer the interstate
    gas program, 2 are permitted to inspect intrastate gas or liquid
    facilities but not to enforce federal standards, 12 are certified to
    implement the intrastate liquid program, and 4 serve as agents to
    administer the interstate liquid program. The system has proven
    confusing and overly bureaucratic, not only for the regulators but for
    the public and the operators as well.
        In the aftermath of our two accidents, we became convinced that OPS
    lacked the resources and the resolve to take meaningful action to
    enhance pipeline safety in Virginia. At that time, OPS only had three
    inspectors to cover 14 Eastern states. We discovered that even though
    OPS had jurisdiction over all intrastate liquid pipelines in Virginia,
    the agency had never conducted an accurate inventory of these
    facilities, could not provide us with a map or tell us where they were
    located, and apparently had never inspected many of them. In essence,
    there was no intrastate liquid pipeline program in Virginia. As for the
    interstate pipelines in Virginia, we knew from first-hand experience
    that OPS was unwilling to take strong enforcement action against
    hazardous oil pipeline facilities, such as Colonial's 32-inch line that
    traverses the City's watershed.
        On the other hand, we were impressed with the job that Virginia's
    own State Corporation Commission (``SCC'') had been doing for many
    years in administering the pipeline safety program for intrastate gas
    facilities. We learned that the SCC was recognized as a national leader
    among state pipeline regulators, that it was developing one of the best
    ``One Call'' programs in the country, and that it had a proven track
    record for taking strong enforcement action against unsafe pipeline
    operators. Finally, we found the agency to be responsive to accident
    victims and was willing to work closely with local governments such as
    Fredericksburg.
        For these reasons, the City led a successful effort in 1993 to
    secure passage of the Virginia Hazardous Liquid Pipeline Safety Act
    (Attachment 1), which authorized the SCC to seek intrastate
    certification and interstate agent status from OPS and to administer a
    hazardous liquid pipeline safety program in Virginia. At the time the
    Virginia General Assembly was considering this legislation, the Eastern
    Regional Director of OPS, Mr. Bill Gute, testified on behalf of the
    City's bill and led us and state officials to believe that OPS would
    welcome the assistance of the SCC in administering this program in
    Virginia.
        Following the adoption of this legislation, the SCC worked
    diligently over a five-year period to develop a top-notch certified
    intrastate liquid program, hired and trained the necessary staff to
    conduct inspections, and prepared itself to become a full partner with
    OPS in the liquid pipeline arena. Just as the SCC was preparing to
    assume this major new responsibility, OPS announced that it was
    reversing its former policy and would no longer encourage states to
    become interstate agents. This meant that the interstate agent program
    would be restricted nationally to the 12 states that currently enjoyed
    that status for gas pipelines and to the 4 states that inspected liquid
    pipelines (Attachment 2).
        Several weeks ago, OPS formally notified the State Corporation
    Commission that it was unwilling to consider an exception to this new
    policy for Virginia, despite its previous support for the Virginia
    legislation and the SCC's efforts, stating that ``the benefits of the
    SCC becoming a permanent interstate agent for hazardous liquid
    pipelines are no longer obvious to us'' (Attachment 3). The only reason
    cited by OPS for this policy reversal was the institution of its new
    ``system-wide approach'' for inspecting interstate pipelines, which the
    agency now claimed it had sufficient staff to conduct on its own. While
    there is certainly merit in conducting system-wide inspections for
    certain interstate pipelines, particularly those of companies like
    Colonial with unusually serious spill records, it remains highly
    doubtful whether this new policy should replace the interstate agent
    program or whether it will result in a higher overall level of pipeline
    safety, particularly if state involvement is simultaneously being
    reduced. In fact, the City suspects that this new ``policy'' is simply
    an excuse for excluding states such as Virginia that have become more
    committed in recent years to the need for stronger pipeline regulation.
        By letter dated January 25, 1999, the Chairman of the SCC responded
    to OPS (Attachment 4), charging that Virginia's preparatory efforts
    over the past five years ``have apparently been a waste of time, money
    and human resources.'' Chairman Miller expressed a deep frustration
    with OPS that we know is shared by regulators in many other states. We
    understand that several other states have been rebuffed recently in
    their efforts to assume a more active role in the interstate program,
    including Texas and Oklahoma.
        In many cases, state regulators are reluctant to speak out on this
    sensitive issue since they feel compelled to maintain cordial day-to-
    day working relationships with OPS. But if you speak to them privately,
    they will tell you that this policy reversal by OPS is compromising
    public safety and environmental protection and that OPS is attempting,
    for political reasons, to reduce their role in the entire pipeline
    safety program. The City believes that the Subcommittee should take
    immediate action to express its concerns about this policy change and
    to restore a proper balance to the federal-state regulatory
    relationship.
    Recommendations
        We would recommend that the Commerce Committee take two steps.
    First, we would encourage the Committee to conduct an oversight hearing
    devoted primarily to an examination of the present federal-state
    relationship regarding pipeline safety. Such a hearing should focus on
    the history, effectiveness, and scope of the state certification and
    interstate agent programs. Are state regulators being effectively
    utilized? Does ``one size fit all'' when it comes to pipeline safety
    and environmental standards or should states be empowered to develop
    their own standards that complement federal efforts? Is complete
    federal preemption of the interstate pipeline program really in the
    best interests of the nation?
        Second, when Congress considers reauthorization of the Act, it
    should amend the Act to establish an interstate agent certification
    program that parallels the current process for intrastate certification
    and that encourages states to assume this responsibility. Such an
    amendment would also necessarily need to address the issue of
    preemption. As you know, current law allows certified states to
    promulgate their own safety standards for intrastate facilities,
    provided they are ``compatible with the minimum standards prescribed''
    by OPS (49 USCS Sec. 60104(c)). This same authority and preemption
    standard could be safely applied to the interstate program, since it
    would not compromise the primacy of federal regulations.
        As a local government, the City is particularly sensitive to the
    preemption issue. We fully support the notion that the federal
    government needs to maintain a coherent, streamlined, national system
    for pipeline regulation that does not impede interstate commerce.
    Nobody wants to create a system under which 50 states promulgate 50
    different sets of interstate pipeline safety standards, all going in
    different directions. We are not advocating such a system. But we would
    encourage you to take a hard look at this issue and to determine
    whether preemption should be relaxed in this situation.
        In conclusion, the City hopes that you will take the opportunity
    this year to scrutinize more closely the recent efforts of OPS to
    reduce the states' role in the pipeline safety program, to conduct
    additional oversight hearings, and to enact legislative amendments
    aimed at empowering states to become more active in all aspects of
    pipeline safety. State and local governments offer tremendous resources
    that should be harnessed by OPS to improve pipeline safety throughout
    the country.
        Thank you again for allowing us to share with you our experiences
    and thoughts on this issue. We look forward to working with you and
    your staff as you work to strengthen this important federal program.
                Sincerely,
                                                 James M. Pates
                                                          City Attorney
    Enclosures

    cc: Mayor Greenup
       Members of City Council
       Marvin S. Bolinger, City Manager
       Commissioners, State Corporation Commission
       Mr. Frank Shafroth, National League of Cities
       Hon. Herbert Bateman, U.S. House of Representatives
       Richard B. Felder, Director, OPS

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        Mr. Barton. There may be other materials that other members
    not currently in attendance have, and we will put those into
    the record if the minority and the majority staff approve.
        We will also have additional questions for this panel.
    There are obviously a number of members who are not here, and
    we will give them that opportunity.
        We would hope that you would give your responses as quickly
    as possible because we plan to move very quickly. I am tempted
    to ask unanimous consent to change the date and reauthorize the
    bill right here.
        But that would not be in the spirit of bipartisanship that
    I just announced at the beginning of this hearing. There was a
    possibility we could mark this reauthorization bill up next
    week. Now that is unlikely, given that there were some
    substantive issues put on the table at this hearing, which is
    the purpose of the hearing. And, also, Mr. Pallone and Mr.
    Markey, and to some extent Mr. Dingell had some issues that
    they raised in their opening statements. So it is unlikely that
    we will do a markup next week on this bill, but it is very
    likely that we will have a reauthorization markup within the
    next month.
        And so I would encourage both our panelists, our
    Administration officials on the previous panel, and members of
    the audience who have stayed in rapt attention for the last
    2\1/2\ hours if you have suggestions, ideas, things that you
    wish to be put on the table, please approach the relevant
    member of the subcommittee on either side of the aisle you feel
    most comfortable with so that we can get those issues into
    play.
        Mr. Bilirakis, do you have a closing comment?
        Mr. Bilirakis. I do not, Mr. Chairman. I suppose what we
    have done is working. It seems to--I guess Ms. Epstein wouldn't
    agree with maybe that statement, I don't know. But----
        Mr. Barton. She was more positive than negative.
        Mr. Bilirakis. There always can be----
        Mr. Barton. She just has some concerns.
        Mr. Bilirakis. Yes. And there always can be some
    improvements made, I suppose, and we want to take a look at
    those rather than maybe reauthorize it exactly as it is.
    Basically, I guess I have repeated what you have just said.
        Mr. Barton. Okay.
        Well, we want to again thank this panel, thank the audience
    for your attention, thank the members who were here.
        This hearing is adjourned.
        [Whereupon, at 4:30 p.m., the subcommittee was adjourned.]
        [Additional material submitted for the record follows:]
      Responses to Questions for the Record of John S. Zurcher, Manager,
             Pipeline Safety, Columbia Gas Transmission Corporation
        Question 1. Do you believe that the 1996 amendments which allowed
    the Department of Transportation to employ risk assessment and risk
    management approaches have resulted in pipeline safety regulations
    which work better and cost less? Why or why not?
        Response. The development of the risk management pilot program has
    significantly increased the understanding by regulators and the
    industry of the causes, prevention, and consequences of natural gas
    pipeline incidents. This has resulted in a positive culture shift aimed
    at lowering the risk to the public and the environment rather than
    simply following command and control recommendations. This philosophy
    motivated the efforts to enact the Comprehensive One-Call Notification
    Act last spring, which addresses the cause of the greatest risk to the
    public--unintentional third-part damage.
        Similarly, the development of the risk assessment/cost benefit
    process has helped industry and regulatory communities identify
    regulatory solutions that bring about the greatest increase in safety
    for each dollar spent.
        We do not believe that the program has reduced costs for industry,
    and in fact we do not think that was a goal of the 1996 Act. Rather,
    risk assessment and risk management are designed to take the dollars
    which are already being spent and employ them in the most effective
    manner from a public safety standpoint. Companies which have stepped
    forward to participate in the risk management demonstration project
    have spent a great deal of time and effort to put forward their own
    unique safety plans. The participants decide to get involved in the
    belief that a more focused and effective safety program will be the
    result.
        Question 2. What level of resources is appropriate for
    reauthorizing legislation?
        Response. The shift of the focus in the industry and regulatory
    community to process management and auditing will result in increased
    efficiency and will help focus resources on high-risk areas. While this
    requires an increase in the qualifications of regulatory auditors and
    improvements in auditing procedures, it should result in a reduction of
    some redundant inspections.
        The development of new regulations and regulatory alternatives will
    require more focused resources within the Office of Pipeline Safety
    (OPS) and the industry as a result of the new processes. This will be
    counterbalanced by the elimination of less effective regulatory
    initiatives. Overall INGAA believes that this will result in a leveling
    of resource requirements at OPS. Accordingly, INGAA feels that Congress
    should provide authorization levels sufficient to maintain current
    staffing and program functions.
        Question 3. The pipeline safety program is paid for through user
    fees. Who ultimately bears those costs? With the restructuring of the
    pipeline industry, are those costs still passed through on a full
    basis?
        Response. Under the present pipeline user fee collection system,
    transmission pipelines (both interstate and intrastate) are assessed a
    fee based on the total number of miles of transmission pipe in their
    respective systems. Prior to the restructuring of the natural gas
    pipeline industry, such user fees were readily passed along to the
    ultimate consumers of natural gas through the rates which pipelines
    charged. Much has changed, however. Restructuring of the industry in
    the 1980's and early 90's resulted in the ``unbundling'' of the
    commodity (natural gas) from the transportation function, in order to
    give customers greater choice and spur competition within the pipeline
    industry. Individual pipelines have been forced, in many cases, to
    discount their transportation rates below traditional levels in order
    to retain existing customers and gain new ones. This discounting calls
    into question whether all costs the pipeline incurs are simply passed
    along to the ultimate customer.
        Question 4. The law currently requires OPS to fund ``up to 50
    percent'' of state pipeline safety efforts. The States have argued the
    OPS needs to be funding a greater share of state pipeline safety
    programs. Should interstate pipelines, which aren't regulated at the
    state level, pay a greater share of state regulatory efforts?
        Response. The current law does indeed authorize OPS to fund ``not
    more than 50 percent'' of state pipeline safety programs. This
    provision (49 USC 60107) was included in the law to: 1) encourage
    States to adopt the federal minimum safety standards, and 2) reimburse
    those States which acted as agents for the U.S. Department of
    Transportation in inspecting interstate natural gas or hazardous liquid
    pipeline facilities. Some State officials have argued that the language
    in the Act should be interpreted to mean that OPS should set a 50
    percent funding level as an ultimate goal. However, INGAA views the
    ``not more than 50 percent'' provision as a ceiling for State grants,
    not a floor.
        About 90 percent of the OPS budget is provided through pipeline
    safety user fees. While intrastate transmission pipelines are assessed
    the fee, the vast majority of fees are collected on interstate
    pipelines. As your question suggests, interstate pipelines are not
    regulated by the States, and yet these interstate pipelines are asked
    to fund a significant share of the cost associated with operating State
    programs. In addition, since the creation of Section 60107, the Office
    of Pipeline Safety has acquired a sufficient number of in-house
    inspectors to perform the required interstate pipeline inspections
    without assistance from State government personnel. Nonetheless, States
    still receive a substantial percentage of their pipeline safety budgets
    from OPS user fees. This results in a cross subsidization of the state
    pipeline safety offices by interstate transmission pipeline operators
    who are not regulated by State officials.
        INGAA questions the rationale for increasing OPS grants to States.
    State governments have the ability to raise funds within their own
    jurisdictions. Indeed, States have primary responsibility for
    regulating the safety of local gas distribution companies (LDCs) and
    intrastate pipelines. In the past, it was assumed that interstate
    pipelines would simply pass all costs along in the rates they charged
    to LDCs and others. As discussed in the previous question, however,
    those assumptions no longer apply to our restructured industry. We
    believe the majority of State pipeline safety efforts should be funded
    by State revenues and/or by those entities which are regulated by the
    States.
        Question 5. What would be the result if the citizen suit provisions
    were modified to facilitate private enforcement actions?
        Response. A citizens suit provision already exists in current law
    (49 USC 60121). The law allows a citizen to bring suit for injunctive
    relief if the citizen: 1) gives 60 day notice to the Department of
    Transportation and the entity alleged to have committed the violation;
    2) the Department has not ``begun and is diligently pursuing an
    administrative proceeding;'' and 3) the Attorney General or a
    comparable state officer has not ``begun and diligently is pursuing a
    judicial proceeding for the violation.''
        At the Subcommittee's February 3rd hearing, the witness
    representing the Environmental Defense Fund advocated a number of
    changes to Section 60121 which INGAA believes are unnecessary and
    overreaching. The current law provides the proper role for private
    enforcement actions if the Department or federal/state law enforcement
    officers are not acting on a particular problem. However, the most
    efficient and timely way to address pipeline safety is through the
    regulatory--not the legal--process. INGAA feels that a focused, risk-
    based regulatory program is the most effective way to protect the
    public. We support a pipeline safety program which is administered by
    the Department of Transportation, not by the court system.
        Question 6. Should the risk management concept be applied more
    broadly? Are legislative changes needed to have a broader application
    of risk management principles?
        Response. INGAA is confident that the risk management philosophy is
    beneficial for protection of the public and the environment. The new
    concepts which the 1996 Act engendered are still under development and
    implementation at the Office of Pipeline Safety. We believe more time
    and effort is needed in order for business and government to digest all
    the new changes. If OPS wants to expand the risk management concept in
    the future, it can do so administratively, without changes to existing
    law.
        Question 7. How is the risk assessment approach to regulation
    working with respect to pipeline safety? Are legislative changes needed
    to improve how it is applied?
        Response. The formalized risk assessment process at OPS is just
    getting established. As I mentioned before, the development of this
    process has permanently changed the mindset of the regulatory process.
    It has already caused the reprioritization of efforts within OPS.
        At this time, we would not recommend any legislative changes.
    Congress can revisit this issue in 2004, when the next reauthorization
    discussions are underway. By that time,there should be a wealth of
    experience with which to evaluate the program.
        Question 8. How has the risk assessment approach improved the
    amount of time it takes to complete a pipeline safety rulemaking? Do
    you feel that the Department of Transportation is enacting better
    regulations as a result of using a risk assessment approach?
        Response. Risk assessment is not, as some have argued, ``analysis
    paralysis.'' OPS has continued to move rules through their process, and
    in fact the time it takes to get new rules through OPS has decreased.
    One controversial proposed rule, dealing with pipeline operator
    qualification, had languished at OPS since 1992. When the 1996 Pipeline
    Safety Act reauthorization passed, however, OPS decided to pursue a
    negotiated rulemaking. We anticipate that this rule will be
    successfully concluded this spring. Other rules have been adopted
    through consensus or embracing industry standards. The trains have not
    only kept running, they are running better.
        The risk assessment approach will, we believe, lead to better
    regulations, because it ``front-loads'' the regulatory process with the
    analysis needed to make better decisions. The Department has placed an
    emphasis on working with industry to improve safety, with the result
    being a faster process and more rational standards.
        Question 9. What is the status of the oil and gas pipeline
    community's Y2K preparedness efforts?
        Response. The interstate natural gas transmission companies have
    been working on diligently resolving the Y2K issue in systems within
    the natural gas transmission industry. These suspect systems can be
    lumped into three general categories: operational systems (embedded
    processors), business systems (accounting and billing), and supplier
    interface (utilities, communications and supply). Each of these
    categories of systems goes through an extensive process of resolving
    the Y2K issue through the steps of planning, inventory assessment,
    remediation, and validation. In addition, an extensive customized and
    coordinated contingency plan effort is being established for the
    unlikely situation that remediation efforts fail to mitigate these
    situations. This new plan is being built off the present contingency
    plans for natural and manmade disasters that have made natural gas the
    most reliable energy source in the US.
        INGAA helped initiate an effort to disseminate the progress of
    those efforts to government and general public through the President's
    Council on Y2K Conversion and the Federal Energy Regulatory Commission.
    This communication is accomplished primarily through a quarterly survey
    that updates key variables that measure the progress of efforts to
    manage this issue.
        The last quarterly update was released on February 18th, 1999. The
    survey covers about 1,000 companies from all sectors of the gas and oil
    industries, whose customers represent 88 percent of the consumption of
    those fuels in the U.S. Almost all the respondents--94 percent--
    indicated they will be ``Y2K Ready'' by September 30, 1999. Additional
    results from the survey include the following:

     More than four-fifths of the combined oil and gas industry
            companies, 86 percent, are in the final stages of fixing and
            testing business information systems to accommodate the Y2K
            date. That compares with 55 percent of the companies in a
            September 1998 survey.
     As for the embedded hardware systems that must be corrected,
            78 percent of respondents said they are in the final stages of
            fixing and testing hardware and embedded systems for their
            operational integrity. The response in the September 1998
            survey was 46 percent.
     Nearly all respondents, 97 percent, said they expect to have
            their Y2K contingency plans in place and tested by the end of
            the third quarter.
        To further ensure the smooth operation of their industries, oil and
    gas companies and associations have coordinated their Y2K efforts
    through the Natural Gas Council and the American Petroleum Institute.
    They share information on technical issues, testing and contingency
    planning; identify and resolve legal issues, including legislation; and
    communicate within the industries and with the public on their work. We
    have also reached out to coordinate our activities with the
    telecommunications and electric utility industries.
        Question 10. As the Department of Transportation has moved from a
    minimum standards approach to a risk based approach, are there some
    existing pipeline safety regulations that are no longer necessary?
        We believe that risk management demonstration project gives the
    Department, and those pipelines that volunteer to participate, greater
    flexibility to meet and exceed minimum safety standards. Pipeline
    companies have a choice to either comply with the existing minimum
    safety standards, or develop their own safety plan with the approval of
    the Department. INGAA does not advocate the removal of any minimum
    safety standards at this time.
                                     ______

                                     Environmental Defense Fund
                                                      February 12, 1999
    The Honorable Joe Barton, Chairman
    The Honorable Ralph Hall, Ranking Democratic Member
    Subcommittee on Energy and Power
    Committee on Commerce
    U.S. House of Representatives
    Washington, D.C. 20515
        Dear Congressmen Barton and Hall: Thank you very much for holding
    the February 3, 1999 hearing on the pipeline safety. I greatly
    appreciate Chairman Barton's comment that he will speak to Congressman
    Upton about holding an oversight hearing on pipeline safety prior to
    reauthorization of the Natural Gas Pipeline Safety Act and the
    Hazardous Liquid Pipeline Safety Act (49 USC 60101 et seq.).
        I am writing to follow-up on the hearing statement of Associate
    Administrator for Pipeline Safety Richard Felder that the annual trend
    in hazardous liquid pipeline releases was downward. I believe that
    statement is inaccurate, particularly during Mr. Felder's tenure. To
    develop my testimony, I used Office of Pipeline Safety data and found
    the following reported release quantities:

                                  [In Millions]
    ------------------------------------------------------------------------
                                                                    Gallons
                                Year                               Released
    ------------------------------------------------------------------------
    1990........................................................       6.44
    1991........................................................       7.84
    1992........................................................       6.55
    1993........................................................       4.61
    1994........................................................       6.24
    1995........................................................       5.67
    1996........................................................       5.78
    1997........................................................       6.21
    1998........................................................       7.70
    ------------------------------------------------------------------------
    Average.....................................................       6.34
    ------------------------------------------------------------------------

        As you can see, since 1995 the trend has been increased reported
    releases each year. In fact, 1998 shows the greatest releases from
    hazardous liquid pipelines since 1991. This nine year analysis of
    pipeline performance represents the most recent and relevant data, and
    is much more reflective of the reality of pipeline releases than a
    longer-term analysis which might show an overall downward trend.
    Additionally, most of the data for the 1990s do not include smaller
    spills, which were reported previously, but which are no longer
    required to be reported.
        Finally, please note that in the testimony presented by C. Richard
    Wilson on behalf of the Association of Oil Pipe Lines and the American
    Petroleum Institute, the pie-chart showing the percentage causes of oil
    pipeline releases, 1992-97, is based on volume released and not the
    number of incidents. This distinction is important because a single
    large-volume release can greatly distort the analysis of causes of
    releases. A more appropriate analysis of where prevention opportunities
    lie would examine the percentage of the total number of releases by
    cause, with follow-up to identify the causes of incidents reported as
    ``other,'' since many of these should have been reported as pipeline
    failures caused by incorrect operation, materials defects, etc.
        I would greatly appreciate it if you would include this
    communication and any responsive information you might receive from
    Associate Administrator Felder in the record of the February 3 hearing.
    Thank you very much.
                Sincerely,
                                          Lois N. Epstein, P.E.
                                                        Senior Engineer
    cc: Richard Felder, Associate Administrator, Office of Pipeline Safety
       Members of the Subcommittee
                                     ______

                                  Association of Oil Pipe Lines
                                                      February 10, 1999
    RE: PIPELINE SAFETY

    The Honorable Joe Barton
    Chairman
    Subcommittee on Energy and Power
    Committee on Commerce
    U.S. House of Representatives
    Washington, D.C. 20515
        Dear Mr. Chairman: Thank you for the opportunity you provided the
    Association of Oil Pipe Lines to appear before the Subcommittee at your
    February 3 hearing on pipeline safety. We appreciate the fair and
    cooperative spirit with which the Subcommittee is approaching this
    issue.
        The purpose of this letter is to correct any impression that may
    have been left at the hearing that the releases from oil pipelines are
    on a rising trend. In fact the long-term trend in oil pipeline releases
    is downward and significantly so. As the attached fact sheet shows,
    six-year average release volumes exhibit a steady downward progression
    for the past 30 years, with a 60 percent reduction in the volume
    released. Moreover, the volume of these annual releases is actually
    quite small in relation to the enormous volume of oil moved by the
    industry--currently about one one-thousandth of a percent.
        However, we do not consider the current level acceptable. We are
    working as an industry to limit releases, and we hope to accelerate the
    downward trend. No release is acceptable. As we indicated in our
    testimony, the Office of Pipeline Safety is a positive force in working
    with us to limit both the occurrences of releases and their size and
    impact.
        I request that you include this communication and the attached fact
    sheet in the record of the February 3 hearing. I hope this information
    will be useful to you as you move forward with reauthorization of the
    pipeline safety program.
        We very much appreciate your timely efforts to address this issue.
    Any questions you or your staff may have about this information can be
    directed to me at (202) 408-7970.
                Yours truly,
                                             Benjamin S. Cooper
                                                     Executive Director
    cc: The Honorable Ralph Hall, Ranking Minority Member.
       Members of the Subcommittee.
                                     ______

