[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
   LOW PRESSURE LIQUID PIPELINES: IN THE NORTH SLOPE, GREATER PRUDHOE 
                              BAY, ALASKA

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

                                (109-95)

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 13, 2006

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure



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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                      DON YOUNG, Alaska, Chairman

THOMAS E. PETRI, Wisconsin, Vice-    JAMES L. OBERSTAR, Minnesota
Chair                                NICK J. RAHALL, II, West Virginia
SHERWOOD L. BOEHLERT, New York       PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of 
WAYNE T. GILCHREST, Maryland         Columbia
JOHN L. MICA, Florida                JERROLD NADLER, New York
PETER HOEKSTRA, Michigan             CORRINE BROWN, Florida
VERNON J. EHLERS, Michigan           BOB FILNER, California
SPENCER BACHUS, Alabama              EDDIE BERNICE JOHNSON, Texas
STEVEN C. LaTOURETTE, Ohio           GENE TAYLOR, Mississippi
SUE W. KELLY, New York               JUANITA MILLENDER-McDONALD, 
RICHARD H. BAKER, Louisiana          California
ROBERT W. NEY, Ohio                  ELIJAH E. CUMMINGS, Maryland
FRANK A. LoBIONDO, New Jersey        EARL BLUMENAUER, Oregon
JERRY MORAN, Kansas                  ELLEN O. TAUSCHER, California
GARY G. MILLER, California           BILL PASCRELL, Jr., New Jersey
ROBIN HAYES, North Carolina          LEONARD L. BOSWELL, Iowa
ROB SIMMONS, Connecticut             TIM HOLDEN, Pennsylvania
HENRY E. BROWN, Jr., South Carolina  BRIAN BAIRD, Washington
TIMOTHY V. JOHNSON, Illinois         SHELLEY BERKLEY, Nevada
TODD RUSSELL PLATTS, Pennsylvania    JIM MATHESON, Utah
SAM GRAVES, Missouri                 MICHAEL M. HONDA, California
MARK R. KENNEDY, Minnesota           RICK LARSEN, Washington
BILL SHUSTER, Pennsylvania           MICHAEL E. CAPUANO, Massachusetts
JOHN BOOZMAN, Arkansas               ANTHONY D. WEINER, New York
JIM GERLACH, Pennsylvania            JULIA CARSON, Indiana
MARIO DIAZ-BALART, Florida           TIMOTHY H. BISHOP, New York
JON C. PORTER, Nevada                MICHAEL H. MICHAUD, Maine
TOM OSBORNE, Nebraska                LINCOLN DAVIS, Tennessee
KENNY MARCHANT, Texas                BEN CHANDLER, Kentucky
MICHAEL E. SODREL, Indiana           BRIAN HIGGINS, New York
CHARLES W. DENT, Pennsylvania        RUSS CARNAHAN, Missouri
TED POE, Texas                       ALLYSON Y. SCHWARTZ, Pennsylvania
DAVID G. REICHERT, Washington        JOHN T. SALAZAR, Colorado
CONNIE MACK, Florida                 JOHN BARROW, Georgia
JOHN R. `RANDY' KUHL, Jr., New York
LUIS G. FORTUNO, Puerto Rico
LYNN A. WESTMORELAND, Georgia
CHARLES W. BOUSTANY, Jr., Louisiana
JEAN SCHMIDT, Ohio

                                  (ii)

                                CONTENTS

                               TESTIMONY

                                                                   Page
 Barrett, Vice Admiral Thomas, Administrator, Pipeline and 
  Hazaedous Materials Safety Administration, U.S. Department of 
  Transportation.................................................    12
 Epstein, Lois, Senior Engineer, on behalf of Cook Inlet Keeper 
  and the Pipeline Safety Trust..................................    32
 Marshall, Steve, President, BP Exploration Alaska, Inc..........    32

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Carnahan, Hon. Russ, of Missouri.................................    73
Cummings, Hon. Elijah, of Maryland...............................    74
Honda, Hon. Michael M., of California............................    88
Poe, Hon. Ted, of Texas..........................................   136
 Rahall, Hon. Nick J., II, of West Virginia......................   137
Tauscher, Hon. Ellen, of California..............................   139

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

 Barrett, Vice Admiral Thomas....................................    46
 Epstein, Lois...................................................    79
 Marshall, Steve.................................................    90


