[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
------------------------------------------------------------------------------
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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.

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

                  STATEMENT OF RICHARD J. COOK

    Mr. Cook. Yes, if I may, my name is Richard J. Cook, and I 
am Vice President of Construction and Technical Support of 
Washington Gas.
    And, Mr. Chairman, if I may, Ms. Coyner used a word that, 
we, who were who were from agricultural areas, would think as 
an oxymoron, and that is a smart pig. But, in the industry, it 
has a meaning that is understood. Also----
    Mr. Barton. That is not as bad as a ``smart Congressman.'' 
Some people think that is an oxymoron.
    Mr. Cook. Let me say that I am here to represent the 
American Gas Association, AGA, and Washington Gas. Washington 
Gas is a local distribution company serving approximately 
820,000 meters in the Washington, DC metropolitan area and the 
surrounding region. Our service area covers 6,648 square miles 
in Maryland, Virginia, West Virginia, and the District of 
Columbia. We have approximately 22,000 miles of gas lines.
    I am here this afternoon--and I am kind of one of these 
bottom-line people; we are here to support this 
reauthorization. And, as is the American Gas Association 
representing 189 LDC's, local distribution companies, that 
deliver gas to almost 60 million homes and businesses in all 50 
States.
    We are literally the gas company, because we are at the end 
of the line. In other words, if you look at the production 
fields, the interstate transmission, the intrastate 
transmission, and to the burner tip, LDC's represent that face 
of the gas industry to the public. The delivery of safe, 
reliable service at a reasonable cost is paramount to 
maintaining and growing our business.
    The safety record of the gas industry I think is exemplary. 
With an estimated 1.5 million miles of distribution lines 
nationwide and serving approximately 60 million customers, our 
accident rates are extremely low.
    Last year Congress gave us another means of lowering this 
number by enacting the legislation to improve the One-Call 
system. The One-Call is our principal tool in combating 
unintentional dig-ins by third parties, the No. 1 cause of 
accidents on natural gas pipelines. Thank you for strengthening 
the One-Call system, and thanks to DOT for moving expeditiously 
to implementing that act.
    AGA and Washington Gas, respectfully, urge Congress to 
reauthorize for another 4 years the current pipeline safety 
statute. We ask that you allow the initiatives created by this 
law--risk assessment, cost-benefit analysis, and the 
establishment of risk management demonstration projects--be 
continued. With regard to authorization levels, we believe the 
funding levels approved for fiscal year 2000 should be 
sufficient to carry this through the next 4 years.
    The 1996 law, including a new section modeled after 
President Clinton's reinventing Government initiatives for risk 
assessment and cost-benefits, we think is important. This 
initiative allows the application of flexible risk assessment 
and cost-benefit analysis to new pipeline safety standards in 
order to gather as much information as possible prior to 
issuing the rule. This analysis is waived if OPS elects to 
utilize alternatives such as a negotiated rulemaking or 
consensus rule.
    The front-end loading of information and discussion of 
issues at the beginning of the process leads to better workable 
rules in the end. Using this approach, OPS has been able to 
dramatically reduce the time it takes to issue final rules. 
Furthermore, working with stakeholders throughout the process 
should result in fewer legal challenges. The Government 
actually realizes a saving in time, personal resources, and 
money.
    The new approach has neither diminished OPS's ability to 
issue new regulations nor resulted in rules that do not protect 
the public or the environment. Experience, to date, has shown 
that regulators and industry can work together to reach safety 
objectives. We don't always agree, but we continue to share 
information and ideas. This leads to a better understanding of 
differing viewpoints which leads to better results.
    I will give you an example of that type of activity that I 
am discussing. OPS's operator qualification rule is a product 
of successful negotiated rulemaking. Prior to using the 
negotiated approach, this rule has been under consideration 
since 1992. A 1994 DOT proposal suggested the initial 
compliance costs alone would exceed in excess of $500 million 
and operators with successful programs in place would have to 
change them.
    Under the new approach, this was achieved much more 
quickly, and the final rule will be issued this spring with 
agreement with virtually all the parties.
    We also support the risk assessment and find that, in fact, 
the local LDC's would like to participate in that.
    So I am cutting my discussion short.
    Mr. Barton. We appreciate it.
    Mr. Cook. You have my written statement. But again, coming 
to the bottom line, we support the reauthorization of this 
bill.
    Thank you.
    [The prepared statement of Richard J. Cook follows:]
Prepared Statement of Richard J. Cook, Vice President, Construction and 
  Technical Support, Washington Gas and Representing the American Gas 
                              Association
    Good afternoon, Mr. Chairman and members of the Subcommittee.
