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



 
                         DISCUSSION DRAFT ON THE 
                       PIPELINE SAFETY IMPROVEMENT 
                         ACT REAUTHORIZATION AND 
                     H.R. 5782, THE PIPELINE SAFETY 
                         IMPROVEMENT ACT OF 2006


                                HEARING

                              BEFORE THE

                  SUBCOMMITTEE ON ENEGY AND AIR QUALITY

                                OF THE 

                        COMMITTEE ON ENERGY AND 
                               COMMERCE

                        HOUSE OF REPRESENTATIVES


                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION


                             JULY 27, 2006

                           Serial No. 109-133

       Printed for the use of the Committee on Energy and Commerce



Available via the World Wide Web:  http://www.access.gpo.gov/congress/house



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                   COMMITTEE ON ENERGY AND COMMERCE
                     JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas                      JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida                  Ranking Member
  Vice Chairman                           HENRY A. WAXMAN, California
FRED UPTON, Michigan                      EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida                    RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio                     EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                      FRANK PALLONE, JR., New Jersey
ED WHITFIELD, Kentucky                    SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia                  BART GORDON, Tennessee
BARBARA CUBIN, Wyoming                    BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois                    ANNA G. ESHOO, California
HEATHER WILSON, New Mexico                BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona                  ELIOT L. ENGEL, New York
CHARLES W. "CHIP" PICKERING,  Mississippi ALBERT R. WYNN, Maryland
  Vice Chairman                           GENE GREEN, Texas
VITO FOSSELLA, New York                   TED STRICKLAND, Ohio
ROY BLUNT, Missouri                       DIANA DEGETTE, Colorado
STEVE BUYER, Indiana                      LOIS CAPPS, California
GEORGE RADANOVICH, California             MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire            TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania             JIM DAVIS, Florida
MARY BONO, California                     JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon                       HILDA L. SOLIS, California
LEE TERRY, Nebraska                       CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey                 JAY INSLEE, Washington
MIKE ROGERS, Michigan                     TAMMY BALDWIN, Wisconsin
C.L. "BUTCH" OTTER, Idaho                 MIKE ROSS, Arkansas                       N, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee


                      BUD ALBRIGHT, Staff Director
                     DAVID CAVICKE, General Counsel
     REID P. F. STUNTZ, Minority Staff Director and Chief Counsel


             SUBCOMMITTEE ON ENERGY AND AIR QUALITY
                 RALPH M. HALL, Texas, Chairman
MICHAEL BILIRAKIS, Florida                RICK BOUCHER, Virginia
ED WHITFIELD, Kentucky                      Ranking Member
CHARLIE NORWOOD, Georgia                  MIKE ROSS, Arkansas
BARBARA CUBIN, Wyoming                    HENRY A. WAXMAN, California
JOHN SHIMKUS, Illinois                    EDWARD J. MARKEY, Massachusetts
HEATHER WILSON, New Mexico                ELIOT L. ENGEL, New York
JOHN B. SHADEGG, Arizona                  ALBERT R. WYNN, Maryland
CHARLES W. "CHIP" PICKERING,  Mississippi GENE GREEN, Texas
VITO FOSSELLA, New York                   TED STRICKLAND, Ohio
GEORGE RADANOVICH, California             LOIS CAPPS, California
MARY BONO, California                     MIKE DOYLE, Pennsylvania
GREG WALDEN, Oregon                       TOM ALLEN, Maine
MIKE ROGERS, Michigan                     JIM DAVIS, Florida
C.L. "BUTCH" OTTER, Idaho                 HILDA L. SOLIS, California
JOHN SULLIVAN, Oklahoma                   CHARLES A. GONZALEZ, Texas
TIM MURPHY, Pennsylvania                  JOHN D. DINGELL, Michigan
MICHAEL C. BURGESS, Texas                   (EX OFFICIO)                            
JOE BARTON, Texas
  (EX OFFICIO)

                               CONTENTS


                                                                       Page
Testimony of:
   Barrett, Hon. Thomas J., Administrator, Pipeline and Hazardous 
     Materials Administration, U.S. Department of Transportation        11
   Mason, Hon. Donald L., Commissioner, Public Utilities Commission 
     of Ohio, on behalf of National Association of Regulatory Utility 
     Commissioners	                                                16
   Jibson, Ronald W., Vice President, Operations, Questar Gas 
     Company, on behalf of American Gas Association	                32
   Mohn, Jeryl L., Senior Vice President, Operations and Engineering, 
     Panhandle Energy, on behalf of Interstate Natural Gas Association 
     of America	                                                        38
   Felt, Timothy C., President & CEO, Explorer Pipeline Company, on 
     behalf of Association of Oil Pipe Lines	                        45
   Epstein, Lois N., P.E., Senior Engineer, Oil and Gas Industry 
     Specialist, Cook Inletkeeper, on behalf of Pipeline Safety Trust	52
Additional material submitted for the record:
   Siggerud, Katherine, Director, Physical Infrastructure Issues, 
     United States Government Accountability Office, prepared statement 
     of	                                                                62

                     DISCUSSION DRAFT ON THE PIPELINE 
                           SAFETY IMPROVEMENT ACT 
                             REAUTHORIZATION AND 
                      H.R. 5782, THE PIPELINE SAFETY 
                          IMPROVEMENT ACT OF 2006


                           THURDAY, JULY 27, 2006

                          HOUSE OF REPRESENTATIVES,
                      COMMITTEE ON ENERGY AND COMMERCE,
                   SUBCOMMITTEE ON ENERGY AND AIR QUALITY,
                                                           Washington, DC.


        The subcommittee met, pursuant to notice, at 11:46 a.m., in Room 
2322 of the Rayburn House Office Building, Hon. Ralph M. Hall 
(Chairman) presiding.
	Members present:  Representatives Shimkus, Sullivan, Murphy, 
Boucher, Green, and Hall.
	Staff present:  Tom Hassenboehler, Counsel; David McCarthy, Chief 
Counsel for Energy and Environment; Elizabeth Stack, Policy 
Coordinator; Peter Kielty, Legislative Clerk; Bruce Harris, Minority 
Professional Staff Member; and Sue Sheridan, Minority Senior Counsel.
	MR. HALL.  The hearing will come to order.
	Without objection, the Chair will proceed pursuant to Committee 
rule 4E and recognize members for 3 minutes for opening statements.  If 
they defer, this time will be added to their opening round of questions.
	Today, we meet to discuss two bills relating to pipeline safety 
reauthorization, one being a committee discussion draft that was put 
together in a bipartisan fashion, and another, H.R. 5782, that was 
recently reported out of the Transportation Committee.  Pipeline safety 
reauthorization is a priority for this committee to get done this year, and I 
am hopeful that our efforts are going to move this bill forward when we 
return from the August recess.  Hopefully we will not only be fruitful in 
the House, but I also have hopes for the Senate.
	The drafts that we are here to discuss today are, in my opinion, 
attempts to make improvements to an already fairly good product that 
was signed into law in 2002.  In addition to it being a good product, I am 
happy to know that the Pipeline and Hazardous Materials Safety 
Administration, PHMSA, has succeeded in achieving nearly all of the 
mandates set forth in the Pipeline Safety Improvement Act of 2002, and 
that the agency has done so in what I think is a timely manner.  Because 
of this hard work, we have more information and statistics on causes of 
accidents, more information on integrity management, more information 
on what States are successfully doing to bring down damages from 
excavation, and more information on how PHMSA is working to 
complete upcoming regulations.
	The committee discussion draft sets forth several new provisions that 
have been proposed by PHMSA, that pipeline industry safety advocates 
and the States, that reauthorizes the program through 2010, adds new 
one-call requirements for States to enforce, authorizes additional grants 
for States to set up damage prevention programs, requires the DOT to 
finalize regulations already underway concerning low-stress pipelines, 
addressing the Alaska BP incident, and further addressing enforcement 
transparency.  In addition, the bill incorporates a proposal from Dr. 
Murphy to further enhance one-call requirements and emergency 
notification.  
I am also glad to see that the draft addresses the 7-year gas 
transmission integrity management assessment interval.  And I look 
forward to being updated for the record by GAO after the hearing on 
their continuing efforts to finalize their work in recommendations 
regarding the 7-year interval that we asked them to do in 2002.  I look 
forward to hearing any comments or concerns about the drafts from the 
witnesses today in trying to address any outstanding issues before we 
introduce the bill when we return in September.
	[The prepared statement of Hon. Ralph M. Hall follows:]

PREPARED STATEMENT OF THE HON. RALPH M. HALL, CHAIRMAN, SUBCOMMITTEE ON 
ENERGY AND AIR QUALITY

        This hearing will come to order. Without objection, the Chair will proceed pursuant 
to Committee Rule 4(e) and recognize Members for 3 minutes for opening statements.  If 
they defer, this time will be added to their opening round of questions.  Today we meet to 
discuss two bills relating to pipeline safety reauthorization, one being a Committee 
discussion draft that was put together in a bipartisan fashion and another, HR 5782, that 
was recently reported out of the Transportation Committee.  Pipeline safety 
reauthorization is a priority for this Committee to get done this year and I am hopeful that 
our efforts to move this bill forward when we return from August recess will not only be 
fruitful in the House but also the Senate. 
        The drafts that we are here to discuss today are, in my opinion, attempts to make 
improvements to an already pretty good product that was signed into law in 2002. In 
addition to it being a good product, I am happy to know that the Pipeline and Hazardous 
Materials Safety Administration or PHMSA (FIM-sa) has succeeded in achieving nearly 
all of the mandates set forth in the Pipeline Safety Improvement Act (PSIA) of 2002, and 
that the agency has done so in a timely manner.  Because of this hard work, we have 
more information and statistics on causes of accidents, more information on integrity 
management, more information on what states are successfully doing to bring down 
damages from excavation and more information on how the PHMSA (FIM-sa) is working 
to complete upcoming regulations. 
        The Committee discussion draft sets forth several new provisions that have been 
proposed by PHMSA (FIM-sa), the pipeline industry, safety advocates, and the states. It 
reauthorizes the program through 2010; adds new one call requirements for states to 
enforce; authorizes additional grants for states to set up damage prevention programs; 
requires the DOT to finalize regulations already underway concerning low stress 
pipelines, addressing the Alaska BP incident; and further addresses enforcement 
transparency. In addition, the bill incorporates a proposal from Mr. Murphy to further 
enhance one call requirements and emergency notification. 
        I am also glad to see that the draft addresses the 7 year gas transmission integrity 
management assessment interval, and I look forward to being updated for the record by 
GAO after the hearing on their continuing efforts to finalize their work and 
recommendations regarding the 7 year interval that we asked them to do in 2002.  
        I look forward to hearing the any comments or concerns about the drafts from the 
witnesses today and trying to address any outstanding issues before we introduce a bill 
when we return in September. At this point I recognize the Ranking Member of the 
Subcommittee, Mr. Boucher, for purposes of an opening statement. 

	MR. HALL.  At this point, I recognize the Honorable Ranking 
Member of the Subcommittee, Mr. Boucher, for purposes of an opening 
statement.
	MR. BOUCHER.  Thank you very much, Mr. Chairman.
	I want to commend you for convening today's hearing on legislative 
proposals to reauthorize the Pipeline Safety Act.  This issue is both 
important and timely.
	In 2002, this committee worked in a bipartisan manner to achieve 
enactment of a consensus pipeline safety law.  In April, this 
subcommittee conducted a hearing at which we gained valuable advice 
from interested parties about the effectiveness of the 2002 law as well as 
receiving suggestions from those witnesses for improvements that can 
now be made.  Today, we focus on legislation that we believe builds on 
the success that has been demonstrated for the 2002 law and would make 
recommended improvements.
	For example, the draft bill encourages States to develop strong 
excavation damage prevention programs as a condition of being certified 
by the U.S. Department of Transportation to regulate and enforce within 
their State's pipeline safety standards.  The draft specifies that the State 
programs should include the nine components which are largely 
recognized as the formula for the most successful prevention programs.  
The bill further incentivizes the development of a vigorous damage 
prevention program by creating a new grant program for States which 
fully develop and implement a damage prevention program, including 
these nine elements.
	These provisions are designed to encourage widespread 
implementation of damage prevention programs, such as the one that has 
been successfully deployed in my home State of Virginia.  Since 
implementation of its program, Virginia has witnessed a dramatic 
reduction in the incidents of damage caused by excavation, and we think 
it is appropriate to encourage other States to adopt programs that are 
modeled on that very successful experience.
	In addition, I was pleased that the 2002 law included a section 
authorizing technical assistance grants for communities, but I was 
somewhat disappointed to note that no grants have been awarded through 
that program by the Department of Transportation.  I continue to think 
that providing assistance to local communities for technical assistance on 
local pipeline issues is a necessity, and I am pleased that the draft bill 
includes a provision that would require the Department of Transportation 
to publish criteria for the grants and to award at least three demonstration 
program grants.  These requirements are in furtherance of the intent of 
our 2002 law and will ensure that the Technical Assistance Grant 
Program is, in fact, utilized.
	One item, which is not contained within the draft but which I would 
like to see included as our bill moves forward, is a provision relating to 
the implementation of an Integrity Management Plan for natural gas 
distribution lines.  During a hearing before this subcommittee 2 years 
ago, a Department of Transportation official testified that the Department 
was planning to develop such a plan for distribution lines, which account 
for more than 85 percent of all natural gas pipelines nationwide, but at 
that time, the idea of a comprehensive Integrity Management Plan for 
those distribution systems was merely a recommendation.
	I am pleased that the Office of Pipeline Safety is moving ahead with 
the establishment of an Integrity Management Plan for these critical 
distribution lines and that OPS expects to publish a distribution integrity 
management rule in early 2007.  This effort marks the first 
comprehensive and consensus-based attempt to develop an Integrity 
Management Plan for natural gas distribution lines, and I commend this 
effort.  What I would like to see is a provision included in the bill that 
simply sets a deadline for the establishment of this rule so as to ensure 
that the progress that has been made to date continues.
	There are other areas that I would hope to hear more about from our 
witnesses this morning.  For example, the recent failure and subsequent 
crude oil leak from a low-pressure transmission line in Alaska highlights 
the need for regulation of low-pressure pipelines.  And the draft 
legislation contains a provision that would require that minimum 
standards be established for regulation of those lines.  I applaud that 
provision.
	The consensus 2002 Act has produced positive results with an 
increased emphasis on safety and on accident prevention, both by the 
agencies of enforcement and by the industry.  The discussion draft that is 
before us today builds upon that success, and I look forward to a 
continuation of the bipartisan effort that we have on this committee that 
has produced that discussion draft as we proceed in September to 
approval of this bill in subcommittee and hopefully rapid approval of the 
measure in the House as well.
	Thank you very much, Mr. Chairman, for scheduling a timely 
hearing.
	I look forward to hearing from the witnesses.
	MR. HALL.  I thank you, Mr. Boucher.
	The Chair recognizes the gentleman from Pennsylvania, Dr. Murphy.
	MR. MURPHY.  Thank you, Mr. Chairman.
	We have a lot to hear about with the complex but valuable bill, and I 
will leave some of those things to more in the category of listening to the 
comments to be made.
	But I would like to say this.
	I came before this committee 2 years ago with some ideas to help 
protect our communities and increase pipeline safety for the sake of our 
homes and our families.  I came with a personal story that affected a 
family in my district.  I went and I visited their home.  I met with their 
children.  They came to me not for themselves but with the idea of 
preventing families around this country from having tragedies or 
problems that potentially could come with pipeline problems.  We were 
able to work out a method that is in this bill that simply responds in an 
efficient way with any potential emergency situations that will prevent 
potential problems from becoming tragic problems.
	And I want to thank you, Mr. Chairman, for listening, you and your 
staff.  I am very grateful, but more importantly, the family is grateful and 
our Nation's families are grateful and our Nation's communities are 
grateful for some of the elements in this bill, which will increase pipeline 
safety.
	I thank you, and I yield back.
	MR. HALL.  Thank you, Dr. Murphy.
	The gentleman from Texas, Mr. Green.
	MR. GREEN.  Thank you, Mr. Chairman, and I will ask unanimous 
consent to place my full statement in the record.
	I want to welcome Admiral Barrett.  Thank you for your previous 
service with the Coast Guard and also now at DOT.  I have a district in 
Houston in the petrochemical area, and we have pipelines everywhere.  
We also have a lot of Coast Guard personnel in the Houston ship 
channel.  And compared to 4 years ago, this legislation is much easier to 
deal with.  Those of us who have lived and worked along pipelines for 
our whole lives, obviously, want the safety, but we also know we need 
new product.
	So Mr. Chairman, I will yield back my time, and again ask that my 
statement be placed in the record, because I look forward to the 
testimony today and the markup on this hopefully in September.
	MR. HALL.  Without objection it will be placed into the record.
	Mr. Boucher.
	MR. BOUCHER.  Mr. Chairman, I ask unanimous consent that 
Ranking Member Dingell's statement be placed in the record.
	MR. HALL.  Without objection it will be placed in the record.
	[The prepared statement of Hon. John Dingell follows:]

PREPARED STATEMENT OF THE HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS 
FROM THE STATE OF MICHIGAN

        Mr. Chairman, thank you for holding this important hearing today.  I want to also 
thank Chairman Barton for his contributions, as well.  I believe this discussion draft is a 
good first step towards reauthorizing our pipeline safety laws and I hope that we can 
continue to work together as these bills move forward.  
        One of the reasons that the discussion on reauthorization has been so civil this year 
is that we did so much hard work in writing the 2002 Pipeline Safety Act.  It represented 
hard-fought compromises, both in this Committee and with our colleagues on the 
Committee on Transportation and Infrastructure.  It made substantial improvements in the 
law that have yielded tangible benefits.  For example, the requirement for natural gas 
transmission operators to conduct baseline assessments of their pipelines has been praised 
for helping detect and repair pipeline anomalies before they turn deadly.  The 
establishment and continued promotion of a three-digit nationwide number that can be 
used prior to excavation activities will help us to prevent one of the leading causes of 
pipeline accidents.  
        While this discussion draft does not make sweeping changes to our work from 2002, 
it does offer some modest and important improvements, including the following:
        Enforcement transparency:  The Department of Transportation's (DOT) enforcement 
of pipeline safety regulations has long been a concern of mine.  In the past, a lack of 
clarity and direction characterized the Department's approach to enforcement, an 
assessment supported by the Government Accountability Office (GAO) in its 2004 report 
entitled "Management of the Office of Pipeline Safety's Enforcement Program Needs 
Further Strengthening."  Although the GAO reports that the situation has improved, my 
concerns remained as recently as this March, when Ranking Member Boucher and I sent 
a letter to DOT on its enforcement strategy.  I believe the transparency requirement in the 
draft will benefit all parties involved in pipeline safety, be they energy companies or 
safety advocates, who want to understand how DOT is applying its enforcement 
authority.  In addition, DOT's enforcement authority is enhanced in several other 
important areas such as one-call and integrity management.  
        Low-Stress Pipelines:  When a British Petroleum (BP) pipeline ruptured in March of 
this year, spilling over 250,000 gallons of crude oil on Alaska's North Slope, the long-
held conventional wisdom that "low-stress" equaled "no-risk" was turned on its head.  
Investigative work by the Democratic staff of the Committee has shown that a lack of 
oversight by the company and a lack of regulation by DOT contributed to this situation.  
The requirement in the discussion draft that DOT issue minimum operating standards for 
low-stress lines will begin to address this issue.  Whether that will resolve the problem 
remains to be seen, but I can assure my colleagues that I will be keeping a close eye on 
the situation.
        Damage Prevention Programs:  One of the leading causes of pipeline accidents and 
damage is the direct result of errors made in excavation.  The discussion draft addresses 
this issue by encouraging States to develop their own damage prevention programs and 
by awarding grant money to those States that take action.  
In sum, Mr. Chairman, I believe we are on the path to producing good legislation 
and I look forward to the testimony of the witnesses here today.  