   LOW PRESSURE LIQUID PIPELINES: IN THE NORTH SLOPE, GREATER PRUDHOE 
                              BAY, ALASKA

                              ----------                              


                     Wednesday, September 13, 2006,

        House of Representatives, Committee on 
            Transportation and Infrastructure, Washington, 
            D.C.
    The committee met, pursuant to call, at 11:00 a.m., in Room 
2167, Rayburn House Office Building, the Honorable Don Young 
[Chairman of the committee] presiding.
    Mr. Young. The Committee will come to order.
    Today the Committee is conducting an oversight hearing on 
the operation of low stress pipelines on the north slope of 
Alaska.
    As the Congressman that represents all of Alaska, I am 
deeply concerned about what occurred. My caring for the 
environment in the State, and especially its workers, has been 
well known.
    In March of this year there was a release of approximately 
5,000 barrels in the eastern operating area of the North Slope, 
a BP Production area.
    The Pipeline and Hazardous Materials Safety Administration 
immediately sent teams to the North Slope. PHMSA issued 
corrective action orders to BP following that release which 
required BP to immediately begin to inspect all its other low 
stress pipelines on the North Slope. The process began in the 
spring and continued all summer.
    On July 19th, this Committee reported out by voice vote the 
Pipeline Safety Improvement Act of 2006. In that bill, we 
required PHMSA to regulate low stress pipelines nationwide. We 
defined low stress pipelines in the bill to include the 
pipeline on the North Slope that was involved in the release of 
oil in March. The bill required PHMSA to complete the low 
stress pipeline rules within one year.
    In August 2006, in conjunction with inspections which PHMSA 
ordered to be conducted, BP detected a release of approximately 
25 barrels of oil on another low stress pipeline, this time in 
the Western Operating Area. As was done with regard to the 
release that occurred in March, the leak was immediately 
cleaned up and PHMSA ordered repairs to be done immediately.
    Last week, PHMSA announced a proposed new rule to regulate 
low stress pipelines. This is the same rule making mandated by 
this Committee in the bill we reported in July. The vote of the 
Committee occurred before the August release of 25 barrels, but 
after the March release of 20,000 barrels. This time line is 
important to put things in context.
    The context is that PHMSA did its job and continues to do 
its job. BP is, and will continue to be, held accountable for 
future North Slope operations by PHMSA and other Federal 
agencies with enforcement authority. That is how law is 
supposed to work.
    PHMSA must do their job in keeping these pipelines safe, 
and I strongly support the efforts and the regulations they put 
forth. BP has a job to do on the North Slope, and I will insist 
that they do it correctly.
    The recent release of oil on the North Slope concerns me 
because the oil that we produce in Alaska provides energy for 
the entire Nation. I want our oil delivered to its destination 
safely, without delay and without harm to the environment.
    I will ask what steps are being taken to make sure that BP 
does the job and this tragedy doesn't happen again.
    I am not here today to beat a dead horse or old oil. I just 
want to make sure it does not happen again.
    Investigations are being conducted and all committees are 
having hearings and everything is going on, especially for the 
media, but my interest is getting Alaskan oil delivered safely, 
safely within Alaska, and to the lower 48 without delay, 
without harm to the environment.
    May I suggest respectfully again, I am deeply disappointed 
in the actions not of individuals, necessarily, or with BP at 
this time, but over the 27 years and not taking the time to 
understand the pumping of oil that we are pumping now was not 
the same oil we pumped at first. There is a problem of more 
water. There is a problem of more--they call them bugs or 
whatever it is that caused the corrosion, and no one paid 
attention to--microbes, yes--attention to the corrosive factor 
in those pipelines, the collection lines.
    The other factor--and this may not be known--is the fact 
that we are producing less oil. And as you produce less oil, 
the oil does not move as rapidly as it would at first with the 
2 million barrels a day. Consequently, there is a more stagnant 
period of time, a slower period of time when those microbes and 
other, I call, corrosive actions can take place.
    Having said that, I have high hopes that BP and other oil 
companies within Alaska that do drill and do deliver oil to 
Alyeska, that they understand that this is a more serious 
problem than they may have thought in the past. It is a 29-
year-old pipeline. Now, people, keep in mind 29 years old is 
old for any facility.
    The Trans-Alaska Pipeline itself, Alyeska, I may compliment 
them. We concentrated on them. We had hearings on the Alyeska 
Pipeline. We had complaints. But they have done an outstanding 
job. They have used the smart pigs, they have used the way to 
detect the corrosion. They have addressed it immediately. They 
have gone through earthquakes. All these things occurred and we 
have been very fortunate.
    Now, I will say nothing is fail-safe in any industry. 
Anybody who thinks it is is dead wrong. But they have done an 
outstanding job. I do think there was a slackness upon certain 
individuals that the lines that we collect the oil from were 
not properly inspected nor repaired. Now, I have got 
information that this is all going to be replaced, if I can 
from my colleagues, with brand new steel. That is good. It 
probably should have been done sooner.
    I asked the question the other day of some individuals with 
the engineering companies have we looked at other forms of 
pipe. Just because this was built by steel in 1975, 1976, do we 
have to go back to steel, or do we go back to some more 
modern--by the way, which comes from petroleum products, such 
things as Quest. There is a pipe that is plastic. It doesn't 
freeze. That is the first thing, does it freeze. It doesn't 
freeze. It expands and contracts, and it doesn't corrode.
    So those are the things I hope these hearings will bring 
forth.
    With that, I will yield to my good friend from Minnesota, 
Mr. Oberstar, for any opening comment he may make.
    Mr. Oberstar. Thank you, Mr. Chairman.
    First of all, I want to express my appreciation for 
responding so quickly as you did, and thoughtfully, to a 
request for hearings on this issue. And I concur with you, the 
issue is not to find fault or blame, but to make sure that 
failures of the past are not repeated in the future.
    I held the first hearings on pipeline safety of this 
Committee back in the early 1980s, mid-1980s, actually. I 
actually planned the hearings well in advance. The Committee 
staff and I had done a great deal of work in preparing for a 
hearing pipeline safety and then there was an explosion in 
Mounds View, Minnesota, just outside of my congressional 
district. It was a gasoline pipeline that had been put in this 
area when it was rural.
    Over time, suburban sprawl overtook the pipeline. And, as 
we learned in the investigation afterward, cathodic protection 
on that line had failed, corrosion set in, there was a leak, 
gasoline was slowly seeping into a suburban street over a 
period of a couple of weeks. And the fumes, which are very 
heavy, settled down close to the ground. At 2:00 a.m. one 
weekday morning, a car driving along with a loose tailpipe 
struck the pavement, caused a spark, ignited the street. The 
pavement buckled and melted. The mailboxes on the street 
melted. A mother and six-year-old child rushed outside their 
front door to see what was going on, and they incinerated.
    We withheld the hearing until the NTSB investigation was 
nearing its conclusion and we had factual data, and that is 
when we learned the information about failure of cathodic 
protection. There were no shutoff valves in that suburban area; 
there was no action taken by the pipeline company to limit the 
damage; there was no pigging of the line over a period of many 
years, many, many years.
    And it was that series of hearings that we found that the 
Office of Pipeline Safety was understaffed, the State 
inspection offices were grossly understaffed, the agency was 
underfunded, and the result of our hearings was to make 
recommendations for increase in staffing and funding of the 
Federal and the State pipeline safety offices and increase the 
frequency of pigging, as well as the automatic shutoff valves, 
particularly in settled areas, regardless of whether they are 
high pressure or low pressure lines or type of commodity moving 
through the line.
    Norm Mineta was then the Chair of the Surface Subcommittee. 
He and I went to the floor with an amendment to increase by $10 
million the budget for Office of Pipeline Safety and succeeded 
in getting that funding.
    Over time, the staffing has slipped. Over time, the funding 
for the States inspection offices, in partnership with the 
Federal Government, have slipped.
    But what was really important that came out in that 
hearing, and a matter that I brought to Pipeline Safety from 
the hearings and inquiries we made on aviation safety, was the 
corporate culture of safety. The Federal Government doesn't run 
the pipelines. The Federal Government doesn't do the 
maintenance on airplanes. The Federal Government doesn't do the 
maintenance on railroads or trucking lines.
    But it oversees them to make sure that they are meeting a 
minimum standard of safety, and that standard is set by the 
Federal Government and the role is to see that the pipeline 
companies conform. And they won't conform if there isn't a 
corporate culture of safety. It starts in the boardroom, not on 
the pipeline. And what is missing in this scenario with the 
number of failures of BP is a corporate culture of safety.
    The Office of Pipeline Safety, which we reconstituted to 
the Pipeline Safety Administration, has gone through a number 
of changes in personnel, in mode of operation, but I think its 
current director, administrator, Admiral Barrett, is the best 
we have seen in that office in probably 20 years. He brings 
from the Coast Guard a culture of safety. He brings a no-
nonsense attitude to inspections and to dealing with pipeline 
operators.
    We also have to set the policy. We have legislation moving 
along that we need to strengthen and to improve the oversight 
of safety and the conduct of safety by both the Office of 
Pipeline Safety and the companies themselves.
    In March, in August, crude oil spills substantial amounts, 
low stress pipeline, and then subsequently to the Alaska there 
was a failure in Toledo, Ohio; 8400 gallons of unleaded 
gasoline got into a creek that found its way into Lake Erie. We 
don't need a repeat of the Cuyahoga River experience in 1968, 
when the river caught on fire because so much pollution was 
being dumped, including crude oil and gasoline. And that had 
the effect of spurring the Congress on to increasing funding 
for sewage treatment plant construction and cleanup and the 
stronger Clean Water Act of 1972.
    I am not going to go through all of that, and I will put 
this into the record, the Western Operating Area policy that 
was supposed to have smart pigs run through the lines every 
year, the Eastern Operating Area BP didn't plan any regular 
maintenance, or the markup in which one of our colleagues 
proposed to eliminate the requirement in current law to 
reinspect gas pipelines once every seven years. The industry 
standard is 20 years between gas transmission inspections. That 
is not sufficient. That is intolerable.
    Let me just close with the framework within which safety 
must be conducted. In the preamble, the opening paragraph of 
the PHMSA law establishing this new agency: ``In carrying out 
its duties, the Administration shall consider the assignment 
and maintenance of safety as the highest priority, recognizing 
the clear intent, encouragement, and declaration of Congress to 
the furtherance of the highest degree of safety in pipeline 
transportation.''
    We have to hold the agency to that highest accountability 
level. We have to hold the industry to that highest 
accountability level. We have the public interest in our hands, 
it is our responsibility, and we have to insist that it is 
carried out in the spirit of the direction of the law, the 
directive, I mean, of the law. And that is not something new, 
this is the opening preamble of the 1958 FAA Act, that safety 
in aviation shall be maintained at the highest possible level.
    I hope that the outcome of these hearings will be to 
illuminate practices of the industry, the enforcement of the 
agency, and the direction we need to go to strengthen both.
    Mr. Young. I thank the gentleman.
    Mr. Petri?
    Mr. Petri. Mr. Chairman, thank you for holding this 
hearing.
    The Highways Transit and Pipeline Subcommittee, which I 
chair, has jurisdiction over pipeline safety, and over the past 
several months we have been working to reauthorize the pipeline 
safety programs.
    The Pipeline Safety Improvement Act of 2002, which this 
Committee passed four years ago, expires on September 30th of 
this year. H.R. 5782, the Pipeline Safety Improvement Act of 
2006, was reported out of this Committee in July. We hope to 
pass the bill off the House floor before the end of the month.
    I am happy to see Admiral Barrett, the Administrator of the 
Pipeline and Hazardous Materials Safety Administration, here 
today. His agency has been very active over the past six months 
in its efforts to deal with the two pipeline leaks on the North 
Slope.
    In response to the March 2nd leak, his agency issued a 
Corrective Action Order that required British Petroleum to 
conduct a rigorous inspection regime on all of its low pressure 
pipelines on the North Slope. As a result of this federally 
mandated inspection regime, British Petroleum discovered 
several flaws in its low pressure pipelines on the North Slope 
and are in the process of replacing approximately 22 miles of 
pipeline.
    In addition, last week, his agency published a Notice of 
Proposed Rulemaking that proposes new and more rigorous safety 
requirements for rural low pressure oil pipelines in unusually 
sensitive areas like Prudhoe Bay, Alaska.
    I look forward to hearing from today's witness from British 
Petroleum as well, Mr. Steve Marshall. While I am happy to hear 
that his organization will be replacing its entire low pressure 
pipeline network on Alaska's North Slope, I am concerned about 
their inspection regime for these pipelines prior to the March 
2nd leak. This whole situation basically proves the wisdom of 
the old saying an ounce of prevention is worth a pound of cure, 
and they are now going to be spending $1 billion. They could 
have probably done a lot better for their stockholders and for 
the industry and for public confidence in the pipelines of our 
Nation by being more proactive.
    We realize that some of these pipelines were acquired from 
a previous owner, but I am still concerned that, given their 
age and the unique problems that are caused by the extreme 
climate on the North Slope, the pipelines have not been 
thoroughly inspected for several years. These are unique 
pipelines, they are low pressure large pipelines, and they pose 
some unique problems. Any solution we come up with for this 
should be tailored to the nature of the problem. We would 
otherwise face the danger of mandating a lot of expense on the 
industry that would not be appropriate to the problem that we 
are dealing with, which is basically created by the conditions 
of a large low pressure pipeline and the dynamics of how that 
works, is my understanding of it.
    In any event, thank you very much, Mr. Chairman. I look 
forward to the testimony of our witnesses today.
    Mr. Young. I thank the gentleman.
    Are there any other opening statements? Mr. DeFazio, you 
had your cup of coffee. Are you ready?
    Mr. DeFazio. Yes, Mr. Chairman, I did.
    [Laughter.]
    Mr. DeFazio. Just starting to kick in. I will get better as 
we go along. Thank you, Mr. Chairman.
    I have got to say that I am, you know, at best, bemused by 
BP in this instance. I can't understand how a publicly held 
company could acquire assets from another publicly held company 
and not conduct due diligence, that is, what are we buying, 
conduct a basic inspection.
    You know, that is sort of the beginning of the problem. I 
mean, you can reach back and try and blame ARCO and perhaps 
they didn't do enough cleaning and maintenance previously, but 
when you actually get to the point of acquisition, you'd think 
at that point it would have happened; clean the lines, inspect 
them. It didn't.