                                  Association of Oil Pipe Lines
                                                          March 5, 1999
    The Honorable Joe Barton
    Chairman
    Subcommittee on Energy and Power
    Committee on Commerce
    U.S. House of Representatives
    Washington, D.C. 20515
        Dear Mr. Chairman: Thank you for the opportunity provide answers to
    the Subcommittee's post-hearing questions on the reauthorization of
    pipeline safety programs. We appreciated the opportunity to have C.
    Richard Wilson, Vice-Chairman of Buckeye Partners, L.P. appear at the
    hearing February 3 to represent the views of the American Petroleum
    Institute and the Association of Oil Pipe Lines. I am transmitting
    these answers to you on his behalf.
        I understand that you will include this communication in the record
    of the February 3 hearing. I hope this information will be useful to
    you as you move forward with reauthorization of the pipeline safety
    program.
        We very much appreciate your timely efforts to address this issue.
    Any questions you or your staff may have about this information can be
    directed to me at (202) 408-7970.
                Yours truly,
                                             Benjamin S. Cooper
                                                     Executive Director
    cc: The Honorable Ralph Hall, Ranking Minority Member.
       Members of the Subcommittee.
       Follow-up Questions for C. Richard Wilson, Vice Chairman, Buckeye
                                 Partners, L.P.
        Question 1. Do you believe that the 1996 amendments which allowed
    the Department of Transportation to employ risk assessment and risk
    management approaches have resulted in pipeline safety regulations
    which work better and cost less? Why or why not?
        Response. The 1996 amendments significantly improved the rulemaking
    process at the Department of Transportation, and, as a result, we are
    getting regulations that work better and cost less. The 1996 amendments
    and the administration of these amendments by the current management at
    the Research and Special Programs Administration and the Office of
    Pipeline Safety broke a logjam in pipeline regulation. Regulations that
    for far too long had been bogged down in controversy and
    misunderstanding of industry practice are now moving forward. In
    particular, substitution of a model of communication and cooperation
    with industry and other stakeholders has been successful where the
    previously-used model of command and control was not. We are getting
    results, we are getting these results sooner, and they are better
    results. We are seeking better results under 1996 amendments, not
    necessarily less short run cost or even fewer regulations. We believe
    the main goal is to see that resources being applied where they have
    the most effect mitigating risk. OPS is making excellent progress
    towards this goal, and the 1996 amendments deserve much of the credit.
        It is important for the Subcommittee to understand that the risk
    management demonstration projects authorized by the 1996 amendments
    have given the Office of Pipeline Safety and the industry an important
    new way to get better results by working together. We believe this new
    approach ultimately will significantly enhance pipeline safety and
    protection of the environment above and beyond the protection available
    under existing regulations. We are in the initial phase of a learning
    process. The early risk management projects are the basis for important
    training and education by both industry participants and regulatory
    staff. This involves both book learning and detailed on the job
    experience with all the parameters involved in oil pipeline operations.
    The learning curve will take time. But we believe we'll achieve much
    better understanding by both sides of how best to operate pipeline
    systems. We are already experiencing far better communication between
    our companies and our regulators. The lessons of this communication are
    not unique to individual facilities. These benefits can be applied
    throughout the industry to enhance the effectiveness of OPS regulation
    across the board. There are significant benefits in mutual
    understanding now. We expect the benefits from the process started by
    the 1996 amendments to increase steadily in the future.
        Question 2. What level of resources is appropriate for
    reauthorizing legislation?
        Response. We believe the current resources available to the Office
    of Pipeline Safety are adequate. Funding for the OPS is provided
    through the pipeline user fee by the oil and natural gas pipeline
    companies that OPS regulates. We believe that the current level of
    resources (represented by the appropriations enacted by the 105th
    Congress) is about right and should be extended in real terms for the
    next four years--fiscal years 2001-2004. This would mean adjusting the
    numbers in the current law for fiscal year 2000 using an inflation
    index approved by the Office of Management and Budget.
        Question 3. The pipeline safety program is paid for through user
    fees. Who ultimately bears those costs?
        Response. Pipeline companies write the checks that pay the fees,
    but it is not obvious how these costs are borne. Oil pipeline companies
    may or may not be able to recover the cost of the user fee from
    customers. Federal oil pipeline user fees are a cost of doing business
    for U.S. oil pipeline companies. Each company tries to obtain the
    revenues from its customers to cover today's costs, to provide returns
    on the capital it uses and to invest to manage the risks that the
    future holds. However, our companies operate in a highly competitive
    market, and it is not guaranteed we will stay in business. Oil pipeline
    rates are subject to regulation by the Federal Energy Regulatory
    Commission, and rate changes generally are capped by an index. This
    index currently requires us to reduce rates. We have no government-
    granted right to pass costs on to our customers. There is fierce
    competition in the oil industry. Each of us must manage his or her
    company to compete with other oil pipelines, with other modes of oil
    transportation, with refineries situated to reach the markets we serve
    and with the ever-present possibility of commodity exchanges that could
    bypass our pipelines entirely. The competitive pressures for improved
    economic, environmental and safety performance apparent in the oil
    industry generally also operate on the management of oil pipeline
    companies. We are doing our best to balance these pressures.
        Question 4. What do you think of the suggestion that release
    liability provisions be added to the reauthorizing legislation?
        Response. We oppose adding language to the reauthorization
    legislation relating to oil spill liability. In general, adequate
    causes of action are available to address damages caused by an oil
    pipeline spill. The liability for an oil pipeline spill onto land is
    currently determined under state law. Pipeline spills onto water are
    subject to both state liability law and to the federal Clean Water Act
    for spills onto navigable waters. We would oppose a proposal to further
    federalize the determination of oil pipeline spill liability unless and
    until study and analysis shows that the potential additional benefits
    over the status quo of such a proposal are justified. We don't believe
    current law puts those damaged by an oil pipeline spill at an unfair
    disadvantage in assigning liability for the spill. Pipeline companies
    carry adequate insurance to cover these risks, and, to our knowledge,
    have been able to cover their obligations under the judgments entered.
    We also would not favor delaying the reauthorization of this important
    program while we and the Subcommittee became entangled in the
    difficulties that have plagued congressional consideration of proposals
    to federalize liability rules in other sectors of the economy.
        Question 5. What would be the result if the citizen suit provisions
    were modified to facilitate private enforcement actions?
        Response. Increasing the number of private enforcement actions will
    mean more litigation costs, but we do not believe this will improve
    pipeline safety. Current law governing federal pipeline safety programs
    contains a citizen suit provision. That provision has the basic
    elements of citizen suit provisions generally. Any person may bring a
    suit against another person for violation of a law or regulation or
    against the agency for failure to perform its duty under the law. The
    agency must be given advance notice of intent to file the citizen suit,
    and the citizen suit may not proceed if the agency is engaged in
    ongoing action to enforce or carry out its own responsibilities under
    the law. We would oppose attempts to modify these provisions to make it
    easier to take management of pipeline safety out of the Office of
    Pipeline Safety and put it in the courts. We can think of little
    justification for believing that judicial involvement in pipeline
    safety issues will settle these issues sooner or, more importantly,
    will achieve better results than we are seeing under the very promising
    initiatives the OPS currently has under way. We expect that additional
    litigation will only divert time and resources that could far more
    productively be used to address safety issues directly.
        Question 6. Do you agree with the conclusion that hazardous liquid
    releases are going up? Why or why not? What can be done to counter this
    trend?
        Response. These releases are not going up. They are going down. Oil
    pipeline releases are on a long-term trend downward, as we indicated in
    our letter of February 10, 1999 to Chairman Barton. A copy of that
    letter is attached. This is a real trend in environmental improvement,
    not a function of reporting protocols. It represents progress, but is
    not a reason for complacency or self-congratulation. Oil pipeline
    spills are rare events, given the volume of petroleum delivered by the
    U.S. system. The volume of releases varies from year to year, and can
    increase in a year when there is an unusual large spill, influenced,
    for example, by the size of the pipe involved. A significant portion of
    spills, particularly the larger spills, are caused by events--weather
    and third-party damage--over which the responsible parties are able to
    exercise only limited influence. However, no release is acceptable. We
    are working very hard as individual companies and as an industry to use
    advanced technology and improved methods to reduce the number and
    impact of spills where we do have some control. The long-term trend
    downward in releases is evidence that this work pays off.
        We are also working to limit the impact of formerly unpredictable
    events on pipeline integrity. Three of the oil pipeline risk management
    demonstration projects include a focus on preventing third party damage
    as part of providing protection superior to that achievable under
    existing OPS regulations. A comprehensive public education initiative
    developed with OPS through a public-private partnership is currently
    undergoing pilot testing in three states. This initiative is designed
    to make the key members of the public much more aware of the risks to
    pipeline integrity of certain activities. Last year's new one-call
    notification legislation has provided a number of opportunities to
    address even more directly the problems of third-party damage to
    pipelines. Under this law, we are working cooperatively with OPS, the
    excavation community, operators of other underground facilities, one-
    call center operators and other stakeholders to significantly improve
    the effectiveness of underground damage prevention. We believe these
    efforts offer promise that the downward trend in pipeline releases will
    continue and, we hope, accelerate.
        Question 7. Should the risk management concept be applied more
    broadly? Are legislative changes needed to have a broader application
    of risk management principles?
        Response. The 1996 amendments to the pipeline safety statutes
    provide sufficient authority for OPS to incorporate risk management
    principles into its regulatory program. Oil pipeline companies
    currently rely on risk management principles to design the programs
    they themselves use to improve safety and limit environmental impact.
    We rely on these principles because they work. We would support
    increased recognition by government regulators of the power of these
    principles. The OPS Risk Management Demonstration Program is a good way
    for Congress and regulators to obtain practical experience with the
    application of risk management techniques. We would do more in the area
    of demonstrating the power of risk management if this were possible.
    However, we are confident that the record of the currently authorized
    demonstration projects will clearly exhibit the value of using risk
    management to enhance pipeline safety and increase the level of comfort
    with this approach in designing regulations.
        Question 8. How is the risk management approach to regulation
    working with respect to pipeline safety? Are legislative changes needed
    to improve how it is applied?
        Response. The risk management approach to regulation is making good
    progress with respect to pipeline safety. We believe the OPS staff
    understands the concepts and is committed to learning the best way to
    apply these principles. We do not recommend legislative change in the
    risk management provisions at this time.
        Question 9. How has the risk assessment approach affected the
    amount of time it takes to complete a pipeline safety rulemaking? Do
    you feel that the Department of Transportation is enacting better
    regulations as a result of using a risk assessment approach?
        Response. As we said in answering a previous question, we have seen
    significantly more progress in developing new rules at the Office of
    Pipeline Safety since the enactment of the 1996 amendments. The 1996
    amendments encourage OPS to use consensus processes and to work with
    all interested parties. This effort has led to regulatory solutions
    that work and are implemented much quicker than was possible in the
    past when regulatory proposals were developed by OPS in isolation. In
    sum, better regulations are being enacted in a much more timely
    fashion.
        Question 10. What is the status of the oil and gas pipeline
    community's Y2K preparedness efforts?
        Response. The oil and natural gas pipeline is on target to resolve
    year-2000-related computer problems before the end of this year. The
    oil pipeline industry will be prepared for the year 2000 changeover,
    and we are investing tens of millions of dollars to ensure this result.
    This is an industry that uses computing and remotely-operated
    technology extensively and has done so for many years. We were aware of
    the Y2K problem as early as almost any industry in the nation and were
    working to solve it before the recent attention to the issue. We are
    cooperating fully with the Federal Energy Regulatory Commission, which
    is leading the Oil & Gas Working Group of the President's Council on
    Year 2000 Convergence. Official estimates and statistics on oil and gas
    industry Y2K preparedness are available from the Working Group.
    Information is also available at the FERC website: www.ferc.fed.us/y2k.
    The President's Council is playing a useful role in helping to
    demonstrate not only internal readiness within a company, or an
    industry, but also readiness in the reliability of interconnections to
    essential services supplied externally, such as electric power, police
    and fire safety response and telecommunications. Ensuring these
    services is a concern for us as well, but we have less control over
    their reliability than we do for our own operations.
        Question 11. As the Department of Transportation has moved from a
    minimum standards approach to a risk based approach, are there some
    existing pipeline safety regulations that are no longer necessary?
        Response. The current leaders of the Department of Transportation,
    the Research and Special Programs Administration and the Office of
    Pipeline Safety, are sensitive to the need to remove or update any
    obsolete requirements so as to streamline and improve the efficiency of
    the pipeline safety regulatory program. For instance, we applaud recent
    efforts by RSPA to update industry standards and incorporate them into
    OPS regulations. Currently, we believe the reform of OPS rules is being
    carried out at an appropriate pace.
                  Fact Sheet on the Oil Pipeline Spill Record
        Oil pipelines move about 12.5 billion barrels of crude oil and
    refined petroleum products annually. Pipelines distribute about 60% of
    the oil transported in the United States, as measured in barrel-miles.
    (One barrel, transported one mile, equals one barrel-mile.)
        The oil pipeline industry's record of spills and reportable events
    \1\ has improved substantially over the last 30 years, with the annual
    number of spills falling by nearly 40% and the volume of oil spilled
    falling by about 60%. In the six years from 1969 through 1974, the
    pipeline system experienced 318 spills per year, for an average annual
    volume of 352,000 barrels. In the most recent six years, 1993-1998, the
    number of spills has averaged 197 per year, and the annual volume,
    143,000 barrels.
    ---------------------------------------------------------------------------
        \1\ The Office of Pipeline Safety publishes data from the
    Department of Transportation's Form 7000, required to be filed for
    incidents meeting any of the following criteria: loss of 50 barrels or
    more of liquid, escape of 5 barrels per day of highly volatile liquid,
    explosion, fire, death, bodily harm or estimated property damage
    exceeding $50,000. The 1993-1998 data discussed here reflect
    information available in February 1999.

    [GRAPHIC] [TIFF OMITTED] T5149.021

        In the years that stand out as peaks, a few very large spills
    pushed volumes higher. The largest spill in the database, for instance,
    occurred in 1970 at a pipeline company's tank farm; it incurred no
    property damage beyond company property. That spill accounted for more
    than 40% of the volume released in that year. In 1987, one large spill
    accounted for more than 30% of the volume. In 1998, one large spill
    accounted for 25% of the volume. Of particular note, however, was that
    1998's largest spill was about \1/4\ the size of 1987's and about 15%
    the volume of the 1970's largest.
        The median spill size (half the spills are smaller, half are
    larger) has been dropping over the period, an indication that improved
    overall performance is not just a matter of reducing those infrequent
    large spills. In the first six years of the period, the median spill
    size was 290 barrels. In the latest six years, it was 100 barrels.
        The volume of oil spilled from pipelines is equal to about one
    gallon (\24/1000\ths of a barrel) for every million barrel-miles of oil
    transported. In common household measures, this equates to less than
    one teaspoon per thousand barrel-miles.
        The most important cause of spills from pipeline systems is
    ``outside force damage,'' including so-called ``third-party damage.''
    (See table.) Outside force damage accounted for 38% of the 1993-98
    volume overall and more than half of the volume spilled from line pipe
    in the system.

         Releases from Liquids Pipelines, by Cause of Incident, 1993-98
    ------------------------------------------------------------------------
                                                       Avg. Annual
                          Cause                          Volume       Share
                                                        (Barrels)      (%)
    ------------------------------------------------------------------------
    Outside Force Damage............................        53991        38
    Corrosion.......................................        30759        21
    Other...........................................        23957        17
    Failed Weld.....................................        10651         7
    Incorrect Operation By Operator Personnel.......        10286         7
    Malfunction Of Control Or Relief Equipment......         6888         5
    Failed Pipe.....................................         6514         5
    Total...........................................       143072       100
    ------------------------------------------------------------------------
    Note: Reflects data available from DOT's Office of Pipeline Safety's
      Internet site as of 2/1/99

        The second largest cause of spills from pipeline systems over the
    1993-98 period was corrosion, accounting for 21% of the volume lost.
    The industry and its suppliers are constantly struggling to identify
    technologies, construction methods and inspection tools that will
    eliminate the risk of a pipeline failure due to corrosion. While one
    year does not constitute a ``trend,'' the latest data \2\ on 1998
    spills due to corrosion are promising: the volume, at about 10,000
    barrels, was one-third of the multi-year average, and accounted for
    less than 8% of the total.
    ---------------------------------------------------------------------------
        \2\ As of January 27, 1999.
    ---------------------------------------------------------------------------
        The Office of Pipeline Safety's data reflects estimates of liquids
    recovered directly, during the first clean-up phase in the immediate
    period following an event. The data exclude remediation and other
    recovery techniques that may take longer to complete. Even so,
    according to data available from the Office of Pipeline Safety Internet
    site as of February 1, 1999, initial recovery of spilled liquids
    equaled 57% of the gross loss over the 1993-98 period. For tank farms
    and pump stations, the initial, or direct, recovery was equal to almost
    75% of the gross loss. Estimated direct recovery on the largest spill
    in 1998 was 99%, for example. In fact, estimated direct recovery from
    all liquids releases in 1998, from line pipe as well as tank farms and
    pump stations, was equal to nearly 75% of the initial volume lost.
                                     ______

                               Commonwealth of Kentucky
                                      Public Service Commission
                                                          March 4, 1999
    Honorable Joe Barton
    Chairman
    Subcommittee on Energy and Power
    2125 Rayburn H.O.B.
    Washington, DC 20515
        Dear Mr. Barton: Enclosed, please find my responses to the follow-
    up questions concerning my testimony before the Energy and Power
    Subcommittee on February 3, 1999.
        I appreciated the opportunity to appear before the Subcommittee to
    express the concerns of Kentucky and the National Association of
    Regulatory Utility Commissioners relating to reauthorization of the
    natural gas and hazardous liquid pipeline safety programs.
        If there are further questions, or if I may be of further
    assistance to the work of the Subcommittee, please do not hesitate to
    contact me.
                Sincerely,
                                       Edward J. Holmes
              Vice Chairman, Kentucky Public Service Commission
                                        Chairman, Committee on Gas,
               National Association of Regulatory Utility Commissioners
    Enclosure (1)
    cc: Representative Markey