	MR. HALL.  The Chair recognizes Mr. Sullivan from Oklahoma.
	MR. SULLIVAN.  Thank you, Mr. Chairman, for holding this 
important hearing today on the draft bill and Pipeline Safety 
Improvement Act Reauthorization and H.R. 5782, the Pipeline Safety 
Improvement Act of 2006.
	I am also pleased to welcome Mr. Timothy C. Felt, the President and 
CEO of Explorer Pipeline Company in Tulsa, Oklahoma, who is 
testifying on the second panel on behalf of the Association of Oil 
Pipelines.
	Explorer Pipeline operates a 1,400 mile pipeline system that 
transports gasoline, diesel fuel, and jet fuel from the Gulf Coast to the 
Midwest, serving Tulsa, Houston, Dallas, Fort Worth, St. Louis, and 
Chicago.
	Nearly half a million miles of crude oil, petroleum products, and 
natural gas transmission pipelines cross the United States.  These 
pipelines are vital to U.S. energy supply, and have important links to 
other infrastructure.  The 107th Congress passed the Pipeline Safety 
Improvement Act to improve pipeline safety and security practices and to 
provide Federal oversight of pipeline operators' security programs and to 
provide for pipeline safety education programs.
	The pipeline industry and the Department of Transportation have 
cooperated to achieve significant improvement in pipeline safety, and 
this improvement is demonstrated by the industry's record.  I am glad 
that Mr. Felt is here to share his insight in pipeline safety.
	Thank you, again, for holding this important hearing, Mr. Chairman.
	MR. HALL.  I thank you.
	[Additional statements submitted for the record follows:]

PREPARED STATEMENT OF THE HON. JOE BARTON, CHAIRMAN, COMMITTEE ON ENERGY 
AND COMMERCE

        Thank you, Mr. Chairman, for holding this hearing on the Committee's discussion 
draft on pipeline safety reauthorization and the Transportation Committee's recently 
reported bill, HR 5782.  Continuing the Committee's tradition regarding this Act, the 
Subcommittee has worked in bipartisan fashion to put together this draft.  I hope that 
after this hearing we will introduce a bill and move to markup soon after Congress 
returns in September.  

Reauthorization of the Pipeline Safety Improvement Act is an important effort that should 
be completed this year, and I am hopeful that our friends in the other body share our 
desire to enact this legislation.
        The draft we are discussing today incorporates several new provisions and 
amendments to the existing law that have been proposed by various stakeholders, 
including the Administration, industry, and safety advocates. It also incorporates some 
legislative language that was introduced by Mr. Murphy.   
        The bill strengthens state one-call requirements for excavation damage, provides 
new authority and grant money to the states to develop their own damage prevention 
programs modeled after the successful programs already in place, and puts some sunshine 
on enforcement actions. 
        The draft also addresses the pending GAO study and the seven year reassessment 
interval, as well as addresses a clarification in the law to direct-sales laterals.  I thank the 
witness for appearing before the Subcommittee today and I look forward to hearing their 
comments and testimony. I yield back the balance of my time.  

PREPARED STATEMENT OF THE HON. MICHAEL G. BURGESS, A REPRESENTATIVE IN 
CONGRESS FROM THE STATE OF TEXAS

        Thank you, Mr. Chairman for holding this important hearing.
        When our constituents think of the movement of products and goods across the 
country -- most of them think about large trucks on the highway carrying everything from 
ice cream to new cars.  
        Some think of the railroads and others think about the barges that traverse the 
Mississippi.  But few think of the interstate transmission pipelines that transport huge 
volumes of crude oil, refined products including gasoline and natural gas; unless 
something goes wrong.  
        Congress last updated the federal pipeline safety law in 2002.  Among other things, 
the bill required operators of regulated gas pipelines in densely populated areas to 
conduct risk analysis and periodic inspections, and to strengthen public education 
regarding pipeline safety.  
        The good news is that the provisions adopted as part of this legislation are working -
- safety has improved and lives have been saved.  But we can always do better, and I am 
hopeful that this year's reauthorization will yield continued improvements in safety.  
        I am looking forward to hearing from the witnesses today about the discussion draft 
before us today, as well as H.R. 5782, considered by the Transportation and 
Infrastructure committee last week.  
        With that, Mr. Chairman, I yield back.  

	MR. HALL.  And I apologize to our witnesses and to those in 
attendance, and I thank Mr. Boucher for allowing us to delay this 
hearing.  We had what was termed an emergency calling of one of the 
parties here in Congress that Mr. Boucher was not a member of, and he 
allowed me to go.  But we are sorry for the delay.
	But let's get underway.  Admiral Barrett, we are honored to 
recognize you from, the Pipeline Hazardous Materials Administration, 
the Department of Transportation.  If you could, summarize, and we will 
get around to getting into your statement with the question-and-answer 
period, if you don't mind.
	Thank you, sir.


STATEMENTS HON. THOMAS J. BARRETT, ADMINISTRATOR, PIPELINE AND HAZARDOUS 
MATERIALS SAFETY ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION; AND HON. 
DONALD L. MASON, COMMISSIONER, PUBLIC UTILITIES COMMISSION OF OHIO, ON BEHALF 
OF NATIONAL ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS

        ADMIRAL BARRETT.  Mr. Chairman, thank you, and Ranking 
Member Boucher, and members of the committee.
	I appreciate the opportunity to discuss your draft proposal to 
reauthorize the pipeline safety program.
	Mr. Chairman, I also truly appreciate your leadership and the 
subcommittee's stewardship on pipeline safety.  I am pleased to provide 
my first testimony before this subcommittee on ways to improve an 
already forward-leaning and positive program and build upon the 
progress that has been made to date.  And frankly, that has been 
achieved, I believe, because of the cooperation and leadership by the 
Congress, the Administration, the Pipeline Safety Administration, and 
also the pipeline industry, States and local authorities, the public, and the 
first responder community working together effectively toward a 
common goal.
	I also want to thank and acknowledge Ms. Stacey Gerard, who is 
with me here this morning.  She has been instrumental in moving the 
agency forward on these programs over the last several years since 2002.  
And I would also like to note that I have just appointed her to be the 
Assistant Administrator of the Office of Pipeline Safety and Hazardous 
Materials and the Chief Safety Officer on a permanent basis.
	So Stacey, thank you.  And she is here this morning.
	And with her is Dr. Ted Wilke, who will step up and become the 
Acting Chief of the Office of Pipeline Safety.  And Dr. Wilke is also here 
this morning.
	The Department and PHMSA are committed, like you, to 
strengthening the pipeline safety program.  We welcome your very 
strong proposal and its key concepts, and I believe they will clearly help 
us reach our goal of eliminating pipeline incidents and providing a 
foundation for energy transportation infrastructure needs and also the 
economic growth that our country depends on.  And reauthorization now 
will help us achieve that.
	The 2002 reauthorization, which you sponsored and the President 
signed into law, introduced the Integrity Management Program, a key 
concept and a key component of a systems-based approach to managing 
and reducing pipeline risks.  In turn, as you noted, we have seen a steady 
decline in the number of pipeline accidents that cause serious harm to 
people or our environment, and we need to stay the course and step up 
our efforts as we look to achieve further success in this area.
	The Pipeline Safety Improvement Act of 2006 will be another 
important milestone for the safety program.  Based on the data we have 
and experience under the 2002 law, the proposal places more emphasis 
on damage prevention, enhancing State program oversight of distribution 
pipelines, and clarifies our responsibility and emergency waiver 
authority during natural disasters and other emergencies.
	Managing pipeline safety based on system risk clearly suggests we 
must minimize damage to pipelines associated with construction damage.  
Several States, including Virginia, as Mr. Boucher noted, and Minnesota, 
have led the way in developing strong damage prevention programs, and 
we have seen up to 50 percent reductions in damages to pipelines from 
construction-related activities.  We would expect similar results from 
other States if we can ensure our State partners have more resources and 
authority and share responsibility with us in getting this job done.  The 
committee's proposal recognizes this need and adopts important 
concepts, which the Administration forwarded, including new civil 
enforcement authority, incentive for States to improve their programs, 
technology grants to advance the safety and efficiency of the one-call 
notification process, and more funding for State programs.
	State partners oversee over 90 percent of operator compliance with 
pipeline safety regulations.  This proposal would also raise the cap on 
grants provided to State agencies over 6 years from 50 percent to 80 
percent to offset the increasing costs of the programs they execute 
consistent with the programs of the Department.  We, frankly, need 
them, and they need our help to be more effective.
	We also learned a great deal from last year's devastating Gulf Coast 
storms on the vulnerabilities that exist within the pipeline infrastructure 
to natural and manmade disasters.  The Administration's proposal 
provides specific authority for emergency waivers when necessary to 
help operators anticipate or respond expeditiously to national or regional 
disasters at the earliest possible time.  We believe this can help minimize 
pipeline safety disruption while maintaining safe operations.
	And like you, Mr. Chairman, I strongly favor a systems-based 
approach to assessing and managing risk, especially as risks to large 
infrastructure systems, like pipelines, change over time.  And an 
effective systems risk management approach, which this subcommittee 
helped devise, is getting positive results.  Integrity Management 
Programs focus operators on making the best use of information as it 
becomes available.  This is a dynamic process to enable an operator to 
deploy attention and resources against the greatest risks, the worst first.
	Reliance on stipulated retesting intervals, as established in the 
current law, seems a disincentive to continuous evaluation and 
adjustment of a dynamic systems approach, in effect, a whole health 
review of pipeline systems.  Our goal should be to regularly and 
systematically utilize the most current information about the system so 
that they can be maintained to operate in the best condition for the 
longest amount of time.
	These reauthorization concepts have been generally supported across 
our stakeholder communities, including the Federal and State family, and 
we are pleased to see many of the same priorities reflected in the 
committee's draft.
	Mr. Chairman, like you, Acting Secretary of Transportation, Maria 
Cino, and PHMSA are wholly dedicated to ensuring the safe operation of 
our pipeline transportation system under both normal and emergent 
conditions.  We understand how important this is to the safety and 
security of our citizens and the continued growth of America's economy.
	Thank you very much.  I would be pleased to answer any questions 
and ask that my full statement be inserted in the record.
	[The prepared statement of Hon. Thomas J. Barrett follows:]

PREPARED STATEMENT OF THE HON. THOMAS J. BARRETT, ADMINISTRATOR, PIPELINE AND 
HAZARDOUS MATERIALS ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION

I. INTRODUCTION
        Chairman Hall, Ranking Member Boucher, members of the Subcommittee, thank 
you for the invitation to appear to discuss your draft proposal to reauthorize the pipeline 
safety program. I appreciate the Subcommittee's stewardship on pipeline safety and I am 
pleased to provide my first testimony before this subcommittee on ways to improve an 
already forward leaning safety program, and to build upon PHMSA's progress to date.  
        I believe your proposal embodies key concepts that will help us reach our goal of 
eliminating pipeline safety incidents and provide a foundation for the energy 
transportation infrastructure we need to continue our strong economic growth into the 
future.
        Americans depend on pipeline transportation for the safe movement of critical 
energy supplies. This dependence makes it crucial to keep the system safe and reliable. 
Over 97 percent of the nation's transportation energy needs are met by petroleum 
products, and 64 percent of these energy products are moved through America's pipeline 
networks. The system is near capacity all the time.  In times of emergencies, this lack of 
redundancy and system capacity makes it important for PHMSA to work along with our 
state partners to assure that energy product transportation is not interrupted.  In the years 
to come, we hope to contribute to increasing the resiliency of this infrastructure. 
        "The Pipeline Safety Improvement Act of 2002" which you sponsored and the 
President signed into law was a most important milestone.  The Act reinforced the 
importance of integrity management, operator qualification, public education, research, 
mapping, construction damage prevention and other initiatives, including one national 
number for One-Call.  Most importantly in my view, the Act set the stage in law for a 
systems approach to managing and reducing pipeline risks.  Over the past five years we 
have seen a steady decline in the leading causes of pipeline failures and the serious 
accidents in which people are injured or the environment is harmed. We need to stay the 
course and step up our efforts.   
        In the past few years, PHMSA has taken a hard look at incidents, their causes and 
what can be done to prevent them. One thing is crystal clear-the leading cause of 
incidents in which people are hurt or killed is construction-related damage causing an 
immediate rupture or damage which later grows to failure. This occurs most often on the 
distribution systems which run through the neighborhoods where people live and work. 
This part of the pipeline system, the distribution network, is almost entirely under the 
jurisdiction of states, our foremost partners in pipeline safety. 

II. ADMINISTRATION PROPOSAL
        The Secretary of Transportation recently submitted to Congress the Administration's 
legislative proposal to reauthorize and improve pipeline safety and protection for the 
environment, and also to enhance infrastructure reliability.  The proposal, the "Pipeline 
Safety and Reliability Improvement Act of 2006" looks to build on our progress in 
achieving the mandates of the 2002 Act by placing more emphasis on damage prevention, 
enhancing state programs' oversight of pipelines, and clarifying our responsibilities and 
emergency waiver authority during natural disasters and other emergencies.
        Managing pipeline safety based on system risk clearly suggests we must minimize 
damage to pipelines associated with construction-damage. Construction damage is almost 
always preventable and we have worked to find practices that will eliminate this problem. 
The challenge is managing this activity without damaging a very crowded underground 
infrastructure - one that gets more crowded every day, not just with pipelines but new 
telecommunications, electric, water and sewer, and other infrastructure. 
        Several states including Virginia and Minnesota have led the way with strong 
damage prevention programs and seen up to 50% reductions in this type of damage. We 
need to prioritize the resources for pipeline safety to be sure that our state partners have 
more resources to share responsibility with us in getting this job done.  The Committee's 
proposal recognizes this need by adopting important concepts which the Administration 
forwarded, including new civil enforcement authority, incentives for states to improve 
their damage prevention programs, technology grants to advance the safety and efficiency 
of the one call notification process, and more funding for state pipeline safety programs.
        The following chart from a PHMSA report gives a picture of the progress possible 
with a strong enforcement program. There are degrees of success with enforcement and 
two model states, Virginia and Minnesota both have fewer than 3 damages per 1,000 one 
call tickets by enforcing the practice of calling before digging.



        Our proposal addresses this concern by establishing a state grant program to provide 
more incentives to states to develop effective damage prevention programs.  State 
agencies and PHMSA would also gain authority to conduct civil enforcement actions 
against anyone who fails to contact "One-Call" prior to digging, with our focus being on 
state enforcement.
        Ensuring the safety of 2.3 million miles of pipelines is an enormous task. Our state 
partners oversee 90 percent of operator compliance with pipeline safety regulations.  We 
seek to raise the cap on grants provided to state pipeline agencies over 6 years from 50 
percent to 80 percent to offset the increasing cost of the programs they execute, 
consistent with the programs of the Department.  State agencies do utilize PHMSA's 
national regulatory pipeline safety standards to inspect the majority of the pipeline 
infrastructure and we increasingly invest in state training and decision support as we 
function as a coordinated workforce.  We need them and they need our help to be most 
effective.  
        Last year's devastating Gulf Coast storms also taught us lessons about the 
vulnerability of pipelines to natural and man-made disasters.  In the wake of last years 
storms, PHMSA's inspectors deployed to State emergency operations centers, operator 
control rooms, and to critical pumping stations across Louisiana and Mississippi to 
monitor operator efforts to work to keep energy moving without standard electric power. 
        To assist with recovery of the pipeline infrastructure during future emergency 
events, the Administration's proposal provides for specific regulatory authority to use 
emergency waivers when necessary to help operators anticipate or respond expeditiously 
to national or regional disasters at the earliest possible time. We believe this can help to 
minimize pipeline system disruption while maintaining safe operations. 
        Like you, I strongly favor a systems-based approach to assessing and managing risk, 
especially as the risks to large infrastructure systems like pipelines often change over 
time.  I expect to see an effective systems risk management approach, which this 
subcommittee helped devise, getting positive results for pipeline safety.  The integrity 
management program has focused operators on making the best use of information as it 
becomes available.  But this must be a dynamic process in which the operator is able to 
deploy attention and resources against the greatest risks, worst first.          Reliance on 
stipulated retesting intervals, as established in current law, is inconsistent with a systems 
approach and a disincentive to continuous reevaluation and readjustment.
Reliance on stipulated retesting intervals as established in current law seems a 
disincentive to the continuous evaluation and readjustment of a dynamic systems 
approach.  It is a basic element of an ongoing "whole-health" review of a pipeline 
system.  The goal is to regularly and systematically utilize the most current information 
about the pipeline system so that it may be maintained to operate safely in the best 
condition for the longest amount of time. 
        These reauthorization concepts have been generally supported across our 
stakeholder community, including the federal and state family, and we are pleased to see 
many of the same priorities reflected in the Committee's proposal.