    And since then they have basically been run to failure, 
which is fairly extraordinary to me for a corporation that, by 
my calculation, made $55,000 a minute in the last quarter. That 
is a lot of money coming out of the pockets of American 
consumers, and you would think that a company that could afford 
to buy back $33.5 billion in stock could afford to invest a few 
million, or tens of millions, or maybe even hundreds of 
millions, in its basic infrastructure in Alaska and elsewhere, 
and none of that happened.
    So then you have got to ask why did it happen, and I think 
then we have to turn to the regulatory scheme. And I believe 
that we need to have regulations that are sensible, sensitive, 
sensitive to the public interest, and, you know, not overly 
burdensome to the point of not making sense, or just regulating 
for the sake of regulation. I don't think we have gotten there 
with the proposal we have before us. I will be interested in 
hearing the witnesses, particularly from the Administration, 
justify why we are going to have three different sets of 
regulations for low stress pipelines.
    Now, I don't know how that is going to be understandable, 
easily executed, and administered. We are going to have the 
populated areas with the highest standards, essentially 
equivalent to the high stress pipelines. That sounds pretty 
good to me. But then we are going to have a slightly lesser 
level, which is the new regulations for low stress pipelines in 
sensitive environmental areas within a quarter mile.
    Well, you know, I come from the West; it is a big area. A 
quarter mile isn't very far for a sensitive environmental area. 
It would depend upon whether sensitive is downhill from there, 
uphill from there, whether there is an intervening ridge. But a 
quarter mile is not very far.
    And I don't understand why we would have, you know, one 
regime for the populated areas, another one for the sensitive 
areas, and then a third one for many people who live in the 
West and much of the Western United States, which is the other 
areas, the rural areas. Why are they the third class citizens 
here?
    Why don't we just have an understandable comprehensive 
regime that is the same for all low stress pipelines that 
assures the public safety, assures environmental protection, is 
not overly burdensome, but requires regular cleaning and 
inspection? And given the profits attributable to this 
industry, I don't think anybody can claim it would somehow 
drive up the cost to consumers. It might mean some CEO gets 
less than a $10 million bonus this year. Maybe it means that 
they can only buy back $20 billion of stock next year. Maybe it 
means that they don't set record profits every quarter. But I 
think most of the American people would think that that was 
okay with them and not overly burdensome on the industry.
    So I will be fascinated to hear why we are going to have 
this bizarre regime of three different levels of protection, 
and the least going to the most pipelines covering a large 
portion of this Country.
    Thank you, Mr. Chairman.
    Mr. Young. I thank the gentleman.
    Mr. Gilchrest?
    Mr. Gilchrest. Thank you, Mr. Chairman.
    I have another hearing and I might have to leave before the 
end of the testimony, so I might not be able to ask some 
questions, but I wanted to put a few questions on the record to 
the witnesses.
    Do you have any idea what kind of microorganism caused this 
corrosion? And have you seen this kind of microorganism before?
    Rust is essentially, chemically speaking, like a slow 
burning fire. So could this have been anticipated, this type of 
microorganism? And has this type of corrosion been treated 
before by other oil companies?
    And how often is a pipeline checked and how is it checked 
to preclude these types of corrosion leaks?
    The interest I have, which is interwoven in all of these 
questions, is the actual microorganism. Do we know what it is? 
Have we seen it before? Do microorganisms evolve and change the 
way they affect the rust or the corrosive effect they have on 
these pipelines? And can this kind of thing be anticipated and 
eliminated?
    So I want to thank the Chairman for this hearing and look 
forward to the witnesses. Thank you, Mr. Chairman.
    Mr. Young. I thank the gentleman.
    Any other opening statements? Mr. Cummings, I believe.
    Mr. Cummings. Thank you very much, Mr. Chairman. And I 
thank you for holding this hearing to enable us to examine both 
the specific circumstances surrounding the oil spill that 
occurred in Prudhoe Bay in Alaska, as well as the adequacy of 
the current oversight regime for low pressure liquid pipelines.
    As my colleagues have discussed, approximately 270,000 
gallons of oil leaked into the Alaskan tundra through a quarter 
inch hole in a BP pipeline in March of this year. Subsequently, 
this summer, additional corrosion was found in the pipeline 
that required it to be partially shut down. This action took 
nearly half of the 400,000 gallons normally transported through 
this BP network out of our national supply chain.
    It has been reported that the owner of the pipeline, BP, 
had not done a thorough inspection of the inside of the 
pipeline in almost a decade. I hope that BP will explain today 
why they allowed their pipelines to be so neglected for so 
long.
    BP is a firm that advertises itself as placing a high 
priority on operating in a manner that is safe for the 
environment.
    Further, BP is a firm that, according to the New York 
Times, made $7.27 billion in profits during the second quarter 
of this year, which was more than 30 percent higher than the 
profit it made during the same period last year, and equated to 
a profit earning of roughly $55,000 a minute. Such figures are 
essentially incomprehensible, particularly to people who are 
paying or were paying $3.00 for a gallon of gas on a fixed 
income, while confronting their rising expenses.
    BP certainly could not credibly say that they did not have 
the money necessary to afford to properly maintain their 
pipelines. Therefore, one can only conclude that BP simply 
didn't have the will to do so.
    Further evidence of this appears in reports of several 
newspapers that suggest independent investigators found 
evidence that BP tried to intimidate employees who reported 
problems with the pipelines.
    Equally incomprehensible to me is the timid and 
shortsighted action being taken by the Pipeline Hazards 
Material Safety Administration, PHMSA, and PHMSA is now 
considering a rule to require inspections every five years of 
pipelines that run through environmentally sensitive areas, 
which, unlike pipelines in urban areas, have generally been 
unregulated by PHMSA. There have been varying estimates that 
from 10,000 to 12,000 miles of pipelines would be left 
unregulated even if these proposed regulations were adopted.
    So often our Government only reacts after an incident has 
occurred. It appears that in this case that the events in 
Alaska clearly show that companies operating low pressure 
pipelines are unwilling to adequately maintain them even at the 
risk of losing production capacity and, thus, profit.
    Despite this, the Administration is unwilling to act to 
close the risks posed by unregulated low pressure pipelines and 
negligent companies.
    Mr. Chairman, the safety of pipelines across our Nation is 
of critical importance and the incidents in Alaska reveal 
serious shortcomings in our safety oversight regime that demand 
immediate attention.
    I look forward to the testimony of today's witnesses and, 
with that, I yield back.
    Mr. Young. I thank the gentleman.
    Mrs. Kelly?
    Mrs. Kelly. Thank you, Mr. Chairman.
    According to the Alaska Department of Environmental 
Conservation, 500 oil spills occur in the Prudhoe Bay oilfields 
along the 800 mile pipeline each year. While most of these 
leaks are minor, quickly detected and remedied, we know from 
what occurred there in March, and more recently in August, that 
the threat of another environmental disaster is very real.
    Shortly after the leak detection in August, one BP official 
referred to the current corrosion detection and control program 
in the Trans-Alaska Pipeline as world-class. Yet, the last time 
the company performed an inline inspection to check that line 
was in 1992. We know that most oil pipelines in Alaska have 
exceeded their 25 year design life; yet, they let 14 years 
lapse. They yet 14 years lapse without proper surveillance of 
this critical stretch of the pipeline. As a result of the 
recent investigations, now we have learned that the walls of 
many of these pipelines have lost as much as 80 percent of 
their thickness because of corrosion.
    The delicate environment in the Northern Slope is at 
considerable and preventable risk. And those that fail to 
remedy the problem should be held accountable. BP is currently 
under investigation by both the Justice Department and the EPA 
to determine whether BP violated the Federal Clean Water Act by 
failing to prevent corrosion in the ruptured line.
    I am happy to see this Committee is holding this hearing 
today to help find out what corrective actions are being taken, 
and I look forward to working with our Chairman Young, who 
represents Alaska's Northern Slope, and I look forward to 
helping him protect this magnificent, this beautiful and 
pristine part of our Country.
    I yield back the balance of my time.
    Mr. Young. Is there anyone wishing to make a statement? Ms. 
Carson, Julia?
    Ms. Carson. Thank you very much, Mr. Chairman.
    I would like to thank the witnesses, too, for appearing 
today before this Committee to discuss this important topic.
    Over the past few years, BP has devoted a great deal of 
time and money toward promoting its image as an environmentally 
responsible company. In my neighborhood alone, we had three 
such operations. I have seen the TV advertisements in which BP 
brags that it is the biggest and best in new U.S. energy 
development. Yet, for years BP has failed to adequately invest 
in its own pipelines and has been grossly negligent. It has not 
lived up to the image it has spent so much money creating.
    Alyeska Pipeline service, which operates the Trans-Alaska 
Pipeline, runs a smart pig every three years and maintenance 
pigs every 14 days through its pipeline. In contrast, BP has 
not run a smart pig through its western line since 1998, and 
did not pig the eastern section since 1992, even though smart 
pigging is a very effective way to spot pipeline damage.
    DOT ordered BP to pig its lines on March 15th. I am baffled 
as to why it took until July for BP to finally comply with the 
order. BP's sluggish response is a further testament to its 
arrogant management and wanton disregard for responsible 
corporate stewardship. As a result of BP's chronic neglect, 
over 200,000 gallons of oil have been spilled, and BP must now 
replace 16 of the 22 miles of corroded low stress pipelines in 
Prudhoe Bay.
    I find it incomprehensible that a company that posted 
approximately $25 billion in profits last year and spent 
millions in advertising to promote its image, did not allocate 
adequate funding to do basic maintenance on its pipelines. How 
can a company that claims to be environmentally responsible 
have two oil spills in Alaska in six months, all along 
resisting cooperating with regulators?
    Yet, BP does not bear all of the blame for the shutdown in 
Prudhoe Bay. The public expects Federal and State government to 
conduct adequate oversight of companies that fail to do 
rudimentary pipe maintenance. Ultimately, the average American 
is bearing the brunt of BP's failures and the Government's 
failures. Gas prices are at near record highs, while our 
biggest oil field is only producing approximately half of its 
normal output.
    I hope today's hearing does more than simply assign blame. 
I hope that today we determine what steps we need to take to 
prevent this gross negligence from occurring again. The DOT has 
proposed a rule which regulates low stress pipelines in 
unusually sensitive rural areas. In light of this spill, I hope 
that today we consider expanding the scope of this rule to 
include all low stress pipelines. Let us not be too lax in our 
response and open the door to the possibility of another spill 
occurring under our watch. Our top priority must be prevention.
    I hope today's hearing will shed light on the strengths and 
weaknesses of this proposed rule and help guide our future 
policymaking on this vital issue.
    Thank you very much, Mr. Chairman and Ranking Member for 
holding this hearing, and I thank the witnesses for being here. 
I am looking forward to your testimony. And I yield back, Mr, 
Chairman.
    Mr. Young. I thank the good lady.
    How many other people would like to speak at this time?
    Just hang on. I want to know how many. One, two. Two, is 
that good?
    Admiral, with all due respect to a gentleman in your 
position, if you would like to go outside and take a short 
break, you are welcome to do it until we get done talking, 
because you are going to be sitting here a while, after your 
testimony, answering questions. So that is up to you. I will 
give you leave of absence.
    Admiral Barrett. I thank you, Mr. Chairman, but I am happy 
to hear the comments.
    Mr. Young. I appreciate that. You are not as quite as 
mature as I am right now.
    [Laughter.]
    Mr. Young. Mr. Honda?
    Mr. Honda. Well, in that spirit, I wanted to just ask if I 
could enter my comments into the record with your consent.
    Mr. Young. You are a great American, a fine individual.
    Mr. Honda. Following your lead, Mr. Chairman.
    Mr. Young. Thank you.
    Who else? Mr. LaTourette.
    Mr. LaTourette. Mr. Chairman, I strive to be a great 
American too, but I will try and just do a couple minutes.
    I have been on this Committee for 12 years and have sat 
through a number of hearings and markups on pipeline safety, 
and Mr. Oberstar's institutional knowledge will be greater than 
mine, but I can remember on high pressure pipelines there was a 
big discussion.
    I think Mr. Oberstar had an amendment to reduce the amount 
of years between smart pigging of those gas pipelines I think 
following the explosion to which he referred to in his opening 
statement. And I don't remember whether he wanted to take it 
from seven to five or five to three, but I listened to his 
arguments, I listened to the industry's arguments, and I wound 
up on that occasion not voting with Mr. Oberstar in that 
markup.
    I was in Cleveland recently and there was a radio trivia 
program in the morning about this spill, and they said, well, 
how long has it been since BP ran the smart pig through the 
pipelines in Alaska, and they said it was 1992, and I said that 
can't be right based upon that discussion, it had to have been 
since then. And being from Cleveland, the former headquarters 
of BP, the heir apparent to Standard Oil of Ohio, I found that 
disconcerting and then looked into some of the previous 
testimony by BP most principally at the Energy and Commerce 
Committee.
    And I hope that the witness today from BP, just sort of as 
a head's up, can talk a little bit about the company audit that 
found that BP was without a senior corrosion engineer for more 
than a year when the March spill occurred, and also left vacant 
the top job in its pipeline corrosion oversight division in 
Alaska for more than six months in 2005.
    Also, I am interested in a statement that Mr. Marshall made 
at that hearing that said that there was a fellow by the name 
of Richard Willum, apparently, who was the head of the 
corrosion inspection chemicals group, and it was opined that he 
had an abrasive nature which may have intimidated workers from 
raising questions about pipeline safety and integrity. And my 
question would be do we think that the American public 
shouldn't expect the safety issues shouldn't be raised at 
nuclear power plants, air traffic control towers, oil 
refineries, or pipelines because a boss has an abrasive nature.
    I would, just on this Committee, suggest that if working 
with someone from Alaska with an abrasive nature was an 
impediment to getting our job done, we would never get anything 
done on this Committee.
    [Laughter.]
    Mr. LaTourette. I look forward to the hearing and I thank 
you, and I yield back my time.
    Mr. Young. I am glad you yield back the rest of your time.
    [Laughter.]
    Mr. Young. If there is no other opening statement, I would 
deeply welcome and deeply appreciate a gentleman that I have 
known when he served in the Coast Guard, and, as you know, I am 
very supportive of the Coast Guard, and he has taken on a very 
awesome responsibility, and I congratulate him for that.
    And, unfortunately, right after he took over the job we 
have had a couple spills. So, Admiral, you are welcome. I look 
forward to your testimony and, of course, the questions that 
will be asked. Admiral.