        Question 1. What portion of State pipeline safety programs are
    funded through the Department of Transportation?
        Answer. States are certified to carry out certain pipeline safety
    functions. These are funded up to 50 percent by the U.S. Department of
    Transportation.
        Question. How is the remainder funded?
        Answer. The remainder of the funds for the pipeline safety programs
    comes in most cases from the states' general funds allocated to the
    state regulatory agency. In some states, Public Utility Commissions are
    funded in total or in part through assessments on utilities.
        Question 2. Who decides how much a State is going to spend on
    pipeline safety efforts?
        Answer. Typically, the state regulatory agency submits a budget
    proposal in the same manner as other State executive agencies. The
    State regulatory agency submits the budget proposal to the U.S.
    Department of Transportation (DOT) for 50 percent funding. DOT awards
    funds up to 50 percent depending on availability of funds and on State
    scores in a DOT grant allocation formula. The DOT grant allocation
    formula factors in the state score on its annual evaluation, and
    certain information from the State Certification Agreement including
    the extent of state jurisdiction, inspector qualifications, number of
    inspection person-days, state adoption of maximum civil penalty
    requirement, state adoption of applicable federal regulations, One-Call
    system minimum requirements, state attendance at state/federal regional
    meetings, and meeting various deadlines.
        Question 3. Approximately how much does a State Pipeline Safety
    program cost?
        Answer. State programs will vary according to certified
    responsibilities, staffing quality, territory, cost of living, and
    staffing level. The staffing levels are based on responsibilities and a
    recommended staffing level. The U.S. DOT will likely have listings of
    State program costs according to the types of responsibilities.
        Question. What types of activities do the State programs support?
        Answer. State activities vary according to the type of Certificate
    of Agreement filed with the U.S. Secretary of Transportation. A state
    could implement an inspection program to include but not be limited to
    comprehensive evaluations, construction project reviews, follow-up
    inspections, specialized audits, and incident investigations. The types
    of operators being regulated could vary from local distribution
    companies, intrastate transmission companies, master meter facilities,
    liquefied natural gas facilities, liquefied petroleum gas facilities,
    hazardous liquids pipelines, offshore gas and liquid transmission,
    direct sales connections, and gathering facilities.
        Question 4. What level of resources is appropriate for
    reauthorizing legislation?
        Answer. The amount required to actually provide 50 percent funding
    in support of the State partnership programs.
        Question 5. Can the Risk Management Demonstration Program be
    applied on intrastate lines or is it only useful for interstate
    facilities?
        Answer. At present, the Risk Management demonstration program is
    applicable only to approved interstate pipeline operators. If the
    project is successful, the Risk Management approach will, in all
    likelihood, be offered to intrastate pipeline facilities and even to
    local distribution companies.
        Question 6. (From Mr. Markey) Considering how slow OPS has been in
    issuing regulations, do you think states should be able to set safety
    and environmental protection standards more stringent than federal
    standards?
        Answer. It certainly does seem that states should have the
    opportunity to set standards that improve the minimum safety standards
    in the Code of Federal Regulations. This would seem to be a matter for
    each states' legislative or regulatory processes. I would think that
    most states have the ability to set such standards if desired.
        As for the pace of OPS in issuing regulations, I am told that this
    is far better now than in past years and seems to be steadily improving
    as OPS/State working relationships mature further.
        Question. Do you think state governments should be able to conduct
    inspections and enforce regulations for interstate pipelines that run
    through the state?
        Answer. States may become certified to act as agents of the U.S.
    Department of Transportation with respect to interstate pipelines.
    Typically, such states conduct inspections and report their findings to
    the DOT for enforcement action by DOT. State regulatory agencies are
    not of one mind concerning whether states should be able to enforce
    regulations as well as to inspect. Some believe that it might be very
    confusing for an interstate pipeline to be subject to enforcement
    actions of several states. Others believe that state enforcement could
    be positive and should be done.
        Question 7. (From Mr. Markey) In your prepared testimony you
    mention that while states are receiving inadequate funding, half a
    million dollars are earmarked for Risk Management feasibility studies.
    Do you think these feasibility studies are taking away from basic
    inspection and enforcement activities directed at safety and
    environmental protection?
        Answer. As I stated in my testimony on behalf of NARUC, state
    regulatory agencies appear to agree that the pilot programs relating to
    risk management may show these to be valuable tools for ensuring
    safety. Our concern is that the development and expansion of such
    programs should not unduly draw funds or attention away from the core
    pipeline safety programs conducted under State/OPS partnerships. We do
    not have data that indicate that such diversion or attention has
    occurred. However, we believe that care must be taken to ensure that
    the core programs continue undiminished as the basic guarantors of
    public safety concerning pipelines. And it is important to note that,
    at present, the risk management studies apply only to interstate
    operators.
                                     ______

              Follow-up Questions for The American Gas Association
        Question 1. Do you believe that the 1996 amendments which allowed
    the Department of Transportation to employ risk assessment and risk
    management approaches have resulted in pipeline safety regulations
    which work better and cost less? Why or why not
        Response. A.G.A. believes that the 1996 Pipeline Safety Amendments
    for risk assessment and risk management approaches have resulted in
    better regulations being promulgated by DOT. ``Front-end'' loading the
    process by gathering information and hearing from stakeholders prior to
    entering the formal rulemaking process has enabled DOT to promulgate
    rules much more quickly than in the past. Furthermore, the rules issued
    after 1996 have been not been subject to court challenges resulting in
    even greater savings in outlays and personnel resources for the federal
    government. Finally, by working to understand the decision making
    process of pipeline operators through the risk management demonstration
    project, federal and state safety regulators are gaining additional
    knowledge that makes them more effective.
        Question 2. What level of resources is appropriate for
    reauthorizing legislation?
        Response. A.G.A. supports keeping funding levels through FY2004
    level with FY2000 levels. An annual inflation adjustment for years
    2001-2004 is acceptable. The Office of Pipeline Safety has largely
    completed several one-time initiatives to enable them to implement the
    1996 pipeline safety act, i.e. developing protocols for cost-benefit
    and risk assessment analyses and a framework for risk management
    demonstration projects.
        Question 3. The pipeline safety program is paid for through user
    fees. Who ultimately bears those costs? With the restructuring of the
    pipeline industry, are those costs still passed through on a full
    basis?
        Response. Interstate pipeline operators initially pay the user fee
    costs. In the past these costs flowed to the ultimate consumer.
    However, with increased competition and unbundling of service the
    situation has changed. Although transmission operators frequently
    discount their charges to compete it is unclear how much of the user
    fee assessment they are absorbing. The amount varies from customer to
    customer depending on the circumstances. However, it is very likely
    that some part of these costs are passed through to local distribution
    companies (LDCs) who pass through all or part of these costs to their
    customers. Industrial and commercial customers of both interstate
    pipelines and LDC also share in the costs.
        Question 4. The law currently requires OPS to fund ``up to 50
    percent'' of safety pipeline safety efforts. The States have argued
    that OPS needs to be funding a greater share of state pipeline safety
    programs. Should interstate pipelines, which aren't regulated at the
    state level, pay a greater share of state regulatory efforts?
        Response. DOT provides a portion of its user fees to states to
    offset up to 50% of the states pipeline safety program. States in turn
    agree to adopt the federal pipeline safety standards as minimum
    standards for their programs. Congress set up this partnership to
    ensure a consistent basis for providing for the public's safety in
    every State. This arrangement has worked well in the past and should be
    continued.
        Each year States submit a form to DOT outlining their safety budget
    and their compliance with certain DOT performance standards. If the
    State meets these standards DOT may grant them up to 50% of their
    safety budget costs. Last year, States received 42% of these cost on
    average. The total funds provided to States under this program
    represent less than half of OPS' annual user fee assessment. At least
    half of all transmission user fees are either passed through to (LDCs)
    or borne directly by (intrastate transmission) entities regulated by
    the State. The current system of user fee assessments is both equitable
    and simple to implement. A.G.A. does not believe that interstate
    pipelines are subsidizing state regulatory efforts.
        Question 5. What would be the result if the citizen suit provisions
    were modified to facilitate private enforcement actions?
        Response. The result would likely be an increase in lawsuits
    without a corresponding increase in public safety or the protection of
    the environment. Under current law, citizens can sue when the
    government fails to act on enforcement in a reasonable timeframe.
    Congress crafted this system to allow the regulators the opportunity to
    do their jobs while giving citizens the right to seek injunctive relief
    on their own if the system did not work properly. While some
    ``citizens'' may not agree with an enforcement decision, it does not
    follow that government enforcers are not acting properly or
    expeditiously. No modifications to the existing provisions of the law
    are justified.
        Question 6. Should the risk management concept be applied more
    broadly? Are legislative changes needed to have a broader application
    of risk management principles?
        Response. No legislative changes are needed at this time. A.G.A.
    believes that DOT presently has adequate authority to broaden the
    application of risk management principles. The key at this juncture is
    to thoroughly understand the principles and to work to identify areas
    of regulation where the application of risk management principles might
    be most effective. It is important to note that these pipelines and
    LDCs have been using some form of risk management analysis for many
    years. They use it to allocate resources expended over and above that
    necessary for compliance with regulations. In general companies spend
    twice as much on safety and maintenance as is required by strict
    compliance.
        Question 7. How is the risk assessment approach to regulation
    working with respect to pipeline safety? Are legislative changes needed
    to improve how it is applied?
        Response. The flexible risk assessment provisions of 1996 were
    modeled after President Clinton's ``Reinventing Government'' executive
    order 12866. They appear to be working very well. The most immediate
    result has been greater communication and information sharing between
    DOT and the regulated industry. DOT has worked with a stakeholder team
    to develop guidelines for applying risk assessment to new regulations
    and should begin this application in the near future. DOT also has
    utilized alternatives that the 1996 statute created that avoid do not
    require a risk assessment such as the negotiated rulemaking for
    operator qualification, adoption of industry standards for updating the
    LNG rules and pending consensus rules on corrosion and plastic piping.
        Question 8. How has the risk assessment approach improved the
    amount of time it takes to complete a pipeline safety rulemaking? Do
    you feel that the Department Of Transportation is enacting better
    regulations as a result of using a risk assessment approach?
        Response. The overall time to complete a rule is coming down. While
    the process is still lengthy, the approach of ``front-end'' loading has
    shown to result in more carefully crafted, consensus rules that are not
    challenged in court. Further, the official process from Notice of
    Proposed Rule to Final Rule has been significantly streamlined. Many of
    the issues before OPS are complex and necessitate the gathering of
    significant amounts of data. The process will never be fast enough for
    some but improvements are real.
        Question 9. What is the status of the oil and gas pipeline
    community's Y2K preparedness efforts?
        Response. Natural gas utilities are making substantial progress
    toward being ready to deliver gas into the Year 2000 and beyond,
    according to the American Gas Association (A.G.A.). According to the
    oil and natural gas industry survey, as of January 1999:

     More than four-fifths (86 percent) of the combined oil and gas
            industry companies indicated they are in the final stages of
            fixing and testing business information systems, such as
            software, to accommodate the Y2K date. That compares with 55
            percent of the companies in the industry's September 1998
            survey, cited by today's Senate report.
     Embedded chips do not pose a significant problem for the
            industries, as had previously been thought, according to the
            survey. The January survey found that 78 percent of all
            respondents said they are in the final stages of fixing and
            testing hardware and embedded systems for their operational
            integrity. This is far higher than the 46 percent response
            reported last September.
     Nearly all respondents (97 percent) said they expect to have
            Y2K contingency plans in place and tested by Sept. 30.
        Question 10. As the Department of Transportation has moved from a
    minimum standards approach to a risk based approach, are there some
    existing pipeline safety regulations that are no longer necessary?
        Response. It is not entirely accurate to state that DOT has moved
    to a risk based approach. DOT's program is actually a combination of
    both minimum standards and a risk-based approach. Existing regulations
    are not required to be reassessed using risk assessment but it may
    prove useful to do so in order to make sure the regulations provide
    safety in the most effective and efficient manner.
                                     ______

                      U.S. Department of Transportation
                   Research and Special Programs Administration
                                                         March 17, 1999
    The Honorable Joe Barton
    House of Representatives
    Washington, DC 20515-2017
        Dear Mr. Barton: Respectfully submitted for the record is the
    Research and Special Programs Administration's Office of Pipeline
    Safety's responses to Edward J. Markey's questions resulting from the
    February 3, 1999, subcommittee hearing on pipeline safety. A copy of
    this letter and the responses have been directly faxed to Lowell Ungar
    per Congressman Markey's request.
        If you have any questions or concerns, please contact me or
    Patricia Klinger, Acting Director, Office of Policy and Program
    Support, at (202) 366-4831.
                Sincerely,
                                                       Kelley S. Coyner
    Enclosure
    cc: Edward J. Markey
          Responses to Questions from Representative Edward J. Markey
        Question 1: The Pipeline Safety Act of 1992 required OPS to develop
    pipeline standards to protect the environment, specifically requiring
    OPS to identify areas ``unusually sensitive to environmental damage''
    by October 1994 and to require periodic inspections of pipeline
    infrastructure in those areas by October 1995. Why has OPS still not
    issued these environmental regulations four years after the first
    deadline? When can we expect these rules to be issued?
        Answer: After extensive consultation with numerous federal and
    state agencies, environmental groups and academia, RSPA developed a USA
    conceptual model that focuses on drinking water and ecological
    resources. The drinking water resources include public water systems,
    wellhead protection areas and sole source aquifers. The ecological
    resources include the following: threatened and endangered, critically
    imperiled, and imperiled species; depleted marine mammals; and areas
    containing a large percentage of the world's population of a migratory
    waterbird species.
        OPS is currently pilot testing this USA conceptional model, using
    drinking water and ecological data created and maintained by other
    government agencies and environmental organizations like The Nature
    Conservancy. During the pilot test period from March through June of
    this year, Federal and States agencies will be considering the model's
    adequacy in identifying the most important environmental areas in
    California, Texas and Louisiana, and the appropriateness and
    accessibility of environmental data to support this decision making.
    OPS is asking Federal, state and other water and ecological experts to
    verify that the USAs identified by the model are unusually sensitive
    areas, and that the model has not missed other USAS. This pilot testing
    provides a needed basis for regulation on USAS.
        A Federal Register notice that will seek comments on the evaluation
    of the USA conceptional model will be published in March 1999. This
    experience will lay the groundwork for regulatory action in fiscal year
    2000.
        Question 2: In 1996 Congress added requirements for cost-benefit
    analyses of regulations. Has this added burden taxed your staff
    resources or slowed issuance of the regulations? Why are environmental
    effects of pipeline accidents not included in the cost-benefit
    analyses?
        Answer: The Accountable Pipeline Safety Act of 1996 included a
    provision requiring peer review for cost-benefit analyses of pipeline
    safety regulations. OPS was already preparing cost-benefit analyses
    under Executive Order 12866 and the Department's policy. Thus, the
    statutory requirement was not an added burden to our regulatory
    process.
        n response to the 1996 mandate, OPS has worked with a government/
    industry task group to develop a risk assessment/cost-benefit framework
    during the past 18 months. We provided a draft of this framework to our
    two pipeline safety advisory committees and briefed both committees on
    the work of the task group. We will be seeking public comment and then
    finalizing the document. The final framework document will be provided
    to the pipeline safety advisory committees this summer.
        Environmental effects of pipeline accidents are included in cost-
    benefit analysis. Complete and precise estimates of monetary damage
    from pipeline spills are often difficult or impossible to quantify.
    Therefore, environmental damage from pipeline spills is often described
    qualitatively rather than quantitatively.
        Question 3: According to the National Transportation Safety Board,
    the Office of Pipeline Safety has only accepted 68% of NTSB
    recommendations, the worst accept-

