[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. *
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* 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
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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.