   TESTIMONY OF VICE ADMIRAL THOMAS BARRETT, ADMINISTRATOR, 
 PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION, U.S. 
                  DEPARTMENT OF TRANSPORTATION

    Admiral Barrett. Good morning, Mr. Chairman. Thank you. 
Ranking Member Oberstar and distinguished members of the 
Committee, thanks for the opportunity to discuss actions of the 
Pipeline and Hazardous Materials Safety Administration to 
oversee BP operations at Prudhoe Bay and the steps we have 
taken to prevent future corrosion problems on similar low 
stress pipelines.
    Our mission is achieving and maintaining safe, 
environmentally sound, and reliable operation of the Nation's 
pipeline transportation infrastructure. In practice, this 
requires understanding the condition of pipelines and ensuring 
operators take actions to prevent and address unsafe 
conditions. As you know, the first responsibility for safety 
rests with the operator.
    Following BP's March 2nd crude oil spill, PHMSA used its 
statutory authority to assert jurisdiction over all BP low 
stress transit lines at Prudhoe Bay. We have issued a series of 
orders to the operator to perform long overdue inspections and 
maintenance, and implement continuing measures for safe 
restoration of operations.
    Since March, senior personnel from PHMSA have been on the 
job directing these actions. I visited Anchorage and Prudhoe 
Bay in July and again in late August to meet with our field 
inspectors, BP and Alyeska executives, State officials in the 
Joint Pipeline Office to assess issues firsthand. Acting 
Transportation Secretary Maria Cino also visited in August to 
assess progress in compliance with our orders.
    We do not understand why BP did not more aggressively 
address the corrosion problems that led to these leaks. We have 
found most pipeline operators demonstrate a higher standard of 
care than we saw here.
    The recent BP Alaska incidents are not indicative of the 
health of the rest of the U.S. energy pipeline infrastructure. 
The number of serious incidents in which people or the 
environment is harmed is steadily declining. As a result of our 
integrity management programs, operators have found and fixed 
at early stages over 57,000 defects systemwide, which otherwise 
could have grown to failure. The system risk management 
approach the agency uses is getting positive results.
    On August 31st, the Administration proposed new safety 
requirements for rural low stress pipelines that could impact 
unusually sensitive areas. This brings forward the integrity 
management approach that has proven successful on other lines, 
and we already regulate low stress lines in populated areas and 
near navigable waterways. The proposed rules have been under 
development for several years, well in advance of this spill, 
and will prevent the type of failure BP allowed to develop at 
Prudhoe Bay.
    We started work on this proposal in 2003 in discussions 
with our technical advisory committees and at public meetings 
in Anchorage, Austin, and Washington. As we always do, we began 
by reviewing available data, analyzed our rulemaking record 
from the 1990s, plus new data on several hundred spills 
voluntarily reported.
    Two-thirds of these spills traveled less than 100 feet. No 
spill traveled a distance as large as a quarter mile. And 
unlike the BP configuration that we are talking about, 
operators report their rural low stress lines are primarily 
short in length, small in diameter, an easily surveyable. The 
primary causes of failure are corrosion and construction-
related external damage.
    Given the small size of the operations and predictable 
failure modes, we proposed a known set of effective 
protections. Our proposal applies the same level of integrity 
assessment we would require for high stress lines, including 
pigging. Moreover, we have expanded corrosion requirements 
beyond what our high pressure standards require, to include 
regular cleaning and continuous monitoring for any risk factors 
that might develop over time.
    I emphasize this is a proposal, one that uses a solid risk-
based program approach based on available information. We seek 
public input. If better information becomes available through 
public comment, we will use it to improve our proposed rule.
    We will also rigorously inspect these lines once regulated 
and bring the added value of PHMSA inspections. In our 
experience, it is our inspectors, as well as the regulation, 
that brings the successful outcomes, because they challenge 
operators to think and improve their practices. Outside audits 
of our inspections have validated this approach.
    The recent BP failures are serious, but we have other 
important work to do, and we need your help, Mr. Chairman. The 
Secretary of Transportation recently submitted to Congress the 
Administration's proposal to reauthorize and build on success 
of the 2002 Pipeline Safety Improvement Act. Once again, a 
risk-based data driven organization, we focused on a problem 
that is growing. Accidents are tending up on construction-
related damage on gas distributions that transit our 
neighborhoods, where people live and work and where our 
children go to school. The Administration's proposal 
strengthens State programs to prevent this damage, a serious 
threat to life safety.
    The proposal also provides for a risk-based approach for 
retesting natural gas pipelines, rather than a fixed seven year 
interval. A recent GAO report endorsed this risk-based 
approach.
    Mr. Chairman, I am also, frankly, humbled by a couple of 
the comments I heard here this morning, and I will do 
everything I can to earn this Committee's trust and to sustain 
it. But I also want to say, in my 35 years in the Coast Guard, 
I got to look not only at Coast Guard programs, but the 
programs of many other agencies, and the system risk-based 
approach that is being implemented by PHMSA that I have seen in 
the past several months since I have been on the job is rock 
solid. It is a sound, prudent approach to get at the most 
serious problems we face.
    Mr. Chairman, I assure you and Committee members that the 
Administration, the Acting Secretary, myself, and the men and 
women of PHMSA share your strong commitment to improving the 
safety, reliability, and confidence in our pipeline 
transportation system. We appreciate your interest in our work, 
and we intend to keep improving our record and do the best 
possible job for the American people and our Nation.
    Thank you very much. With your permission, I will submit my 
written statement for the record, and I will be pleased to 
answer any questions you may have.
    Mr. Young. Thank you, Admiral. I have a series of 
questions, and then I will turn it over to Mr. Petri to issue 
time. I am going to take a little break for a moment.
    Have you or are you, in your department, are you acting as 
a policeman or as an advisor? And if you are acting as an 
advisor, has BP responded in a positive fashion about 
addressing this problem?
    Admiral Barrett. We provide oversight, Mr. Chairman, as you 
know. We direct actions we think are necessary. The first 
responsibility for safety rests with the operator. My 
assessment is, prior to the March spill, BP was not doing the 
type of job that needed to be done up there in understanding 
the conditions of their lines and reacting appropriately to 
that.
    I went up there in July to assess progress in complying 
with our orders, and at that time it was not moving along as 
quickly as I liked. Subsequently and currently, I would say 
that BP is doing the types of things we would have liked to see 
them do sooner, but, nonetheless, they are doing the types of 
things we think need to be done to restore safe operations at 
Prudhoe Bay.
    Mr. Young. Do you have personnel on ground watching or 
overseeing what they are doing now so he or she can report 
directly back to you?
    Admiral Barrett. Yes, sir, we do. We have had inspectors on 
site almost continuously since the initial spills. We have had 
senior personnel visit there regularly. We brought in 
additional technical resources from Oak Ridge National 
Laboratories to help assess conditions and corrosion issues, 
and we maintain active inspection. I would point out we 
actually validate the data we are getting from BP. We are 
receiving a lot of data from them on a daily basis, and we are 
assessing it daily on both the western and eastern operating 
lines.
    But a typical approach for us is BP goes out and shoots a 
segment of line to look for corrosion. We will spot-check some 
of those inspections and we will take down the data, our 
inspectors will take down the data. And when their data runs 
come into our office in Anchorage or Denver, we are able to 
benchmark to make sure that the data we are getting is 
reliable. So we have been active on that and we will continue 
to be that way.
    Mr. Young. You issued some new regulations, I believe it 
was last week. If they had been in place on low stress lines, 
would that have prevented what happened in August?
    Admiral Barrett. Yes, sir, it would have. The proposed 
regulations would require a comprehensive corrosion management 
program to be in place, and the approach taken by BP prior to 
the March spill would not pass muster under that proposal.
    Mr. Young. Of course, we heard a lot--it is so funny to 
listen to this, but we heard a lot about what this is going to 
do to the price of oil and gasoline at the pump station, et 
cetera, et cetera Does PHMSA, when they have these inspections, 
does this come in play or do you still have strict regulations 
to make sure that the pipeline is safe?
    Admiral Barrett. Well, Mr. Chairman, thank you. Our primary 
focus is, of course, safety and environmental protection. We 
are concerned, obviously, with the impacts of safety failures 
on the national transportation pipeline infrastructure and, in 
applying our rules, we obviously factor that in.
    The Administration also, in its reauthorization proposal, 
submitted to the Committee and the Congress a proposal for a 
study that we would conduct with the Department of Energy to 
get a better understanding of the redundancy and the 
reliability of the national pipeline infrastructure that would 
give us a better basis, perhaps, to look at this issue in the 
future.
    Mr. Young. Well, you know, we hear a lot about these lines, 
and I have read testimony of some future witnesses about they 
refer to the BP lines like other lines. But these lines that 
were affected, are these a common form of line that had the 
spills and are they used by other operators around the Country? 
And, if so, have those operators had the same problem? I mean, 
this is not the collective field in the world.
    You know, I like to say we are the largest producers, but 
there are fields in Pennsylvania, there are fields in North 
Dakota, there are fields in Montana, there are fields in Texas 
and Oklahoma and Arkansas, et cetera, and I have never heard 
anyone talk about the collective lines. Are these lines similar 
or are they different?
    Admiral Barrett. Mr. Chairman, what distinguishes them most 
is their size. These are 30 inch and 34 inch lines. The eastern 
and western areas each carry 200,000 barrels, roughly, a day of 
crude. Most other lines of this type that you are talking 
about, the low stress or the gathering, are much, much smaller; 
they are typically shorter segments, maybe a mile or two to 
three or four miles, their sizes are generally well less than 
half the size of the BP lines, and, consequently, the risks 
they pose are substantially less.
    Mr. Young. Well, my time is about up, but you heard my 
opening statement about the speed in which the oil would flow. 
Would it be more advisable, or is this beyond your scope, of 
having a different line put in place because the field is 
diminishing in size now in productivity so that there would be 
less chance for corrosion? Or do other lines in the lower 48 
have the corrosion problems that we are having in Prudhoe Bay? 
Is there a different form of corrosive oil?
    Admiral Barrett. I think, if I could, two answers. One is 
corrosion is a constant threat to any line, and those 
mechanisms are well known. The risk of the type of 
microbiological corrosion that we believe is involved here--and 
that is still being looked at--is a known risk on the North 
Slope, and there are, you know the other operations up there, 
including regulated lines, we oversee about 400 miles of 
regulated lines up there, factor that in to their corrosion 
management programs.
    And so a well maintained, properly operated pipeline can 
operate indefinitely, and we typically have not seen, as I 
said, the same type--you know, what went on here was basically 
BP was not cleaning the line on a regular basis and not 
understanding the internal conditions in that line. Typically, 
operators have a much more aggressive program to get a handle 
on those issues. They certainly do on the North Slope. Taps, 
which you mentioned, and we look at regularly, runs cleaning 
pigs about every 14 days and smart pigs every several years, 
and we didn't see that type of program here, sir.
    Mr. Young. I thank you, Admiral.
    I would just like to remind people, because the TV cameras 
are on and I have a chance to be on the soapbox, just remind 
everybody that we are dealing with the most northern part of 
the United States of America and the most hostile climate, and 
we are pumping oil. And I would just like to remind everybody 
or ask the question where did the oil come from. I say this for 
Al Gore specifically. This was a jungle at one time. This was a 
forest at one time. This was a fern-laden area with mammals at 
one time. And that is the reason we are pumping the oil. So 
before everybody jumps off the edge of the cliff about the 
hothouse effect, just remember we were there before.
    I am out of time.
    Mr. Oberstar?
    Mr. Oberstar. The Chairman is never out of time.
    Thank you very much, Mr. Chairman. Footnote to your comment 
about oil being created at that spot, but that was millions of 
years ago, and the place was uninhabitable by humans at the 
time. But what was created in a period of several millions of 
years we have been remarkably resourceful at consuming at a 
little under 100 years of the industrial revolution. And we 
will keep digging and keep looking.
    Mr. Young. And we will build more dams and have hydrogen 
gas, too.
    Mr. Oberstar. That is right.
    And your reference, Mr. Chairman, to the hostile 
environment, I would call the Committee's attention--I think it 
would be useful for members and for the Committee to get the 
History Channel's review of the construction of and operation 
of the Alaska Pipeline. It depicts in very factual, 
straightforward manner and very compelling recitation of the 
hostile environment in which the line was built, continues to 
operate, the protections to the permafrost that were necessary 
in construction of the pipeline. And you and I both served on 
the Merchant Marine Fisheries Committee at the time that that 
was made possible, so you are quite right about the conditions 
under which BP is operating.
    Now, let's look at the record of this company, Admiral.
    In March of 2005 there was a Texas refinery explosion of 
BP. Fifteen people died, 100 or so injured.
    March of 2006, 270,000 gallons spilled, the worst spill, up 
to that point, on the North Slope, BP. The Eastern Operating 
Area, they did a smart pig of an eight mile segment, 
identifying 187 anomalies of pipeline wall loss, 16 in which 
the loss was 70 to 80 percent, according to the documents your 
agency has provided us.
    Didn't an alarm bell go off somewhere in BP? Apparently 
not.
    August 6th BP began shutting down the Eastern Operating 
Area when the network lost 200,000 barrels. April of 2006, 
12,000 cubic foot natural gas loss also in Alaska. In March of 
2006, Toledo, Ohio, 8400 gallons of gasoline. Just fortunate 
that that didn't explode like Mounds View in Minnesota. In 1998 
BP pigged the line, found six areas of internal corrosion, but 
never did anything further.
    In Little Falls, Minnesota this year, just a few months 
ago, Koch Industries--that is K-O-C-H Industries--Pipeline 
broke, sent a geyser of oil 75 feet in the air. Passing 
motorists, realizing that Morrison County is not in the oil 
belt, it realized that that was unusual, called 911, which 
called the Koch Pipeline headquarters in Wichita, Kansas, and 
they had already been alerted by their own sensors that there 
was a break and began the process of shutting it down. There 
were 135,000 gallons of oil that contaminated the land. 
Fortunately, it was far enough from the Mississippi River that 
it didn't get into the Mississippi to contaminate that 
extraordinary body of water.
    I will say that Koch responded very promptly, very 
vigorously, but there too they had pigged the line. They 
noticed that there were anomalies several years ago. They 
decided it was not within the ambit of seriousness to do 
anything about it, so they let it go, and that is where the 
corrosion occurred, that is where the break occurred, and that 
is where the damage was done to the land.
    Now, when there is an isolated incident you can say, well, 
somebody missed something or they didn't take it seriously 
enough. But here is a pattern of conduct, and that is what we 
look for in safety, in systems of safety. And here is a pattern 
of conduct that deviates from safety, from that standard that I 
cited that is in the law: maintenance of safety is the highest 
priority, highest degree of safety in pipeline transmission.
    This is not a pattern of conduct of highest level of 
safety. This is a corporate culture of neglect of safety. And 
when the corporate boardroom fails, a Federal agency must be 
there to make sure that they correct their failures.
    Now, what do you think we need to do from here forward? We 
have a five year inspection in high pressure liquid lines, we 
have a fire year requirement for low pressure liquid lines that 
are in populated areas of 50,000 SMSA or greater. But all 
others--gas transmission lines are seven years and all others 
unregulated. How can we justify, how can the department, the 
agency justify that distinction? There are only 600 miles of 
line in low density population areas that are environmentally 
sensitive. The rest of them don't count? Admiral?
    Admiral Barrett. Thank you, Mr. Oberstar. Two things. One, 
the proposal we have on the low stress lines would bring 
forward the type of regular inspection you are talking about on 
the high stress lines, that is, a pig or equivalency with every 
five years or so. It actually goes beyond that and would 
require regular cleaning of the lines, continuous monitoring 
and remediation.
    So I think we are, with the lines that we are talking about 
here, the BP lines, we are taking essentially the same approach 
and, in some senses, enhancing it, certainly with respect to 
cleaning. It requires operator qualifications, it requires leak 
detection systems, and it requires better record keeping so we 
get a better handle on what is going on.
    But in terms of your broader question, I think the answer 
is that over the last, certainly, six, eight years the agency 
has brought forth a very aggressive, what we term and you 
know--and I think you had some fingerprints on some of this--an 
integrity management program. And our inspection approach, our 
regulations are quite comprehensive. They include a broad range 
of how operators look at their lines, identify the most serious 
risk, and then have to react to that. And we have, through that 
process, corrected over 57,000 defects on lines through that 
process.
    But I don't know if people understand how comprehensive 
that is. We typically, on the IM inspections, we will put a 
team out there for as long as two weeks. We frequently partner 
up with State inspectors if they are part of our program in a 
particular State, and we will take a rigorous look at what the 
company is doing at all levels to ensure that they have a safe 
system of risk management and continuous adjustment on their 
programs.
    We, in fact, to respond specifically with respect to BP on 
the North Slope, we also oversee their regulated lines on the 
North Slope, and for the past several years we have been 
engaged with them in getting them to bring up the integrity 
management programs on those lines. And we have talked to them 
about their lines in the lower 48 and inspected them, again, 
from the same approach. Ms. Girard called in--this was before I 
got here--the CEO of BP North America, to discuss exactly that, 
how you are bringing forward an effective integrity management 
approach in areas where we were identifying problems. And we do 
look at operators' records of performance and we do identify 
where we think they are sleeping.
    So I appreciate the comment. I understand it. I think the 