    ance rate of any Department of Transportation administration. Why has
    OPS failed to follow so many NTSB recommendations?
        Answer: DOT and the NTSB both have important roles to play in
    pipeline safety. NTSB investigates pipeline accidents and makes
    recommendations; RSPA evaluates their recommendations. We believe that
    OPS and NTSB are in agreement on key safety issues, but sometimes
    differ on the way to resolve those issues. Often, the disagreement is
    over the OPS selection of a non regulatory solution.
        RSPA is making every effort to work more closely with the NTSB.
    Areas of particular collaboration are improvements to corrosion
    regulation, damage prevention, data improvements and investigation of
    human factors' impact on safety. At RSPA's initiative, we established
    meetings with NTSB staff every six months to discuss all open
    recommendations and RSPA's response to each of them. We do this in
    addition to the written responses and follow-ups that are required for
    every NTSB recommendation. We also coordinate informally with NTSB
    staff on the nature and status of our response to each recommendation.
        We have included NTSB experts in ongoing efforts to address
    pipeline safety problems, even without any recommendation from NTSB.
    For example, we have met with state governments, standards groups, and
    gas pipeline groups to discuss how underground clearances for utilities
    are addressed in various laws, regulations, and standards.
        The NTSB statement that OPS has only accepted 68% of NTSB
    recommendations includes all recommendations issued to OPS since the
    early 1970s. Of all recommendations closed by the NTSB during the last
    ten years, 83% were classified by NTSB as acceptable. Of the NTSB
    recommendations that are currently classified as open, 14 are
    classified as acceptable and seven as unacceptable. OPS continues to
    work to allow NTSB to close these recommendations as acceptable. In
    1998, OPS updated NTSB on actions being taken to address each open
    recommendation.
        In addition, the 27 NTSB recommendations issued in the last two
    years have not been classified by NTSB as either acceptable or
    unacceptable because OPS is now in the process of providing initial
    responses or because NTSB has yet to issue a classification
    determination.
        Question 4: Since the 1996 amendments, OPS has approved six
    demonstration projects among the 2,200 regulated operators. How much
    OPS staff time has gone into those six projects? Has the staff time
    used in these projects reduced OPS ability to issue regulations
    mandated by the Congress? Since the projects directly affect only a
    small percentage of operators, how has the information teamed from the
    projects affected generic regulations?
        Answer: OPS has allotted two full-time engineers to risk
    management, and regional staff and other experts are used on an as-
    needed basis. To date, this amounts to approximately five person-years
    annually. This allocation of staff resources has not reduced OPS's
    ability to issue regulations mandated by the Congress. OPS augments in-
    house risk management capability by contracting with risk management
    experts and consulting with representatives from state agencies.
        The Demonstration Program represents OPS's most ambitious test of
    risk-based approaches to improve safety, environmental protection, and
    service reliability. While risk management may not be the appropriate
    regulatory alternative for every operator, it has provided information
    and techniques that OPS is already using with other operators in the
    compliance program and in shaping new regulations.
        n the compliance area, our experience in the Demonstration Program
    has influenced us to move away from a piecemeal inspection process to a
    system-based approach. Using this approach on Alyeska Pipeline, we are
    conducting a risk-based review of all the valves on the system
    resulting in repair and replacement of valves in environmentally
    sensitive areas. Using this approach on Colonial Pipeline, we have
    worked with the Department of Justice to order system wide evaluation
    of all water crossings on a risk basis.
        To extend the risk assessment process outside the pipeline
    companies, OPS now routinely uses internet-accessible information
    systems, electronic town meetings, and other approaches that solicit
    and incorporate broad-based public input into the Risk Management
    Demonstration Programs. In addition, we now solicit involvement on
    other programs such as damage prevention, mapping and system integrity,
    using techniques that were first developed for the Demonstration
    Program.
        Question 5: In 1996 we assigned peer review of risk assessment to
    the existing advisory committees. What risk assessments have been peer
    revised by the advisory committees? What changes have been made in
    response to the committee reviews? One-third of these committees are
    composed of industry representatives. What steps have you taken to
    ensure that conflicts of interest do not color their reviews.
        Answer: A table of rulemaking projects for which risk assessments
    were reviewed by the advisory committee is attached. To the extent that
    any changes are made in a rule because of advisory committee comments,
    these are noted in the rulemaking documents published in the Federal
    Register. To date, there has been only one significant change to a
    proposed rule because of the peer review. After providing risk
    assessment information to the advisory committee and a full discussion
    of our proposed requirement, in 1998, RSPA added an environmental
    factor to the hydrostatic pressure testing requirement for hazardous
    liquid pipelines.
        Although one-third of the advisory committee membership is composed
    of representatives from industry, two-thirds are derived from the
    public and state and federal agencies with expertise in issues relevant
    to pipeline safety and environmental protection. RSPA has been
    successful in its effort to include government and public members with
    environmental interests and expertise as well as a broad range of
    engineering and safety expertise. The full and open discussion of the
    advisory committee process provides the necessary balance between
    interests.

       Table of Rules Reviewed by the Technical Pipeline Safety Standards
      Committee (TPSSC) and the Technical Hazardous Liquid Pipeline Safety
                    Standards Committee (THLPSSC) Since 1996
    ------------------------------------------------------------------------
            Rulemaking Topics              Committee            Status
    ------------------------------------------------------------------------
    Leak Detection and Emergency      THLPSSC...........  Final rule
     Flow Restriction Devices.                             published
                                                           governing
                                                           computerized leak
                                                           detection
                                                           methods. Further
                                                           action pending
                                                           development of
                                                           ``unusually
                                                           sensitive area''
                                                           definition
    Risk-Based Approach to            THLPSSC...........  Final rule
     Hydrostatic Testing.                                  published
                                                           allowing
                                                           operators to
                                                           exclude certain
                                                           low risk
                                                           pipelines and
                                                           certain pipelines
                                                           in which an
                                                           instrumented pig
                                                           is run from the
                                                           requirement to
                                                           hydrostatically
                                                           test older
                                                           hazardous liquid
                                                           pipelines
    Excess Flow Valve Performance     TPSSC.............  Final rules
     Standards and Customer                                published
     Notification.                                         establishing
                                                           standards for the
                                                           performance of
                                                           excess flow
                                                           valves installed
                                                           in gas pipelines,
                                                           and for notifying
                                                           gas customers of
                                                           the availability
                                                           of such valves
    Low-stress Hazardous Liquid       THLPSSC...........  Final rule
     Pipelines.                                            published
                                                           excluding certain
                                                           short, low risk
                                                           pipelines from
                                                           the hazardous
                                                           liquid pipeline
                                                           safety standards
    Standards for Breakout Tanks....  THLPSSC...........  Notice of proposed
                                                           rulemaking (NPRM)
                                                           published to seek
                                                           comments on new
                                                           design,
                                                           construction, and
                                                           maintenance
                                                           standards for
                                                           certain hazardous
                                                           liquid storage
                                                           tanks
    Siting, Design, and Construction  TPSSC.............  NPRM published
     Standards for Liquefied Natural                       proposing revised
     Gas Plants.                                           standards for
                                                           liquefied natural
                                                           gas plants
                                                           associated with
                                                           gas pipelines
    Metrication.....................  TPSSC and.........  Final rule was
                                      THLPSSC...........   issued adding
                                                           metric
                                                           measurements to
                                                           the gas and
                                                           hazardous liquid
                                                           pipeline safety
                                                           standards
    ------------------------------------------------------------------------

                                     ______

                             Environmental Defense Fund
                                           Washington, DC 20009
                                                         March 25, 1999
    The Honorable Joe Barton, Chairman
    Subcommittee on Energy and Power
    Committee on Commerce
    Room 2125, Rayburn House Office Building
    Washington, DC 20515-6115
        Dear Congressman Barton: Thank you once again for holding a hearing
    on February 3, 1999 on reauthorization of the natural gas and hazardous
    liquid pipeline safety programs, and for inviting testimony from the
    Environmental Defense Fund (EDF). The following are EDF's responses to
    the Questions posed in your February 19, 1999 letter:
        Question #1: Do you believe that the 1996 amendments which allowed
    the Department of Transportation to employ risk assessment and risk
    management approaches have resulted in pipeline safety regulations
    which work better and cost less? Why or why not?
        Answer #1: The risk assessment provisions of the 1996 amendments
    have not yet been fully implemented for any proposed or final
    regulation for natural gas or hazardous liquid pipelines, and the cost-
    benefit analysis protocol is still under development. Thus, there is
    currently no basis for assessing whether the risk assessment provisions
    have resulted in better or cheaper pipeline safety regulations. Note
    that the examples of recent regulatory improvement given by John
    Zurcher in his testimony representing the Interstate Natural Gas
    Association of America, are unrelated to the risk assessment provisions
    of the amended pipeline safety statute. The mandatory risk assessment
    provisions of the law have, if anything, slowed down regu-

    latory development by the Office of Pipeline Safety (OPS) in the over
    two year period since the law's passage.
        The risk management provisions of the 1996 amendments have not
    resulted in any improvements to the pipeline safety regulations, as no
    new regulations or initiatives, nor changes to existing regulations,
    have been proposed by OPS based on knowledge gained through the risk
    management demonstration projects.
        Question #2: What level of resources is appropriate for
    reauthorizing legislation?
        Answer #2: EDF agrees with the testimony of state pipeline
    officials that the annual appropriation levels should be sufficient to
    cover 50% of states' costs, since state officials perform the vast
    majority of pipeline safety inspections. Section 60107(a) of the
    pipeline safety law authorizes federal grants to reimburse states for
    ``up to 50 percent'' of their costs.
        Additionally, EDF believes Congress should be concerned that OPS
    may be devoting too much of its annual appropriations to the Risk
    Management Demonstration project program, while simultaneously not
    meeting Congressionally-mandated deadlines for standards needed to
    protect the environment. These deadlines include the 1994 deadline to
    identify environmentally sensitive areas (Section 60109), and the 1995
    deadline for companies to periodic inspect pipelines in such areas
    (Section 60102(f)(2)). Some language ensuring that OPS meets these
    deadlines expeditiously should accompany Congressional appropriations.
        Question #3: Should the risk management concept be applied more
    broadly? Are legislative changes needed to have a broader application
    of risk management principles?
        Answer #3: To date, there is no evidence of superior pipeline
    performance for pipelines participating in the risk management program
    than would otherwise have been the case. Moreover, as stated in my
    February 3 testimony:
        During the two year period of this program, OPS only has approved
            four of these projects and granted only one regulatory
            exemption . . . [the risk management program] in no way
            provides the public with additional information about pipeline
            risks, nor does it demonstrate problems with existing standards
            that need to be overcome through an individualized process. In
            fact, because companies can undertake nearly all these actions
            without the formal involvement of OPS (e.g., implementing
            environmental management systems), it is unclear why this
            program even needs to be part of the statute.
        Before expanding this program, there needs to be conclusive
    evidence of its benefits. There are extensive costs to government for
    the risk management program, and these costs come at the expense of
    other important federal activities such as meeting Congressional
    deadlines for environmental protection standards.
        Question #4: How is the risk assessment approach to regulation
    working with respect to pipeline safety? Are legislative changes needed
    to improve how it is applied?
        Answer #4: See the answer to Question 1. Additionally, as noted in
    my February 3 testimony, ``despite EDF's efforts, OPS staff have not
    included language covering environmental benefits into any of its draft
    documents on performing cost-benefit analyses.'' Such language is
    essential to ensure development of regulations that adequately protect
    human health and the environment.
        Question #5: How has the risk assessment approach affected the
    amount of time it takes to complete a pipeline safety rulemaking? Do
    you feel that the Department of Transportation is enacting better
    regulations as a result of using a risk assessment approach?
        Answer #5: See the answers to Questions 1 and 4.
        Question #6: As the Department of Transportation has moved from a
    minimum standards approach to a risk based approach, are there some
    existing pipeline safety regulations that are no longer necessary?
        Answer #6: As discussed in my February 3 testimony, the trend for
    releases from hazardous liquid pipelines has been upward since 1995, or
    around the time OPS began moving toward a risk based approach. For this
    reason, and the lack of evidence that a risk based approach has
    resulted in superior performance for the overall pipeline universe, EDF
    observes that the greater problem appears to be regulatory deficiencies
    rather than over-regulation of natural gas and hazardous liquid
    pipelines. As the attached article from the March 8, 1999 Boston Globe
    states, National Transportation Safety Board chairman Jim Hall gives
    the federal Office of Pipeline Safety a ``big fat F'' on its
    performance in overseeing pipelines.
        I apologize for the delay in sending these responses to you but, as
    your staff was aware, your letter arrived at my office during the
    beginning of a multi-week vacation.
        Please let me know if I can be of any further assistance. Thank you
    very much for this opportunity to respond to your questions.
                Sincerely,
                                          Lois N. Epstein, P.E.
                                                        Senior Engineer
    cc: The Honorable Ralph Hall, Ranking Democratic Member
    Attachment

                   [Monday, March 8, 1999--The Boston Globe]

