[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
  THE PIPELINE INSPECTION, PROTECTION, ENFORCEMENT, AND SAFETY ACT OF 
                         2006; IMPLEMENTATION 
        REVIEW AND DISCUSSION OF SAFETY ASSESSMENT INTERVALS FOR
                         NATURAL GAS PIPELINES

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

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON ENERGY AND AIR QUALITY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 12, 2008

                               __________

                           Serial No. 110-101


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov

                  U.S. GOVERNMENT PRINTING OFFICE
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                    COMMITTEE ON ENERGY AND COMMERCE

                  JOHN D. DINGELL, Michigan, Chairman

HENRY A. WAXMAN, California          JOE BARTON, Texas
EDWARD J. MARKEY, Massachusetts          Ranking Member
RICK BOUCHER, Virginia               RALPH M. HALL, Texas
EDOLPHUS TOWNS, New York             J. DENNIS HASTERT, Illinois
FRANK PALLONE, Jr., New Jersey       FRED UPTON, Michigan
BART GORDON, Tennessee               CLIFF STEARNS, Florida
BOBBY L. RUSH, Illinois              NATHAN DEAL, Georgia
ANNA G. ESHOO, California            ED WHITFIELD, Kentucky
BART STUPAK, Michigan                BARBARA CUBIN, Wyoming
ELIOT L. ENGEL, New York             JOHN SHIMKUS, Illinois
ALBERT R. WYNN, Maryland             HEATHER WILSON, New Mexico
GENE GREEN, Texas                    JOHN B. SHADEGG, Arizona
DIANA DeGETTE, Colorado              CHARLES W. ``CHIP'' PICKERING, 
    Vice Chairman                    Mississippi
LOIS CAPPS, California               VITO FOSSELLA, New York
MIKE DOYLE, Pennsylvania             STEVE BUYER, Indiana
JANE HARMAN, California              GEORGE RADANOVICH, California
TOM ALLEN, Maine                     JOSEPH R. PITTS, Pennsylvania
JAN SCHAKOWSKY, Illinois             MARY BONO, California
HILDA L. SOLIS, California           GREG WALDEN, Oregon
CHARLES A. GONZALEZ, Texas           LEE TERRY, Nebraska
JAY INSLEE, Washington               MIKE FERGUSON, New Jersey
TAMMY BALDWIN, Wisconsin             MIKE ROGERS, Michigan
MIKE ROSS, Arkansas                  SUE WILKINS MYRICK, North Carolina
DARLENE HOOLEY, Oregon               JOHN SULLIVAN, Oklahoma
ANTHONY D. WEINER, New York          TIM MURPHY, Pennsylvania
JIM MATHESON, Utah                   MICHAEL C. BURGESS, Texas
G.K. BUTTERFIELD, North Carolina     MARSHA BLACKBURN, Tennessee
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana

                                 ______

                           Professional Staff

                 Dennis B. Fitzgibbons, Chief of Staff

                   Gregg A. Rothschild, Chief Counsel

                      Sharon E. Davis, Chief Clerk

                 Bud Albright, Minority Staff Director

                                  (ii)
                 Subcommittee on Energy and Air Quality

                    RICK BOUCHER, Virginia, Chairman
G.K. BUTTERFIELD, North Carolina,    FRED UPTON, Michigan
    Vice Chairman                         Ranking Member
CHARLIE MELANCON, Louisiana          RALPH M. HALL, Texas
JOHN BARROW, Georgia                 ED WHITFIELD, Kentucky
HENRY A. WAXMAN, California          JOHN SHIMKUS, Illinois
EDWARD J. MARKEY, Massachusetts      JOHN B. SHADEGG, Arizona
ALBERT R. WYNN, Maryland             CHARLES W. ``CHIP'' PICKERING, 
MIKE DOYLE, Pennsylvania                 Mississippi
JANE HARMAN, California              ROY BLUNT, Missouri
TOM ALLEN, Maine                     STEVE BUYER, Indiana
CHARLES A. GONZALEZ, Texas           MARY BONO, California
JAY INSLEE, Washington               GREG WALDEN, Oregon
TAMMY BALDWIN, Wisconsin             MIKE ROGERS, Michigan
MIKE ROSS, Arkansas                  SUE WILKINS MYRICK, North Carolina
DARLENE HOOLEY, Oregon               JOHN SULLIVAN, Oklahoma
ANTHONY D. WEINER, New York          MICHAEL C. BURGESS, Texas
JIM MATHESON, Utah                   JOE BARTON, Texas (ex officio)
JOHN D. DINGELL, Michigan (ex 
    officio)
                                 ------                                

                           Professional Staff

                     Sue D. Sheridan, Chief Counsel
                        John W. Jimison, Counsel
                   Rachel Bleshman, Legislative Clerk
                    David McCarthy, Minority Counsel
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. G.K. Butterfield, a Representative in Congress from the 
  State of North Carolina, opening statement.....................     1
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     2
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................     3

                               Witnesses

Carl T. Johnson, Administrator, Pipeline and Hazardous Materials 
  Safety Administration, U.S. Department of Transportation.......     4
    Prepared statement...........................................     6
Stacey Gerard, Chief Safety Officer, Pipeline and Hazardous 
  Materials Safety Administration, U.S. Department of 
  Transportation.................................................    16
    Prepared statement \1\.......................................
Don Mason, Commissioner, Public Utilities Commission of Ohio.....    27
    Prepared statement...........................................    29
Philip D. Wright, President, Williams Gas Pipeline Company.......    42
    Prepared statement...........................................    44
Rick Kessler, board member, Pipeline Safety Trust................    62
    Prepared statement...........................................    64
Paul Preketes, Senior Vice President of Energy, Delivery 
  Consumers Energy...............................................    71
    Prepared statement...........................................    73
Timothy Felt, President and CEO, Explorer Pipeline; Chairman, 
  Association of Oil Pipelines...................................    77
    Prepared statement...........................................    79

                           Submitted Material

``2007 Interstate Natural Gas Pipeline System,'' map, submitted 
  by Mr. Wright..................................................    85

----------
\1\ Ms. Gerard did not submit a prepared statement.


  THE PIPELINE INSPECTION, PROTECTION, ENFORCEMENT, AND SAFETY ACT OF 
    2006; IMPLEMENTATION REVIEW AND DISCUSSION OF SAFETY ASSESSMENT 
                  INTERVALS FOR NATURAL GAS PIPELINES

                              ----------                              


                       WEDNESDAY, MARCH 12, 2008

                  House of Representatives,
            Subcommittee on Energy and Air Quality,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:10 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Rick 
Boucher [chairman of the subcommittee] presiding.
    Members present: Representatives Boucher, Butterfield, 
Barrow, Wynn, Inslee, Matheson, Dingell (ex officio), Upton, 
Walden, and Barton (ex officio).
    Staff present: Bruce Harris, Laura Vaught, Chris Treanor, 
Rachel Bleshman, Alex Haurek, Tom Hassenboehler, David 
McCarthy, and Garrett Golding.

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mr. Butterfield [presiding]. At this time I am going to 
call the hearing to order. Thank you very much for your 
patience in waiting for us to start.
    Today we have called this meeting to have a hearing on--and 
I am going to quote it verbatim, ``The Pipeline Inspection, 
Protection, Enforcement, and Safety Act of 2006; Implementation 
Review and Discussion of Safety Reassessment Intervals for 
Natural Gas Pipelines.''
    We have two witnesses on the first panel and I want to 
thank each one of them for coming forward today to be a part of 
this process. I want to thank the members for their 
participation today. I am going to begin with a very brief 
opening statement and then I will ask the ranking member if he 
would likewise give his opening statement and any member 
desiring not to make an opening statement will have that time 
added to your time later in the hearing. But I want to thank 
all of the witnesses today for coming to air their concerns 
about the issue of natural gas pipeline safety.
    This committee can and will craft legislation to ensure 
proper compliance with safety regulations without becoming 
overly cumbersome for the industry responsible for abiding by 
this law. The committee shares jurisdiction with the Committee 
on Transportation and Infrastructure but it is this committee's 
goal to allow stakeholders an opportunity to express their 
concerns.
    I would like to recognize and thank all of the witnesses at 
this time starting off with Mr. Carl Johnson, who is the 
Administrator for the Pipeline and Hazard Material Safety 
Administration for USDOT. Also joining him today is the Chief 
of Staff and I have her name, Stacey Gerard, who is the Chief 
Safety Officer who will be accompanying Mr. Johnson today.
    The second panel will include Don Mason, who is the 
Commissioner for the Public Utilities Commission of the State 
of Ohio. Mr. Phillip D. Wright, who is the President of 
Williams Gas Pipeline Company and Rick Kessler, board member of 
Pipeline Safety Trust. Paul--I cannot pronounce that--Senior 
V.P. of Energy for Delivery Consumer's Energy and finally, Tim 
Felt, who is the President and CEO of Explorer Pipeline. Again, 
thank all of you for coming and thank you for your testimony 
today.
    Mr. Butterfield. At this time I will recognize the 
gentleman from Michigan for his opening statement.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Thank you, Mr. Chairman. I also want to thank 
Chairman Boucher for calling this hearing to review the 
implementation of the PIPES Act of '06, a bill that passed 
under this committee on a bipartisan basis and was signed into 
law in December of 2006.
    The U.S. currently has over 200,000 miles of oil pipelines 
and 260,000 miles of natural gas pipelines. Safety and security 
of this infrastructure is of the highest importance to our 
Nation and certainly worthy of this subcommittee's oversight. 
Pipelines are the arteries of our Nation's energy 
infrastructures. Through our thousands of miles of pipelines we 
transport the energy that fuels our economy in our daily lives. 
Unfortunately, recent accidents have thrust this vital 
infrastructure into the headlines for the wrong reasons and 
highlighted the need for safety reassessments.
    The Pipeline and Hazardous Material Safety Administration, 
PHMSA, is in the process of working with the Pennsylvania PUC 
on a house explosion that occurred this last week. Tragically, 
two people were injured and taken to the hospital where one 
later died. One house was destroyed; another eight houses were 
damaged.
    The National Transportation Safety Board is also closely 
following this terrible incident and they have new information 
linking the explosion to a gas pipeline leak. With proper 
safety assessments we can help assure that the terrible 
incident like this does not happen again. Given the vast size 
of our pipeline system and the limited resources at our 
disposal, it is imperative that safety inspections and 
regulations are as sufficient and productive as possible.
    While today's hearing is rightly focused on the 
implementation and oversight issues of the PIPES Act, attention 
should also be given to allocating these finite resources in a 
more cost effective and efficient manner to assure that we 
absolutely maximize our safety efforts.
    The issue of gas transmission lines, PHMSA was supportive 
of removing the 7 year requirement for a safety assessment in 
favor of a risk base interval during the debate of the PIPES 
Act and continues to be supportive of making a legislative fix 
today. We hear from industry and how an arbitrary, one size 
fits all, 7 year requirement could cause, in fact, more 
critical pipelines in high population areas to be assessed less 
frequently than necessary while resources are spent accessing 
other lines in remote areas that, in fact, could be more at 
risk. There is value in a risk base sorting approach, we can't 
inspect all the lines all the time but we can ensure that the 
public is indeed protected.
    As noted by the GAO, it is widely recognized that a risk-
based approach will help focus attention and resources where 
needed for the sake of increasing pipeline safety. I would 
agree that we should seek a legislative fix that would 
implement this risk-based assessment. Again, this issue has 
always been a strong bipartisan and important issue. I look 
forward to hearing from the agency, our witnesses today, and 
the challenges that they face in meeting some of these 
deadlines that are in this PIPES Act.
    I would yield back the balance of my time, Mr. Chairman.
    Mr. Butterfield. I want to thank you, gentleman. The 
gentleman from Washington, Mr. Inslee?
    Mr. Inslee. I will reserve my opening, thank you.
    Mr. Butterfield. The gentleman reserves. The ranking 
members recognize Mr. Barton.
    Mr. Barton. Thank you. Thank you, Mr. Chairman. It is good 
to see you in the chair. It is going to be an enjoyable 
experience.
    Mr. Butterfield. It reminds me of being a judge many years 
ago, though I will not lock up anyone up today, I promise you.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. They have that authority. Mr. Chairman, the 
bill that we are reviewing today passed in the last few days of 
my chairmanship back in 2006, I was very active on this issue. 
We have a strong pipeline interstate pipeline system in Texas 
plus the intrastate, I mean, the intrastate system in Texas 
plus the interstate system nationally and had the problem of 
Alaska. It accelerated the need to reauthorize the pipeline 
bill.
    I know there is some concern about it, especially the 
assessment period and things like this so it is very applicable 
to be holding this hearing. Having said that, I think we all 
know that our pipeline system in the United States is the envy 
of the world. It has performed admirably for decades and 
decades and as we get better technology and better metallurgy 
we always find ways that we can improve our inspections and 
improve our maintenance of the pipeline system.
    I think it is also important that we review the past 
legislation because as we move into an alternative energy 
situation, there are growing calls for ethanol pipelines. And I 
think you are going to probably see as we build some L & G 
facilities off the east and west coast some demands to build 
additional pipelines to transport natural gas from the coasts 
to the internal areas of our country.
    So we are glad to have our new administrator here, Mr. 
Johnson. He has got a tremendous record of public service and 
is that rare breed who has actually served on the Hill, where 
he knows what we do.
    So as you know, Mr. Administrator, we have another hearing 
going on downstairs on food safety and the oversight 
subcommittee and we are expected to have several votes on the 
floor so you are going to see us coming and going this morning 
but we are delighted that you are here and you have your 
assistant and we look forward to hearing your testimony. With 
that Mr. Chairman, I yield back.
    Mr. Butterfield. I want to thank the ranking member. I am 
being told that we have a very serious motion to adjourn on the 
floor right now and it is calling our attention elsewhere and 
so we are going to have to depart from the House floor and cast 
our vote and immediately return back to the room. But when we 
do return we are going to hear from these two witnesses :the 
Honorable Carl T. Johnson, who is the Administrator of the 
Pipeline and Hazardous Materials Safety Administration of the 
USDOT. We will also have the testimony of Ms. Stacey Gerard, 
who is the Chief Safety Officer for that organization. At this 
time the committee will stand in recess. Did I drop the ball on 
that? Did I have your title right? OK. All right. We are going 
to stand in recess and we will return just as quickly as we 
can. The committee is in recess.
    [Recess.]
    Mr. Boucher. The subcommittee will reconvene. I understand 
that in the previous hour we had opening statements by 
committee members and we have not heard from Mr. Johnson. And 
so Mr. Johnson, we want to welcome you to the subcommittee this 
morning and without objection to your prepared written 
statement will be made part of the record and we would welcome 
the oral summary of that statement for approximately 5 minutes. 
So we will be happy to hear from you at this time.

   STATEMENT OF CARL T. JOHNSON, ADMINISTRATOR, PIPELINE AND 
 HAZARDOUS MATERIALS SAFETY ADMINISTRATION, U.S. DEPARTMENT OF 
                         TRANSPORTATION

    Mr. Johnson. Thank you, Chairman Boucher, Ranking Member 
Upton. Thank you for the invitation to appear today. I am 
pleased to discuss the progress of the Pipeline and Hazardous 
Material Safety Administration in advancing safety. The 
enormity of PHMSA's mission, its complexity, and reach into the 
lives of every citizen makes it imperative that we succeed. I 
am committed to make this a great year for PHMSA and to help 
accomplish the most important safety priorities. We have 
improved our ability to investigate safety concerns. Not just 
incidents but the first indication of a problem.
    We have been challenged this year responding to failures at 
several pipelines and I am sad to say that six people have lost 
their lives. The engineering issues have been difficult. We 
carefully examine operator safety performance, including the 
corporate commitment to safety. If it is lacking we build a 
better safety culture. Despite these incidents noted, the 
record in pipeline safety is good. Over the past 20 years, 
while population, energy consumption, and pipeline ton miles 
have been rising, the number of serious pipeline incidents has 
declined an average of 10 percent every 3 years. And this is no 
accident. It is a reflection of aggressive programs to reduce 
risk and protect the public.
    As the Nation works to meet energy goals, several different 
opportunities confront us with unexpected urgency. The first is 
managing an expanded pipeline transport of products like 
ethanol. Our concerns are less if these new products can be 
moved safely but how they can be moved safely. A second 
challenge is increasing the reliability of the infrastructure 
we have. Thirdly, we face a pipeline building boom, bringing 
new designs, new materials, and new technologies. We have 
prepared and we must prepare communities and emergency 
responders.
    We are working to address all of the many aspects of the 
PIPES Act provisions and its intent. Foremost is our emphasis 
on enforcement and we are more transparent about the vigor of 
our enforcement. On May 1, 2007, PHMSA rolled out its new 
enforcement transparency Web site and we are near completing 
all of the regulatory mandates of the PIPES Act. These include 
distribution integrity management and including excess flow 
valves, low-stress pipelines, and control room management 
including the risk of fatigue and the effectiveness of alarms.
    I have reviewed all of these rules and found these 
regulatory actions are well developed. Getting ready for DIMP 
is a lot more than a rule. It takes a system and we have built 
one. We have consensus standards, guidance, training, IT for 
databases, and more resources for oversight.
    Getting 50 states to implement a performance standard takes 
a lot of work. We know you are concerned about the availability 
of public information on pipeline operations to communities in 
which they operate. We have been working with pipeline 
operators to pilot test criteria for future grant awards. Our 
aim is to have communities identify information they need, to 
have operators make that information understandable, and 
hopefully to use that information to benefit the safety of the 
community. We funded public viewing of two events sponsored by 
the Bellingham Trust and we are preparing to fund two 
professional associations of county and city government to 
increase public participation in pipeline projects.
    Section 13 of the PIPES Act requires PHMSA to issue rules 
for the use of safety orders as an additional option for 
addressing pipeline integrity threats and we are about to 
finalize an interim final rule.
    Regarding the 7 year assessment rule PHMSA reported to 
Congress on this topic last year. We believe that a scientific 
basis is the best way to inform safety decisions and the 
allocation of safety resources. We are prepared to make these 
decisions on a segment by segment basis, one operator at a 
time.
    PHMSA very much appreciates the opportunity to report on 
the status of our progress with the PIPES Act implementation 
and I am committed to full compliance. Thank you and I would be 
pleased to answer questions that you may have.
    [The prepared statement of Mr. Johnson follows:]

                      Statement of Carl T. Johnson

                            I. INTRODUCTION

    Chairman Dingell, Ranking Member Barton, members of the 
Committee, thank you for the opportunity to appear today. I am 
pleased to discuss the progress of the U.S. Department of 
Transportation's Pipeline and Hazardous Materials Safety 
Administration (PHMSA) in advancing safety, since the passage 
of the Pipeline Inspection, Protection, Enforcement and Safety 
(PIPES) Act in December, 2006. I am Carl Johnson, the new PHMSA 
administrator. Accompanying me is Stacey Gerard, Chief Safety 
Officer and Assistant Administrator of PHMSA.
    As quickly as the months have passed for PHMSA since 
enactment of this important program reauthorization, I realize 
the months remaining in my term are passing even more quickly, 
and I am committed to make this a great year for PHMSA. We will 
continue to accomplish the most important safety priorities and 
realize our agency potential to provide the most critical 
protections for the American people while our Nation's reliance 
on the safe transportation of energy and hazardous materials 
increases. I must take this opportunity to say that your 
commitment to completing the timely reauthorization of the 
national pipeline safety program enormously increases our 
chances of success.

                   II. BUILDING A GREAT ORGANIZATION

    The enormity of PHMSA's mission--its complexity and reach 
into the lives of every citizen--makes it imperative that we 
are positioned to be successful. Just last month, the President 
forwarded to Congress the FY 2009 budget, the first budget 
PHMSA prepared since the passage of the PIPES Act. This budget 
frames our plan to get the resources needed to address the 
pipeline safety challenges the nation faces and that the PIPES 
Act recognizes. The resources requested will help us meet the 
intent of Congress to help provide states with more resources 
for oversight of the entire 1.9 million miles of infrastructure 
under their jurisdiction, help all pipeline safety stakeholders 
reduce damage to pipelines and help PHMSA build the capability 
to inspect and enforce to the full extent needed.
    The recent completion of the ambitious PHMSA Strategic 
Plan, signed off by my predecessor and now Deputy Secretary of 
Transportation, Admiral Thomas Barrett, drives not only our 
budget request, but virtually all the actions of the agency. 
This Plan makes our job easier. It focuses on building our 
capability to make best use of information to drive down risk 
and guides the decisions we make--not only to improve the 
performance of PHMSA, but the entire hazardous materials 
transportation system. PHMSA strives to be a model agency--one 
that inspires confidence in our stakeholders because we have a 
risk-based rationale to guide our work that is transparent, 
meaningful, and easy to understand.