agency is moving against it. That is not to say we can't always 
do things better. Certainly on the low stress proposal we are 
soliciting comments, and if there is data or information out 
there that people feel suggests we should do something more or 
less rigorous or with some different approach, we are certainly 
open to it. But I appreciate the comment and I understand the 
concern, sir.
    Mr. Oberstar. Well, I have a number of other questions, but 
this place clears out pretty fast after opening statements, Mr. 
Chairman, and in deference to those who remain, I will 
withhold. But I will come back to a number of issues in your 
comment.
    Mr. Petri. [Presiding] Thank you.
    Mr. Gilchrest.
    Mr. Gilchrest. Thank you very much, Mr. Chairman.
    Admiral, thank you for coming and giving us your testimony. 
Can you identify the specific microorganism that caused this 
corrosion to occur? And is it a new microorganism, has it 
evolved in any way, or is it a known entity?
    Admiral Barrett. Mr. Gilchrest, thank you. We do believe 
that the spills up there were likely caused by microbiological 
activity. We are looking into that. We haven't completed our 
look. We don't know specifically what organism may have been 
involved or may not. We will continue to look at that to pin 
down what is going on.
    What I did want to offer to you, though, is the risks of 
this type of corrosion are well known up on the North Slope. 
Typically, they inject sea water or water into the wells. The 
risk of organisms getting through the production separation 
process, where the water and gas is taken out, and into some of 
the product and moving down the transfer lines is a known risk, 
and there are methods, including cleaning, corrosion 
inhibitors.
    Mr. Gilchrest. So this is not anything that caught anybody 
off guard? There are known mitigation measures to these kinds 
of corrosion and it is known that those mitigation measures, 
even in this circumstance, done on a regular basis, would have 
been effective?
    Admiral Barrett. Yes, sir, and the other operators do that. 
And without understanding exactly what the mechanism, as you 
said, I would qualify on that basis, but generally regular 
cleaning of lines like this and effective corrosion management 
programs would preclude this type of problem.
    Mr. Gilchrest. So years of experience in this kind of 
environment, pumping out this quantity of oil, using sea water 
probably on a fairly regular basis over the decades, this kind 
of problem with corrosion is known to be mitigated with regular 
treatment so it wouldn't happen.
    Admiral Barrett. Sir, I would say the risk is generally 
well known up there, and operators have to have a comprehensive 
corrosion management program in place to address it, and most 
do.
    Mr. Gilchrest. So as a result of past experience and known 
mitigation measures, who do you think is at fault for these 
leaks, BP, Pipeline Safety Administration, a combination of the 
two, or what other factor?
    Admiral Barrett. I would say the primary responsibility for 
safety always rests with the operator. Prior to the March 
spill, these lines were not regulated by us, and we have 
proposed, as has been indicated this morning, bringing them 
under Federal oversight.
    Mr. Gilchrest. Who regulated the mitigation measures to 
corrosion?
    Admiral Barrett. Well, typically, on most of the lines up 
on the North Slope, we have oversight programs in place and, 
again, the operator would have primary responsibility, but we 
would oversee the way in which they manage it.
    Mr. Gilchrest. Now, you would oversee the way they manage 
the mitigation measures to prevent corrosion. That is in 
statute right now?
    Admiral Barrett. Yes, sir. In our regulations, Part 195 of 
Title 49 describe the approaches we would take and what 
requirements we have in place to do that.
    Mr. Gilchrest. So those approaches weren't taken or you 
missed some of the scheduling clean-outs?
    Admiral Barrett. Well, these requirements did not apply to 
these lines prior to the March spills.
    Mr. Gilchrest. Oh, I see.
    Admiral Barrett. We have imposed a lot of requirements 
subsequent to that spill by order and we have proposed 
regulations to address it on a broader scale.
    Mr. Gilchrest. I see. Thank you very much.
    Admiral Barrett. Thank you, sir.
    Mr. Gilchrest. Thank you, Mr. Chairman.
    Mr. Petri. Mr. DeFazio.
    Mr. DeFazio. Thank you, Mr. Chairman.
    Admiral, in response to one of Mr. Gilchrest's questions 
you said the companies have to have comprehensive corrosion 
management in place and most do. I am concerned about the most 
do part. Can you tell me who those that don't?
    Admiral Barrett. I was thinking specifically, sir, of the 
discussion about BP and what transpired recently up there, and 
specifically with respect to the North Slope. The other lines 
that we see have the type of cleaning and corrosion controls in 
place that the regs require and that we would expect, quite 
frankly.
    Mr. DeFazio. Okay, so you are talking about the comparison 
between the regular maintenance cleaning, inspection that 
Alyeska does versus BP, that sort of thing.
    Admiral Barrett. Yes, sir.
    Mr. DeFazio. It wasn't something more generally broadcast 
around the Country--
    Admiral Barrett. No, sir.
    Mr. DeFazio.--where we might have other problems we don't 
know about?
    Admiral Barrett. No, sir.
    Mr. DeFazio. Okay.
    Admiral Barrett. In fact, to the contrary.
    Mr. DeFazio. I am just curious--and I will be asking BP 
about this, but what does it cost to clean or smart pig a line? 
I mean, I assume, if Alyeska does it every two weeks with 
cleaning and then regularly--I mean, it can't be prohibitively 
expensive.
    Admiral Barrett. No. It would vary, obviously, with the 
size and nature of the line, but typically a cleaning pig is 
much less expensive, maybe $1,000 a mile, you know, for a line 
the size of Alyeska. It is still substantial. But the ILI, the 
inline inspection device, is much more expensive--of course, 
you not only have to run the device, you have to analyze the 
results--but you might be looking at about, I would guess, 
$6,000 to $8,000 a mile for that type of approach.
    Mr. DeFazio. Okay. So here is sort of--I mean, you are 
talking about risk-based management, and that is sometimes the 
best way to go versus a hard rule, but I am concerned here that 
BP was apparently following industry standards for 20 years, 
and they supposedly were following a risk-based management 
approach proposed by industry. I am concerned about something 
that isn't more prescriptive, particularly in all these other 
thousands of miles of line we are talking about and whether or 
not a risk-based approach, given that prevailing mentality, is 
adequate.
    And I guess it kind of reminds me of a fight I engaged in 
from when I first came to Congress that, unfortunately, never 
came to fruition until after a horrible tragedy, but for years 
I argued that the FAA was conflicted because it had to regulate 
both the public health and safety, but it also was mandated 
under historic statutes to promote the industry, and balance 
those two things. It was only after the Value Jet crash that I 
was able to get an amendment to strip them of that charge and 
move them much more toward pure public safety regulation. And I 
am concerned here.
    Yes, we don't want to impose unnecessary costs, but we 
don't want to lean toward avoiding costs to the industry that 
might prevent depredation of public resources. I mean, again, 
on your low pressure, as I understand it, it doesn't--you know, 
a creek isn't necessarily a sensitive area, it just might 
happen to be your creek. It isn't defined under Federal law as 
particularly sensitive. And then the quarter mile, as I pointed 
out earlier, yes, you said many spills don't go more than 100 
yards, but, you know, there are many places where pipelines 
have been built in essentially following rights of way and cuts 
that are above valleys with water, you know, below sometimes 
critical resources more than a quarter mile away. Again, where 
did we come up with a quarter of a mile?
    So I guess I have a couple of questions. Why wouldn't we 
regulate all pipelines and move away from the risk-based 
approach for the majority? Where did we get the quarter mile 
standard? Why don't we apply the standard in any and all 
watersheds with at least the minimum quarter mile standard? 
Those would be three questions.
    Admiral Barrett. Thank you, sir. Let me approach it on a 
couple levels. First, for clarity, I have said repeatedly, and 
I would emphasize, with respect to the specifics of the BP 
spill, I don't think BP was following the type of standards we 
typically see in the industry, whether the lines are regulated 
or not, by not having a regular cleaning program and 
understanding the conditions of their lines. So I don't want to 
leave the impression that they were following the practices we 
typically see.
    On a broad sense, the risk management issue I think is 
important, and in the rule making we propose, for example, and 
we apply elsewhere, you know, you have to continuously monitor 
and assess conditions on your lines, understand them, and then 
react to your most serious risk. But what gets lost sometimes 
is one of the reasons that approach is so important, and I also 
think one of the reasons it has been so effective in other 
areas that PHMSA has regulated, is the risk changeover time. In 
other words, it can change from external circumstances, such as 
development coming up around a line, maybe we are building more 
houses or more schools; maybe the data we have is showing a new 
problem, Mr. Gilchrest mentioned maybe it is a different kind 
of microbiological activity you need to adjust to.
    But the risks change. And I believe firmly you have to have 
a program in place that requires the operator to look at their 
risk profile, catch changes in that, and react to it in a way 
that cuts those risks off early. And I think that is the 
fundamental value of those types of approaches, and the more 
prescriptive approaches typically cannot get to that.
    I heard the comment earlier about the five year. We 
generally require, and would in this rule, pigging of these 
lines about every five years. But there are some lines that you 
can't pig; they are either telescoping in nature, they may have 
bends or valves in the lines that would prevent that. So you 
have to have some other way to provide equivalent levels of 
safety, and, again, manage that risk in some prudent way.
    And with respect to the quarter mile, again, we are a data 
driven organization, and I think that is our charter--
    Mr. DeFazio. If I could, before you answer that. But as I 
understand it, you do not mandate that data be submitted on all 
the unregulated lines So since there is no mandate that you 
receive the data, unless you read about it in the newspaper or 
it somehow is brought to your attention, you won't necessarily 
know about it. So how can you be data driven on those thousands 
of miles of line if people don't have to report?
    Admiral Barrett. We have looked at the lines that are out 
there, the nature of the lines. Many of these, as I said, are 
small. A couple States have good records on them, Texas in 
particular. And we have looked at the nature of those lines, 
the amount of product that they hold, and generally where they 
are being operated and how, and, simply, our assessment is that 
they don't pose the same level of risk as the larger lines, 
particularly the big lines you are talking about with BP.
    But I want to be clear. We are a data driven organization, 
and the record is open. This is a proposal. And if there is 
information or data out there that suggests the scope of what 
we are approaching should be expanded or contracted, or the 
requirements should be different, if that information is 
brought forward on the record, we are certainly receptive to 
it. And I want to be clear on that. This is a proposal and we 
are open to information that suggests the answer could be 
adjusted.
    Mr. DeFazio. Okay, thank you.
    Thank you, Mr. Chairman.
    Thank you, Admiral.
    Admiral Barrett. Thanks.
    Mr. Petri. Let's see, Mr. LaTourette.
    Mr. LaTourette. Thank you, Mr. Chairman.
    And, Admiral, thank you for the work that you do and the 
quick response. I just have one question, and I will try and 
make it short, but it is a follow-up on what the Chairman was 
discussing with you. I don't think that my district is unique 
from other members', and probably the number one phone call we 
received until recently was about the price of gasoline.
    Now, thankfully, normalcy has almost come back in that gas 
is about $2.29, and we have a lot of discussions and debates 
around here about everybody wants gas to be about a buck a 
gallon again, the good old days; we fight about whether we 
should explore for more oil; we ask questions about why we 
haven't built any new refineries since 1981. I can remember a 
couple years ago Marathon Oil wanted to build a pipeline across 
Ohio and everybody wanted cheap gas, everybody wanted more 
pipelines, but nobody wanted it in their backyard in Ohio.
    So if it is not only a supply and demand question, it is 
also an infrastructure question. When the shockwaves on gas 
prices first were felt in my part of the world maybe three 
years ago, when there was a disruption in the Wolverine 
Pipeline in Michigan and then also one on a pipeline whose name 
I don't recall, but between Oklahoma and Texas, and gas went up 
to $2.25 and people were screaming then. And we have seen now, 
when it has crested $3.00, people really don't know what to do.
    The Chairman's question, and I think my question to you is 
I heard you answer him that when you look at the things that 
you need to look at relative to regulation, safety trumps 
everything else. And I think that that is exactly as it should 
be. But I think what he was getting as is do you have the 
authority today to consider economic impact.
    And by that I mean not all pipelines are created equal, and 
in this day--I think we are in an energy crisis, and in this 
day of energy crises, do you feel that, at PHMSA, you currently 
have the authority to take into consideration the economic 
impact that would result in the disruption of a certain 
pipeline as you move forward? And, if you don't, is there 
something that you think we need to do to give you more tools?
    Admiral Barrett. Thank you, sir. No, I believe we have the 
authority that we need. And what I would say is we certainly 
can look at the, just from a transportation agency, the impact 
on transportation, as I said, our safety oversight and 
environmental oversight does provide benefits to the 
reliability and integrity of those lines.
    I think the real issue is the appropriate way to factor 
that in to our oversight programs, and obviously we are going 
to look a bit harder at that and pay more attention to it. But 
I think the real issue is we have the authority, it is how we 
can bring that forward in an effective manner.
    Mr. LaTourette. I thank you.
    Chairman, I yield back.
    Mr. Petri. Thank you.
    Mr. Pascrell?
    Mr. Pascrell. Thank you, Mr. Chairman.
    Vice Admiral, I looked through your testimony very 
carefully, and I want to bring your attention to a couple of 
places. You know, my conclusion was, when I read your 
testimony, here we go again.
    Page 3 of your testimony, the second paragraph: ``We have 
proposed new federal regulations for low stress pipelines, 
including the BP lines that recently failed. The rules have 
been under development for several years and would prevent the 
type of corrosion failure BP allowed to develop at the Bay.'' 
This, to me--and I can only give you my perception of this--is 
nothing more than bureaucratic drivel, because you also say, on 
page 4, in the second paragraph: ``Based on the information 
developed in connection with our rulemaking proposal, we 
believe that most other unregulated low stress pipelines are 
operated to a higher standard of care.'' You see where I am 
talking about?
    Admiral Barrett. Yes, sir.
    Mr. Pascrell. And on page 8 you say, first paragraph: 
``Based on information received in connection with developing 
our proposed rule making for low stress pipelines, we believe 
most operators demonstrate a higher standard of care in their 
operations whether or not they are federally regulated.''
    I want you to tell this panel what leads you to that 
conclusion? What evidence can you put before us that the 
process of self-regulation in these low stress lines actually 
has credibility? And I can go on to cite to other places, but 
start off with that.
    Admiral Barrett. Well, first--
    Mr. Pascrell. Admiral, the reason why I am asking this 
question, sir, with all due respect, is BP is only a small part 
of this problem. We passed legislation on this very panel not 
too long ago. It didn't even include liquid pipelines. It 
didn't even include it. That was six weeks after the disaster 
in the Bay. So I come with a perception here, and I want you to 
correct my perception.
    Admiral Barrett. In two senses I would. First, the agency 
has been working on these regulations for several years, well 
in advance of these bills, and it is one of the last pieces of 
the puzzle, if you will, that we brought forward in response to 
the 2002 Pipeline Safety Act, and the highest priority of the 
agency has been on lines that threaten life safety and our 
communities. The type of situation Mr. Oberstar mentioned at 
Moundsville is acutely on my mine--
    Mr. Pascrell. Vice Admiral, you know, back in 2002 it was 
not because of your agency which brought us to that point, it 
was because this bipartisan Committee kept on insisting that we 
come to some compromise and some change. The Administration did 
not run point on that, has not run point three months ago, and 
has not run point on it now. So what happened in 2002 is not 
because of the agency, it is because of a bipartisan 
cooperation on this Committee.
    Admiral Barrett. With respect, sir, I would suggest that 
the record--and it is in my statement--of performance that the 
agency has brought forward in this industry over these years 
has shown a steadily decreasing trend in the serious incidents 
on pipelines.
    But I want to answer your second question also, and that is 
where did we get this information. In the several years we were 
working on this, we had a number of public hearings. We had 
multiple meetings of our technical advisory committee. We 
solicited input from the public and from the industry on these 
low stress lines, in terms of where they were, what size they 
were, how much product they carried, what areas they 
threatened, and how they were being overseen and managed by the 
industry.
    And that is where that information came from, that 
extensive, several year process of gathering data, and that is 
what our proposal, frankly, is based on. And the contrast that 
I was drawing there was what we were seeing with respect to the 
very large low stress lines that BP had on the North Slope and 
the vast majority of these lines in the United States, which 
are far smaller, much shorter segments, and pose, in many 
respects, a different problem; and the proposal goes at the 
most serious risks that those lines pose.
    Mr. Pascrell. The specific issue that we are addressing 
today, and I was trying to put it into context, we are talking 
about 22 miles. It costs 8,000 miles to clean, you have heard 
this, to pig. That is $176,000. There is something wrong here, 
because this is a corporation which had a $226 billion profit 
last year. And the cost of cleaning this up is $100 million. 
There is something wrong. And you are not here defending--are 
you? I don't think you are.
    Admiral Barrett. No. To the contrary--
    Mr. Pascrell. I know you are not defending any particular 
corporation, but are you defending the possibility that we can 
do this, these thousands of miles of pipeline, we can do this 
part self-service and then the Government inspect some of it? 
Or are you saying there needs to be regulation for all of the 
lines? What are you saying?
    Admiral Barrett. Well, two things. First, the type of 
inspection you refer to with respect to BP, we have in fact 
ordered, subject to the March bills, the eastern line that 
turned out to have the problems in August was being assessed by 
a smart pig because we ordered it. And so understanding the 
conditions of the lines is something we expect in all of our 
programs and in any area we oversee.
    But in terms of the regulation we are bringing forward, it 
is tailored to address the most serious issues we believe these 
lines pose, and not be unduly burdensome to many smaller 
operators with smaller lines, where we believe the risk is not 
as great. But we are, as I indicated, open to data if the 
public or anyone else believes that the proposal should be more 