III. CONCLUSION
        I assure the members of this Subcommittee, that the Administration, Acting 
Secretary Cino, and the dedicated men and women of PHMSA share your strong 
commitment to improving safety, reliability, and public confidence in our Nation's 
pipeline infrastructure.
        Like you, we understand the importance of our mission to the safety of our citizens 
and the energy security and continued economic growth of our great Nation.
        Thank you.
        I would be pleased to answer any questions you may have.

	MR. HALL.  Thank you, sir.
	We have a vote on, and we would like to go ahead and let Mr. Mason 
give his 5-minute presentation, if you would, and then we will recess for 
probably 20 minutes.  We have two votes: a 15-minute vote and a 5-
minute vote.  We will probably be back in 30 minutes when we leave.
	All right.  I recognize you for your preliminary statement.
	Thank you.
COMMISSIONER MASON.  Thank you, Mr. Chairman, Ranking 
Member Boucher, and members of the subcommittee.
	I am Don Mason, Public Utilities Commissioner, State of Ohio, but I 
am also here to represent the National Association of Regulatory Utility 
Commissioners where I am the Chairman of the Gas Committee.  And 
we prepared our testimony in conjunction with NAPSR, which is the 
National Association of Pipeline Safety Representatives, which are 
people who actually have their boots on the ground doing the inspection 
of the pipe.
	Again, NARUC is a quasi-governmental, non-profit organization as 
well as NAPSR, so we do; in fact, represent the State partnership to the 
Federal agencies.
	I will focus in on the four key points we would like to bring to the 
table at this point.  We do strongly support the funding provisions found 
in the discussion draft, and we appreciate the efforts to up the funding to 
80 percent for State funding, but we do remind all that in all likelihood, 
the actual funding is probably going to be around 55 percent when all is 
said and done with regard to how much the States end up spending.  The 
States are still a major partner in our endeavors.
	But State pipeline safety program funding is heavily dependent upon 
PHMSA's proper sharing of the user fees.  State pipeline safety programs 
represent approximately 80 percent of the Federal/State inspector 
workforce that oversees pipeline inspections nationwide, as also 
indicated by the Admiral.  Without adequate funding, States would not 
be able to conduct the required inspections of the existing pipeline 
facilities or new pipeline construction projects, and we do hope there are 
new projects helping to bring more competitive cost natural gas to the 
market.
	I will just briefly touch upon the issue of certification.  We do have 
some concerns in the way the certification language could possibly be 
read, not that it is necessarily being read this way, but we want to ensure 
that the States have flexibility in moving forward aggressively, even 
though they may not, in fact, meet all nine conditions as indicated.  The 
theory being is that those might be some of the States we want to help 
move forward eventually hitting all nine elements.
	Also, it is key to say that it is our understanding that the intent of the 
subsections 601 through 604 in H.R. 5782, when taken together, give the 
Secretary the discretion to make damage prevention program grants to 
States not only to support an existing damage prevention program, but 
also to provide an incentive to improve programs that currently may not 
be able to meet all of the elements outlined in legislation.  However, with 
additional assistance, we think we can implement and maintain effective 
programs as contemplated by the bill.
	And moving on to, perhaps, the fourth point, I would like to say, are 
damage prevention grants.  Our last concern is contained in the draft 
discussion, as well as H.R. 5782.  There is prohibition against lobbying, 
which we, of course, understand, but there is presently a prohibition 
against using funding for litigation.  And we might remind that one of the 
elements is having civil penalties in place.  So basically, to have civil 
penalties in place, but not allow funding of litigation, actually is 
discouraging and perhaps may be construed to be an unfunded mandate.  
Additionally, I think those in the Congress recognize that if we have the 
authority to have civil penalties, there will be a percent of the population 
out there that will, in fact, litigate.  So we do need to be armed when we 
go against them.
	That will be my summary, and I am available, of course, after the 
break, Mr. Chairman and Members of Congress.
	[The prepared statement of Commissioner Donald L. Mason 
follows:]



PREPARED STATEMENT OF THE HON. DONALD L. MASON, COMMISSIONER, PUBLIC 
UTILITIES COMMISSION OF OHIO, ON BEHALF OF NATIONAL ASSOCIATION OF REGULATORY 
UTILITY COMMISSIONERS

 Grant funding must increase to meet resource requirements of State pipeline 
safety programs.  States strongly support the provisions found in both the 
Discussion Draft and HR 5782 that would provide up to 80% funding for State 
pipeline safety programs.
 The language amending Section 60105(b)(4) as proposed in both the 
Discussion Draft and HR 5782 will encourage the States to establish 
effective damage prevention programs without creating a certification criteria 
that a State may not be able to meet due to reasons outside the control of the 
State's pipeline safety agency.  We believe that the language contained in the 
Discussion Draft is more beneficial to the State programs.
 States should be able to access damage prevention program grants to begin, 
maintain and/or improve their damage prevention programs.
 States should be able to use grants for litigation.  States are mandated in both 
the Discussion Draft and HR 5782 to use civil penalties, if necessary, therefore 
litigation could be necessary as well.


        Good Morning Mr. Chairman, Ranking Member Boucher and Members of the 
Subcommittee.
        I am Donald L. Mason, a commissioner at the Public Utilities Commission of Ohio 
(PUCO).  I have served in that capacity since 1998.  I also serve as the Chair of the 
Committee on Gas for the National Association of Regulatory Utility Commissioners 
(NARUC).  As Chairman of the NARUC Committee on Gas, I am testifying today on 
behalf of that organization and the National Association of Pipeline Safety 
Representatives (NAPSR).  In addition, my testimony reflects my own views and those of 
the PUCO.  On behalf of NARUC, NAPSR and the PUCO, I very much appreciate the 
opportunity to appear before you this morning.
        NARUC is a quasi-governmental, non-profit organization founded in 1889.  Its 
membership includes the State public utility commissions serving all States and 
territories.  NARUC's mission is to serve the public interest by improving the quality and 
effectiveness of public utility regulation.  NARUC's members regulate the retail rates and 
services of electric, gas, water, and telephone utilities.  We are obligated under the laws 
of our respective States to ensure the establishment and maintenance of such utility 
services as may be required by the public convenience and necessity and to ensure that 
such services are provided under rates and subject to terms and conditions of service that 
are just, reasonable, and non-discriminatory.  NAPSR is a non-profit organization of 
State pipeline safety directors, mangers, inspectors and technical personnel who serve to 
support, encourage, develop and enhance pipeline safety.
        We greatly appreciate your efforts, Mr. Chairman, as well as the members and staff 
of the Subcommittee on Energy and Air Quality, to make this legislation helpful and 
useful to the State agencies that are charged with ensuring the public safety with regard to 
pipelines.  Additionally, we greatly appreciate the efforts of your colleagues and staff on 
the Transportation and Infrastructure Committee for their assistance to the States.  Today, 
I would like to bring your attention to four issues found in both the Discussion Draft and 
HR 5782.


1.  Funding
 	States strongly support the provisions found in both the Discussion Draft and HR 
5782 that would provide up to 80% funding for State pipeline safety programs.  The rapid 
expansion of federal pipeline safety initiatives in recent years (such as operator 
qualification, public awareness, integrity management, homeland security) has greatly 
increased the cost and resource demands of State participation.  However, the grants 
authorized to be appropriated under both the Discussion Draft and HR 5782 are not 
adequate to move the States anywhere close to the 80 percent, even by 2010 or 2012. As 
an example, if the States' pipeline safety costs remain the same as the amount projected 
for 2006, even the 2010 authorization for pipeline safety ($25,855,000 - $2,000,000) is 
only 54.8% of the cost of the State pipeline safety programs.
        State pipeline safety program funding is heavily dependent upon Pipeline Hazardous 
Material Safety Administration (PHMSA) proper sharing of these user fees.  State 
pipeline safety programs represent approximately 80 percent of the federal/State 
inspector work force that oversees pipelines nationwide.  Without adequate funding, 
States will not be able to conduct the required inspections of the existing pipeline 
facilities or new pipeline construction projects, and encourage compliance with new and 
existing safety regulations.  Grant funds are an effective way to leverage resources and 
increase total inspection capability since States match or exceed federal funding provided 
for pipeline safety.  

2.  Certification
 	The language amending Section 60105(b)(4) as proposed in both the Discussion 
Draft and HR 5782 will encourage the States to establish effective damage prevention 
programs without creating a certification criteria that a State may not be able to meet due 
to reasons outside the control of the State's pipeline safety agency.  The States agree that 
this is necessary language to include in this legislation and we support the provisions 
found in both the Discussion Draft and HR 5782, however we believe that the language 
contained in the Discussion Draft is more beneficial to the State programs.
 
3.	State Damage Prevention Programs
        It is our understanding that the intent of subsections (a)(2), (c), and (e) of Section 
60134 of HR 5782, taken together, gives the Secretary the discretion to make damage 
prevention program grants to States not only to support an existing damage prevention 
program but also to provide an incentive to improve a program that currently may not be 
able to meet all elements outlined in the legislation; however, with additional assistance 
can attain and maintain an effective program as contemplated in the bill.  Additionally, it 
is our understanding that the intent of subsection (c) of Section 60134 of the Discussion 
Draft is to provide the Secretary with the same discretion found in HR 5782 and outlined 
above.  
        Provided our interpretation of the language found in the referenced sections and 
subsections is correct, we believe that both bills are moving in the right direction.  
However, we also believe that both bills, with regard to the damage prevention program 
grants, contain a large degree of ambiguity and therefore leave much up to the 
interpretation of these subsections.  
        If the intent is indeed to enable the States to receive damage prevention program 
grants so that their programs can meet and exceed all the Damage Prevention Program 
Elements, we would suggest that language be added to both measures that clearly state 
that the States shall receive damage prevention program grants for the purpose of 
meeting, maintaining, or exceeding any or all the Damage Prevention Program Elements, 
thereby encouraging  the States to work to establish the effective damage prevention 
programs envisioned by the Discussion Draft and HR 5782.

We bring this issue to your attention because it is our opinion that under the Discussion 
Draft language and HR 5782 an argument can be made that a State must be found to have 
an effective program in order to be awarded a grant.  Therefore, a State that has 
implemented some, but not all, of the effective program elements may not be eligible to 
obtain grant support for action it is currently taking, or for improving its existing 
program.  If the  intent of this legislation is to encourage States to adopt effective damage 
prevention programs, it seems counterproductive for States that have progressed in that 
area, or that could make progress if funds were available, to be ineligible for any funding 
at all.

4.  Damage Prevention Grants to States
        Our last concern is contained in both the Discussion Draft and HR 5782.  Subsection 
60134(c)(2) APPLICATION of the Discussion Draft a and subsection 60134(g) 
NONAPPLICABILITY OF LIMITATION of HR 5782 both stipulate that damage 
prevention grant funds cannot be used for lobbying or in direct support of litigation.  The 
Lobbying prohibition is understandable; however, "litigation" could include State 
enforcement actions or State defense of actions taken under its damage prevention 
program.  Additionally, under the Damage Prevention Program Elements in element 
seven of both pieces of legislation, the language makes reference to the fact that in order 
for a State to have a "effective" program, the program must include ".the use of civil 
penalties.."  If the State authority is mandated under federal law to enforce states' 
damage prevention laws which could include civil penalties, it must be contemplated that 
these penalties may be appealed and that the State would need to litigate.  We therefore 
respectfully suggest that "in direct support of litigation" be deleted, or the intent of this 
language clarified.
        Mr. Chairman, that concludes my remarks and I am available to answer any 
questions that you or the Subcommittee members may have.  Thank you again for that 
opportunity to appear before you today.

	MR. HALL.  All right.  Thank you very much.
	We will take a break now.  We will pick up again at, say, 12:30.
	[Recess.]
	MR. HALL.  All right.  We will get underway.
	I have some questions now, if you gentlemen would.
	And without objection, we will put into the record the Pipeline 
Safety Improvement Act Reauthorization Statement from the National 
Utility Contractor Association.
	Without objection, it is admitted.
	[The information follows:]



	MR. HALL.  And the statement of Steven Sandhur, CEO on behalf of 
the American General Contractors, offered for the record.
	Without objection, it is entered into the record.
	[The information follows:]