                         `Big Fat F' on Pipeline Safety
                         [By Scott Allen--Globe Staff]
        Avila Beach, Calif.--This used to be Hollywood's idea of a funky
    beach town, a sunbaked row of businesses sandwiched between green hills
    and endless Pacific surf. The poster from a 1978 movie filmed here,
    ``California Dreaming,'' still hangs proudly in the Custom House
    restaurant.
        But that was before a clothing shop owner ``struck oil'' when she
    tried to expand a few years ago. Now, bulldozers are demolishing most
    of downtown to clean up massive oil contamination from leaking
    pipelines that went undetected for years.
        ``This town used to have its own hip atmosphere,'' said a disgusted
    Lindsey Olsen, looking at the metal sheeting that encloses the land
    where her favorite nightclub once stood. ``Now look at it. It's ugly.''
        While the United States has taken strides in reducing tanker spills
    since the Exxon Valdez accident of 10 years ago, the country has made
    less progress against other dangerous spills, especially pipeline
    leaks. Nearly 8 million gallons of hazardous liquids escaped US
    pipelines in 1998, the most since 1991.
        Though pipeline leaks don't get the attention of tanker accidents
    they are nearly as destructive. Unocal Corp. spilled at least 8.5
    million gallons of petroleum products from pipelines in a fragile dune
    area near Avila Beach as well as more than 400,000 gallons that flowed
    under the village.
        The National Transportation Safety Board, which investigates
    pipeline accidents, has warned for years that many pipelines are old,
    poorly maintained, and operated by underqualified people--sometimes
    with deadly results. Two teenagers in Lively, Texas, were killed in
    1996 when liquid butane escaped from a corroded pipe, causing an
    explosion.
        But the National Transportation Safety Board chairman, Jim Hall,
    complains that the US Department of Transportation office in charge of
    regulating the nation's 157,000 miles of pipeline hasn't been
    listening.
        ``The Office of Pipeline Safety has just had a pretty terrible
    track record for a number of years,'' Hall said, adding that the office
    adopts significantly fewer Safety Board recommendations than federal
    agencies such as the Federal Aviation Administration. He said he'd give
    the Office of Pipeline Safety ``a big fat F on everything they've
    done.''
        Few believe that better regulation would have helped at Avila
    Beach, where the leaks began decades ago and where the state accused
    Unocal of withholding information about the spill outside of town.
    However, Safety Board officials say other spills could be avoided with
    tougher regulation.
        In particular, Hall wants tougher rules to prevent corrosion, the
    cause of the Texas explosion as well as a major fuel oil spill in South
    Carolina's Reedy River in 1996.
        Hall also believes lax employee training requirements have
    contributed to accidents such as the propane explosion in San Juan that
    killed 38 people in 1996. Gas company workers failed to find the leak
    despite repeated efforts.
        Department of Transportation officials say they agree with the
    Safety Board's general concerns, but disagree that their agency isn't
    making pipelines safer. They say the Office of Pipeline Safety adopts
    far more Safety Board recommendations now than in the past and that the
    volume of spills in the 1990s is less than in previous decades.
        ``We've made tremendous strides in improving pipeline safety,''
    said Kelley F. Coyner, administrator of the Research and Special
    Programs Administration, which oversees the Office of Pipeline Safety.
        She said the office recently worked with industry, state
    regulators, and others to come up with stronger pipeline worker
    qualifications, though the Safety Board criticized the proposals as
    weak. Also, Coyner said that new rules on leak detection will go into
    effect in July and that her agency is experimenting with education
    programs to reduce construction accidents.
        That's not enough for the National Pipeline Reform Coalition, a
    group of environmentalists as well as labor unions and business and
    government leaders who are pushing for tougher laws and pipeline safety
    enforcement.
        Lois Epstein of the Environmental Defense Fund, a member of the
    coalition, told a congressional committee last month that the Office of
    Pipeline Safety has not identified environmentally valuable areas near
    pipelines, despite a 1992 law to do so. And she said the agency's fines
    are so low that it may be cheaper for pipeline operators to pay rather
    than prevent leaks.
        At Avila Beach, about to virtually shut down for 18 months for the
    oil cleanup, Tony Quale doesn't have to be convinced that pipelines are
    dangerous. As the cleanup project rumbled behind him, he said
    nostalgically, ``The loudest sound used to be the crashing of the
    waves.''
                                     ______

                      U.S. Department of Transportation
                   Research and Special Programs Administration
                                                         March 29, 1999
    The Honorable Joe Barton
    Chairman, Subcommittee on Energy and Power
    Committee on Commerce
    House of Representatives
    Washington, DC 20515-2017
        Dear Mr. Barton: Respectfully submitted for the record is the
    Research and Special Programs Administration's consolidated response to
    follow-up questions from the February 3, 1999, subcommittee hearing on
    pipeline safety. Although questions 17 through 21 were previously
    forwarded under separate cover to Mr. Markey, they are also included
    for your convenience.
        If you have any questions or concerns, please contact me or
    Patricia Klinger, Acting Director, Office of Policy and Program
    Support, at (202) 366-4831.
                Sincerely,
                                                       Kelley S. Coyner
    Enclosure
                Responses to Questions from Chairman Joe Barton
        Question 1: Could you please explain how the risk assessment
    provisions from the 1996 reauthorization are being implemented?
        Answer: We have developed a policy framework to address the risk
    assessment provisions from the Accountable Pipeline Safety and
    Partnership Act of 1996 and the cost-benefit provisions of E.O. 12866.
    First, both the Technical Hazardous Liquid Pipeline Safety Standards
    Committee (hazardous liquid pipelines) and the Technical Pipeline
    Safety Standards Committee (gas pipelines) have been briefed on the
    risk assessment and cost-benefit requirements that must guide the
    preparation and presentation of regulatory proposals. Each committee
    has five public members, five government members and five industry
    members.
        Second, RSPA has worked with a government/industry task group to
    develop a risk assessment/cost-benefit framework during the past 18
    months. The framework is a guidance document that establishes the steps
    to follow in identifying and evaluating cost and benefits of proposed
    initiatives affecting regulated pipelines. We provided a draft of this
    framework to our two pipeline safety advisory committees and briefed
    both committees on the work of the task group. Shortly, we will be
    seeking public comment and then finalizing the document. The final
    framework document will be provided to the pipeline safety advisory
    committees this summer.
        Third, RSPA is now providing risk assessment and cost-benefit
    analyses with each proposed rule submitted to the advisory committees
    for voting via the mail or at semi-annual meetings. The advisory
    committees also receive full briefings by RSPA staffers on all
    proposals at the semiannual pipeline safety advisory committee
    briefings. The advisory committees must vote on all proposed
    regulations after a review of the risk assessment and cost-benefit
    information. RSPA makes adjustments to the proposals based on the input
    of the committee members.
        Question 2: How has it affected the amount of time it takes to
    complete a rulemaking?
        Answer: It has had little effect on the amount of time required to
    process a rulemaking. Analysis of costs and benefits and of risks was
    already being done for pipeline safety standards under DOT policy and
    Executive Order 12866. Submitting the risk assessment information to
    our technical advisory committees, the Technical Hazardous Liquid
    Pipeline Safety Standards Committee or the Technical Pipeline Safety
    Standards Committee, has not required any more time since the
    committees already are required to judge the technical feasibility,
    reasonableness, and practicability of all of our proposed rulemakings
    before the rules are issued. In other words, RSPA practice was codified
    and no delays have been experienced in providing risk assessment
    information or processing votes by mail ballot or at semiannual
    meetings of the committees.
        Question 3: Are modifications to the risk assessment portion of the
    statute needed to make it work more effectively?
        Answer: Based on our experience modification to the statute is not
    needed.
        Question 4: There are three rulemakings that the Department of
    Transportation is required to complete under prior reauthorizations
    which have not yet been completed. Could you please explain the status
    of those rulemakings and when they are likely to be completed?
        Answer: The three rulemakings follow:
        Emergency Flow Restricting Devices (Docket No PS-133). Under 49
    U.S.C. 60102(j), we are required to survey and assess the effectiveness
    of emergency flow restricting devices (EFRD) and other procedures,
    systems, and equipment used to detect and locate hazardous liquid
    pipeline ruptures and minimize product releases. Further, we are
    required to prescribe standards on the circumstances under which an
    operator of a hazardous liquid pipeline facility must use an EFRD or
    another procedure, system, or equipment.
        In January 1994, we issued an advance notice of proposed rulemaking
    to obtain information about the performance of EFRDs and leak detection
    systems now in service (59 FR 2802). We also investigated the use of
    computerized systems to collect pipeline operational data and detect
    leaks. On September 29, 1995, we published a report of the results.
    And, in October 1995, we held a public workshop on issues involved in
    regulating the use of EFRDs. Then on July 6, 1998, we published rules
    on using software-based systems to detect leaks on hazardous liquid
    pipelines (63 FR 36373). The rules require that operators who use these
    systems must design, operate, and maintain them in accordance with the
    consensus standard, ``API 1130, Computational Pipeline Monitoring,''
    published by the American Petroleum Institute. These rules were needed
    to advance the industry's acceptance of the technology, and to reap the
    safety and environmental advantages inherent in API 1130, which are
    accelerated leak detection and response. We plan to conduct further
    rulemaking on EFRDs and leak detection systems after completion of a
    separate proceeding now underway to define areas that are unusually
    sensitive to environmental damage in the event of a hazardous liquid
    pipeline accident (see below). We recognize that these areas are
    leading candidates for the use of EFRDs and leak detection systems.
        Areas Unusually Sensitive to Environmental Damage (Docket No. PS-
    140.) The pipeline safety laws (49 U.S.C. 60100 et seq) require the DOT
    to define areas unusually sensitive to environmental damage in the
    event of a hazardous liquid pipeline accident and to prescribe
    regulations that establish criteria for identifying each hazardous
    liquid pipeline facility and gathering line located in these unusually
    sensitive areas (USAs). RSPA has sought public participation through
    six public workshops and a series of technical meetings.
        RSPA developed a USA conceptual model that focuses on drinking
    water and ecological resources. The drinking water resources include
    public water systems, wellhead protection areas and sole source
    aquifers. The ecological resources include threatened and endangered;
    critically imperiled and imperiled species; depleted marine mammals;
    and areas containing a large percentage of the world's population of
    migratory waterbird species. We are currently pilot testing this model
    in California, Texas and Louisiana, using data created and maintained
    by other government agencies and environmental organizations like The
    Nature Conservancy. During the pilot, RSPA is asking Federal, state and
    other water and ecological experts to verify the adequacy of the model.
    The pilot testing will provide us practical experience on which to base
    a regulation on USAs.
        We are planning to issue an NPRM on defining and identifying USAs
    in late 1999 (fiscal year 2000). The definition will provide a basis
    for associated rulemaking actions Congress has called for on EFRDs and
    increased inspections.
        Increased Inspection Requirements (Docket No. PS-141). Under 49
    U.S.C. 60102(f)(2), we are to prescribe, if necessary, additional
    standards requiring the periodic inspection of certain pipelines
    located in high-density population areas, in areas unusually sensitive
    to environmental damage, and in crossings of commercially navigable
    waterways. The standards must include any circumstances under which an
    inspection must be conducted with an instrumented internal inspection
    device and, if the device is not required, use of an inspection method
    that is at least as effective as using the device in providing for the
    safety of the pipeline.
        Regardless of their location, all gas and hazardous liquid
    pipelines are subject to inspection requirements under DOT's pipeline
    safety standards (49 CFR Parts 192 and 195). We began investigating the
    need for additional inspection requirements for pipelines in the areas
    described above by holding a public workshop in Washington, DC, on
    October 19, 1995. The purpose of the workshop was to exchange
    information with the public on various issues associated with requiring
    additional inspections, including whether present inspection
    requirements are sufficient, the effectiveness of instrumented internal
    inspection devices, the circumstances that might demand additional
    inspections, and the costs involved. We will take further action to
    assess the need for additional inspection requirements after defining
    areas that are unusually sensitive to environmental damage in the event
    of a hazardous liquid pipeline accident, as discussed above.
        Question 5: As the Department of Transportation has moved from a
    minimum standards approach to a risk-based approach, are there some
    existing pipeline safety regulations that are no longer necessary?
        Answer: The risk-based approach we are implementing addresses the
    most safety sensitive matters on a priority basis. We do not anticipate
    abandoning the minimum standards approach, but rather improving it by
    using explicitly risk-based criteria to ensure that each pipeline
    company, whether large or small, can select the set of safety solutions
    that are appropriate to individual circumstances.
        A report is due to Congress on March 31, 2000, documenting the
    results of the risk management demonstration program. While this report
    will evaluate whether or not application of risk management should be
    incorporated in the pipeline safety program on a permanent basis, it
    may identify circumstances when certain existing safety regulations may
    no longer be necessary.
        Question 6: What portion of State pipeline safety programs are
    funded through the Department of Transportation? How is the remainder
    funded?
        Answer: In 1998, the Federal pipeline safety grant allocations
    represented 41 percent of the estimated State requests in both the
    natural gas and hazardous liquid programs. Most states fund their
    pipeline safety programs through a `gross receipts' assessment of the
    utilities. There are a few states that have a user fee assessment on
    pipeline facilities. Generally, these assessments complement the
    funding they get from the pipeline safety grant program.
        Question 7: What level of resources is the Office of Pipeline
    Safety requesting for FY 2000?
        Answer: We have requested $38,187,000 and 105 FTE.
        Question 8: Should the risk management concept be applied more
    broadly? Are legislative changes needed to have a broader application
    of risk management principles?
        Answer: Because we are just beginning to evaluate the application
    of risk management in our oversight of operators' programs, an
    assessment of whether to extend risk management principles would be
    premature. Based on what we have seen, the concept is promising.
        Question 9: What is the status of the Office of Pipeline Safety and
    the oil and gas pipeline community's Y2K preparedness efforts?
        Answer: RSPA is working collaboratively with government and
    industry through the President's Council on Y2K Conversion Energy
    Sector Oil and Gas Workgroup. Working with the Council Oil and Gas Work
    Group, RSPA participated in creation of a comprehensive industry survey
    to assess industry readiness and contingency planning. The survey will
    be updated quarterly and is our primary means of tracking and
    monitoring industry Y2K progress. The survey indicates a high degree of
    awareness throughout industry and demonstrates that an effort is
    underway to assure a high level of readiness. The results of the Work
    Group's first survey are cautiously optimistic, projecting that
    pipeline Y2K failures will be minimal.
        We are working to promote industry and government cooperation,
    public awareness, coordination of potential issues and solutions, and
    companies active resolution of identified problems. We are coordinating
    our efforts with the Council Sectors on Transportation, Environment,
    and Emergency Services to facilitate solutions and contingency
    planning. We serve as a critical link between state pipeline safety
    agencies, state utility commissions, and the oil and gas industry. We
    work with state programs to keep them informed of Y2K developments and
    to encourage their monitoring of companies they regulate.
        Last year, we sent an advisory bulletin to industry and our state
    partners that outlined the problem, the Work Group's strategy, and
    identified industry and government contacts for companies needing
    advice. We also provide advice and assistance to companies during
    inspections.
        During 1999, we will encourage the pipeline industry to conduct
    testing after taking steps to protect the public and the environment
    from possible failures during testing. We are about to issue a Federal
    Register notice encouraging testing by operators and informing them of
    our enforcement policy for companies which do not take appropriate
    planning actions. RSPA has authority to inspect records as needed to
    enforce the pipeline safety statutes. If a Y2K related safety risk were
    identified through inspection, further Y2K compliance information could
    be requested. If pipeline facilities operations are determined to pose
    a hazard to life, property, or the environment, RSPA can issue a
    corrective action order after providing notice and an opportunity for a
    hearing. Notice and hearing may be waived if a situation presents an
    imminent threat to life, property, or the environment.
        Existing regulations already address many of the potential failure
    areas of Y2K. For example, in the event of failure of SCADA systems,
    telecommunications, or electricity, operators already are required to
    have contingency plans including preparation for manual operations. As
    operators progress with their Year 2000 assessments, the industry is
    generally moving at a fast pace to replace old potentially vulnerable
    systems with new Year 2000 compliant systems. We feel that the industry
    will be safer as a whole as a result of the massive effort underway to
    assure Y2K compliance.
        Question 10: Recently, both the Department of Transportation and
    the Environmental Protection Agency have begun to assert jurisdiction
    over petroleum storage tanks (breakout tanks). As a result, tank
    operators are being asked to meet different and conflicting regulatory
    requirements. What efforts are being taken to resolve this situation?
    When is a resolution likely to occur?
        Answer: RSPA and Environmental Protection Agency (EPA) Region and
    Headquarters representatives are working to resolve and clarify
    jurisdictional issues regarding storage tanks, particularly those that
    serve both pipelines and other modes of transportation. We will
    hopefully reach agreement on the best way for each agency to exercise
    its regulatory authority without creating undue burdens on industry. In
    this regard, we are working to (1) clarify each agency's jurisdiction
    to issue pollution prevention and response planning regulations, and
    define which facilities are jointly regulated and which are exclusively
    subject to EPA or RSPA regulations; (2) develop a way to resolve site-
    specific jurisdictional disputes; (3) develop information that explains
    each agency's jurisdiction at intermodal facilities; (4) jointly
    oversee operator compliance; (5) address response preparedness issues
    at certain facilities; and (6) commit additional resources to regional
    response activities. RSPA and EPA staff will meet again in March to
    continue their discussions.
        Question 11: (From Mr. Dingell) In its testimony, the Department
    discusses its formation of a cost-benefit framework working group that
    will establish the framework for future cost-benefit analysis.
        (a) When does DOT expect to complete this framework?
        (b) How will this framework differ from the Clinton
    Administration's Executive Order on Risk Assessment?
        Answer: (a) We have developed a policy framework to address the
    risk assessment provisions from the Accountable Pipeline Safety and
    Partnership Act of 1996 and the cost-benefit provisions of E.O. 12866.
    We provided a draft of this framework to our two pipeline safety
    advisory committees and briefed both committees on the work of the task
    group. Shortly we will be seeking public comment and then finalizing
    the document. The final framework document will be provided the
    pipeline safety advisory committees this summer. We expect to have a
    completed product for the November, 1999 committee meetings.
        (b) This framework does not substantially differ from that provided
    for by Executive Order on Regulatory Planning and Review, E.O. 12866.
    We created the framework to the advisory committees who are now changed
    by law to review risk assessment information for each proposed
    regulation. The framework elaborates on the steps to follow in
    identifying and evaluating information on costs and benefits.
        Question 12: (From Mr. Dingell) What is the status of OPS action
    under Sec. 60102(f) regarding standards for the replacement of pipeline
    to accommodate internal inspection devices and periodic inspection of
    pipelines?
        Answer: A final rule amending the gas and hazardous liquid pipeline
    safety regulations to require that certain new and replaced pipelines
    be designed and constructed to accommodate the passage of instrumented
    internal inspection devices was issued on April 12, 1994 (59 FR 17275).
    All new gas transmission and all new and replaced hazardous liquid
    pipelines must now accommodate internal inspection devices. However,
    because of two petitions for reconsideration and extensive public
    comment and advisory committee recommendations, the requirements have
    been stayed with respect to certain replaced sections of gas
    transmission and all offshore gas pipelines. We expect to complete
    rulemaking on these last issues in 1999.
        Question 13: (From Mr. Dingell) Has OPS issued standards designed
    to identify pipelines in high density population areas pursuant to Sec.
    60109?
        Answer: Both the gas and hazardous liquid pipeline safety
    regulations were written prior to enactment of that section in 1996 and
    contain requirements for pipelines located in high density populated
    areas and these areas are defined. In the gas pipeline safety
    regulations they are referred to by class location and in the hazardous
    liquid pipeline safety regulations they are referred to by definition.
        High density population areas are identified in the national
    pipeline mapping system which is being created now based on voluntary
    operator participation. We expect 75% of operators to provide
    information for the system by the end of year 2000. The system will
    accurately depict pipelines in relation to people and environmentally
    important areas. RSPA has issued mapping standards for collection of
    data in the national and state repositories. These standards have been
    coordinated with the Department's Bureau of Transportation Statistics
    and comply with Federal Geographic Data Standards for spacial data. Ten
    state agencies, six pipeline mapping vendors, and 22 pipeline companies
    pilot tested the national pipeline mapping system and we are actively
    soliciting data now from all hazardous liquid and natural gas
    transmission operators.
        Question 14: (From Mr. Dingell) In addition to the previously
    referenced OPS activity, the Pipeline Safety Act requires DOT to
    promulgate a number of regulations and standards. Please provide an
    inventory on DOT's progress to date in fulfilling these requirements.
    (a) For completed actions, please provide the date on which the action
    was finalized. (b) For pending actions, please provide an expected
    completion date. (c) For actions that required completion by a
    statutory date certain, please reference the required statutory
    deadline in your response.
        Answer: The chart below describes all outstanding mandated pipeline
    safety rulemakings and those completed since 1998.