or less stringent. You know, that is a normal process for us 
and it is a normal process for Federal regulatory agencies, to 
put what we think the best thinking out is there and solicit 
public input on that, and that is what we are doing.
    Mr. Pascrell. Mr. Chairman, I just have one further point. 
BP just had an accident on what we would consider is a small 
low stress unregulated line in Long Beach last week. The point 
I am trying to make, in conclusion, Mr. Chairman, is that all 
of these lines we need to sit down--as we did with the gas 
lines--we came to a compromise, we came to an understanding, 
after many years of gridlock. This is not a question of 
regulation versus deregulation. This is not the question. We 
missed the point. We should have regulation that we could all 
agree with, and I hope that that is the direction you are going 
in.
    Admiral Barrett. Sir, and in fact, the Long Beach line you 
mention is regulated by one of our State partners, California, 
and we are working with them now and will look at what may or 
may not have transpired there.
    Mr. Pascrell. Thank you, Vice Admiral.
    Thank you, sir.
    Mr. Young. [Presiding.] Mr. Boozman?
    Mr. Boozman. Thank you, Mr. Chairman.
    Admiral, can you help me a little bit with the extent of 
the problem? After Katrina and the episodes there, when we got 
into really looking at our dams and dikes and things like that, 
we really found a tremendous problem that is going to cost a 
great deal to rectify. You know, with this additional 600 miles 
or whatever, what is your gut feeling as to the extent of the 
problem that is out there? I mean, are they in good shape or 
are they not going to be in good shape?
    Admiral Barrett. They will be in much better shape once we 
apply the requirements that we have got in this package. And we 
are directing that at the lines we believe have the most risk.
    But, in fairness, what is coloring the picture right now is 
the low stress line that BP had on the North Slope, which is 
more than twice the size of most of these lines. Most of these 
lines are far smaller, they are in rural areas, they do not 
threaten population or navigable waters. Certainly, there are 
risks there and, certainly, we are being attentive to that, 
but, candidly, we do not believe that they pose the same level 
of risk that a line like the BP lines at Prudhoe Bay pose.
    Mr. Boozman. And yet, like I say, there are dikes that have 
more level of risk as far as population and stuff like that, 
but a bad dike is a bad dike. As we get into this, are a lot of 
the 600 miles, are we going to find problems that is going to 
take a lot of money to correct?
    Admiral Barrett. No, sir, I don't believe it will. In many 
cases these lines are, as I indicated, from the public record 
we have got, being indicated with a generally reasonable 
standard of care. And, obviously, we are looking to make that a 
bit more rigorous, but I think our estimate in the rule making 
was about a $17 million target. I would have to go back and 
look at the cost benefit, but we are bringing the regs forward 
in a way we think will be effective and where the cost benefit 
analysis sustains the action we are proposing.
    Mr. Boozman. Good.
    Thank you, Mr. Chairman.
    Mr. Young. I thank the gentleman.
    Mr. Honda?
    Mr. Honda. Thank you, Mr. Chairman.
    Vice Admiral, thank you for being here. I guess I am trying 
to understand. PHMSA is an organization that is to regulate 
pipelines, is that correct?
    Admiral Barrett. It is one of our charters. We also do 
hazardous materials.
    Mr. Honda. And you are about to put together regulations 
that would cover low stress pipelines?
    Admiral Barrett. Yes, sir.
    Mr. Honda. And it hasn't been done before because it was 
considered that, if it is in the rural areas, that they are not 
of great concern?
    Admiral Barrett. No, sir, not that they weren't of concern. 
We have been working on the rule making for several years. But 
they did not have the same priority as high stress high 
pressure lines, oil and gas, that run through populated areas. 
I mean, we put our first priority on life safety.
    Mr. Honda. Okay, so the low stress pipelines in rural areas 
were of low priority, so, therefore, they were exempt from 
inspection?
    Admiral Barrett. No, sir. We were moving to bring them 
under regulation. I am just trying to understand your question, 
though. We moved first. That is, the agency moved, since 2002, 
first against higher risk.
    Mr. Honda. Okay. And then since they were exempt and they 
were going to be done later, the industry was--they were 
required to do the inspection?
    Admiral Barrett. The operator is always responsible for, 
you know, the safety of the operation of the line.
    Mr. Honda. They were required to do the inspection?
    Admiral Barrett. They would have to maintain their lines as 
any responsible operator.
    Mr. Honda. Is it required for them to create the--do we, by 
statute, require them to maintain their own--I mean, you know, 
when we go on the road and drive, we are required to have 
certain kinds of levels of proficiency. Are we requiring--did 
we require them to have a certain level of maintenance or 
oversight?
    Admiral Barrett. Well, again, I think the level of care 
that the operator--
    Mr. Honda. That is yes or no. By statute, did we or did we 
not?
    Admiral Barrett. Well, no. We are proposing to bring them 
under regulation, which is what we propose--
    Mr. Honda. Okay, so they were not regulated. They were 
supposed to be responsible.
    Admiral Barrett. Yes, sir.
    Mr. Honda. Okay, and they were not.
    Admiral Barrett. And we were bringing forward regulations 
to oversee them.
    Mr. Honda. Now, the evidence of corrosion was detected by 
the smart pig that you required them to use, and found about 
187 anomalies in the walls of the 22 miles or 8 mile section up 
in the Eastern Slope of wherever it was?
    Admiral Barrett. Prudhoe Bay.
    Mr. Honda. There was some discussion about sea water and 
organisms. I am not sure that is--you know, I don't know how 
pertinent that is if the inspection is supposed to look at 
anomalies in walls, right? So are we looking at ways to conduct 
these kinds of inspections in the future?
    Admiral Barrett. The proposal we have put out would require 
a much more extensive corrosion management program, but 
fundamentally--I think I understand your question. 
Fundamentally, an operator has to understand the condition of 
his lines. He has to be able to understand what--
    Mr. Honda. Not to interrupt--
    Mr. Young. Would the gentleman yield? Let him answer the 
question, please, Mr. Honda. Don't interrupt him as he is 
answering.
    Mr. Honda. Okay, I just have a certain amount of time. I am 
trying to get to certain points.
    Mr. Young. I will yield time.
    Mr. Honda. Go ahead, Admiral. Thank you.
    Admiral Barrett. I think, so, fundamentally, any operator 
has to do that. And our requirements, in many cases, require 
them to do that, and that is exactly what our proposal would 
require these low stress lines to do.
    Mr. Honda. Does the proposal require an audit of how many 
low stress pipes we have out there?
    Admiral Barrett. It would require that--obviously, one of 
the things that we will do is, once the rule is in place, we 
will go out and inspect these lines, and we will assess if all 
the lines that are within the scope of the regulation are being 
covered. And that inspection program is a very critical portion 
of what we do. And, typically, when we go out and look at, on 
the ground with our inspectors, we will typically pick up some 
lines that perhaps we weren't aware of, and we will bring them 
into the program.
    Mr. Honda. Do we have an inventory of low stress pipelines?
    Admiral Barrett. On the national level they are not mapped 
in all States, so the answer is--
    Mr. Honda. No.
    Admiral Barrett.--we are basing our estimates on what we 
were able to get from States that have these lines mapped.
    Mr. Honda. So we don't have an inventory as of yet. Are we 
going to require that in our guidelines?
    Admiral Barrett. We will go out and look at, you know, the 
lines that are within our scope, and we will put inspectors out 
and see what is in those fields.
    Mr. Honda. Are we going to require, under the guidelines, 
to have an inventory of low stress pipelines?
    Admiral Barrett. On a national level we will require 
mapping of the lines that are within our program, and we will 
look to ensure that all lines that are covered by the 
regulation are mapped.
    Mr. Honda. Within the programs, your program, who is not 
included?
    Admiral Barrett. I mean, we do not require mapping of lines 
that are not regulated by us or by the States. We have 
substantial partnerships with the States, and they oversee a 
lot of this.
    Mr. Honda. So--
    Admiral Barrett. But on a Federal level we only map the 
areas we are responsible for.
    Mr. Honda. Then help me understand the delineation between 
State responsibility and Federal responsibility over the 
inventory of low stress lines.
    Admiral Barrett. Well, again, if we bring them in the scope 
of our regulations, we will inventory them and map them.
    Mr. Honda. What are the criteria in order to bring them 
into the inventory?
    Admiral Barrett. Well, again, what we know from States, our 
partners, our primary partners, and, secondly, what we find 
when we go out and look at these lines and assess the fields 
that they are in. We get information from the operators. We ask 
and we get a lot of data.
    Mr. Honda. Who are the primary authors of the guidelines 
that PHMSA is putting together?
    Admiral Barrett. Well, of course, we are.
    Mr. Honda. You in partnership with the States and with the 
industry, or what?
    Admiral Barrett. Well, the national pipeline 
infrastructure, if you will, is overseen not only by Federal 
agencies, but by States; they play a significant role. In fact, 
one of the proposals, Mr. Chairman, in the reauthorization 
package would be to strengthen State oversight of the area we 
feel that is currently the most treacherous, which is the 
natural gas distribution systems. But that is a State program 
that we are looking to bolster.
    Mr. Honda. Okay, then I guess the sense I am getting is 
that no matter how much work we do on oversight and bringing 
low stress pipe into the system, there is going to be still 
some low stress pipes out there that are not going to be 
inspected nor have any oversight, whether at the State level or 
the Federal level. Is that correct?
    Admiral Barrett. Well, we are proposing to oversee the 
areas where we believe the risks exist, and we are certainly 
open to data that suggests that that proposal should be more or 
less stringent or have different requirements. But, you know, 
we are a data driven, risk-based organization, and so we tailor 
our proposals to where we believe the risk is.
    And in this particular case, with low stress line, we 
believe the risk exists where there are threatened 
environmental areas. We already do the populated areas and the 
navigable waters, but where there are threatened or endangered 
species, where it could threaten community water supplies, and 
where the history of spills suggest that a failure on one of 
those lines could threaten those activities, the quarter mile 
buffer that we have talked about.
    Mr. Honda. Last question, Mr. Chairman.
    It seems to me, if you are data driven, it sounds like the 
data is acquired reactively.
    Admiral Barrett. Not necessarily. We have gone out over 
several years extensively with public hearings, public 
announcements, public meetings to draw in as much data as we 
can get. Is it perfect? No. Typically, unregulated line--I 
mean, we are gathering as much data in as we can, and we are 
receptive to any data that is available.
    Mr. Honda. Okay. And--
    Mr. Young. The gentleman's time has run out.
    Mr. Boustany?
    Mr. Boustany. Thank you, Mr. Chairman.
    Admiral, has the quality of your inspections changed within 
the last six months?
    Admiral Barrett. Well, I think not only in the last six 
months, but probably over the last several years the quality of 
our inspections has become much more rigorous through the 
integrity management program. As I indicted, a typical 
inspection for that program is not a one shot by one inspector 
looking at a thing, but it is basically a two week program 
oversight of what an operator is doing; it is checking their 
data, checking their programs, going out and validating it in 
the field and making sure that they are paying attention to the 
most serious issues; and, as a follow-up to those inspections, 
ordering, if necessary, any corrective action. And, typically, 
our inspections lead, about 80 percent of them, lead to us 
obtaining or directing some type of follow-up enforcement or 
compliance action by operators.
    Mr. Boustany. Thank you. What kind of review has PHMSA's 
oversight activities received from the Inspector General of DOT 
or the GAO?
    Admiral Barrett. Those reviews have been multiple over the 
years and generally highly favorable. Most recently, GAO came 
out with two reports the end of August which are, for the most 
part, highly complimentary, the approaches used. And what I 
would also say is, frankly, we have been very aggressive in 
clearing recommendations from the National Transportation 
Safety Board in our lanes.
    I think probably over the last four to six years over 40 
NTSB recommendations--and I believe we only have about three 
that are still open, and they are open with acceptable actions. 
So I would say the endorsement has been strong. And, quite 
frankly, as I indicated, based on my experience, I think the 
program approaches being used are rock solid.
    Mr.  Boustany. And one final question. In talking about 
your risk-based approach in answering Mr. LaTourette's question 
about looking at economic impact, and you said, yes, you do 
have the authority to do that, do you also consider our 
Nation's energy security and distribution as part of that 
equation? And do you communicate with the Department of Energy 
on these issues or are you really stovepiped in this approach?
    Admiral Barrett. No, I would say one of the strengths we 
have is outreach with other agencies, and we are working on 
that all the time. As I indicated, we have submitted--the 
Administration has submitted a proposal to help us get a better 
handle on that with a study that we would do jointly with 
Energy to understand the issue a little more clearly. I believe 
we have the authority, but I think, frankly, we would like a 
little better understanding of where these issues might be so 
we can tailor our approaches appropriately.
    Mr. Boustany. Do you have a time line on that study?
    Admiral Barrett. I believe it is one year. I would have to 
go back and check, but--
    Mr. Boustany. We would be interested.
    Admiral Barrett. It would be--it is in the Administration's 
proposal. And I appreciate--I believe the Committee has 
endorsed that, and we would look forward to that.
    Mr. Boustany. Thank you very much.
    Mr. Chairman, I yield back.
    Mr. Young. I thank you.
    If there are no other--oh, excuse me, Mr. Oberstar.
    Mr. Oberstar. Thank you, Mr. Chairman. I have just a couple 
of points that I desisted earlier so that other members could 
have their full opportunity.
    Admiral, I want to come back to your statement that the 
internal inspection requirements of the proposed rule are the 
same as the inspection requirements in current law. But the 
proposed rule provides that the operator may use inline 
inspection tools. That is not the same as current law that says 
must.
    Admiral Barrett. If there is any lack of clarity there, 
sir, we would be glad to clear that up, but basically--
    Mr. Oberstar. You would be willing to substitute must for 
may?
    Admiral Barrett. Sure. Because, in reality, as you well 
know and the Chairman knows, you can't pig lines all the time. 
So we have to permit some alternative equivalencies. I think 
the language that may or must are certainly getting at the same 
intent, to make them pig the lines or have another acceptable 
program to do that.
    Mr. Oberstar. I think we have to have that clarity. You 
also made a very thoughtful comment that the operator has to 
understand the condition of the line.
    Admiral Barrett. Yes, sir.
    Mr. Oberstar. There is a duty to know and a duty to protect 
on the part of the company. Surely, they knew they were running 
into a lower grade of oil. Surely, they knew that there was 
sand coming up with that oil. Surely, they knew that there was 
natural gas, and the aromatic hydrocarbons that accompany it, 
along with water that then create the conditions for corrosion.
    Admiral Barrett. Those risks are well known on the North 
Slope, sir.
    Mr. Oberstar. And the Chairman has--and I attribute 
directly to him a very--who understands this; it is in his 
State, in his backyard--that the Alyeska line--Mr. Chairman, if 
I understand you correctly--has a filter at the beginning of 
the line to filter out unwanted materials. Is there no filter 
on this line at the beginning?
    Admiral Barrett. Well, I think the sediments and solids you 
are talking--one of the risks we looked at when we went up on 
BP was to make sure they didn't create any problems for the 
Trans-Alaska Pipelines. And, frankly, the--because they didn't 
understand the condition of the lines, the BP lines, how much 
sediment or solids actually existed in those lines and what 
could be pushed forward into taps was a concern of ours and a 
concern of taps. BP is now building bypasses with assistance 
from Alyeska, actually, to manage those solids in a way that 
doesn't produce a risk to the line.
    But what I was getting at is Alyeska Pipeline and other 
operators on the North Slopes clean these lines much more 
regularly, on a basis of every several weeks to several months. 
They run the pigs on a regular basis. And we just did not see 
that here.
    Mr. Oberstar. Yes. And you also pointed out in the 
discussion that we had in my office that there is at least one 
segment where the pipeline dips--
    Admiral Barrett. Yes, sir.
    Mr. Oberstar.--for the caribou crossing. And because the 
pressure is less, the flow has slowed down, there is an 
aggregation of sediment that creates the conditions for 
corrosion, rather than a condition where the line is flowing 
more freely.
    Admiral Barrett. Yes, sir, you are right. Where you have 
elevation changes on a line, again, your standard risk 
assessment would suggest you have an increased risk of 
corrosion--of water collecting, basically, and creating a 
corrosion risk in those locations. That is fairly well known.
    Mr. Oberstar. I appreciate that. And that suggests we need 
to strengthen the law, require more frequent inspections, and 
actions to be taken to clean those lines as a matter of 
responsibility of the company and as a responsibility of your 
agency to oversee them.
    Admiral Barrett. Sir, and we are proposing that. I 
understand.
    Mr. Oberstar. Thank you.
    Admiral Barrett. Thank you.
    Mr. Pascrell. Mr. Chairman, make one more quick point, 
please?
    Mr. Young. One quick one.
    Mr. Pascrell. Thank you, sir.
    I just wanted to put into the record, as I understand the 
testimony and the questions and answers that have been provided 
today, that for low stress lines there is no accident 
reporting, there is no data reporting required, and there is no 
mapping required. I want to put that into the record.
    Admiral Barrett. Sir, that is not entirely accurate.
    Mr. Pascrell. Well, then make it accurate.
    Admiral Barrett. There is still reporting required under 
the Clean Water Act, depending on the nature of a spill that 
might occur from those lines and where it would occur. We had 
extensive voluntary reporting of spills on those lines and we 
took that into account in developing our rule making. So there 
has been a fair amount of data that we collected in shaping our 
proposal. Now, not all of it was required by us--
    Mr. Pascrell. Excuse me. I used the word required. I will 
stick by the statement. Thank you.
    Mr. Young. Without any other questions, Admiral, thank you 
for your testimony, and God bless you and the work you have to 
do, and let's make sure we can produce this oil fairly for the 
Nation as well as the State of Alaska.
    Admiral Barrett. Mr. Chairman, thank you, and I appreciate 
the Committee's support in all these areas.
    Mr. Young. Thank you.
    At this time we will call up--and I will tell you ahead of 
time--the second panel--at 1:00 I do have to leave--Ms. Lois 
Epstein and Steve Marshall. Ms. Lois Epstein is the Senior 
Engineer on behalf of Cook Inletkeeper and Pipeline Safety 
trust and Mr. Marshall is President of BP Exploration Alaska, 
Incorporated.
    Ms. Epstein, you are first.