               III. WE ARE ADVANCING SAFETY IN MANY WAYS

    I believe we are doing just what we have promised in our 
Strategic Plan. Since the passage of the PIPES Act, we are 
making better use of information to improve safety. Perhaps 
most importantly, we have improved our ability to investigate 
safety issues--not just incidents, but the first indication of 
safety concerns. It is a priority for us to put more resources 
into investigations, preparing all our inspection and 
enforcement staff to understand the concept of root cause of 
pipeline failures and revamping our inspection and enforcement 
efforts to be even more effective.
    Improvements of our investigative process have proven 
critical, for example, in guiding our oversight of all pipeline 
infrastructure in Alaska. We have been increasing our resources 
in Alaska and stepping up efforts to assist the state through 
the Petroleum Systems Integrity Office and the Joint Pipeline 
Office. This assistance includes directly delivering training 
from our Transportation Safety Institute, sharing data bases 
and information systems, and facilitating the inclusion of 
Alaska officials in meetings with other states through the 
National Association of State Pipeline Safety Representatives. 
Making better use of information guides all our actions. Most 
importantly, it guides our targeting of inspections and leads 
us to put special emphasis on operators whose performance need 
particular improvement. We work with companies to identify 
areas of concern and determine the appropriate level of effort 
needed for remediation. We have been particularly challenged 
this year working to respond to integrity issues for several 
pipelines of strategic importance to our national fuel supply 
which have experienced failures. Investigation is necessary to 
determine the extent to which the cause of failure is systemic 
and what is necessary to restore safe operations. 
Unfortunately, there have been incidents this past year, in 
Mississippi, Minnesota, Louisiana, Texas and California, 
sometimes caused by problems that are not easily remedied. I am 
sad to say that six people tragically lost their lives. More 
fortunately, our work with technology to advance operators' 
abilities to improve integrity, including the assessment of 
non-piggable pipelines, has achieved important results. Despite 
these incidents noted, the record in pipeline safety is good. 
Over the past 20 years, all the traditional measures of risk 
exposure have been rising--population, energy consumption, 
pipeline ton-miles. At the same time, the number of serious 
pipeline incidents--those involving death or injury--has 
declined by an average of ten percent every 2 years. This is 
``no accident.'' It's a reflection of aggressive programs to 
reduce risk and protect the public. We aim to continue this 
long-term trend.

[GRAPHIC] [TIFF OMITTED] T0717.033


    We hope that the success of integrity management programs 
will continue to drive down the number of serious pipeline 
incidents and will help us make important inroads in greater 
safety in distribution systems. In fact, we believe this 
approach can benefit the entire hazardous materials 
transportation system.
    We routinely examine operators' safety performance and 
identify what factors in companies' operations make the 
difference in improving their records. Further, we review the 
impact of different regulatory programs on safety in other 
industries. We inevitably come to the conclusion that 
individual corporate executives' commitment to safety and their 
effective management of information to drive down risk are 
critical. As a result, when we take action with an individual 
company with a poor performance record, we have begun to 
institute additional management requirements to help build a 
better ``safety culture.'' At the same time, at the national 
level, in our work with trade associations, we are promoting 
focus on safety culture as a way to improve performance. At the 
national level, our efforts are intended to inspire improved 
performance--we are not considering regulating ``safety 
culture.'' On an individual, remedial basis, however, we get 
more prescriptive. We detail how the company needs to create an 
environment in which risk information is brought forward and 
rewarded, how risk information is managed and tracked, and what 
is the adequate scientific basis for assessing and deciding how 
risk and control are measured. We are concerned about the 
transparency of this process and how safety and profitability 
values are balanced.
    Helping communities deal with pipeline safety has been a 
priority of the past year as well. Of course, PHMSA always has 
at the top of our list of concerns using the best information 
available to guide our damage prevention efforts. Working with 
the Common Ground Alliance and all the underground damage 
prevention stakeholders, we target for assistance those states 
whose risk of construction related damage is the greatest or 
those states in which the potential for improvement is real. 
Among the program efforts of the past year is a stakeholder-
driven collaboration on guidance, known as the Excavation 
Damage Prevention Initiative (EDPI) effort, to help states 
achieve full implementation of the ``Nine Point Damage 
Prevention Program'' codified in the PIPES Act. This guidance 
explains to state agencies what is intended in the ``nine point 
program'' and how to get there. We are putting representatives 
in the field to help explain the benefits of the program. We 
have also invested in a pilot research effort in Virginia to 
test ways of improving excavation location and communications 
technology so that the one call notification system is more 
accurate, works faster, and contributes to a safer work place. 
And of course, we have supported educating the public on the 
importance of calling 811, to help prevent damage to pipelines 
during an excavation. Pipeline operators believe that this 
number is effective in preventing damage to their facilities, 
and many are voluntarily adding this number to their permanent 
pipeline markers.
    There are other ways to help communities live safely with 
pipelines. One of the most important of these is guiding 
communities to make safe land use decisions. Building on the 
model of the Common Ground Alliance, in the past year we have 
called stakeholders together in a similar model, called 
Pipeline and Informed Planning Alliance (PIPA). This is a 
follow-up activity to a mandate of the Pipeline Safety 
Improvement Act (PSIA) of 2002, and results from a 
recommendation by the Transportation Research Board.
    A companion effort is helping communities understand where 
pipelines are located, who owns and operates them, and what 
other information is available for community planning. 
Following the passage of the PIPES Act, PHMSA worked with the 
Department of Homeland Security/ Transportation Safety 
Administration to resolve concerns about security sensitive 
information. Vital information that communities need for land 
use, environmental and emergency planning around pipelines is 
now publicly available through PHMSA's National Pipeline 
Mapping System (NPMS). We continue to work with states, 
industry and other stakeholders to make the NPMS information 
more accurate and more useful. Additionally, we have completed 
a review of thousands of operators' public education programs 
and provide operators with feedback.

            IV. RELIABLE FUEL SUPPLY PRESENTS NEW CHALLENGES

    As the Nation realizes the need to work toward the 
President's goal of reduced oil consumption over the next ten 
years, several different opportunities surface for PHMSA, and 
they confront us with unexpected urgency. The first is the 
challenge associated with managing a new set of products with 
properties we have not managed on a large scale in pipeline 
transportation--products like ethanol, hydrogen, carbon dioxide 
and potentially other biofuels. Some of these we are familiar 
with, but we expect the scale of operations to grow. Others, 
like ethanol, bring new technical issues we really have not 
confronted to the extent now contemplated. The second challenge 
is the need to increase the reliability of the infrastructure 
in place and, if possible, to get more capacity from it--more 
throughput. Thirdly, we face a pipeline building boom for the 
first time in decades, bringing the challenge of new designs, 
new materials, and new technologies to review and hopefully 
find acceptable. In FY 2007, PHMSA spent 14 percent of its 
field inspection time overseeing new construction, compared to 
2 percent the prior year.
    Another challenge is the need to work with the communities 
through which these products will be transported and help them 
understand the need for these products, the benefits they 
provide, the protections in place, and most importantly, how to 
respond to them in the event of an incident. Pipeline 
operators, in particular, have moved quickly to be ready to 
transport large volumes of ethanol, either in existing 
pipelines, retrofitted and dedicated to ethanol service, 
blended with other petroleum products or in batches, or in new 
pipelines designed for the purpose. Ethanol poses very unique 
emergency response challenges, and PHMSA is responsible for 
helping communities prepare.
    While we always work to set standards for safe 
transportation, we also work to remove impediments and any 
unnecessary regulatory overlaps. Our concern is less ``if'' 
these new products can be moved safety, but ``how'' can they 
move safely, and how can we contribute to making it happen 
easier and sooner. There are many opportunities we see for 
harmonizing regulatory approaches to simplify the program logic 
for the industry--to examine what various regulatory structures 
try to achieve, where there are gaps, where there are overlaps 
and where there are occasions to simplify. Essentially, we 
would like to have ``one plan'' that works to meet similar 
objectives with one approach to assess risk, prioritize risk 
control and evaluate effectiveness. We have been testing this 
concept in Alaska as we work with state and federal agencies to 
plan for improved safety performance in the future. The model 
of the Joint Pipeline Office certainly has bearing on broader 
Alaska pipeline operations and applications for the Alaska Gas 
project, on which we have design review responsibility already. 
We think there are broader opportunities for simplification to 
a policy of ``no gaps, no overlaps'' in other areas of PHMSA 
responsibility. Another challenge for PHMSA is hiring and 
maintaining qualified pipeline engineering staff. It is taking 
us longer to fill vacancies, however, we are on track to fill 
our vacancies in 2008. There is a pipeline construction boom 
happening at the same time many individuals are retiring. 
Industry is competing for the same talent. To meet this 
challenge, PHMSA is implementing new ways of attracting talent, 
including remotely deploying employees at regional locations 
where they can telework and address issues directly in the 
field.
    We have worked hard to step up to all these challenges. We 
notified the public of our intent to regulate these new 
products, if we weren't already regulating them. We continue to 
work with individual operators, identifying safety concerns 
that must be satisfied, both with the infrastructure and with 
the surrounding community. We work with other federal agencies 
to think about the transportation implications from the 
inception of marketing new fuels, as part of a systemic 
planning process. We work with other countries to benefit from 
their experience. We collaborate with the pipeline industry, 
the renewable fuels organizations, and others like emergency 
responder organizations and the National Commission on Energy 
Policy, to investigate and solve technical challenges.
    Consistent with these efforts, PHMSA has investigated 
safety issues involved in allowing existing or proposed natural 
gas transmission pipelines to operate at higher pressure. Based 
on extensive examination by PHMSA, we have determined that 
improved technology in metallurgy and pipe manufacture, and 
improved pipeline life cycle management practices now give us 
the opportunity to ease supply constraints by allowing pipeline 
operating pressure to increase enough to boost capacity by as 
much as 10 percent. Increasing capacity also enhances pipeline 
efficiency. Higher operating pressures are consistent with 
practices in Canada, the United Kingdom and others.
    We evaluated requests for special permits from companies 
seeking to operate existing or proposed pipelines at higher 
pressure. In granting the requested special permits, we 
required operators to demonstrate compliance with certain 
design specifications and imposed conditions requiring 
adherence to additional safety standards. In addition to 
allowing public comment on the requests for special permits, 
PHMSA held a public meeting and brought stakeholders into the 
development of the permitting criteria. As a result, PHMSA just 
proposed revising regulations to allow increased capacity. This 
will encourage the use of newer pipeline materials and 
associated safety standards, resulting in a net positive effect 
on overall pipeline safety.
    While PHMSA has the ability to make regulatory changes 
benefiting natural gas transmission pipeline capacity, there is 
not an immediate pathway available to relieve constriction on 
oil pipelines. Consistent with the authorization in the PIPES 
Act, PHMSA is working with the Department of Energy and the 
Department of Homeland Security to develop an approach to 
investigation of ``chokepoints'' in the oil pipeline 
transportation system. We are scoping out an approach to 
modeling ``what if'' scenarios and the consequences of 
disruptions.
    Any accident or incident poses a potential disruption to 
the delivery of energy supplies. While safety is always first, 
we are keenly aware of the need for reliable energy supply in 
the U.S. as well. We work closely with industry and our state 
partners to help safely restore service after a hazardous 
liquid pipeline accident, and 95 percent of the time this has 
been achieved within 7 days. With integrity management programs 
improving our understanding of pipeline condition and new 
technology available with more accurate diagnostic capabilities 
we can expedite the process to make sure these systems are safe 
to operate. In this way, we help make sure energy products are 
delivered not only safely but reliably.
[GRAPHIC] [TIFF OMITTED] T0717.034


                 V. MEETING THE INTENT OF THE PIPES ACT

    There are many aspects to the PIPES Act provisions and 
intents. Section 6 of the PIPES Act requires PHMSA to provide 
monthly updated summaries to the public of all enforcement 
actions and provide a mechanism for operators to make 
responsive information available to the public. This emphasis 
on enforcement programs, and particularly the need to make more 
transparent to the public the vigor and comprehensiveness of 
our enforcement efforts, is a high priority to PHMSA. In the 
year since the passage of the PIPES Act, PHMSA engaged in an 
intensive and productive pipeline enforcement period. We are 
very proud of these efforts and believe that they reflect a 
shared commitment by Congress, the Administration, and DOT to 
use the full range of civil and criminal enforcement tools 
under the Federal Pipeline Safety Laws to maintain a safe and 
reliable oil and gas pipeline transportation system.
    On May 1, 2007, PHMSA rolled out its new enforcement 
transparency website, eight months ahead of the schedule set in 
the PIPES Act. This enforcement information can be found at 
(http://primis.phmsa.dot.gov/comm/reports/enforce/
Enforcement.html).While the PIPES Act requires us to post 
monthly summaries, we have chosen to do more. We do not merely 
post summaries of our enforcement actions. We provide access to 
copies of the actual enforcement documents filed by PHMSA and 
the operators' responses. We provide a brief narrative 
describing how each part of our enforcement process works, the 
penalties assessed, and the recent enforcement history of 
operators. All of this data is searchable by year, type of 
action, and other factors. The project is still in its infancy, 
and the history available and quality of the project will only 
improve with time.
    We made this extra effort and went beyond the requirements 
of the Act. Transparency in the enforcement process provides 
notice to the industry as to what sort of regulatory violations 
we consider serious, what types of enforcement actions such 
violations are likely to evoke from PHMSA, and what the costs 
of non-compliance are likely to be. We believe this is already 
leading to improved performance. Transparency also alerts the 
public as to what we are doing as public servants, what the 
compliance performance of operators has been, what progress is 
being made, and where this agency needs to improve. We 
subscribe to the theory that transparency, when coupled with 
useful and reliable data, will lead to self-correcting 
behavior, both on the part of the regulated community and on 
the part of government itself.
    We have been impressed but not surprised with the response 
we have received to this transparency initiative. We are 
currently seeing 800 ``hits'' per day on the website from non-
DOT sources--from industry, local governments, and interested 
citizens. The website is also making us, as a government 
agency, more vigilant in making sure that our enforcement 
efforts are legally sound, that we are treating all operators 
fairly, and that the penalties we impose are commensurate with 
the impact of incidents and violations from which they arise.
    As to the vigor of PHMSA enforcement, we initiated 259 
pipeline enforcement actions in 2007, the second highest number 
since 2002. Seven of these involved corrective action orders 
(CAOs) issued in response to incidents causing fatalities or 
serious injury, hazardous liquid spills that damaged the 
environment, or other conditions posing serious threats to 
public safety or the environment. When serious incidents 
occurred, we responded immediately to the scene, ordered the 
operator to reduce the operating pressure of their lines or 
shut them down completely until remedial action could be taken.
    The number of CAOs to which operators have satisfactorily 
responded, completing the compliance actions required by PHMSA, 
and allowing the agency to close the cases, has been increasing 
steadily since 2002. In that year, only two CAOs were completed 
and closed, as opposed to 14 in 2007. In each case, a hazardous 
facility has been made safe to operate.
    PHMSA continues to make full use of its penalty authority. 
In 2007, PHMSA proposed civil penalties of $4,288,800, a 39 
percent increase from 2006 and the second highest amount since 
2002.
    Continuing to take advantage of the full range of 
enforcement tools available to us, we opt for our best 
prosecutorial weapon. In July 2007, PHMSA and the Department of 
Justice announced the settlement of a civil action against El 
Paso Pipeline Company, arising out of a tragic incident near 
Carlsbad, New Mexico, in which 12 people were killed. This 
settlement was reflected in a judicial consent decree that 
included a civil penalty of $15.5 million and injunctive relief 
worth $86 million. This case represents the largest judicial 
settlement ever brought under the Federal Pipeline Safety Laws.
    The most intensive enforcement effort PHMSA undertook since 
the passage of the PIPES Act has been our work in Alaska. The 
2006 BP oil spills on Alaska's North Slope demonstrated the 
vulnerability of this environmentally sensitive area to major 
oil spills and the country's vulnerability to disruptions in 
critical supplies of crude oil from Alaska. It also focused 
extensive media attention on the need to strengthen 
environmental and safety oversight of the entire oil and gas 
industry in Alaska. As a result of these incidents, PHMSA has 
taken the lead in trying to forge a new regulatory and 
enforcement partnership, based on the concept of ``One Plan,'' 
to meet the needs of various state and federal agencies.
    As part of this work in Alaska, PHMSA has issued a CAO and 
three Amendments against BP to correct systemic problems in its 
pipeline system on the North Slope. As reflected in these 
orders, BP committed to the $260 million replacement of 16 
miles of oil transit lines where the 2006 failures occurred. We 
signed a letter of intent with the State of Alaska Department 
of Natural Resources to improve state-federal cooperation in 
the oversight of the oil and gas pipeline industry throughout 
the state. We provided technical assistance to the U.S. 
Attorney for Alaska and the Environment and Natural Resources 
Division of the Department of Justice in their prosecution of a 
criminal case against BP, in which the company pled guilty to 
criminal negligence related to the maintenance of the Prudhoe 
Bay oil transit lines in November 2007. In that case, BP agreed 
to pay a penalty of $20 million for the 2006 spills.
    PHMSA issued several enforcement actions against Alyeska 
Pipeline, the owner of the Trans-Alaska Pipeline System (TAPS) 
including a Notice of Probable Violation, with a proposed 
penalty of $817,000 for alleged safety violations relating to a 
pump station fire, inadequate cathodic protection, and other 
safety issues that threaten the integrity and reliability of 
this critical infrastructure.
    As our regulatory focus has changed, so has our enforcement 
focus. It is becoming increasingly complex and innovative. Our 
work in Alaska is just one example where we ``think outside the 
box'' to devise enforcement solutions that better comport with 
the agency's rising safety goals. It means that we must forge 
new relationships among regulatory agencies and other 
stakeholders, such as the one we're building in Alaska, to 
design solutions that fit the circumstances. We are undertaking 
enforcement actions that seek to help instill a genuine 
``safety culture'' within companies that have demonstrated a 
``tin ear'' to placing safety first. We strive to be leaders in 
this effort. We do use our full range of enforcement options to 
encourage operators to do more than meet the letter of the law 
and to make our Nation's pipeline system even safer.
    Beyond our focus in the past year on enforcement 
transparency and vigor, we have been working on all the 
statutory mandates of the PIPES Act.
    A noteworthy provision helps states with more resources for 
oversight of the entire 1.9 million miles of infrastructure 
under their jurisdiction and helps all pipeline safety 
stakeholders reduce damage to pipelines. The President's FY 
2009 budget does make important strides to increase funding to 
state agencies, and our request would increase funding on 
average about 50 percent over prior year funding and get us 
much closed to the goal of reimbursing states up to 80 percent 
of their program costs. PHMSA is also striving to comply with 
the standard in the Act pertaining to the necessary level of 
inspection and enforcement personnel. Similarly, in the area of 
damage prevention assistance, we ask for and are providing 
additional resources to help states achieve performance of all 
nine program elements. We are very actively involved in 
advancing damage prevention efforts.
    PHMSA is also addressing all the additional requirements in 
the reauthorization. There are three significant regulatory 
mandates in the PIPES Act: 1) Distribution Integrity Management 
(DIMP), including excess flow valves (EFVs); 2) Low-Stress 
Pipelines; and 3) Control Room Management, including the risk 
of fatigue and confidence in and adequacy of alarms. For each 
of these initiatives, PHMSA's regulatory actions are well 
developed, supported with thorough regulatory analyses, and at 
advanced stages of review.
    Section 9 of the PIPES Act requires PHMSA to prescribe 
minimum standards for integrity management programs for 
distribution programs, including requiring operators to install 
EFVs in certain circumstances. We are gathering additional data 
and completing analyses to complete the requirements for 
mandating the installation of EFVs. We asked our state partners 
to remind operators of the deadline in the law and they are 
doing so. We are moving the DIMP proposal to publication, but 
getting ready for DIMP is a lot more than a rule. It takes a 
system--and we built one. We have consensus standards, 
guidance, training, IT for data bases, and more resources for 
oversight. Getting 50 states to implement a performance 
standard takes a lot more preparation than preparing a single 
federal entity.
    Section 4 of the PIPES Act requires PHMSA to issue 
regulations for low-stress hazardous liquid pipelines. This 
mandate required us to promulgate a supplementary notice beyond 
our original proposal. With that step completed, we are in the 
final stages of completing the first phase of a final rule to 
cover the low-stress lines that pose the highest consequence to 
the environment.
    Section 12 of the PIPES Act mandated that PHMSA issue 
regulations requiring operators to develop, implement, and 
submit for DOT approval a human factors management plan to 
reduce risks associated with human factors, including a maximum 
limit on the hours of service for controllers.
    Section 19 of the PIPES Act requires PHMSA to issue 
standards to implement National Transportation Safety Board 
recommendations concerning Supervisory Control and Data 
Acquisition (SCADA) operation, including: (1) use of graphics; 
(2) review and audit of alarms on monitoring equipment; and (3) 
pipeline controller training. We have completed necessary data 
gathering and analyses, and are rapidly moving that proposal to 
publication addressing both sections. PHMSA addresses Sections 
12 and 19 through one rulemaking which will help controllers 
recognize and move quickly to act on abnormal events and 
mitigate their consequences.
    In each of these projects over the past year, PHMSA found 
ways to strengthen our original concepts and added additional 
elements to the initiatives. Each of these projects has also 
benefited from public dialogue in the past year intended to 
enrich information available to us as we formulate the 
regulatory solutions.
    Section 21 of the PIPES Act mandated PHMSA to evaluate leak 
detection technology and submit a report to Congress on the 
effectiveness of leak detection systems utilized by operators 
of hazardous liquid pipelines. PHMSA examined the issue, 
drafted a report and posted it for public comment at the end of 
last year. We are assessing the additional input and moving 
quickly to finalize the report. We have invested in several 
research projects intended to improve the sensitivity of leak 
detection technology, particularly for hazardous liquid 
operators. As we work on advancing this technology, we believe 
we have adequate oversight in place to evaluate the leak 
detection capability of individual operators and have exercised 
authority as needed to compel system upgrades where warranted. 
Our report is available on our website in draft while we 
complete the final editing to include public comments.
    A long standing concern of the Committee is the issue of 
availability of public information on pipeline operations to 
the communities in which they operate. Section 5 of the PIPES 
Act requires PHMSA to award the first three community 
information technical assistance grants as demonstration 
grants, up to $25,000 each, for the purpose of demonstrating 
and evaluating the utility of the grants. We have been working 
with pipeline operators to develop concepts for this project 
which we could ``pilot test''. We see this initiative as a 
partnership between operators and communities. Our aim is to 
have communities identify information they need on operators' 
performance, to have operators make that information 
understandable, and hopefully to use that information to 
benefit the safety of the community. We asked operators to 
assist us with moving this project forward on a pilot basis, 
preparatory to grants. The results of these pilots will inform 
the criteria we would use more broadly. We funded public 
viewing of two events sponsored by the Bellingham Trust. We are 
preparing to fund two professional associations of county and 
city government officials to represent the public interest in 
pipeline projects. We are encouraging them to increase public 
participation in a range of initiatives to protect pipelines 
and communities from risks, including but not limited to 
informing land use decisions near existing and new pipelines.
    Section 13 of the PIPES Act requires PHMSA to issue rules 
for the use of safety orders as an additional option for 
addressing pipeline integrity threats. We are finalizing an 
interim final rule, that will be published shortly, 
establishing the procedural regulations for issuing safety 
orders and how notice and consultations will be provided. 
Operators will be provided with notice and opportunity for 
informal proceedings to determine the measures necessary to 
mitigate the concern. Once this enforcement option is available 
to us, we will be in a better position to ensure operators are 
addressing longer term conditions before they become immediate 
hazards. In keeping with our policy of transparency in all of 
our enforcement actions, all safety orders will be accessible 
to the public on our website.
    I am committed to full implementation of the PIPES Act and 
the agency looks forward to achieving full compliance as soon 
as possible.