	MR. HALL.  At this time, we will start visiting with you gentlemen 
about your opening statements.
	Admiral, with your background as a risk manager from the first order 
of the United States Coast Guard, can you lend us some of your 
experience regarding managing pipeline safety based on system risk and 
how this risk system lends its application to the current 7-year 
reassessment interval under discussion?
	ADMIRAL BARRETT.  Thank you, Mr. Chairman.
	As you know, with your experience, these pipeline systems are very 
long-life systems.  They are going to be in place for 10, 20, 30, 40, or 
even 50 years.  And approaching risk management from a systems 
perspective allows you to concentrate on the most serious risks, which is 
always essential.  And one of the issues you have on long-lived systems 
is those risks change over time.  They can change because of the nature 
of the product that goes through the system.  They can change from just 
fatigue.  They can change from development coming in around the lines.  
But fundamentally, the risk profile may change.  And an effective system 
risk management perspective is dynamic.  It has to constantly reassess 
and direct its attention at the most serious concerns at any point in time.  
And I frankly believe a fixed interval mandate for re-inspection, as it is 
in the law now, at a fixed point in time, detracts from that systematic, 
continuous updating type of thing.  You may have a need to re-inspect in 
2 or 3 years, based on certain conditions.  On other lines or in other 
segments, frankly, you may not need to do it for 10 or 15 years, 
depending on what your current information is showing you.
	And the other thing, aside from the changing conditions, 
fundamentally, there is only so much time and attention and resources 
that you can direct at issues.  You always want to direct it at the most 
important ones, and putting it against something that may not be the most 
important, frankly, I think just takes your eye off the ball.  That is a 
general perspective, sir.
	MR. HALL.  Could you explain the current draft?  It contains a 
deadline for low-stress pipelines, like the BP line that was involved in an 
accident up on the North Slope a few weeks back, and I understand there 
was a public meeting on this proposed rule.  When will that be released 
for comment, if you can tell us?  And can you describe for us how the 
meeting went and what issues were raised?
	ADMIRAL BARRETT.  Sure.  We had a public hearing to address 
regulation, or potential regulation, of low-stress lines.  We are actively 
working on a Notice of Proposed Rulemaking that we would expect to 
have out early this fall.  It would address situations like the BP lines and 
other low-stress lines.  Our approach would look at things like corrosion 
control, damage prevention programs, operator qualifications, the types 
of things integrity assessments, integrity management that go to an 
overall systems look at these things and bring them under the Federal 
umbrella.  And I think you will see better results, particularly in areas 
where, again, there are unusually sensitive areas or high-consequence 
areas where the risks from low-pressure lines, although they are lower 
than they are with other types of lines, frankly are just simply not going 
to be acceptable anymore.  This was an issue the Administration and the 
agency was working on.  It was not, unfortunately, at the top of our list 
prior to the BP incident, but it is clear we need to move that forward 
quickly, and we are doing so, sir.
	MR. HALL.  What other issues were raised, then, and discarded or 
considered and accepted?
	ADMIRAL BARRETT.  In terms of the hearing or in terms of the low-
pressure lines?
	MR. HALL.  The hearing.
	ADMIRAL BARRETT.  I think we covered many of the items that we 
are talking about in the reauthorization, the types of approaches we are 
taking here with respect to damage prevention programs, with respect to 
the technical criteria for integrity assessment, operator qualifications and 
a broad range of technical issues getting at some of the corrosion control 
issues, pretty broad-ranging set of topics, of which low pressure was just 
one.
	MR. HALL.  I thank you.
	Mr. Mason, regarding the certification of State programs that are 
encouraging and promoting effective State damage-prevention programs 
and the actual awarding of grant money, the States that have effective 
State damage prevention programs, why should we, as Congress, 
authorize additional money for grant programs to States that might not be 
engaged in an effective damage prevention program, and there are some?
	COMMISSIONER MASON.  Thank you, Mr. Chairman.
	What it goes to the heart of is some States may not presently have all 
nine elements, but may be working towards it.  As many Members of 
Congress know, who may have been State legislators in the past, many 
State general assemblies meet every other year for a limited time period, 
and so it might take a period of a couple biannual budgets of that State 
government in order to get them to a stage where they actually meet all 
nine elements.  And what we would like to see is the discretion in the 
Department that they can evaluate if that agency is headed in the right 
direction, perhaps has language proposed or is introduced that, again, is 
taking the agency towards having all nine elements.  Therefore the 
Secretary would have that discretion of giving grants in that case.  But if 
it is absolutely in place, you must have these nine before you get one 
dollar, that is almost like saying if you are a sinner, you are not allowed 
into church.
	I thought I would throw that in there.
	ADMIRAL BARRETT.  Mr. Chairman, I agree with that, by the way.
	MR. HALL.  We had a preacher one time that said he had good news 
and bad news for us.  He said, "The good news is, there is enough money 
in the church right now to pay off all of our debt.  The bad news is, it is 
still in your pockets."
	All right.  My time is up.  I recognize Mr. Boucher.
	MR. BOUCHER.  Why thank you, Mr. Chairman.
	Mr. Mason, if a State can show that it is well on the way toward 
implementing the nine-point program, what does that mean?  If you are 
going to implement something, why not just do all nine points and have 
that done at the outset?  And then you could comply with the bright-line 
standard that says no money unless you have done it.  I mean, we know it 
works.  We know what they are.  What is wrong with simply saying, "Go 
on and do it, if you want the funds."?
	COMMISSIONER MASON.  Congressman, I represent 50 State 
commissions and 50 State pipeline administrations in today's testimony, 
and I think everybody has their heart in the right place and is focused on 
this, but again, when they go back to their general assemblies, sometimes 
they get more authority in order to actually have all nine elements, they 
are competing against everything from healthcare costs to education to 
transportation within their own State general assembly's time.  And so, 
again, they might be headed in the right direction, they just might not be 
there yet.
	MR. BOUCHER.  You are saying there are some States that might not 
have adequate statutory authority to implement by rulemaking the nine-
point program and they would have to get the statute amended to do that, 
and that necessarily takes time.
	COMMISSIONER MASON.  Yes, sir.
	MR. BOUCHER.  That is the source of your suggestion?
	COMMISSIONER MASON.  Yes, sir.
	MR. BOUCHER.  Okay.  Mr. Barrett, do you have anything to add to 
that?
	ADMIRAL BARRETT.  No, sir.  I agree it is an issue and one we 
should address.
	MR. BOUCHER.  Mr. Barrett, let me ask you this question.
	The Administration had proposed to us that we include a change in 
the pipeline safety law regarding safety orders.  And you may notice that 
our bill incorporates your recommendation.  We have a provision in our 
bill that very closely reflects what you had suggested.  Could you please 
tell us why the Administration needs this authority and how you would 
implement the authority and what kind of context would it be applied?  
And the reason I ask you this is because some of our witnesses will 
testify later in opposition to this and will say that it is overly broad and 
that, just to quote one of the witnesses, it "would eliminate the due 
process benefit by practically abolishing any threshold or burden of proof 
for DOT in triggering a safety order."  So I would like to give you an 
opportunity to respond to that criticism before it is formally lodged with 
us.
	ADMIRAL BARRETT.  Thank you, sir.  As you know, the 2002 Act 
actually has a provision that would allow us to issue this type of order 
and really does not have much in the way of criteria for it.  And our 
intent, frankly, was to provide a little more due process in that to allow 
people to come in.  And the type of order we are talking about here is 
where there is not an imminent hazard yet.  There is not a good long-
term solution in place.  Something needs to be done within some 
responsible timeline: 60 days or 6 months or what have you.  And these 
are safety-related conditions that we are talking about, not just anything.  
But clearly our intent is to do that in a way that is tied to a specific 
concern that is identified as a safety-related problem on a particular line 
and to issue an order that the operator or the industry can come in and get 
an opportunity to contest before we would put something out firmly.  
And that dialogue process, my experience has been, frankly, wrings out 
most of the problems in terms of the agency doing something untoward 
or, I don't want to say irresponsible, but whimsical, if you will.  And I 
think that our intent was to actually tighten the process up, because there 
is authority in the existing law, and we would like to be a little more 
specific and provide for that opportunity for due process a little more, 
quite frankly.
	MR. BOUCHER.  Okay.  Thank you.
	Two other questions to you.
	With respect to the Technical Assistance Grant provision, you may 
have noted, from my opening statement, that I was a major proponent of 
including the opportunity for Technical Assistance Grants in 2002 and 
have some measure of disappointment that grants have not been made.  
Not only have grants not been made, but your office has not actually 
published the criteria that would be utilized in determining the kinds of 
grants that would be made, giving guidance to applicants as to how their 
applications should be structured.  Can you talk a little bit about your 
intention in terms of publishing the criteria that would govern the grant-
making process for the Technical Assistance Grants?
	ADMIRAL BARRETT.  I think we would have no problem with 
identifying those criteria a little more clearly so that people know what 
we are about.
	MR. BOUCHER.  Would you publish a set of guidelines?
	ADMIRAL BARRETT.  I would have no objection to doing that, a 
broad set of guidelines.  Yes, sir.
	MR. BOUCHER.  So the answer is yes?
	ADMIRAL BARRETT.  Yes, sir.
	MR. BOUCHER.  All right.  Thank you.
	Can you give us a timeframe within which you might be able to do 
that?
	ADMIRAL BARRETT.  I could, but I don't want to speculate here.
	MR. BOUCHER.  You could, but you would rather not.
	ADMIRAL BARRETT.  I think responsibly, we are probably talking 3 
to 6 months.  That would be about the timeline we would be looking at 
there.
	MR. BOUCHER.  That is great.  We will start the clock.
	ADMIRAL BARRETT.  Yes, sir.  We have no problem with that.
	MR. BOUCHER.  All right.  Thank you.
	Second question.
	I know that you have a rulemaking underway with respect to 
Integrity Management Plans for natural gas distribution lines.  This is a 
provision that we strongly support, and we have duly noted your progress 
in this regard and commend you for it.  My question to you is this.  
Would you be able to accept, would you be amenable to a reasonable 
deadline contained in the statute by which your rulemaking would have 
to be completed?  And we could talk with you about what a reasonable 
amount of time is and reflect that, but would such a deadline in the 
statute be acceptable to you?
	ADMIRAL BARRETT.  Under the conditions you raise there, that we 
would work to get something that takes into account the type of process 
we have to deal with, no, sir, I would have no objection to that.
	MR. BOUCHER.  Thank you very much.
	Mr. Chairman, that concludes my questions.
	MR. HALL.  The Chair recognizes Mr. Sullivan.
	MR. SULLIVAN.  Thank you, Mr. Chairman.
	Admiral, how does the PHMSA envision the enforcement 
transparency authority to work that is contained in this discussion draft?  
Would allowing companies who are parties to the enforcement action to 
also post their side of the story be something you are open to?  Would a 
rulemaking be appropriate to make sure due process and ongoing dispute 
resolution processes are not compromised?
	ADMIRAL BARRETT.  Sir, I think that is two different pieces.  One, I 
am an absolute proponent of transparency in the enforcement process and 
generally.  And I would tell you quite frankly, I believe that transparency 
breeds self-corrective behavior.  I think most people out there, in this 
industry in particular, are generally trying to do the right thing, and so 
are we, and so are the other folks involved in this process.  And so the 
more transparent we are about this, I think the less, frankly, we have to 
regulate.  The more you get consensus standards, the more you get 
agreed-to practices.  So I absolutely would have no problem whatsoever 
with doing this in a way that allows industry to come in with their 
position or their statement or their response on some process or some 
action that we are taking.
	In terms of the second half of your question, I am sensitive.  There is 
a formal process involved when we assess or take a penalty action of 
some type.  There is opportunity for notice and a hearing and stuff like 
that.  And many times, for example, there are settlement discussions or 
agreements that we look to reach.  And we, obviously, would have to 
have measures in place to protect the ability to do that in a way that is 
fair to everybody.  But in terms of the generic type of information we are 
posting and allowing people to put their side or their comment up, I have 
absolutely no problem at all with that.  I would encourage it, quite 
frankly.
	MR. SULLIVAN.  Thank you, sir.
	MR. HALL.  All right.  Do you have follow-up questions?  I have no 
follow-up questions.
	ADMIRAL BARRETT.  Thank you, sir.
	MR. HALL.  Thank you very much, and thank you for the time, 
preparation, time you have attended, and the time it takes away from 
you.  I appreciate both of you, and I thank you very much.
	ADMIRAL BARRETT.  Thank you, Mr. Chairman, and I look forward 
to continuing to work with the committee.
	MR. HALL.  Yes, sir.
	ADMIRAL BARRETT.  Thank you, sir.
	MR. HALL.  If we have the second panel: Ronald Jibson, Jeryl Mohn, 
Timothy Felt, and Lois Epstein.
	All right.  We have Mr. Jibson, Vice President of Operations, 
Questar Gas Company on behalf of the American Gas Association.  We 
recognize you for 5 minutes.  If you would, summarize, and then we will 
ask you questions.
	Thank you, sir.

STATEMENTS OF RONALD W. JIBSON, VICE PRESIDENT, OPERATIONS, QUESTAR GAS 
COMPANY, ON BEHALF OF AMERICAN GAS ASSOCIATION; JERYL MOHN, SENIOR VICE 
PRESIDENT; OPERATIONS AND ENGINEERING, PANHANDLE ENERGY, ON BEHALF OF 
INTERSTATE NATURAL GAS ASSOCIATION OF AMERICA; TIMOTHY C. FELT, PRESIDENT & 
CEO, EXPLORER PIPELINE COMPANY, ON BEHALF OF ASSOCIATION OF OIL PIPE LINES; 
AND LOIS N. EPSTEIN, P.E., SENIOR ENGINEER, OIL AND GAS INDUSTRY SPECIALIST, 
COOK INLETKEEPER, ON BEHALF OF PIPELINE SAFETY TRUST

	MR. JIBSON.  Thank you, Mr. Chairman, and good morning.
	I would like to thank the committee for convening this hearing on 
this important topic of pipeline safety.  My name is Ron Jibson.  I am 
Vice President of Operations at Questar Gas Company.  Questar Gas 
provides natural gas service to approximately 850,000 customers in 
Utah, southwestern Wyoming, and a small portion of southeastern Idaho.
	I am testifying today on behalf of the American Gas Association, or 
AGA, and also the American Public Gas Association, or APGA.
	Together, AGA and APGA represent more than 850 local natural gas 
utilities serving almost 56 million customers nationwide.
	I would like to begin my testimony by first commending the 
committee, in particular Chairman Hall and Ranking Member Boucher 
and their staffs, as well as Congressmen Barton and Ranking Member 
Dingell, for putting together what we believe is overall a good legislative 
proposal.  We believe the draft bill represents a positive first step and 
provides good foundation for moving the ball forward on pipeline safety.
	In our opinion, the 2002 Act has been working well, and only minor 
adjustments should be considered at this point, with one possible 
exception.  Our companies have identified one major area that we believe 
requires considerable improvement, that area being excavation damage 
prevention.
	Congressional attention to more effective State excavation damage 
programs can and will result in real measurable decreases in the number 
of instances occurring on natural gas distribution pipelines each year.  
Excavation damage is the single cause of a majority of natural gas 
distribution pipeline incidents, and we are very pleased that the 
committee's draft addresses this very important issue.
	What are some of the facts about most gas distribution safety 
incidents?
	During last week's Transportation and Infrastructure Committee's 
markup of H.R. 5782, two members of the committee stated that between 
2002 and 2005, the greatest number of pipeline incidents occurred in the 
Nation's gas distribution systems and that such incidents were on the 
increase.  Any conclusions on relative safety between gas distribution, 
gas distribution on hazardous liquid pipelines must be tempered by the 
fact that distribution has almost four times the miles of pipe as both gas 
transmission and liquids combined.
	Where do these distribution incidents come from?
	Really, there are two types of incidents that involve natural gas 
distribution systems, and we have got charts depicting this.  I think also 
in your packet, but first of all, there are those incidents that are caused by 
factors the pipeline operator, to some extent, have control, such as 
improper welds, material defects, incorrect operation, corrosion, or 
excavation damage by a utility contractor; and secondly, those caused by 
external forces, which are due to factors the pipeline has little or limited 
ability to control.  Those would be cases such as excavation damage by a 
third party, earth movement, floods, vandalism, structure fires, and 
lightening.
	The term excavation, as I have used it here today, is intended to 
include demolition, excavation, tunneling, or construction activities as 
presented in the bill being considered today by this committee.
	[Chart.]
	As you can see by the blue area in the chart, utilities do a very good 
job at minimizing instances that they have control over.  The record 
shows that between 2002 and 2005, 82 percent of all reported instances 
were the result of excavation damage by a third party or other factors the 
utility company has little control over.  In many cases, the typical little- 
or no-control area involves a party outside the jurisdiction of authorities 
overseeing pipeline safety.
	[Chart.]
	Furthermore, as shown in the second chart, you can see that during 
the same 4-year period, instances due to third-party excavation more than 
doubled.  Excavation damage thus represents the single greatest threat to 
distribution system safety, reliability, and integrity.
	Efforts by the Common Ground Alliance damage prevention 
organization and the nationwide education program on the three-digit, 
one-call, 8-1-1 dialing system to prevent excavation damage are great 
steps in the right direction, but more is needed.
	AGA and APGA support the proposal before the committee to 
outline the required nine elements of an effective State damage 
prevention program in the legislation and to provide for additional 
funding for State implementation of the program.
	Just a couple of other quick issues I would like to highlight for the 
committee.
	First of all, funding for one-call grants and the Common Ground 
Alliance.  AGA and APGA urge Congress to provide continued funding 
authority over the upcoming reauthorization period for grants to States to 
support one-call programs and the Common Ground Alliance.
	In regards to instant response protocols, AGA and APGA also 
commend this committee for including language within the draft bill to 
establish protocols for post-incident activity.  The language requiring a 
call to the operator any time a pipeline is damaged, regardless of 
severity, is a critically-important addition to the bill.  Likewise, the 
requirement to call 9-1-1 and the utility operator whenever the substance 
being carried by the pipeline is escaping from the pipeline is a positive 
addition and consistent with current best practices established by 
consensus of all stakeholders in the Common Ground Alliance.
	It is important that calls to 9-1-1 and the resulting mobilization of 
extremely busy emergency response personnel occur only when a 
substance is escaping from the pipeline.  In those situations, as well as 
when a pipeline is damaged without leakage, a call to the owner-operator 
of the pipeline will also help more quickly and effectively mitigate 
potential hazard.
	Regarding the issue of safety orders, we are pleased to see that the 
committee recognizes the importance of being accorded due process with 
regards to safety orders.  However, it is important that there is some 
definitive guidance on when such a safety order is warranted.
	Regarding enforcement transparency, we support the idea of 
transparency so long as the normal due process is preserved and 
confidentiality during negotiation and settlement of individual cases is 
protected.
	Regarding transmission integrity assessment reassessment time 
interval, we are pleased that the committee recognizes the importance of 
letting the U.S. Government Accountability Office complete its report.  It 
is our hope that in evaluating the appropriateness of the 7-year 
inspection, the GAO will cover all of the pertinent facts and then, based 
on the facts, Congress will consider allowing the Secretary of 
Transportation to change the interval or pursue another remedy.  This 
will allow operators to continue to deliver natural gas safely and 
affordably.
	In summary, AGA and APGA believe that congressional passage of 
pipeline safety reauthorization this year will result in timely and 
significant distribution system safety improvements.  We commend the 
committee for putting together a solid discussion draft to address this 
important issue and commit to working with you to secure passage of 
this final bill this year.
	The members of AGA and APGA emphatically support the 
recommendation that Congress enact legislation that gives States an 
incentive to adopt stronger damage prevention programs.
	Thank you for the opportunity to appear today.
	[The prepared statement of Ronald W. Jibson follows:]

PREPARED STATEMENT OF RONALD W. JIBSON, VICE PRESIDENT, OPERATIONS, QUESTAR 
GAS COMPANY, ON BEHALF OF AMERICAN GAS ASSOCIATION

        I would like to thank the Committee for convening this hearing on the important 
topic of pipeline safety.  My name is Ron Jibson.  I am Vice President of Operations at 
Questar Gas Company. Questar Gas provides retail natural gas-distribution service to 
more than 800,000 customers in Utah, southwestern Wyoming and a small portion of 
southeastern Idaho. 
        I am testifying on behalf of the American Gas Association (AGA) and the American 
Public Gas Association (APGA).  AGA represents 197 local energy utility companies 
that deliver natural gas to more than 56 million homes, businesses and industries 
throughout the United States.  AGA member companies account for roughly 83 percent 
of all natural gas delivered by the nation's local natural gas distribution companies.  AGA 
is an advocate for local natural gas utility companies and provides a broad range of 
programs and services for member natural gas pipelines, marketers, gatherers, 
international gas companies and industry associates. 
 	APGA is the national, non-profit association of publicly owned natural gas 
distribution systems.  APGA was formed in 1961, as a non-profit and non-partisan 
organization, and currently has 655 members in 36 states.  Overall, there are 
approximately 950 municipally owned systems in the U.S. serving nearly five million 
customers. Publicly owned gas systems are not-for-profit retail distribution entities that 
are owned by, and accountable to, the citizens they serve. They include municipal gas 
distribution systems, public utility districts, county districts, and other public agencies 
that have natural gas distribution facilities.   
        The Pipeline and Hazardous Materials Safety Administration (PHMSA) and the 
industry have made significant progress on the initiatives mandated by the 2002 pipeline 
safety act.  
        In our opinion only minor adjustments should be considered at this point, with one 
exception:  Our companies have identified one major area we believe requires 
considerable improvement:  excavation damage prevention.  Congressional attention to 
more effective state excavation damage programs can, and will, result in real, measurable 
decreases in the number of incidents occurring on natural gas distribution pipelines each 
year.  Excavation damage is the single cause of a majority of natural gas distribution 
pipeline incidents. 
        Distribution pipelines are operated by natural gas utilities, sometimes called "local 
distribution companies" or LDCs.  The gas utility's distribution pipes are the last, critical 
link in the natural gas delivery chain. Gas distribution utilities bring natural gas service to 
customers' front doors.  To most customers, their local utilities are the "face of the 
industry".  Our customers see our name on their bills, our trucks in the streets and our 
company sponsorship of many civic initiatives.   We live in the communities we serve 
and interact daily with our customers and with the state regulators who oversee pipeline 
safety.  Consequently, we take very seriously the responsibility of continuing to deliver 
natural gas to our communities safely, reliably and affordably.  
        Our industry's commitment to safety is borne out each year through the federal 
Bureau of Transportation Statistics' annual figures comparing modes of transportation.  
Indeed, delivery of energy by pipeline is consistently the safest mode of energy 
transportation. 

The Difference in "Pipelines"
 	Understandably, most customers link all "pipelines" together, however there are 
indeed significant differences between the liquid transmission systems, natural gas 
transmission systems and the natural gas distribution systems operated by local gas 
utilities. Each type of pipeline system faces different challenges, operating conditions and 
consequences of incidents. 
 	Interstate transmission systems are generally made up of long, straight runs of large 
diameter steel pipelines, operated at high volumes and high pressures.  These larger 
transmission lines feed natural gas to the gas distribution utility systems.
Gas distribution utility systems, in contrast, are configured like spider webs, operate 
at much lower volumes and pressures and always carry gas that has been odorized for 
easy leak detection.  Distribution pipeline systems exist in populated areas, which are 
predominantly urban or suburban.  
        Distribution pipelines are generally smaller in diameter (as small as 1/2 inch), 
operate at pressures ranging upward from under one pound per square inch, and are 
constructed of several kinds of materials including a large amount (over 40 percent) of 
non-corroding plastic pipe.  Distribution pipelines also have frequent branch connections, 
since most customers require individual service lines. Most distribution systems are 
located under streets, roads, and sidewalks and when working on them, care must be 
taken not to unnecessarily disrupt the flow of traffic and of commerce. Because 
distribution pipelines provide a direct feed to customers, the use of in-pipe inspection 
tools usually requires natural gas service to customers to be interrupted for a period of 
time. 
        Federal regulations recognize the differences between these types of pipelines, and 
different sets of rules have been created for each.  49 CFR Part 192 sets out the 
regulations for natural gas transmission and distribution pipelines and the rules 
discriminate between the two, while 49 CFR Part 195 sets out the regulations for liquid 
transmission lines. 