 TESTIMONY OF LOIS EPSTEIN, SENIOR ENGINEER, ON BEHALF OF COOK 
  INLET KEEPER AND THE PIPELINE SAFETY TRUST; STEVE MARSHALL, 
             PRESIDENT, BP EXPLORATION ALASKA, INC.

    Ms. Epstein. Thank you, Mr. Chairman, Mr. Oberstar, and 
Members of the Committee. I appreciate your inviting me to 
testify today.
    My name is Lois Epstein, and I am an Alaska and Maryland 
licensed engineer and an oil and gas industry specialist with 
Cook Inletkeeper in Anchorage, Alaska. Cook Inletkeeper is a 
nonprofit membership organization dedicated to protecting the 
47,000 square mile Cook Inlet Watershed and a member of the 
Waterkeeper Alliance of 150+ organizations headed by Bobby 
Kennedy, Jr. Additionally, I am a part-time consultant for the 
Pipeline Safety Trust, and my testimony today reflects both 
organizations' views.
    The Pipeline Safety Trust came into being after the 1999 
Olympic Pipeline tragedy in Bellingham, Washington which left 
three young people dead, wiped out every living thing in a 
beautiful salmon stream, and caused millions of dollars of 
economic disruption.
    As is well known because of BP's recent pipeline problems 
on the North Slope, releases from low pressure, also known as 
low stress, liquid pipelines can have serious, adverse 
environmental and economic consequences. The two photos 
included in my testimony--and one is up right now--show the 
extent of the damage and the cleanup. Investing in pipeline 
safety pays off in nationwide environmental and economic 
benefits.
    The U.S. Department of Transportation's Pipeline and 
Hazardous Materials Safety Administration, or PHMSA, has 
jurisdiction over BP's pipelines. However, BP's so-called 
``transit'' pipelines currently are exempt from Federal 
regulation, which means that other pipelines like BP's have no 
Federal corrosion prevention requirements, no smart pigging or 
equivalent requirements, and no Federal inspectors checking on 
operations.
    Based on the BP situation and industry's own data showing a 
disproportionately high release rate on these types of 
pipelines--and I would refer PHMSA and the Committee to the 
August 1st letter that was sent to PHMSA--there are strong 
technical and economic reasons to regulate low pressure 
transmission pipelines.
    Among the economic costs, the State of Alaska lost $6.4 
million in royalties and taxes for each day the entire oil 
field was shut down. Additionally, there was a noticeable spike 
in the price of crude oil for several days following BP's 
initial announcement, raising oil costs for both industry and 
the public. And PHMSA's resources have been stretched thin as a 
result of this situation, which is another cost.
    The BP situation also demonstrates, one, the value of smart 
pigging pipelines regularly and as frequently as possible to 
identify wall thinning and, two, the need for Federal oversight 
of pipelines. Importantly, when USDOT surveyed pipeline 
operators in 1992, it found that 84 percent of the unregulated 
low pressure pipeline mileage nationwide was not operated in 
compliance with the requirements of Part 195. My written 
testimony provides extensive detail on these conclusions.
    Additionally, my written testimony shows that 18 years 
after State pipeline safety regulators asked DOT to remove the 
exemption, PHMSA, just last week, proposed only to regulate an 
incremental sliver of the unregulated low pressure transmission 
pipeline universe. And I would like to point out to the 
Committee, having participated in the public meetings and on 
the advisory committee, that much of the discussion there was 
on gathering lines, not on the low stress transmission lines.
    This means that many miles of low pressure transmission 
pipelines remain unregulated and susceptible to the problems BP 
experienced. And PHMSA will never even know about most such 
problems because the unregulated pipelines need not report 
their releases to USDOT. Out of sight and out of mind.
    In developing its proposed rule, PHMSA ignored technical 
and other information provided it by public interest 
organizations and the proven efficacy of smart pigging and, 
instead, moved forward with industry's proposal to address 
these lines substantially intact. The proposed requirements are 
not equivalent, and we heard some questioning on that today, 
and contrary to PHMSA's testimony, six pages of rules were 
reduced to one paragraph that is not as enforceable. And as a 
member of the advisory committee, we spent a long time making 
those regulations as enforceable as possible. The ``must'' is 
incredibly important.
    Additionally, the Committee's marked up version of the 
pipeline safety law reauthorization, H.R. 5782, is not 
something that we support as public interest public safety 
groups, as far as it addresses the low stress pipelines. Cook 
Inletkeeper and the Pipeline Safety Trust will submit detailed 
comments to PHMSA on the 2006 proposed rule; however, Congress 
needs to know right now that PHMSA's proposed rule is just a 
patchwork of requirements taken from Part 195, with no 
substantial evidence that such requirements will decrease 
releases significantly.
    In addition to improving pipeline safety regulation, Cook 
Inletkeeper and the Pipeline Safety Trust recommend that 
Congress consider adopting the following measures: authorize, 
perform, and implement the recommendations of an independent 
audit on the maintenance and operation practices of all North 
Slope oil and gas facilities; create a citizens oversight group 
modeled after the Prince William Sound Regional Citizens 
Advisory Council created after the Exxon Valdez oil spill; 
harness clean, renewable, and homegrown energy sources like 
properly cited wind, solar, tidal, and farm-based bio-fuels, 
and promote the use of plug-in hybrid vehicles; reduce our 
Nation's dependence on oil through increased efficiency and 
conservation; and, last, consider the difficulty of preventing 
oil and gas-related releases before making sensitive onshore, 
for example, the Arctic National Wildlife Refuge, or sensitive 
offshore environments available for oil and gas drilling.
    In conclusion, PHMSA's current proposal deserves aggressive 
congressional questioning and it will receive strong negative 
public comments. Cook Inletkeeper and the Pipeline Safety Trust 
believe there are sound safety, environmental, and economic 
rationales for PHMSA to issue a rule requiring all low pressure 
transmission pipelines to meet existing transmission pipeline 
standards, just as the non-rural low pressure alliance must 
meet.
    We commend BP for admitting fault for its technical and 
related financial misjudgments with respect to its North Slope 
transit pipelines. Let's learn from this situation and make 
certain it does not happen again by ensuring that no low 
pressure pipelines remain unregulated.
    Thank you very much for your attention to these concerns.
    Mr. Young. Thank you.
    Mr. Marshall?
    Mr. Marshall. Mr. Chairman, members of the Committee, thank 
you for the opportunity to speak today. I am Steve Marshall, 
President of BP Exploration, Alaska.
    In the past six months we have had two leaks from the oil 
transit lines at Prudhoe Bay. These occurred on my watch and, 
as President, I am in overall charge of the business in Alaska. 
The buck stops with me. And my team and I will do everything we 
can to rectify this situation going forwards, to get production 
back as quickly and as safely as we can, and apply the lessons 
learned going forwards.
    We have fallen well short of what you and the American 
people expect of BP, and have fallen far short of the standards 
we expect of ourselves. We know, going forwards, that we will 
be measured by not what we say, but what we do, and we are in 
action to fix the problems and, in doing so, regaining your 
trust and that of the American people.
    Both spills have been cleaned up. We have received positive 
comments from the State agencies about the quality of our 
responses, and we believe there will be no lasting damage to 
the environment. We won't know the exact cause of the leaks 
until we complete the failure analysis of the pipes. That work 
is underway in cooperation with both State and Federal 
regulators.
    We believed we had a very comprehensive corrosion 
management system, one that covers over 1500 miles of oil 
pipelines, flow lines, gathering lines, oil separation 
facilities, and, indeed, transit lines. The inspections that we 
did told us time and again that these pipelines were in good 
condition. In retrospect, since these leaks, we have identified 
gaps in that program, and we are going to take the lessons and 
apply them going forwards.
    Currently, our primary focus is on the safe resumption of 
oil production from the east side of Prudhoe Bay. Let me speak 
first to the western side of the field.
    Currently, the west is producing over 200,000 barrels per 
day. We continue to gather additional inspection data, and so 
far 25 percent of the transit line on the west has been 
surveyed and, so far, appears to be in good condition for 
service. Our confidence in that line increases every day.
    On the east side of the field we are pursuing two options 
for the safe resumption of production. We are vigorously 
inspecting the transit line, and, to date, we have completed 
nearly 6,000 inspections, again, about 25 percent of the line, 
and so far this data set also indicates fitness for service; 
and we are currently working with the DOT to submit an 
application for restate of the east to allow maintenance and 
smart pigging of that line.
    We are also aggressively pursuing bypasses to connect the 
production facilities in the east to existing lines which are 
known to be of good condition. We expect those bypasses to be 
complete by the end of October. And, beyond that, pipeline 
replacement will start during the latter part of this year at a 
project expected to cost in the order of $150 million.
    Looking ahead to the longer term, I would like to make five 
points:
    First, we will implement a program of routine maintenance 
and smart pigging going forwards on all our transit lines on 
the North Slope;
    Second, we will determine the precise corrosion cause and 
modify our corrosion management system accordingly;
    Third, we will voluntarily include all of BP's operated 
transit lines, all 122 miles, in the DOT's internal management 
program;
    Fourth, we will replace 16 miles of transit lines; and
    Fifth, we have already made organizational changes, adding 
a technical directorate, to review and modify operating 
standards and, importantly, to verify that those standards are 
indeed being met.
    Since 2000, we completed many internal and external reviews 
of our corrosion management system, covering the work 
environment, the technical integrity of the program and the 
integrity of the data we use. I rely daily on experts, teams of 
experts in Alaska to manage the corrosion management, as I do 
on all aspects of our business, indeed, as I rely on many teams 
to manage the entirety of our business in the State.
    But it doesn't stop there. I welcome challenge, scrutiny, 
whether it comes from government, from partners, our commercial 
joint venture partners, whether it comes from external 
consultants and, indeed, from our workforce. Having worked on 
the Slope for five years early in my career, I know the 
importance of getting worker input, and I take very seriously 
any way we can to shine a spotlight on our systems and continue 
to make improvements to all of those.
    We have had State reviews, multiple internal audits, 
including two reviews by our chief engineer of our corrosion 
management system. As we have gone back over those reviews, no 
one pointed to these transit lines as a particular problem. If 
they had, we would have acted on it.
    In closing, we are committed to accomplishing all of this 
with full transparency with all of our stakeholders, and with 
the full involvement and enrollment of regulators, partners, 
and employees; and I am personally committed to investing the 
time, effort, and resources to regain the trust of you and the 
American public. Thank you.
    Mr. Petri. [Presiding.] Thank you. Now we will turn to 
questions and begin with Mr. Oberstar.
    Mr. Oberstar. Ms. Epstein, when the Committee acted earlier 
this year to move the pipeline safety bill, you had some 
comments on the bill at the time. Do you recall what those 
were?
    Ms. Epstein. I was invited to testify in March, and I was 
not as involved in the actual markup, although we were very 
interested in participating in that. But our position has been 
consistently that the low stress pipelines need to be 
regulated, all of them need to be regulated. If they are not, 
we have no assurance that the corrosion prevention measures, 
the cleaning measures, and all the other Part 195 measures that 
are required are actually being carried out.
    And it is of concern to me that by not requiring all those 
measures to be done that the excellent record of declining 
releases that PHMSA is touting would not apply to these types 
of pipelines, even for the small segment of lines that they are 
going to be regulating as part of their proposed rule, should 
that rule be made final in its current form. There is just 
overwhelming technical evidence that they need to be regulating 
all these lines.
    Mr. Oberstar. Do you support change in the proposed rule, 
which I discussed with Admiral Barrett earlier, that current 
law says operators must inspect the integrity of the pipeline 
using internal inspection measures and the proposed rule says 
the operator may use inline inspection? He seemed willing to 
return to the current law of a requirement, a must inspect. 
Would you support that?
    Ms. Epstein. If you look at the proposal, some of the 
existing requirements are referred to in whole. In the case of 
the integrity management, six pages, as I mentioned in my 
testimony, of very specific requirements were reduced to a one 
paragraph section of the proposed where it does say ``may.'' 
And with due respect to Vice Admiral Barrett, the situation 
where some pipelines are not piggable is true for higher stress 
and higher pressure transmission lines as well, and there is an 
equivalent approach that can be taken there. It is also true 
for the lower stress non-rural lines.
    Mr. Oberstar. Thank you.
    Mr. Marshall, thank you for being here. It is somewhat 
courageous on your part to come and defend a record that is 
rather unsavory, frankly.
    I want to understand your response to every five-year, in-
line inspection of high-pressure liquid lines, low-pressure 
liquid lines in only populated areas, or so-called 
environmentally sensitive areas, and gas transmission in-line 
inspection every seven years. What would be your reaction, or 
what is your opposition to, as apparently has been the case for 
BP, to five-year inspection of all of those low-pressure 
pipelines carrying liquid material wherever they are?
    Mr. Marshall. Mr. Oberstar, thank you for the question.
    On the North Slope, BP has a very active pigging program. 
Each year, we run over 350 maintenance pigs across the entire 
of our system. Again, we operate about 1,500 miles of 
pipelines. These transit lines represent about 1/100th of those 
lines.
    In addition, we inject over two million gallons of 
corrosion inhibitors with biocite added to try and eliminate 
the propensity of microbes to occur. We focus our maintenance 
pigging activities in the areas where we believe the 
probability of corrosion to be the highest. We start at the 
wellhead. Unlike many pipeline management systems, we have the 
opportunity to go further upstream to try and protect the 
entirety of the system, which hopefully protects the system 
going through to these transit lines.
    We do employ and have employed smart pigs, maintenance pigs 
and smart pigs on the transit lines on the western side of the 
field in 1990 and 1998, and in the interim we have used a 
combination of techniques, ultrasonic testing and corrosion 
weight-loss coupons to verify the condition of the lines in the 
interim years.
    On the west, it was only in late 2005 that we started to 
see the indications of higher corrosion rates that caused us to 
put a smart pig in the plan for 2006. Unfortunately, that was 
too late to prevent the March spill.
    Mr. Oberstar. That was a good apologia pro vita sua, but it 
didnFEt answer my question. What objection do you have to a 
five-year inspection requirement of liquid pipelines, 
regardless of whether they are in populated areas or in so-
called environmentally sensitive areas? With what you have just 
recited, I should think you would have no objection, it not in 
favor of.
    Mr. Marshall. Mr. Oberstar, thank you again. I apologize 
for not addressing the question the first time.
    I can only really speak for the Alaska operation. That is 
my scope of responsibility. Certainly, going forward, for these 
transit lines and for the replacement transit lines, we are 
committed to maintenance pig as regularly as we need to, to 
smart pig as least as often as the regulations require, and 
five years is not a problem on these transit lines.
    Mr. Oberstar. And just one final point. I raised with 
Admiral Barrett a matter that Chairman Young had discussed on 
various occasions, that the Alyeska pipeline has a filter at 
the beginning of its line to filter out sand, water, 
corrosives. Why don't you do that?
    Mr. Marshall. We actually do have, I wouldn't call them 
filters. If you can see the chart, the second of the two 
charts, there are on the North Slope in Prudhoe Bay, six 
producing facilities which are separation plants, which take 
the raw crude streams of oil, gas and water and actually do the 
separation, the straining of the solids, water, and take the 
gas off, to produce sales-quality crude that goes into these 
lines. So that is the highest quality crude oil that we can 
provide. So we actually have some very sophisticated facilities 
to do just that.
    Mr. Oberstar. Well, according to data provided to us by the 
pipeline inspection agency, in 1998 there was an inspection of 
six areas that showed six areas of internal corrosion. It was 
no re-pigged and nothing was done to address those areas of 
corrosion. The agency also reports that BP covered or inspected 
only a portion of the eastern section in July. I think there is 
a much broader area of responsibility here for the company to 
address. I will have to leave it at that.
    Mr. Petri. Thank you.
    Mr. LaTourette?
    Mr. LaTourette. Thank you very much, Mr. Chairman.
    Thank you both for coming. Mr. Marshall, I think when you 
were in the room and I was talking to the Admiral, obviously 
anytime there is a leak or a disruption in the Nation's 
pipeline system, it has potential environmental and safety 
difficulties. I want to focus on the economics for the moment.
    There are a number of people in my district, I would 
describe some as conspiracy theorists. They believe that you 
and other oil companies are manipulating artificially the price 
of gasoline on the world market. When they hear that there has 
been no smart-pigging of these lines since 1992 and you throw 
in executive compensation and you throw in record profits, it 
sort of fuels that.
    So I want to read about page and a half, and then I have 
two questions, if you would just be patient. It is my 
understanding that the United States Government has initiated 
investigations both civil and criminal of BP, alleging among 
other things that BP manipulated U.S. crude oil and unleaded 
gasoline markets. It is my understanding the company has 
acknowledged the investigation and said that they are 
cooperating. The Commodities Futures Trading Commission has 
issued subpoenas, which has focused on the possible 
manipulation of the global over the counter market in 2003 and 
2004.
    The separate gasoline inquiry, it is my understanding, 
focuses on a single day's trading on the New York Mercantile 
Exchange in 2002. In the broader civil investigation into crude 
oil trading, investigators are examining whether BP used 
information about its own pipelines and storage tanks at a key 
delivery point in Cushing, Oklahoma to influence the crude oil 
price benchmarks.
    When the leak occurred in March, the Office of Pipeline 
Safety issued a corrective action on March 15. It is my 
understanding that on July 20, they had to come back in and 
evaluate what the company was doing or not doing, and issued an 
amendment on July 20. I was struck that we should judge the 
company not by what you say, but by what you do.
    So my first of two questions would be, it is my 
understanding in the amended corrective order that BP was 
instructed to conduct additional gamma ray scans at Prudhoe Bay 
west and east in the Lisbon lines, extract and analyze samples 
from the failed Prudhoe Bay west pipeline wall, install 
facilities to handle solids from cleaning pig operations, 
develop contingency plans to send solids directly into the 
transatlantic pipeline tanks, and by August 1 develop a plan to 
remove the standing crude oil in the Prudhoe Bay west pipeline 
by August 22. It was my understanding that was about 17,000 
barrels of oil, and report within 30 days on actions and plans 
for replacing, abandoning and restoring the operation of the 
Prudhoe Bay west pipeline.
    Can you tell us, please, what the status is of the 
company's compliance with the amended corrective action order?
    Mr. Marshall. Thank you for the question, Mr. LaTourette.
    To the best of my knowledge, we are in full compliance with 