       VI. Risk Based Approach to Seven-Year Assessment Intervals

    Section 25 of the PIPES Act required PHMSA to review and 
comment on the GAO report on the seven-year assessment interval 
and send Congress legislative recommendations necessary to 
implement the conclusions of that report. PHMSA has reviewed 
our experience with gas transmission operators' implementation 
of integrity management and the report of the General 
Accountability Office on this subject. We reported our findings 
to Congress on this topic last year and recommended that 
Congress amend the law to provide us the authority to 
promulgate risk-based standards for pipeline reassessment. As a 
risk-based, data driven organization, we continue to believe 
that a scientific basis is the best way to inform safety 
decisions and the allocation of safety resources. We have 
demonstrated that as an agency, we and our state agency 
partners have the ability, experience and training to review 
the adequacy of engineering justification that would be 
presented to us by operators seeking to vary the reassessment 
interval. We recently held a public meeting on the technical 
basis for making decisions on assessment intervals. The bottom 
line is that we believe these decisions should be made on a 
case-by-case basis, one operator at a time, and segment by 
segment, so that relevant operating characteristics can be 
considered along with individual operator performance.

                            VII. Conclusion

    PHMSA very much appreciates the opportunity to report on 
the status of our progress with PIPES Act implementation and 
overall pipeline safety program. We share your commitment to 
improving safety, environmental protection and reliability of 
our Nation's pipeline system.
    Thank you. I would be pleased to answer any questions you 
may have.

                                  ###

                              ----------                              

    Mr. Boucher. Well, thank you very much, Mr. Johnson. We 
appreciate your being with us here this morning.
    I am concerned about the record of your agency in complying 
with a number of deadlines that were established in association 
with the 2006 act and I want to explore with you this morning 
what those deadlines were and get a sense from you about why 
they were missed. And our purpose here is not to be critical, 
our purpose is to understand what needs to happen in order to 
make sure that the will of Congress that was expressed on a 
bipartisan basis by this committee as we constructed the 2006 
act is carried out. So please understand that that is our 
purpose.
    Let me review the record and point to a couple of key 
deadlines that you have missed and then I will ask you why that 
happened and what you intend to do with regard to these issues.
    In a hearing in July of 2006, before this subcommittee, I 
inquired of Admiral Barrett who at that time was the 
administrator of the pipeline program when the department would 
publish criteria that would give guidance to local governments 
in applying for the Technical Assistance Grants. And these 
Technical Assistance Grants are designed to enable the local 
governments to participate effectively in various proceedings 
relating to pipeline safety that your agency or potentially 
other government lenities might be involved in conducting.
    I was told by Admiral Barrett in July of 2006, that the 
guidance--these guidelines to localities would be published 
within 3 to 6 months and I actually have a transcript of that 
hearing which reflects that we had quite a conversation during 
which he committed repeatedly to publishing those criteria 
within 3 to 6 months of July of 2006. Well, here it is now 
almost 2 years later and those criteria, that guidance has not 
been published so my first question to you is why not? Now, I 
realize you have only been on the job about 2 months and so I 
am a little bit disabled in that I cannot blame you for all of 
these problems but I need your statement of intention with 
regard to when the guidance will be published as to what your 
criteria for awarding these Technical Assistance Grants will 
be. So can you give me a date?
    Mr. Johnson. We have the criteria available and I believe 
we are ready to present them to you today. In fact, we do have 
copies of it that I have given to you this morning and it is 
ready to be published.
    Mr. Boucher. Well, that is good news. So you get a clear 
passing grade on the first question. Now, I have got two other 
areas in which I suffer the same disability but I cannot blame 
Mr. Johnson, but I can get a statement from him of when we are 
going to get the clarifications that we need and the 
publication of rules. So the secondary was this: the 2006 law 
set a deadline of December 31, 2007, for your agency to publish 
an Integrity Management Plan rule and this would be integrity 
management for the natural gas distribution lines, which 
comprise fully 85 percent of natural gas pipelines, and that 
deadline was also missed. So when can we expect the rule to be 
published for Integrity Management Plans?
    Mr. Johnson. Well, the agency fully understands and I 
believe that this is the rule that probably is the most 
important rule for us because it has the greatest potential for 
safety since distribution pipelines run through communities. 
The proposed plan has been drafted and I believe we will have 
it ready to be published this spring.
    Mr. Boucher. Can you be more precise about when this 
spring?
    Mr. Johnson. I cannot be completely precise about that 
because there are things that are beyond my control that will 
dictate that but I can give you an idea that it will be done 
before the end of June.
    Mr. Boucher. Before June ends?
    Mr. Johnson. Yes.
    Mr. Boucher. OK. I am going to say to you what I said to 
Admiral Barrett when he was here. We are going to start the 
clock and let us hope that you are a better clock observer than 
he was.
    Mr. Johnson. Well, I certainly hope so, sir.
    Mr. Boucher. And so we fully anticipate that by June we 
will have that rule published and if it has not happened you 
will be visiting with us again. All right.
    The third area was this, in the 2006 act for the first time 
regulation was imposed on low-stress pipelines and that was in 
the wake of a major oil spill on the Alaskan North Slope from a 
low-stress line, about 200,000 gallons was spilled on that 
occasion and so Congress in the 2006 act, for the first time, 
imposed regulation on the low-stress lines. And your agency was 
directed to publish regulations for low-stress lines also by 
December 31, 2007 and that deadline was also missed. When can 
we expect that rule to be published?
    Mr. Johnson. We have worked consistently to address all the 
issues needed to complete the regulation in low-stress 
pipelines and again, I believe, we will have the phase I issue 
of the final rule out this summer.
    Mr. Boucher. Can you be more specific about when this 
summer?
    Mr. Johnson. Again, I would say probably before September.
    Mr. Boucher. OK. Why is it taking so long to do that?
    Mr. Johnson. I do not have a ready excuse for you, sir, 
except to say that we are committed to safety at PHMSA. This is 
an organization that is just totally focused on safety and the 
deadlines are taken very seriously.
    The last 15 months for PHMSA have been particularly 
challenging. We have had a number of incidents of unusual 
nature that we have had to investigate, we have a very complex 
system of oversight on enforcement issues, we have had the 
emerging alternate fuel issue, which is affecting the pipeline 
transportation that came on very quickly. We have had the 
continuing focus on the Alaska pipeline issues and then also 
the maturing of PHMSA as an agency, which has been quite a 
challenge as well.
    Mr. Boucher. But you still think it is going to take until 
September to publish this rule?
    Mr. Johnson. Yes sir, I believe it will.
    Mr. Boucher. Yes, all right. Well, I will have to express 
some disappointment that it has taken that long and will 
continue to take that long. Nevertheless, we will await with 
interest the publication of that rule and expect it will happen 
within that timeframe.
    The study to which, I think, you referred in your statement 
suggests that the requirement in the 2006 law that there be a 
reinspection of pipelines every 7 years be repealed and that 
reinspections occur where evidence suggests that a reinspection 
is appropriate. What are your comments with regard to whether 
or not there should be a statutory repeal of that 7 year 
reinspection requirement? And if you believe that it ought to 
be repealed, how would your agency propose to oversee pipeline 
safety with a view toward making sure that a repeal of that 
annual or that every 7 year reinspection does not jeopardize 
safety? What steps would you take?
    Mr. Johnson. Well, PHMSA is a risk-based data-driven safety 
organization and we believe that basically a scientific basis 
is the best way to make those decisions. And I think that if we 
are granted that, it would be on a case-by-case basis, pipeline 
by pipeline.
    Mr. Boucher. But how would you know that a reinspection of 
a particular pipeline is needed? What kind of evidence would 
come to your attention?
    Mr. Johnson. If I may, I think I might have our safety 
officer respond.
    Mr. Boucher. Ms. Gerard, welcome back. We are glad to have 
you here.

STATEMENT OF STACEY GERARD, CHIEF SAFETY OFFICER, PIPELINE AND 
 HAZARDOUS MATERIALS SAFETY ADMINISTRATION, U.S. DEPARTMENT OF 
                         TRANSPORTATION

