[Senate Hearing 109-1139]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 109-1139
 
                        REAUTHORIZATION OF THE 
                        PIPELINE SAFETY PROGRAM

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

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                           NOVEMBER 16, 2006

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation



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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                     TED STEVENS, Alaska, Chairman
JOHN McCAIN, Arizona                 DANIEL K. INOUYE, Hawaii, Co-
CONRAD BURNS, Montana                    Chairman
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA J. SNOWE, Maine              JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon              BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada                  BARBARA BOXER, California
GEORGE ALLEN, Virginia               BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire        MARIA CANTWELL, Washington
JIM DeMINT, South Carolina           FRANK R. LAUTENBERG, New Jersey
DAVID VITTER, Louisiana              E. BENJAMIN NELSON, Nebraska
                                     MARK PRYOR, Arkansas
             Lisa J. Sutherland, Republican Staff Director
        Christine Drager Kurth, Republican Deputy Staff Director
             Kenneth R. Nahigian, Republican Chief Counsel
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
   Samuel E. Whitehorn, Democratic Deputy Staff Director and General 
                                Counsel
             Lila Harper Helms, Democratic Policy Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 16, 2006................................     1
Statement of Senator Inouye......................................     2
    Prepared statement...........................................     2
Statement of Senator Lautenberg..................................    13
Statement of Senator Pryor.......................................    51
Statement of Senator Stevens.....................................     1

                               Witnesses

Barrett, Thomas J., Vice Admiral, USCG (Retired); Administrator, 
  Pipeline and Hazardous Materials Safety Administration, 
  Department of Transportation...................................     3
    Prepared statement...........................................     4
Bender, E. Frank, Vice President, Gas Distribution and New 
  Business Division, Baltimore Gas and Electric Company; on 
  behalf of the American Gas Association and the American Public 
  Gas Association................................................    42
    Prepared statement...........................................    44
Boss, Terry, Senior Vice President, Environment, Safety and 
  Operations, Interstate Natural Gas Association of America......    31
    Prepared statement...........................................    33
Felt, Timothy, President/CEO, Explorer Pipeline Company; Member, 
  American Petroleum Institute Pipeline Committee; and Vice 
  Chairman/Treasurer-Elect, Association of Oil Pipe Lines........    24
    Prepared statement...........................................    26
Weimer, Carl, Executive Director, Pipeline Safety Trust..........    17
    Prepared statement...........................................    18

                                Appendix

Barrett, Thomas H., Administrator, Department of Transportation, 
  letter, dated December 4, 2006, to Hon. Jim DeMint.............    55
Peters, Hon. Mary E., Secretary of Transportation, letter, dated 
  November 28, 2006, to Hon. Ted Stevens.........................    56
Response to written questions submitted by Hon. Daniel K. Inouye 
  to:
    Thomas J. Barrett............................................    58
    E. Frank Bender..............................................    58
    Terry Boss...................................................    59
    Timothy Felt.................................................    60
    Carl Weimer..................................................    61
Sandherr, Stephen E., CEO, Associated General Contractors of 
  America, prepared statement....................................    56


                        REAUTHORIZATION OF THE 
                        PIPELINE SAFETY PROGRAM

                              ----------                              


                      THURSDAY, NOVEMBER 16, 2006

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m. in room 
SR-253, Russell Senate Office Building, Hon. Ted Stevens, 
Chairman of the Committee, presiding.

            OPENING STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    The Chairman. We are here today to hear testimony on the 
reauthorization of the pipeline safety program.
    The Pipeline and Hazardous Materials Safety Administration 
has jurisdiction that covers approximately 160,000 miles of 
hazardous liquid interstate transmission pipelines, 305,000 
miles of natural gas transmission pipelines, and 1.9 million 
miles of natural gas distribution pipelines throughout our 
Nation. Generally, this Administration is responsible for 
overseeing interstate transmission pipelines, while the states 
are responsible for monitoring the safety of intrastate 
pipelines.
    The state's authority is delegated by the Administration to 
the intrastate pipelines safety offices. The Administration 
also allows state officials to act as agents in administering 
interstate pipeline safety programs excluding enforcement 
actions which are handled by the Administration directly for 
those sections of the interstate pipelines which are within a 
state's boundaries.
    Now, pipelines are one of the safest forms of 
transportation, in most cases their safety records have 
steadily improved. Unfortunately, recent events in our State of 
Alaska demonstrate there is much that can be done. All of that, 
by the way, occurred in 22 miles of pipe.
    In September, Senator Inouye, Senator Lott, Senator 
Lautenberg and I introduced legislation known as the PIPES Act 
to reauthorize and strengthen the Federal pipeline safety 
programs through the Fiscal Years 2007-2010. This comprehensive 
bill is based upon the draft pipeline safety authorization 
legislation submitted by the Administration, reports and 
testimony from the Government Accountability Office and the 
Department of Transportation Inspector General. In addition, 
representatives from the pipeline industry and pipeline safety 
advocate community, many of whom are represented by the 
witnesses here today, also provided valuable input and 
perspective.
    The House Transportation and Infrastructure Committee and 
the House Energy and Commerce Committee are also working on 
pipeline safety legislation. A total of three hearings 
pertaining to pipeline safety were held in the House, and our 
Alaska delegation held a listening session in October on the 
overall topic in Alaska.
    I appreciate Vice Admiral Barrett and his staff for driving 
down to Anchorage to be with us at that listening session. It 
is my hope that the three of our committees can work together 
to develop a joint legislative product that both Chambers will 
pass this year. We've had contact with the House, and the House 
has been willing to work toward a bill prepared that it will be 
a joint bill that can pass in the first week of December. As 
far as I know, there are no political differences with regard 
to the goals of this bill so I hope that this hearing will 
produce the information we need to proceed to work with the 
House and to work out a bill before the first week in December. 
Senator Inouye?

              STATEMENT OF HON. DANIEL K. INOUYE, 
                    U.S. SENATOR FROM HAWAII

    Senator Inouye. Thank you very much, Mr. Chairman. I hope 
that our presence here this morning would indicate to one and 
all that this is a bipartisan matter. That our energy supply 
depends on a safe and efficient pipeline system. The House has 
similar legislation, and time is of the essence. We hope to get 
this through right away. I ask that my statement be made part 
of the record.
    [The prepared statement of Senator Inouye follows:]

 Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii
    Our Nation's energy supply depends on a safe and efficient pipeline 
system. As we saw this summer in Alaska, pipeline disruptions can have 
a major impact on consumers. With this in mind, Chairman Stevens and I, 
together with Chairman Lott and Senator Lautenberg, approached the task 
of reauthorizing the Federal pipeline safety program with great care 
and keen interest.
    We met with the Pipeline and Hazardous Materials Safety 
Administration (Pipeline Administration) to review the Administration's 
reauthorization proposal and listened to the interests and concerns of 
the pipeline industry and pipeline safety advocates. We then crafted S. 
3961, the Pipeline Inspection, Protection, Enforcement, and Safety Act 
of 2006, known as the PIPES Act, this September. The bill builds upon 
the successes of the reauthorization in 2002 and all of the good work 
already done by the Office of Pipeline Safety and the Pipeline 
Administration over the past several years. Much of the bill comes from 
the Administration's own proposal and refines the current Federal 
safety program to ensure that we have the safest and most dependable 
pipeline system in the world.
    Additionally, our bill takes several new steps to address areas of 
growing concern including the prevention of third-party damage, low-
stress pipeline standards, human factors mitigation, and increased 
pipeline security and disaster recovery. Most importantly, the bill 
also significantly increases funding for pipeline safety inspectors and 
pipeline safety research, allowing us to double our efforts on these 
important fronts.
    I know many of the witnesses here represent different elements of 
our complex pipeline system and you each have different interests. I 
believe our legislation presents an excellent opportunity to strengthen 
our current system, and I hope that you will work with us toward this 
goal. I understand that the House Transportation and Infrastructure and 
Energy and Commerce Committees both have bills similar to ours and I 
look forward to working with them to quickly pass a bill into law as 
soon as the opportunity arises.

    The Chairman. Thank you very much, it will be part of the 
record. The statements of the witnesses will be printed in full 
in the record, we hope that you will summarize them to the 
extent that you can. Our first panel is just one person. Once 
again, Vice Admiral Thomas Barrett, retired. He's the 
Administrator of the Pipeline and Hazardous Materials Safety 
Administration. Thank you for appearing, we'd be pleased to 
have your statement.

 STATEMENT OF THOMAS J. BARRETT, VICE ADMIRAL, USCG (RETIRED); 
    ADMINISTRATOR, PIPELINE AND HAZARDOUS MATERIALS SAFETY 
          ADMINISTRATION, DEPARTMENT OF TRANSPORTATION

    Admiral Barrett. Mr. Chairman, thank you. Mr. Co-Chairman, 
thank you both for your opportunity to testify and for the 
leadership you've exhibited on this particular issue. I'm 
pleased to discuss your proposal to reauthorize the Federal 
Pipeline Safety Program.
    As you know, pipelines--as you mentioned, Mr. Chairman--are 
a safe way to transmit and transfer energy. But the data shows 
that we have an opportunity here to close some remaining gaps 
in the pipeline safety program and do a better job for the 
public in terms of ensuring that energy can be transmitted 
across our country safely.
    It's abundantly clear at this time that the risk posed by 
construction-related damage to underground gas distribution 
systems is growing. In fact, it's the only area where our 
safety trends are headed in the wrong direction. It is the 
leading cause of pipeline accidents in which people are killed 
or seriously hurt. And that's why I ask for your help in 
passing this legislation now.
    On a daily basis I see reports reflecting incidents on gas 
distribution pipelines. These distribution pipelines are 
located where the majority of American families live, where 
schools are located. Recently, for example, in Oklahoma, a 
residential developer using Earth-moving equipment struck a 
natural gas pipeline and caused the evacuation of a nearby 
elementary school. Over 14,000 schools nationwide, from 
elementary through colleges, are located near distribution 
pipelines. And in my judgment, the safety margin between a 
precautionary evacuation of a school and tragedy following an 
incident is not adequate.
    We need to cut these incidents off better, up-front. And we 
believe the best approach, as proposed by the Administration 
and reflected in your Committee proposal is to support our 
state partners who oversee nearly 1.7 million miles of 
distribution pipeline systems with incentives that would raise 
the cap on grants to their agencies from 50 percent to 80 
percent over 6 years, an incentive approach coupled with 
stronger civil enforcement authority. And we need this 
authority to be successful, and the states need it.
    The benefits of this enhanced authority and enhanced damage 
prevention programs will benefit oil and gas distribution lines 
and the gas distribution system in particular.
    I would invite your attention and maybe we can turn that 
picture so you can see it, I was up recently at Baltimore Gas & 
Electric, this is a picture--can you see all right, sir? This 
is what the underground looks like--you have 
telecommunications, you have water, you have gas, you have 
sewer all in very compacted areas. In this case, you had a 
telecommunication line run across the top of a gas line. That 
runs the risk of taking the coating off the line. Perhaps, 
eventually--had it not been discovered, leading to a failure 
and the resultant risk of breach.
    And the benefits of preventing distribution problems, the 
One-Call systems, the incentive programs, better state 
enforcement, run to not simply the gas lines, but they run to 
everybody in that underground--the telecommunications industry, 
they run to the water supply, they run to the sewer lines--you 
will have less disruption, less accidents, less traffic jams, 
if we are able to move this program forward successfully, to 
say nothing of less safety risks to life and property.
    I particularly appreciate the Committee's attention also, 
to better leadership accountability. I think that is a key way 
of improving the emphasis on the accuracy and the data that are 
reported to the Federal Government, and allows us to assess and 
get at problems. I particularly appreciate your personal 
leadership on that. I think it's key to involve senior 
corporate leadership in understanding the conditions that are 
reflected in their own organizations and what they report to 
us.
    I would point out as you indicated, that the core 
reauthorization concepts are supported very broadly across our 
stakeholder community. And as you indicated there are--as far 
as we can tell--this is a bipartisan issue, it is a fundamental 
safety issue. And I believe that the core concepts in the 
Senate provision as you work out issues with the House are 
fundamentally sound. And I am hopeful that with your support, 
we will be able to bring this to a successful conclusion.
    I assure the members of the Committee, that the 
Administration, Secretary Peters and the men and women of PHMSA 
draw on your strong personal and Committee commitment to 
improving the safety, the liability and public confidence in 
our Nation's pipeline infrastructure safety. I appreciate the 
opportunity to be here, and I would be pleased to answer any 
questions that you have for me. Thank you, sir.
    [The prepared statement of Admiral Barrett follows:]

Prepared Statement of Thomas J. Barrett, Vice Admiral, USCG (Retired); 
Administrator, Pipeline and Hazardous Materials Safety Administration, 
                      Department of Transportation

I. Introduction
    Chairman Stevens, Co-Chairman Inouye, members of the Committee, 
thank you for the invitation to appear today to discuss your proposal 
to reauthorize the Federal program our Nation depends on to maintain 
safety in its energy pipeline network. I very much appreciate the 
Committee's interest in pipeline safety and I am pleased to provide my 
testimony on your proposal and the need to pass a reauthorization bill 
this year.
    I believe your bill embodies key concepts that will help us reach 
our goal of eliminating pipeline safety incidents. It provides a solid 
foundation for the energy transportation infrastructure we need to 
continue our strong economic growth into the future.
    Your bill addresses the most important safety concern we face--the 
growing rate of construction-related pipeline accidents, driven by a 
growing economy. These accidents, the leading cause of pipeline-related 
injuries and deaths, can and must be prevented. To do so, we need to 
strengthen the ability and authority of the states and ourselves to 
address these safety issues. That is why we need reauthorization now.

II. Why Two Issues Matter More Than Any Others
    In the past few years, PHMSA has taken a hard look at incidents, 
their causes and what can be done to prevent them. Issue number one is 
crystal clear--the leading cause of incidents in which people are hurt 
or killed is construction-related activities that cause an immediate 
rupture or damage which later grows to failure.
    Construction related damages on gas distribution systems has 
increased at a rate of 50 percent from 1996 to 2005 and will continue 
to get worse if we don't do something about it. These gas distribution 
systems run through the neighborhoods where people live and work and, 
even more concerning near our children's schools. Just last week a 
careless residential developer using Earth-moving equipment, ruptured a 
natural gas pipeline and caused the evacuation of an elementary school 
in Oklahoma. Over 14,000 schools nationwide, including elementary and 
secondary schools, are located in the vicinity of pipelines. 
Fortunately, this school and its community experienced only an 
evacuation and a temporary suspension of natural gas service. It could 
have been worse. Reducing the frequency and community impacts of 
incidents such as this receives the foremost attention of PHMSA and our 
closest partners in public safety, state pipeline safety agencies. The 
natural gas pipeline distribution network is almost entirely under the 
jurisdiction of states.
    Where operators are improving their pipeline safety performance, 
the gains come because operators are managing pipeline safety based on 
system risk. Clearly, to make a difference in saving lives, we must 
minimize damage to pipelines and other underground utilities, 
associated with construction related activity. 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 everyday, not just with pipelines but new 
telecommunications, electric, water and sewer, and other 
infrastructure.
    The photo below is a depiction of this crowded infrastructure and 
the very problem we're continuing to face. The photo shows an instance 
in which an operator discovered newly installed fiber optic lines 
directly over its natural gas pipeline. In this case, One-Call was not 
contacted and the operator was unaware of construction taking place in 
the vicinity of its pipeline.




    Several states including Virginia and Minnesota have led the way 
with strong damage prevention programs and have seen up to 50 percent 
reductions in this and other construction-related damages. We need to 
prioritize the resources for pipeline safety to be sure that our state 
partners have sufficient 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. (A ``One-Call'' 
ticket is a record of receipt by a state agency of a notice of the 
caller's intention to excavate.)



    Issue number two is helping states more. We need new authority to 
address this concern by establishing a grant program to encourage 
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. Our focus, however, will continue to be placed 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.

III. Senate Reauthorization Proposal
    Your proposal incorporates the Administration's proposed core 
safety improvements to address these top two issues--additional 
authority to extend effective enforcement of state ``one-call'' laws to 
any violator and improve damage prevention programs through greater 
incentives, and additional authority to strengthen state oversight of 
distribution pipelines generally.
    Your proposal also addresses a third issue, the importance of a 
strong and resilient energy transportation infrastructure. Americans 
depend on pipeline transportation for the safe movement of the vast 
majority of critical energy supplies. 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.
    Your proposal would authorize the Administration's proposed 
petroleum transportation capacity study, intended to identify 
limitations in the pipeline network that could adversely affect supply. 
This is important to improving our understanding of how to protect 
strategic energy supplies, a question that has been of increasing 
concern in recent months.
    In times of emergencies, a lack of redundancy and system capacity 
makes it important for PHMSA to work along with our state partners and 
other Federal agencies to assure that energy product transportation is 
not interrupted. Last year's devastating Gulf Coast storms taught us 
lessons about the vulnerability of pipelines to natural and man-made 
disasters. We believe we can help minimize pipeline system disruption 
while maintaining safe operations. To clarify our objective, we sought 
authority in the statute to address the need for PHMSA coordination 
within the Federal family to assist with recovery of the energy 
infrastructure. In the years to come, we hope to contribute to 
increasing the resiliency of this infrastructure.
    Your Committee's proposal reflects significant bipartisan 
collaboration on a range of proposals, some of which have been offered 
by the Administration and some which have not. We believe that the 
Administration's interests would be best served by passage of a bill 
this year, and we do not believe that any one or the combination of 
provisions we did not propose presents a serious concern. Some of the 
provisions are welcome additions.
    We support the initiative on executive certification of integrity 
management performance. This places an increased emphasis on the 
importance and accuracy of performance reporting. To get the results we 
want out of pipeline operators, we need to increase management's 
accountability and place additional attention on the importance of 
having more precise information to target safety risks.
    We strongly favor a systems-based approach to assessing and 
managing safety related risk, especially as the risks to large 
infrastructure systems, like pipelines, often change over time. We 
expect to see increasing results from our effective systems risk 
management approach, which this committee helped devise. For integrity 
management programs to be effective, operators must be free to focus on 
making the best use of information as it becomes available. This must 
be a dynamic process in which the operator is able to deploy attention 
and resources against the greatest risks, worst first.
    In keeping with this approach, we urge the Committee to grant the 
Secretary broader authority to adjust the inspection intervals for 
natural gas pipelines on the basis of risk factors. Reliance on 
prescribed 7 year retest intervals as established in current law goes 
against this process. It seems a disincentive to the continuous 
evaluation and readjustment of a dynamic systems approach that 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. We believe that if the Secretary determines that 
pipeline safety will be enhanced by establishing risk-based 
reassessment intervals, the Secretary should be able to issue rules 
establishing criteria for reassessing natural gas pipeline facilities 
on shorter and longer intervals not exceeding 10 years.
    In issuing such rules, the Secretary should be able to consider all 
significant risk factors, including, but not limited to, design, 
fabrication, and environmental and operating conditions. The Secretary 
should be able to determine the pipelines to which these rules apply. 
For a pipeline to be subject to a reassessment interval in excess of 7 
years, we would consider as a prerequisite that the pipeline is 
operating under an integrity management program that has been reviewed 
by the Department or an authorized state agency and a determination is 
made that the operator is providing appropriate risk analysis and 
control.
    Your proposal would also require DOT to impose standards for low-
stress liquid transmission lines. Although we already have a notice of 
proposed rulemaking on this subject, we have not determined yet whether 
covering more pipeline mileage and imposing more requirements can be 
justified by cost/benefit analysis. We have this matter under 
consideration and would appreciate having flexibility for the Secretary 
to make an appropriate decision to maximize protection of public 
safety, the environment and the reliability of energy supply.
    Another provision would require DOT to develop standards to address 
risks associated with pipeline control operations and would require 
some limitation on hours of service. In keeping with our systems risk 
management philosophy, we believe operators should have flexibility to 
develop their own systems plans to assess pipeline control management 
risks associated with human factors. We find this provision limits the 
development of risk control measures to certain prescribed solutions. 
We believe the Secretary should have more flexibility to consider the 
need for procedures, processes and other system measures to ensure 
effective performance in pipeline control functions, communication, 
information exchange, warning, or management of controller schedules 
and rest periods.
    We appreciate the Committee's leadership in recognizing the 
importance of several other issues, such as pipeline security and 
incident recovery; corrosion research; the advancement of national 
consensus standards; and inspection and enforcement staffing. These 
provisions can each strengthen the Department's hand in meeting the 
growing challenges of pipeline safety. The Administration is making 
progress in pipeline security and incident recovery through the 
Department's and Department of Homeland Security's Memorandum of 
Understanding (MOU) and PHMSA and TSA's recently implemented annex to 
the MOU. We appreciate the concern about the need to plan to build a 
workforce for building pipelines in the future, and we will be happy to 
work with the Congress on making use of existing programs within the 
government.
    We would be concerned that the added costs of the provisions 
significantly exceed that of the Administration's proposal. We would be 
pleased to work with the Committee to ensure appropriate fiscal 
controls and accountability are provided in any mechanism for 
recovering extraordinary inspection expenses. Perhaps the Congress also 
should consider providing for a more equitable distribution of cost 
over the entire pipeline industry, instead of limiting the burden to 
the transmission industry. The vast majority of the benefits of this 
proposal, if authorized, accrue for the first time to the distribution 
segment of the pipeline industry.