Regulatory Authority
        As part of an agreement with the federal government, in most states, state pipeline 
safety authorities have primary responsibility to regulate natural gas utilities as well as 
intrastate pipeline companies. However, state governments are encouraged to adopt as 
minimum standards the federal safety standards promulgated by the U.S. Department of 
Transportation (DOT.)  In exchange, presently DOT reimburses the state for up to 50% of 
its pipeline safety enforcement costs.  Therefore, the actions of Congress affect state 
regulations and our companies.  The states may also choose to adopt standards that are 
more stringent than the federal ones, and many have done so.  Questar and many other 
distribution system operators report being in close contact with state pipeline safety 
inspectors.  As a result of these interactions, distribution operator facilities are subject to 
more frequent and closer inspections than required by the pipeline safety regulations.

Natural Gas Utilities Are Committed to Safety
 	Our commitment to safety extends beyond government oversight.  Indeed, safety is 
our top priority -- a source of pride and a matter of corporate policy for every company. 
These policies are carried out in specific and unique ways.  Each company employs 
safety professionals, provides on-going employee evaluation and safety training, 
conducts rigorous system inspections, testing, and maintenance, repair and replacement 
programs, distributes public safety information, and complies with a wide range of 
federal and state safety regulations and requirements.  Individual company efforts are 
supplemented by collaborative activities in the safety committees of regional and national 
trade organizations.  Examples of these groups include the American Gas Association, 
the American Public Gas Association and the Interstate Natural Gas Association of 
America.
 	We continually refine our safety practices.  Natural gas utilities spend an estimated 
$6.4 billion each year in safety-related activities.  Approximately half of this money is 
spent in compliance with federal and state regulations.  The other half is spent, as part of 
our companies' voluntary commitment to ensure that our systems are safe and that the 
communities we serve are protected. 

What Are The Facts About Most Gas Distribution Safety Incidents? 
        During last week's Transportation and infrastructure Committee's mark-up of H.R. 
5782, two members of the committee stated that between 2002 and 2005 the greatest 
number of pipeline incidents occurred in the nation's gas distribution systems, and that 
such incidents were on the increase.  For clarification sake, I would like to qualify this 
statement.  Any conclusions on relative safety between gas distribution, gas transmission 
and hazardous liquids must be tempered by the fact that distribution has almost 4 times 
the miles of pipe than gas transmission and liquids combined

So, where do these distribution incidents come from? 
        There are two kinds of incidents involving natural gas distribution systems, depicted 
in the attached chart titled: "Most Distribution Incidents Caused by External Forces": (1) 
Those caused by factors the pipeline operator can to some extent control, such as 
improper welds, material defects, incorrect operation, corrosion or excavation damage by 
a utility contractor; and (2) those caused by External Forces, which are due to factors the 
pipeline has little or limited ability to control, such as excavation damage by a third party, 
earth movement, structure fires, floods, vandalism and lightning.  
        The term "excavation" is intended to include demolition, excavation, tunneling or 
construction activities as presented in the bill being considered today by this committee.
        As you can see by the blue area in the chart, utilities do a good job in minimizing 
incidents that they can control.
        The record shows that between 2002 and 2005, 82 percent of all reported incidents 
were the result of excavation damage by a third party or other factors the utility company 
had little or no control over. In many cases, the typical "little or no control" incident 
involves a party outside the jurisdiction of authorities overseeing pipeline safety.  
        Furthermore, as shown by the second attached chart titled: "Incidents Caused by 
Excavators Have More than Doubled Since 2002", during the same four-year period, 
incidents due to 3rd party excavation more than doubled.  Excavation damage thus 
represents the single greatest threat to distribution system safety, reliability and integrity.
        Efforts by the Common Ground Alliance (CGA) damage prevention organization 
and the nationwide education program on the three-digit One Call 811 dialing to prevent 
excavation damage are steps in the right direction.  But more is needed.
        AGA and APGA support the proposal before this committee to outline the required 
nine elements of an effective state damage prevention program in the legislation and to 
provide for additional funding for state implementation of the program.  Data from the 
last five years demonstrates that states that have stringent enforcement programs 
experienced a much lower rate of excavation damage to pipeline facilities than states that 
do not have stringent enforcement powers. 
AGA and APGA urge Congress to provide continued funding authority over the 
upcoming reauthorization period for grants to the CGA and to the states to support One 
Call programs.
        The statistics are clear.  Excavation damage prevention presents the single greatest 
opportunity for distribution safety enhancements, and we urge Congress to take decisive 
action on this front.
        AGA and APGA also commend this committee for including language within its 
draft bill to address the issue raised by Congressman Murphy during an earlier pipeline 
safety oversight hearing, regarding establishing protocols for post-incident activity.  The 
language requiring a call to the operator anytime a pipeline is damaged, regardless of 
severity is a critically important addition to the bill.  Likewise, the requirement to call 
911 and the facility operator whenever the substance being carried by the pipeline is 
escaping from the pipeline is a positive addition, and consistent with a current best 
practice established by consensus of all stakeholders in the CGA.  It is important that 
calls to 911 and the resulting mobilization of extremely busy emergency response 
personnel, occur only when the substance is escaping from the pipeline.  In those 
situations, as well as when a pipeline is damaged without leakage, a call to the owner or 
operator of the pipeline will also help more quickly and effectively mitigate the potential 
hazard.  

Gas Transmission Integrity Reassessment Time Interval
        It is our hope that in evaluating the appropriateness of the 7-year re-inspection 
requirement, the U.S. Government Accountability Office (GAO) will uncover all of the 
pertinent facts and, that based on the GAO findings, Congress will consider options for 
allowing the Secretary of Transportation to change the interval, consistent with the GAO 
findings. This will allow operators to continue to deliver natural gas safely and 
affordably.  Consequently, AGA and APGA support the provision for the seven-year re-
inspection proposed in the committee's draft bill.



Summary
        AGA and APGA believe that Congressional passage of pipeline safety 
reauthorization this year will result in timely and significant distribution system safety 
improvements. 
        The members of AGA and APGA emphatically support the recommendation that 
Congress enact legislation that gives states an incentive to adopt stronger damage 
prevention programs.  We look forward to working with you to secure passage of 
legislation this year.

	MR. HALL.  Thank you, Mr. Jibson.
	Mr. Mohn, we recognize you for 5 minutes.  Stay as close as you 
can.  Thank you.
        MR. MOHN.  I will do so.
	Thank you, Mr. Chairman.
	Good afternoon.  I am Jeryl Mohn from Panhandle Energy.
	Today, I am speaking on behalf of the Interstate Natural Gas 
Association of America, or INGAA.  INGAA is the trade association that 
represents virtually all of the interstate and interprovincial natural gas 
pipelines in North America.
	In April, I testified before the subcommittee on progress being made 
in gas transmission integrity management programs, and I suggested 
some relatively modest improvements in the current Federal Pipeline 
Safety Program.  Today, I will focus my comments on a few of the 
specific legislative proposals that you are considering.
	The first item is the 7-year reassessment interval for gas transmission 
pipelines.  I testified in April that the 7-year interval was not based upon 
any engineering or risk analysis, but rather a compromise between House 
and Senate negotiators.  In reaching this agreement in 2002, however, 
Congress recognized and required that GAO prepare an analysis on the 
reassessment interval in time for you to consider options for this year's 
reauthorization.
	INGAA has been one of the stakeholders working with GAO over 
the last year to develop this report.  However, we understand that it will 
be released after the August congressional recess.  We don't know 
precisely what GAO will say, but our impression in talking to them is 
that they will indeed recommend to Congress that DOT be directed to 
develop an alternative to the 7-year mandate that instead employs best 
engineering practices.  The committee discussion draft includes a 
placeholder provision on this issue requiring the DOT send Congress any 
legislative recommendation once the GAO report is complete.  This 
provision does not otherwise change the reassessment interval, however.
	Mr. Chairman, we appreciate that the discussion draft references this 
issue; however, the provision does not direct DOT to make any further 
change without further congressional action.  Absent the reauthorization 
bill before us today, such additional action would be unlikely for another 
4 years.
	Therefore, we ask that the subcommittee do as I believe you intend 
to do and collect the views of GAO prior to marking up a bill.  If GAO 
views support of such an action, we urge you to adopt the provision that 
has already been recommended by DOT as recognized in H.R. 5678.  
This would keep the 7-year reassessment interval in place unless or until 
DOT completes the rulemaking on an alternative based on technical data, 
risk factors, and engineering analysis.
	Another issue I would like to address is the regulation of pipelines 
we call direct sales laterals.  A direct sales lateral is typically short in 
length, connecting one of our interstate pipelines to a large single 
customer, such as a power plant or industrial facility.  Under current law, 
these lines are regulated for safety purposes at the State level even 
though they are owned by interstate pipeline to which they are 
connected.  A Federal agency, namely FERC, already has Federal 
authority to regulate these direct sales laterals for economic purposes.  
We believe Congress should also clarify that these laterals be regulated 
by DOT in the same way other interstate pipeline facilities are 
conducted.  This would provide consistent regulation for all of the 
pipeline facilities owned by our interstate systems.  The discussion draft 
does make this change, which has also been recommended by DOT, and 
we certainly appreciate that and endorse that provision.
	And last, Mr. Chairman, but not least, I want to focus on damage 
prevention.  Mr. Jibson did a good job in explaining to you the exposure 
faced by distribution companies.  For gas transmission companies, it is 
not much different.
	In 1998, this committee approved legislation that was part of the T-
21 highway bill to encourage improvement in State damage prevention 
programs.  The programs are often referred to as one-call or call-before-
you-dig programs.  The 1998 legislation accomplished a great deal to 
enable improvement in these programs, but we believe now is the time 
for another substantial improvement.  INGAA strongly supports the 
damage prevention provisions proposed by DOT that are incorporated in 
the discussion draft.  The development of national standards, along with 
modest grant funds for States that meet those standards, is an excellent 
proposal.  You heard testimony in April to support our belief that these 
efforts will result in reducing a significant number of accidents.
	My written testimony includes some additional comments on several 
other issues, and, Mr. Chairman, I would be happy to answer further 
questions for you at the appropriate time.
	[The prepared statement of Jeryl L. Mohn follows:]



PREPARED STATEMENT OF JERYL L. MOHN, SENIOR VICE PRESIDENT, OPERATIONS AND 
ENGINEERING, PANHANDLE ENERGY, ON BEHALF OF INTERSTATE NATURAL GAS 
ASSOCIATION OF AMERICA

        Mr. Chairman and Members of the Subcommittee:
        Good morning.  My name is Jeryl Mohn, and I am Senior Vice President of 
Operations and Engineering for Panhandle Energy.  I am testifying today on behalf of the 
Interstate Natural Gas Association of America (INGAA).  INGAA represents the 
interstate and interprovencial natural gas pipeline industry in North America.  INGAA's 
members transport over 90 percent of the natural gas consumed in the United States 
through a network of approximately 200,000 miles of transmission pipeline.  These 
transmission pipelines are analogous to the interstate highway system - in other words, 
large capacity systems spanning multiple states or regions.
        Panhandle Energy, headquartered in Houston, Texas, is a subsidiary of the Southern 
Union Company and owns or holds a major ownership interest in five interstate pipelines 
and a liquefied natural gas import terminal.  Our pipelines serve a significant share of 
markets in the Midwest, the Southwest including California, and Florida.  In addition, our 
Trunkline LNG terminal in Lake Charles, Louisiana is one of the nation's largest LNG 
import facilities.
        Mr. Chairman, I submitted extensive testimony in April on the reauthorization of the 
Pipeline Safety Act, including information on the natural gas transmission Integrity 
Management Program (IMP) and the safety of gas pipelines.  My comments today will 
focus on several specific legislative proposals, but I would refer the Committee back to 
my earlier testimony for more general background on this topic.

REASSESSMENT INTERVALS
        As you know, the Pipeline Safety Improvements Act of 2002 mandated a natural gas 
transmission integrity management program pursuant to which the industry would 
undertake a 10-year baseline inspection program to ensure the safety of all gas 
transmission pipeline segments located in populated areas.  Three years into this program, 
the inspections are progressing well, and the industry is generally on track for meeting 
the 10-year baseline requirement.
        The 2002 Act also included the requirement that these pipeline segments be 
reassessed every seven years thereafter.  It is fair to say that the seven-year number was 
not based on any engineering analysis; instead, it represented a political compromise 
between the Senate position favoring five-year re-assessment interval and the House 
position favoring a 10 -year interval.  Sixty years of operational experience in pipeline 
industry strongly suggested that, for most pipelines, anything shorter than ten years was 
both unnecessary and a waste of resources.  Nonetheless, Congress settled on the seven-
year interval as a compromise between the two positions.  In recognition of this, 
however, the 2002 Act also required the Government Accountability Office to analyze 
the re-assessment question and to report to the Congress in time for the next 
reauthorization debate.
        Mr. Chairman, that debate is today.  The GAO has been working on a report for 
almost a year now, and we understand that it will be completed soon - probably by the 
middle of September.   The Administration's bill (HR 5678) already includes a provision 
addressing the issue by retaining the seven-year requirement unless and until the 
Department of Transportation promulgates an alternative requirement based on 
engineering and risk analysis.  INGAA strongly supports this provision.
        Why not just stick with the current requirement for another reauthorization period?  
There are several reasons for a change now.  First, the DOT has interpreted the seven-
year reassessment requirement to begin after each individual segment is first inspected, 
rather than once the 10 -year baseline period is complete.  This means that segments first 
inspected in years 2003, 2004 and 2005 must be reassessed in years 2010 through 2012, 
while the first battery of baseline inspections is still ongoing.  This overlap of baseline 
inspections and re-inspections could create pipeline capacity constraints that would have 
the potential to result in higher natural gas prices for American consumers than would 
otherwise be the case.  Inspection and maintenance work reduces pipeline operational 
capacity, and some inspections even require complete system shutdowns for weeks at a 
time.  Getting these requirements right, so that inspection work is rational and justified, is 
critical to minimizing the likelihood of gas supply problems attributable to integrity 
management work.
        Next, the internal pipeline inspections covered in the IMP program primarily 
addresses one type of pipeline integrity threat - corrosion.  Corrosion causes about 25 
percent of all gas transmission lines accidents.  While this is the largest single cause of 
accidents on gas transmission pipelines, it is not the only cause.  For example, excavation 
damage is the leading cause of accidents associated with fatalities and injuries.  Focusing 
scarce resources on a single cause of accidents, without looking at other areas where 
other safety improvements can be made, will not provide the best level of overall safety.
        Finally, there is the one-size-fits-all nature of the current seven-year requirement.  
The best method for improving safety, however, is to weigh risks and prioritize work 
based on those potential risks.  Some pipeline segments may, in fact, need to be inspected 
more often than every seven years due to their inherent risk, while others do not need to 
be re-inspected for 10 to 15 years (once the baseline is complete) due to their low risk.  
We will end up with an even safer pipeline system if the focus is on reducing risks to the 
public, rather than just compliance with a mandated set of requirements that may bear 
little relation to actual risk.
        The Committee's Discussion Draft includes a "placeholder" provision on this issue, 
wherein the Secretary of Transportation would be required to report back to Congress 
with any legislative recommendations once the GAO report is complete.  We would 
simply note that the Secretary has already provided a legislative recommendation on this 
matter, which is included in HR 5678.  The placeholder provision in the discussion draft 
would not allow the Secretary to initiate any change in the seven-year requirement 
without further action by Congress - action that would be unlikely to occur again for the 
next four years.  INGAA therefore urges the Committee to adopt the provision from HR 
5678, which allows the Secretary to initiate a rulemaking on this matter and make a 
change based upon "technical data, risk factors, and engineering analyses."  

DIRECT SALES LATERALS
        As part of its earlier testimony, INGAA provided the Committee with a history on 
the safety regulation of direct sales laterals.  Suffice it to say here that continued state 
regulation of sales laterals owned by interstate pipelines is anachronistic and unnecessary.  
It also diverts resources away from what should be the states' primary focus on intrastate 
pipeline facilities, including distribution lines.
        The Discussion Draft includes a provision to move the safety regulation of direct 
sales lateral pipelines owned by interstate pipelines from states to the Pipeline and 
Hazardous Materials Safety Administration within DOT.  This would be consistent with 
the existing economic regulation of these pipelines at the federal level.  The Federal 
Energy Regulatory Commission regulates a direct sales lateral owned by an interstate 
pipeline as a part of the interstate pipeline, a result that is backed by judicial precedent. 
There is no legitimate reason why safety regulation should be treated any differently.  
States that are "interstate agents" on behalf of DOT would be able to oversee and audit 
the regulation of direct sales laterals owned by an interstate pipeline as part of the 
interstate agent function.
        The language in the Discussion Draft does not affect direct sales laterals owned 
either by a customer (such as a power plant or factory) or by an intrastate pipeline.  These 
direct sales laterals still would be regulated by the states.  
INGAA strongly supports the provisions in the discussion draft and in the 
Administration bill on this matter.

OTHER ISSUES IN HR 5782 AND THE DISCUSSION DRAFT
One-Call Civil Enforcement
        One-call damage prevention systems are created, and managed, at the state level.  
INGAA believes that enforcement of these state programs, including civil penalty 
enforcement, should also be at the state level.  Consequently, INGAA has some concern 
about the federal Department of Transportation enforcing state one-call laws.  Damage 
prevention requires cooperation between both underground utility owners and excavators.  
Enforcement is best handled by the regulator that has responsibility for administering the 
one-call programs, i.e., the state regulators, so that enforcement strategy can be 
coordinated achieving the private sector participation and cooperation that is essential for 
success.
        If Congress feels strongly about civil penalties for one-call enforcement, then we 
urge you to review the approach taken by the Transportation and Infrastructure 
Committee, whereby federal enforcement would only be permitted in those states that 
have not adopted civil penalty authority on their own.  We believe the end-goal should be 
effective state enforcement of one-call laws, not the preemption of state one-call law 
enforcement by the federal government.

State Damage Prevention Programs
        The goals behind this program - the further improvement in state damage prevention 
laws - have been an INGAA priority for many years.  From the standpoint of reducing 
pipeline accidents, this is the single most important issue in the 2006 reauthorization bill.  
INGAA strongly supports this provision.  