    Ms. Gerard. Appreciate being here, sir. Thank you. We would 
require a notification by the operator that they intended to 
exercise some different interval than 7 years and we would on a 
case-by-case basis look at the design of the pipeline, how it 
was built, what kind of materials, what age, the operating 
history, the performance of the operator, and the environment 
in which it operated. And the performance of the operator in 
integrity management up to that point would certainly be 
considered.
    Mr. Boucher. We have got a vote on the floor. We are trying 
to figure out how to deal with you and deal with that too. 
Well, do you believe we should follow the recommendation of 
this study and repeal that reinspection requirement?
    Mr. Johnson. Yes, I do.
    Mr. Boucher. Ms. Gerard, do you agree with that?
    Ms. Gerard. Yes, sir.
    Mr. Boucher. Well, I was listening to your answer at least 
out of one ear and I did not hear you tell me what kind of 
evidence you would be looking for and what process you would 
have to make sure that that sort of evidence is reaching you 
that a reinspection might be called for with regard to a 
particular pipeline. Now, this is what we would want to know 
and have some confidence that you have got a process in place. 
With some assurance that when a pipeline is beginning to 
encounter problems or that a reinspection otherwise would be 
called for that, that fact would in some way through your 
process come to your attention, that is what we are looking 
for.
    Ms. Gerard. We would require the operator--if we entered 
into a rulemaking, we would require that they notify us of 
their intent to use an interval other than the 7 years, 
particularly if it was a longer interval. Remember that we have 
a very rigorous inspection program of each and every operator 
and have full data on what their performance has been to date; 
we know a lot about them. So we would require them to notify us 
and we would immediately look at the design of the pipeline, 
the age, what kind of technology assessment was used.
    We would look at the operating experience of the line, the 
environment around the line and, most importantly, we would be 
looking at the performance of the operator, how good a job have 
they been doing so far in assessing, controlling, and 
evaluating risks? How well do they use information? So that 
review would be done on an individual basis but the trigger 
would be a notification.
    Mr. Boucher. OK. Here is what I am going to ask. I am 
undecided about what if anything we should do with this. I 
would like for you to submit to us in writing a detailed 
statement of the process that you would undertake and the 
criteria that you would use to assure that inspections of 
pipelines take place in a way that guarantees safety, and we 
are continuing to have safety problems. I think there were five 
or so incidents just recently where there were fatalities 
associated with pipeline accidents and this is an area that 
requires constant vigilance. And if we are going to get away 
from the rigid 7-year schedule I would like to know in detail 
what is going to take its place and what your intentions as an 
agency to make sure that we could repeal that requirement 
consistently to safety.
    Ms. Gerard. I should mention we did have a public meeting 
on this in January, so we are prepared to provide the details 
that you have asked for very quickly.
    Mr. Boucher. All right. I really do need to go to the floor 
and vote, and as much as I do not want to, I am going to recess 
the subcommittee and I appreciate your patience. Mr. Upton, I 
am sure, will have some questions when he returns. Thank you.
    [Recess.]
    Mr. Boucher. Well, with the apologies of the subcommittee 
we will reconvene. Thank you very much, Mr. Johnson, for your 
patience. The ranking member of the subcommittee, the gentleman 
from Michigan, Mr. Upton is recognized for his questions.
    Mr. Upton. Well, thank you again, Mr. Chairman. Mr. 
Johnson, welcome again, a couple of things that I am interested 
in. In your testimony, you talked about new technologies I 
would be interested in hearing a little bit about some of the 
new technologies that we are likely to see in coming years 
invested in the pipelines across the country.
    Mr. Johnson. Yes, I think I would like to defer to my Chief 
Safety Officer for that, again, emphasizing the newness of my--
--
    Mr. Upton. I understand.
    Mr. Johnson [continuing]. Position and Stacey, would you?
    Ms. Gerard. Sir, in the past few years we have supported 47 
projects just focused on being able to detect and manage 
corrosion, for example. I think one of our most important 
priorities is being able to improve the sensitivity of 
technology, to be able to detect weaknesses in a pipe wall, to 
be able to make that technology more sensitive, to be able to 
detect a crack, for example, at the earliest possible stage. 
There are many pipelines through which an instrument cannot 
pass at all. Developing technologies to be able to assess 
without running an instrument like a pig through would be 
examples.
    Mr. Upton. Mr. Johnson, you talked a little bit about 
developing the standards in your testimony and for all 50 
states that performance standards would have to be established 
by all 50 states. Where are we in terms of the progress of the 
states agreeing to a standard and do we have 35 states or 30 or 
you know where are we and how long do you think that it will 
take?
    Ms. Gerard. Prior to entering into the rulemaking stage we 
had a process of a series of workshops that took place in which 
we had representation from many states. One of the 
representatives in that process was Commissioner Mason, who 
will testify later. And we would take the results of our work 
to the National Association of Regulatory Commissioners 
meetings and give them an update on the approach we were 
taking.
    We got resolutions from NARUC which expressed their 
preferred approach being a performance approach with simple 
elements that they could adopt and administer at the state 
level. So I am hopeful that as a result of the process we use 
to develop the approach that we are taking in rulemaking--that 
we will have the support of the states who need to adopt this 
as a state requirement.
    Mr. Upton. Mr. Kessler from the Pipeline Safety Trust is 
coming to testify on the second panel. He talks in his 
testimony a little bit about establishing a Web-based system 
that would allow public access to basic inspection information 
regarding specific pipelines. What are your thoughts in that 
regard and what type of precautions might be there so you think 
about the worst case scenario of someone trying to damage some 
of our pipelines?
    Ms. Gerard. We are all for transparency and have made some 
important strides in that area. This one is more challenging 
because the inspection process is not a black and white 
decision; yes, the company did it, or no, the company did not. 
Our inspectors consult with each other and our regional 
directors, with outside experts and so the process of making a 
decision about the company's performance takes time. And we 
would be concerned about posting something that an inspector 
felt might not have been a completed effort or their best 
thought. We have no problem with posting completed actions of 
the agency but we would be concerned about publishing something 
that might not be the finished product.
    Mr. Upton. One of the reasons that this committee took the 
action that it did, the legislation that was adopted on a 
bipartisan basis was the different stories of what was going on 
in Alaska. One of the ideas, of course, that many of us came to 
and I referenced in my opening testimony was as it related to 
risk-based this scenario rather than just an automatic every 7 
years. What has happened with you all watching over the 
pipelines in Alaska?
    Ms. Gerard. Well, we regulate many pipelines in Alaska and 
we have stepped up our oversight given the--some significant 
events that have been experienced by more than one operator. 
Regarding the operators that we have the greatest concern 
about, we have taken enforcement action. We have itemized our 
concern in corrective action orders. We have been very detailed 
and amended those orders when necessary. Where it concerns the 
Alaska Pipeline, which we govern jointly with the BLM and the 
State of Alaska, we have worked hard to improve the framework 
for how we govern jointly, to be more efficient. The bottom 
line is that we are bringing forward integrity management to 
the pipelines in Alaska. They are at various stages of progress 
and for the pipelines that we had not regulated prior to the 
accident that BP had, we are bringing integrity management 
forward under enforcement orders. We expect this performance-
based approach, which is also risk-based, to result in much 
better performance in the future.
    Mr. Upton. Thank you. I know my time has expired so I yield 
back. Thank you, Mr. Chairman.
    Mr. Boucher. Thank you very much, Mr. Upton. The chairman 
of the full committee the gentleman from Michigan, Mr. Dingell, 
has joined us and is recognized for his questions.
    Mr. Dingell. Mr. Chairman, I thank you for your courtesy 
and I commend you for this hearing. Mr. Johnson, welcome to the 
committee. I understand you are new in your position and I 
would note that in your written testimony it takes about 14 
pages to get through the items that I am about to address here.
    I would begin by reminding you that the Mineta Act, which 
reorganized your agency in 2004, requires your agency to 
consider safety as its highest priority and it says nothing 
about increasing throughput--citing infrastructure, or 
regulatory overlaps.
    Now, I have a number of questions about how the agency has 
been functioning. I repeat, I understand that you are new in 
your job but I would observe that these are questions that you 
are going to have to address so I will read the question and 
then ask--read the facts and then ask the question and I would 
appreciate a yes or no answer.
    One, Section 9 of the Pipeline Inspection Protection 
Enforcement and Safety Act or the PIPES Act required your 
agency to promulgate regulations for an Integrity Management 
Program for natural gas distribution pipelines by December 31, 
2007. Has your agency met that deadline? Yes or no.
    Mr. Johnson. No.
    Mr. Dingell. Mr. Johnson, Section 13 of the PIPES Act 
required your agency to promulgate regulations strengthening 
your authority to issue safety orders in order to avoid risk to 
public safety, property, human life, and the environment. These 
regulations were due December 31, 2007, has your agency met 
that deadline?
    Mr. Johnson. No.
    Mr. Dingell. Mr. Johnson, on Section 4 of the PIPES Act you 
are required to publish regulations relative to low-stress 
hazardous liquid pipelines to the same standards and 
regulations as other hazardous liquid lines by December 31, 
2007, this committee spent a considerable amount of time and 
effort with your agency on this provision, have you met that 
deadline?
    Mr. Johnson. No.
    Mr. Dingell. Now I understand that you have published a 
proposed rule but that the rulemaking has not been completed, 
is that correct?
    Mr. Johnson. Yes.
    Mr. Dingell. Now Section 21 and 22 required your agency to 
conduct two studies on leak detection technology and corrosion 
control regulations by December 31, 2007. Has either study been 
published?
    Mr. Johnson. On the Web site, the technical findings have 
been posted.
    Mr. Dingell. I am sorry.
    Mr. Johnson. On the Web site, the findings of the survey 
have been published.
    Mr. Dingell. It has?
    Mr. Johnson. Yes.
    Mr. Dingell. Which one is that?
    Mr. Johnson. Twenty-one.
    Mr. Dingell. Twenty-one. So the Section 21, has the 22 been 
published?
    Mr. Johnson. No.
    Mr. Dingell. The Pipeline Safety Improvement Act of 2002 
required your agency to establish competitive procedures for 
the award of pipeline safety information grants to communities; 
this is a provision that was very much pushed by our good 
friend and chairman, Mr. Boucher. Our support for this program 
was reaffirmed in the 2006 act. Now 6 years after this 
requirement was first put into law, has your agency established 
these procedures?
    Mr. Johnson. It was made available for the record today.
    Mr. Dingell. Today?
    Mr. Johnson. Yes, sir.
    Mr. Dingell. Now, let us go back through this list and see 
if we get some commitments for agency action. First of will you 
please tell the committee about whether and when you will meet 
your obligations for the following requirements: a. the 
integrity management rule for distribution pipelines, when will 
that be or will your responsibilities be carried out?
    Mr. Johnson. It will be published this spring, sir.
    Mr. Dingell. Now, with regard to safety orders, when will 
that responsibility be accomplished?
    Mr. Johnson. That will be published this week, sir.
    Mr. Dingell. Now, low-stress pipelines, when will you 
accomplish your responsibilities there please?
    Mr. Johnson. That will be published this summer, sir.
    Mr. Dingell. Leak detection and corrosion control, a major 
problem, when will your responsibilities there be completed?
    Mr. Johnson. In about a month, sir.
    Mr. Dingell. About a month. Now, criteria for information 
grants to communities, a very essential part of making a grant 
is knowing what they are going to do, when, how, why, and what 
standards they will have to meet. When will that information 
and the criteria be properly assembled?
    Mr. Johnson. As I mentioned, that criteria is available for 
the record today, sir.
    Mr. Dingell. Thank you. Mr. Chairman, I thank you for your 
courtesy. Mr. Johnson, I wish you good luck. You are falling 
into a spot where your predecessors have not performed their 
labors properly. I wish you good luck and hope that you will 
have better success in serving the public than have your 
predecessors.
    Mr. Chairman, I would also like to note just one thing 
more. And that is that a former staff member of this committee, 
a valuable friend of most of us on the committee, one of the 
people who did the extraordinarily fine work in completing the 
pipeline safety legislation over the years, which was rather 
hallmark of the success of this committee, is with us and he 
will be testifying: Mr. Rick Kessler. Mr. Kessler, welcome to 
the committee. Mr. Chairman, I thank you for your courtesy.
    Mr. Boucher. Thank you, Mr. Dingell. The gentleman from 
Oregon, Mr. Walden is recognized for 5 minutes.
    Mr. Walden. Thank you very much, Mr. Chairman. And 
obviously these are issues we care deeply about, especially 
those of us from the northwest where there were some failures. 
I want to follow up a bit on what the chairman just was talking 
about in terms of the deadlines. In your opinion, how much of a 
failure to meet some of these deadlines is attributable to a 
lack of resources either staffing or budgetary? Do you have the 
people and the money to comply with this law?
    Mr. Johnson. I believe we have the people and the time. I 
think it has been more of a function of the distractions, and I 
should not say distractions, but the events that have occurred 
over the past 15 months. I mentioned them earlier. They were 
the number of incidents that we have had to investigate----
    Mr. Walden. Right.
    Mr. Johnson. The complexity of oversight and enforcement 
rules that we are working with, the speed with which the 
alternate fuels has emerged and its importance, and for 
pipelines. The number of--the amount of time and the continuing 
effort we have had on the various Alaska pipelines incidents, 
and also the relative newness of the agency itself and the 
maturing of that with the replacement of senior officials.
    Mr. Walden. I know you have had some additional and unusual 
challenges certainly in the last year. I was also a member of 
the Oversight and Investigations Subcommittee as well as this 
one and I know we did some hearings. I am trying to remember 
which subcommittee did them on Pipeline Safety in Alaska and 
the problems there and I realize some of those were state 
driven issues, not federal, but hopefully that is getting 
resolved. I apologize for not being here earlier. I was in a 
subcommittee downstairs, Food Safety. And could you just 
briefly tell me the status on the Alaska situation with BP's 
field lines?
    Mr. Johnson. My safety officer--Chief Safety Officer--
Stacey Gerard has been devoting a lot of time to that----
    Mr. Walden. Right.
    Mr. Johnson [continuing]. And I would like for her to 
address that if she may?
    Ms. Gerard. Well, we maintain and place corrective action 
orders which BP is complying with. Should there be a failure to 
meet all the terms we would take further enforcement action. We 
have enforcement action underway at this time which we are not 
at liberty to discuss. We are working actively with other 
federal agencies in this matter as well as the State of Alaska. 
And I am happy to say that we are working on applying integrity 
management as a general philosophic approach to all of Alaska. 
And so whether it is lines which we currently regulate or lines 
which are under the jurisdiction of Alaska----
    Mr. Walden. Right.
    Ms. Gerard. We have been spending a lot of time assisting 
Alaska in understanding and learning how to apply those 
concepts and harmonizing so that we have one set, one plan that 
will work for Alaska.
    Mr. Walden. And you feel like you are making progress on 
that plan?
    Ms. Gerard. We do.
    Mr. Walden. OK. Good. In terms of this risk-based analysis 
because it seems to me that the requirement is every 7 years 
you are supposed to--they are supposed to be in check, can you 
speak just a little bit more about that because it seems to me 
that it makes more sense to--there are some lines they do not 
need to check every 7 years and there are others you probably 
need to check every 7 days. How do you make those decisions and 
are you able to?
    Ms. Gerard. We did provide a report in late November that 
did identify several pages of criteria that spoke to the 
construction and the design of the pipeline, the type of metal, 
the type of coatings, and the operating performance of the 
line, the environment that it is in, and the performance of the 
operator and being able to assess and control risk. All those 
are factors that we would use to decide what was appropriate. 
We review these operators now; we are familiar with their 
programs. Should we move to a risk-based approach through 
regulation, we would put out a proposal, go through the 
rulemaking process, and we would require operators to notify us 
in the event they chose a different interval.
    Mr. Walden. OK.
    Ms. Gerard. And we would have the opportunity to review how 
well that operator addressed the criteria and I also would 
point out we have a notification process in place like this 
today. Liquid operators, for example, if they are going to use 
an alternative form of testing notify us. We have the 
opportunity to inspect and make a decision and we post all 
those notifications on our Web site so it is quite transparent 
if an alternative is being considered and reviewed by the 
agency.
    Mr. Walden. All right. Thank you. My time has expired. Mr. 
Chairman, I appreciate the witnesses and I look forward to the 
other panel.
    Mr. Boucher. Thank you very much, Mr. Walden. The gentleman 
from Washington State, Mr. Inslee is recognized for a total of 
8 minutes.
    Mr. Inslee. Thank you. This is has been something on my 
mind ever since the Bellingham tragedy and got to know the 
three families quite well and so I have been sort of committed 
to this issue for sometime. And it is with great frustration to 
think that all these number of years the Federal government is 
still not fulfilling its obligation to future families like 
this and it is just to tell you it is very disappointing after 
years of this effort knowing this tragedy in Bellingham that we 
are still not doing the job. I am just expressing that to you 
and I hope you share some of that frustration; you can pass it 
along to your organization, knowing how terrible a tragedy like 
this can be dealing with these volatile liquids. I want to ask 
you--you told us some new deadlines you have given yourself, 
having not met the statutorily imposed ones, what are the 
consequences for if there is going to be continued failure to 
meet what you have just told Mr. Dingell your new goal lines 
are?
    Mr. Johnson. The consequences are very, very serious and I 
certainly take that commitment very seriously and I will assure 
you that I will meet those deadlines.
    Mr. Inslee. We hope that that is true and we hope that you 
through your agency find some way to discuss consequences if 
you do not meet them. I mean, frankly the statutory deadlines 
were pretty generous I thought at the time they were set given 
the length of period of time we have been working on this. So I 
hope you talk with your personnel about that, that there are 
some consequences and you internalize that in your agency to 
make sure this does not happen again. I want to ask you about 
the change of requirements of inspection, the 7 year 
requirement. Having seen up close and in person what can happen 
if you do not have a good management system, I am very 
reluctant to move away from mandatory requirement with a time 
period involved. And the reason is, is that a risk-based 
assessment, while intellectually satisfying and perhaps 
scientifically valid I have just seen it fail. We had 
discussions about the fact that BP had a risk-based assessment 
on their corrosion control and others I have seen this it just 
seems to have failed in real life because people--these 
managers have made assumptions about the corrosion in their 
pipelines and were just wrong. And they may not, through the 
lack of their intellectual ability or scrutiny or anything 
else, just that things were going on in their pipelines they 
did not know about and so it is I can understand the charm of 
it but to give my constituents certainty that these things are 
going to be checked, I am just very reluctant to move away from 
a statutory requirement. So what could you tell us about why I 
can have a higher level of guarantee to my clients with an 
uncertain risk-based approach that is subject to the discretion 
of all kinds of federal agencies, the same agencies that have 
not even met the statutory requirement that we set in the same 
industry that has had some of these repeated issues. How can 
that discretion give--and I know the parents of these three 
kids who were killed in Bellingham. If I go back and tell them 
we are now going to trust the discretion of this agency and 
discretion of corporate managers and they are going to come up 
with some formula, how could I possibly say that is as 
confidence creating as a firm deadline?
    Mr. Johnson. I understand your concerns and I know you use 
the example of the BP corrosion; Stacey Gerard has had some 
very significant experience in that. I have not been there yet. 
I would like Stacey perhaps to address that.
    Ms. Gerard. I want to say that we would not characterize 
the assessment process that BP had in place as an adequate 
risk-based process. I believe that if we had regulation in 
place that is in place in other segments of the industry, that 
accident would not have occurred. I think that we would not 
allow the decision to be at the discretion of the operator. We 
would have the checks and balances in place, where the operator 
would be required to notify us and we would conduct a review of 
the extent to which their plan met our criteria. We would not 
allow them to proceed if it did not. We have been growing and 
we have added resources to be able to spend more time in this 
kind of a review. I think the quality of the oversight is 
stronger and I think the overall record of reduction of serious 
incidents reflects that performance overall is improving.
    Mr. Inslee. You know I am looking at an article from the 
Seattle Times about the situation we're in. In the review of 
the Alaska pipelines a Seattle based engineering firm had 
concerns about their system, that essentially were whitewashed, 
I don't know if you are familiar with this or not. I will give 
it to you so you will be familiar with it but looking at what 
happened there, it just doesn't give me much confidence that 
there were will be some sort of rigorous scientific assessment 
that will be other than subject to the failures we have still 
recognized.
    Ms. Gerard. Are you speaking about BP in particular?
    Mr. Inslee. Yes, yes and I have got nothing against BP, 
they have done some marvelous work in some other energy fields 
but I think it is indicative of why we just cannot have that 
high level of confidence when it is subject to some negotiation 
between the agency and the regulated industry. It may end up 
being 20 years, it may be 15, just to feel confidence that I 
can give people, and when you have 7 years it gives them some 
degree of confidence and I am just telling you, given the risk 
here and the tragedy that can unfold, I think we ought to, for 
a marginally less cost-effective regulatory system, trade that 
for a higher degree of confidence. That is what I believe. 
Given what has happened in the past in this industry and given 
the fact, frankly, this agency cannot even meet the standards 
that we have given you now, and now we are going to trust you 
to negotiate some risk-based assessment that you are going to 
apply to every single pipeline in the country. No, we cannot 
trust that. My constituents cannot trust that.
    Ms. Gerard. We understand your disappointment. I do think 
that the products that we will produce shortly will be of a 
good quality and that any action that we would take should the 
Committee decide to let us do so, on the alternative approach 
on the intervals, will be publicly noticed. We get a lot of 
inquiries from the public about activities that are underway 
now and we feel it is our obligation to answer every one of 
them.
    Mr. Inslee. Yes, I understand, I am just--maybe I am not 
asking as many questions and making a statement here. I just 
think that I am not going to create confidence for a little bit 
of organizational simplicity here. That is just my belief. 
Thank you.
    Mr. Boucher. Thank you, Mr. Inslee. The gentleman from 
Maryland, Mr. Wynn is recognized for 5 minutes.
    Mr. Wynn. Thank you, Mr. Chairman.
    Mr. Boucher. The gentleman is passing. The gentleman from 
Utah, Mr. Matheson is recognized for 5 minutes.
    Mr. Matheson. Thanks Mr. Chairman. I know we have talked a 
little bit about the Integrity Management Program; can you give 
me a sense of what percentage of overall natural gas 
transmission pipeline accidents are attributable to causes the 
Integrity Management Program is designed to address?
    Mr. Johnson. I can probably provide that for the record. I 
do not have that in my mind at this point. I do not know--can 
you help him, Stacey?
    Ms. Gerard. Well, the leading causes are being struck by a 
third party and corrosion, and we believe that that is the 
cause of the vast majority of the incidents, and that the 
Integrity Management Program is designed to detect corrosion. 
It is very strong in detecting corrosion and managing the 
prevention of damage through a variety of programs. That is all 
part of an Integrity Management Program.
    Mr. Matheson. Should we be concerned about the impact that 
not addressing the 7 year requirement that exists now, not 
looking to changing something else, could that have an affect 
on natural gas deliverability if we do not address that issue?
    Ms. Gerard. We know that it is the position of the gas 
industry that it could affect deliverability. We are primarily 
concerned about safety, and we believe that the scientific 
approach is going to give us a better result and we are 
concerned about getting every community assessed. Base line 
assessment is a priority. We would rather get every community 
assessed first to make sure that every community has had the 
benefit of that safeguard.
    Mr. Matheson. Do you think with the Integrity Management 
Program set up the way it is today that directs funds to look 
for inspections, are we doing it in a way where we are focused 
on corrosion, you said in prevented accidents? Are we in that 
context missing or not directing resources to other potential 
threats to pipelines that affect the way the program is 
structured now?
    Ms. Gerard. We have a very rigorous review of the 
operators' risk assessment. It is a 2-week review by a team of 
experts who we have spent millions of dollars training and 
keeping current with technology. They must look at every 
possible risk that pipeline faces, not just the leading causes. 
And a big issue is just because you have never faced that risk, 
are you doing everything you can to anticipate the risk that 
has not come along yet? That is one of the greatest challenges 
we face in working with operators on their risk assessments.
    Mr. Matheson. Let me then, I will ask my question a 
different way than that. Is the current way based on the 
legislation we have drafted, and the way it is being 
implemented, does it give you the flexibility to address risks 
in an appropriate way or would you like a more flexible way to 
deal with looking at potential risks in pipeline safety?
    Ms. Gerard. It is our preference that you would give us the 
flexibility to use a rulemaking process to establish the 
criteria that would be used for the reassessment interval. We 
think it would encourage the best use of information that 
operators would be more vigilant in looking at risks and 
considering them. It is not that they are not vigilant today, 
but I think that the management process would be more dynamic 
and that it would encourage the allocation of resources to the 
greatest risk. That is what we think is most important. We are 
about driving down risk, and when we have limitations that are 
not science based, the potential for an allocation not to be to 
the greatest risk can happen.
    Mr. Matheson. OK. Thank you, Mr. Chairman. I will yield 
back my time.
    Mr. Boucher. Well, thank you very much, Mr. Matheson. I 
want to say thank you, Mr. Johnson, for coming here this 
morning. I hope you have viewed this as a pleasant introduction 
to this subcommittee and let me echo the comments of Chairman 
Dingell: we wish you well in your work----
    Mr. Johnson. Thank you.
    Mr. Boucher. We are going to be interacting with you on a 
somewhat regular basis as the various timeframes--you announced 
in response to questions--are achieved, and we very much 
encourage you to meet those timeframes as you have said today 
that you will. You presented to us this morning for the first 
time a set of proposed criteria----
    Mr. Johnson. Yes.
    Mr. Boucher [continuing]. That you would apply for purposes 
of making grants for Technical Assistance Programs for 
communities. Now, while I realize that I have been asking for 
those criteria now for almost 2 years, and was promised those 
criteria about a year-and-a-half ago and now we have proposed 
criteria, I am going to ask that you delay the publication of 
those for a brief period. We would like to review them, to 
consider them, and perhaps to have a dialogue with you about 
them before you actually make those criteria public and that is 
a process that we hope to complete within approximately 1 
month, but we will be back in touch. So do not call us we will 
call you and we will have a conversation about those criteria.
    You have also indicated in response to questions that you 
would supply to us the steps that you would intend to take in 
the process to put in place that would substitute for the 7 
year automatic reinspection schedule in the event that 
amendments are made to the law and that schedule no longer is 
applicable, and we look forward to receiving that. When, by the 
way, do you think you will be able to supply that to us?
    Ms. Gerard. Two weeks to a month. We are going to draw on 
the criteria that we have submitted in the November letter and 
we are going to review the transcript of the January public 
meeting, so I would like to have a month.
    Mr. Boucher. OK. A month is fine and we will look forward 
to receiving that document from you in approximately 1 month. 
Well, that is it, thank you for your attendance here this 
morning. Thank you for your cooperation and answering these 
questions and we certainly do wish you well in your work.
    Mr. Johnson. Thank you very much.
    Mr. Boucher. At this time let me introduce the second panel 
and we would ask them to come forward at this time. We have 
five witnesses on the second panel: Mr. Don Mason, who is a 
member of the Public Utilities Commission of the State of Ohio 
testifying this afternoon on behalf of the National Association 
of Regulatory Utility Commissioners; Mr. Phillip Wright, the 
President of Williams Gas Pipeline Company; Mr. Rick Kessler, 
who Chairman Dingell introduced some moments ago, who is a 
board member of the Pipeline Safety Trust and a former valuable 
staff member of this committee; Mr. Paul, I hope I am 
pronouncing this correctly, Preketes, Senior Vice President of 
Energy for Delivery for Consumers Energy; and Mr. Timothy Felt, 
President and Chief Executive Officer of Explorer Pipeline and 
Chairman of the Association of Oil Pipelines. And gentlemen, 
without objection your prepared written statements will be 
included in our record. We would welcome your oral summaries of 
those statements. And let me apologize to you in advance. I am 
going to have to depart before very long and Mr. Wynn from 
Maryland will be chairing the subcommittee in my absence and he 
will be taking the chair momentarily for that purpose and you 
will be in very good hands with Mr. Wynn. So welcome, we are 
delighted to have you with us. We will look forward to your 
oral statements. Please try to keep those to approximately 5 
minutes. Mr. Mason, we will be happy to begin with you and you 
might move that microphone over.