IV. Conclusion
    Over the past 5 years we have seen a steady decline in the leading 
causes of pipeline failures, with the exception of construction damage 
in distribution systems. We need to step up our efforts to address this 
problem. Each of the authorizing committees with jurisdiction over the 
pipeline safety program has developed a proposal for reauthorizing the 
program for the years 2007-2010. Each of the proposals incorporates the 
Administration's core safety reforms--strengthening the ability of 
states to address our most serious safety concerns. The similarities 
are much more significant than the differences.
    We understand that some efforts are being made to reconcile 
differences among the bills at the Committee level, with the hope that 
a single proposal could be voted on in both Houses before the end of 
the session. We ask Congress to pass a reauthorization bill this year, 
focusing on the key similarities among the bills.
    As important as a reauthorization bill will be for the enhancement 
of pipeline safety, especially natural gas distribution lines, benefits 
of a final bill would extend far beyond pipelines. Indirectly, 
additional customers of a reauthorized pipeline safety program include 
other stakeholders in America's underground infrastructure, the 
electric, telecommunications, water and sewer and other industries.
    The following chart shows the rate of which one of our leading 
states in underground damage prevention receives locate requests from 
utility sectors not related to pipelines--over 80 percent. 
Strengthening the Nation's pipeline safety program to include increased 
resources for states will ensure the safety of not only pipelines, but 
the underground infrastructure owned and operated by these utilities as 
well.



    I assure the members of this committee, that the Administration, 
Secretary Peters, 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 reliability and continued economic 
growth of our great Nation. I would be pleased to answer any questions 
you may have.
    Thank you.

    The Chairman. Well, thank you very much. Are there any 
developing new technologies that will be put into place into 
pipelines to increase the safety of them?
    Admiral Barrett. There are multiple technologies, Senator, 
and we have a quite robust research and development program--
partnered with industry, I might add--on a cost-sharing basis 
to bring those forward. They are extensive in the areas of 
corrosion detection and prevention in terms of assessing the 
condition of the pipelines, and in terms of maintaining the 
integrity of the system.
    Our key program, as you know, is integrity management, so 
in terms of understanding the condition of the lines, you are 
very familiar with the pigging, the inline inspection devices, 
making those devices able to detect better the conditions of 
the internal portions of the lines as well as external 
corrosion, is enormously important. And as technologies are 
coming forward, we will continue to push for them.
    The Chairman. The 2002 Act required regulations to be 
issued by your agency, and operators were required to complete 
their initial baseline assessments within 10 years of that Act 
and to reassess the lines not less than 7 years on an ongoing 
basis. Do you believe that that Act has been followed so far?
    Admiral Barrett. Yes, sir. The baseline assessments are 
progressing quite well, more than 50 percent of them are 
completed, the others are moving forward timely. I do not 
believe that the mandatory 7 year assessment is the most 
desirable approach--I would prefer that the assessment interval 
be based on an ongoing system risk analysis of the line and as 
an agency also we would be prepared to address that through 
waiver provisions on a case-by-case basis if we have to.
    The Chairman. Do you have that power now, to have a waiver?
    Admiral Barrett. We do, sir. And we can exercise it--it is 
more resource intensive, it's a company-by-company, specific -
by-specific approach--it's more burdensome on the particular 
company and on us, I'd rather have a set of standard criteria, 
but yes sir, we do have that authority.
    The Chairman. One of the provisions of our bill would 
prohibit that future exercise of that power to exempt operators 
from the 7 year assessment, do you object to that?
    Admiral Barrett. Yes sir, I would. I would want the ability 
to exercise the waiver authority where it's suitable, because 
from a safety management point-of-view, I believe some 
flexibility is desirable.
    The Chairman. Why would we want to exempt them altogether 
from a reassessment?
    Admiral Barrett. From a reassessment, no. I believe you 
absolutely have to have a reassessment. The integrity 
management program fundamentally requires, on an annual basis, 
that an operator look at the condition of their lines and 
determine where the greatest safety risks are and address those 
risks in a timely manner and we oversee that. And in some cases 
that--all I was saying is 7 years may not be the right 
interval--in some cases it might need to be earlier, in other 
cases it could well be later, as much as, say, 10 years.
    The Chairman. I understood that you did object to that, all 
that really does is prohibit you from exempting any operator 
from the 7 year reassessment.
    Admiral Barrett. Maybe I misunderstood your question.
    The Chairman. I'd appreciate it if you'd take a look at 
that because we heard that you disagreed with it, but I don't 
know why.
    I understand you're working on a low-stress pipeline rule 
and you have a proposed rulemaking with regard to, not all low-
stress pipelines, but to some. The bill that the four of us 
have introduced would require you to regulate a wider portion 
of the pipeline industry, particularly low-stress pipeline. 
What are your thoughts on that?
    Admiral Barrett. Sir, as you know, we have proposed 
regulating a portion of those lines, including the type of 
lines that BP operated up at Prudhoe Bay, the low-stress 
transmission lines and gathering lines. We received a fairly 
broad range of comments in response, our rulemaking period just 
closed November 6th. The commentary ranges from, what we 
proposed is too stringent and should not include mandatory 
cleaning or pigging requirements on one end, to another end 
that says we should regulate every low-stress line in the 
country and we are in the process of evaluating those comments 
right now. And obviously we will, early next year, bring forth 
a final ruling in that regard. But we are still evaluating the 
comments we received.
    The Chairman. Those 16 miles of transit lines were actually 
high-stress pipelines but they're operated at a low-stress 
pressure level.
    Admiral Barrett. Yes sir, that's correct.
    The Chairman. They were exempt, then, by means of operation 
in spite of the fact that they were designed for higher stress.
    Admiral Barrett. Yes, sir. Our rules exempt lines that are 
operated at less than 20 percent of the maximum operating rated 
strength of the lines.
    The Chairman. Why?
    Admiral Barrett. Again, because of the perceived risk prior 
to this summer of those lines. We had started a rulemaking 
proposal to bring those lines under regulation about 2 years 
ago, and we're working that forward. Our view was not that they 
didn't need more oversight, but that was not the agency's 
highest priority, we were more concerned with getting at lines 
where there was a demonstrated greater safety risk to life and 
the performance record on lines of that type prior to this 
summer was relatively--I use that term--relatively, better.
    The Chairman. Well, I'm still mystified by what happened up 
our way that the very fact that there are so many miles and 
it's just those 16 miles which were low-pressure which built up 
the corrosion which led to the leaks. Now, what you're saying 
is, is if they operate at a low enough pressure, we don't pay 
any attention to them. Why?
    Admiral Barrett. Again, I'm not saying that we not pay any 
attention to it, we had not gotten a regulatory package in 
place on those lines prior to the BP spills.
    But what I'd also say, too, and you're of course very 
familiar with this--we also, frankly, would not have expected 
anybody to not clean lines like that regularly, to not pig 
lines like that regularly. The standard of care exercised by BP 
on those lines was surprisingly well below what we typically 
see elsewhere in the industry. And the history of failures on 
lines like that, it has been modest in terms of oil spills or 
damage. And we were discouraged, and frankly it's a mystery to 
me why BP in contrast to other operators up there, did not 
maintain those lines better.
    The Chairman. Well, I've taken up to the North Slope of 
Alaska over the years, probably the entire Senate at one time 
or another, and we got briefings about all of the safety 
programs and how all of these things were pigged and how there 
was this maintenance, and yet here these 16 miles of lines 
which carry the basic product after they've gone through the 
conditioning plants to the big pipeline, not only did they not 
pig it, but they didn't have a shunt to take out any material 
that gathered in that pipeline, in those pipelines before they 
had a pig pipeline.
    Admiral Barrett. Yes, sir, that's correct.
    The Chairman. And one of the reasons for the low pressure 
was that they didn't want to try to push that stuff so it 
actually went into the big pipeline, because they would have 
had liability in the big pipeline if something happened. But I 
really don't understand a system that allows the operator to 
determine regulations simply by the amount of pressure.
    Admiral Barrett. Again, it was relatively--in the Agency's 
judgment--a relatively lower risk. There's the risk of failure 
to the line at lower pressure is less than the risk of failure 
on a line operating at high pressure, near its maximum 
operating strength. Particularly, as you always run the risk of 
some type of overpressure in a line that could test the rated 
strength of the line. So the pressure is one of the factors 
that affects the integrity of the line, or the risk that the 
line would fail, as will corrosion as you earlier mentioned.
    The Chairman. Well there was some indication that at times 
that pressure may have been increased in order to do some 
cleaning of the line instead of pigging, did you know that?
    Admiral Barrett. Not specifically for that purpose, I know 
when you start-up a line or shut it down you may see some 
modest fluctuation around the pressure, so you might have seen 
a small bump on start-up, but not specifically for the purpose 
that you mentioned, I'm not aware of that.
    The Chairman. Our bill will allow low-stress pipelines to 
be mapped in the National Pipeline Mapping System, and comply 
with regulations in place for other pipelines with respect to 
instant reporting. Have you looked at that provision?
    Admiral Barrett. Yes, sir.
    The Chairman. Do you agree with that?
    Admiral Barrett. We support that. Yes, sir, we do.
    The Chairman. Senator Inouye?
    Senator Inouye. In the year 2000, the El Paso Pipeline had 
a terrible accident.
    Admiral Barrett. Yes, sir.
    Senator Inouye. And the Pipeline agency announced a $2.5 
million fine, but apparently nothing has happened to it. Can 
you tell us what happened?
    Admiral Barrett. Yes, sir, I can. And that's not completely 
closed, but the Agency's penalty, if you will, is wrapped into 
a broader approach with the Department of Justice in terms of a 
more macro-settlement of issues related to that incident. Our 
penalty became wrapped up in a larger penalty settlement. I can 
provide the specifics on it, but I don't believe that is quite 
settled out yet.
    Senator Inouye. Do you think there should be better 
transparency?
    Admiral Barrett. I think that transparency is always 
welcome, I strongly support it, and one of our objectives 
certainly is to improve the transparency of enforcement and 
inspection results generally so that everybody knows where we 
are taking enforcement actions and what the ultimate outcomes 
are. And we have recently posted up on our website better 
information on our enforcement record over the last 5 years, 
shows a steadily increasing use of that authority. It has about 
quadrupled over the last 5 years, but we will be looking to 
make our actions more transparent and more traceable. I take 
your point, though, I agree with you.
    Senator Inouye. On the National Pipeline Mapping System, 
there are those who say you should do away with it, others say 
let's have it because otherwise states would have to bear the 
burden. What are your thoughts?
    Admiral Barrett. I think the mapping system is essential 
for several reasons. First, it's a terrific aid to local, 
county-level community planning efforts. And if you're deciding 
where to put in a new subdivision, where to locate a school, I 
think both local officials and quite frankly the public needs 
to understand what lines are running through those 
neighborhoods, and generally where those lines are.
    Post-9/11, obviously the security of the national energy 
infrastructure and knowledge about key nodes on those systems 
and on a national level knowing where all of those lines are 
poses a security risk. We have been working closely--I've been 
working with Kip Hawley and TSA to find a way to reconcile both 
of these needs. But I think both, in terms of community 
planning and, by the way, we're fairly close to finding ways to 
accommodate that and also protecting our security interests--I 
think the mapping system provides substantial benefit to the 
public, and also to local planning and state planning 
officials. And I think the lines, as you know, in some cases 
are simply at a state level, but in many cases they are 
interstate. And I believe, to use your word, Senator, 
transparency to the extent it's consistent with security, is 
very helpful.
    Senator Inouye. Mr. Chairman, may I submit a couple of 
questions?
    The Chairman. Go ahead. Oh, you want to submit them. The 
Senator wishes to submit some questions to the record, he'd 
appreciate it if you could respond to them.
    Admiral Barrett. Absolutely, sir.
    The Chairman. Senator Lautenberg?

            STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Yes, thanks Mr. Chairman for holding 
this really timely hearing as we see the capacity requirements 
for moving our energy supplies increasing fairly rapidly. And 
we in New Jersey had a terrible incident in 1994, residents of 
Edison, New Jersey, fast asleep, suddenly a gas pipeline 
exploded and sent fire nearly 400 feet into the sky. And the 
Mayor of the town recalled that it was daylight at midnight, 
the fire consumed 8 apartment buildings, left 128 families with 
no homes, sent some 1,500 men, women and children fleeing into 
the night. Just this past August, I understand, Mr. Chairman, 
you discussed the BP spill up in Prudhoe Bay, and with Prudhoe 
Bay producing some 400,000 barrels of oil a day. And this 
summer when we're faced with a major oil supply shortage due to 
severe corrosion in the pipeline for maintenance and inspection 
seemed out of sync with what it was that we could have done to 
prevent that.
    Now that private companies own and operate so many of these 
pipelines that bring natural gas to us and these pipelines 
supply 25 percent of the energy that we use in the United 
States. So, if anything, the last decade has demonstrated that 
strong Federal regulations can lead to better pipeline safety, 
stronger industry, safer homes and offices for everyone. And 
I'm pleased to be a co-sponsor of the PIPES Act that, Mr. 
Chairman, you and Senator Inouye have authored, affording 
introduction of new technology, excess flow valves for new or 
replacement pipes. These valves automatically shut off when 
there's a line that's ruptured to help prevent injury, protect 
property and most importantly, save lives. So, I hope our 
colleagues will support this bill and Admiral Barrett, thanks 
for being here today.
    When we look out at things and we, I'm sure, can't possibly 
see reductions in the need for increased capacity, so how do we 
continue to expand that capacity? Do we just, exchange sizes of 
pipe or lay pipe alongside the--what do we do to keep up with 
this, even as we make sure that the pipelines that we presently 
have, have the capability and are operating in the most 
efficient manner?
    Admiral Barrett. Senator, thank you. And I do appreciate, 
sincerely, your support for this bill.
    I think you need to do several things, and the list I would 
give you is not exhaustive. One solution we recently took 
action on, was to allow some new construction pipelines to 
operate at higher operating pressure, and that is, instead of 
limiting them to 70 percent of their maximum operating 
strength, allow them to operate at 80 percent, which allows the 
line to carry more capacity, these are gas lines we're talking 
about. But that was conditioned on new materials, new design, 
construction oversight and agreements on operating practices 
and procedures and inspection. So by providing a more rigorous, 
if you will, regime, we were able to issue waivers to let some 
newly constructed lines operate at higher pressure. So that was 
on the margins, but 6 or 7 percent more product moving through 
a line is very positive. So that's one approach.
    I think we have to work more broadly and more closely with 
all communities, if you will, that are affected by new lines so 
that they can be put in with the assurance that they can be 
operated safely. And by that I mean, we have an agreement and 
we work with the National Association of State Fire Marshals, 
we're working with the fire services, first responders, we do 
support and have--through hazmat grant programs helped to train 
first responders, but fundamentally to, through a public 
process, understand the risks to an area of bringing in new 
lines, and then provide a vehicle to manage those risks safely. 
And I believe that the job of pipeline safety with the support 
of this committee, the types of things we're talking about in 
this bill, the damage prevention programs with our state 
partners, can manage the risks in a way that will allow these 
developments to go forward with more confidence that they do 
not pose an unacceptable risk for our schools or our Nation.
    Senator Lautenberg. Admiral Barrett, I'm sure that the 
physical ability to do these, to increase pipelines and 
increase capacity can be found, but the community resistance to 
these things is yet another major problem. Especially where 
there has been an incident along the way in a state or a town 
and people see what kind of a threat this poses. And I can tell 
you, we've tried to help companies put more pipe down and 
improve efficiency, and it's a battle of major proportions.
    Admiral Barrett. Senator, I could not agree with you more, 
and to take Senator Inouye's word, though, I believe what can 
help most is transparency, transparency in where the lines are, 
what the benefits are that they provide, what the risks are and 
how those risks can be managed.
    You have a witness later, Carl Weimer from Pipeline Safety 
Trust, I was recently down in New Orleans at their annual 
meeting, I was up in Bellingham at the site of a tragedy up 
there, similar to the one you mention in New Jersey. I met with 
the families involved, and the commitment I gave them was that 
I understand how tragic these incidents can be. And I am 
committed, and this agency is committed to doing everything we 
can to ensure lines operate safely. And I think that's the 
assurance that we have to be able to provide communities, and 
to get there, is to have honest dialogue and robust dialogue 
about the concerns they have and how we would propose to 
address them.
    And I agree with you, it is not an easy process.
    Senator Lautenberg. I would propose your presence when we 
have these town meetings, I think.
    Admiral Barrett. I would be delighted to that, and----
    Senator Lautenberg. I don't know whether you'll be 
delighted--you're nice to volunteer, but that's true of your 
background.
    Admiral Barrett. Senator, I do think we have to listen and 
understand.
    Senator Lautenberg. You have the jurisdiction under the 
PHMSA as it is to issue technical assistance grants to local 
communities, have you done any?
    Admiral Barrett. Not specifically, and I believe there are 
provisions in some of the bills that would actually require us 
to do some demonstration grants. And part of the issue is 
devising criteria to make those grants smart and effective. And 
I believe we would support having a provision that would allow 
us to do some demonstrations, determine if they're effective, 
and go forward.
    Senator Lautenberg. Hard to understand why something like 
that couldn't be expedited, especially if we're turning more to 
the states and the localities to participate more actively.
    Your testimony calls for restoring public access, Senator 
Inouye talked about transparency to the National Pipeline 
Mapping System. Do you believe there are any valid security-
related concerns about making that information more widely 
available?
    Admiral Barrett. Yes, sir, I do. We met with TSA and 
depending on how much fidelity is provided in the information 
and what type of information, but I think there's a way to 
balance those security concerns that are legitimate and they 
are serious in some cases. But nonetheless, I believe on a 
local level we can provide the information that community 
planners and community citizens need, and we are working 
closely with TSA to achieve that. And TSA, by the way, I would 
add, is supportive of finding a way to meet the public 
information need, at the same time protecting the legitimate 
security concerns.
    Senator Lautenberg. Chairman, I think it's awful tough to 
have transparency, full knowledge in the communities without 
having those we do not like to see the map be able to see it. 
So, there are a compliment of problems here. I, for one, can't 
see how we can bypass the communities in terms of that 
information.
    Mr. Chairman, thanks very much for having this hearing.
    The Chairman. Thank you.
    Admiral Barrett. thank you, Senator.
    The Chairman. Admiral one of the things that came out of 
our listening session in Alaska was that the Trans-Alaskan 
Pipeline, because of some apparent action and the Pipeline 
having become a conductor for induced electrical current, 
developed a series of grounds so that that current could not 
lead like electrolysis to affect any water that might be inside 
the pipeline. As we looked at these transit lines, they were 
supposed to have been cleaned by the cleaning plants, and the 
oil in the transit line is supposed to be free of gas and water 
and sludge. However, all three built-up in those transit lines, 
and the question has been asked, why doesn't your 
Administration look at the problem of this concept of induced 
electricity and the possibility of electrolysis having 
something to do with the erosion and corrosion inside the 
pipeline that lead to the leaked sections we had?
    Admiral Barrett. Senator, I think you're correct but we do. 
I think electrolysis-electrochemical reactions obviously are a 
risk of corrosion in any line, and in northern latitudes, you 
also have the possible, the telluric-type current effect from 
things like the Aurora. That has been an issue on the Trans-
Alaska Pipeline.
    I met, about 2 weeks ago, with Dr. Wong to talk about how 
we could get a better handle on that type of risk with respect 
to northern latitude pipelines in general. But it is an area 
that warrants attention and research and it is one that is 
actively looked at. But I agree with you that it's an area we 
will----
    The Chairman. Are you going to pursue that? I think the 
Aurora comes down to, or Canada comes down to the northern part 
of what we call the South 48 states, but beyond that, some of 
it could be induced just from electrical storms.
    Admiral Barrett. Yes, sir. And we are going to pursue the 
further research in some appropriate way in that area, and I 
also intend to talk to the State of Alaska about it as well, 
because they obviously have some concerns, particularly in 
northern latitudes.
    The Chairman. My last question--are you going to do 
anything about putting additional burdens on states? After all, 
they are monitoring the vast majority of the pipelines in this 
country, not you. They only come to you when there's a problem. 
But are you going to put them on notice of additional 
requirements if they are going to be delegated the right, as 
you do now, you delegate your authority under the law to the 
states.
    Admiral Barrett. We delegate a lot of authority to them, we 
do assess how strong their programs are and as you know this 
proposal would not simply strengthen their enforcement 
authority on damage prevention. But we're also looking to 
increase the grants authority from up to as much as 80 percent 
to help better resource them to execute the programs that they 
help us do. We view them very much as partners, and I believe 
they view us the same way. And as you indicated, they have more 
than three times, three and a half times the number of 
inspectors that the Federal Government does, and it's 
absolutely essential that our inspections and enforcement 
actions be coordinated.
    But, fundamentally, also they are closer to the problems in 
many cases, certainly the gas distribution line issue that 
Senator Lautenberg mentioned, they're going to be closer to it 
in many cases, they'll get quicker, smarter solutions than we 
could from a little distance back. So, our goal would be to 
strengthen their programs, but also with the help of the 
Congress, provide additional resources to back-stop them.
    The Chairman. Thank you very much for your testimony, 
Admiral, I appreciate it and look forward to working with you 
on the subject, we hope to get you a bill before the Congress 
recesses.
    Admiral Barrett. Senator, thank you very much, Mr. Co-
Chairman, thank you, Senator Lautenberg, thank you for coming 
in and I look forward to working with you all the time. Thanks, 
sir.
    The Chairman. Our second panel is Mr. Carl Weimer, he is 
the Executive Director of the Pipeline Safety Trust of 
Bellingham, Washington, Mr. Timothy Felt, the President and CEO 
of the Explorer Pipeline Company of Tulsa, Oklahoma, he's 
speaking on behalf of the Association of Oil Pipe Lines and the 
American Petroleum Institute. Third witness is Mr. Terry Boss, 
Senior Vice President for Environment, Safety and Operations to 
the Interstate Natural Gas Association of America and Mr. Frank 
Bender, Vice President of Gas Distribution and New Business 
Division of Baltimore Gas and Electric Company in Baltimore, 
Maryland on behalf of the American Gas Association and American 
Public Gas Association.
    Gentlemen, we appreciate your courtesy in coming to be with 
us today. This hearing is necessary in order that we may move 
our bill, and we would appreciate your statements as I 
indicated, your statements will be printed in the record in 
full, we look forward to your comments. Mr. Weimer, may we call 
on you first, please.