    My name is Richard J. Cook and I am Vice President of Construction 
and Technical Support for Washington Gas here in Washington, D.C. Thank 
you for this opportunity to appear before the Subcommittee in regard to 
reauthorization of the pipeline safety statute.
    Washington Gas is a natural gas local distribution company (LDC) 
serving customers through nearly 820,000 meters in the Washington, D.C. 
metropolitan area and the surrounding region. Our service area covers 
6,648 square miles in Maryland, Virginia, West Virginia and the 
District of Columbia. Our system contains nearly 22,000 miles of 
natural gas lines.
    I am also here this afternoon representing the member companies of 
the American Gas Association (A.G.A.). A.G.A. represents 189 LDCs that 
deliver natural gas to almost 60 million homes and businesses in all 50 
states.
    LDCs comprise that segment of the natural gas industry that 
delivers natural gas to homes and businesses. We are at the end of a 
line stretching from the producing fields, through the interstate and 
intrastate pipeline system to the natural gas burner tip. We are, to 
the general public, the face of natural gas. The delivery of safe, 
reliable service at a reasonable cost to our customers is paramount to 
maintaining and growing our business.
    Although each State utility commission has primary regulatory 
authority over LDCs, federal pipeline safety regulations also have an 
impact on our operations. States adopt the federal safety rules as 
minimum requirements and receive grants of up to fifty percent (50%) of 
their pipeline safety enforcement costs from the Department of 
Transportation's (DOT) Office of Pipeline Safety (OPS) each year. This 
system has worked well and has provided a level of consistency from 
State to State. Nevertheless, we are always interested in finding 
better ways to provide safe, reliable service.
    Our safety record is exemplary. With an estimated 1.5 million miles 
of distribution lines nationwide and serving approximately sixty 
million customers, our accident rate is extremely low. We are grateful 
that last year Congress gave us another means of lowering that number 
by, enacting legislation to improve the one-call system. One-call is 
our principal tool in combating unintentional dig-ins by third 
parties--the number one cause of accidents on natural gas pipelines. 
Thank you for recognizing the importance of strengthening the one-call 
system. And thanks to DOT for moving expeditiously to implement the 
act. Your actions will result in improved coverage by state one-call 
laws and assist in the prevention of future accidents.
                 reauthorization for the 106th congress
    A.G.A. and Washington Gas respectfully urge Congress to reauthorize 
for another four years the current pipeline safety statute and allow 
the initiatives created by the 1996 reauthorization--risk assessment, 
cost/benefit analysis and the establishment of risk management 
demonstration projects--to continue to unfold. The risk assessment and 
cost/benefit requirements have been applied to several rules, both 
final and pending. To date, four risk management demonstration projects 
have been approved for liquid pipelines and one for a natural gas line, 
with three more close to approval. With regard to authorization levels, 
we believe the funding level approved for FY 2000 should be sufficient 
to carry the program forward for another four years.
    update on the implementation of the 1996 reauthorization statute
Risk Assessment and Cost Benefit
    The policy and regulatory changes imposed by the 1996 pipeline 
safety reauthorization bill are working well and moving forward 
smoothly. The 1996 law included a new section modeled after President 
Clinton's ``Reinventing Government'' initiatives outlined in Executive 
Order 12866. This initiative allows the application of flexible risk 
assessment and cost/benefit analysis to new pipeline safety standards 
in order to gather as much information as possible prior to issuing a 
rule. The analysis is waived if OPS elects to utilize alternatives such 
as a negotiated rulemaking, consensus rule or simply adoption of 
industry standards if no party objects.
    This ``front-end loading'' of information and discussion of issues 
at the beginning of the process leads to better, workable rules in the 
end. Using this approach, OPS has been able to drastically reduce the 
time it takes to issue final rules. The initial information gathering 
and analysis takes substantial time, to be sure, but once done OPS is 
able to move much more rapidly through the formal rulemaking process. 
Furthermore, working with the stakeholders throughout the process 
should result in fewer legal challenges. The government will realize 
savings in time, personnel resources and money.
    Of major concern was the suggestion that the new approach would 
either diminish OPS' ability to issue new regulations, or result in 
rules that did not protect the public or the environment. This has not 
proven to be the case. Experience to date has shown that regulators and 
the regulated industry can work together to reach safety objectives. We 
don't always agree but we continue to share information and ideas. This 
leads to a better understanding of differing viewpoints, which can only 
lead to better results.
    Two of OPS' recent implementation activities have had a direct 
impact on operations at Washington Gas:
     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
------------------------------------------------------------------------

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