    STATEMENT OF DON MASON, COMMISSIONER, PUBLIC UTILITIES 
                       COMMISSION OF OHIO

    Mr. Mason. Thank you, Mr. Chairman. It is always good to be 
before you and members of this committee. As a taxpayer, as a 
regulator, as a person that has been involved in pipeline 
safety we are actually pleased that the committee is involved 
in something of this technical nature it is again reassuring. I 
have been before you many times. I will summarize.
    I think the important thing to realize is that states, 
utility commissions and those utilities that are regulated by 
the states are the ones who actually have to make the 
investments in terms of inspection time from the manpower side 
or investment money from the utility side. So we appreciate the 
regulations as Paul gave by PHMSA. We appreciate the 
legislation by Congress, but the bottom line is the boots on 
the ground are going to be somewhere on the state level. That 
is why in our prepared testimony we explain how many personnel 
there are out there representing the states about 325 doing the 
inspections. I think PHMSA has around 75--somewhere in that 
number--so again the burden is on the states.
    In going back--and I am going off my prepared statements 
just to get to some very clear points--it takes money by the 
utilities to put into the infrastructure. Most of your 
utilities have filed rate cases with the state based on some 
sort of a hypothetical throughput of natural gas, some 
volumetric measurement.
    With the increasing prices of natural gas, and you have all 
seen it, and your constituents have been very concerned by it, 
going from say $3 at MCF to $7, $8, $10, and even $12 at MCF in 
2005. You saw reduced consumption by the consumers. Well, what 
that meant was that the gas companies who were making their 
money on that throughput received less money. Well, those rate 
cases were set up, included money for overhead, money for 
investment, money for safety, money for capital improvements. 
So when the volumetric throughput drops off, when customers 
quit burning gas because they need to save money, that is felt 
all the way through the system. What that basically means is at 
that point the utility does not have the money to invest.
    So what I want you to know is that we appreciate the rules 
and regulations but this is a state issue as far as funding. 
Now, as Chairman of the NARU Committee on Gas, I have been 
pushing innovative rate design, called decoupling, and one of 
the purposes of decoupling is to incent the customer not to 
burn so much natural gas and incent the company to help create 
that message.
    But the other thing it does, it affects what your concerns 
are today here. By having decouple methodology for rate design 
it allows the company to be neutral as far as revenue goes, 
when the customers start burning less and less gas.
    So my point to the committee is, we appreciate the time and 
energy. We think PHMSA has been doing a very good job 
partnering with the states and I sort of wish Congressman Hall 
was here because I always like throwing him a few funnies when 
he is here but I would say getting state support is a lot like 
herding cats; it is really hard to do.
    But the thing that PHMSA has really done with us is a re-
step to NAPSER, which is the pipeline safety professionals, and 
they have reached out to NARU, which are the commissioners, is 
creating these partnerships. So when the rules are implemented, 
the rules will have that support, and this is important because 
states like Texas have completely different concerns about 
pipeline inspection than like in Ohio.
    I know, for example, when the EFVs became a big issue about 
2 years ago, we were quick to point out that in Ohio a great 
many gas distribution lines to the home are less than 10 pounds 
per square inch of pressure, so it would not even qualify for 
an EFV.
    Likewise, the pipeline safety professionals in Texas 
brought to our attention, the problem with EFVs on some of 
their system is they are so close to the gas production and 
gathering that you would have constituents dropping out within 
the distribution system that could, in fact, gum up a valve and 
that is a non-technical term but it might cause the valve not 
to function properly.
    So again, the point is, we appreciate the fact that PHMSA 
has used this broad-base approach working with pipeline safety 
professionals and working with the utility commissioners from 
all the states and regulated jurisdictions so then when you do 
have a product come before you it is something that will be 
functional and will work well. And again, my prepared 
statements are before you.
    [The prepared statement of Mr. Mason follows:]

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    Mr. Wright. Would you like to pause for questions or shall 
I go?
    Mr. Wynn [presiding]. No, we would like each of the 
witnesses to go ahead and proceed and then at the conclusion we 
will take questions. Thank you.

    STATEMENT OF PHILLIP D. WRIGHT, PRESIDENT, WILLIAMS GAS 
                        PIPELINE COMPANY

    Mr. Wright. Thank you, Mr. Chairman. My name is Phil Wright 
and I am President of Williams Gas Pipeline Company. Williams 
is the Nation's second largest transporter of natural gas. I 
also serve as Chairman of the Board of the Interstate Natural 
Gas Association. OK, thank you very much, sir. Again, my name 
is Phil Wright. I am President of Williams Gas Pipeline 
Company. Williams is the second largest transporter of natural 
gas in the Nation. I am also a Chairman of the Board of the 
Interstate Natural Gas Association of America, INGAA, on whose 
behalf I am testifying today. INGAA represents virtually all of 
the interstate natural gas pipelines in the United States and 
Canada. The mileage of the pipelines represented by INGAA 
totals over 200,000 miles.
    I will begin with a quick report on integrity management 
and the integrity management program. The Act of 2002 included 
the requirement for PHMSA to develop a rulemaking on integrity 
management for natural gas transmission lines. The act required 
all operators to first identify all segments of pipeline 
located in populated or high consequence areas, undertake 
baseline assessments or inspections, if you will, of all these 
segments within 10 years and perform reassessments of those 
segments every 7 years thereafter.
    The act also required that we complete at least 50 percent 
of our baseline assessments within 5 years of enactment. The 5-
year way point in the baseline was reached this past December 
and I am pleased to report that the industry is on track for 
meeting the baseline requirement. In fact, as of December we 
have inspected over 51 percent of the high consequence pipeline 
mileage covered under the act. The number of actual anomalies 
that have been found to date requiring repair is small. This is 
a strong indicator that the maintenance practices operators use 
to protect the useful life of this vital infrastructure is 
effective. The inspection program is proactive. It helps us 
identify potential problems, mainly corrosion, and fix them 
before they become real problems.
    So the Natural Gas Integrity Management Program is on 
schedule and working the way that Congress intended. This leads 
me to the focus of this hearing: the 7 year reassessment 
interval.
    INGAA has consistently proposed that reassessment intervals 
should be set on a segment-by-segment basis, looking at the 
various risk factors and science to determine what the 
appropriate interval should be. The current 7 year requirement 
results in most attention and resources being concentrated 
almost entirely on corrosion problems, which are also one of 
the least likely causes of serious accidents. As well, the 7 
year requirement in essence presumes that reassessments can be 
done with little or no impact on pipeline operations or natural 
gas deliverability. That presumption is without basis and fact. 
The impact is often significant and adds costs to consumers.
    Mr. Chairman, numerous technical analyses of this issue 
have all suggested risk-based assessment intervals rather than 
an arbitrary fixed number. This conclusion has come from 
qualified stakeholders outside the pipeline industry. In 
quoting the general accounting office, we believe the title of 
their report in 2006 speaks for itself: ``Risk-based Standards 
Should Allow Operators To Better Tailor Reassessments to 
Pipeline Threats.'' We believe the GAO's assessment is rightly 
concluded. We also want to make sure that there is clear 
understanding that corrosion is not the only safety factor 
facing pipelines. In fact, accidents due to corrosion, again, 
the focus of the reinspection interval, account for less than 
four percent of incidents resulting in death or injury. Clearly 
the industry sees a need to mitigate the effects of corrosion 
and we are meeting that need, as evidenced by the data. In 
prioritizing our resources, we think you would agree that our 
efforts are best focused on those causes that give rise to the 
greatest number of incidents such as external damage 
prevention.
    You have before you official recommendations from both GAO 
and DOT, and my written testimony covers much more on the 
issue. INGAA urges Congress to adopt the statutory language 
proposed by DOT Deputy Secretary Barrett in November of last 
year. We believe--in fact, the GAO and DOT believe--doing so 
would improve the safety of pipelines by better focusing our 
efforts.
    Unintentional damage to our pipelines from excavation is 
the leading cause of deaths and injuries associated with 
natural gas transmission. Going forward we really believe that 
should be the area of concentration of our improvement efforts.
    At the request of the leadership of PHMSA staff, my company 
volunteered to undertake a pilot community assessment program 
focused on educating local policy makers on pipelines and 
pipeline safety, deploying state of the art technology and 
working to develop programs that prevent pipeline accidents. 
Williams is working with Fairfax County, Virginia, which has an 
excellent One Call program on this pilot and we believe it will 
help prevent damage, excavation damage, in that rapidly growing 
community. We hope this effort can be extended to other 
communities across the country. Thank you, Mr. Chairman and 
members of the subcommittee, and I will be happy to respond to 
questions.
    [The prepared statement of Mr. Wright follows:]

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    Mr. Wynn. Thank you for your testimony. Mr. Kessler.

 STATEMENT OF RICK KESSLER, BOARD MEMBER, PIPELINE SAFETY TRUST

    Mr. Kessler. Thank you, Mr. Chairman. And I just want to 
say thanks to Chairman Dingell and Chairman Upton--or rather, 
Chairman Boucher-- for their wonderful introduction earlier. 
Good morning and thank you for allowing me the honor of 
testifying before what I think is the best committee in 
Congress. And for the record my name is Rick Kessler, and as 
some of you know I had the great fortune of staffing this 
subcommittee for a number of years, beginning in the mid 1990s, 
on the issue of pipeline safety.
    But I am here today as a member of the Board of Directors 
of the nonpartisan, nonprofit Pipeline Safety Trust. The Trust 
came into being after the 1999 Olympic pipeline tragedy in 
Bellingham, Washington that left three young people dead, 
devastated a local salmon stream and caused millions of dollars 
of economic disruption. The Trust is the Nation's only 
nonprofit organization to provide the voice for those affected 
by pipelines who otherwise would have none, including those who 
have died in pipeline accidents.
    Our vision is simple: communities should feel safe when 
pipelines run through them and trust that their government is 
proactively working to prevent pipeline hazards. We believe 
that local communities who have the most to lose if pipelines 
fail should be included in discussions of how best to prevent 
pipeline accidents. Only when trusted partnerships between 
pipeline companies, government, communities and safety 
advocates are formed will pipelines truly be safer.
    Because time is short and because a lot of ground in my 
written testimony has been covered, I want to provide a very 
condensed summary of our written testimony and focus a bit more 
intently on the reassessment interval for natural gas 
transmission pipelines.
    The bottom line is the trust believes it is critical, 
absolutely critical, to maintain the 7 year reassessment 
interval that this committee and Congress mandated as a 
backstop in 2002 and again reaffirmed in 2006. We believe 
PHMSA's proposed waiver process appears to be technically sound 
and we believe that providing extensions of the reinspection 
period are most appropriately done on a case-by-case basis; 
however, because this is a resource-intensive process the 
assessment of fees for waiver processing should be considered 
to ensure that PHMSA's ability to carry out its primary 
mission, its primary mission of ensuring pipeline safety, is 
not harmed.
    What I want to also add to that is there has been some talk 
as if the 7 year provision is somehow arbitrary and that there 
is not a risk-based program, actually the program currently 
underway is risk-based, the 7 year interval there is a 10 year 
interval that was the baseline performance, the 7 year is a 
backstop that this committee and Congress under Chairman Tozan 
put in place because the purely risk-based assessment was not 
getting the job done.
    I would remind everyone that prior to 1996 the requirement 
that was never carried out by DOT was for a 2 year reinspection 
period and in 2002 the Senate again in a deal cut by, I 
believe, then Senator Corzine and Senator John McCain was for a 
5 year baseline and 5 year reinspection period. This committee 
came back with a 10 year baseline and a 7 year reinspection 
period that included a waiver, which is in the statute, that 
allows for extensions based upon other things. I think it was 
Mr. Matheson who was talking about the need to keep product 
flowing, so that was all thought out by this committee and 
included in the original provision.
    I think, rather than spending time debating industry's 
concern about the duration of a reassessment period that really 
has yet to even kick in, we believe the Nation's safety efforts 
should be focused on addressing critical public safety, 
environmental protection, and public information provisions of 
the law that have yet to be implemented, including PHMSA's 
failure to move forward on establishing the Pipeline Safety 
Information Grant Program. The committee, led now by Chairman 
Boucher, created that program in the '02 act and strongly 
reaffirmed its support again in the '06 act.
    I am glad to hear today that PHMSA is, after all this time, 
moving forward, though the brief glance I got of their proposal 
does raise some concerns, and I am glad Chairman Boucher asked 
for some time to consult on that.
    I actually think these grants would allow members of the 
public to hire independent experts to explain, analyze, and 
interpret technical data, thereby actually promoting better 
decisions and increasing meaningful communication between 
diverse members of the public, governmental decisionmakers, and 
the pipeline industry. Ultimately, the program would help 
pipeline operators at PHMSA as much as the public. Congress 
must ensure that the program is established and fully funded.
    We have mentioned a number of deadlines that PHMSA has 
failed to miss and we just point out that this is, has 
historically been the case and that is why I know a number of 
you are concerned because of the trend and I just want to also 
kind of sum up.
    Oh, I also want to mention the deadline for excess flow 
valves which is coming up on June 1, 2008. The National 
Transportation Safety Board has studied and recommended the use 
of EFVs for years and millions of them are successfully used 
today. Firefighters nationwide promote the use and Congress has 
mandated their use. We urge the committee to keep a close eye 
on the upcoming deadline and to assure that we move past the 
study to just stalling tactics of the past and onward to the 
nationwide use of these important safety devices.
    To wrap up, I just want to highlight some successes we have 
witnessed since passage of the act. PHMSA has made great 
strides in carrying out enforcement transparency under pipes, 
the stakeholder communications Web site is a huge improvement 
and we appreciate the success in making pipeline mapping system 
available again. I also want to congratulate them on the 
implementation of the National 811 One Call number, which then 
Chairman Barton and our former colleague Chris John led the 
way, along with the rest of you in implementing. Thank you very 
much and again, it is a great honor to be before you.
    [The prepared statement of Rick Kessler follows:]

                       Statement of Rick Kessler

    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 Rick 
Kessler and I am testifying today as a member of the Board of 
Directors of the Pipeline Safety Trust. As many of you know, I 
had the great fortune of staffing this subcommittee in the area 
of pipeline safety for a number of years. Additionally, 
Pipeline Safety Trust staff are members of the Pipeline and 
Hazardous Materials Safety Administration's (PHMSA's) Technical 
Hazardous Liquid Pipeline Safety Standards Committee, chair of 
the Governor-appointed Washington State Citizens Committee on 
Pipeline Safety, and on the steering committee for PHMSA's 
Pipeline and Informed Planning Alliance. This testimony was 
prepared by the Executive Director of the Pipeline Safety Trust 
Carl Weimer, me, and one of the Pipeline Safety Trust's 
technical consultants, Lois Epstein, P.E., who previously 
served on the Technical Hazardous Liquid Pipeline Safety 
Standards Committee representing the public.
    The Pipeline Safety Trust came into being after the 1999 
Olympic Pipe Line 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. After investigating this tragedy, the U.S. 
Department of Justice (DOJ) 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 DOJ'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 local 
communities who have the most to lose if a pipeline fails 
should be included in discussions of how best 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 non-profit 
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, we are here to speak 
today for those who have been tragically affected by pipeline 
incidents since the Pipeline Inspection, Protection, and 
Enforcement Act of 2006 (PIPES) passed. We are speaking for the 
relatives of Maddie and Naquandra Mitchel who died in the 
November 2007 Dixie Pipeline propane explosion in Mississippi, 
which also destroyed many homes and scorched 150 acres of 
forest. We are speaking for the family of Corbin Fawcett who 
was killed driving down an interstate highway in Louisiana when 
the Columbia Gas Transmission pipeline under that highway 
exploded in December 2007. We also are speaking for the six 
members of the general public who were killed in distribution 
pipeline explosions in 2007, and for all those affected by the 
more than $110 million in property damage caused by pipeline 
incidents in 2007, not to mention the millions of dollars in 
uncalculated costs from fuel price increases when these 
pipelines are temporarily shut down because of failures. Last, 
we are speaking on behalf of the land and water and wildlife 
that has been contaminated or otherwise impacted as a result of 
oil pipeline releases since passage of the law.
    The Pipeline Safety Trust's staff and volunteers have 
testified before Congress nine times since the Bellingham 
tragedy. We have brought forward and worked with others on many 
initiatives that have been put into law through the Pipeline 
Safety Improvement Act of 2002 and PIPES. In the past 7 years, 
we have developed valuable working relationships with many key 
staff members of PHMSA, the pipeline industry, local 
government, and citizens nationwide.

 Review of the Implementation of the Pipeline Inspection, Protection, 
                   Enforcement and Safety Act of 2006

    It has been a little over 14 months since Congress enacted 
PIPES, so we appreciate the committee holding this hearing to 
review the successes and failures of PHMSA's efforts to 
implement many of the important safety improvements contained 
in the act. The Pipeline Safety Trust has been actively 
involved with many of these initiatives, and we are pleased to 
provide you with the following overview of our perspective on 
implementation of the PIPES Act to date.
    In several instances noted below, PHMSA has missed 
deadlines contained in PIPES. Congress and the public deserve 
an explanation of why deadlines are missed. The Trust has 
supported every deadline that Congress has imposed and we 
encourage deadlines as a way to force safety improvements to 
move forward, but we also recognize that it is sometimes better 
to do things right instead of doing them fast.

     Reassessment Intervals for Natural Gas Transmission Pipelines

    Ever since the passage of the Pipeline Safety Improvement 
Act of 2002, the natural gas pipeline industry has argued that 
the reassessment interval for gas transmission pipelines was 
not based on well-considered engineering and scientific data. 
Industry argues that each pipeline has its own unique 
properties and, as such, each pipeline should have reassessment 
intervals based on its own particular engineering and data. 
While we agree that the initial interval was not based on any 
exhaustive study or data, it also is clear that the data needed 
to make such a determination were not yet available. The 
integrity management process in the 2002 act was the needed, 
comprehensive start to collect such specific data from specific 
pipelines. Congress gave the industry ten years to complete the 
initial baseline integrity management survey, and we have only 
recently passed the date where the industry was to have 
completed 50% of that baseline task.
    PHMSA and the industry have begun a process to provide 
companies that have successfully completed the initial baseline 
assessments for segments of their pipelines a way to apply for 
waivers from the current Congressionally-mandated reassessment 
interval. The Trust's review of this process by our technical 
consultants has concluded that the process is reasonable, 
technically-sound and well thought-out, albeit resource-
intensive on the part of PHMSA. The proposed process provides 
significant safety protections, including an analysis by PHMSA 
that the public can comment on. We ask Congress to maintain the 
Congressionally-mandated reassessment interval to ensure a 
thorough review by PHMSA of waiver requests and knowledge by 
the public of pipeline-specific deviances from the mandated 
reassessment interval.
    Since no rule for the waiver process has been drafted for 
review, the Trust wants to provide PHMSA and Congress with a 
list of the things we believe need to be clearly spelled out in 
the proposed waiver process:
      Waivers should not be processed if PHMSA does not 
have the resources to do so without undermining its existing 
pipeline safety programs. If these waivers are a priority of 
the industry, then Congress should consider implementing fees 
for waiver applications to provide PHMSA with the resources to 
get the job done.
      Waivers should only be considered for pipeline 
segments that have fully completed their initial baseline 
assessment, and must not be considered for those operators 
using Direct Assessment.
      Waivers should only be considered for pipeline 
segments where operators have provided PHMSA with sufficient 
information to show that the baseline assessment was adequate, 
and that they have identified the pertinent threats and have a 
plan in place to correctly monitor and address those threats.
      Waivers should not be considered for pipeline 
segments where failures have occurred within the past ten years 
from causes within operators' primary responsibility 
(corrosion, material failures, incorrect operation, etc.).
      Waivers should not be considered for pipeline 
segments that include bare steel pipe, ineffective pipe 
coating, or ineffective cathodic protection.
      Waivers should not be considered for pipeline 
segments where identified threats (such as selective seam 
corrosion) include issues where time-to-failure calculations 
are unreliable.
      Waivers should be revoked if failures occur from 
causes within operators' primary responsibility (corrosion, 
material failures, incorrect operation, etc.).
      Waiver applications, supplemental information, 
correspondence, and final waivers should all be included in an 
easy-to-locate, publicly-accessible, Web-based docket.
      All National Environmental Policy Act 
requirements must be fulfilled in development of PHMSA's waiver 
process.
    We also would like to point out that while the trend for 
the number of significant pipeline incidents in the past 10 
years for onshore liquid pipelines is declining, the trend for 
significant incidents for onshore natural gas transmission 
pipelines is increasing. The following graphs illustrate these 
trends.