 STATEMENT OF CARL WEIMER, EXECUTIVE DIRECTOR, PIPELINE SAFETY 
                             TRUST

    Mr. Weimer. Yes, Mr. Chairman and members of the Committee, 
thank you for inviting me to speak here today on the important 
subject of pipeline safety.
    The Pipeline Safety Trust came into being after the Olympic 
Pipeline tragedy in Bellingham that left three young people 
dead, killed every living thing in a beautiful salmon stream, 
and caused millions of dollars of economic disruption. Similar 
tragedies have happened in other places before and since the 
Bellingham tragedy.
    I'd like to start this morning by saying we're quite 
pleased with S. 3961 and we want to thank you for bringing it 
forward. In our opinion, there are many things in it that will 
increase pipeline safety. Just to mention some of our 
favorites, we support the provisions in the Senate bill 
regarding low-stress pipelines. We support the inclusion in the 
Senate bill that requires an executive signature on integrity 
management reports. We support the 1-year requirement for the 
development of integrity management standards for gas 
distribution systems, and we support the language in the Senate 
bill which requires PHMSA to electronically post monthly 
summaries of its enforcement actions.
    The House Energy and Commerce bill provided language that 
provides operators the opportunity to provide response to PHMSA 
enforcement actions, to better illustrate both sides of the 
enforcement story. This only seems fair, and we hope the 
Committee will adopt this and additional enforcement 
transparency language as well.
    We support the language in the Senate bill which would 
authorize technical assistance grants to communities and 
provide PHMSA incentive to move demonstrations of this program 
forward sooner rather than later. There is one small change of 
an item already in the bill which we think would make the bill 
even stronger. The National Transportation Safety Board, and 
the International Association of Fire Chiefs has recommended to 
PHMSA that excess flow valve installation be mandatory in new 
construction when pipelines are being replaced or upgraded.
    The Pipeline Safety Trust commissioned a review of excess 
flow valves, and that review came to the same mandatory 
installation conclusion. For these reasons, we support the 
language in the Senate bill that includes the development of 
criteria for requiring the installation of excess flow valves, 
but ask that that language be strengthened to ensure that these 
inexpensive safety devices are installed, unless a company can 
prove that they will not operate correctly on their particular 
system. In our opinion, the current language, which requires 
these valves on the basis of feasibility and risk analysis, 
provides too much wiggle room.
    The only disagreement we have with the Senate bill is 
concerning permit streamlining. We have not seen any documented 
need for streamlining for the construction and expansion of 
pipelines. Until such need is proven, we oppose the language in 
Section 13 of the Senate bill.
    Since my time today is so short, let me just briefly 
mention important areas where we believe all the bills still 
need improvement. After the 2001 terrorist attacks, the 
National Pipeline Mapping System was removed from public 
access. We believe that maps that allow local government to 
know where pipelines are in relation to housing developments 
and businesses are critical to prevent pipeline damage and to 
increase pipeline safety. Current security concerns makes the 
mapping system mainly useless for local government, since the 
map information cannot be added to local GIS systems or 
planning maps because of the required nondisclosure. The 
location of pipelines are no secret, in fact, they are required 
to be marked at each public road crossing and railroad crossing 
and in sufficient number along each buried line, so that the 
location is accurately known. If terrorists want to find 
pipeline, they will.
    For these reasons, we ask that you direct PHMSA to 
reinstate access to the National Pipeline Mapping System so 
that local governments can plan safely.
    One of the most important functions that PHMSA provides is 
the ongoing independent inspection of pipeline companies' 
operations. We support the additional inspectors in the bill. 
Unfortunately, none of these inspection findings are available 
to local government, or the public for review. PHMSA should be 
required to create an Internet-accessible inspection docket 
similar to the enforcement transparency requirements in the 
Senate bill where the public could review basic company 
inspection information.
    And finally, in 2004, the Transportation Research Board 
released a study on developing risk-informed land-use guidance 
near transmission guidance near transmission pipelines for use 
by state and local governments. One of the major pieces of that 
report was the recommendation to PHMSA for the establishment of 
a Pipeline and Informed Planning Alliance, a multi-stakeholder 
effort aimed at moving this risk-informed land-use guidance 
forward.
    The Pipeline Safety Trust was invited to be on the steering 
committee for that effort in early 2005. Since that time not 
one meeting has been held, and progress on this important 
initiative seems to have stalled. We think that Congress should 
help move this process forward by setting a date certain for 
this initiative to get started, and require PHMSA to report to 
Congress on progress made at regular intervals.
    Thank you again for this opportunity to testify today. In 
the past 5 years, pipeline safety has moved forward on many 
fronts, and we appreciate the part that PHMSA, the industry, 
and particularly Congress has had in this progress. We hope you 
will consider the ideas we have brought forward today, which we 
believe will take pipeline safety up another significant notch, 
and I'm glad to answer any questions now, that you have now, or 
any time in the future. Thank you.
    [The prepared statement of Mr. Weimer follows:]

        Prepared Statement of Carl Weimer, Executive Director, 
                         Pipeline Safety Trust

    Mr. Chairman and members of the Committee:
    Good morning, and thank you for inviting me to speak today on the 
important subject of pipeline safety. My name is Carl Weimer and I am 
testifying today as the Executive Director of the Pipeline Safety 
Trust. I am also a member of the Office of Pipeline Safety's Technical 
Hazardous Liquid Pipeline Safety Standard Committee, as well as the 
Chairman of the Governor-appointed Washington State Citizens Committee 
on Pipeline Safety. I also bring a local government perspective to 
these discussions as an elected County Commissioner in Washington 
State.
    The Pipeline Safety Trust came into being after the 1999 Olympic 
Pipeline tragedy in Bellingham Washington that left three young people 
dead, wiped out every living thing in a beautiful salmon stream, and 
caused millions of dollars of economic disruption to our region. After 
investigating this tragedy, the U.S. Justice Department recognized the 
need for an independent organization that 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 the Justice Department's recommendation and awarded the 
Pipeline Safety Trust $4 million which was used as an initial endowment 
for the long-term continuation of the Trust's mission.
    The vision of the Pipeline Safety Trust is simple. We believe that 
communities should feel safe when pipelines run through them, and trust 
that their government is proactively working to prevent pipeline 
hazards. We believe that the local communities who have the most to 
lose if a pipeline fails should be included in discussions of how 
better to prevent pipeline failures. And we believe that only when 
trusted partnerships between pipeline companies, government, 
communities, and safety advocates are formed, will pipelines truly be 
safer.
    The Pipeline Safety Trust is the only nonprofit organization in the 
country that strives to provide a voice for those affected by pipelines 
that normally have no voice at proceedings like this. With that in 
mind, I am here to speak today for the families who lost their husbands 
and fathers in the 2004 Walnut Creek California pipeline explosion 
caused when the pipeline company incorrectly marked the location of 
their pipeline. I am speaking today on behalf of the people living 
along the Kentucky and Ohio Rivers who in 2005 awoke to find 290,000 
gallons of crude oil had been dumped by a pipeline into those rivers. 
And I am here to speak today on behalf of the people who were affected 
by the more than $846 million of property damage that pipelines are 
responsible for in the past 5 years.
    The Pipeline Safety Trust has already provided testimony this year 
to both the House Transportation and Infrastructure Committee and the 
House Energy and Commerce Committee. As the reauthorization process has 
proceeded many different ideas have been incorporated into the 
different bill versions, so I would like to start this morning by 
providing our opinion on which of these ideas will do the most to make 
pipelines safer.

Best Provisions in the Different Bills
    Low-Stress Pipelines--We support the provisions in S. 3961, and 
appreciate the addition in Section 3(3) that clarifies that certain 
exemptions do not apply to incident reporting and the National Pipeline 
Mapping System.
    The 200,000 gallon crude oil leak on the North Slope of Alaska last 
winter, the additional leak found this past summer followed by a 
partial shut-down of the Prudhoe Bay Oil Field, and the ensuing fiasco 
concerning BP's previously inadequate pipeline maintenance and testing 
have made it clear that all such low-stress pipelines should fall under 
the same minimum Federal standards as other transmission pipelines. 
Likewise, those sections of pipeline, which could affect Unusually 
Sensitive Areas, should be required to meet the same integrity 
management provisions as other transmission pipelines.
    The Pipeline and Hazardous Material Safety Administration (PHMSA) 
is currently engaged in a rulemaking on these low-stress pipelines that 
has as a starting point a proposal that is much weaker, and more 
confusing, than what is included in S. 3961, and the version of the 
bill coming forward from the House Energy and Commerce Committee. We 
hope that Congress will pass these provisions soon so that PHMSA 
understands the importance Congress has put on ensuring these pipelines 
are maintained in a way that protects the environment and the economy.
    Senior Executive Signature on Integrity Management Reports--We 
support this inclusion in S. 3961, and believe it is an excellent 
method to ensure that the senior management that makes decisions 
regarding maintenance, testing, and budget decisions affecting pipeline 
safety are also aware of the current integrity of their federally-
regulated pipelines.
    Distribution Integrity Management Program & Deadline--The majority 
of deaths and injuries from pipelines occur from incidents on the 
distribution pipeline systems that bring gas to our towns, businesses, 
and homes. From the period 2001 through 2005 sixty-one people died 
along these pipelines, and two hundred and thirty seven were injured. 
PHMSA, states, industry, and private organizations have undertaken an 
aggressive work plan to come up with an integrity management program 
for distribution pipelines. The Phase 1 report on this plan was 
released earlier this year, and all involved deserve our thanks for 
their efforts.
    It is imperative that this plan now moves to the adoption of rules 
as soon as possible. We applaud and support the one-year requirement in 
all the present bills for the development of such standards.
    One area that bills differ is regarding requirements to include 
criteria for the installation of excess flow valves. The National 
Transportation Safety Board (NTSB) has recommended to PHMSA that excess 
flow valve installation be mandatory in new construction and when 
existing service pipelines are being replaced or upgraded. The 
International Association of Fire Chiefs supports this mandatory 
installation position. The Pipeline Safety Trust commissioned an 
independent review of the literature and science on excess flow valves, 
and that review came to the same mandatory installation conclusion.
    For these reasons we support the language in S. 3961 that includes 
the development of criteria for requiring the installation of excess 
flow valves.
    Enforcement Transparency--One of the things that PHMSA has been 
criticized for in the past is the lack of the use of enforcement to 
deter future accidents. In our own Bellingham tragedy, PHMSA announced 
with great fanfare a proposed penalty of $3.02 million. Then for nearly 
5 years the regulators and the pipeline company went behind closed 
doors, and when they emerged the fine had been mysteriously reduced to 
$250,000. The only information available to the public regarding why 
this drastic reduction had occurred was the short phrase in the 
Settlement Order that said ``In order to avoid further litigation or 
expense, OPS and Olympic resolve this case.'' This did not sit well 
with the people in Bellingham, and certainly does not instill 
confidence or trust in a regulatory agency.
    In 2000, the El Paso Pipeline in New Mexico blew up killing an 
entire extended family of twelve. Again PHMSA announced with much 
fanfare a proposed $2.52 million fine. Now, over 6 years later, there 
is no information available about the status of that penalty, and it 
appears that not one cent of it has been collected.
    Most law enforcement in this country takes place in public for good 
reasons. Public scrutiny enhances credibility, accountability and 
fairness. Seeing PHMSA expeditiously enforce its regulations would 
instill confidence that safe pipeline operation is a requirement rather 
than a guideline. If companies challenge fines because regulations are 
poorly crafted, the public could demand better rules.
    We support the language in S. 3961, which requires PHMSA to 
electronically post monthly summaries of its enforcement actions. We 
also support the language in the House Energy and Commerce Bill that 
provides operators the ability to provide response to PHMSA enforcement 
actions to better illustrate both sides of the enforcement story. This 
only seems fair, and we hope the Senate Commerce, Science, and 
Transportation Committee will adopt this additional language as well.
    Technical Assistance Grants--The Pipeline Safety Improvement Act of 
2002 included a new program to enhance the understanding and 
involvement of local communities and state initiatives in pipeline 
safety issues by making grants of up to $50,000 available for 
``technical assistance to local communities and groups of individuals 
relating to the safety of pipeline facilities in local communities.''
    These grants were envisioned as a way to keep valuable independent 
pipeline safety initiatives moving forward, and to ensure that those 
most directly impacted by pipeline failures have the resources to 
become legitimate stakeholders in processes to improve pipeline safety. 
Examples of groups that could benefit from such grants include the 
Washington City and County Pipeline Safety Consortium and the Kentucky 
Pipeline Safety Advisory Committee. Both of these groups formed after 
major pipeline failures and involve a broad spectrum of stakeholders 
looking for solutions to keep their communities safe and avoid further 
pipeline accidents. These grants would be a small price to pay to help 
foster such outstanding examples of independent pipeline safety 
initiatives, and pipeline safety involvement. Such local involvement is 
critical as PHMSA moves forward in the areas of pipeline damage 
prevention and encroachment. Another potential use of the grants is to 
pay for increased public and local government involvement in industry 
standards development and to assist in public comments on technical 
regulations.
    To date none of these grants have been awarded, and to our 
knowledge PHMSA has not even begun the process to develop procedures to 
award such grants. We support the language in S. 3961, which would 
reauthorize these grants, and provide PHMSA an incentive to move 
demonstrations of this program forward sooner rather than later.
    State pipeline damage prevention programs--For years now PHMSA has 
partnered with the Common Ground Alliance and One-Call centers to 
provide a nationwide structure to educate contractors, utilities, local 
government, and the public on the need to be aware of the underground 
pipeline infrastructure, develop best management practices, and use 
one-call locator services. These have been valuable programs, and have 
laid the start of a national network to improve pipeline damage 
prevention.
    It has become apparent over the past few years that for these 
efforts to be truly effective there needs to be enforceable laws, and 
adequate local enforcement of those laws, to provide the incentive for 
all who dig to pay attention to how and where they dig. Progressive 
states such as Virginia and Minnesota have proven that with good 
education programs coupled with data collection and adequate and fair 
enforcement, the number of incidents of damage to pipelines decreases 
considerably.
    The only way that state and local enforcement will increase is if 
Congress provides increased funding to the state's pipeline programs, 
and allows PHMSA to distribute that funding in such a way that it is an 
incentive for states to increase their capacity for enforcement. We 
support the language in S. 3961, which provides for greater funding of 
state damage prevention programs, and provides clarity of what such 
programs should include. We also believe that at this point in time it 
is important that this money is available to help states develop such 
programs, so we also support the language that was included in the 
House Energy and Commerce Bill that amends 60105(b)(4) to make it clear 
that a state that is ``encouraging and promoting the establishment of a 
program'' can receive the grant funding even if the program is not yet 
fully in place.
    Safety Orders--We fully support the language in S. 3961, which 
allows PHMSA to waive notice and a hearing in an emergency. We oppose 
the language in the Senate bill, which requires the new rules be in 
place before a safety order can be issued. We hope that these rules 
will be promulgated swiftly, and support the ``within 1 year'' 
provision in the House Energy and Commerce Bill, but we do not believe 
issuance of such important orders should be put on hold until these new 
rules are promulgated.
    Permit Streamlining--We supported the language in Section 16 of the 
Pipeline Safety Improvement Act of 2002 that gave PHMSA authority to 
help expedite and coordinate the repair of existing pipelines to help 
ensure timely safety repairs without preempting any Federal, state, or 
local environmental laws. We have not seen any documented need for 
permit streamlining for the construction and expansion of pipelines. 
Until such documented need is proven we oppose the language in Section 
13 of S. 3961. Additionally, this section does not contain critical 
language prohibiting preemption of Federal, state, or local 
environmental laws.
    One-Call Civil Enforcement--We support the language in S. 3961. We 
agree that PHMSA's authority should not be limited in any state, and 
that calling 911 to report damage should not be the only method 
included. We also support the language that includes operators who fail 
to respond to location requests in a timely manner, or who mark 
pipelines incorrectly.
    Gas Pipeline Integrity Reassessment Interval--The first cycle of 
integrity management assessment for gas pipelines has not even been 
completed yet, so we support the Senate bill's authors who chose not to 
address the reassessment interval at this early date.
    Human Factor Risk Management Rulemaking--We support the 18 month 
requirement for development of these standards, and also support the 
specific language in S. 3961 that requires these standards to address 
work hours and schedules.
    Leak Detection Technology Report--We support the language in S. 
3961 which requires a report from PHMSA within 1 year on the 
effectiveness of current leak detection technology.
    Although S. 3961 and the associated House Bills contain many 
important improvements to pipeline safety, we feel that there are still 
some significant omissions from all of these bills. We ask that you 
amend S. 3961 to include the following provisions.

Needed Improvements Missing at This Time
The Need for More Publicly Available Information
    One of the Pipeline Safety Trust's highest priorities is to ensure 
that there is enough accurate information easily available to local 
governments and the public to allow them to independently gauge the 
safety of the pipelines that run through their communities. PHMSA has 
made a good deal of progress in this area, but some of the most 
important information pieces are still missing. We ask that you help 
make this information available.
    Maps--Maps that allow local government emergency responders, 
planners, and zoning officials to know where pipelines are in relation 
to housing developments and a variety of infrastructure are critical to 
prevent pipeline damage and increase pipeline safety. Maps that allow 
the public to see what pipelines run through their neighborhoods are 
also the best way to capture the public's attention regarding pipeline 
safety, increase their awareness of pipeline damage issues, and enlist 
them to be the eyes to help prevent pipeline damage. Maps also allow 
homebuyers to decide their own comfort level with living near 
pipelines.
    The 2002 Pipeline Safety Improvement Act required that pipeline 
companies provide PHMSA with data for the National Pipeline Mapping 
System (NPMS) so such maps could be available for the above purposes. 
Unfortunately after the September 11, 2001 terrorist attacks the NPMS 
system was removed from easy access and became a password-protected 
system that approved users have to agree not to share with anyone else. 
This new NPMS security removes the maps from the public altogether, and 
makes the system mainly useless for local government since the map 
information can not be added to local GIS systems or planning maps 
because of the required nondisclosure.
    This removal of maps out of fear that terrorists may use them to 
find targets flies in the face of common sense. The location of 
pipelines are no secret, in fact 49 CFR 195.410 requires that ``Markers 
must be located at each public road crossing, at each railroad 
crossing, and in sufficient number along the remainder of each buried 
line so that its location is accurately known.'' If terrorists want to 
find pipelines, they will. All that has been accomplished by removing 
maps from the public is to increase the growing problem of encroachment 
near pipelines, and of unintentional damage to pipelines.
    This removal of the NPMS from the public has also caused some 
states, such as Washington, Texas and Louisiana, to spend their limited 
state dollars to duplicate this mapping system so that local government 
and the public have access to this valuable information.
    For these reasons we ask that you direct PHMSA to reinstate access 
to the NPMS, so local governments can plan safely and the public can be 
aware of the pipelines that run through their midst.
    Access to Inspection Findings--One of the most important functions 
that PHMSA provides is the ongoing independent inspection of pipeline 
companies' operations, maintenance, and training programs. The findings 
of these inspections form one of the very basic protections to the 
public. Unfortunately none of these inspection findings are available 
for local government or the public to review, leaving them to only 
guess the condition of pipelines, or even if such inspections are 
taking place.
    The pipeline industry themselves complains about this system. 
Individual companies do know when they have been inspected, but often 
have to wait months or years to learn the outcome of the inspections, 
and most times if no problems were found they hear absolutely nothing. 
This lengthy, or nonexistent, feedback system to pipeline companies is 
unfair, and does not improve safety the way a timely feedback system 
would.
    Somewhere there must exist, or there should exist, a simple 
coversheet for each inspection that includes basic information such as 
pipeline segment included, the date of the inspection, type of 
inspection, concerns noted, and corrections required. If this basic 
information, along with associated correspondence between the agency 
and the pipeline company, were provided on an Internet-based docket 
system that could be searched by state or pipeline company name, we 
believe it would go a long way toward demonstrating progress, and thus 
increasing trust in pipeline safety. This inspection transparency would 
go hand-in-hand with the enforcement transparency that is already 
included in S. 3961.
    Reporting of Over-Pressurization Events--One of the clearest 
measurements of whether a pipeline company has good control of their 
pipeline system is the number of times that they allow their pipeline 
to exceed the maximum allowable operating pressure plus a permitted 
accumulation pressure for gas pipelines, or 110 percent of the maximum 
operating pressure for liquid pipelines. Unfortunately the vast 
majority of these events are not required to be reported to PHMSA, so 
neither PHMSA nor the public can use this indicator to determine 
whether the pipeline company is causing unwarranted stress on their 
pipeline and therefore needs greater scrutiny.
    In the 1980s when it was decided to provide an exemption to 
reporting most of these important events the reasoning was that the 
reporting would be extremely time intensive and costly for the 
industry, and PHMSA (RSPA at that time) had no database that would 
handle the data in a way that would be valuable for the agency. Fifteen 
years ago e-mail, the Internet, and integrated databases were a vague 
dream. That has all changed, so the arguments used against the 
collection of this valuable information no longer apply. Furthermore, 
with increased capabilities in control room technology, remote 
communications, and integrity management the number of over-
pressurization events should have reduced. Without this reporting 
requirement we have no way to know.
    For these reasons the exemptions from reporting these events 
contained in 49 CFR 191.23(b) and 49 CFR 195.55(b) should be removed.
Pipelines and Informed Planning Alliance (PIPA)
    In August of 2004, the Transportation Research Board of the 
National Academies released a study on the feasibility of developing 
risk-informed land use guidance near existing and future transmission 
pipelines for use by state and local governments. This study was an 
attempt to address the need for local governments to use land use and 
zoning laws to try to protect citizens and pipelines from encroachment 
by development near existing pipelines and in the siting of new 
pipelines.
    The vast majority of local planning departments have little 
expertise or knowledge of pipelines, so developing such guidance is a 
crucial part in the overall strategy of damage prevention. PHMSA 
provided a report to Congress on the development of these guidance 
activities in January of 2005. One of the major pieces of that report 
was the establishment of the Pipelines and Informed Planning Alliance 
(PIPA), a multi-stakeholder effort aimed at designing and moving this 
risk-informed land use guidance forward.
    This effort will not be easy because many of these stakeholders 
have little reason to add concern for pipelines very high up on their 
already crowded list of priorities, but it is essential that this 
effort get underway. This is another area where increased funding for 
state participation, and funding of the Pipeline Safety Information 
Grants to allow these stakeholder groups to participate as equal 
partners, will be required for a successful outcome.
    The Pipeline Safety Trust was invited to be on the steering 
committee for the PIPA effort in early 2005. Since that time not one 
meeting has been held, and progress on this important initiative seems 
to have stalled. We think that Congress should help move this process 
forward by setting a date-certain for this initiative to get started, 
and require PHMSA to report to Congress on progress made at regular 
intervals.