Grants to States and State Pipeline Safety Grants
        These two provisions provide additional federal grant funds to the states, for both 
improving state one-call programs and assisting in the regulation and enforcement of 
safety standards for intrastate pipelines and natural gas distribution lines.
        Natural gas and hazardous liquid transmission lines are under federal safety 
jurisdiction while natural gas distribution lines (LDCs) and intrastate pipelines are under 
state jurisdiction.  Transmission line operators - and only transmission line operators - 
pay the annual user fees to PHMSA that fund the federal pipeline safety program and all 
of the associated grants to the states.
        HR 5782 and the Discussion Draft both anticipate significant increases in grants to 
the states.  Still, based on the current regime for collecting user fees, federally-regulated 
pipelines would fund an increasing share of the cost of regulating of intrastate pipelines at 
the state level.   This would include the costs of developing and implementing the 
Distribution Integrity Management Program, which is focused on reducing accidents 
involving state-regulated gas distribution lines. 
        INGAA accepts the premise that transmission line operators should contribute to the 
cost of programs the directly benefit transmission lines, such as the damage prevention 
program.  INGAA also believes that distribution line operators should contribute a fair 
share of the cost of this program as well, because a national damage prevention initiative 
would be a central part of the distribution integrity management program.  If Congress 
increases the matching funds for state pipeline safety grants as well, from "up to 50 
percent" to "up to 80 percent," distribution operators regulated by the states should also 
help to offset the additional cost of these grants.  There is no justifiable reason why 
interstate transmission pipeline operators - regulated at the federal level - should 
continue to subsidize state-regulated entities.  DOT should consider a new user fee 
formula that includes gas distribution lines in federal user fee collections, and if 
necessary, Congress should authorize user fees to be collected from distribution 
operators.

Safety Orders
        Both the Discussion Draft and the Administration Bill propose modifying the 
existing statute with respect to the issuance of safety orders.  The first change to existing 
law would be a requirement that any safety orders be issued only after notice and 
opportunity for a hearing.  This is an excellent change that INGAA supports.  The 
provision, however, also would expand the conditions for which a safety order could be 
issued from the current "potential safety-related condition" to "any condition that could 
affect public safety, property, or the environment."  This would be an overly-broad 
expansion of authority.  The considerations in (2) are also vague and overly-broad, except 
for (2)(A), which is specific and understandable.  A standard that could lead to shutting 
down a pipeline delivering energy on a real-time basis to millions of consumers must be 
specific in order to avoid unnecessary (and to consumers, costly) disruptions.

Technical Assistance Grants
        This provision in the Discussion Draft extends the authorization of the "technical 
assistance grant to communities" that was part of the 2002 Act.  INGAA supports this 
provision, with a request that pipeline operators also be eligible for grants to fund 
activities that an operator might undertake to educate local communities about pipelines 
or improve safety communications targeted at communities located near pipelines.  Such 
education and/or communication efforts would be consistent with the spirit of what was 
authorized in 2002.

Enforcement Transparency
        INGAA generally supports increased enforcement transparency, and therefore 
supports this provision, with the following suggestions.  First, we believe that companies 
involved in enforcement proceedings should be allowed to provide information "telling 
their side of the story" to DOT for inclusion in any electronic posting.  This would be 
optional, but it would possibly provide a more balanced view of a pending action.  In 
addition, we urge the Committee to include language protecting due process and the 
confidentiality of parties engaged in settlement proceedings.

INCIDENT REPORTING
        INGAA would like to highlight one final issue that is not part of either bill, but that 
was raised in its earlier testimony. This is the manner in which accident data is collected 
for natural gas transmission lines.  The current criteria result in an inaccurate measure of 
accidents on natural gas transmission pipelines and thereby provide the Congress and the 
public with a misleading impression about accident trends.
        The tally of natural gas transmission accidents reported by DOT annually is based 
on the number of "reportable incidents."  "Reportable incidents" are defined as those 
which: 1) cause a fatality, 2) cause an injury, or 3) result in property damage of $50,000 
or more.  These criteria create a misleading impression, because the value of property 
damage includes the dollar value of the natural gas lost as a result of the accident.
        During the last six years, natural gas commodity prices have increased more than 
300 percent.  Prices that were approximately $2 per mcf in 2000 now fluctuate between 
$5.50 and $10 per mcf.  These higher natural gas commodity prices, which are a function 
of market forces, have greatly increased the number of "reportable incidents" for gas 
transmission lines, since the $50,000 threshold has remained constant.  This is skewing 
accident data and giving the impression that accidents are increasing, when in fact they 
are not.  Accident criteria and subsequent data analyses and conclusions should not be 
based on the market price of natural gas, which in recent years has been extremely 
volatile.  Instead, such data should be based on a constant measurement, such as the 
volume of gas lost, etc.  We ask that the Committee consider a requirement that DOT 
initiate a rulemaking to change the criteria for property damage.

CONCLUSION
        Mr. Chairman, I again want to thank you for the opportunity to testify today.  
INGAA hopes the Committee marks up this legislation soon, so that a final bill can be 
enacted before the adjournment of the 109th Congress. We stand ready to work with you 
on completion of a bill in 2006.  

Witness Contact Information:
Jeryl L. Mohn
Senior Vice President, Operations and Engineering
Panhandle Energy
5444 Westheimer Road
Houston, Texas  77056
713-989-7410

INGAA Contact Information
Martin E. Edwards III
Vice President, Legislative Affairs
Interstate Natural Gas Association of America
10 G Street, NE, Suite 700
Washington, DC  20002
202-216-5910

Summary of Testimony

INGAA appreciates the opportunity to testify on reauthorization of the Pipeline Safety 
Act.  We support the timely reauthorization of the Act, and want to provide some specific 
comments on the key bills that have been introduced.  Our recommendations for 
legislation to reauthorize the Act in 2006 include:
 Re-examination of the seven-year reassessment interval that was part of the gas 
integrity management requirement in the 2002 legislation.  We recommend a 
reassessment interval based on scientific and/or engineering criteria.  The 
provision contained in the Administration bill (HR 5678) accomplishes this 
objective and has INGAA's support.
 Incentives to further improve state damage prevention programs nationwide.
 Amend the definition of "direct sales lateral" pipelines in the Pipeline Safety 
Act to make those owned by interstate pipelines jurisdictional to federal, rather 
than state, oversight.
 Amend natural gas transmission accident reporting criteria to remove the 
linkage to the cost of natural gas lost, since this value fluctuates significantly 
over time and therefore provides misleading data.

	MR. HALL.  Well, thank you, sir.
	Mr. Felt.
        MR. FELT.  Mr. Chairman, members of the subcommittee, my name 
is Tim Felt.  I am President and CEO of Explorer Pipeline Company 
headquartered in Tulsa, Oklahoma.
	As Mr. Sullivan graciously acknowledged earlier, Explorer operates 
1,400 miles of petroleum products pipeline, serving 16 States extending 
from the Gulf Coast throughout the Midwestern United States.
	I appreciate the opportunity to appear today on behalf of API and 
AOPL.  Together, API and AOPL represent the companies responsible 
for the vast majority of U.S. oil pipeline transportation.
	I will summarize my written testimony and ask that the full text and 
attachments be included in the record of this hearing for the 
subcommittee's consideration.
	Mr. Chairman, the Pipeline Safety Improvement Act of 2002 is a 
success.  Industry and DOT have cooperated to achieve significant 
improvement in pipeline safety, and this improvement is demonstrated 
by our industry's record.  This record is reflected on the charts that 
accompany my testimony.
	The oil pipeline industry plans to invest over $1 billion in pipeline 
safety improvements over the next 5 years.  Because of this, it is very 
important that Congress reauthorize the DOT Pipeline Safety Program in 
2006 to send a clear signal that these investments are appropriate and 
DOT is on the right track in implementing the Pipeline Safety 
Improvement Act of 2002.
	We suggest extending the Act at least 5 years to guarantee as much 
certainty as possible to DOT, the affected industry, and the public 
regarding the rules governing the safety oversight of our national 
pipeline infrastructure.  
	The prospects for a single, widely-supported pipeline safety 
reauthorization bill are excellent.  The three proposals before us have a 
number of elements in common and address, for the most part, the same 
issues.  The parties with an interest in pipeline safety ought to be able to 
work together to achieve a compromise that has very broad support.  Our 
goal of passage of legislation this year is within reach.
	In these short remarks, I will only address the key provisions of these 
various proposals.  We urge the Energy and Commerce Committee to act 
promptly on these issues, reconcile any differences of the Transportation 
and Infrastructure Committee's version, and move to passage by the full 
House.
	At the center of both bills are similar provisions that will strengthen 
enforcement of State laws designed to prevent underground damage.  All 
include a comprehensive list of the elements, including effective 
enforcement, that characterize successful State underground damage 
prevention programs.  We strongly support these provisions and urge the 
committees to build the final legislative product around underground 
damage prevention.
	I serve on the Common Ground Alliance as a Board Member for the 
oil pipeline industry.  The CGA is one of the best things that has 
happened to pipeline safety in many years.  CGA provides a forum to 
work underground damage prevention issues that simply don't exist 
anywhere else.  One of CGA's current roles is to lead the public 
awareness campaign to promote use of the nationwide, toll-free, 8-1-1 
telephone number for one-call notification.  It actually originated in this 
committee and then became required by the 2002 Act.  We believe the 
legislation you are considering should reauthorize Section 6105 of Title 
49, which authorizes funds that could be used to support CGA and the 8-
1-1 campaign.
	As Mr. Boucher mentioned earlier, I would like to address the 
provision that modifies DOT's current authority to issue mandatory 
orders to pipeline operators.
	Current law allows DOT to issue a safety order to an individual 
operator in situations that appear to require action, but do not rise to the 
level of danger implied in a hazardous facility designation.  As we 
understand it, the intent is to provide DOT with an enforcement tool with 
a lower threshold that would not require DOT to first declare that an 
operator's facility is or would be hazardous before actions would be 
required of the operator that could be documented in the public record.  
The discussion draft adds to current law a welcome notice requirement 
and opportunity for a hearing at DOT before any such safety order could 
be issued.  However, the draft goes on, in effect, to eliminate this due 
process benefit by practically abolishing any threshold or burden of proof 
for DOT in triggering a safety order.
	The Secretary of Transportation may order an operator to make 
possibly extensive expenditures on all or a portion of the operator's 
system to address any condition that poses a risk based on any factors the 
Secretary considers appropriate.
	We appreciate DOT's desire to develop an enforcement tool to 
document and address situations where DOT and the operator can 
identify conditions that are not yet severe, but may become so.  
However, the proposal in the discussion draft goes too far in the direction 
of preventing the possibility of arbitrary action against an individual 
operator who has violated no DOT regulation.  Under these provisions, 
an operator would be virtually powerless to contest effectively any DOT 
requirement to make what the operator believes an unnecessary 
expenditure of scarce resources to address questionable risks.
	We would like to work with this subcommittee to develop a 
provision that provides Mr. Barrett and the DOT what it needs in terms 
of documentation of its interactions with operators about needed safety 
improvements, but which contains the proper protections to ensure that 
all actions ordered, in fact, are justified, prudent, and represent real 
safety improvements.
	In summary, current pipeline safety law is working, and working 
very well.  Improvements can be made, particularly in strengthening the 
underground damage prevention, but fundamental changes are not 
needed.  The legislative proposals before the House all seek to make 
improvements in the fundamentally-sound DOT Pipeline Safety Program 
based on the Pipeline Safety Improvement Act of 2002.  We need to 
move promptly to agree on the improvements that can gain broad support 
and incorporate these improvements into a Pipeline Safety 
Reauthorization Bill that can be enacted this year.  
	The oil pipeline industry stands ready to help in any way we can to 
achieve this worthy goal.
	Thank you.
	[The prepared statement of Timothy C. Felt follows:]

PREPARED STATEMENT OF TIMOTHY C. FELT, PRESIDENT & CEO, EXPLORER PIPELINE 
COMPANY, ON BEHALF OF ASSOCIATION OF OIL PIPE LINES

        Mr. Chairman, Members of the Subcommittee, my name is Tim Felt.  I am President 
and CEO of Explorer Pipeline, headquartered in Tulsa, Oklahoma.  Explorer operates 
1,400 miles of petroleum products pipeline serving 16 states extending from the Gulf 
Coast throughout the mid-western United States.
        I am a member of the API Pipeline Committee, vice-chairman and treasurer elect of 
the Association of Oil Pipe Lines, and the board member representing the oil pipeline 
industry's interests in the Common Ground Alliance, a voluntary, private sector 
organization composed of the key stakeholders in the prevention of excavation damage to 
underground facilities.  I appreciate the opportunity to appear today on behalf of API and 
AOPL.  Together, API and AOPL represent the companies responsible for the vast 
majority of U.S. oil pipeline transportation.  
        As the Subcommittee reviews the current state of pipeline safety and the progress 
that has been made since the 2002 Act, these are the main points I would like to 
emphasize:
 The Pipeline Safety Improvement Act of 2002 is a success.  Industry and DOT 
have cooperated to achieve significant improvement in pipeline safety, and this 
improvement is demonstrated by our industry's record.  This record is reflected 
on the charts that accompany my testimony.
 The oil pipeline industry is making the investments that are required to fully 
comply with the law and in many cases to exceed the law's requirements.  The 
oil pipeline industry plans to invest over $1 billion in pipeline safety 
improvements over the next five years.  Because of this it is very important that 
Congress reauthorize the DOT pipeline safety program in 2006 to send a clear 
signal that these investments are appropriate and DOT is on the right track in 
implementing the 2002 Act.  
 There are three principal legislative proposals to discuss, and, the prospects for 
a single, widely-supported bill are excellent.  Earlier this year, the Bush 
Administration transmitted proposed reauthorization legislation, introduced as 
HR 5678.  Last week the Transportation and Infrastructure Committee 
unanimously reported HR 5782, a bill that our industry can wholeheartedly 
support.    HR 5782 has been re-referred to the Energy and Commerce 
Committee, which last week released its own discussion draft for comment.  
These proposals have a number of elements in common and address, for the 
most part, the same issues.  The parties with an interest in pipeline safety and 
pipeline infrastructure ought to be able to work together to achieve a 
compromise that has very broad support.  Our goal of passage of legislation this 
year is within reach.

        My testimony will discuss the provisions of these various proposals that we think 
need the most focus in working towards this compromise.  We urge the Energy and 
Commerce Committee to act promptly to mark up HR 5782, reconcile any differences 
with the Transportation and Infrastructure Committee's version and move to passage by 
the full House. 

The Role of Pipelines in Petroleum Supply
        As we begin discussion of pipeline safety legislation, it is useful to remind the 
Subcommittee of the role oil pipelines play in energy supply.  An understanding of this 
role leads to appreciation of the need for effective and workable policies to provide the 
certainty that this key part of the petroleum distribution system can carry out its role 
efficiently and safely. 
        About 40 percent of the total U.S. energy supply comes from petroleum, but the 
transportation sector depends on petroleum for 96 percent of its energy.  Two-thirds of 
domestic crude oil and refined products transportation is provided by pipeline.  Pipelines 
do this safely and efficiently.  The cost to transport a gallon of petroleum by pipeline is 
very low, typically 2-3 cents per gallon.  Transportation in the US would quickly come to 
a halt without pipelines to deliver crude oil to refineries and petroleum fuels to consumers 
in various parts of the country.
        Oil pipelines are common carriers whose rates are controlled by the Federal Energy 
Regulatory Commission.  Oil pipeline income is driven only by the volume transported 
and does not depend on the price of the products transported.  In fact, high oil prices have 
a negative impact on oil pipeline income by raising power costs and reducing demand for 
petroleum.

Progress in Pipeline Safety
        Oil pipeline operators have been subject to the DOT's pipeline integrity 
management regulations since March 2001, before enactment of the 2002 Act.   DOT's 
inspections of operators' plans show that integrity testing will eventually cover 
approximately 82 percent of the nation's oil pipeline infrastructure.  The oil pipeline 
industry is past the halfway point in the implementation of integrity management.  Large 
oil pipeline operators (greater than 500 miles of pipeline) completed the required 50 
percent of their baseline testing of the highest risk segments prior to the September 30, 
2004 deadline set by the regulations.  DOT has audited each of these operators under 
these regulations at least two times - an initial "quick hit" audit and one subsequent full 
audit.  Many are involved in a third audit cycle.  Although operating under a different 
deadline, similar progress towards their requirements has been achieved by the small 
operators.
        Operators are repairing conditions in need of repair and less serious conditions that 
are found in the course of investigating defects.  Operators are fixing what they find, 
often going beyond the requirements of the law.



Improved spill record
        As a result of this program, the oil pipeline spill record has improved dramatically in 
the last five years, as the exhibits show.  The data for these exhibits comes from a 
voluntary industry program that since 1999 has collected extensive data on oil pipeline 
performance.  These figures represent line pipe releases, which are those that occur 
outside the company's facilities and are the releases most likely to impact the public and 
the environment.
        The trend is down for each cause category.  The number of total releases dropped 51 
percent, releases due to corrosion dropped 67 percent, and releases due to operator error 
dropped by 63 percent.  Finally, releases from third party damage from excavation 
dropped 37 percent.  
        The safety improvement has been dramatic even though the data only covers half the 
7-year baseline assessment period for oil pipelines.  We expect this trend to continue as 
we complete the first full cycle and begin the reassessment intervals.  This provides a 
clear indication that the federal pipeline safety program is working.
        This background underscores the importance of using this reauthorization cycle to 
endorse and, where appropriate, strengthen DOT's current pipeline safety program.

Legislation
        The legislative proposals under consideration in the House - HR 5678, HR 5782 and 
the Energy and Commerce discussion draft - all assume continuation of this good 
program and seek to make it better.  I would like to highlight the provisions of these 
proposals that we believe are the most significant and deserve the most attention by the 
Subcommittee.