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    Liquid pipelines, with nearly 130,000 fewer miles 
nationwide than gas pipelines, have nearly twice as many 
significant incidents but their incident trend is downward. The 
apparent increase in the number of significant incidents for 
natural gas transmission pipelines is notable because it 
illustrates that there are still significant safety problems to 
address with respect to natural gas transmission pipelines.
    The discussion today has been on possibly increasing the 
reassessment interval for gas pipelines, but we shouldn't lose 
sight of the fact that the integrity management rules that 
require any such assessment only apply to pipelines within 
``high consequence areas.'' According to PHMSA, less than 10% 
of natural gas transmission pipeline mileage is within those 
high consequence areas, so people living, working, traveling, 
or recreating along the other 90%+ of this Nation's natural gas 
pipelines are not guaranteed the same protections. Mr. Corbin 
Fawcett who I mentioned earlier as being killed while driving 
along an interstate highway in Louisiana was one of those 
people outside of a high consequence area who paid the ultimate 
price for not being in an area with these added protections.
    We would like Congress and PHMSA to consider a phased 
expansion of the pipeline mileage to be included within the 
definition of High Consequence Areas (HCA). This definition, to 
a large extent, is what determines which transmission pipeline 
segments are required to be inspected under the integrity 
management rules. At this time, HCAs mainly include populated 
areas, areas where people congregate, and for liquid pipelines 
drinking water sources and certain biologically significant 
areas, plus 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 the baseline integrity management 
testing is now nearing completion 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, heavily traveled highways, 
and in the case of liquid pipelines swimable and fishable 
waters. While we are not opposed to the pipeline industry 
saving time and money through the waiver process being 
discussed here today, we think some of that time and money 
should be reinvested to ensure that more people like Corbin 
Fawcett don't lose their lives because they happened to be on 
the wrong side of some risk assessment line.

                   Pipeline Safety Information Grants

    The Pipeline Safety Trust has long pushed for technical 
assistance grants to allow local communities that are most at 
risk from the potential hazards of pipelines in their midst to 
take a more active and informed role in determining those 
risks, and to allow the public to play a meaningful part in the 
various processes that lead to pipeline safety standards and 
regulations. These grants will promote better technical and 
policy decisions, and will increase communication between 
diverse members of the public, governmental decisionmakers, and 
members of the pipeline industry. The grants will allow members 
of the public to hire independent experts to explain, analyze, 
and interpret technical data.
    This committee, led by now-Chairman Boucher, established 
the Pipeline Safety Information Grants program in the Pipeline 
Safety Improvement Act of 2002. The committee reaffirmed its 
support for this program in PIPES, pushing for the 
implementation of the technical assistance grant program even 
harder by requiring PHMSA to set up a competitive process for 
these grants before PHMSA would be allowed to award any grants 
under section 60114 for Technology Development Grants for 
damage prevention.
    It has been over 5 years since Congress called for these 
community grants, but to our knowledge PHMSA has yet to set up 
a competitive process, and certainly none of these grants have 
been awarded. During that period, the ``local communities and 
groups of individuals'' as defined in the USC 60130 who are in 
need of technical assistance for ``engineering or other 
scientific analysis of pipeline safety issues'' or for 
``promotion of public participation in official proceedings'' 
have been left to their own devices in the face of processes 
and proceedings that are overwhelmingly steered by the pipeline 
industry and its comparatively limitless dollars.
    One of the Pipeline Safety Trust's core beliefs is that 
pipeline safety is a three-legged stool: one leg represents 
pipeline regulators, one leg represents the pipeline industry, 
and the last leg represents the local communities that are 
positively and negatively affected by pipelines. Take away any 
one leg and the stool becomes dangerously unstable. Local 
governments and community organizations generally do not have 
the resources to be a meaningful leg in this stool, which is 
why these grants are so important for pipeline safety.
    Here are some specific examples of how these grants could 
provide real value for pipeline safety:
      PHMSA is currently undertaking a very valuable 
effort called the Pipelines and Informed Planning Alliance 
(PIPA). This effort in part is a result of a provision in the 
Pipeline Safety Improvement Act of 2002, which required PHMSA 
to study the concerns with population encroachment along 
transmission pipeline rights-of-way. The PIPA process has 
brought together all the stakeholders to develop solutions to 
the thorny issues involving pipelines intersecting with 
proposed local developments. One significant barrier to the 
success of this initiative is the lack of participation by 
local governments and citizens who actually understand and 
control the local zoning, permitting, and planning processes; a 
key impediment to their participation is the cost of 
participation in terms of travel, costly conference calls, and 
lack of staffing. Providing a technical assistance grant to a 
group that could ensure basic staff support and cover 
participation costs by local governments and citizen 
participants would remove this impediment.
      The Pipeline Safety Trust received numerous calls 
in the past year from members of local school boards who are 
looking at locating new schools on property that contains, or 
is near, a pipeline. Pipeline Safety Information Grants could 
enable a school board to hire an independent consultant to 
research the existing information about pipeline risk, and then 
help educate and inform the school board about the particular 
risks of their proposed site and ways to mitigate those risks. 
That information could then be shared with other school 
districts faced with similar decisions.
      For the past few years, local governments and 
citizens across the country have been faced with numerous new 
pipeline proposals. They have serious questions about how 
pipelines are installed, maintained, and inspected, as well as 
how possible incidents could affect their safety, drinking 
water sources, and properties. These grants could provide such 
communities a source for independent technical information that 
could help them focus their concerns on the proper threats, and 
thus become valuable partners in safely siting needed new 
pipelines. The information that comes out of these grants could 
then be shared with other local governments.
      The Washington City and County Pipeline Safety 
Consortium and the Kentucky Pipeline Safety Advisory Committee 
were formed after major pipeline failures and involved a broad 
spectrum of stakeholders looking for solutions to keep their 
states safe and avoid further pipeline accidents. Technical 
assistance grants under Sec. 60130 could help fund staff time 
for these outstanding examples of independent pipeline safety 
initiatives and pipeline safety involvement by multiple 
stakeholders. Such local involvement is critical as PHMSA moves 
forward in the areas of pipeline damage prevention and 
encroachment.
      Finally, another potentially important use of 
these grants is to pay for increased public involvement in 
industry standards development and to assist in public comments 
on technical regulations and the various waiver processes. For 
example, in the Midwest a waiver was granted by PHMSA for a 
very large yet-to-be-built gas pipeline to operate at higher 
pressure with thinner steel before local governments or 
affected communities even knew such a pipeline was proposed.
    Ultimately, implementation of the Pipeline Safety 
Information Grants program will not only help local 
communities, but it will also help pipeline operators and PHMSA 
by ensuring that communities are able to educate themselves and 
receive independent information that builds confidence in the 
safety of a particular pipeline or proposed activity by 
pipeline operators.

                          Low Stress Pipelines

    The 200,000 gallon BP crude oil pipeline leak on the North 
Slope of Alaska found during the winter of 2006, the additional 
leak found in the summer of 2006 followed by a partial shut-
down of the Prudhoe Bay Oil Field, and the ensuing fiasco 
concerning BP's previously inadequate low-stress pipeline 
maintenance and testing have made it clear that all low-stress 
oil 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 higher-stress transmission pipelines.
    Section 4 of PIPES remedied the unwarranted low-stress 
pipeline exemption and required PHMSA to ``issue regulations 
subjecting low-stress hazardous liquid pipelines to the same 
standards and regulations as other hazardous liquid pipelines'' 
(emphasis added) with limited exceptions for pipelines 
regulated by the U.S. Coast Guard and certain short-length 
pipelines serving refining, manufacturing, or truck, rail, or 
vessel terminal facilities. Section 4 of PIPES clear directive 
to PHMSA has been only partially followed, and PHMSA has missed 
the mandated December 31, 2007 requirement for issuance of 
regulations.
    Since passage of PIPES, PHMSA issued a proposed rule on May 
18, 2007 covering ``Protecting Unusually Sensitive Areas from 
Rural Low-Stress Hazardous Liquid Pipelines.'' Though several 
members on the Technical Hazardous Liquid Pipeline Safety 
Standards Committee objected, PHMSA decided to pursue a two-
phase approach to meet the Section 4 mandate, with Phase One 
covering rural low-stress pipelines affecting Unusually 
Sensitive Areas and Phase Two covering all other rural low-
stress pipelines. The Trust and others commented on several 
inadequate provisions of the Phase One proposed rule which, 
contrary to Section 4, does not apply ``the same standards and 
regulations'' to low-stress hazardous liquid pipelines that 
higher-stress pipelines must meet. In contrast to higher-stress 
pipelines, the proposed rule contains a uniform distance 
approach to determining those pipelines that ``could affect'' 
an Unusually Sensitive Area (ironically, the same type of one-
size-fits-all approach that industry objects to for the natural 
gas transmission pipeline reassessment interval). PHMSA's 
approach is both non-scientific and different from the 
requirements applying to higher-stress pipelines, thus making 
it contrary to the requirements of PIPES. As for Phase Two, 
PHMSA is pursuing data collection prior to rulemaking, and we 
do not know when that rule--which Congress required to be 
completed by the end of last year--even will be proposed.

     Distribution Integrity Management Program Rulemaking Deadline

    Congress also gave PHMSA a deadline of December 31, 2007 in 
PIPES to prescribe minimum standards for integrity management 
of natural gas distribution pipelines. While it is clear that 
PHMSA has been working on integrity management standards for 
distribution pipelines, it is also clear that they have missed 
this deadline.
    One of our particular interests with distribution pipelines 
is the use of Excess Flow Valves (EFVs). PIPES requires the use 
of EFVs for most new and replaced service lines in single 
family residential housing after June 1, 2008. We hope that 
PHMSA makes every effort to meet this important deadline. The 
National Transportation Safety Board (NTSB) has studied and 
recommended the use of EFVs for years, firefighters nationwide 
promote their use, there are millions of EFVs in successful use 
nationwide, and Congress has mandated their use. We hope that 
Congress will keep a close eye on this upcoming deadline to 
make sure we have finally moved past the study-it-to-death 
stalling tactics from past years so there are no further delays 
in the nationwide use of these important safety devices.

     Enforcement Transparency and Other Forms of Public Information

    In our opinion, one of the true successes of PIPES has been 
the rapid implementation by PHMSA of the enforcement 
transparency section of the act. It is now possible for 
affected communities to log onto the PHMSA website (http://
primis.phmsa.dot.gov/comm/reports/enforce/Enforcement.html) and 
review enforcement actions regarding pipelines in those 
communities. This transparency should increase the public's 
trust that our system of enforcement of pipeline safety 
regulations is working adequately or will provide the 
information necessary for the public to push for improvements 
in that system.
    Transparency in enforcement documentation represents just 
one of the relatively new efforts by PHMSA to provide valuable 
information for public review. PHMSA's Stakeholder 
Communications website represents a huge improvement in 
transparency in the last few years, and we also appreciate 
PHMSA's efforts in getting the National Pipeline Mapping System 
available again to the public.
    The one area where PHMSA could go even further in 
transparency would be in establishing a web-based system that 
would allow public access to basic inspection information about 
specific pipelines. An inspection transparency system would 
allow the affected public to review when PHMSA and its state 
partners inspected particular pipelines, what was found, and 
how any concerns were rectified. Inspection transparency should 
increase the public's trust in the checks and balances in place 
to make pipelines safe.

                    State Damage Prevention Programs

    We strongly support the section in PIPES that encourages 
states to increase their efforts surrounding damage prevention. 
Outside force damage remains one of the top causes of 
significant pipeline incidents, and is also one of the hardest 
causes to address by regulation. There is strong evidence of 
success with state damage prevention programs that include 
elements of stakeholder education, collaboration, and 
participation, as well as the use of dispute resolution, 
enforcement of damage prevention laws, best technologies, and 
constant evaluation and improvement.
    PHMSA appears to be emphasizing these elements in its 
current communications and programs, but we hope that Congress 
will keep a close eye on whether PHMSA is providing clear 
guidance to states in these areas, as well as whether the 
increased funding included in PIPES actually flows to the 
states. Without increased funding, it is unlikely that many 
states will have the ability to increase the effectiveness of 
their damage prevention programs. The authorization and 
appropriation of increased funds for these efforts are the 
responsibility of Congress.

     Public Education and Awareness for the New 811 One Call number

    We are happy to see the implementation of the new 
nationwide 811 One Call number, which will make it easier for 
people across the country to know where to call before they 
undertake activities that could cause harm to pipelines. Former 
Chairman Barton, former Congressman Chris Johns and other 
members of this Committee deserve all our thanks for their 
successful effort to include language in 2002 Act that made 811 
a reality. While getting the number functioning was a huge 
undertaking, an even bigger task is to make sure that 
homeowners, excavators, utility workers, and many others know 
about and use the 811 number. We hope that Congress will 
continue to support the 811 effort through ongoing 
appropriation of funds. The Common Ground Alliance has done a 
good job of kicking off this effort and using federal funding 
to leverage private investments, but there is still much work 
to do.

                    Leak Detection Technology Study

    Following a number of high profile liquid pipeline failures 
where leak detection systems were unable to identify ruptures 
or ongoing small leaks (including the 200,000 gallon BP North 
Slope pipeline failure in winter of 2006), PIPES required PHMSA 
to produce a report by December 31, 2007 to report on these 
inadequacies and ways to improve leak detection technologies. 
PHMSA has missed the deadline for this much-needed leak 
detection technologies report.

                       Internal Corrosion Control

    Following a number of leaks on pipelines on the North Slope 
in Alaska, PIPES required PHMSA to review whether current 
regulations regarding internal corrosion on liquid pipelines 
were adequate, and to produce a report by December 31, 2007 
based on this review followed by regulatory implementation. 
PHMSA has met once with the Technical Hazardous Liquid Pipeline 
Safety Standards Committee to discuss internal corrosion 
issues, but to date PHMSA has not issued a report on the review 
or started any rulemaking activities. PHMSA has missed the 
deadline for this much-needed internal corrosion control report 
and its follow-up activities. Additionally, states and federal 
entities such as the Minerals Management Service (MMS) and the 
U.S. Coast Guard that are updating their pipeline regulations 
now are missing opportunities to include PHMSA's latest 
internal corrosion control findings in their respective 
regulatory updates. MMS, in fact, recently closed its public 
comment period for a comprehensive overhaul of its pipeline 
safety regulations.

               The Need To Address Unregulated Pipelines

    Pipelines that are not regulated by PHMSA, like rural low-
stress hazardous liquid pipelines prior to PIPES' mandate, can 
have releases with serious consequences that are not even 
reported to PHMSA nor, in many instances, to any government 
entity (depending on state or offshore reporting requirements). 
49 CFR 195.1(b), for instance, contains nine exemptions to 
PHMSA's regulatory framework for hazardous liquid pipelines, 
including the rural low-stress pipeline exemption that has not 
yet been removed. As a result, unregulated pipelines--whether 
by statute or by regulation--only become regulated after 
significant safety or environmental tragedies occur.
    To prevent such tragedies, Congress should require the NTSB 
to study the likelihood of releases from currently unregulated 
pipelines using available release data from the National 
Response Center, state release reporting databases, the media, 
etc. Such a report should include recommendations to Congress 
to ensure regulatory coverage of all pipelines that might pose 
significant safety or environmental risks. The report should 
examine such things as whether the current definition of 
gathering lines inhibits regulatory coverage of such pipelines, 
and whether produced water lines should have safety 
requirements under PHMSA just as offshore produced water lines 
do under MMS regulations.
    Finally, the Trust encourages the Committee to determine 
why the NTSB has not investigated many recent, significant 
pipeline accidents such as BP's North Slope pipeline incidents 
in 2006. Such investigations and NTSB's subsequent 
recommendations provide critical information for Congress, 
PHMSA, the pipeline industry, and the public to examine during 
future reauthorization efforts.
    We should all celebrate the progress that has been made 
since the passage of the Pipeline Safety Improvement Act of 
2002 and PIPES, while acknowledging that continuous evaluation 
and improvement can make pipelines considerably safer yet, and 
can enhance the public's trust in pipelines.
    Thank you again for this opportunity to testify today. The 
Pipeline Safety Trust hopes that you will closely consider the 
ideas and analysis we have brought forward. If you have any 
questions now or at anytime in the future, the Trust would be 
glad to answer them.

                          Summary of Testimony

    Regarding the reassessment interval for gas transmission 
pipelines, we find that PHMSA's proposed waiver process is 
technically sound. Congress should consider implementing fees 
for waiver applications to provide PHMSA with the resources to 
get the job done. We believe it is important to maintain the 
Congressionally mandated reassessment interval. The trend for 
significant incidents for onshore natural gas transmission 
pipelines is increasing, so as the initial baseline assessment 
is completed it is time to expand the definition of high 
consequence areas to further reduce incidents.
    Regarding Community Technical Assistance Grants, after more 
than 5 years PHMSA has yet to set up a competitive process, and 
none of these grants have been awarded. Congress must ensure 
that the program is established and funded fully.
    Regarding low stress pipelines, section 4 of PIPES clear 
directive to PHMSA has only been partially followed, and PHMSA 
has missed the mandated December 31, 2007 requirement for 
issuance of regulations.
    Regarding integrity management for gas distribution 
pipelines, while it is clear that PHMSA has been working on 
integrity management standards for distribution pipelines, it 
is also clear that they have missed the deadline set out in 
PIPES.
    One of the true successes of PIPES has been the rapid 
implementation by PHMSA of the enforcement transparency section 
of the act. PHMSA's Stakeholder Communications website 
represents a huge improvement in transparency in the last few 
years, and we also appreciate PHMSA's efforts in getting the 
National Pipeline Mapping System available again to the public. 
The one area where PHMSA could go even further in transparency 
would be a Web-based system that would allow public access to 
basic inspection information about specific pipelines
    PIPES held a promise of increased funding to states that 
implement sound damage prevention programs. Congress should 
keep a close eye on whether PHMSA is providing clear guidance 
to states in these areas, as well as whether the increased 
funding included in PIPES actually flows to the states. 
Congress should ensure that the money is not only authorized, 
but also appropriated.
    PHMSA has missed the deadline for the much-needed leak 
detection technologies report, as well as the deadline for this 
much-needed internal corrosion control report and its follow-up 
activities.
                              ----------                              

    Mr. Wynn. Thank you for your testimony. I am going to try 
to pronounce this correctly, Mr. Preketes. Preketes, I was way 
off, I apologize.