    ----------------------------------------------------------------------------------------------------------------
                  Docket No.                        Title                Current Phase               Schedule
    ----------------------------------------------------------------------------------------------------------------
    PS-94................................  Qualification of         Final Rule being         Final Rule 8/99
                                            Pipeline Personnel.      prepared.
    PS-118...............................  Excess Flow Valve (EFV)  Final Rule published 2/  .......................
                                            Customer Notification.   98.
    PS-126...............................  Passage of Internal      Final Rule for gas       Final Rule 6/99
                                            Inspection Devices.      pipeline
                                                                     ``replacement''
                                                                     sections being
                                                                     prepared.
    PS-133...............................  Emergency Flow           NPRM awaiting            NPRM 12/00 \1\ Final
                                            Restricting Devices      definition for           Rule not yet scheduled
                                            (EFRDs).                 unusually sensitive
                                                                     areas.
    PS-140...............................  Areas Unusually          NPRM being prepared....  NPRM 12/99 Final Rule
                                            Sensitive to                                      not yet scheduled
                                            Environmental Damage
                                            (USAs).
    PS-141...............................  Increased Inspection     NPRM awaiting            NPRM 12/00 \2\ Final
                                            Requirements.            definition for           Rule not yet scheduled
                                                                     unusually sensitive
                                                                     areas.
    RSPA-97-2094.........................  Underwater Abandoned     NPRM being prepared....  NPRM 5/00 \3\ Final
                                            Pipeline Facilities.                              Rule not yet scheduled
    RSPA-97-3001.........................  Periodic Underwater      NPRM being prepared....  NPRM 6/01 \4\ Final
                                            Inspections.                                      Rule not yet scheduled
    RSPA-98-4868.........................  Gas Gathering Line       Preparing for an         Meeting 7/00 \5\ Final
                                            Definition.              electronic public        Rule not yet scheduled
                                                                     meeting in April 1999.
    ----------------------------------------------------------------------------------------------------------------
    \1\ Statutory deadline 10/96
    \2\ Statutory deadline 10/95
    \3\ Statutory deadline 4/94
    \4\ Statutory deadline 10/95
    \5\ Statutory deadline 10/94

        Question 15: Please provide a history of all federal enforcement
    actions related to the Colonial Pipeline System since enactment of the
    Hazardous Liquid Pipeline Safety Act of 1968.
        Answer: The tables below provide a listing of open and of closed
    enforcement cases relating to Colonial Pipeline as of January 25, 1999.

             Colonial Pipeline--Open Enforcement Cases as of 1/25/99
    ------------------------------------------------------------------------
                                    Date                      Brief Summary
                 CPF               Opened     Type of Case       of Case
    ------------------------------------------------------------------------
    10504A......................   8/24/90  Agreement......  This case was
                                                              initiated
                                                              after a
                                                              December 18,
                                                              1989 fatigue
                                                              failure in
                                                              Orange County,
                                                              VA, on the
                                                              operator's 32-
                                                              inch pipeline.
                                                              This case
                                                              requires the
                                                              operator to
                                                              conduct an ORA
                                                              on the 32-inch
                                                              pipeline. See
                                                              CPF # 14501H.
    13503H......................   3/30/93  Hazardous        Initiated
                                             Facility Order   following a
                                             (3/30/93).       March 28, 1993
                                                              pipeline
                                                              rupture near
                                                              Reston, VA,
                                                              this case
                                                              requires the
                                                              operator to
                                                              expose
                                                              portions of a
                                                              36-inch
                                                              pipeline to
                                                              determine if
                                                              dents or
                                                              gouges are
                                                              present and
                                                              make repairs
                                                              where
                                                              appropriate.
                                                              Additionally,
                                                              the operator
                                                              is required to
                                                              internally
                                                              inspect and
                                                              repair the
                                                              pipeline to
                                                              ensure its
                                                              integrity. See
                                                              CPF # 14501H.
    14501H......................   5/16/94  Consent Order    This case was
                                             (8/15/95).       initiated as a
                                                              proposed
                                                              hazardous
                                                              facility order
                                                              following
                                                              evaluation of
                                                              the
                                                              information
                                                              generated by
                                                              CPF # 13503H.
                                                              This case
                                                              incorporated
                                                              certain
                                                              requirements
                                                              from two other
                                                              previous cases
                                                              CPF # 13503H
                                                              and 10504A in
                                                              an expanded
                                                              integrity
                                                              verification
                                                              program. The
                                                              operator is
                                                              required to
                                                              internally
                                                              inspect (and
                                                              in some cases,
                                                              reinspect) or
                                                              hydrostaticall
                                                              y test
                                                              portions of
                                                              the pipeline
                                                              system. All
                                                              anomalies are
                                                              to be
                                                              evaluated and
                                                              repairs made
                                                              where
                                                              appropriate.
                                                              All three
                                                              cases remain
                                                              open until all
                                                              of the items
                                                              in CPF 14501H
                                                              are completed.
    26503H......................   7/31/96  Consent Order    Initiated as a
                                             (7/3/97).        hazardous
                                                              facility order
                                                              following the
                                                              June 26, 1996
                                                              pipeline
                                                              failure near
                                                              Simpsonville,
                                                              South
                                                              Carolina, this
                                                              case was later
                                                              modified to a
                                                              Consent Order.
                                                              The operator
                                                              is required to
                                                              internally
                                                              inspect
                                                              certain pipe
                                                              segments and
                                                              complete work
                                                              on pressure
                                                              controlling
                                                              switches.
    27501.......................   12/5/97  Final Order (3/  This case found
                                             8/99).           several
                                                              violations and
                                                              requires the
                                                              operator to:
                                                              implem
                                                              ent a
                                                              refresher
                                                              training
                                                              program;
                                                              evalua
                                                              te the
                                                              adequacy of
                                                              post accident
                                                              alcohol
                                                              testing
                                                              procedures;
                                                              conduc
                                                              t a
                                                              comprehensive
                                                              survey for
                                                              pipelines
                                                              exposed to the
                                                              atmosphere;
                                                              and
                                                              conduc
                                                              t an ORA which
                                                              will consider
                                                              internal
                                                              inspection
                                                              results, over
                                                              pressure
                                                              protection
                                                              devices,
                                                              overall system
                                                              integrity and
                                                              the
                                                              practicality
                                                              of future re-
                                                              hydratesting
                                                              and/or
                                                              repeated
                                                              internal
                                                              inspection of
                                                              certain
                                                              pipeline
                                                              segments.
                                                             The case
                                                              remains open
                                                              pending
                                                              completion of
                                                              these items.
    28501.......................   1/15/98  NOPV & PCP of    This case
                                             $45,000.         alleges
                                                              several
                                                              probable
                                                              violations
                                                              including
                                                              isolation of
                                                              thermal relief
                                                              devices,
                                                              improper set
                                                              points for
                                                              relief valves,
                                                              and inadequate
                                                              maintenance
                                                              inspections.
                                                              The case
                                                              proposes a
                                                              civil penalty
                                                              of $45,000.
                                                              The operator
                                                              has requested
                                                              a hearing.
    28502.......................   3/13/98  NOPV & PCP of    This case
                                             $5,000.          alleges the
                                                              operator
                                                              failed to file
                                                              an accident
                                                              report in a
                                                              timely manner
                                                              and proposes a
                                                              civil penalty
                                                              assessment of
                                                              $5,000. The
                                                              operator paid
                                                              the civil
                                                              penalty before
                                                              issuance of a
                                                              final order
                                                              and has taken
                                                              steps to
                                                              prevent
                                                              recurrence.
    28505.......................   8/20/98  NOPV & PCO.....  Initiated
                                                              following a
                                                              March 30, 1998
                                                              pipeline
                                                              failure in the
                                                              Morgan Falls
                                                              landfill near
                                                              Atlanta, GA,
                                                              this case
                                                              alleges
                                                              several
                                                              probable
                                                              violations
                                                              including
                                                              inadequate
                                                              pipe support,
                                                              failure to
                                                              follow
                                                              procedures,
                                                              and record-
                                                              keeping
                                                              errors. The
                                                              case proposes
                                                              to issue a
                                                              compliance
                                                              order
                                                              requiring the
                                                              operator to
                                                              identify
                                                              pipeline
                                                              segments
                                                              crossing
                                                              landfill
                                                              areas,
                                                              evaluate
                                                              stresses
                                                              placed on the
                                                              segments and
                                                              re-evaluate
                                                              internal
                                                              inspection
                                                              results of
                                                              certain areas.
                                                              Additionally,
                                                              the case
                                                              requires the
                                                              operator to
                                                              modify its
                                                              right-of-way
                                                              inspection
                                                              procedures and
                                                              record-
                                                              keeping. The
                                                              operator has
                                                              requested a
                                                              hearing.
    28506M......................   8/20/98  NOA............  This case
                                                              requires the
                                                              operator to
                                                              amend its
                                                              patrolling
                                                              procedures and
                                                              emergency
                                                              response plan.
                                                              The operator
                                                              is revising
                                                              the
                                                              procedures.
    ------------------------------------------------------------------------
    CPF--Compliance Progress File; PCP--Proposed Civil Penalty; NOPV--Notice
      of Probable Violation; NOA--Notice of Amendment; PCO--Proposed
      Compliance Order; ORA--Operation Reliability Assessment.