Greater Citizen Involvement--State Pipeline Advisory Committees
    The Pipeline Safety Improvement Act of 2002 provided a vehicle for 
greater public involvement in pipeline safety issues for pipeline 
advisory committees appointed by state Governors. The states of 
Washington and Kentucky have both taken advantage of this opportunity 
to involve a broader range of stakeholders in pipeline safety 
discussions. The creation of state advisory committees is essential for 
greater public involvement, especially as PHMSA moves forward on 
efforts to involve local communities on issues regarding pipelines, 
encroachment and smart local planning. In Washington State the Citizen 
Committee on Pipeline Safety has become an integral part of rulemaking 
and public involvement, as well as a valuable sounding board for 
concerned citizens, local government, industry, and the state 
legislature.
    We believe that greater public involvement, leads to greater trust 
and understanding, which leads to smarter, more comprehensive pipeline 
safety initiatives. For this reason we hope that Congress will 
encourage the creation of more state pipeline advisory committees. This 
could be accomplished by having PHMSA promote such advisory committees, 
while tying a small percentage of the state pipeline safety program 
grant to the appointment and ongoing meeting of such a Governor-
appointed committee.

Financial Responsibility Requirements for Pipeline Corporations
    Large corporations can shield themselves from liability for poor 
safety practices through certain strategies, such as holding assets 
that may generate liability (e.g., pipelines) in subsidiaries or as 
shares of separate corporations. As part of this strategy, the parent 
corporation drastically undercapitalizes its subsidiary. In the case of 
pipelines, this is common. It is not unusual for a pipeline company to 
be capitalized by virtually 100 percent debt, lent by the large 
corporate shareholders.
    In fact, the owners of the Olympic Pipeline used a similar 
strategy. In a major spill like Bellingham, the undercapitalized 
pipeline company is forced into bankruptcy when the owners decline to 
provide further financing. In the usual bankruptcy, the shareholders 
lose the company assets to the debt holders, but in this case, those 
are the same entities. Bankruptcy presents no meaningful threat to 
these shareholders but it does allow pipeline companies to avoid 
financial consequences for inadequate safety measures.
    Congress should consider imposing financial responsibility 
requirements for pipelines as it already does for other companies under 
the Resources Conservation and Recovery Act (RCRA) and the Oil 
Pollution Act (OPA). To get this process started we urge Congress to 
ask for a study from either GAO or CRS, to describe how this works in 
other regulatory realms, and how it could best be adapted for 
pipelines.

Expansion of High Consequence Areas (HCA)
    Finally, we would like Congress to consider a phased expansion of 
what is included within the definition of high consequence areas (HCA). 
This definition, to a large extent, is what determines which 
transmission pipelines are required to be inspected under the integrity 
management rules. At this time HCA's mainly include populated areas, 
areas where people congregate, and for liquid pipelines drinking water 
sources, and navigable waterways. This was a good starting place for 
integrity management since it represented the most crucial areas and a 
significant undertaking for the industry.
    As the first phase of integrity management testing is accomplished 
we believe operator and regulator experience, along with the increases 
in industry infrastructure needed to undertake these inspections, makes 
it possible to expand the definition of HCA to include important areas 
that were left out of the initial definition. These left out areas 
would include things like important historical sites, national parks 
and wildlife refuges, and in the case of liquid pipelines swimable and 
fishable waters.
    Before I finish I would like to comment on the progress that PHMSA 
has made under its current leadership. In the past seven and a half 
years, since the Bellingham pipeline tragedy, due to strong efforts 
from citizens, Members of Congress, PHMSA, and the industry itself, 
progress has been made to prevent further tragedies like those that 
have occurred in Edison, NJ; Walnut Creek, CA; Blenheim, NY; Mounds 
View, MN; Lively, TX; San Bernardino, CA; Bellingham, WA; Carlsbad, NM; 
and elsewhere.
    For the first time parts of gas and liquid transmission pipelines 
now have to be internally inspected, and rulemaking is proceeding to 
include integrity management requirements for gas distribution 
pipelines where the majority of deaths and injuries occur. Pipeline 
operators now have clear requirements for communicating to the public 
and local government, and OPS has unveiled new additions to their own 
website and communication programs. Perhaps just as significant, many 
progressive thinking pipeline companies have taken pipeline safety 
seriously enough that they are now leading by example by operating and 
maintaining their pipelines in ways that go beyond the minimum Federal 
standards.
    We should all celebrate this progress, while acknowledging that 
continuous evaluation and improvement can make pipelines considerably 
safer yet, and thereby restore the public's trust in pipelines.
    Thank you again for this opportunity to testify today. We hope that 
you will consider the ideas we have brought forward today, which we 
believe can take pipeline safety up another significant notch. If you 
have any questions now, or at anytime in the future, I would be glad to 
try to answer them.

    The Chairman. Mr. Felt?

  STATEMENT OF TIMOTHY FELT, PRESIDENT/CEO, EXPLORER PIPELINE 
              COMPANY; MEMBER, AMERICAN PETROLEUM 
   INSTITUTE PIPELINE COMMITTEE; AND VICE CHAIRMAN/TREASURER-
              ELECT, ASSOCIATION OF OIL PIPE LINES

    Mr. Felt. Mr. Chairman, Mr. Co-Chairman, members of the 
Committee, 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 and 
throughout the mid-western United States. I appreciate the 
opportunity to appear today on behalf of API and AOPL. 
Together, these organizations 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 Committee's consideration.
    Our primary message today is that we believe a pipeline 
safety reauthorization bill can be passed in this Congress. 
Congress should act now, not at some indefinite future date, to 
reaffirm and strengthen a program put in place with the 
Pipeline Safety Improvement Act of 2002. The 2002 Act 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 in 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. Reauthorization sends a clear 
signal that these investments are appropriate, and that DOT is 
on the right track in implementing the Pipeline Safety 
Improvement Act of 2002.
    In addition, several billions of dollars of investment in 
new oil pipeline infrastructure are underway or planned in the 
near-term. Certainty in the safety requirements this 
infrastructure must meet is very important for these 
investments. The prospects for a compromise pipeline safety 
reauthorization bill should be excellent--the proposals before 
us have a number of elements in common, and address for the 
most part, the same issues.
    We've come this far and worked together so well that we 
must achieve passage of a bill. We should not wait for some 
future Congress to enact a compromise bill that could be passed 
now.
    Let me discuss a few provisions of interest. Damage 
prevention--at the center of all 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. DOT is given important new authority to assist in 
enforcing damage prevention laws. We strongly support these 
provisions and urge the Committees to build their final 
legislative product around underground damage prevention.
    I serve on the Common Ground Alliance Board as a Member for 
the oil pipeline industry. The CGA is one of the best things 
that has happened to pipeline safety in many years. The CGA 
provides a forum to work underground damage prevention issues 
that simply doesn't exist anywhere else.
    One of the 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 that was required by 
the 2002 Act. Your bill should explicitly authorize funds to 
support the 8-1-1 campaign.
    Regarding safety orders--section 6 of S. 3961 contains a 
provision that modifies DOT current authority to issue 
mandatory orders to pipeline operators. As I explain in more 
detail in my written statement, we have concerns with this 
provision. As drafted, the Secretary of Transportation may 
order an operator to make extensive expenditures, including 
replacement of the operator's entire system to address any 
condition that poses a risk based on any factors the Secretary 
considers appropriate. Under these provisions, an operator 
could be powerless to contest a DOT order for unnecessary 
expenditures of scarce resources to address questionable risks.
    We urge the Committee to transform the provision into a 
problem-solving tool instead of a provision that assumes a 
contest among lawyers is always necessary. We suggest the 
Committee direct that the administrative procedures 
implementing this order offer the pipeline operator an 
opportunity to confer informally with DOT before exercising the 
operator's right to a hearing. Any action by mutual agreement 
as a result of the consultation could be reduced to words and 
made both public and enforceable. This simple modification will 
save time and legal costs and bring about safety improvements 
sooner. If the operator and DOT cannot agree promptly on a 
remedy, the DOT would still retain authority to conduct a 
formal hearing and issue its order.
    In summary, current pipeline safety law is working, and 
working very well. The legislative proposals before Congress 
all would make real improvements in an already sound DOT safety 
program. The important goal at this point is enactment of the 
legislation reauthorizing this program. The passage of 
compromise legislation is more important than any concerns we 
have with individual provisions. 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 public 
should not have to wait until next Congress to make the 
improvements we can agree on now.
    We need to pass a pipeline safety reauthorization bill in 
this Congress and the oil pipeline industry stands ready to 
help in any way we can to achieve this worthwhile goal. Thank 
you.
    [The prepared statement of Mr. Felt follows:]

 Prepared Statement of Timothy Felt, President/CEO, Explorer Pipeline 
 Company; Member, American Petroleum Institute Pipeline Committee; and 
      Vice Chairman/Treasurer-Elect, Association of Oil Pipe Lines

    Mr. Chairman, members of the Committee, my name is Tim Felt. I am 
President and CEO of Explorer Pipeline Company, 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 oil 
pipeline industry's Board Member for the Common Ground Alliance, a 
voluntary, private-sector organization dedicated to 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.

Summary
    As the Committee 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:

   We need to enact pipeline safety reauthorization legislation 
        before the end of this Congress. A lot of work has gone into 
        the current bills, and there are no major disagreements about 
        what a compromise among the various bills should look like. 
        Let's get a good bill passed now.

   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 needed 
        to fully comply with the law and related regulations and in 
        many cases to exceed their requirements. We plan 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. 
        Reauthorization sends a clear signal that these investments are 
        appropriate, and DOT is on the right track in implementing the 
        2002 Act.

   In addition, several billions of dollars of investments in 
        new oil pipeline infrastructure are underway or planned in the 
        near-term. Certainty in the safety requirements this 
        infrastructure must meet is very important for these 
        investments.

   The Administration, the jurisdictional Committees of the 
        House and Senate, the industry and the pipeline advocates are 
        in virtual agreement on the core provisions of a compromise 
        reauthorization bill that could be passed in 2006. Passage of a 
        bill before final Congressional adjournment is our shared goal.

   If this Congress passes a reauthorization bill, the 
        protections provided by this compromise will be available now. 
        If this Congress fails to pass a bill, a subsequent Congress 
        must start over to adopt new legislation approving the needed 
        authority. That could take months or years. Congress can act 
        now and should act now.

    We urge you to act promptly to reconcile any differences between 
the Senate bill, S. 3961, and the bills approved by the House 
Committees and send a compromise bill to the President this year.

The Role of Pipelines in Petroleum Supply
    In discussing pipeline safety legislation, it is useful to remind 
the Committee 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 that provide certainty so this key part 
of the petroleum distribution system operates efficiently and safely.
    About 40 percent of the total U.S. energy supply comes from 
petroleum, but the transportation sector depends on petroleum for 97 
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 deliver a gallon of petroleum by 
pipeline is very low, typically 2-3 cents per gallon. Transportation--
airlines, automobiles, trucks, barges and ships--could not function 
without pipelines to deliver crude oil to refineries and refinery 
output of petroleum fuels to consumers in various parts of the country. 
The national oil pipeline system is a bargain for consumers and an 
absolutely essential part of the U.S. economy.
    Oil pipelines are common carriers whose rates are regulated by the 
Federal Energy Regulatory Commission. Oil pipeline income is driven by 
the volume delivered and does not depend on the price of the products 
transported. Oil pipeline companies do not profit from high oil prices. 
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 well past the 
halfway point in the implementation of integrity management. 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. Operators are finding and 
repairing conditions in need of repair and less serious conditions 
discovered in the course of investigating defects. Operators are fixing 
what they find, often going beyond the requirements of the regulations.

Improved Spill Record
    These inspections and repairs have improved the oil pipeline spill 
record dramatically in the last 5 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. Line pipe is rightly the primary 
focus of DOT's program, so the improvement in our record is direct 
evidence of the wisdom of the DOT approach.
    The trend in oil pipeline incidents 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.
    This safety improvement record only covers half the 7-year baseline 
assessment period for oil pipelines. We expect the record to show 
continued improvement as we complete the first full cycle and move 
through subsequent mandatory 5-year reassessment intervals.
    The Federal pipeline safety program is working. Congress needs to 
pass a reauthorization bill that endorses and, where appropriate, 
strengthens this excellent program.

Legislation
    The legislative proposals--the Administration's H.R. 5678, the 
House versions of H.R. 5782 and the Senate's S. 3961--all assume 
continuation of the current DOT 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 
Committee. My testimony will also discuss improvements we recommend for 
certain of the provisions. While none of these bills are perfect from 
our perspective, the Committee should understand that we see nothing 
that would cause AOPL and API to oppose enactment of compromise 
pipeline safety reauthorization legislation based on these bills. 
Enactment of the legislation is more important than any concerns we 
have with individual provisions.

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 H.R. 5678, H.R. 5782 and S. 3961 
are similar provisions that will strengthen the impact of state laws 
designed to prevent underground damage. Incentives are provided to 
states that adopt strong damage prevention laws and programs. To 
qualify for these incentives a state must also be adequately enforcing 
its damage prevention laws. Improvement in enforcement of state damage 
prevention laws would make real improvement in pipeline safety.
    In addition, these bills all make it a Federal civil violation to 
ignore state underground damage prevention laws. We believe this 
expression of the seriousness the Federal Government attaches to damage 
prevention enforcement is one of the most important safety advances 
proposed in these or any recent pipeline safety bills.

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. CGA provides a forum to work underground damage prevention 
issues that simply doesn't exist anywhere else. 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 8-1-1 telephone number for one-call notification that was required 
by the 2002 Act. Section 17 of S. 3961 should specifically authorize 
funds to support the 8-1-1 campaign.

Low-Stress Pipelines
    Earlier this year there was a significant leak from a crude oil 
pipeline on the North Slope of Alaska that was under DOT's 
jurisdiction, but was operating at less than 20 percent 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 particular leak was a statistical anomaly in its size and 
is not at all typical of releases from low-stress pipelines. 
Nevertheless, the 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, but 
was not covered by the DOT regulations then in effect 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.
    DOT has accelerated a rulemaking process that was underway before 
the leak occurred to address the regulation of low-stress pipelines. In 
the House, one of the pipeline safety reauthorization bills directly 
addresses the regulation of low-stress pipelines other than gathering 
lines. AOPL and API worked with the House Energy and Commerce Committee 
and are supporting a provision in that Committee's version of H.R. 5782 
that would subject the pipeline on the North Slope that leaked and 
similar pipelines to the same DOT regulation that currently covers 
high-stress pipelines. Section 13 of S. 3961 is similar to this House 
provision. We continue to support the House Energy and Commerce 
Committee low-stress provision and urge this committee to adopt the 
same language so that the treatment of low-stress pipelines will be the 
same in each bill.

Safety Orders
    Sec. 6 of S. 3691 modifies DOT's current authority to issue 
mandatory orders to pipeline operators. Title 49 section 60117(l) was 
added 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. Unfortunately, the existing section 
60117(l) does not provide for notice or an opportunity for a hearing 
before an order would be issued. This existing provision is seriously 
lacking in due process protection for pipeline operators who might be 
subject to such an order.
    The Administration's bill, the House Energy and Commerce bill and 
Sec. 6 of S. 3961 all amend section 60117(l) to add 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, Sec. 6 goes 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''. Under these provisions an operator 
could 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.
    Notwithstanding these concerns, we recognize that some version of 
Sec. 6 is likely to be included in any final pipeline safety 
reauthorization bill. Therefore we urge the Committee to transform the 
provision into a problem-solving tool instead of a provision that 
assumes a contest among lawyers is always necessary. We suggest the 
Committee direct that the administrative procedures implementing this 
order offer the pipeline operator an opportunity to confer informally 
with DOT before exercising the operator's right to a hearing. We 
believe informal consultation will produce remedies acceptable to both 
operator and DOT that will resolve the vast majority of DOT's concerns 
without the need for a formal hearing. Any action taken by mutual 
agreement as a result of the consultation could be reduced to writing 
and made both public and enforceable. We believe this simple 
modification will save time and legal costs and bring about safety 
improvements sooner. If the operator and DOT cannot agree on a remedy, 
the DOT would retain the authority to conduct a formal hearing and 
issue its order.
    Finally, we suggest the Committee to modify Sec. 6 of S. 3961 to 
focus the authority on pipeline integrity risks and remove pipeline 
``replacement'' as a remedy for this low-threshold order. If DOT is 
going to take the expensive step of ordering replacement of a pipeline, 
it should be done under the higher-threshold hazardous facility order 
authority of title 49 section 60112.

Enforcement Transparency
    Sec. 9 of S. 3961 requires DOT to post information on a monthly 
basis about pipeline enforcement actions taken by the Secretary or the 
Pipeline and Hazardous Materials Safety Administration. 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. The House Energy and Commerce Committee language captures 
these safeguards and in addition ensures that no information will be 
disclosed under this provision that would not be disclosed under the 
Freedom of Information Act. We believe consistency with the Freedom of 
Information Act should be required in whatever bill passes.

Cost Recovery for Extraordinary Events
    Sec. 19 of S. 3691 authorizes DOT to recover DOT's costs of 
investigating major pipeline safety incidents ``from the person or 
persons responsible for the incident.'' The amounts collected would not 
be returned to the Treasury, but would remain available to DOT until 
expended to cover the cost of investigating and monitoring incidents. 
We question the wisdom of this provision. DOT should budget for these 
types of expenses through the normal Federal budget process. The 
additional fees authorized by Sec. 19 would not be subject to 
Congressional control or oversight through the appropriations process. 
There would be no effective check on the operation of this authority 
once this bill passes.

Other Provisions
    My comments today have not addressed every provision of every 
proposal. Most of the provisions I have not discussed we do not oppose 
or do not directly affect the oil pipeline industry. I would reiterate 
that the important goal at this point is enactment of the legislation. 
Passage of compromise legislation is more important than any concerns 
we have with individual provisions.
    With so little time left in the current Congress, we hope the 
Committee will work with the House to put together (and quickly) a bill 
that has broad appeal and can pass both Houses. The test for inclusion 
of a provision should be whether it is acceptable to all the interested 
parties. We need to move forward by consensus, and we need to move 
rapidly if a bill is to pass. It would be a shame to have come this far 
and worked together so well and yet not achieve passage of the bill. 
The protections for the public that a bill would provide are within 
reach, particularly in the area of damage prevention and state 
cooperation. These protections should be made available now. We should 
not make the public wait for some future Congress to enact these 
protections.

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 Congress 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.

    
    
    
    

    The Chairman. Thank you very much. Senator Inouye has been 
called away because of a problem relating to the death of a 
friend, so he's not going to be here the balance of the time.
    Mr. Boss, you're next, please.