Underground Damage Prevention
        Pipeline releases caused by excavation damage are the most traumatic, the largest, 
and are the most likely to threaten the public and the environment.  At the center of HR 
5678, HR 5782 and the discussion draft are similar provisions that will strengthen 
enforcement of state laws designed to prevent underground damage, and all include a 
comprehensive list of the elements, including effective enforcement, that characterize 
successful state underground damage prevention programs.  These elements were 
developed with the assistance of the Common Ground Alliance.  We strongly support 
these provisions and urge the committees to build their final legislative product around 
underground damage prevention.   
        HR 5678, HR 5782 and the discussion draft all make it a federal crime to ignore 
state underground damage prevention laws.  We believe this expression of the 
seriousness the federal government attaches to damage prevention is one of the most 
important safety advances proposed in these bills.  HR 5782 structures this authority to 
encourage states to become effective in enforcing their damage prevention laws.  
Effective state enforcement of these laws is the most efficient approach to damage 
prevention and ought to be the goal of federal policy.  We urge the Subcommittee to give 
serious consideration to directing DOT to forgo federal action where DOT determines 
state laws are being adequately enforced.
        There are three distinct steps in damage prevention: notification, prompt and 
accurate marking, and careful digging with due regard for the markings.  HR 5782 and 
the discussion draft both provide for a balanced federal enforcement impact on the 
damage prevention process in the sense that both create, with slightly different drafting 
solutions, a federal cause of action against an operator who fails to respond to a location 
request or fails to accurately mark the location of a pipeline as well as against an 
excavator who fails to notify the one-call system or disregards location information or 
markings.  We support this balance.  

Common Ground Alliance
        As noted at the beginning of my testimony, I serve as the Common Ground Alliance 
Board member for the oil pipeline industry.  The CGA is one of the best things that has 
happened in pipeline safety in many years.  Industry stakeholders support the CGA 
financially and in return receive value that couldn't be purchased.  CGA provides a forum 
to work underground damage prevention issues that simply doesn't exist anywhere else.  
DOT and other federal agencies with an interest in the underground infrastructure receive 
value as well, because CGA brings solutions to the table instead of problems.  One of 
CGA's current roles is to lead the public awareness campaign to promote use of the 
nationwide, toll-free 811 telephone number for one-call notification that was required by 
the 2002 Act.  We believe the legislation you are considering should reauthorize section 
6105 of title 49, which authorizes funds that could be used to support CGA and its 811 
campaign.

Low Stress Pipelines
        Earlier this year there was a significant leak from a BP Alaska crude oil pipeline on 
the North Slope operating at or less than 20% of specified minimum yield strength -- low 
stress.  Crude oil from this release covered an approximately two-acre area.  Based on 
API's Pipeline Performance Tracking System, our industry's internal data library on oil 
pipeline spills, this leak is a statistical anomaly in its size and is not at all typical of 
releases from low stress pipelines. Nevertheless, this leak shows that anomalies do occur 
and must be considered in managing the risks pipelines present.  That pipeline was 
regulated by the Alaska Department of Environmental Conservation at the time of the 
accident but was exempt from DOT oversight because it was operating at low stress, did 
not cross a navigable waterway, was in a rural area and did not transport highly volatile 
liquids.  
        HR 5782 and the discussion draft both direct DOT to develop regulations to address 
low stress pipelines by a date certain.  We support these provisions.  Each allows DOT 
the flexibility to craft regulation that addresses risks appropriately.  Pipelines operated at 
low stress are inherently less risky relative to the high stress transmission lines that are 
the proper principal focus of DOT's pipeline safety program.  We would recommend that 
DOT's regulation of low stress pipelines 
         apply to low stress pipelines carrying high volume, as in the case of the line on 
the North Slope that leaked, 
         follow the DOT's consistent risk-based policy of focusing an appropriate level 
of protection on areas where the consequences of a spill are high, 
         choose measures of protection that address the actual risks presented and 
         take care to balance costs and benefits. 

We have provided DOT with an outline describing a structure for regulating low stress 
pipelines.  DOT can put low stress pipeline regulations in place using elements its 
successful integrity management regulations, and has begun the administrative process to 
do this.  Existing legislative authority is adequate, but the setting of a date for completion 
of the process in legislation will ensure all interested parties that DOT will act in a timely 
manner.

Safety Orders
        The Subcommittee draft contains a provision similar to one in the Administration's 
bill, HR 5678, that modifies DOT's current authority to issue mandatory orders to 
pipeline operators.  Subsection (l) was added to section 60117 of title 49 by the Pipeline 
Safety Improvement Act of 2002 to allow DOT to issue a "safety order" to an individual 
operator in situations that appear to require action, but do not rise to the level of danger 
implied in a "hazardous facility" designation under section 60112, the principal authority 
available to DOT to order actions by an operator.  The intent in 2002, as we understand it, 
was to provide DOT with an enforcement tool with a lower threshold that would not 
require DOT to first declare that an operator's facility "is or would be hazardous" before 
actions would be required of the operator that could be documented in the public record. 
        The discussion draft and HR 5678 both add to section 60117(l) a welcome notice 
requirement and opportunity for a hearing at DOT before any order could be issued.  
Ensuring a modicum of due process addresses a significant omission in the 2002 Act.  
However, both provisions go on, in effect, to eliminate the due process benefit by 
practically abolishing any threshold or burden of proof for DOT in triggering a safety 
order.   The Secretary of Transportation may order an operator to make possibly 
extensive expenditures on all or a portion of the operator's system to address "any 
condition that poses a risk" based on any "factors the Secretary considers appropriate".   
        We appreciate DOT's desire to develop an enforcement tool to document and 
address situations where DOT and the operator can identify conditions that are not yet 
severe but may become so.  However, the proposal in HR 5678 and the discussion draft 
goes too far in the direction of permitting the possibility of arbitrary action against an 
individual operator who has violated no DOT regulation.  Under these provisions an 
operator would be virtually powerless to contest effectively any DOT requirement to 
make what the operator believes to be unnecessary expenditures of scarce resources to 
address questionable risks.
        We would like to work with the Subcommittee to develop a provision that provides 
DOT what it needs in terms of documentation of its interactions with operators about 
needed safety improvements, but which contains the proper protections to ensure that any 
actions ordered in fact are justified, prudent and represent real safety improvements.  We 
would also want to be sure that such orders to individual operators do not become a 
substitute for appropriately crafted regulations that apply to all operators.

Enforcement Transparency
        Section 2(j) of the discussion draft requires DOT to post on a website monthly 
information about pipeline enforcement actions taken by the Secretary or the Pipeline and 
Hazardous Materials Safety Administration.  Enforcement information is made publicly 
available by DOT for other modes regulated by the Department.  We have no objection to 
this proposal as long as the normal due process and confidentiality attaching to 
negotiation and settlement of cases is preserved.  

Other Provisions
        My comments today have not addressed every provision of every proposal.  Most of 
the provisions I have not discussed appear acceptable or do not directly affect the oil 
pipeline industry.  We will continue to analyze the legislation and make our views 
available to those working on the legislation.  The oil pipeline industry wants to work 
constructively with Congress, DOT and interested parties to achieve a compromise 
among the various legislative approaches that are offered that can achieve the broadest 
possible support.  Our goal should be enactment of a bill this year that will reauthorize 
the pipeline safety program for several years - we suggest at least 5 years -- to guarantee 
as much certainty as possible to DOT, the affected industry and the public regarding the 
rules governing the safety oversight of our national pipeline infrastructure.  That goal is 
within our reach if we all can continue to work together.

Closing
        In summary, current pipeline safety law is working, and working very well.  
Improvements can be made, particularly in strengthening underground damage 
prevention, but fundamental changes are not needed.    The legislative proposals before 
the House all seek to make improvements in the fundamentally sound DOT pipeline 
safety program based on the Pipeline Safety Improvement Act of 2002.   We need to 
move promptly to agree on the improvements that can gain broad support and incorporate 
these improvements in a pipeline safety reauthorization bill that can be enacted this year.  
The oil pipeline industry stands ready to help in any way we can in the achievement of 
this worthy goal.
        This concludes my remarks, I will be happy to respond to questions.

	MR. HALL.  Thank you.
	Ms. Epstein, we recognize you for 5 minutes.
        MS. EPSTEIN.  Thank you, Chairman Hall, Mr. Boucher, and other 
members of the subcommittee.
	My name is Lois Epstein, and I am an Alaska and Maryland licensed 
engineer, and an oil and gas industry specialist with Cook Inletkeeper in 
Anchorage, Alaska, and a consultant to the Bellingham-based Pipeline 
Safety Trust.
	My testimony today reflects both Cook Inletkeeper and the Pipeline 
Safety Trust's views.
	My background in pipeline safety includes membership since 1995 
on the U.S. Department of Transportation's Technical Hazardous Liquid 
Pipeline Safety Standards Committee and testifying before Congress in 
1999, 2002, 2004, and 2006 on pipeline safety.
	The safety and environmental constituents I represent commend the 
committee staff from both parties for an excellent discussion draft which 
should, with a minor change in the enforcement transparency section, 
proceed toward swift passage at the committee level and in the U.S. 
House of Representatives.  These organizations are particularly 
supportive of the provisions in the discussion draft addressing technical 
assistance grants, enforcement, and enforcement transparency, and low-
stress pipeline regulation, though we are disappointed that the bill does 
not include a mandate for public dissemination of pipeline maps.
	Section 2(i) of the discussion draft reauthorizes a provision of the 
Pipeline Safety Improvement Act of 2002 on technical assistance grants, 
which has not been implemented by PHMSA to date, and which is the 
number-one priority of the safety and environmental protection 
communities in this bill.  This provision, when implemented, will 
promote better technical policy decisions and will increase 
communication between diverse members of the public, governmental 
decision makers, and members of the pipeline industry.  Technical 
assistance grants will allow members of the public to hire independent 
experts to explain, analyze, and interpret operator and policy-related 
data.
	The language of Section 2(i) of the discussion draft ensures that there 
will be at least three demonstration grants not exceeding $25,000 for the 
purpose of demonstrating and evaluating the utility of grants under this 
section.  And the language ensures broad dissemination of the grant's 
technical findings.  Both organizations are confident that there will be 
widespread support for continuing these grants, which is why we are not 
concerned that there likely will be only three demonstration grants with a 
maximum value of $25,000 per grant, as compared to the $50,000 per 
grant and an open-ended number of grants allowed in the 2002 statute.
	Both organizations support the provisions of the discussion draft 
granting PHMSA additional enforcement authorities.  Section 2(e) 
covering safety orders and Section 2(f) covering integrity program 
enforcement.
	The enforcement transparency provision, Section 2(j) of the 
discussion draft, is a strong step forward.  To date, PHMSA has not 
provided timely information to the public, State, local government, or 
industry on its enforcement activities.  To ensure greater trust in this 
Nation's pipeline safety programs, it is important for stakeholders to be 
aware of the enforcement activities taking place by having the Federal 
government post the enforcement documents it issues, such as orders, 
letters, and any applicable industry responses to those documents.
	Enforcement transparency begins when enforcement actions are first 
proposed, continues with regular updates for each stage of the process as 
developments occur, and ends when cases are closed.  The discussion 
draft language is close to this concept, but needs to make clear that 
PHMSA would make enforcement information available as cases 
progress, not only when cases are finalized.
	The organizations I represent today support regulating low-stress 
pipelines to prevent releases to the environment, such as this winter's 
release of approximately 200,000 gallons of crude oil from a BP low-
stress transmission line on the North Slope of Alaska.  Regulation of 
low-stress pipelines should be based on the data compiled by PHMSA 
and others, and regulatory definitions and thresholds should not be set by 
Congress.
	Both organizations support the language of Section 2(k) of the 
discussion draft, which gives PHMSA the discretion it needs to develop a 
technically-sound rule, which by the way, H.R. 5782 does not do because 
of its specificity.
	We also support Sections 2(a) through 2(d), 2(h), 2(k), and 2(l) of the 
discussion draft and the 4-year reauthorization period.
	In areas where H.R. 5782 differs from the discussion draft, the 
organizations provide the following comments.
	On Section 2, covering damage prevention and State damage 
prevention programs, based on our contacts with State pipeline safety 
regulators, both organizations prefer the language in the discussion draft 
to the language in H.R. 5782.
	On Section 3, covering the distribution integrity management 
program rulemaking issue, both organizations support the 1-year 
rulemaking deadline and accept the language contained in Section 2(e) 
on standards for distribution integrity management programs.
	On Section 4, covering pipeline control management, both 
organizations support the Section 4(a) language requiring standards to 
reduce the risks associated with human factors, including fatigue.
	On Section 7, covering standards to implement NTSB 
recommendations, both organizations support inclusion of the three 
mandates to PHMSA to develop new regulatory standards.  In addition, 
we support and have been working to ensure that PHMSA implements 
NTSB recommendation P-05, which would require "computer-based leak 
detection systems on all lines unless engineering analysis determines that 
such a system is not necessary."  This important recommendation should 
not be ignored by Congress and PHMSA.
	Thank you very much for your interest in pipeline safety and 
environmental protection.  Please feel free to contact me or Carl Weimer 
of the Pipeline Safety Trust at any time.
	[The prepared statement of Lois N. Epstein, P.E. follows:]

PREPARED STATEMENT OF LOIS N. EPSTEIN, P.E., SENIOR ENGINEER, OIL AND GAS 
INDUSTRY SPECIALIST, COOK INLETKEEPER, ON BEHALF OF PIPELINE SAFETY TRUST

The Discussion Draft
        Cook Inletkeeper and the Pipeline Safety Trust are particularly supportive of the 
provisions in the Discussion Draft addressing Technical Assistance Grants, Enforcement 
and Enforcement Transparency, and Low-Stress Pipeline Regulation.  The Technical 
Assistance Grants provision is the number one priority of the safety and environmental 
protection communities.  On enforcement transparency, Congress needs to direct the 
Pipeline and Hazardous Materials Safety Administration (PHMSA) to provide all official 
documentation to the public from the start of enforcement actions until cases are closed.  
With respect to low-stress pipeline regulation, the Discussion Draft language gives 
PHMSA the discretion it needs to develop a technically-sound rule (which H.R. 5782 
does not).

H.R. 5782
        Cook Inletkeeper and the Pipeline Safety Trust prefer the language in the Discussion 
Draft to the language in H.R. 5782 on damage prevention and state damage prevention 
programs, and H.R. 5782 does not contain important provisions covering Technical 
Assistance Grants and Enforcement and Enforcement Transparency.  Both organizations 
support the one year rulemaking deadline for distribution integrity management programs 
and the Section 4 language on reducing the risks associated with human factors.
        Both Cook Inletkeeper and the Pipeline Safety Trust support a four-year 
reauthorization period.


        Good morning.  My name is Lois Epstein and I am an Alaska- and Maryland-
licensed engineer and an oil and gas industry specialist with Cook Inletkeeper in 
Anchorage, Alaska.  Cook Inletkeeper is a nonprofit, membership organization dedicated 
to protecting Alaska's 47,000 square mile Cook Inlet watershed, and a member of the 
Waterkeeper Alliance of 150+ organizations headed by Bobby Kennedy, Jr.  My 
background in pipeline safety includes membership since 1995 on the U.S. Department of 
Transportation's Technical Hazardous Liquid Pipeline Safety Standards Committee 
which oversees the Pipeline and Hazardous Materials Safety Administration's 
(PHMSA's) oil pipeline activities and rule development, testifying before Congress in 
1999, 2002, 2004, and 2006 on pipeline safety, and researching and analyzing the 
performance of Cook Inlet's 1000+ miles of pipeline infrastructure by pipeline operator 
and type.   I have worked on environmental and safety issues for over 20 years for two 
private consultants, the U.S. Environmental Protection Agency, Environmental Defense, 
and Cook Inletkeeper.  
        Additionally, I am a part-time consultant for the Pipeline Safety Trust, located in 
Bellingham, Washington, and my testimony today reflects both Cook Inletkeeper and the 
Pipeline Safety Trust's views.  The Pipeline Safety Trust came into being after the 1999 
Olympic Pipe Line tragedy in Bellingham, Washington which left three young people 
dead, wiped out every living thing in a beautiful salmon stream, and caused millions of 
dollars of economic disruption to the region. After investigating this tragedy, the U.S. 
Department of Justice (DOJ) recognized the need for an independent organization which 
would provide informed comment and advice to both pipeline companies and 
government regulators and would provide the public with an independent clearinghouse 
of pipeline safety information.  The federal trial court agreed with DOJ's recommendation 
and awarded the Pipeline Safety Trust $4 million that was used as an initial endowment 
for the long-term continuation of the Trust's mission.
        For more details on many of the issues discussed below, please see my U.S. House 
of Representatives testimony on March 16, 2006 before the Highway, Transit, and 
Pipelines Subcommittee of the Committee on Transportation and Infrastructure and on 
April 27, 2006 before the Subcommittee on Energy and Air Quality of the Committee on 
Energy and Commerce.