the amended order. We are working very closely with the 
Department of Transportation on all aspects of that line, of 
all aspects of the amended order. With specific reference to 
the western line, that indeed has been drained. You are 
absolutely correct on the volume. We are proceeding to put in 
place the necessary bypasses, working with Alyeska to put a 
bypass into tank 110 at pump station one to allow the solids to 
avoid plugging up the filters, if there is that potential.
    Mr. LaTourette. I thank you for that.
    My second question is going to be really a simple ``why.'' 
It is my understanding that the findings that the Office of 
Pipeline Safety made, among other things, was that your 
predecessor, ARCO, had suspended the cleaning of the Prudhoe 
Bay east pipeline in 1992, when solid deposits clogged the 
strainers that have been discussed here, in the tap system. 
Again, I mean, I have heard a lot of we didn't do it, or some 
people don't do it because it wasn't required. The Government 
doesn't require me to change the oil in my car every 3,000 
miles, but I do because I would like my car to continue to run.
    So my question, I think on behalf of the folks that I 
represent, and by the way, the biggest building in downtown 
Cleveland is the BP Tower. We are very proud of your presence 
when you were there. Why, why since 1992 didn't somebody at 
your company, or the company you subsumed, decide that this was 
a good idea?
    Mr. Marshall. I can't speak for the intervening years 
between 1992 and 2000, but when BP took over the lines in 2000, 
we instituted a program of inspection, ultrasonic testing of 
the line. We compared the results of that testing with the 
results of the smart-pigging that have been done on the west 
side only two years previously. Prudhoe Bay consists of two 
halves broadly similar, eight miles with three facilities on 
each side. We found the results of our ultrasonic testing to 
confirm the line was in very similar good condition to that in 
the west. So we continued that through until the present time.
    Mr. LaTourette. The only thing I would say is that I knew 
that you did that, and to me that is a little bit akin to my 
doctor putting a stethoscope on my chest and making a 
determination that I didn't have heart disease. I think 
sometimes more is needed, and I think it saddens me that more 
wasn't done in this situation, and you have acknowledged that.
    Ms. Epstein, you look like you wanted to say something. Do 
you want to say something?
    Ms. Epstein. No.
    Mr. LaTourette. Okay, very good.
    Thank you, Mr. Chairman. I yield back.
    Mr. Petri. Thank you.
    Just housekeeping, I am reliably informed that there will 
be some votes on the floor starting in five to ten minutes. 
This hearing room will need to be cleared about 1:30 or so for 
another hearing at 2:00 o'clock. With that in mind, we 
obviously can accommodate members.
    Mr. DeFazio. Mr. Chairman, thank you. I appreciate it.
    To Mr. Marshall, do you handle a significantly different 
substance than Alyeska? I mean, is there a tremendous 
difference in the oil that you are moving and they are moving?
    Mr. Marshall. To the best of my knowledge, we handle oils 
from a variety of fields. Indeed, the quality does vary 
considerably.
    Mr. DeFazio. Right. I mean, they have a mix; you have a 
mix. You would think that maybe some of the same contaminants 
in theirs are in yours and yours are in theirs.
    Mr. Marshall. They do take an aggregation of all the 
fields, including those that we operate and those that 
ConocoPhillips operates.
    Mr. DeFazio. So then you are saying your fields may be 
particularly problematic?
    Mr. Marshall. No, I wouldn't say they are particularly 
problematic. We have a variety of crude oils of different 
qualities.
    Mr. DeFazio. Right. Well, I guess the question I am getting 
to is you have such a long history in Alaska and as I 
understand it you have been top dog for the last five years up 
there. If Alyeska thinks that they have to smart-pig every 
three years and they do cleaning pigs every seven to fourteen 
days, I guess the question would be, why was there a management 
decision made to wait between eight and fourteen years on your 
lines? I mean, wouldn't you think if they are cleaning them 
every seven to fourteen days, you should maybe clean a little 
more frequently than once every 14 years?
    Mr. Marshall. When we pigged the western side of the field 
in 1998, there was very nominal solids came back, less than two 
cubic yards of solids, which did not indicate a solids problem.
    Mr. DeFazio. That was the cleaning, and then you followed 
it with a smart pig?
    Mr. Marshall. A smart pig, yes.
    Mr. DeFazio. Yes. And then you found some anomalies when 
you did that?
    Mr. Marshall. We found some anomalies, but we believed that 
the management of those was under control through the 
subsequent testing. But we do run cleaning pigs and smart pigs 
on a number of our lines. Northstar runs a pig every 14 days. 
We run that for preventing paraffin buildup. There are a number 
of reasons why pigs are run. One is for cleaning lines. The 
other is to avoid the potential for wax buildup. An 800-mile 
pipeline is quite a different proposition than an eight-mile 
pipeline, with cooling effects and the need to inject reducing 
agents.
    We believe that the systems we had in place using 
ultrasonic testing and corrosion coupons were sufficient. As I 
have said before, clearly in hindsight, they fell short.
    Mr. DeFazio. They were not.
    Mr. Marshall. And we will rectify that going forward.
    Mr. DeFazio. Yes, and as I understand it, I mean the cost, 
do you agree with the costs we heard earlier, a 22-mile line, 
approximately, we had here $175,000, or somewhat? I think we 
got a little lower number out of the Admiral.
    Mr. Marshall. I think that is in the ballpark, yes.
    Mr. DeFazio. Yes. So you said you have 1,500 miles of line 
in Alaska. Was that it, when you said 1,500 miles?
    Mr. Marshall. That includes oil well lines, gathering 
lines, flow lines and transit lines, yes.
    Mr. DeFazio. Okay. So for those which are well lines, you 
mean horizontal? Or you are talking--
    Mr. Marshall. All on the surface lines. These are all 
typically above-ground.
    Mr. DeFazio. Okay. So what kind of regime are you going to 
impose on the 1,500 miles now that you have this problem in 
terms of cleaning and smart-pigging?
    Mr. Marshall. We have had, even prior to the spills, a very 
comprehensive program of maintenance-pigging and smart-pigging 
across the slope.
    Mr. DeFazio. On some of the lines.
    Mr. Marshall. On some of the lines, yes.
    Mr. DeFazio. Yes. Well, how about all of them in the 
future? I guess the question would be, will you commit in the 
future that all your lines are going to be cleaned and smart-
pigged on some sort of regular interval? When I look at the 
costs involved, they are infinitesimally insignificant in terms 
of the revenues of your corporation. I realize you are managing 
one particular part of it and there is probably a lot of 
pressure on you to maximize profits up there. But when you look 
at the downside, the interruptions, the costs, the pollution, 
the cleanup, it seems that your higher-ups would need to 
recognize that that is a cost that would be well-spent.
    Mr. Marshall. We are certainly committed to doing 
everything we can to make sure the inspections of those lines, 
whether it is involving maintenance-pigging, smart-pigging, the 
injection of corrosion inhibitors, looking at reformulation of 
corrosion inhibitors, which we do many times a year to make 
sure we have the best chemicals that we can possibly use, and 
are indeed effective.
    We are certainly committed to doing a baseline reassessment 
of all our lines going forward to make sure we truly understand 
the condition of the lines and implement whatever practices we 
need to.
    Mr. DeFazio. Ms. Epstein, are you reassured by this 
commitment here? Do you think a little more needs to be done?
    Ms. Epstein. I do. I understand that BP historically has 
paid an extensive amount of attention to its flow-lines up 
there, the vast majority of the mileage with respect to 
preventing corrosion. That is a good thing. The problem is that 
these were judged to be low-risk lines. Clearly, that was a 
technical mistake. It is something that highlights that even 
what the Federal Government considers low-risk can be 
inaccurate as well.
    But what I think we really need to focus on today is just 
making sure that all of the low-stress lines get the regulation 
they deserve.
    Mr. DeFazio. So could we say a low-risk line is a line that 
hasn't yet had a problem?
    Ms. Epstein. You could if you don't have the data. 
Absolutely.
    Mr. DeFazio. Yes. Thank you.
    Thank you, Mr. Chairman.
    Mr. Petri. Thank you.
    Mrs. Kelly?
    Mrs. Kelly. Thank you.
    Mr. Marshall, I grew up in Lima, Ohio, where there is a BP 
catalytic cracking factory. In the late 1970s and early 1980s, 
three percent of all the air pollution in the United States of 
America was thrown up into the air by that factory. So my 
feeling about BP is somewhat tainted by all the acid rain that 
came over, because I then lived in New York, from a lot of that 
kind of thing.
    I am concerned that there is a pattern in BP of not 
maintaining what they have. You state in your testimony you 
took over BPXA during a critical juncture for the company as it 
emerged from a period of low prices, and that you wanted to re-
instill pride trough improving both the physical facilities in 
the oilfield and our operating practices.
    So what has stopped you from reinvesting your companyFEs 
record profits into a new pipeline inspection regime, to 
restore those aging and deteriorated pipelines, and rededicate 
that environmental damage that has already been brought to us 
by these pipeline failures? I would like to know if you can do 
all this repair without passing the costs of the repair, 
maintaining your pipelines, onto the consumer?
    So I am asking you two questions.
    Mr. Marshall. Mrs. Kelly, thank you for the question.
    Since I arrived in Alaska in 2001, I am proud to say we 
have actually increased significantly the amount of money we 
spend, not only capital investment, but also the amount we 
spend to operate the field. Our corrosion management program 
has increased 80 percent over the five years. We have increased 
our major repair spend, a four-fold increase in that since 2004 
to 2007. We continue to invest. The infrastructure that we have 
up there is of vital importance not only to us, but to the 
Nation.
    These two spills have very painfully reminded us of the 
obligation we have to provide safe fuel to the Nation. We are 
going to leave no stone unturned making sure that the pipeline 
repairs, the replacements that we do every year, are indeed 
brought forward. We accelerate our renewal programs that had in 
place. We are going to bring those forward. We are bringing 
extra people in to make sure that we can actually more 
aggressively address those programs and make the necessary 
investments.
    We have been doing that. I am proud to say that the 
business is in far better shape, notwithstanding these two 
spills, but I am not satisfied we have gone far enough. I won't 
be satisfied until we have actually reestablished the trust of 
both the American Nation and all our stakeholders.
    Mrs. Kelly. I appreciate that. Would you now address the 
second question I asked you? How can you do this without 
passing the costs on in the form of higher gasoline to the 
consumer?
    Mr. Marshall. Quite frankly, that is not an issue I have 
been focused on. We need to understand what our plans are, our 
investment. Every year we invest something in the range of $600 
million to $700 million per year capital investment on the 
North Slope. We see that investment going forward increasing 
dramatically with the prospect of a gas pipeline. We need to 
make sure that we have facilities that are fit for service. As 
a number of the members have talked about this morning, the 
flow-rates have dropped. We need to make sure that the 
infrastructure there is replaced with infrastructure not 
because it is in bad shape, but is more appropriate to the 
condition of service that it is in.
    One of the lessons that I have learned from this is, from 
these last two incidents, is the importance of understanding 
changing conditions. If I could go back and do a better job of 
something, it would be to truly understanding the changing 
nature of the oilfield and make sure we are doing everything we 
could to address that.
    Mrs. Kelly. Perhaps, Mr. Marshall, you might send somebody 
by my office to try to help me understand how you are going to 
do this without increasing the cost of gasoline. We are 
struggling right now. You know that.
    Mr. Marshall. Okay. I would be happy to do that.
    Mrs. Kelly. Thank you.
    Ms. Epstein, do you have something?
    Ms. Epstein. Yes, Representative Kelly. I have one small 
point to add. I had stated in my testimony that pipeline safety 
is a good investment for the public and small business, for 
just the reasons that you are raising. When we don't do 
pipeline safety right and we have serious disruptions, of 
course it is the public and the small business community that 
ends up paying, and we will never get that money back because 
no matter what happens, no matter who is at fault.
    So that is why we feel so very strongly that we need a 
regulation that covers all low-stress pipelines, so we donFEt 
wait until there is yet another accident and then go back and 
have this same sort of hearing again, and say there is another 
type of low-stress pipeline that we need to cover. The State 
safety regulators recommended in 1988 that all these pipelines 
be covered by PHMSA and we are still waiting.
    Thank you.
    Mrs. Kelly. Thank you. I yield back.
    Mr. Petri. Thank you.
    Mr. Pascrell?
    Mr. Pascrell. Thank you, Mr. Chairman.
    Thank you, Mr. Marshall. You have been pretty 
straightforward in your answers. I want to ask you a couple of 
questions.
    To your knowledge, where did DOT get the data it used for 
the proposed rule? In your experience, working for over 10 
years on behalf of the environmental and safety community, has 
DOT ever called you to obtain data or other information on the 
number of low-stress pipeline miles, on the seriousness of low-
stress pipeline releases, or on the number of spills 
themselves, in order to develop specific rulemakings? That is 
my first question.
    Mr. Marshall. Mr. Pascrell, I have to confess that I donFEt 
have that information in front of me. I will be happy to take 
that away and provide a written response back to you as soon as 
we can gather that.
    Mr. Pascrell. Do you know the answer to that question, Ms. 
Epstein?
    Ms. Epstein. No, I don't know the specifics with BP. I do 
know general surveys that have been done by PHMSA and I do know 
some of the problems with the data they have collected and the 
inconsistencies, and some of the recent data that I cited that 
was submitted just before the Prudhoe Bay shutdown from 
industries showing that 21 percent of the larger spills from 
1999 to 2004 were from these low-stress pipelines, and they 
represent far less percentage of the overall Nation's mileage 
than that.
    Mr. Pascrell. We got a rude awakening when we investigated 
the natural gasline situation in the United States of America, 
that the Federal Government was not doing its job, and the 
Federal Government is standing there. I am wondering what they 
are doing in this kind of work. So there is responsibility here 
on all accounts for everybody.
    I want to ask you another question, Mr. Marshall. You state 
in your testimony on page seven that corrosion rates are not 
static, and they can increase or decrease depending on fluid 
properties or changes in conditions that affect the efficacy of 
corrosion inhibitors. For that reason, locations that are prone 
to corrosion damage, or where damage has been identified, are 
inspected as often as every three to six months. You said that.
    In 1998, corrosion was detected in the western side of the 
line. This is where the March leak was located. How often was 
that section of pipe inspected between 1998 and 2006?
    Mr. Marshall. Mr. Pascrell, to the best of my knowledge, 
the pipe was inspected on a regular basis with ultrasonic 
testing. What we try and do with that ultrasonic testing is 
determine the actual corrosion rate, and with coupons try and 
understand what the corrosion rates in terms of potential wall 
loss per year might be.
    Mr. Pascrell. But what you have heard today, Mr. Marshall, 
is that there is some question about the sufficiency of 
ultrasonic, and other proposals have been suggested here. I 
would like, if you could possibly give me a written answer to 
both my first question and my second question, which I just 
asked you. I would like that, and I would hope that you could 
submit that within a week through the committee to me. Is that 
a problem?
    Mr. Marshall. I would be happy to do that, yes.
    Mr. Pascrell. Thank you, sir.
    Thank you, Mr. Chairman.
    Mr. Petri. Thank you.
    I would like to thank you both for your testimony. We are 
about to conclude. I can't help but ask a question or two 
myself. I hesitate. I was trained in law school and I was told 
never to ask questions you don't know the answer to, but I 
guess I will violate that.
    Do you have any idea how much the cleanup is going to cost 
BP, in dollars?
    Mr. Marshall. That should be a question it would seem I 
would know the answer to. That is again something we have not 
focused on. I will be happy to get the answer. We don't look at 
costs at all when it comes to cleanup. We do what it takes. We 
have brought whatever equipment, people and resources we need 
to do that. As I said earlier, the feedback on our response has 
been first-class. I will be happy to give you an estimate of 
what the spill in March and the leak in August have actually 
cost us.
    Mr. Petri. It occurs to me that under the leadership of 
Lord Brown and others, BP has spent hundreds of millions of 
dollars changing its whole corporate image to this green and 
gold, and a huge public relations effort. And that investment 
is probably going to have a reduced payoff because of episodes 
like this. So there are not only the direct costs of the 
consequences of cleanup, but the enormous long-term costs in 
terms of trying to create a favorable environment in which to 
service your customers and do business.
    Mr. Marshall. Mr. Chairman, I am very conscious of the 
impact on reputation, public trust, confidence in BP. I know 
that track record takes a long time to build, and it is very 
easy to lose it. We are determined. I am determined to earn 
that trust back. As I said at the start, it is about action, 
sustained action, not just in a few short months, but over a 
sustained period, many years. I have the backing of the company 
to do just that, to put whatever investment, both capital and 
operating, into our business to make sure we get back to where 
Alaska has enjoyed, with the highest standards, setting those 
standards, and actually meeting those standards.
    Mr. Petri. We would appreciate any informed, thoughtful 
suggestions you might have as to how we in this Congress or 
different Federal agencies could help you with that process in 
terms of not just beating you about the head and shoulders, 
which may be deserved in this case to some considerable extent, 
but also in terms of helping figure out the most useful ways we 
can to reduce the chances.
    Nothing is perfect, and you are going to have errors in 
life, and you can always fight the last war, but we would like 
to encourage you to help, as a leader in the industry, in 
developing not just industry policies, but legal frameworks 
that we are in the business of helping to create, and 
regulatory frameworks that are conducive to the most 
environmentally helpful and safe and efficient operation of 
these pipelines.
    It is one thing to say we are doing a good job. It is 
another thing to do it in an intelligent way that actually 
really lowers costs over time for everyone and makes a cleaner 
world. Costs and good environmentalism are not enemies. They 
often work hand-in-glove, as you know.
    Mr. Marshall. Mr. Chairman, you have my pledge that not 
only do we want to meet regulations, we want to be proactive in 
setting the standards, working with Congress, working with the 
DOT, to apply whatever lessons we learn from these incidents 
into the future, not only for us, but for the industry.
    Mr. Petri. We look forward to hearing from you with any 
suggestions as to how we can help make sure. Sometimes there 
are competitive disadvantages, if you want to do the right 
thing and the competitors donFEt. It makes sense to have a 
standard that is set across the board. In my part of the world, 
in the paper industry, they were very much in favor of trying 
to put in some environmentally good rules, but they wanted 
Federal regulations or laws because they did not want to be put 
at a competitive disadvantage if they did do that.
    So there is a proper place for us to help good corporate 
citizens be in real terms good corporate citizens. And also to 
help people live up to the standards they set for themselves, 
and we would like to do that in this case.
    Mr. Marshall. Okay. I would be happy to do that.
    Mr. Petri. This hearing is adjourned.
    [Whereupon, at 1:38 p.m. the committee was adjourned.]

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