                                Colonial Pipeline--Closed Enforcement Cases as of 1/25/99
    ----------------------------------------------------------------------------------------------------------------
                                                  Date
                      CPF #                      Opened           Type of Case                   Date Closed
    ----------------------------------------------------------------------------------------------------------------
    4WO300...................................    4/13/84  Warning Letter..............  4/13/84
    2WO123...................................    4/23/84  Warning Letter..............  4/23/84
    2WO143...................................     3/1/85  Warning Letter..............  3/1/85
    2510.....................................     7/7/88  NOPV & PCP of $25,000 & NOA.  4/10/89 Final civil penalty
                                                                                         assessment of $15,000.
    2WO267...................................     6/5/89  Warning Letter..............  6/5/89
    1094.....................................    9/20/88  NOPV & PCP of $10,500.......  8/29/89 Final civil penalty
                                                                                         assessment of $10,500
    1103.....................................   11/27/89  NOPV & PCP of $5,000........  3/4/91 Final civil penalty
                                                                                         assessment of $5,000
    21502....................................    11/7/91  NOPV & PCP of $5,000........  7/27/92 Final civil penalty
                                                                                         assessment of $3,000
    21505H...................................   12/20/91  Hazardous Facility Order....  5/29/92
    22506W...................................    8/31/92  Warning Letter..............  8/31/92
    22501....................................    3/11/92  NOPV & PCP of $1,500........  5/12/93 No civil penalty
                                                                                         assessed
    23501W...................................     2/3/93  Warning Letter..............  2/3/93
    44508....................................     5/2/94  NOPV & PCP of $25,000.......  11/4/97 Final civil penalty
                                                                                         assessment of $5,000
    25505W...................................    4/17/95  Warning Letter..............  4/17/95
    25506W...................................    6/16/95  Warning Letter..............  6/16/95
    26500....................................     3/7/96  NOPV & PCP of $8,500 & NOA..  3/25/97 Final civil penalty
                                                                                         assessment of $8,500
    26505....................................   10/17/96  NOPV & PCP of $1,250........  6/24/98 Final civil penalty
                                                                                         assessment of $1,250
    26506....................................    11/8/96  NOPV & PCP of $25,000 & PCO.  7/27/98 Final civil penalty
                                                                                         assessment of $25,000
    28500C...................................    1/15/98  Letter of Concern...........  1/15/98
    28504C...................................    7/21/98  Letter of Concern...........  7/21/98
    28507C...................................    8/20/98  Letter of Concern...........  8/20/98
    ----------------------------------------------------------------------------------------------------------------
    CPF--Compliance Progress File; PCP--Proposed Civil Penalty; NOPV--Notice of Probable Violation; NOA--Notice of
      Amendment; PCO--Proposed Compliance Order; ORA--Operation Reliability Assessment.
    Warning Letters--Warning Letters are the least serious enforcement actions issued. The operator is warned to
      correct circumstances leading to probable violations but no final determination of violation is made. The
      operator is advised that enforcement action may be initiated in the future if it is found that corrective
      action has not been taken.
    Letter of Concern--Letters of Concern are not considered enforcement actions. These documents are used to bring
      areas of concern to the operator's attention.

        Question 16: Has OPS ever removed a state's authority to regulate
    intrastate pipelines?
        Answer: Yes, the State of Hawaii was decertified in 1993 under the
    Natural Gas Pipeline Safety Program as a result of the state
    experiencing a revenue shortfall causing the state to not be able to
    provide adequate technical staff. At that time, safety jurisdiction for
    Hawaii intrastate pipelines reverted to the Federal government.
        Question 17: (From Mr. Markey) The Pipeline Safety Act of 1992
    required OPS to develop pipeline standards to protect the environment,
    specifically requiring OPS to identify areas ``unusually sensitive to
    environmental damage'' by October 1994 and to require periodic
    inspections of pipeline infrastructure in those areas by October 1995.
    Why has OPS still not issued these environmental regulations four years
    after the first deadline? When can we expect these rules to be issued?
        Answer: After extensive consultation with numerous federal and
    state agencies, environmental groups and academia we have developed a
    USA conceptual model that focuses on drinking water and ecological
    resources. The drinking water resources include public water systems,
    wellhead protection areas and sole source aquifers. The ecological
    resources include the following: threatened and endangered, critically
    imperilled, and imperilled species; depleted marine mammals; and areas
    containing a large percentage of the world's population of a migratory
    waterbird species.
        OPS, in cooperation with the American Petroleum Institute (API),
    state and federal government agencies, environmental groups, and
    academia will pilot test a USA conceptional model. The pilot will
    provide the opportunity to consider the model's adequacy, its
    effectiveness as a basis for operator decision making, and the
    appropriateness and accessibility of environmental data to support this
    decision making. We plan to ask water and ecological experts to verify
    that the USAs identified by the model are unusually sensitive areas,
    and that the model has not missed other USAs. This pilot testing will
    provide us with practical experience prior to creating a regulation on
    USAs.
        A Federal Register notice that will seek comments on the USA
    conceptional model is expected to be published in March 1999. The pilot
    testing will begin soon after and is expected to take about a year.
    This experience will lay the groundwork for regulatory action in fiscal
    year 2000.
        Question 18: (From Mr. Markey) In 1996 Congress added requirements
    for cost-benefit analyses of regulations. Has this added burden taxed
    your staff resources or slowed issuance of the regulations? Why are
    environmental effects of pipeline accidents not included in the cost-
    benefit analyses?
        Answer: The Accountable Pipeline Safety Act of 1996 included a
    provision requiring peer review for cost-benefit analyses of pipeline
    safety regulations. OPS was already preparing cost-benefit analyses
    under Executive Order 12866 and the Department's policy. Thus, the
    statutory requirement was not an added burden to our regulatory
    process.
        In response to the 1996 mandate, RSPA has worked with a government/
    industry task group to develop a risk assessment/cost-benefit framework
    during the past 18 months. We provided a draft of this framework to our
    two pipeline safety advisory committees and briefed both committees on
    the work of the task group. We will be seeking public comment and then
    finalizing the document. The final framework document will be provided
    to the pipeline safety advisory committees this summer.
        Environmental effects of pipeline accidents are included in cost-
    benefit analysis. Complete and precise estimates of monetary damage
    from pipeline spills are often difficult or impossible to quantify.
    Therefore, environmental damage from pipeline spills is often described
    qualitatively rather than quantitatively.
        Question 19: (From Mr. Markey) According to the National
    Transportation Safety Board, the Office of Pipeline Safety has only
    accepted 68% of NTSB recommendations, the worst acceptance rate of any
    Department of Transportation administration. Why has OPS failed to
    follow so many NTSB recommendations?
        Answer: The OPS acceptance rate for NTSB recommendations is at 68%
    for two reasons. First, we sometimes disagree with the NTSB
    recommendation. Second, we often implement safety actions that the NTSB
    rates as unacceptable despite the fact that the action is one we
    believe addresses NTSB's safety concern. In other words, we believe
    that OPS and NTSB are in agreement on key safety issues but sometimes
    differ on the way to resolve these issues.
        It is worth noting that of all pipeline safety recommendations
    issued to OPS in the last 10 years, 83% were classified acceptable by
    the NTSB. A recent spate of unacceptable closings of older
    recommendations drove OPS from the middle of the Department's ratings
    to the bottom. We regret this action and are working with NTSB to
    respond more favorably to the safety actions we are taking in 21
    pending and 27 as yet unclassified recommendations.
        Question 20: (From Mr. Markey) Since the 1996 amendments, OPS has
    approved six demonstration projects among the 2200 regulated operators.
    How much OPS staff time has gone into those six projects? Has the staff
    time used in these projects reduced OPS ability to issue regulations
    mandated by the Congress? Since the projects directly affect only a
    small percentage of operators, how has the information learned from the
    projects affected generic regulations?
        Answer: OPS has allotted two full-time engineers to risk
    management, and regional staff and other experts are used on an as-
    needed basis. To date, this amounts to approximately five person-years
    annually. This allocation of staff resources has not reduced OPS's
    ability to issue regulations mandated by the Congress. OPS augments in-
    house risk management capability by contracting with risk management
    experts and consulting with representatives from state agencies.
        The Demonstration Program represents OPS's most ambitious test of
    risk-based approaches to improve safety, environmental protection, and
    service reliability. While risk management may not be the appropriate
    regulatory alternative for every operator, it has provided information
    and techniques that OPS is already using with other operators in the
    compliance program and in shaping new regulations.
        In the compliance area, our experience in the Demonstration Program
    has influenced us to move away from a piecemeal inspection process to a
    system-based approach. Using this approach on Alyeska Pipeline, we are
    conducting a risk-based review of all the valves on the system
    resulting in repair and replacement of valves in environmentally
    sensitive areas. Using this approach on Colonial Pipeline, we have
    worked with the Department of Justice to order system wide evaluation
    of all water crossings on a risk basis.
        In the regulatory area, the Demonstration Program has influenced
    our rewrite of corrosion standards to include options for addressing
    the highest risk areas in a way that addresses system specific safety
    issues. In other words, operators will be able to prevent and fix
    corrosion problems on a risk basis. We also issued a risk-based
    regulation requiring testing and evaluation of older liquid pipelines.
    This action will prevent spills and ruptures in high risk areas.
        To extend the risk assessment process outside the pipeline
    companies, OPS now routinely uses internet-accessible information
    systems, electronic town meetings, and other approaches that solicit
    and incorporate broad-based public input into the Risk Management
    Demonstration Programs. In addition, we now solicit involvement on
    other programs such as damage prevention, mapping and system integrity,
    using techniques that were first developed for the Demonstration
    Program.
        Question 21: (From Mr. Markey) In 1996 we assigned peer review of
    risk assessment to the existing advisory committees. What risk
    assessments have been peer revised by the advisory committees? What
    changes have been made in response to the committee reviews? One-third
    of these committees are composed of industry representatives. What
    steps have you taken to ensure that conflicts of interest do not color
    their reviews.
        Answer: A table of rulemaking projects for which risk assessments
    were reviewed by the advisory committee is attached. To the extent that
    any changes are made in a rule because of advisory committee comments,
    these are noted in the rulemaking documents published in the Federal
    Register. To date, there has been only one significant change to a
    proposed rule because of the peer review. This was the addition of an
    environmental factor to the rule providing a risk-based alternative to
    pressure testing hazardous liquid pipelines issued in 1998.
        Although one-third of the advisory committee membership is composed
    of representatives from industry, two-thirds are derived from the
    public and state and federal agencies with expertise in issues relevant
    to pipeline safety and environmental protection. RSPA has been
    successful in its effort to include government and public members with
    environmental interests and expertise as well as a broad range of
    engineering and safety expertise. Although the industry representatives
    are concerned with the economics of safety and environmental
    protection, RSPA believes that this interest is not inconsistent with
    either safety or environmental protection. The dynamics of the advisory
    committee process provides the necessary balance of interests.

       Table of Rules Reviewed by the Technical Pipeline Safety Standards
      Committee (TPSSC) and the Technical Hazardous Liquid Pipeline Safety
                    Standards Committee (THLPSSC) Since 1996
    ------------------------------------------------------------------------
            Rulemaking Topics              Committee            Status
    ------------------------------------------------------------------------
    Leak Detection and Emergency      THLPSSC...........  Final rule
     Flow Restriction Devices.                             published
                                                           governing
                                                           computerized leak
                                                           detection
                                                           methods. Further
                                                           action pending
                                                           development of
                                                           ``unusually
                                                           sensitive area''
                                                           definition
    Risk-Based Approach to            THLPSSC...........  Final rule
     Hydrostatic Testing.                                  published
                                                           allowing
                                                           operators to
                                                           exclude certain
                                                           low risk
                                                           pipelines and
                                                           certain pipelines
                                                           in which an
                                                           instrumented pig
                                                           is run from the
                                                           requirement to
                                                           hydrostatically
                                                           test older
                                                           hazardous liquid
                                                           pipelines
    Excess Flow Valve Performance     TPSSC.............  Final rules
     Standards and Customer                                published
     Notification.                                         establishing
                                                           standards for the
                                                           performance of
                                                           excess flow
                                                           valves installed
                                                           in gas pipelines,
                                                           and for notifying
                                                           gas customers of
                                                           the availability
                                                           of such valves
    Low-stress Hazardous Liquid       THLPSSC...........  Final rule
     Pipelines.                                            published
                                                           excluding certain
                                                           short, low risk
                                                           pipelines from
                                                           the hazardous
                                                           liquid pipeline
                                                           safety standards
    Standards for Breakout Tanks....  THLPSSC...........  Notice of proposed
                                                           rulemaking (NPRM)
                                                           published to seek
                                                           comments on new
                                                           design,
                                                           construction, and
                                                           maintenance
                                                           standards for
                                                           certain hazardous
                                                           liquid storage
                                                           tanks
    Siting, Design, and Construction  TPSSC.............  NPRM published
     Standards for Liquefied Natural                       proposing revised
     Gas Plants.                                           standards for
                                                           liquefied natural
                                                           gas plants
                                                           associated with
                                                           gas pipelines
    Metrication.....................  TPSSC and THLPSSC.  Final rule was
                                                           issued adding
                                                           metric
                                                           measurements to
                                                           the gas and
                                                           hazardous liquid
                                                           pipeline safety
                                                           standards
    ------------------------------------------------------------------------