        STATEMENT OF TERRY BOSS, SENIOR VICE PRESIDENT, 
        ENVIRONMENT, SAFETY AND OPERATIONS, INTERSTATE 
               NATURAL GAS ASSOCIATION OF AMERICA

    Mr. Boss. Good morning Chairman and Members of the 
Committee. I am Terry Boss, Senior Vice President of 
Environment, Safety and Operations of the Interstate Natural 
Gas Association of America, or INGAA.
    INGAA is a trade association that represents virtually all 
of the interstate and inter-provincial pipelines and natural 
gas pipelines in North America. Pipelines represented by INGAA 
have been regulated for safety issues by the Federal Government 
since 1968. Our pipelines were, in fact, the first to be 
covered under the Federal Pipeline Safety Act. Some of you may 
know that the 2002 reauthorization of the Pipeline Safety Act 
included a provision requiring the establishment of a natural 
gas pipeline integrity management program.
    This program requires each natural gas pipeline operator 
first to identify all segments located in high consequence 
areas. Second, to develop an integrity management program for 
reducing risks to the public in these areas. Third, to 
undertake baseline integrity assessments of all of the segments 
identified in these areas within 10 years of enactment. Fourth, 
develop a process for making repairs to any anomalies found as 
a result of these assessments; and fifth, reassess segments at 
least every 7 years thereafter in order to verify continued 
pipe integrity.
    How has this program worked so far? To quote the GAO in its 
recent report, 06-946, ``The gas integrity management program 
is benefiting public safety by supplementing existing safety 
requirements with risk-based management principles that focus 
on safety risks.'' INGAA agrees that this largely has been a 
successful program. The amount of inspection and repair work 
completed to date is covered in my written testimony. To keep 
it brief, what I can say is that the natural gas pipeline 
industry is on track for completing the baseline assessments 
within the 10 year requirement. We have not found a large 
number of problems with the pipelines that have been inspected, 
but the anomalies that are being found are being corrected.
    As I noted, the program requires we focus on these high 
consequence areas, which we call HCAs. These segments represent 
about 7 percent of the total natural gas transmission mileage 
in the U.S. However, because we are principally using internal 
inspection devices called smart pigs for the vast majority of 
this work, and because these smart pigs can primarily be put 
into and taken out of the pipelines at compressor stations 
placed about 75 miles apart, we are really assessing far more 
than just the HCAs targeted in the program. In fact, we 
anticipate we will actually inspect between 55 and 60 percent 
of the total pipeline mileage during this baseline period. Any 
anomalies found are corrected, even though they are not located 
in HCA areas.
    In looking forward to the current reauthorization bill, I 
would like to focus on two of the INGAA priorities in the 
limited time I have. The highest priority for INGAA is changing 
the current requirement that all of the reassessments be 
completed at least once every 7 years. This static, one-size-
fits-all number was--and remains the source of--continued 
frustration for the INGAA membership and that it has no basis 
in engineering or risk analysis and actually limits the 
effectiveness of the program. A risk-based reassessment 
interval determined for each pipeline segment is the most 
logical and effective alternative for focusing efforts and 
improving safety performance overall.
    When the House and Senate were renegotiating the 2002 bill, 
INGAA agreed to the 10 year baseline requirement, but had 
strong misgivings about the fixed 7 year reassessment interval. 
Our support for that bill hinged on the fact that Congress 
included a provision requiring the GAO to perform an analysis 
on this interval. The GAO has, in fact, released this report in 
September, and it supports the idea of changing the 7-year 
requirement with one based on risk and engineering analysis. 
The title of the report really says it all. Risk-Based 
Standards Should Allow Pipeline Operators To Better Tailor 
Reassessments to Pipeline Threats.
    Mr. Chairman, we urge the Committee to heed GAO's 
recommendation and include risk-based standards for 
reassessment intervals in your reauthorization bill.
    I also want to mention one other issue--excavation damage, 
the primary cause of serious incidents on our pipelines. In 
1998, Congress approved legislation to encourage improvements 
in state damage prevention programs. The 1998 legislation 
accomplished a great deal with respect to improving these 
programs, but we believe the time has come to take things to 
the next level. We suggest the development of national 
standards, including enforcement, for state One-Call programs. 
INGAA supports the damage-prevention provisions in S. 3961, and 
believes these efforts would result in the reduction of serious 
incidents.
    My written testimony includes comments on several 
additional issues, but at this point I would like to conclude 
my remarks. Thank you, Mr. Chairman, for giving me the 
opportunity to testify before the Committee. I'd be happy to 
answer your questions.
    [The prepared statement of Mr. Boss follows:]

 Prepared Statement of Terry Boss, Senior Vice President, Environment, 
  Safety and Operations, Interstate Natural Gas Association of America

    Mr. Chairman and members of the Committee:
    Good morning. My name is Terry Boss, and I am Senior Vice President 
of Environment, Safety and Operations for the Interstate Natural Gas 
Association of America (INGAA). INGAA represents the interstate and 
inter-provincial 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 212,000 miles 
of transmission pipeline. These large capacity pipelines spanning 
multiple states or regions are analogous to the interstate highway 
system.

Industry Background
    Mr. Chairman, natural gas provides 25 percent of the energy 
consumed in the U.S. annually, second only to petroleum and exceeding 
that of coal or nuclear. From home heating and cooking, to industrial 
processes, to power generation, natural gas is a versatile and 
strategically important energy resource.
    As a result of the regulatory restructuring of the industry during 
the 1980s and early 1990s, interstate natural gas pipelines no longer 
buy or sell natural gas. Interstate pipelines do not take title to the 
natural gas moving through their pipelines. Instead, pipeline companies 
sell transportation capacity in much the same way as a railroad, 
airline or trucking company.
    Because the natural gas pipeline network is essentially a ``just-
in-time'' delivery system with limited storage capacity, customers 
large and small depend on reliable around-the-clock service. That is an 
important reason why the safe and reliable operation of our pipeline 
systems is so important. The natural gas transmission pipelines 
operated by INGAA's members and by others historically have been the 
safest mode of transportation in the United States. The interstate 
pipeline industry, working cooperatively with the Pipeline and 
Hazardous Materials Safety Administration (PHMSA), is taking 
affirmative steps to make this valuable infrastructure even safer.
    Congressional involvement in pipeline safety dates back almost 40 
years to enactment of the Natural Gas Pipeline Safety Act in 1968. This 
legislation borrowed heavily from the engineering standards that had 
been developed over the previous decades. The goals of this Federal 
legislation were to ensure the consistent use of best practices for 
pipeline safety across the entire industry, to encourage continual 
improvement in safety procedures and to verify compliance. While 
subsequent reauthorization bills have improved upon the original, the 
core objectives of the Federal pipeline safety law have remained a 
constant.

How Safe Are Natural Gas Pipelines?
    While the safety record of natural gas transmission lines is not 
perfect, it compares very well with that of other modes of 
transportation. Since natural gas pipelines are buried and isolated 
from the public, pipeline accidents involving fatalities and injuries 
are unusual.
    Pipeline accidents generally are reported to the Department of 
Transportation when one of three things occurs: (1) a fatality, (2) an 
injury, or (3) $50,000 or more in property damage. Recently, the 
Department of Transportation has categorized most ``reportable 
incidents'' either as ``significant incidents'' or as ``serious 
incidents'' and placed that data on its website.
    ``Serious incidents'' are defined as incidents that involve 
fatalities and injuries. The PHMSA graph below shows the decreasing 
trend of ``serious incidents'' on natural gas transmission pipelines 
from 1989-2005. For the last 5 years, the number of serious incidents 
that occurred on natural gas transmission pipelines has averaged five 
incidents per year.



    It is instructive to look at the causes of these serious incidents 
for clues on where to devote resources that can prevent serious 
incidents in the future. The pie chart below depicts the causes of 
these serious incidents. Since 2002, all the fatalities that have 
occurred during ``serious incidents'' on natural gas transmission 
pipelines have been excavation-related.



    ``Significant incidents'' include not only the aforementioned 
``serious incidents,'' but also reportable incidents where property 
damage and gas lost exceeds $50,000 in 1984 dollars. Property damage 
and natural gas cost are adjusted using the Consumer Price Index for 
property damage and the Energy Information Administration data for 
delivered gas cost. The PHMSA graph below shows the trend of 
``significant incidents'' on natural gas transmission pipelines since 
1989. It is worth noting that the spike in ``significant incidents'' 
reported in 2005 reflects the pipeline damage caused by hurricanes Rita 
and Katrina. Property damage jumped from an average of $40 million a 
year (2005 dollars) to over $220 million in 2005. It is interesting to 
note that over 75 percent of these property damage costs associated 
with gas transmission pipeline incidents are either damage to the 
pipeline operator's facilities or the value of the natural gas lost 
(i.e., these are not damages to third-party property).



    As with the serious incidents, it is informative to understand the 
causes of these significant incidents so that technology and management 
practices can be focused on preventing future incidents. For example, 
periodic inspections using smart pig technology are effective at 
discovering ``time dependent'' defects, such as corrosion, before they 
result in significant incidents. Periodic inspections, however, are not 
effective in preventing ``time independent'' incidents such as external 
force (i.e., excavation and weather-related damage). The pie chart 
below depicts the causes of the reported significant incidents.



    One note on the reportable incident statistics. From the raw data 
on reportable natural gas transmission accidents over the last 10 
years, it could be concluded that the safety of natural gas 
transmission pipelines has deteriorated, especially over the last 6 
years. This conclusion would be misleading, however, because the 
increase in the commodity value of natural gas has skewed the number of 
reportable incidents. As noted earlier, ``reportable incidents'' 
include those in which property damage exceeds $50,000 including the 
value of the natural gas lost in the incident. Natural gas commodity 
prices have increased by over 200 percent since 2000, and this has 
significantly affected the number of incidents where property damage 
has exceeded the $50,000 threshold. In examining the natural gas 
transmission integrity management program, the Government 
Accountability Office (GAO) noted this anomaly (in report 06-946) and 
suggested that DOT amend the reporting criteria to eliminate the 
linkage to natural gas commodity prices. While the establishment of the 
significant and serious incidents categories by PHMSA accurately 
depicts incident trends, INGAA agrees that the recommendation by GAO 
would provide more accurate and useful accident data.
The Pipeline Safety Improvement Act of 2002 and Integrity Management
    While the Pipeline Safety Improvement Act of 2002 (PSIA) focused on 
a variety of issues (including operator qualification programs, public 
education, and population encroachment on pipeline rights-of-way), the 
most significant provision of the 2002 reauthorization law that would 
improve long-term pipeline safety was the ``Integrity Management 
Program'' (IMP) for natural gas transmission pipelines.
    Section 14 of the PSIA requires operators of natural gas 
transmission pipelines to: (1) identify all the segments of their 
pipelines located in ``high consequence areas'' (areas adjacent to 
significant population); (2) develop an integrity management program to 
reduce the risks to the public in these high consequence areas; (3) 
undertake baseline integrity assessments (inspections) at all pipeline 
segments located in high consequence areas, to be completed within 10 
years of enactment; (4) develop a process for making repairs to any 
anomalies found as a result of these inspections; and (5) reassess 
these segments of pipeline at least every 7 years thereafter in order 
to verify continued pipe integrity.
    The PSIA requires that these integrity inspections be performed by 
one of the following methods: (1) an internal inspection device (or a 
``smart pig''); (2) hydrostatic pressure testing (filling the pipe with 
water and pressurizing it well above operating pressures to verify a 
safety margin); (3) direct assessment (digging up and visually 
inspecting sections of pipe selected based on various electronic 
measurements and other characteristics); or (4) ``other alternative 
methods that the Secretary of Transportation determines would provide 
an equal or greater level of safety.'' The pipeline operator is 
required by regulations implementing the 2002 law to repair all non-
innocuous imperfections and adjust operation and maintenance practices 
to minimize ``reportable incidents.'' For natural gas transmission 
pipelines, internal inspection devices are the primary means for 
assessing integrity because, when they can be used, such devices are 
more versatile and efficient. The other assessment methods enumerated 
in the reauthorization law are useful when smart pig technology cannot 
be effectively used. A drawback associated with such alternatives is 
that they require a pipeline to cease or significantly curtail gas 
delivery operations for a period.
    There are some practical issues that must be addressed in order to 
utilize ``smart pig'' inspection devices more fully:

   First, older pipelines were not engineered to accept such 
        inspection devices because these pipelines often were built 
        with tight pipe bends, or non-full pipe diameter valves, 
        continuous sections of pipe with varying diameters, and side 
        lateral piping. While these features do not impede the movement 
        of natural gas through the pipeline (because natural gas can be 
        compressed), moving a solid object through such pipelines is 
        another matter. These older pipeline systems must be modified 
        to allow the use of internal inspection devices.

   Another legacy issue is modifying pipelines to launch and 
        receive internal inspection devices. Since a pipeline is buried 
        underground for virtually its entire length, the installation 
        of above-ground pig launchers and receivers is usually done at 
        or near other above-ground locations, such as compressor 
        stations. Occasionally, however, new sites must be obtained for 
        these facilities. Compressor stations are typically located 
        along the pipeline at a spacing of 75 to 100 miles apart. 
        Therefore, a set of launchers and receivers must be installed 
        for every pipeline segment between compressor stations because 
        the inspection device cannot go through a compressor. Once 
        installed, these launchers and receivers can usually remain in 
        place permanently.

    Surveys conducted by our industry about 5 years ago suggested that 
almost one-third of transmission pipeline mileage could immediately 
accommodate smart pigs, another one-quarter could accommodate smart 
pigs with the addition of permanent or temporary launching and 
receiving facilities, and the remainder, about 40-45 percent, would 
either require extensive modifications or never be able to accommodate 
smart pigs due to the physical or operational characteristics of the 
pipeline. Scheduling these extensive modifications to minimize consumer 
delivery impacts has been one of the most challenging aspects of the 
integrity management program.
    The natural gas pipeline industry will use hydrostatic pressure 
testing and direct assessment for segments of transmission pipeline 
that cannot be modified to accommodate smart pigs, or in other special 
circumstances. There are issues worth noting with both hydrostatic 
testing and direct assessment. In the case of hydrostatic testing, an 
entire section of pipeline must be taken out of service for an extended 
period of time, limiting the ability to deliver gas to downstream 
customers and potentially causing market disruptions as a result. In 
addition, hydrostatic testing--filling a pipeline up with water at 
great pressure to see if the pipe fails--is a destructive or ``go--no 
go'' testing method that must take into account pipeline 
characteristics so that it does not exacerbate some conditions while 
resolving others. Also, because of this ``go--no go'' nature, testing 
must go on continuously until the segment successfully completes the 
test, generally 8 hours at pressure, with no leaks or failures.
    Direct assessment is generally defined as an inspection method 
whereby statistically chosen sections of pipe are excavated and 
visually inspected at certain distance intervals along the pipeline 
right-of-way based on sophisticated above ground electrical survey 
measurements that predict problem areas. The amount of excavation and 
subsequent disturbance of landowner's property involved with this 
technology is significant and does not decrease with future 
reassessments. Disturbing other infrastructure, including roads and 
other utilities, also creates a risk and an inconvenience for the 
public.
    Finally, while the pipeline modifications and inspection activity 
generally can follow a pre-arranged schedule, repair work is an 
unpredictable factor. A pipeline operator does not know ahead of time 
how many anomalies an inspection will find, how severe such anomalies 
will be, and how quickly they must be repaired. Only the completed 
inspection data can provide such information. Repair work often 
requires systems to be shut down even if the original inspection work 
did not effect system operations. The unpredictable nature of repair 
work must be kept in mind, especially during the baseline inspection 
period, when it can be expected the number of required repairs to be 
the greatest.

Integrity Management Progress to Date
    The integrity management program mandated by the PSIA is performing 
very well. The program is doing what Congress intended; that is, 
verifying the safety of gas transmission pipelines located in populated 
areas and identifying and removing potential problems before they 
occur. Based on 2 years of data, the trend is that natural gas 
transmission pipelines are safe and becoming safer.
    PHMSA immediately initiated a rulemaking to implement the gas 
integrity requirements upon enactment of PSIA in December of 2002. The 
Administration successfully met the one-year deadline set by the law 
for issuing a final IMP rule. Therefore, 2004 was the first full year 
of what will end up being a nine-year baseline testing period (the 
statute mandates that baseline tests on all pipeline segments in high 
consequence areas must be completed by December of 2012). PHMSA's final 
rule credits pipeline companies for some integrity assessments 
completed before the rule took effect, thereby mitigating the effects 
of the shorter baseline period.
    PHMSA has summarized the progress achieved through 2005 as follows:

        1. Total Gas Transmission Mileage in the United States--There 
        are 295,665 miles of gas transmission pipeline in the U.S. 
        (INGAA's members own approximately 200,000 miles of this total, 
        with the remainder being owned by intrastate transmission 
        systems or local distribution companies.)

        2. Total High Consequence Area (HCA) Mileage--There are 20,191 
        miles of pipeline in HCAs (i.e., mileage subject to gas 
        integrity rule). This represents about 7 percent of total 
        mileage.

        3. HCA Pipeline Miles Inspected through 2005--

            2004--3,979 miles (incorporated some prior 
        inspections before rule took effect).

            2005--2,744 miles.

            Therefore, 6,723 miles of HCA pipeline inspected to 
        date, or 33 percent of total.

        4. Total Pipeline Miles Inspected (including non-HCA 
        pipeline)--

            2004--30,452 miles (7.65 to 1 over-test ratio).

            2005--19,884 miles (7.24 to 1 over-test ratio).

            Therefore, 50,366 total miles, or approximately 17 
        percent of total transmission pipeline mileage.

    The total HCA pipeline mileage inspected to date suggests that the 
industry is generally on track to meet the 10-year baseline 
requirement. With 3 years of the baseline period completed at the end 
of 2005, about 30 percent of the HCA mileage had been inspected. This 
translates into 10 percent being completed annually--exactly the volume 
of work needed in order to meet the baseline requirement.
    The 2002 law also required a risk-based prioritization of these HCA 
assessments so that higher-ranking HCA pipeline segments would be 
scheduled for assessment within 5 years of enactment. This means that 
by December of 2007, the industry must complete at least half of the 
total HCA assessments, by mileage; and that work contains the segments 
with the highest probability of failure. Again, we appear to be on 
track for meeting this requirement.
    The mileage counted as being assessed in 2004 is higher than what 
we anticipate will be the average annual mileage going forward because 
the industry was able to include some HCA segments that had been 
inspected in the few years immediately prior to the rule taking effect. 
As mentioned, this jump-started the program and compensated some for 
the fact that the final IMP rule did not take effect until December of 
2003, thus reducing the de facto baseline period to 9 years.
    The vast majority of the assessments to date have been completed 
using smart pig devices. As discussed, these devices can only operate 
across large segments of pipeline--typically between two compressor 
stations. A 100-mile segment of pipeline may, for example, only contain 
5 miles of HCA, but in order to assess that 5 miles of HCA, the entire 
100-mile segment between compressor stations must be assessed. This 
dynamic is resulting in a large amount of ``over-testing'' on gas 
transmission systems. While it has completed assessments on 6,723 miles 
of HCA pipe thus far, the industry actually has inspected over 50,000 
miles of pipe up through 2005 in order to capture the HCA segments. Any 
problems identified as a result of inspections, whether in an HCA or 
not, are repaired.
    In summary, while only about 7 percent of total gas transmission 
pipeline mileage is located in HCAs, it is anticipated that, due to 
over-testing situations, about 55 to 60 percent of total transmission 
mileage actually will be inspected during the baseline period.
    In addition, PHMSA has made the data available for the first half 
of the 2006. This shows that an additional 1,885 miles of natural gas 
transmission line in HCAs were inspected during this period, keeping 
the program on track to meet its target.
    Now let us look at what the integrity inspections have found 
through 2005. This data focuses on information from HCA segments since 
these segments are the only ones specifically covered under the 
integrity management program.

        1. Reportable Incidents in HCAs (in 20,191 miles)

            2004--9 (2 time-dependent).

            2005--10 (0 time-dependent).

        2. Leaks (too small to be classified as a reportable incident) 
        in HCAs (in 20,191 miles)

            2004--117 (29 time-dependent).

            2005--104 (20 time-dependent).

        3. Immediate Repairs in HCAs Found by Inspections (repair 
        within 5 days)

            2004--101 (3,979 miles inspected).

            2005--237 (2,744 miles inspected).

        4. Scheduled Repairs in HCAs Found by Inspections (repair 
        generally within 1 year)

            2004--595 (3,979 miles inspected).

            2005--403 (2,744 miles inspected).

    Time-dependent defects are separated out in the data for incidents 
and leaks because these types of defects are the prime target of 
reassessment under the integrity management program. By time-dependent, 
we mean problems with the pipeline that develop and grow over time and, 
therefore, can be managed by reinspecting on a periodic basis. The most 
prevalent time-dependent defect is corrosion; therefore, the IMP effort 
focuses most intently on corrosion identification and mitigation. These 
same assessments might also be able to identify other pipeline defects 
such as original construction defects or excavation damage. Original 
construction defects (stable defects) are usually found and addressed 
during post-construction inspections; any construction defects found 
with this new, more sensitive inspection technology would be fixed 
``for good'' so that future assessments looking for these types of 
anomalies will be unnecessary. Most reportable incidents caused by 
excavation damage (more than 85 percent of the incidents in these HCA 
areas during this time period) result in an immediate pipeline failure, 
so periodic assessments are unlikely to reduce the number of these 
types of time-independent incidents in any significant way. Periodic 
assessments on a reasonable schedule are, therefore, most effective for 
time-dependent defects.
    The number of incidents associated with time-dependent defects in 
HCA areas is fairly low, and these reportable incidents (e.g., one 
reportable incident per year average) have occurred in HCA areas not 
yet assessed under this program. As critical time-dependent defects are 
found and repaired, these incident and leak numbers should approach 
zero since the gestation period for these defects is significantly 
longer than the reassessment interval.
    As for repairs, we have identified the number of ``immediate'' and 
``scheduled'' repairs that have been generated by the IMP inspections 
through 2005. These are anomalies in pipelines that have not resulted 
in a reportable incident or leak but are repaired as a precautionary 
measure. ``Immediate repairs'' and ``scheduled repairs'' are defined 
terms under both PHMSA regulations and engineering standards. As the 
name suggests, immediate repairs require immediate action by the 
operator due to the higher probability of a reportable incident or leak 
in the future. Scheduled repair situations are those that require 
repair within a longer time period because of their lower probability 
of failure.
    Even though it is early in the baseline assessment period, the data 
suggest a very positive conclusion regarding present state of the gas 
transmission pipeline system and the effectiveness of the integrity 
management programs. ``Immediate repairs'' in HCAs removed 50 anomalies 
for every 1,000 pipeline miles inspected. ``Scheduled repairs'' removed 
an additional 140 anomalies per 1,000 miles inspected. By completing 
these immediate and scheduled repairs in a timely fashion, the pipeline 
industry is reducing the possibility of future reportable incidents or 
leaks. Also, data from operators who have completed more than one such 
periodic assessment over a number of years strongly suggests there will 
be a dramatic decrease in time-dependent defects requiring repairs the 
second time around.
    For the inspections that have occurred during the first half of 
2006, the trend is continuing with removing 38 ``immediate'' anomalies 
and 50 ``scheduled'' anomalies for every 1,000 miles inspected.
    Many of the gas pipelines being inspected under this program are 50 
to 60 years old. While is it often hard for non-engineers to accept, 
well-maintained pipelines can operate safely for many decades. 
Policymakers often compare pipelines to vehicles and ask questions such 
as: Would you fly in a 50-year-old airplane? From an engineering 
standpoint, the comparison to aircraft or automobiles is an unsound 
one. Natural gas pipelines are built to be robust and are not subject 
to the same operational stresses as vehicles. Much of the above 
inspection data comes from pipelines that were built in the 1940s and 
1950s. And yet, the number of anomalies found on a per-mile basis is 
low. Once these anomalies are repaired, the ``clock can be reset'' and 
these pipelines can operate safely and reliably for many additional 
decades. One important benefit of the integrity management program is 
the verification and re-establishment of the known safety factors on 
these older pipeline systems.