The Discussion Draft
        The safety and environmental protection constituents I represent commend the 
committee staff from both parties for an excellent Discussion Draft which should - with a 
minor change - proceed toward swift passage at the committee level and in the U.S. 
House of Representatives.  The organizations I represent are particularly supportive of 
the provisions in the Discussion Draft addressing Technical Assistance Grants, 
Enforcement and Enforcement Transparency, and Low-Stress Pipeline Regulation.  I first 
will discuss these provisions, then will cover other provisions of the Discussion Draft, 
and last will address H.R. 5782 - the bill marked-up on July 19 in the Committee on 
Transportation and Infrastructure of the U.S. House of Representatives.
        Technical Assistance Grants.  Section 2(i) of the Discussion Draft reauthorizes a 
provision of the Pipeline Safety Improvement Act of 2002 which has not been 
implemented to date and which is the number one priority of the safety and 
environmental protection communities.  This provision, when implemented, will promote 
better technical and policy decisions, and will increase communication between diverse 
members of the public, governmental decision-makers, and members of the pipeline 
industry.  These technical assistance grants will allow members of the public to hire 
independent experts to explain, analyze, and interpret technical data.
        The grants can be used to: 1) analyze operator-reported data on integrity 
management (e.g., to compare operations of similar pipelines), 2) interpret (for the 
public) operator studies on right-of-way selection and operational decisions, 3) assist 
community organizations and local governments  to comment on regulations or industry 
standards in areas where they wouldn't otherwise have the resources to do so, and 4) 
provide effective public input to government and industry in ways not now foreseeable.  
Examples of public organizations that could benefit from such grants include the 
Washington City and County Pipeline Safety Consortium and the Kentucky Pipeline 
Safety Advisory Committee, which each formed after major pipeline failures and include 
a broad spectrum of stakeholders interested in ways to avoid additional pipeline accidents 
in their states.  Note that the 2002 statute requires that these grants not be used for 
lobbying or in direct support of litigation.
	The language of Section 2(i) of the Discussion Draft ensures that there will be at 
least three demonstration grants not exceeding $25,000 "for the purpose of demonstrating 
and evaluating the utility of grants under this section" and ensures broad dissemination of 
the grant's technical findings.  Both organizations I represent are confident that there will 
be widespread support for continuing these grants, which is why these organizations are 
not concerned that there likely will be only three demonstration grants with a maximum 
value of $25,000 - as compared to the $50,000 allowed in the 2002 statute and an 
unspecified number of grants - during this reauthorization period.
        Enforcement and Enforcement Transparency.  Both of the organizations I represent 
support the provisions in the Discussion Draft granting PHMSA additional enforcement 
authorities - Section 2(e) covering Safety Orders and Section 2(f) covering Integrity 
Program Enforcement.
	The Enforcement Transparency provision, Section 2(j) of the Discussion Draft, is a 
strong step forward.  To date, PHMSA has not provided timely information to the public, 
state and local government, or industry on its enforcement activities. To ensure greater 
trust in this nation's pipeline safety programs, it is important for stakeholders to be aware 
of the enforcement activities taking place by having the federal government post the 
enforcement documents it issues (e.g., orders and letters) and any applicable industry 
responses to those documents.  Enforcement transparency begins when enforcement 
actions are first proposed, continues with regular updates for each stage of the process as 
developments occur, and ends when cases are closed.  Our organizations ask that the 
subcommittee make the following minor wording change (or equivalent) to Section 
2(j)(1)(a) of the Discussion Draft to make it clear the intent of this section:
        (a) IN GENERAL.-Not later than 12 months after the date of enactment of this 
section, the Secretary shall begin to provide a monthly summary to the public of all 
gas and hazardous liquid pipeline enforcement actions taken by the Secretary or the 
Pipeline and Hazardous Materials Safety Administration, from the time 
enforcement actions are proposed until enforcement actions are finalized.  
Each summary shall include information on the operator involved in the 
enforcement activity, the type of violation that necessitated the enforcement 
activity, the penalty or penalties proposed, any changes in status since the 
previous summary, the final assessment amount of each penalty, and the reasons 
for a reduction in the proposed penalty, if appropriate.

        Low-Stress Pipeline Regulation.  The organizations I represent support regulating 
low-stress pipelines to prevent releases to the environment such as this winter's release of 
approximately 200,000 gallons of crude oil from a BP low-stress transmission pipeline on 
the North Slope of Alaska.  Regulation of low-stress pipelines should be based on the 
data compiled by PHMSA and others, and regulatory definitions and thresholds should 
not be set by Congress.  Both organizations support the language of Section 2(k) of the 
Discussion Draft, which gives PHMSA the discretion it needs to develop a technically-
sound rule (which H.R. 5782 does not do).
        Other Provisions of the Discussion Draft.  The organizations I represent support the 
following provisions of the Discussion Draft: 
         One Call Civil Enforcement (Section 2(a)),
         State Damage Prevention Programs (Section 2(b)),
         State Pipeline Safety Grants (Section 2(c)),
         Damage Prevention Technology Development (Section 2(d)),
         Seven Year Reinspection (Section 2(h)), since this section incorporates the 
findings of the upcoming Comptroller General report into policy-making as our 
organizations testified previously should be done,
         Cost Reimbursements, covering Design Reviews (Section 2(k)),
         Direct Line Sales (Section 2(l)), and
         The Four-Year Reauthorization period (Section 3).

H.R. 5782
        In areas where H.R. 5782 differs from the Discussion Draft, the organizations I 
represent provide the following comments:  
	On Section 2 covering damage prevention and state damage prevention 
programs, based on our contacts with state pipeline safety regulators, both organizations 
prefer the language in the Discussion Draft to the language in H.R. 5782.  Most notably, 
in section (b) of both draft bills, the Discussion Draft language "encouraging and 
promoting the establishment of a [state] program designed to prevent damage" (emphasis 
added) is far superior to H.R. 5782's language, i.e., the state "has agreed to take actions 
toward establishing a program designed to prevent damage" (emphasis added), because 
the former allow allows federal funding to continue prior to passage of state legislation.
        On Section 3 covering the distribution integrity management program rulemaking 
issues, both organizations support the one year rulemaking deadline and accept the 
language contained in Section 2(e) on standards for Distribution Integrity Management 
Programs.
        On Section 4 covering pipeline control management, both organizations support the 
Section 4(a) language requiring standards to reduce the risks associated with human 
factors, including fatigue.
        On Section 5 covering low-stress pipelines, both organizations believe the language 
contained in H.R. 5782 unnecessarily and inappropriately limits PHMSA's technical 
discretion in low-stress pipeline rulemaking.  This language limits regulation of 
currently-unregulated low-stress pipelines to certain locations (despite the need for at 
least corrosion prevention for all currently-unregulated low-stress pipelines) and sets the 
minimum diameter for PHMSA-regulated low-stress pipelines.  Such language intrudes 
upon PHMSA's ability to regulate pipelines based on technical data.  As discussed above, 
the language in the Discussion Draft on low-stress pipelines provides PHMSA with 
needed discretion for its regulatory decisions.
        On Section 6 covering appropriations, as noted above, both organizations support a 
four-year reauthorization period.
        On Section 7 covering standards to implement National Transportation Safety Board 
(NTSB) recommendations, both organizations support inclusion of the three mandates to 
PHMSA to develop new regulatory standards (NTSB recommendations P-05-1, 2, and 3).  
In addition, both organizations support - and have been working to ensure that - PHMSA 
implements NTSB recommendation P-05-5 which would require "computer-based leak 
detection systems on all lines unless engineering analysis determines that such a system 
is not necessary."  This important recommendation should not be ignored by Congress 
and PHMSA.
        Last, disappointingly, H.R. 5782 does not address Technical Assistance Grants and 
Enforcement and Enforcement Transparency, which are high priorities for safety and 
environmental protection organizations.
        Thank you very much for your interest in pipeline safety and environmental 
protection.  Please feel free to contact me or Carl Weimer of the Pipeline Safety Trust at 
any time with your questions or comments.

	MR. HALL.  Thank you very much.
	All right.  That concludes their opening statements.
	Mr. Mohn, can you explain the process operators undergo when 
applying industry science and risk-based best practices to their own 
monitoring of their pipelines for reassessment intervals, both before the 
7-year requirement and after the 7-year requirement?
	MR. MOHN.  I would be happy to.
	In fact, there is a framework that was developed in a consensus 
standard following the 2002 Act in the regulatory framework put in place 
by OPS that is our guide in doing so.  That guide broadly defines threats 
to our pipeline anywhere from internal to external corrosion to 
metallurgy issues to damage from third parties and forces us to go 
through an analysis, making an assessment of how we are going to 
mitigate each one of those threats.  Then, as we look at all of our 
thousands of miles of pipelines, we develop a relative risk ranking, if you 
will, as to those pipelines that have the greatest probability of a failure 
and then apply appropriate mitigative measures.  For external corrosion, 
we will use and do extensively use, smart pigs to assess metal loss and 
then remediate any unacceptable wall loss, again, in a very prescriptive 
process that is defined in the consensus standard we call B-31-8.  It is an 
ANSI standard.
	The way we would conduct the analysis if we didn't have the 7-year 
prescriptive standard, will again be guided by whatever standard is put in 
place by PHMSA.  I would expect, again, a similar rigorous, risk-based 
process where we assess each threat and determine what the mitigated 
measures are and the timeframe within which we would apply those 
mitigative measures.
	I would just note that we have said many times in our testimony, and 
you heard Admiral Barrett say again today, that there are some pipes 
that, because of specific circumstances, that we do assess more 
frequently.  We have some pipes today that we assess every 3 years, 
some pipes we assess every 5 years in applying the current B-31-8 
standards.
	MR. HALL.  Mr. Jibson, how do utilities respond when notified of 
damage to pipelines?  And how prompt is that response?  And how does 
mandating utility notification of pipeline damage help ensure better 
pipeline safety, if it does?
	MR. JIBSON.  Yes.  First of all, the first question in regards to your 
question--
	MR. HALL.  How do you respond?
	MR. JIBSON.  Okay.  On the response, we have right now a system 
where we have 24/7 dispatching, emergency numbers that are posted on 
all of our pipelines and available.  That information comes into us.  We 
immediately have people who respond to those emergencies, and we get 
out on them.  Different States have different requirements.  In our 
particular State, we have a requirement where we respond within 1 hour 
of that emergency call.  Now that is what we consider actually getting to 
the site and taking care of the immediate danger.  We also have 
relationships with our local authorities, the emergency response groups, 
who know where to call and immediately take care of some of the initial 
dangers of having the public in a safe situation so that we can go in and 
then rectify the problem and take care of that immediately.
	Enhanced procedures, as we talked about with the 9-1-1 call, we 
believe that will only enhance our ability to respond to safety issues.  The 
9-1-1 call is very imperative, especially if there would be substance 
escaping from the pipeline.  In the cases where there is not an actual 
release of the substance from the pipeline, we feel like the 9-1-1 call may 
not be necessary, but it does not alleviate the need for the call to come 
into the operator.  And any enhanced enforcement or enhanced 
provisions that would facilitate us getting the calls sooner and more 
directly would certainly help us in the safety issue.
	MR. HALL.  My time is up.
	The Chair recognizes Mr. Boucher.
	MR. BOUCHER.  Well, thank you, Mr. Chairman.  And I want to 
thank each of our witnesses for being here today.  This is a hearing 
where I think we have had reflected on both panels a very broad 
consensus, that the discussion draft moves in the right direction and 
should be moved forward from this subcommittee for further legislative 
consideration.  And, Mr. Chairman, I would very much hope that we 
could do that early in the month of September.
	Let me just ask a couple of questions focused on the discussion draft, 
and this would be for each of you.
	One of the major subjects we are addressing is excavation damage 
prevention.  Would you agree that the provisions in the discussion draft 
would effectively discourage that damage by setting in place a program 
that would be designed to prevent it?  So this can be a very short answer, 
hopefully, because I do have some follow-ups for each of you with 
regards to the effectiveness of our excavation damage prevention 
measures.
	MR. JIBSON.  I think I could answer very quickly that yes, we 
certainly agree that the bill would enhance that.  I think we would just 
rely on experience with what has taken place in Virginia, Minnesota, 
Georgia, Tennessee, and others who have enhanced programs.  The 
numbers don't lie.  It has proven to be a very effective program, and I 
think that we would see that throughout the United States.
	MR. BOUCHER.  All right.
	Mr. Mohn?
	MR. MOHN.  I would simply say yes, I agree with Mr. Jibson.
	MR. BOUCHER.  All right.  Thank you.
	Mr. Felt?
	MR. FELT.  We strongly support the provisions.  Thank you.
	MR. BOUCHER.  Thank you.
	Ms. Epstein?
	MS. EPSTEIN.  Yes.
	MR. BOUCHER.  Excellent.  You are all terrific witnesses.
	We have heard a recommendation from the representative of 
NARUC this afternoon that a modification be made in the discussion 
draft to the rather firm tie between grants that would be to the benefit of 
the States and the presence in those States of the excavation damage 
prevention safety guidelines, this nine-point program.  And the draft 
basically says you have to have the guidelines in place before the grants 
can be provided.  The representative from NARUC said, well, it may 
take some time for us to get our State legislative bodies to give us the 
statutory authority necessary in order to be able to implement the nine-
point program, and therefore, once we have demonstrated that we are 
really trying hard, maybe we should get the grant.  My initial response to 
that, although I didn't say this to our representative when he was here, 
but I will say it now, is that it seems to me that we ought to keep this 
firm tie in place and require that the program actually be implemented 
before the money is provided.  Let that be an incentive.  And perhaps the 
award of this money could be used as leverage by the regulatory agency 
in order to get the State legislature to grant the authority to implement 
the rules much more quickly.
	So you have heard what he said.  You have heard what I have had to 
say.  What do you think?
	MR. MOHN.  I would be glad to go first.
	We all use performance incentives with our children and in our 
businesses that are financially based.  The production of results and the 
award of those financial incentives should follow in that order.  So I 
personally believe, and I think generally if you look at the way our 
company and most of our interstate companies administer those 
programs, once results are produced, the reward or the acknowledgement 
of that and the award of the grant in this case should be made.
	MR. BOUCHER.  So you would agree with me?
	MR. MOHN.  Yes.
	MR. BOUCHER.  Thank you.
	Mr. Jibson?
	MR. JIBSON.  Very quickly, I believe that the success of any program 
is inherent on the participation and support of all of the stakeholders 
involved.  The nine-point program involves many stakeholders, and I 
think that I would agree with Mr. Mohn that the incentives are certainly 
there to have the components in place at the time of receiving the 
funding, but maybe there is some middle ground, and I will take maybe a 
middle-road position here, because I believe that we do need some 
funding to assist in getting the nine points going and get those in place in 
many States.
	MR. BOUCHER.  Well, now there is other funding that flows that 
could be used for that purpose.
	MR. JIBSON.  Right.  And maybe that is that middle area.  Maybe that 
could be channeled that way and this be specific for--
	MR. BOUCHER.  That could be done at the discretion of the State, if 
they choose to do so.
	MR. JIBSON.  Right.  I agree the incentive is there, but I also agree 
that some States will need that supportive funding from some 
mechanism.
	MR. BOUCHER.  All right.  All right.  That is a carefully calibrated 
statement.
	Mr. Felt?
	MR. FELT.  Sir, I guess I am not familiar with all of the intricacies 
that the 50 States have to deal with, and I might defer to your judgment 
on that aspect of it.  But I would say that anything we can do to get the 
damage prevention programs installed at the highest level as soon as 
possible benefits any operator and the public, in general, I would 
wholeheartedly support that.
	MR. BOUCHER.  Thank you.  That is very diplomatic, also.
	Ms. Epstein?
	MS. EPSTEIN.  I have communicated with several of those States on 
this exact question, and actually, I think they have made a persuasive 
case to me, and these are some very dedicated pipeline safety officials, 
that the language in the discussion draft, which was discussed with these 
State officials, where it talks about encouraging and promoting the 
establishment of a State program, is far superior to the language in H.R. 
5782 where the State has already agreed to take actions, for the reasons 
that we heard today that why delay and, as you said, there could be some 
way of providing some of the funding.  And the States have agreed that it 
is something to strive towards, but things sometimes happen slower at 
the legislative level and at the appropriations level as well than they can 
always hope for.
	MR. BOUCHER.  Right.  So the financial reward should follow the 
complete performance?
	MS. EPSTEIN.  That is right.
	MR. BOUCHER.  Thank you.
	Those are all of the questions I have, Mr. Chairman.
	I want to thank these witnesses.  And again, I would hope that we 
could move to markup at the earliest possible time.
	MR. HALL.  You liked these witnesses, didn't you?
	MR. BOUCHER.  I did.  I thought they were great.
	MR. HALL.  You like witnesses that agree with you, don't you, Mr. 
Boucher?
	MR. BOUCHER.  I vastly prefer those, yes.
	MR. HALL.  Well, they did a good job.
	MR. BOUCHER.  They did.
	MR. HALL.  The Chair recognizes Mr. Sullivan.
	MR. SULLIVAN.  Thank you, Mr. Chairman.
	This is for Mr. Felt from Tulsa.  This is our other West Point guy 
right here.
	You state in your testimony that your industry supports the low-
stress transmission deadline required in the base text.  How has your 
industry been engaged on the issue since the BP incident and at the 
public meeting PHMSA had to discuss the rule?
	MR. FELT.  I am not sure what our involvement was at the public 
meeting, but I do know that the industry, as a whole, has got a team of 
people working together to try to come up with a provision that will be 
fair to the industry and also be fair to the Government and to the public.  
So we have got an active team that is working with the Government on 
that.
	MR. SULLIVAN.  Okay.  And one more question.
	Your testimony raised some concern with the safety orders language 
in the discussion draft and the scope that it is intended to cover.  Can you 
further explain what type of new authorities, if any, you think would be 
appropriate?  And do you think a rulemaking process would help address 
some of these concerns?  Would a consent-based process be more 
appropriate here?
	MR. FELT.  I am not sure what you mean by the consent-based 
process, sir.
	MR. SULLIVAN.  Which one do you think would be better?
	MR. FELT.  I guess we feel like we could work with the DOT in the 
language that they need to get the tools that they need in place.  When 
Mr. Barrett testified, he talked about it being focused on safety, and we 
agree with that.  We thought that maybe the language that was in there 
opened it a little bit too broadly.  I am not opposed to the order, so if they 
feel that that is necessary, I mean, it is already in there.  We just want to 
make sure that the boundaries are clear and that the protections are in 
place.  And so our industry is having discussions with PHMSA on 
working out the differences that we can both support.  So I think we are 
on our way to getting there.
	MR. SULLIVAN.  Okay.  Well, thank you very much.
	MR. HALL.  Mr. Shimkus, the Chair recognizes you for 5 minutes.
	MR. SHIMKUS.  Mr. Chairman, I don't have any questions at this 
time.
	MR. HALL.  Well, you might submit them later.
	All right.  Do you have any second questions?  You got such good 
answers before, you don't want to ruin your record now.
	MR. BOUCHER.  No.
	MR. HALL.  Well, you have been a really good panel and a very 
informative group, and we thank you.  And thank you for the time it 
took.
	And don't have any dismay over the fact that there are so many 
empty chairs here.  This is probably the last day we will be here for the 
next 4 or 5 weeks, and there is a lot to do, and they are doing things.  But 
each one of them has someone here that is better for them to hear it than 
it is for us, because they do most of the work.  It will also be submitted to 
everybody, copies of your testimony.  It is not wasted on empty chairs, 
and we want to really thank you for it.
	All right.  Is there anything further for the good of the committee?  If 
not, we are adjourned.
	[Whereupon, at 1:45 p.m., the subcommittee was adjourned.]


SUBMISSION FOR THE RECORD OF KATHERINE SIGGERUD, DIRECTOR, PHYSICAL 
INFRASTRUCTURE ISSUES, UNITED STATES GOVERNMENT ACCOUNTABILITY OFFICE

 

  See Lurking Below: Oil and Gas Pipeline Problems in the Cook Inlet Watershed, 28 pp. plus 
appendices, 2002, and follow-up reports in 2003 and 2005.  www.inletkeeper.org/pipelines.htm