 STATEMENT OF PAUL PREKETES, SENIOR VICE PRESIDENT OF ENERGY, 
                   DELIVERY CONSUMERS ENERGY

    Mr. Preketes. Good afternoon, Chairman and members of the 
committee. I am pleased to appear before you today and wish to 
thank the committee for calling this hearing. My name is Paul 
Preketes, Senior Vice President of Energy Delivery for 
Consumers Energy in Michigan. I am here testifying today on 
behalf of the American Gas Association and the American Public 
Gas Association. AGA represents over 200 local distribution 
companies that deliver natural gas to more than 64 million 
homes, businesses, and industries throughout the United States 
and the APGA is a national association of public gas systems 
that encompass over 950 communities.
    Local distribution companies, or LDCs, are the face of the 
industry. Consequently we take very seriously the 
responsibility of continuing to deliver natural gas to our 
communities safely, reliably, and affordably. Safety is our 
business. Natural gas utilities spend an estimated $6.4 billion 
each year in safety and related activities. The Pipeline 
Inspection, Protection, Enforcement, and Safety Act of 2006 or 
the PIPES Act, contained several substantive provisions that 
focused on LDC-related issues.
    Because excavation damage prevention is the leading cause 
of natural gas distribution pipeline incidents, the most 
important of these was the section excavation damage 
prevention. In writing the law this committee created an 
incentive for states to adopt stronger damage prevention 
programs. This was a major step toward expanding the safety 
culture beyond just our industry and creating a situation where 
all stakeholders can come together to focus on this issue. We 
commend the Energy and Commerce Committee for the attention 
that was given to improving state excavation damage prevention 
and for having made the nine elements the centerpiece of a 2006 
bill.
    I am happy to report that in 2007, key national 
stakeholders formed the Excavation Damage Prevention 
Initiative, EDPI, to build upon the good work done by this 
committee. The EDPI produced a document entitled, ``A Guide to 
the Nine Elements'' to provide guidance to states working to 
incorporate the nine elements into their existing pipeline 
safety programs. Last month the AGA partnered with the National 
Association of Regulatory Utility Commissioners to continue 
work on this issue. With AGA's support NARU passed a resolution 
urging state commissions to review their current excavation 
damage prevention programs and to consider the EDPI's ``Guide 
to the Nine Elements'' document in making revisions and 
improvements in order to incorporate fully the elements of the 
PIPES Act.
    Another example of progress with the damage prevention, as 
Mr. Kessler said, was the Common Ground Alliance's successful 
roll-out of 811, the National Call Before You Dig number, that 
was kicked off and went live in May of 2007. The other 
significant section of the bill that related to natural gas 
utilities was a section on Distribution Integrity Management 
Programs or DIMP. For 2 years, PHMSA has been diligently 
working with key stakeholders to develop a DIMP regulation. We 
are very supportive of this effort and are strong advocates of 
Integrity Management. We fully support taking the responsible 
course of action in seeking to enhance distribution pipeline 
integrity and we are confident that PHMSA's work today will 
result in a DIMP rule that enhances safety while providing 
flexibility.
    The diversity among gas distribution pipelines makes it 
impractical to establish prescriptive requirements that would 
be suitable for all circumstances. In order to achieve maximum 
distribution safety enhancements, a high level rule that 
contains an appropriate level of flexibility, including a 
strong risk assessment component and which takes into account 
all the various stakeholder concerns, is essential. One size 
fits all is not an appropriate solution for distribution 
integrity. This will allow each natural gas facility operator 
to manage their system and ensure a goal of actually improving 
system safety based on individual companys' system performance 
characteristics and not simply following prescriptive rules 
that in many cases do not enhance the safety of particular 
systems. It would be most appropriate to require that all 
distribution pipeline operators, regardless of size, implement 
a risk-based integrity management program that would contain 
seven key risk assessment elements.
    The PIPES Act also contains the provision requiring the 
insulation of excess flow valves on new or fully replaced 
services on single family dwellings. EFVs can effectively stop 
the flow of gas in situations where there is a rapid release of 
gas. It should be noted, however, that the excess flow valves 
are not effective in stopping the release of gas in small 
leaks. While EFVs are a helpful safety device, they are only 
one component of pipeline safety. The industry has made 
significant progress in installing these devices. In 2006, the 
AGA completed a study of its members when Pipeline Safety 
Legislation was being reauthorized. At that time, about 66 
percent of the new services installed by its members included 
excess flow valves, and my company Consumers Energy was among 
them.
    With respect to control room management, AGA, APGA believe 
that the vast majority of operators have already implemented 
effective procedures for control room operations. This is in 
part confirmed by the fact that there are no reportable natural 
gas incidents from the past 10 years in which a primary cause 
was the action of the gas controller. In fact, our associations 
are not aware of any natural gas incidents attributed to a 
natural gas controller's actions.
    With respect to the 7 year inspection interval for 
transmission integrity, AGA supports the testimony of 
Interstate National Gas Association and the effort to establish 
technically-based reassessment in rules similar to AS&E B31.8S 
consensus standard in lieu of the existing 7 year intervals. I 
appreciate the opportunity to testify today and would be happy 
to answer any questions.
    [The prepared statement of Mr. Preketes follows:]

                       Statement of Paul Preketes

    Good morning, Mr. Chairman and members of the Committee. I 
am pleased to appear before you today and wish to thank the 
Committee for calling this hearing. Pipeline safety is a 
critically important issue, and I commend you for not only 
holding this hearing, but for all the work that you and your 
colleagues have done over the years to ensure that America has 
the safest, most reliable pipeline system in the world. My name 
is Paul Preketes. I am the senior vice president of energy 
delivery of Consumers Energy, based in Michigan. Consumers 
Energy provides natural gas service for heating and other uses 
to nearly 1.7 million customers in 54 of the 68 counties in 
Michigan's Lower Peninsula. It serves an area that spans 13,000 
square miles and includes 215 cities and villages. Among the 
largest areas served are Bay City, Flint, Jackson, Kalamazoo, 
Lansing, Macomb, Midland, Royal Oak, Saginaw, and Livonia. More 
than one-half of the utility's gas customers are in metro 
Detroit.
    I am here testifying today on behalf of the American Gas 
Association (AGA) and the American Public Gas Association 
(APGA). AGA, founded in 1918, represents 200 local distribution 
companies that deliver natural gas to more than 64 million 
homes, businesses and industries throughout the United States. 
A total of 69 million residential, commercial, and industrial 
customers receive natural gas in the U.S., and AGA's members 
deliver 92 percent of all the natural gas provided by the 
Nation's natural gas utilities. AGA is an advocate for local 
natural gas utility companies and provides a broad range of 
programs and services for member natural gas pipelines, 
marketers, gatherers, international gas companies and industry 
associates.
    APGA is the national association of publicly-owned natural 
gas distribution systems. There are currently approximately 950 
public gas systems in the United States. Publicly-owned gas 
systems are not-for-profit, retail distribution entities that 
are owned by, and accountable to, the citizens they serve. They 
include municipal gas distribution systems, public utility 
districts, county districts, and other public agencies that 
have natural gas distribution facilities.
    The gas utility's distribution pipes are the last critical 
link in the natural gas delivery chain. Local distribution 
companies, or LDC's, are the ``face of the industry.'' Our 
customers see our name on their bills, our trucks in the 
streets, and our company sponsorship of many civic initiatives. 
We live in the communities we serve and interact daily with our 
customers and with the state regulators who oversee pipeline 
safety. Consequently, we take very seriously the responsibility 
of continuing to deliver natural gas to our communities safely, 
reliably, and affordably.
    Indeed, SAFETY is our business. It has to be, because the 
environment in which we work has several factors over which we 
have no direct control--such as the public, excavators, 
weather, floods, and earth movement. However, LDCs contend with 
these every day. Therefore as an industry, we make safety our 
number one priority--subscribing to the philosophy that safety 
is our number one priority, for our employees, our customer and 
the public. It all begins with the Tone at the Top and building 
a strong culture around safety. Natural gas utilities spend an 
estimated $6.4 billion each year in safety-related activities. 
Approximately half of this money is spent in compliance with 
federal and state regulations. The other half is spent as part 
of our companies' programs and activities that go beyond mere 
compliance, to ensure that our systems are safe and that the 
communities we serve are protected.

                      Excavation Damage Prevention

    The Pipeline Inspection, Protection, Enforcement and Safety 
Act of 2006 (PIPES Act) contained several substantive 
provisions that focused on LDC related issues. The most 
important of these is the section on Excavation Damage 
Prevention. Excavation damage is the leading cause of natural 
gas distribution pipeline incidents. The latest statistics from 
DOT show that in 2007, over forty percent of incidents on 
distribution pipelines were from third party excavation or 
outside forces like automobiles hitting gas meters. If you 
exclude incidents classified as ``Miscellaneous'' or ``Other,'' 
this statistic increases to almost eighty percent.
    In writing the law, this committee created an incentive for 
states to adopt stronger damage prevention programs. This was a 
major step towards expanding the safety culture beyond just our 
industry--and creating a situation where all the stakeholders 
can come together to focus on this issue. For over 3 years, a 
group of excavation damage prevention stakeholders (composed of 
excavators, underground facility owners, natural gas facility 
operators, safety advocates, state regulators, and the public) 
worked together to craft the nine ``Elements'' that were 
eventually contained in the PIPES Act of 2006. We commend the 
Energy and Commerce Committee for the attention that was given 
to improving state excavation damage prevention, and for having 
made the nine elements a centerpiece of the bill. We are now 
focused on building upon that earlier national stakeholder 
collaboration. I am happy to report that, in 2007, key national 
stakeholders formed the Excavation Damage Prevention Initiative 
(EDPI) to build upon the good work done by this committee. The 
EDPI produced a document entitled ``A Guide to the 9 Elements'' 
to provide guidance to states working to incorporate the ``9 
Elements'' into their existing pipeline safety programs.
    Last month AGA partnered with the National Association of 
Regulatory Utility Commissioners (NARUC), during its February 
2008 Winter Meetings in Washington, D.C., to continue work on 
this issue. With AGA's support, NARUC passed a resolution 
urging state commissions to review their current excavation 
damage prevention programs and to consider the EDPI's ``Guide 
to the 9 Elements'' document in making revisions and 
improvements in order to incorporate fully the nine Elements of 
the PIPES Act. There is still much work to be done. Each state 
is unique and the local stakeholders have to decide how best to 
implement the nine elements. Sometimes enforcement resides with 
the state attorney general, while in other states the utility 
commission can enforce damage prevention rules. With the EDPI 
guidance document, the support of PHMSA, and the national trade 
associations, we believe local stakeholders can make the 
legislative and regulatory changes needed to enhance damage 
prevention programs in their particular states.
    Another example of progress with damage prevention was the 
Common Ground Alliance's successful roll-out of 811, the 
national ``Call Before You Dig'' number that was kicked off in 
May 2007. The Common Ground Alliance (CGA) is an association 
dedicated to ensuring public safety, environmental protection, 
and the integrity of underground services by promoting 
effective damage prevention practices. Its members focus on 
reducing damages to all underground facilities in North America 
through shared responsibility among all stakeholders. Members 
include pipeline operators, excavators, locators, road 
builders, public works, state One Call organizations, federal 
and state regulators, and many others. The CGA has grown to 
over 1,300 individual members, 165 member organizations, and 40 
sponsors. The initial 811 roll-out effort included 179 
broadcasts in 73 media markets. The coverage reached 75 million 
Americans. Stakeholders are now incorporating the ``Call 811'' 
message in their advertising material. I have had the privilege 
or representing the natural gas industry and serving as the CGA 
board chair.

                   Distribution Integrity Management

    The other significant section of the bill that related to 
natural gas utilities was the section on Distribution Integrity 
Management Programs (DIMP). For 2 years, PHMSA has been 
diligently working with key stakeholders to develop a DIMP 
regulation. We are very supportive of this effort, and are 
strong advocates of integrity management. We fully support 
taking a responsible course of action in seeking to enhance 
distribution pipeline integrity, and we are confident that 
PHMSA's work to date will result in a DIMP rule that enhances 
safety while providing flexibility. The collaboration between 
PHMSA, state regulators, utility system operators, fire 
marshals, and the public has been exceptional. PHMSA should be 
commended for leading such an effort. It should be noted that 
distribution integrity management impacts a large portion of 
America's energy infrastructure. The diversity among gas 
distribution pipelines makes it impractical to establish 
prescriptive requirements that would be suitable for all 
circumstances.
    In order to achieve maximum distribution safety 
enhancements, a high-level rule that contains an appropriate 
level of flexibility including a strong risk assessment 
component, and which takes into account all the various 
stakeholder concerns, is essential. This will allow each 
natural gas facility operator to manage their system and ensure 
a goal of actually improving system safety based on individual 
company systems performance characteristics, and not simply 
following prescriptive rules that, in many cases, do not 
enhance the safety of particular systems. It would be most 
appropriate to require that all distribution pipeline 
operators, regardless of size, implement a risk-based integrity 
management program that would contain seven key elements:
    1. Develop and implement a written integrity management 
plan.
    2. Know the infrastructure performance.
    3. Identify threats, both existing and of potential future 
importance.
    4. Assess and prioritize risks.
    5. Identify and implement appropriate measures to mitigate 
risks.
    6. Measure performance, monitor results, and evaluate the 
effectiveness of its programs, making changes where needed.
    7. Periodically report performance measures to its 
regulator.
    These seven elements will be clarified by way of guidance 
being developed by a nationally recognized standards body to 
provide a basis for operator compliance and for regulator 
enforcement.
    Though PHMSA did not meet the December 2007 deadline for 
promulgating a final rule, we believe the progress that has 
been made thus far is significant. Furthermore, given the 
magnitude of the distribution system (2 million miles), the 
number of parties involved (including federal regulators, 50 
state agencies and over 1200 operators), the time taken to 
ensure a workable regulation that can be implemented and 
enforced has been time well spent.

                           Excess Flow Valves

    The PIPES Act also contained a provision requiring the 
installation of excess flow valves (EFVs) on new or fully 
replaced service lines on single family residential dwellings. 
In situations where there is a rapid release of gas, EFVs can 
effectively stop the flow of gas. It should be noted that 
excess flow valves are not effective in stopping the release of 
gas in small leaks. Therefore, while EFVs are a helpful safety 
device, they are only one component of pipeline safety.
    The industry has made progress in installing these devices. 
In 2006, AGA completed a survey of its members when pipeline 
safety legislation was being reauthorized. At that time, about 
66 percent of the new services installed by its members 
included excess flow valves. In 2007 AGA sponsored a workshop 
to explain the benefits and limitations of excess flow valves. 
In addition, the implementation of EFVs has been discussed 
within AGA's technical committees. Gas utilities that have 
voluntarily installed EFVs explained the technical challenges 
involved with installing EFVs in various situations.
    Since the passage of the PIPES Act and the AGA workshop, 
more operators have voluntarily begun to install EFVs on new 
service lines where installation is feasible. The rate will be 
close to 100 percent once the regulatory requirements are 
finalized. I say close to 100 percent because there are certain 
facilities with low pressures or significant particles or 
liquids in the natural gas, excess flow valves should not be 
installed.

                        Control Room Management

    AGA and APGA believe that the vast majority of operators 
have already implemented effective procedures for control room 
operations. This is in part confirmed by the fact that there 
are no reportable natural gas incidents from the past 10 years 
in which the primary cause was the action of a gas controller. 
In fact, our associations are not aware of any natural gas 
distribution incidents attributable to a natural gas 
controller's actions. Even with no incidents attributable to 
the actions of a gas distribution controller, gas utilities 
support legislative requirements to enhance control room 
operations.
    AGA has a gas control committee that meets regularly to 
discuss technical issues, develop guidelines, and share best 
practices. PHMSA's staff has attended the gas control fall and 
spring meetings of the last few years. This has helped both 
parties understand the safety and operational issues necessary 
for new regulations.
    There is a vast diversity in the control rooms of gas 
distribution, gas transmission and hazardous liquid operations. 
Natural gas has the properties of a compressible fluid that can 
expand and contract. Gas transmission operations operate at 
high pressures and have compressor stations about every 150 
miles. Distribution pipelines operate at much lower pressures 
and rarely ever have compressors. Furthermore, the ``control 
rooms'' of many small utilities may do little more than 
indicate the pressure and flowrate, at one or more gate 
stations, where the utility receives natural gas from its 
transmission supplier. Hazardous liquid pipelines primarily 
move incompressible fluids, like crude oil across the country, 
but are vastly different from gas transmission pipelines.
    PHMSA held a workshop on May 23, 2007 in Washington DC to 
address the control room management issue of all three pipeline 
sectors. Pipeline controllers from all three pipeline sectors 
provided technical presentations, along with PHMSA staff. All 
parties agree that there is vast diversity in the pipeline 
operations of gas distribution, gas transmission, hazardous 
liquids, and large and small operators. Because of this 
diversity, safety processes appropriate for one operator are 
often not practical for another operator. Furthermore, such 
diversity makes a uniform national regulation difficult to 
develop and implement. AGA believes that it is in all 
stakeholders' best interests for the final regulation to be 
written at a high level, reasonably providing operators the 
flexibility to adopt practices and procedures which are 
appropriate to their own system.
    PHMSA has made much progress in developing a proposed rule. 
PHMSA has presented nine elements to enhance pipeline control 
room management. We support these enhancements.
    1. Clearly define the roles and responsibilities of 
controllers to ensure their prompt and appropriate response to 
abnormal operating conditions.
    2. Formalize procedures for recording critical information 
and for exchanging information during shift turnover.
    3. Establish shift lengths and schedule rotations to 
protect against the onset of fatigue; and educate controllers 
and their supervisors in fatigue mitigation strategies and how 
non-work activities contribute to fatigue.
    4. Periodically review SCADA displays to insure controllers 
are getting clear and reliable information from field stations 
and devices.
    5. Periodically audit alarm configurations and handling 
procedures to provide confidence in alarm signals and to ensure 
controller effectiveness.
    6. Involve controllers when planning and implementing 
changes in operations, and maintain strong communications 
between controllers and field personnel.
    7. Determine how to establish, maintain, and review 
controller qualifications, abilities and performance metrics, 
with particular attention to response to abnormal operating 
conditions.
    8. Analyze operating experience including accidents and 
incidents for possible involvement of the SCADA system, 
controller performance, and fatigue.
    9. Validate the adequacy of controller-related procedures, 
training and the qualifications of controllers, possibly 
annually through involvement by senior level executives of 
pipeline companies.
    Let me summarize my comments on pipeline controllers by 
saying that all pipeline controllers fall under the provisions 
of the operator qualification (OQ) regulations. Therefore, 
these individuals are already trained and qualified in 
accordance with these regulations and company OQ programs. 
Controllers must be proficient in communication protocols, in 
recognizing abnormal operating conditions, and in emergency 
response protocols. Training is extensive and pipeline 
companies have elements in their training plans, such as 
training on the fundamental characteristics of natural gas, 
understanding of the individual pipeline system, supervised 
operation of the pipeline system, and written exams. All of 
these steps must be completed and proficiency demonstrated 
before an individual receives management approval to operate 
the system without direct oversight of a more experienced and 
qualified controller.

                   Transmission Integrity Management

    The regulation for transmission integrity management was 
finalized in December 2003. The Associations believe the 
program has been very successful in enhancing safety. Operators 
are ahead of schedule in accessing transmission pipelines. More 
than 50 percent of the total pipeline miles in high consequence 
areas have been inspected under the integrity management 
regulation, well before the December 2007 deadline. Industry, 
regulators, and technical consultants have worked to develop 
and implement new technologies that can assess transmission 
pipelines in situations where internal inspection devices or 
pressure testing are not feasible. These indirect assessment 
methods, like External Corrosion Direct Assessment, have been 
very beneficial to gas utilities that operate transmission 
pipelines.
    Operators have learned much during the implementation of 
the regulation and AGA believes there can be some improvements 
in the current regulation. AGA supports the testimony of the 
Interstate Natural Gas Association of America and the effort to 
establish technically based re-assessment intervals similar to 
the ASME B31.8s consensus standard in lieu of the existing 
seven-year intervals.

                                Summary

    The natural gas utility industry is proud of its safety 
record. We are committed to continuing our efforts to operate 
safe and reliable systems and to strengthen excavation damage 
prevention laws in every state.
    Representatives from the public, state and federal 
government, industry, and other stakeholders have reached 
consensus on a framework for Distribution Integrity Management. 
The seven basic elements necessary for an effective program can 
be incorporated into a risk-based, performance-oriented federal 
regulation. The installation of excess flow valves will be part 
of DIMP. Even before the mandated effective date, there has 
been an increase in the number of new or replaced service lines 
being installed with this safety device.
                              ----------                              

    Mr. Wynn. Thank you. We will now hear from Mr. Felt.