Issues for the 2006 Reauthorization
    The PSIA authorized the Federal pipeline safety program at the 
Department of Transportation through Fiscal Year 2006, and it has, 
therefore, expired. INGAA would like the Committee to consider 
amendments addressing three issues in the pipeline safety law. Each of 
these would achieve an evolutionary change in the current pipeline 
safety program: (1) reconsideration of the seven-year reassessment 
interval, to one based instead upon a more reasoned, data-driven and 
scientific approach; (2) improvements in state excavation damage 
prevention programs; and (3) change in the jurisdictional status for 
direct sales lateral lines.

Seven-Year Reassessment Interval
    Under the PSIA, gas transmission pipeline operators have 10 years 
in which to conduct baseline integrity assessments on all pipeline 
segments located in HCAs. Operators are also required by law to begin 
reassessing previously-inspected pipe 7 years after the initial 
baseline and every 7 years thereafter. PHMSA has interpreted these two 
requirements to mean that, for those segments baseline-inspected in 
2003 through 2005 (including those for which a prior assessment is 
relied upon), reassessments must be done in years 2010 through 2012--
even though baseline inspections are still being conducted.
    In 2001, INGAA provided Congress with a proposed industry consensus 
standard on reassessment intervals that had been developed by the 
American Society of Mechanical Engineers (ASME). The ASME standard used 
several criteria to determine a reassessment interval for a particular 
segment of pipe, such as the operating pressure of a pipe relative to 
its strength and the type of inspection technique used. This standard 
relied upon authoritative technical analyses and a ``decision matrix'' 
based on more than 50 years of operational and performance data for gas 
pipelines.
    For most natural gas transmission pipelines (operating at high 
pressures), the ASME standard proposed a conservative 10-year 
reassessment interval. The standard suggested longer inspection 
intervals for lower pressure lines (a small number of pipelines that 
are lower in risk due to their lower operating pressures). The standard 
also suggested shorter intervals for pipeline segments operating in 
higher-risk environments, including those where unusually aggressive 
corrosion would be more likely to occur. Recent and past pipeline 
inspection data confirms that the ASME criteria are conservative.
    There are several reasons for being concerned about whether the 
seven-year reassessment interval is appropriate. First, there is the 
``overlap'' in years 2010 through 2012. The ability to meet the 
required volume of inspections is daunting given the limited number of 
inspection contractors and equipment available. In addition, this 
stepped-up level of inspection activity would be difficult to 
accommodate without effecting gas system deliverability. This last 
point is critical. Some assume that we are focusing on the re-
assessment interval only because of the costs to industry. In fact, our 
costs will be modest compared to the potential costs to consumers in 
the form of higher natural gas commodity prices if pipeline capacity 
becomes too constrained. Some regions of the country can handle more 
frequent reductions in pipeline deliverability due to the volume of 
pipeline capacity serving those regions. The Chicago region and the 
Gulf Coast, for example, are better equipped to handle frequent 
pipeline capacity interruptions due to the abundance of pipeline 
capacity in those regions. Other regions, such as the Northeast and 
Southern California, face greater risk that gas commodity prices will 
spike if pipeline capacity is reduced too often. These downstream 
market effects should be carefully considered, especially during the 
baseline inspection period when pipeline modifications (to accommodate 
inspection equipment), inspections, and repair work will all be at peak 
levels.
    Some also suggest that if the pipeline industry is technically 
capable of inspecting its lines for corrosion more frequently than 
engineering standards suggest, it should do so and not worry about the 
costs or the logistics. It is certainly true that large interstate 
pipelines could, in fact, be inspected more frequently than every 7 
years, especially once systems have been modified to accommodate smart 
pig devices. But just because pipelines can be inspected more often 
does not mean it is rational to require a one-size-fits-all inspection 
policy. Most automobile manufacturers recommend vehicle oil changes 
every 3,000 miles. Congress could instead mandate that all vehicles 
have oil changes every 1,000 miles, but, of course, there would be 
little, if any, additional benefit to the more frequent oil changes, 
and the costs associated with the more frequent oil changes would take 
money away from other, more beneficial maintenance activities.
    The integrity management program requires that the industry 
identify and mitigate risks to the public associated with operating our 
pipelines. Inspections are but one tool to achieve that end and they do 
not accomplish all of the required goals of the program. The 
inspections carried out pursuant to the integrity management program 
focus primarily on one cause of pipeline accidents--corrosion. 
Corrosion causes about 25 percent of the failures on gas transmission 
lines. What about the other 75 percent of accidents? What can be done 
to mitigate the risks of those? A credible and effective integrity 
management program prioritizes risks and develops strategies for 
addressing all risks. A program that mandates system-wide inspections 
too frequently can seriously affect an operator's ability to perform 
even more frequent inspections at the very few locations that may 
warrant shorter time-frames and may detract from other important 
integrity activities such as damage prevention. Focusing attention and 
resources on unnecessarily frequent inspections may also lead to a 
false sense of security that such inspections are addressing all 
significant threats to pipeline safety.
    We recognize that some lawmakers may be hesitant to change to the 
seven-year reassessment interval given the debate on this issue in 
2002. The authors of the PSIA realized this discussion would be ongoing 
and requested that the Government Accountability Office (GAO) review 
this issue. GAO has completed its report (Report 06-945) and has 
concluded that the fixed re-inspection interval (i.e., 7 years) is too 
conservative for the majority of the natural gas transmission pipelines 
and, therefore, has recommended intervals be based on risk and 
engineering analysis. INGAA concurs with the GAO recommendation. The 
baseline assessments already underway are yielding valuable information 
from which to make reasoned decisions about re-assessment intervals 
going forward. INGAA therefore urges the Congress to address the 
reassessment issue in this reauthorization bill. As the GAO stated in 
its report, there is no compelling reason to wait and address this 
issue at a later time--the facts already support a risk-based program 
of re-assessments.

Damage Prevention
    In 1998, the Transportation Equity Act for the 21st Century (TEA-
21) highway legislation included a relatively modest program called the 
``One-Call Notification Act.'' The goal of this legislation was to 
improve the quality and effectiveness of state one-call (or ``call-
before-you-dig'') damage prevention programs. By developing Federal 
minimum standards and then giving grants to those states that adopted 
the minimum standards, this law contributed to improving damage 
prevention efforts all across the Nation. And it did so without 
mandating that states adopt the Federal minimum standards.
    Over the last 8 years, there has been a great deal of improvement 
in damage prevention. INGAA believes that the time has come to take 
these efforts to the next level. Excavation damage prevention has been, 
and should remain, a major focus for pipeline safety. On gas 
transmission pipelines, accidental damage from excavation equipment is 
the leading cause of fatalities and injuries. The majority of incidents 
that have raised public and Congressional concern have been due to 
excavation damage. These accidents are the most preventable of all, and 
better communication between pipeline companies, excavators and the 
public is the key to such accident prevention. Despite all the progress 
that has been made since 1998, some excavators still do not call before 
they dig.
    Unfortunately, there was a fatal accident involving excavation 
damage to one of our member company pipelines just last week in 
Wyoming. While the investigation is still in progress, it is not 
unreasonable to assume that there was at least some level of 
misunderstanding between the excavator and the pipeline operator. With 
the right level of communication and understanding, however, these 
accidents are avoidable.
    One state, in particular, has developed an outstanding damage 
prevention program based on improved communication, information 
management, and performance monitoring and enforcement. That state is 
Virginia. Not only does Virginia require broad participation by all 
utilities and excavators, but also it has effective public education 
programs and effective enforcement of its rules. INGAA believes that 
effective enforcement is the most important element to improving state 
programs beyond the progress already made, and we believe Virginia 
offers a model for other states to adopt. Statistics demonstrate the 
success of the Virginia program--the state has experienced a 50 percent 
decrease in the excavation damage since implementing its program.
    For 2006, INGAA asks the Congress to emphasize once again the 
importance of excavation damage prevention by including a new program 
of incentives for state action. A modest amount of focused grant funds 
could go a long way to encourage states to improve the content and 
enforcement of their damage prevention programs.

Safety Regulation of Direct Sales Laterals
    One of the goals of the original Pipeline Safety Act enacted in 
1968 was to establish a clear line of demarcation between Federal and 
state authority to enforce pipeline safety regulations. Prior to 1968, 
many states had established their own safety requirements for 
interstate natural gas pipelines, and there was no particular 
consistency in such regulations across the states. This created 
compliance problems for interstate pipeline operators whose facilities 
crossed multiple states. The Pipeline Safety Act resolved this conflict 
by investing the U.S. Department of Transportation with exclusive 
jurisdiction over interstate pipeline safety while delegating to the 
states authority to regulate intrastate pipeline systems (generally, 
pipelines whose facilities are wholly within a single state).
    The statutory definition of an ``interstate gas pipeline facility'' 
subject to Federal regulation was clarified further when the Congress 
reauthorized the Pipeline Safety Act in 1976 (Pub. L. 94-477). As part 
of this clarification, the Congress stated that ``direct sales'' 
lateral pipelines were not subject to Federal jurisdiction. Direct 
sales laterals are typically smaller-diameter pipelines that connect a 
large-diameter interstate transmission pipeline to a single, large end-
use customer, such as a power plant or a factory. Such direct sales 
laterals often are owned and maintained by the interstate transmission 
pipeline operator to which they are connected.
    This clarification was made necessary by a 1972 U.S. Supreme Court 
decision (Federal Power Commission v. Louisiana Power and Light, 406 
U.S. 621) in which the Court ruled that for purposes of economic 
regulation (i.e., rate regulation), direct sales laterals were subject 
to preemptive Federal jurisdiction. This ruling created uncertainty 
regarding the authority to regulate the safety of direct sales laterals 
because when the Pipeline Safety Act was enacted in 1968, it was 
assumed by the Congress that such pipelines would be subject to both 
economic and safety regulation at the state level.
    While this exemption from Federal jurisdiction may have made sense 
30 years ago, it now is an anachronism. As mentioned, many of these 
direct sales laterals are owned and operated by interstate pipelines. 
The natural gas transported in such lines travels in interstate 
commerce, and the lateral lines are extensions of the interstate 
pipelines to which they are interconnected.
    Additionally, interstate natural gas pipelines are now subject to 
the PHMSA's Gas Integrity Management Program and are required to 
undergo a specific regimen of Congressionally-mandated inspections and 
safety verification. State-regulated pipelines are not covered under 
the Federal program. Instead, states are allowed to create their own 
safety programs, which may have different processes/procedures covered 
than the Federal integrity management program. Given the comprehensive 
Federal program, there is no particular reason for small segments of 
the interstate pipeline system to be subject to differing and 
potentially inconsistent regulation at the state level. The 
inefficiency of this approach is further compounded by the fact that an 
interstate pipeline operator with direct sales laterals in multiple 
states likely will be subject to inconsistent regulation across the 
states. It is therefore understandable that interstate pipelines wish 
to have their direct sales laterals subject to the same Federal 
integrity management requirements as mainline facilities. This would 
ensure a consistent and rational approach to integrity management 
system-wide, in contrast to being compelled to exclude parts of the 
pipeline network on the basis of an outdated set of definitions.
    INGAA supports amending the definitions of ``interstate gas 
pipeline facilities'' and ``intrastate gas pipeline facilities'' in the 
Pipeline Safety Act to eliminate the jurisdictional distinction between 
direct sales laterals and other segments of an operator's interstate 
natural gas pipeline system. This would make such segments of pipeline 
subject to Federal safety regulation consistent with the approach taken 
for the economic regulation of such pipeline facilities.
    Direct sales laterals that are not owned by an interstate pipeline 
would still be regulated by states. This amendment also would have the 
benefit of permitting the states to concentrate their resources on 
developing and enforcing integrity management programs for their 
natural gas distribution lines.

Conclusion
    Mr. Chairman, thank you once again for inviting INGAA to 
participate in today's hearing. I would like to provide some written 
comments on S. 3961 for the record. INGAA has made the reauthorization 
of the Pipeline Safety Act a top legislative priority, and we want to 
work with you and the Committee to move a bill forward as soon as 
possible. Please let us know if you have any additional questions, or 
need additional information.

    The Chairman. Thank you very much, Mr. Boss. Mr. Bender?

         STATEMENT OF E. FRANK BENDER, VICE PRESIDENT,

          GAS DISTRIBUTION AND NEW BUSINESS DIVISION,

        BALTIMORE GAS AND ELECTRIC COMPANY; ON BEHALF OF

                THE AMERICAN GAS ASSOCIATION AND

              THE AMERICAN PUBLIC GAS ASSOCIATION

    Mr. Bender. Thank you, Senator.
    Good morning, I'm pleased to appear before you today and 
would like to thank the Committee for convening this hearing on 
the important topic of pipeline safety. My name is Frank 
Bender, I'm Vice President of Gas Distribution and New Business 
at Baltimore Gas and Electric Company, and we deliver natural 
gas to 634,000 customers in Maryland.
    I'm testifying today on behalf of the American Gas 
Association, and the American Public Gas Association. Together, 
AGA and APGA represent more than 850 local gas utilities 
serving more than 56 million customers nationwide.
    I'd like to begin my testimony by first commending the 
Committee, particularly Chairman Stevens and Co-Chairman Inouye 
and their staffs, as well as Senators Lott and Lautenberg, for 
putting together what we believe is a good legislative 
proposal. We hope that the Committee will act quickly to get a 
bill passed this year.
    In our opinion, the Pipeline Safety Act of 2002 has been 
working well, and only minor adjustments should be considered 
at this point, with one exception. Our companies have 
identified one major area we believe requires considerable 
improvement, and that is excavation damage prevention.
    The term ``excavation'' as I use it here, and as defined by 
the Department of Transportation in its regulations includes 
all types of digging, demolition, tunneling or construction 
activities.
    Congressional attention to more effective state excavation 
damage programs can and will result in real, measurable 
decreases in the number of incidences occurring on natural gas 
distribution pipelines each year. Excavation damage is the 
single-largest cause of natural gas distribution pipeline 
incidents, and we are very pleased that S. 3961 addresses this 
very important issue.
    I'm pleased to report here also today that natural gas 
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 
damages by a third-party, not under the control of the utility. 
In many cases, the typical ``little or no control'' incident 
involves a party that is even outside the jurisdiction of 
authorities overseeing pipeline safety.
    Most unfortunately, during this same 4-year period, 
incidents due to third-party excavation more than doubled. 
Excavation damage thus represents the single greatest threat to 
distribution system safety, reliability and integrity. AGA and 
APGA are pleased that the provisions of S. 3961 outline nine 
elements of an effective state damage prevention program in the 
legislation, and provide for additional funding for state 
implementation of the program. The Associations also urge 
Congress to provide continued funding authority over the 
upcoming reauthorization period for grants to states to support 
One-Call programs, and to the Common Ground Alliance.
    I might digress a minute and say while I was sitting here, 
I received a page saying that there was a gas main struck by 
third-party excavation in Laurel and 37 homes are impacted. 
This is not an unusual occurrence. I get sometimes one, 
sometimes two, sometimes even three of these a day.
    The other issues of importance I would like to highlight 
briefly for the Committee have to do with gas transmission 
pipeline integrity management, and pipeline controller fatigue 
management.
    With regards to pipeline integrity, GAO suggests allowing 
operators to reassess their systems at intervals based on 
technical data, risk factors and engineering analyses. AGA and 
APGA agree with using technically-based assessment intervals.
    Finally, AGA and APGA support the proposed directive that 
DOT proscribe standards to reduce risk associated with managing 
fatigue in pipeline controllers. However, we are concerned 
about the possibility of complex regulations on ``mandatory'' 
working hours. DOT, in fact, recently held a public meeting on 
that topic, and the excellent information exchanged served to 
reinforce our belief that controller functions in the natural 
gas transmission, hazardous liquid and gas distribution 
industries are too diverse to be addressed by a one-size-fits-
all regulation.
    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 bill and 
commit to working with you to secure passage of the final bill 
this year. Thank you for the opportunity to appear here today.
    [The prepared statement of Mr. Bender follows:]

Prepared Statement of E. Frank Bender, Vice President, Gas Distribution 
   and New Business Division, Baltimore Gas and Electric Company; on 
  Behalf of the American Gas Association and the American Public Gas 
                              Association

    Good morning, I am pleased to appear before you today and would 
like to thank the Committee for convening this hearing on the important 
topic of pipeline safety. My name is Frank Bender, I am Vice President 
of Gas Distribution and New Business Division of Baltimore Gas and 
Electric Company, a subsidiary of Constellation Energy. BG&E delivers 
natural gas to 634,000 customers in Maryland.
    I am testifying today on behalf of the American Gas Association 
(AGA) and the American Public Gas Association (APGA). Together AGA and 
APGA represent more than 850 local natural gas utilities serving more 
than 56 million customers nationwide.
    I would like to begin my testimony by first commending the 
Committee, particularly Chairman Stevens and Co-Chairman Inouye and 
their staffs, as well as Senators Lott and Lautenberg, for putting 
together what we believe is a good legislative proposal. We hope that 
the Committee will act quickly to get a bill passed this year.
    In our opinion the Pipeline Safety Act of 2002 has been working 
well and 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 largest cause of natural gas 
distribution pipeline incidents--and we are very pleased that S. 3961 
addresses this very important issue.
    There are two kinds of incidents involving natural gas distribution 
systems: 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's contractor) 
and 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, floods, vandalism, lightning 
and structure fires).
    The term ``excavation'' as I use it here and as defined by the 
Department of Transportation in its regulations includes demolition, 
excavation, tunneling or construction activities. Excavation is wide 
spread--from directional boring for new cable lines to installation of 
fences.
    I am pleased to report here today that natural gas 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 that is outside the jurisdiction of authorities 
overseeing pipeline safety.
    However--and most unfortunately--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.
    The Common Ground Alliance (CGA) is a member-driven organization 
dedicated to ensuring public safety by reducing damage to underground 
facilities. Along with pipeline operators, the CGA membership includes 
excavators, locators, road builders, electric utilities, 
telecommunications, regulators and other stakeholders. Efforts by the 
Common Ground Alliance damage prevention organization, such as the 
nationwide education program to educate the citizenry about the three-
digit One Call ``8-1-1'' number to prevent excavation damage, are steps 
in the right direction. But clearly more is needed.
    AGA and APGA are pleased that the provisions of S. 3961 outlines 
nine elements of an effective state damage prevention program in the 
legislation and provide for additional funding for state implementation 
of the program.
    Other issues of importance that I would like to highlight briefly 
for the Committee are:

Gas Transmission Integrity Management
    The Department of Transportation and pipeline operators have put 
forth a tremendous amount of effort to implement the gas transmission 
pipeline integrity management requirements of the Pipeline Safety Act 
of 2002. The Government Accountability Office (GAO) recently issued a 
report on the subject of transmission integrity management reassessment 
intervals. The report states that the gas integrity management program 
appears to be working.
    The GAO also suggested allowing operators to reassess their systems 
at intervals based on technical data, risk factors and engineering 
analyses. AGA and APGA agree with using technically-based assessment 
intervals.

Safety Orders
    AGA and APGA believe that the language in S. 3961 that allows a 
safety order to be issued for ``any condition that poses a risk to 
public safety, property, or the environment'' is overly broad. DOT 
already is using its authority to issue corrective action orders to 
enforce safety rules on facilities that are determined to present a 
hazard to life, property and the environment.

Human Risk Factors Risk Management
    AGA and APGA support the proposed directive that DOT prescribe 
standards to reduce risks associated with fatigue, but we are concerned 
about the possible development of complex regulations on ``mandatory'' 
working hours.
    DOT recently held a public meeting on the topic, and the excellent 
information exchanged served to reinforce our belief that controller 
functions in the natural gas transmission, hazardous liquid, and 
distribution industries are too diverse to be addressed by a ``one-
size-fits-all'' regulation.

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 to the Common Ground Alliance.

Enforcement Transparency
    We support the idea of enhancing enforcement transparency, so long 
as due process is preserved and confidentiality during the 
administrative process of individual cases is protected. The Department 
of Transportation has a system where notices of probable violations are 
issued and operators are given an opportunity to promptly respond. If 
transparency during enforcement activities improves public confidence, 
we support enhancements with administrative due process.

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 bill, and commit to working with you to secure 
passage of a final bill this year.
    Thank you for the opportunity to appear here today.

    The Chairman. Well thank you all very much. We're pleased 
with the general endorsement of the work we've done so far, 
Senator Inouye and I have agreed we will ask the staff to 
prepare the final draft and have a vote to report this bill out 
this afternoon, sometime after the vote around five o'clock. 
We'll be prepared to go to conference with the House when we 
get back from having an opportunity for both the House and 
Senate staff to work on trying to get a compromise ready for us 
so we can get it done for the 2 weeks we're back in December.
    We generally thank you for your positive comments. None of 
you mentioned the certification by CEOs of the safety program--
did any of you find objections to that provision?
    Mr. Boss. No, sir.
    The Chairman. Good, thank you.
    It's my understanding that there are a number of gas 
transmission lines in high consequence areas that cannot be 
pigged. And these are inspected using different methods. Is 
there anything that's going to come forward--new technology or 
a new process or new procedure that will give us the same 
protection that pigging might give in those areas? Would any of 
you wish to comment on that? Mr. Bender?
    Mr. Bender. Yes, sir, I'd like to comment. We have--even 
though we're a distribution company--because we have about 150 
miles of distribution pipeline that operates at the pressure 
that requires that it comes under the transmission integrity 
management program. About 54 of those miles are in what we call 
high consequence areas.
    We actually have an improving, very effective means of 
detecting problems in that pipe with a process called Direct 
Assessment. In fact, the picture that Admiral Barrett had on 
display, that situation was discovered by using Direct 
Assessment, which is essentially measuring along the path of 
the pipe externally at the ground level with electronic sensing 
devices to determine defects and things of that nature. So we 
feel that pigging is not appropriate, and that's of course what 
makes distribution systems so much different.
    Many of those lines in the distribution system don't have 
alternate feeds, so if you have to shut down that line to pig, 
in all likelihood you're inconveniencing customers and taking 
them out of service. So, the Direct Assessment technique is 
finding defects, so it is working, and we think in our case 
that technology is proving its effectiveness.
    The Chairman. Mr. Boss?
    Mr. Boss. Yes, I agree with Frank on that subject. In my 
former life I worked as, handling research for pipeline 
integrity. That technology is very good, it is a flexible 
technology, so as new tools become available--and the key to 
this technology is the integration of separate tools to give 
you refined information about the location. And the way the 
regulation is designed it gives the flexibility as new 
technology comes along to incorporate it to improve it as we 
move forward. But we feel it's a very effective technology in 
finding some of these things.
    The Chairman. In looking at what happened to our transit 
lines in Alaska, I was surprised to find that in places there 
was corrosion, erosion inside the pipeline that eliminated 
almost 80 percent of the thickness of the pipeline in a small 
location, but that's what lead to the failure of the pipeline.
    I was told we're developing some things like ultrasound and 
other things that will be able to locate that kind of a defect. 
Are you all working on similar technologies? Do you have 
similar problems?
    Mr. Boss. There have been extensive programs going on for 
many years with Pipeline Research Committee and GTI, PHMSA has 
a significant amount of funds that they are using for those 
technologies, and we are proving a lot of those technologies 
out. One thing, we're a very conservative industry, we want to 
be sure the technology really does work before we do apply it, 
so there are a lot of efforts going that way. The thing that we 
had talked about on the Direct Assessment work is that it puts 
a very, a lot of rigor into the process, so that people do a 
very much step-by-step process which helps significantly.
    The Chairman. Would Direct Assessment find where the 
pipeline integrity has been weakened by corrosion and erosion 
inside?
    Mr. Boss. There are standards for both external corrosion 
and internal corrosion, and like I said, the National 
Association of Corrosion Engineers have published this, those 
have been incorporated into the regulation and it's a matter of 
using the right tools in combination with that rigorous process 
to help find some of those areas.
    The Chairman. It's hard for this Senator to imagine the 
ability of using Direct Assessment on thousands of miles of 
pipe. That comes to my mind--how do you deal with thousands of 
miles of pipe and say that the system works?
    Mr. Bender. In the case of distribution systems, pigging is 
just not a good option, so even though it is expensive to use 
Direct Assessment, we have found it a useful tool to do, you 
know, the miles that we have, at least as a distribution 
company under the Pipeline Integrity regulation. Distribution 
systems--if you looked at a distribution system on a map, 
essentially they would look like, almost like spaghetti, a lot 
of elbows, a lot of turns, a lot of regulators, a lot of 
valving, different sizes, different soil conditions, so Direct 
Assessment, we find, works. So, to Mr. Boss's point, we're not 
currently just using one method, we're using three methods and 
correlating the effect. So, it's not an inexpensive approach, 
but by the time we took customers out of service, by the time 
we had to deal with elbows and regulators and valving, Direct 
Assessment still would be less expensive than pigging, and more 
effective in our system than pigging.
    The Chairman. Most of those pipelines are buried, aren't 
they?
    Mr. Bender. That's correct, Senator.
    The Chairman. Mr. Boss?
    Mr. Boss. Yes, and that's a very important part of the 7-
year reassessment. If you're actually inspecting these lines 
quite a bit more often than you need to be, given the risk 
that's involved with those, and the deterioration, the expense 
of doing this Direct Assessment process does not depreciate 
over the years, it's a very, very expensive process.
    The Chairman. Senator Lautenberg?
    Senator Lautenberg. We talked earlier about access to the 
mapping data. Now, I ask you, Mr. Weimer, and I asked Admiral 
Barrett about this as well--do you believe that there are valid 
security-related concerns about having more public access to 
the mapping?
    Mr. Weimer. I guess my answer would be the same as Admiral 
Barrett's that there probably are valid security concerns, 
depending on the level of information provided. We've been 
having this argument in Washington State, because Washington 
State is about to put maps on the Internet live that they've 
went out and collected the data on themselves. And what they're 
doing is providing just the maps of the line pipe and not all 
of the attributes on those pipes, so they're not showing where 
the valves are and where the taps are and those types of 
things, they're just showing a map at a 1-to-24,000 scale that 
would allow local governments to know where the maps run in 
relation to proposed housing developments and hospitals and 
schools and those types of things. And at that level, I don't 
think that there is a security concern.
    Senator Lautenberg. Yes, you know one of the things, 
unfortunately, in the age in which we now live, this question 
arises in many ways. For instance, chemical plant storage 
facilities, do you put out an alert to the community that these 
are highly dangerous facilities if attacked, incinerated in any 
way, and so we have to decide between safety from the routine 
causes, and that which could invite an attack of some sort. And 
I don't think that you get by by not disclosing this 
information, this is of significant value. We talk about 
excavations being a primary cause of problems, accidents in 
pipes, and so I think it's awful hard to eliminate public 
access to mapping. How do any of you feel about it? Is there a 
difference in view?
    Mr. Felt. Sir, I have a little bit of a concern, we will 
support the bill and whatever is finally decided, but we 
personally meet with the communities, we meet with the 
homeowners and homeowner's associations, we spend considerable 
money trying to educate the public on the location of the 
pipeline and what to look out for on a pipeline. There are 
markers all over the place, and yes, the terrorists could see 
the markers, but so could the public. It's been my experience--
and I don't say that this is the case all over--but we can meet 
with communities and they don't seem to have a concern until 
there's an issue. We've met with communities, for example, on 
new developments and shopping centers where people know there's 
a pipeline there, they want to pave over it and they want to 
put a building right next to it. We've met with the local city 
council and expressed our opinions, but the developer would win 
out. Now, we've actually met with Mr. Weimer and some of his 
associates, and they're going to help come to some of these 
communities and help educate them. Because until they have an 
accident, they don't appreciate it. Having the maps there ahead 
of time, to me, makes it easier for someone looking to do 
damage by having access to the entire scope of all of the pipes 
in the country, which makes it easier for them--yes, they could 
do the research, but make them do the research. Someone 
interested in their local community is better off getting the 
information locally. We are very willing to have that 
information available to the communities and to the homeowners, 
I'm just not sure that the National Pipeline Mapping System--
with too much information--is the best way to do that.
    Senator Lautenberg. There are questions raised, but as life 
has its risks, normally, crossing roads and that kind of thing, 
at some point I think we're better off, we'll continue to know 
what's there, and to be able to take the precautions. And I 
think as has been said, if the community is made aware of the 
fact that this is where these pipes run, but particularly on 
permits on excavation and so forth to be fairly reliably 
managed is a critical issue.
    Mr. Weimer, the excess flow valves--what do you think we 
might do to improve the bill with respect to requiring excess 
flow valves? First of all, are these--these are safety devices, 
not without cost. And, what's the value in these? To try and 
implant these all over, especially in new construction?
    Mr. Weimer. Right, this is one of the things that the 
National Transportation Safety Board has been recommending for 
some time that PHMSA hasn't implemented, and PHMSA is going 
through the process, through the distribution integrity 
management program of looking at this. What the bill says, I 
think, is commendable and probably goes exactly where we want 
to go to encourage the criteria to be developed that requires 
these excess flow valves in just new pipelines and pipelines 
that are being replaced. Depending who you talk to, and excess 
flow valve costs from seven to thirty dollars, fifteen dollars 
is what we hear most of the time. So, if you're putting in a 
new pipeline that's already exposed, it's not that costly to 
install one of those.
    The problem we saw with the bill is the language in there 
talks about the criteria would be based on feasibility and risk 
analysis, and that kind of provides a lot of wiggle room for a 
company to argue that it's not feasible because of cost or not 
feasible because of some other reason. Where I think it should 
be turned around, let the company prove that it's not feasible 
for their own system, and if they can't prove that, then they 
should be installed.
    Senator Lautenberg. Well, if the question of cost is really 
not significant you're saying it is seven dollars--did I 
understand you correctly?"
    Mr. Weimer. Yes, seven to thirty dollars is what the valve 
itself costs and then----
    Senator Lautenberg. Are these things one per leg, close to 
the house or within the house?
    Mr. Weimer. Typically it would be one per house between the 
main on the street and where the house is, because they 
operate, if the line is----
    Senator Lautenberg. Tell me what you can do for seven 
dollars to put something in that's not a--it's obviously not a 
mechanical thing--seven--a soda pop almost costs seven bucks in 
some places. What do you get with a--?
    Mr. Weimer. It's a little valve that automatically shuts if 
the pressure breaks in the pipeline. So it shuts off the gas 
coming from the main to the house if there is excavation 
damage, or if a homeowner is out shoveling and breaks the----
    Senator Lautenberg. Does it buildup pressure behind the 
valve?
    Mr. Weimer. No, because that's already, that pressure is 
already in that pipeline and it just stops it at that point so 
it doesn't continue to leak into people's basements or into the 
house, causing an explosion.
    Senator Lautenberg. It sounds like a pretty good 
investment, Mr. Bender?
    Mr. Bender. I'd just like to say that AGA, APGA supports 
the legislation, the current wording in the legislation. We 
don't consider cost when we're talking about our customer's 
safety, so the word feasibility to us means, although excess 
flow valves do work, there are certain conditions where they 
don't work. If the gas pressure, if the house is on a low 
pressure main, which is essentially a third of a pound, it's 
almost like puffing on a soda straw. Our belief and from the 
manufacturers of these excess flow valves is that you have to 
have at least 10 pounds of pressure for them to work. So, I 
think PHMSA's approach is the right approach because you don't 
want to mandate something where you could be redirecting that 
effort and those resources to something that could really make 
a difference. So we like the wording as it currently exists, 
and support PHMSA's approach.
    I would say also that use of excess flow valves is 
increasing across the country by many utilities, and so I think 
utilities on their own are finding the benefit of excess flow 
valves and are introducing them in new construction as well and 
I've got to tell you, PHMSA's made it pretty clear they expect 
to see the use of excess flow valves increase.
    Senator Lautenberg. What kind of a record do you have that 
highlights the number of incidents that result from excess 
pressure building up? Is that a frequent occurrence?
    Mr. Bender. In our service territory, we've never seen a 
case where we thought an excess flow valve being installed 
would have prevented a house explosion. We've seen house 
explosions many times, people try to commit suicide, believe it 
or not, by disconnecting the gas line. But nationally I know 
down in Virginia, the case down in Virginia, was it Riding, 
Virginia? They felt that an excess flow valve would have 
prevented that there. So, we're not disputing that.
    Senator Lautenberg. It's not a high incidence of accident, 
I take it? Are there numbers of these reported where the 
pressure became excessive and an explosion or a fire resulted?
    Mr. Weimer. If I can try to answer that, I think you could 
probably get the best accurate answer if you ask the National 
Transportation Safety Board to provide their information, 
they've been looking at that. Certainly as we've heard, third-
party damage, excavation damage to these types of distribution 
pipelines is the highest cause of damage, so any time you 
have--between the main and the house--some kind of excavation 
damage, these valves can potentially save people's lives.
    Senator Lautenberg. I have one last question, Mr. Chairman. 
The PHMSA inspections--do you support making the results of 
these inspections publicly available?
    Mr. Weimer. I certainly support that, that was in our 
testimony. We don't support everything, we don't need to have 
the pig data and all of that stuff, but a basic cover sheet 
that talks about the company's name, what section of the 
pipeline was inspected, what was found, when it was fixed, and 
the company's response to that, so both sides of the stories 
are shown, seems like a relatively easy thing to put up along 
with the enforcement transparency that we're talking about. 
That's already done in certain states, I know in Washington 
State you can go onto the Internet, type in any company's name, 
and all of the intrastate pipelines that Washington State is in 
control of, you can look at the inspection records. And it 
helps, I think people realize how often pipelines are inspected 
and how good the companies are doing, so I think it would be a 
benefit to both the public and the company.
    Senator Lautenberg. Seems so to me. Any objection to----
    Thanks, Mr. Chairman.
    The Chairman. Senator Pryor?

                 STATEMENT OF HON. MARK PRYOR, 
                   U.S. SENATOR FROM ARKANSAS

    Senator Pryor. Thank you, Mr. Chairman. I have a couple of 
questions for Mr. Boss, if I may, about the reassessment, which 
I understand--or assessment--as I understand that's your term 
used for inspections and you, as I understand, you do not like 
the 7-year inspection. Is that arbitrary? Is that why you don't 
like it? And you prefer kind of a risk-based formula, is that 
right?
    Mr. Boss. Yes, Senator, there is an engineering consensus 
standard out there from the American Society of Mechanical 
Engineers that makes recommendations on how to do it. I would 
use an analogy, it basically gives you some idea on when to 
change the oil, every 3,000 miles. Right now as we're looking 
at this, it's looking to change our oil every thousand miles. 
We're looking at a lot of new technology that will be very 
similar to some of the automobiles that basically tell you when 
to inspect this and turn to the findings. So, we think it's 
very arbitrary and it's taking a lot of investment to these 
areas that don't need to be done at this time where we could 
use that investment otherwise.
    Senator Pryor. I'd say from the regulators standpoint, it's 
easier to have a flat rule, like a 7-year investment, you force 
industry to look every 7 years on every part of their system, 
and you have sort of done that and you know it's up to 
standards and blah, blah, blah, it may be a little overkill, 
but it does seem to be a safe approach. From a regulator's 
standpoint, or from an oversight standpoint from the 
government's perspective, if you go into some different 
approach, some different formula, calculation, whatever it is--
how does the public know that you are maintaining a safe 
pipeline? One of the things you're saying is--7 years costs too 
much money. How does the public out there know, well, these 
pipeline companies aren't going to skimp, and they're going to 
push their pipeline safety issues out to the very edge, the 
very limit and maybe to the breaking point and maybe then your 
system is dangerous over time--what assurance does the public 
have there?
    Mr. Boss. Well as mentioned in the GAO studies, there are 
extensive inspections that go on by PHMSA inspectors up to 3 
weeks at a time with these different companies, look at these 
details. The engineering standards are built with a lot of 
different safety factors, to give an example, a table may say 
every 5 years, every 10 years, every 15 years, simplifying that 
sort of thing, and there's extensive work being used in all the 
international communities where the regulators look at, on a 
risk-based methodology, in Canada and also in Europe.
    Senator Pryor. So, you like the risk-based because you get 
to look at each section of the pipe based on all of the 
circumstances around it, based on all of the circumstances 
around it, based on whatever environmental circumstances and 
whatever capacity it has, and all of the various factors you 
take into consideration.
    Mr. Boss. Senator, since 1953, the engineering standards 
had specific requirements for high-density population areas for 
natural gas transmission, PHMSA adopted those in regulation in 
the 1970s. We've had risk-based standards for high population 
density areas. This program has added to that effort on the 
assessment area on that.
    Senator Pryor. So, in other words, you're comfortable with 
the risk-based assessment.
    Mr. Boss. Yes, and there are limits and believe me, PHMSA 
is out there checking very hard to be sure things are being 
done right.
    Senator Pryor. And in your industry, from your perspective, 
the 7-year flat rule just doesn't make a lot of sense.
    Mr. Boss. No, there are some places where we may have to do 
it more often, there are some cases where we should be doing it 
at a longer period.
    Senator Pryor. Mr. Bender, let me ask you in your 
testimony, you mention Section 15 of S. 3961 and you talk, I 
think you said it was a one-size-fits-all regulation.
    Mr. Bender. Right.
    Senator Pryor. I'd like to get a little more detail on your 
thoughts on that because the way I read it, and maybe I 
misunderstand it, but it looks like the approach that we're 
taking actually recognizes the diversity and the varying 
circumstances on pipelines, so could you tell me what you mean 
by ``one-size-fits-all?''
    Mr. Bender. Thank you, Senator. The distribution systems 
and how they're operated are different than liquid pipelines 
and gas transmission pipelines--the control rooms, the 
equipment, the pressures, the amount of gas that you're moving, 
the risk of inappropriate action, the staffing of a control 
room, you may have two or three people in a control room, you 
may only have one person in a control room. To have a mandatory 
limit or prescription regarding schedules, and I guess the 
example I'll give is we have three people normally in our 
control room and we, in flu season, somebody may call in sick. 
And if the mandatory restriction or window or plan has been 
submitted that an operator won't work past 8 hours, that would 
not be good for us because you've got to sometimes say, ``Tell 
the operator that he or she may have to stay over and work a 
second shift.'' Now that is within their realm of ability, it's 
not a physical job and we do that frequently, and plus there 
are other people in the control room, there's not a case where 
somebody's going to be asleep at the throttle.
    Now I'm not saying there are cases where working a second 
shift wouldn't be appropriate, depending on the circumstances 
of the staffing of the control room, of the system and what was 
going on in the system, so that's when I say, really, one size 
doesn't fit all, and that's our concern. You know, it's not, 
it's just, we are just concerned that because the systems are 
different, we wouldn't want to have very prescriptive 
regulation regarding the schedules.
    Senator Pryor. Mr. Chairman, that's all I have, thank you.
    The Chairman. Thank you, Senator. We thank you--all of 
you--for your testimony and for your support of our endeavors 
so far. We're going to do our best to get this bill passed this 
year, and we'll be obviously in a period of some negotiation 
with the House when we come back in December if we can get the 
bill out of here today or tomorrow. We'd be happy to have your 
comments along the line, this is a bill we want no surprises, 
we're pleased with the general support we have now, you've made 
some suggestions here this morning, I've asked the staff to 
pursue those suggestions. We'll do our best to make sure we 
have a good bill and I do thank you for your attitude, it is 
very supportive of what we want to do, and increases the 
confidence in this inspection and safety system. Thank you very 
much.
    [Whereupon, at 11:25 a.m. the hearing was adjourned.]


                            A P P E N D I X

                               Department of Transportation
                                   Washington, DC, December 4, 2006
Hon. Jim DeMint,
Senate Committee on Commerce, Science, and Transportation,
Washington, DC.

Dear Senator DeMint:

    The Senate may have an opportunity this week to reauthorize the 
pipeline safety program by adopting the Pipeline Inspection, 
Protection, Enforcement, and Safety Act of 2006. I am writing to urge 
your support for reauthorization and to explain how the Pipeline and 
Hazardous Materials Safety Administration (PHMSA) intends to use its 
statutory authority in connection with the current requirement 
(codified at 49 U.S.C. Sec. 60109(c)(3)(B)) that operators of natural 
gas pipelines reassess the integrity of their pipelines at intervals 
not to exceed 7 years.
    As you know, the Administration's reauthorization proposal would 
have granted the Secretary of Transportation authority to establish 
through rulemaking risk-based reassessment intervals that would have 
superseded the seven-year statutory standard. Our proposal was strongly 
supported by industry and endorsed by the Government Accountability 
Office in a report issued earlier this year, but it appears doubtful 
that any bill considered this week would propose the new authority.
    Nevertheless, as I testified before the Committee on Commerce, 
Science, and Transportation last month, PHMSA is prepared to address 
the need for risk-based reassessment intervals under its existing 
authority. The Secretary of Transportation has specific authority under 
existing law to modify the seven-year reassessment requirement on a 
case-by-case basis through issuance of regulatory waivers. Under 49 
U.S.C. 60109(c)(5), the Secretary may waive or modify the 7-year 
reassessment requirement if the Secretary determines that such a waiver 
is ``not inconsistent with pipeline safety.'' In making waiver 
determinations, the Secretary may consider ``any relevant factor,'' 
including the need to maintain local product supply or the 
unavailability of inspection equipment. Waiver applications under the 
current provision must be decided in accordance with the Act's general 
waiver provision (Section 60118(c)), which imposes certain procedural 
requirements, including notice and opportunity for a hearing.
    Under that standard, an operator requesting a waiver of the seven-
year reassessment requirement would have an opportunity to demonstrate 
that a longer interval is justified considering all of the relevant 
operating parameters and conditions on the pipeline. PHMSA is inclined 
to grant such a waiver where an operator can demonstrate that the 
subject pipeline is covered by an integrity management program that has 
been reviewed by PHMSA and determined to provide appropriate risk 
analysis and control; a baseline assessment has been completed; the 
data on the current condition of the pipeline is sufficient to validate 
its integrity; and the proposed interval is consistent with the overall 
risk profile of the line.
    In the circumstances, with the Congress' support, we expect to be 
able to accomplish the objective underlying our rulemaking proposal--
moving to a risk-based reassessment program--even though the specific 
provision proposed by the Administration will not be adopted. My staff 
has discussed this matter with the staffs of the authorizing 
committees, and we understand that a risk-based approach such as I have 
described has been specifically contemplated in the drafting, staff 
deliberation, and pre-conference processes.
    Thank you for your continued interest in, and support of, the 
pipeline safety program. If I may be of assistance to address any 
additional concerns, please do not hesitate to contact me.
        Sincerely and very respectfully,
                                         Thomas H. Barrett,
                                                     Administrator.
                                 ______
                                 
                               Department of Transportation
                                  Washington, DC, November 28, 2006
Hon. Ted Stevens,
Chairman,
Senate Committee on Commerce, Science, and Transportation,
Washington, DC.