    STATEMENT OF TIMOTHY FELT, PRESIDENT AND CEO, EXPLORER 
        PIPELINE, CHAIRMAN, ASSOCIATION OF OIL PIPELINES

    Mr. Felt. Thank you, sir, that is the correct pronunciation 
of my name.
    Mr. Wynn. All right.
    Mr. Felt. Members of the subcommittee, my name is Tim Felt. 
I am President and CEO of Explorer Pipeline, headquartered in 
Tulsa, Oklahoma. I am Chairman of the Association of Oil 
Pipelines and Power Leadership of the Pipeline Segment of the 
API. I appreciate the opportunity to appear to today on behalf 
of AOP and API. Together these organizations represent the vast 
majority of U.S. oil pipeline transportation companies. It has 
been just over a year since the enactment of the Pipeline 
Inspection, Protection, Enforcement, and Security Act of 2006. 
On behalf of our members I wish to thank you for your 
leadership in passing that comprehensive and very important 
legislation.
    As a subcommittee reviews the current state of pipeline 
safety and the progress that has been made since the PIPES Act, 
there are a few main points that I would like to emphasize. 
First, industry and DOT have cooperated to achieve continued 
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. In 2 weeks the oil 
pipeline industry will be in compliance with the deadline for 
the 7 year baseline assessment of the Integrity Management 
Plan. We are proud of the demonstrated improvement in safety 
from this program and look forward to continual improvement. 
The cornerstone of the PIPES Act was a focus on underground 
damage prevention. The oil pipeline industry is working 
aggressively with other industry and government stakeholders to 
encourage and assist the states implementation of the nine 
elements to effective damage prevention. We believe the 
implementation of the other requirements in the PIPES Act will 
continue to effectively improve pipeline safety and 
reliability.
    About 40 percent of the total U.S. energy supplied comes 
from petroleum but the transportation sector depends on 
petroleum for 96 percent of its energy. Two-thirds of domestic 
crude oil or refined products transportation is provided by 
pipeline. Pipelines do this safely and efficiently, and the 
cost to transport a gallon of petroleum by pipeline is very 
low, typically two to four cents per gallon. Oil pipelines are 
common carriers whose rates are controlled by a Federal Energy 
Regulatory Commission. Oil pipeline income is driven only by 
the volume transported and does not depend on the price of 
products transport; in fact, high oil and refined product 
prices have a negative impact on oil pipeline income by raising 
power costs and reducing demand for petroleum.
    Oil pipeline operators have been subject to the DOT's 
Pipeline Integrity Management Regulations since March 2001. 
DOT's inspections of operators' plans shows that integrity 
testing will eventually cover approximately 82 percent of the 
Nation's oil pipeline infrastructure almost four times the 
original estimate.
    In the next 2 weeks large oil pipeline operators will be in 
compliance with the required baseline testing deadline of the 
highest risk segments set by the regulations. DOT has audited 
each of these operators under these regulations at least two 
times. An initial quick hit audit and a subsequent full audit. 
Although operating under a different deadline the same program 
has been followed for the smaller operators.
    Operators are repairing conditions in need of repair and 
less serious conditions that are found in the course of 
investigating certain conditions. There have been over 3,800 
conditions repaired or mitigated that needed immediate 
attention. Over 14,000 other conditions, repaired on a 
scheduled basis and an additional 32,000 features repaired that 
were not required by the program. Operators are fixing what 
they find often going beyond the requirement of the law.
    As a result of this program the oil pipeline spill record 
has improved dramatically in the last 8 years, as the exhibits 
show. The first chart shows a decline of over 40 percent in 
both the number of spills and the volume released from pipeline 
facilities. When measured just along the right of way the area 
with the most direct potential to affect the public and the 
environment both the number and volume of spills have declined 
over 50 percent. For each cause category the trend is down.
    As you see in the second chart the most dramatic area of 
improvement has been in the decline and corrosion related 
spills nearly 70 percent reduction in less than 8 years. The 
Integrity Management Program is clearly a major success. We 
believe full implementation of the PIPES Act will make this 
good program better. While the number of spills caused by third 
party damage has declined significantly, these incidents remain 
of critical concern to our industry because they result in the 
disproportionate share of the consequences. Damage to buried 
pipelines during excavation is a persistent preventable and 
significant cause of pipeline releases. Damage prevention 
programs are almost totally controlled by the laws of the 
states and the effectiveness of the framework and enforcement 
of damage prevention laws varies among the states.
    As a board member and chairman of the Common Ground 
Alliance, an organization that Congress helped start to bring 
the key interests and damage prevention together in the 
cooperative effort to improve safety, I can affirm the 
importance of federal leadership in this area. The PIPES Act 
provided clear guidance for an effective state program in the 
nine elements to effective damage prevention.
    From the industry prospective we have also stepped up our 
efforts working with other stakeholders to approach the various 
states on legislative and/or regulatory improvements. We have 
committed both financial and staff resources at the company 
association level to work for improvements in these state 
programs and are encouraged with the results.
    Let me wrap up real quick and say that while biofuels is 
not the subject of this hearing, I would like to take the 
opportunity to update the committee on the status of oil 
pipeline industry's efforts in this area. Last year the 
industry engaged in an accelerated R&D effort to understand and 
find solutions to problems of stress corrosion cracking 
identified with the presence of ethanol in some pipelines and 
tank facilities. Members of the----
    Mr. Wynn. Mr. Felt, I am going to have to ask you to wrap 
up, we are going to try to get questions in before this vote.
    Mr. Felt. OK. Thank you very much.
    [The prepared statement of Mr. Felt follows:]

                         Statement of Tim Felt

                              Introduction

    I am Tim Felt, President and CEO of Explorer Pipeline and 
Chairman of the Association of Oil Pipe Lines (AOPL). I 
appreciate this opportunity to appear before the subcommittee 
today on behalf of AOPL and API.
    AOPL is an unincorporated trade association representing 48 
interstate common carrier oil pipeline companies. The 
membership is predominately domestic, but also includes 
companies affiliated with Canadian pipelines. AOPL members 
transport nearly 85% of the crude oil and refined petroleum 
products moved by pipeline in the United States. API represents 
over 400 companies involved in all aspects of the oil and 
natural gas industry, including exploration, production, 
transportation, refining, and marketing. Together, these two 
organizations represent the vast majority of the U.S. pipeline 
transporters of petroleum products.
    Explorer Pipeline operates a 1,880-mile pipeline system 
that transports gasoline, diesel fuel and jet fuel from the 
Gulf Coast to the Midwest. Explorer is based in Tulsa, 
Oklahoma, and serves Houston, Dallas, Fort Worth, St. Louis and 
Chicago. Through connections with other products pipelines, 
Explorer serves more than 70 major population centers in 16 
states. Explorer currently transports refined products with 
more than 72 different product specifications for over 60 
different shippers. The company does not buy or sell petroleum 
products; it only provides transportation services. Explorer is 
owned by subsidiaries of Chevron, Conoco Phillips, Marathon, 
Sunoco, American Capital, and Shell.

                                Summary

    It has been over just over a year since enactment of the 
Pipeline Inspection, Protection, Enforcement, and Security Act 
of 2006 (PIPES Act). On behalf of the members of AOPL and API, 
I wish to thank the Members of this subcommittee, and the full 
committee, for their leadership in passing that important 
legislation. As the subcommittee reviews the current state of 
pipeline safety and the progress that has been made since the 
PIPES Act of 2006 became effective, I would like to update the 
committee on the ongoing safety activities of the oil pipeline 
industry. First, the oil pipeline industry will complete the 7 
year baseline testing for the Integrity Management Program by 
March 31, 2008. We are proud of the demonstrated improvements 
in safety this program has produced and look forward to 
continuing the process used by PHMSA and industry that has 
brought about this improvement.

               The Role of Pipelines in Petroleum Supply

    About 40 percent of total U.S. energy supply comes from 
petroleum, 96 percent of the energy used in the transportation 
sector. Fully two-thirds of the ton-miles of domestic petroleum 
transportation are by pipeline. The major alternatives to 
pipelines for delivery of petroleum are tank ship and barge, 
which require the source and user be located adjacent to 
navigable waters. Trucks and rail also carry petroleum, but are 
limited in very practical ways in the volume they can 
transport. In fact, pipelines are the only reasonable way to 
supply large quantities of petroleum to most of the Nation's 
consuming regions. Pipelines do so efficiently, safely and 
cost-effectively. Liquid pipelines are the backbone of the 
fuels industry. Pipelines provide a transportation service 
only. As common carriers, pipeline rates are controlled by the 
Federal Energy Regulatory Commission. Pipelines have no 
influence over crude oil or refined product prices nor do they 
profit from their sale. The continued safe, reliable operation 
of this critical infrastructure is an appropriate public policy 
concern and an important joint responsibility of the industry I 
represent, the Department of Transportation, and the Congress.

        Progress Report on Pipeline Safety Integrity Management

    Since March 2001 (for large operators) and February 2002 
(for small operators), oil pipelines have been subject to a 
mandatory federal pipeline safety integrity management rule 
(Title 49, section 195.452) administered by the Pipeline and 
Hazardous Material Safety Administration (PHMSA). The oil 
pipeline industry's experience with integrity management 
preceded the enactment of the Pipeline Safety Improvement Act 
of 2002. Large operators will complete the required 100 percent 
of their baseline testing of the highest risk segments by the 
March 31, 2008 deadline set by the integrity management 
regulations. PHMSA has inspected the performance of each of 
these operators under the regulations at least twice--an 
initial ``quick hit'' inspection and a subsequent full 
inspection. Regular inspections are a permanent part of the 
future.

                      Improvement in Spill Record

    The oil pipeline spill record has improved dramatically in 
the last 8 years as the attached exhibit shows. The Pipeline 
Performance Tracking System (PPTS), a voluntary industry 
program established by AOPL and API, has collected extensive 
oil pipeline performance data since 1999. The first page of the 
exhibit shows a decline of over 40% in both the number of 
spills and the volume released from pipeline facilities. When 
measured just along the pipeline right-of-way, the area with 
the most direct potential effect on the public and the 
environment, both the number and volume of spills have declined 
over 50%. As you can see in the breakdown on page 2 of the 
exhibit, the most dramatic area of improvement from the 
integrity management program has been the decline in corrosion 
related spills--nearly 70% in less than 8 years. The integrity 
management program is clearly a major success.

                           Damage Prevention

    From the liquid pipeline perspective, the cornerstone of 
the PIPES Act was the focus on underground damage prevention. 
While the number of spills caused by third party damage has 
declined significantly, these incidents remain of critical 
concern to the industry because they result in a 
disproportionate share of the consequences. Damage to buried 
pipelines during excavation is a persistent, preventable, and 
significant cause of pipeline releases. Releases caused by 
excavation damage tend to be more dramatic, larger, and more 
likely to threaten the public and the environment in comparison 
to releases from other causes. Damage prevention programs are 
almost totally controlled by the laws of the States. The 
effectiveness of the framework and enforcement of damage 
prevention laws varies among the States. The affected interests 
in damage prevention are typically beyond the reach of any 
single regulatory authority, so often the most feasible 
approach is a cooperative one that brings affected interests 
together in a voluntary commitment to improvement.
    As a board member and Chairman of the Common Ground 
Alliance, an organization that Congress helped start to bring 
the key interests in damage prevention together in a 
cooperative effort to improve safety, I can affirm the 
importance of federal leadership in this area. The PIPES Act 
provided clear guidance for an effective state program in the 
``9 elements to effective damage prevention''. We hope the 
additional incentive in the form of financial resources will 
encourage the states to review their programs--from 
effectiveness of implementation to enforcement. We are very 
encouraged that the first round of solicitations is expected to 
draw a meaningful number of applicants.
    From the industry perspective, we have also stepped up our 
efforts, working with other stakeholders, to approach the 
various states on legislative and or regulatory improvements. 
We believe there are some model state programs that accommodate 
the needs of the broad group of stakeholders--from underground 
utilities to the construction industries--that could be 
emulated across a number of states. We have committed both 
financial and staff resources at the company and association 
level to work for improvements in these state programs. We are 
encouraged by the positive response from the states and hope 
this program will produce real improvements in damage 
prevention programs including increased state enforcement of 
laws and regulations. We commend Congress for putting priority 
attention on this problem and PHMSA for reaching out to the 
states and to the industry with such commitment to a common 
purpose.

                  Oil Pipelines Operated at Low Stress

    The PIPES Act required new regulations for oil pipelines 
operating at low stress. We support PHMSA's approach of 
implementing the PIPES Act requirement in a two phase approach. 
We support PHMSA's decision to phase in the rule, addressing 
first the larger-sized, riskier pipelines and addressing at a 
later date all other low-stress pipelines except those exempt 
from PHMSA's oversight as defined in 195.1(b).
    We look forward to PHMSA finalizing the regulation for 
phase-one implementation.

                    Pipeline Control Room Management

    The PIPES Act required the implementation of a plan to 
address human factors risks associated with control room 
operations. The liquid pipeline industry has held several 
workshops with industry controllers, alone and with PHMSA. Our 
members have a keen interest in the appropriate oversight of 
control room operations and already have some practices in 
place that address ergonomics, shift changes and schedules, 
alertness, appropriate training and qualification, definition 
of controller roles and responsibilities, and Management of 
Change. We have been in regular communication with PHMSA 
concerning an industry consensus standards effort underway to 
identify issues that operators should take into account when 
enhancing their plans and procedures. We believe that with the 
active participation of the senior PHMSA staff, these industry 
standards will inform as well as form the basis of the control 
room regulations.

                                Biofuels

    While biofuels is not the subject of this hearing, I would 
like to take this opportunity to update the subcommittee on the 
status of the oil pipeline industry's efforts in this area. 
Last year, the industry engaged in an accelerated R&D effort to 
understand and find solutions to the problem of stress 
corrosion cracking identified with the presence of ethanol in 
some pipeline and tank facilities. This research is being 
carried out under the auspices of the Pipeline Research Council 
International (PRCI) with the active support and participation 
of the PHMSA.
    Members of the research team believe the test results to 
date are very encouraging signs that the industry will be able 
to address the safety and technical challenges to pipeline 
transportation of ethanol. We will be pleased to provide a more 
detailed technical briefing for the committee by the research 
scientists at some future date.
    Dating to the early 1990s, operators have found that 
ethanol has lead to Stress Corrosion Cracking (SCC) in tankage 
and piping associated with blending, storage and distribution 
facilities. The safety concerns created by the development of 
SCC is the focus of the industry's R&D efforts. The test 
results to date indicate the following:
    * The origin and manufacturing process of ethanol has 
significant impact on development of Stress Corrosion Cracking 
(SCC);
    * The development of SCC is significantly reduced by 
decreasing oxygen content of fuel grade ethanol, regardless of 
its origin;
    * Potential means to mitigate SCC have been identified and 
are being tested;
    * Early test results indicate a blend of 90% gasoline 10% 
ethanol may be transported on existing pipelines without 
causing SCC.
    Another technical challenge to pipeline transportation of 
ethanol is maintaining product quality. Ethanol has an affinity 
for water which can be picked up as the product flows through 
the pipeline network. In current multi-product pipelines, small 
amounts of water enter the pipeline system through fuels as 
well as terminals and tank roofs. The industry expects that 
pipeline operators will be able to overcome this issue on an 
individual pipeline system basis.
    We will continue to keep the subcommittee and the rest of 
Congress informed of developments.

                               Conclusion

    We believe the industry efforts in concert with the PHMSA 
have clearly resulted in significant improvements in the safe 
operation of hazardous liquid and natural gas pipelines. We are 
committed to that program with a goal to continuous safety and 
environmental improvement.
    Thank you for the opportunity to testify before the 
Subcommittee on these important matters.
                              ----------                              

    Mr. Wynn. Thank you and we do have your full testimony and 
we will certainly take it to heart. We are going to move very 
briskly and try to conclude the hearing in view of the upcoming 
vote.
    Mr. Mason, if I understood you correctly, you said lower 
gas usage would impact research and development among other 
things. Was that--is that-- correct?
    Mr. Mason. It would lower gas consumption by residential 
consumers affects the entire rate structure utilities file with 
that commission. If that included R&D it will affect R&D. If it 
included capital improvements, it will affect that.
    Mr. Wynn. You proposed a decoupling of some sort?
    Mr. Mason. Well, what we have talked about at NARUC is a 
way of reformulating the rates that utilities file at the state 
level so that they will be held harmless from decreased 
consumption. The idea is that the revenue generated will be 
neutral.
    Mr. Wynn. Am I hearing you say that even though consumption 
is down you would maintain this rate level?
    Mr. Mason. Yes, because hypothetically what would happen 
is, let us say that per MCF you had two cents going toward 
something and the home was using 100 MCF, now that it is using 
80 MCF instead of, say, that two cents becomes 2.16, or 
something like that.
    Mr. Wynn. But you would actually increase?
    Mr. Mason. OK, but per home the same dollar amount flows 
through.
    Mr. Wynn. All right. And quickly, between Mr. Wright and 
Mr. Kessler there seems to be a disagreement regarding the 7 
year reassessment interval. I guess, I just want to ask, Mr. 
Wright, are you indicating that you do not believe that the 
waiver provisions would be adequate to address your concerns?
    Mr. Wright. Actually, we agree with the Deputy Secretary's 
recommendation, which does provide for statutory relief through 
that process. The difficulty between just relying on the waiver 
is that it is sort of an ad hoc approach that requires 
reinventing the wheel almost every time, and depending on what 
staff member you are in front of, you may get a different 
interpretation. If they had the backbone of some statutory 
guidelines it would make the process much more efficient and 
perhaps even, and I do not want to speak for PHMSA, but would 
reduce or make more efficient the effort.
    Mr. Wynn. Mr. Kessler, the thrust of your testimony was 
that we maintain the 7 year reassessment interval while you 
acknowledged that you thought the waiver was appropriate, why 
do you believe that satisfies Mr. Wright's concerns?
    Mr. Kessler. Well, Mr. Chairman, again the committee and 
Congress enacted that as a compromise with industry support and 
because, again, I think being able, if we are going to extend 
periods for reinspection, going with the risk-based approach, 
it should be on an individual pipeline basis based upon the 
risks of that particular pipeline. I would also point out that 
we had deregulation of sorts since--approaching the early '90s 
and it was coupled with a de-enforcement and the result was a 
disaster that we saw in Bellingham and in El Paso with six, 
eight kids killed in just over a year period. That is why the 
backstop of the 7 year but again the committee and we all 
agreed that there should be a way to extend those periods on a 
case-by-case basis if it was sound to do so.
    Mr. Wynn. Thank you. At this time I want to recognize Mr. 
Walden.
    Mr. Walden. Thank you, Mr. Chairman.
    Mr. Wynn [continuing]. For 5 minutes.
    Mr. Walden. Appreciate that. I just have one question I 
want to lay out there and get your input on and that involves 
the distribution of the user fees and Mr. Preketes, did I get 
close? Good. Do you think there can be a more equitable 
distribution of user fees to different pipeline sectors like 
transmission and distribution and Mr. Wright, maybe you can 
comment on that same issue as well.
    Mr. Preketes [continuing]. Well, AGA and APGA, 
respectively, disagreed with the written testimony regarding 
the user fees. We think the issue is not which segment of the 
industry pays user fee----
    Mr. Walden. Right.
    Mr. Preketes. Gas transmission or distribution but which 
end users of the natural gas pay the user fees. When Congress 
intended the user fees be put on the transmission pipeline, it 
was 100 percent of the gas flows through that pipeline so all 
end users end up paying that.
    Mr. Walden. Right.
    Mr. Preketes. But if you look at the country using 22 TCF, 
about half of that goes through the transmission pipes to 
customers and never goes through distribution. The other half 
goes to distribution, and if you put all that fee on the 
distribution we think it is an error because all end users 
eventually benefit from all those rules. Things like that are 
in there. Like control excavation damage, prevention, and 
integrity management, whether it be distribution or 
transmission we believe benefit all customers therefore keep 
the fee the way it is. Then all end users will pay the fees it 
equates.
    Mr. Walden. Mr. Wright, do you want to comment on that?
    Mr. Wright. Our position is now and has been that all 
stakeholders involved in and benefiting from the oversight and 
regulations and participating in the process should share in 
the fees.
    Mr. Walden. OK. All right. Mr. Chairman that is the only 
question I had. Given we are out of time, really. I apologize 
we have got a few others to ask but----
    Mr. Wynn. Well, we do have--you do have a few more minutes 
if you----
    Mr. Walden. I have got to get over there, so.
    Mr. Wynn. All right. Well, if there are no further 
questions I want to thank the panelists for their participation 
and their testimony. This will conclude the hearing. I would 
like to remind members that they may submit additional 
questions for the record to be answered by the relevant 
witness. The question should be submitted to the committee 
clerk within the next 10 days and the clerk will notify your 
offices of the procedures. Without objection, the committee is 
now--subcommittee, excuse me--is now adjourned.
    [Whereupon, at 1:00 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

    [GRAPHIC] [TIFF OMITTED] T0717.032
    

                                 
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