Dear Mr. Chairman:

    On behalf of the Administration, I want to thank you and your 
Committee for the commitment you have shown to pipeline safety and to 
the continued improvement of programs administered by the U.S. 
Department of Transportation. When I appeared before the Committee as a 
nominee in September, I pledged to make reauthorization of the pipeline 
safety program a top priority. I urge Congress to do the same as it 
heads into the final weeks of the session.
    As you know, four pipeline reauthorization proposals are pending 
before this Congress. Each of the bills would give the Department and 
our state partners new tools to address safety risks, including growing 
risks posed by construction-related damage to underground pipelines, an 
unfortunate and largely preventable consequence of our growing economy. 
The Administration and the Department are committed to addressing this 
problem, but we need additional authority to be successful.
    The rate and severity of construction-related pipeline incidents 
are growing. These incidents hit close to home--on distribution lines 
that run through neighborhoods where families live and schools are 
located. And the consequences are tragic; excavation damage is the 
overwhelming cause of pipeline accidents in which people are injured or 
killed.
    To reduce these accidents, we need to better support and strengthen 
our state partners. State pipeline safety agencies oversee nearly 1.7 
million miles of the pipeline distribution system that is at greatest 
risk of serious construction damage. Consistent with sound integrity 
management, the Department needs greater flexibility to put pipeline 
safety resources where they are needed most. When it comes to 
addressing construction-related damage, this means fostering 
comprehensive programs for enforcing existing ``one-call'' laws, as a 
few States have demonstrated with positive results.
    Beyond helping states with damage prevention and overall integrity 
management, each of the legislative proposals builds on the success of 
past safety reforms, with somewhat varying detail and emphases. I would 
be happy to share our views on particular provisions or to assist the 
Congress in any other way in reconciling differences among the four 
bills. In the final analysis, however, what the bills have in common is 
vastly more important than any one or combination of their differences. 
I urge Congress to reauthorize the pipeline safety program this year to 
give us more authority to help save lives. By preventing damage to 
pipelines, Congress will also strengthen the Nation's energy highways, 
improve the reliability of critical energy supplies, and, in the case 
of one-call enforcement, enhance the protection of other underground 
infrastructure and utilities, including communications and electrical 
distribution.
    Thank you for the opportunity to provide the Department's views on 
reauthorization of the pipeline safety program. We would be pleased to 
provide assistance as legislation is considered by the Congress. The 
Office of Management and Budget has advised that there is no objection 
to the presentation to Congress of these views from the standpoint of 
the Administration's program.
    An identical letter has been sent to the Co-Chairman of the Senate 
Committee on Commerce, Science, and Transportation, and the Chairmen 
and Ranking Members of the House Committees on Transportation and 
Infrastructure and Energy and Commerce.
        Sincerely yours,
                                            Mary E. Peters,
                                       Secretary of Transportation.
                                 ______
                                 
            Prepared Statement of Stephen E. Sandherr, CEO, 
               Associated General Contractors of America

    On behalf of the Associated General Contractors of America (AGC), I 
appreciate the opportunity to comment on S. 3961, the Pipeline 
Inspection, Protection, Enforcement and Safety Act of 2006. AGC is 
especially concerned about Sec. 4(a) which creates a new permanent 
Federal one-call enforcement program. While this provision may be good 
to encourage the few states that do not have strong one-call laws that 
include enforcement and civil penalties, it takes a step back from the 
progress we have made to ensure a strong partnership for damage 
prevention. The success of the Common Ground Alliance and the 
successful records of state one-call laws comes from the participation 
of the construction industry, the locating industry and the underground 
facility owners in a true partnership committed to damage prevention.
    AGC believes that Federal enforcement provisions do not further the 
partnership that we have been committed to for the last 8 years. A 
permanent Federal program is unnecessary. AGC and the Common Ground 
Alliance both support the premise that the best place for enforcement 
decisions to be made is in the states themselves. The Federal 
Government should encourage states to adopt policies and procedures 
that promote effective one-call programs, then withdraw and allow the 
states to operate and enforce them.
    We strongly believe that the most important thing the Committee can 
do to improve safety would be to modify the bill to ensure that all 
owner/operators, locating personnel, and excavators share equally in 
the responsibility for facility integrity, and most importantly public 
and worker safety. Absent this focus in the enforcement language, the 
successful partnership may begin to falter.
    AGC is proud of our history as a construction industry sponsor of 
the Common Ground Alliance (CGA). AGC believes that in the spirit of 
``shared responsibility,'' a concept promoted by the CGA, owner/
operators and locating personnel must be held to just as high a 
standard as excavators for damage prevention process enforcement to be 
equitable. States such as Virginia and Minnesota have demonstrated that 
enforcement works--when it is equally applied to all stakeholders to 
the damage prevention process across the board. We are pleased that 
these state's One-Call programs were used as models for the nine points 
listed in the Administration's proposal. the House Transportation and 
Infrastructure Committee's bill and the House Energy and Commerce 
Committee's bill as well as S. 3961.
    AGC supports best practices as outlined by the CGA. AGC members 
call before they dig; wait the required amount of time for utilities to 
locate and mark their facilities; dig with care; and so much more. It 
is just as important, if not more so, that utilities respond in a 
timely manner and that locators mark the facilities clearly and 
accurately as prescribed by law.
    The Commonwealth of Virginia provides an excellent example of how 
an effective program operates. They enjoy a successful partnership 
between the excavators, the facility owners, the locators and the 
state. One of their hallmarks is strict enforcement--across all 
stakeholder groups. Virginia has data from 1996 to 2005 indicating a 60 
percent increase in one-call excavation notices while documenting a 50 
percent reduction in excavation damage to gas pipelines.
    Clearly, no one wants to cause damage. Criminal penalties are not 
appropriate for any stakeholder be they a locator, utility owner, 
professional excavator or a private citizen operating in good faith. 
They should not be included in any reauthorization of the Pipeline 
Safety Act. Civil penalties, however, send a strong message that 
stakeholders must operate in a responsible, safe manner.
    AGC also urges the Committee to include authorizations for funding 
for the Common Ground Alliance, promotion of 8-1-1 three-digit 
nationwide dialing for one-call (which goes online in 2007), and for 
technology development grants to enhance locating technologies and 
render underground utilities more locatable. These programs are 
critical to getting universal adoption of our common best practices.
    Again, AGC encourages the Committee to promote successful damage 
prevention programs. But the most important lesson we have learned from 
our successful efforts in the Common Ground Alliance are that these 
laws must take into account the entire damage prevention process, not 
simply focus on the excavator. AGC encourages leveling the playing 
field between stakeholders--easing the inequitable burden included in 
the bill which currently lies primarily with the excavator when it 
should recognize that to be successful these programs must recognize 
the role that all parties have in public and worker safety, facility 
integrity and damage prevention.
    Again, thank you for the opportunity to comment on this important 
issue. I look forward to working with the Committee to enact meaningful 
and fair legislation reauthorizing the Pipeline Safety Improvement Act.
    Thank you.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                           Thomas J. Barrett

    Question 1. I understand that the Administration generally supports 
the enforcement provisions of S. 3961, with some added changes that 
were incorporated into the House Energy and Commerce Committee's bill. 
The 2000 El Paso Pipeline accident in New Mexico, which killed an 
entire extended family of twelve, triggered the need for the provision. 
The Pipeline agency originally announced a proposed $2.52 million fine. 
Today, 6 years later, no penalty has ever been collected. Can you 
provide the Committee with information regarding the status of that 
penalty and whether any funds have been collected from the operator?
    Answer. PHMSA proposed a $2.52 million fine against El Paso Natural 
Gas Company following the New Mexico accident and we remain determined 
to bring this matter to a just resolution. We are working with the 
Department of Justice to apply our strongest options available. The 
United States is in nonpublic discussions with the company at this 
time.

    Question 2. Do you believe that a similar enforcement transparency 
policy might be a good practice for your hazardous materials 
enforcement actives at the Pipeline agency or the other DOT 
administrations?
    Answer. Yes, we believe this to be a good practice. PHMSA's 
hazardous materials enforcement program has led our effort in 
enforcement transparency, making comprehensive enforcement data 
available on a PHMSA webpage. We have designed a new webpage about our 
pipeline safety enforcement actions, which will provide information on 
each action and current status. I am committed to making our inspection 
and enforcement activities more transparent.

    Question 3. Some feel that the security restrictions imposed on the 
National Pipeline Mapping System (NPMS) do little to improve security, 
but do hamper safety efforts to reduce building encroachment near 
pipelines and third-party damage. Additionally, I understand that the 
removal of the NPMS from the public domain has forced some states, such 
as Washington, Texas and Louisiana, to spend their limited state 
dollars to duplicate this mapping system so local government and the 
public have access to this valuable information. Are you considering 
reinstating public access to the NPMS so local governments can plan 
safely and the public can be aware of the pipelines that run through 
their area?
    Answer. Yes. PHMSA is working to restore public access to the NPMS 
information that will be available in mid-2007, in a way that 
accommodates both public and security concerns. We believe the restored 
information will meet the needs for environmental, emergency, land use 
and other planning activities. We are consulting with all relevant 
parties--including pipeline safety advocates, the Department of 
Homeland Security's Transportation Security Administration, other 
Federal agencies, the pipeline industry and our state partners in 
developing our approach.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                            E. Frank Bender

    Question 1. In your testimony, you seem to suggest that Section 15 
of S. 3961 requires the development of a ``one-size-fits-all'' 
regulation to address pipeline controller fatigue and other human 
factors. In fact, our bill requires each pipeline operator to develop 
their own rules on worker's hours of service, consistent with current 
science on fatigue management. This approach recognizes the 
``diversity'' of pipeline controller functions among different pipeline 
operations by letting operators devise their own strategies to reduce 
human factors. What about this approach is troubling to your members?
    Answer. We commend the Senate for the recent passage of the 
Pipeline Inspection, Protection, Enforcement, and Safety Act of 2006, 
which includes requirements for controller work plans to address 
fatigue and other human factors. I acknowledge the flexibility that was 
provided in the Senate bill. The language should be sufficient for DOT 
to develop regulations that provide the needed flexibility for the more 
than 1,100 natural gas distribution operators, whose control operations 
are vastly different from gas transmission and hazardous liquid 
operators.

    Question 2. Regarding third-party damage, I believe much of the 
prevention effort has focused on the commercial excavation community, 
including contractors, utility, cable and telecommunications companies. 
Is there also a third-party damage problem from ordinary citizens 
engaged in routine excavation near their property, particularly in 
urban areas? If so, should our damage prevention programs take this 
into account?
    Answer. Yes, and I believe the language in the reauthorized 
Pipeline Act successfully addresses that problem. There is the 
potential for problems with ordinary citizens engaged in routine 
excavation near their property causing damage to underground utilities. 
The reauthorized Pipeline Safety Act states in 49 U.S.C. 60134(b) that 
and effective damage prevention program includes ``A process for 
fostering and ensuring active participation by all stakeholders in 
public education for damage prevention activities.''
    Some operators are already working to educate ordinary citizens 
about the dangers of not using one-call before digging. The Common 
Ground Alliance best practice for public education includes children 
and property owners as target audiences, as well as excavators and 
contractors.\1\
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    \1\ Common Ground Alliance Best Practices, Version 3.0 Public 
Education and Awareness Practice Statements & Description.
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                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                               Terry Boss

    Question 1. Under existing authority and the nonemergency waiver 
provision of S. 3961, gas transmission pipeline operators would be able 
to request a waiver of the seven-year reassessment interval. While I 
know INGAA had hoped that the interval would be changed statutorily, 
why wouldn't this approach work just as well? In effect, the seven-year 
interval would become a back-stop and operators who could demonstrate 
to the Pipeline agency that a longer interval would not have an impact 
on safety, would be allowed to change it.
    Answer. INGAA agrees that gas transmission operators can request 
waivers from the seven-year reassessment interval. Senator DeMint had 
raised this issue with PHMSA Administrator Thomas Barrett prior to the 
passage of H.R. 5782 in the Senate. Administrator Barrett's response 
(see pages 55 and 56) makes it clear that PHMSA does intend to 
entertain waiver requests of this nature, so long as the operator can 
``demonstrate that a longer interval is justified considering all of 
the relevant operating parameters and conditions on the pipeline.'' We 
appreciate the willingness of Administrator Barrett--and the Congress--
to support these waivers where they can be justified. INGAA remains 
convinced, however, that waivers are a temporary solution.
    Congress chose to enact a specific statutory requirement for 
reassessment intervals in 2002. The seven-year requirement was never 
based upon an actual analysis of the safety and engineering associated 
with natural gas transmission lines; it was instead the product of 
political compromise. This is why the provision in the 2002 bill 
requiring an analysis by the Government Accountability Office (GAO) was 
so important. The GAO was able to spend over a year gathering and 
analyzing data on this issue so that it could recommend a more reasoned 
alternative. As you know, the GAO (Report 06-945) did recommend to 
Congress that the statute be changed to allow PHMSA to undertake a 
rulemaking for changing the seven-year interval to one in which 
reassessment intervals are based upon risk analysis. Until the statute 
is changed by Congress, though, the seven-year requirement remains the 
standard--even though it does not have any justification from an 
engineering standpoint. PHMSA has the authority to review waiver 
requests, but those requests do not have to be acted upon, and if 
granted, can be revoked at any time. INGAA also has concerns about the 
consistent application of waiver authority across a large number of 
pipelines. INGAA's members have consistently advocated regulatory 
certainty in such matters--an opportunity to participate in the 
rulemaking process and a clear understanding by both operators and 
regulators of the requirements. The waiver process leaves much more 
uncertainty for both parties to manage.
    In terms of using the seven-year requirement as a ``back-stop,'' 
INGAA would be much more comfortable with using a time-frame that 
actually has some justification. The GAO report highlights the work 
that has been done by the American Society of Mechanical Engineers 
(ASME), which has recommended prescriptive intervals of 10 years for 
most high-stress natural gas pipelines (i.e., the vast majority of 
INGAA member company pipelines). This ten-year standard has undergone 
review and approval by the American National Standards Institute, and 
therefore has been demonstrated to have a scientific and engineering 
justification. If there is to be any back-stop on reassessment 
intervals, the ASME standard is the one that makes the most sense.
    The reauthorization bill approved by Congress requires PHMSA to 
report back within 60 days on a legislative provision for enacting the 
GAO recommendation. INGAA hopes that Congress will seriously consider 
and approve the legislative proposal from PHMSA. Granting waivers from 
the seven-year requirement is a short-term solution at best. There is 
no reason why Congress cannot allow PHMSA to develop a more logical and 
justifiable reassessment interval policy for the long-term. INGAA 
believes this development is best accomplished through the rulemaking 
procedure, with public notice and participation, consideration of 
comments by all interested parties, and advice from the Technical 
Advisory Committee.

    Question 2. In the GAO report on the seven-year reassessment 
interval, the GAO noted that it was difficult to evaluate the nature 
and cause, such as corrosion, of individual pipeline problems 
discovered during initial pipeline assessments because the Pipeline 
agency does not require pipeline operators to report such information. 
Would you be opposed to providing such information to the Pipeline 
agency?
    Answer. No, INGAA would not be opposed. We are in the process of 
surveying our own association members as to the nature and causes of 
the defects that were repaired in the high consequence areas subject to 
Integrity Management Program for years 2004-2006 and plan on sharing 
the results of that information with PHMSA.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                              Timothy Felt

    Question 1. In your testimony, you reference the Association of Oil 
Pipe Lines' opposition to the requirements in S. 3961's section 3 that 
all low-stress pipelines be subject to Federal incident reporting and 
National Pipeline Mapping System regulations. Can you explain your 
opposition to these regulations?
    Answer. In our testimony we supported the House Energy and Commerce 
Committees bill language that significantly broadens the regulation of 
low-stress pipelines and exceeds the Administration's proposed 
requirements for these lines. This bill language would subject oil 
pipelines operating at low-stress that are similar to the Prudhoe Bay 
lines that leaked in March 2006 to the same regulations as oil 
transmission pipelines operated at high-stress.
    We oppose additional DOT mapping and reporting requirements for the 
remaining lines operated at low-stress that would not be covered by the 
House bill. These remaining lines are:

        I. regulated by the Coast Guard; or

        II. serving refining, manufacturing, or truck, rail or vessel 
        terminal facilities, if the pipeline is less than 1 mile long 
        (measured outside the facility grounds) and does not cross an 
        offshore area or a waterway currently used for commercial 
        navigation.

    These are the reasons for this opposition:

        1. With respect to I., we recommend against dual regulation of 
        facilities or disrupting existing regulatory arrangements by 
        shifting regulatory responsibility from one agency to another 
        unless there is a very good reason. The Coast Guard is not lax 
        in its attention to the facilities it regulates. Pipelines 
        regulated by the Coast Guard should be all the Coast Guard's 
        responsibility, not part the DOT's and part the Coast Guard's 
        responsibility.

        2. With respect to II., these pipelines are short and so 
        closely associated with the facilities they serve that mapping 
        details would be obscured and not helpful. The facilities 
        served by these pipelines are not subject to DOT regulations 
        currently, and we do not believe adding DOT reporting 
        requirements for them is merited.

        3. Also with respect to II., leak reporting for these pipelines 
        could be required by PHMSA under existing law if the benefits 
        would justify the costs. PHMSA has not chosen to do so, most 
        likely because the benefits do not justify the costs. These 
        facilities are for the most part inside a company's fence. So 
        are the infrequent and generally quite small leaks, which occur 
        primarily at valves rather than in pipe itself. Rather than a 
        Congressional mandate for a program to collect data on leaks 
        from these facilities, it would be better for PHMSA to propose 
        such a program through the administrative process and tailor it 
        to meet a cost-benefit test.

    Question 2. In your testimony, you note that oil pipelines are 
subject to a baseline assessment period of 7 years and a reassessment 
period of 5 years under integrity management rules. Do you anticipate 
problems or difficulty in meeting the five-year reassessment interval 
for your members' pipelines in high consequence areas?
    Answer. When these requirements were proposed by PHMSA's 
predecessor in 2000-2001, we were concerned that the vendor capacity 
available for pipeline assessment--internal inspection devices and the 
people to interpret the output of the devices--might not be sufficient 
to the requirements of the regulations. We have worked through these 
concerns, in part because the vendor community has responded to the 
need and in part because PHMSA's regulations provide flexibility to the 
operator to design assessment schedules. The oil pipeline industry is 
on track to meet the pipeline integrity regulatory requirements 
applicable to our pipelines. Our industry has embraced integrity 
management as good business. The application of integrity management is 
successfully making lasting improvements in the oil pipeline 
infrastructure, and not just in those portions of the infrastructure 
that are in high consequence areas.
                                 ______
                                 
  Response to Written Question Submitted by Hon. Daniel K. Inouye to 
                              Carl Weimer

    Question. In your testimony, you recommend that Congress consider 
studying the imposition of financial responsibility requirements for 
pipelines as it already does for other companies under the Resources 
Conservation and Recovery Act (RCRA) and the Oil Pollution Act (OPA). 
Can you further explain why this is needed?
    Answer. Thank you for the opportunity to expand on our testimony 
regarding the possible need for financial responsibility (also referred 
to as financial assurance) measures for pipelines to increase 
protection of communities and the environment.
    As stated in our earlier testimony because of the corporate 
structuring of pipeline companies as independent companies owned solely 
by larger corporations there exists the potential to under-capitalize 
these pipeline companies, and thus avoid or significantly delay large 
liabilities caused by accidents by simply declaring bankruptcy. This in 
fact was exactly what happened with the Olympic Pipeline Company after 
the Bellingham tragedy, where two of the largest corporations in the 
world, (British Petroleum and Shell), allowed their solely-owned 
pipeline company to enter bankruptcy.
    There are a number of Federal statutes that include financial 
assurance clauses to prevent this type of liability dodging, and also 
to help ensure that safety will be internalized into a company's 
management. Financial assurance is required under the Oil Pollution Act 
(OPA), the Comprehensive Environmental Response, Compensation, and 
Liability Act (CERCLA, or Superfund), the Resource Conservation and 
Recovery Act (RCRA), the Safe Drinking Water Act, the Outer Continental 
Shelf Lands Act (OCSLA), the Federal Land Policy and Management Act, 
and the Surface Mining Control and Reclamation Act (SMCRA).
    A number of studies have been done that show the value of such 
financial assurance. A Programmatic Regulatory Assessment of OPA 90 
done by the U.S. Department of Transportation in 2001 showed that the 
single largest contributor to reducing spills was the financial 
responsibility rule within OPA 90. Other studies done by the 
independent group Resources For The Future have shown a similar 
successful effect of financial responsibility rules in a number of 
different statutes.
    Here is a list of what we have found to be the most relevant 
studies, and where they can be found. We have also attached copies of 
these studies for your convenience. *
---------------------------------------------------------------------------
    * The information referred to has been retained in Committee files.

    OPA 90 Programmatic Regulatory Assessment (PRA)--Benefit, Cost, and 
Cost Effectiveness of Eleven Major Rulemakings of the Oil Pollution Act 
of 1990 (May 2001)--Prepared by: Economic Analysis Division, John A. 
Volpe National Transportation Systems Center, Cambridge, Massachusetts 
---------------------------------------------------------------------------
http://www.uscg.mil/hq/g-m/regs/PDF/pra-main.pdf.

    Financial Assurance Rules and Natural Resource Damage Liability: A 
Working Marriage? James Boyd (March 2001)--Discussion Paper 01-11 
http://www.rff.org/rff/Documents/RFF-DP-01-11.pdf.

    Financial Responsibility for Environmental Obligations: Are Bonding 
and Assurance Rules Fulfilling Their Promise? James Boyd (August 
2001)--Discussion Paper 01-42 http://www.rff.org/rff/Documents/RFF-DP-
01-42.pdf.

    While it is clear to us that financial assurance rules do serve as 
a valuable way to prevent spills and internalize the costs of such 
prevention for many industries, we are not as clear on what benefits 
these rules would provide to pipelines. Because of the lack of public 
information on the bankruptcies of pipeline companies, and the 
collection of fines and total damages, there is no way for us to assess 
whether such additional rules are needed. For this reason, in our 
testimony we suggested that Congress ask for a study of the need and 
benefit for such financial assurance rules for pipelines. We still 
believe that such a study is called for, and should be able to answer 
whether financial assurance rules would be beneficial to increasing 
pipeline safety.
    Thank you again for this opportunity to provide additional 
testimony.

                                  
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