[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]






                        THE SAFETY OF HAZARDOUS
            LIQUID PIPELINES (PART 2): INTEGRITY MANAGEMENT

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

                               (111-128)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON

             RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             July 15, 2010

                               __________


                       Printed for the use of the
             Committee on Transportation and Infrastructure





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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman
NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
    Vice Chair                       DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
    Columbia                         VERNON J. EHLERS, Michigan
JERROLD NADLER, New York             FRANK A. LoBIONDO, New Jersey
CORRINE BROWN, Florida               JERRY MORAN, Kansas
BOB FILNER, California               GARY G. MILLER, California
EDDIE BERNICE JOHNSON, Texas         HENRY E. BROWN, Jr., South 
GENE TAYLOR, Mississippi                 Carolina
ELIJAH E. CUMMINGS, Maryland         TIMOTHY V. JOHNSON, Illinois
LEONARD L. BOSWELL, Iowa             TODD RUSSELL PLATTS, Pennsylvania
TIM HOLDEN, Pennsylvania             SAM GRAVES, Missouri
BRIAN BAIRD, Washington              BILL SHUSTER, Pennsylvania
RICK LARSEN, Washington              JOHN BOOZMAN, Arkansas
MICHAEL E. CAPUANO, Massachusetts    SHELLEY MOORE CAPITO, West 
TIMOTHY H. BISHOP, New York              Virginia
MICHAEL H. MICHAUD, Maine            JIM GERLACH, Pennsylvania
RUSS CARNAHAN, Missouri              MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California      CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois            CONNIE MACK, Florida
MAZIE K. HIRONO, Hawaii              LYNN A WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          JEAN SCHMIDT, Ohio
TIMOTHY J. WALZ, Minnesota           CANDICE S. MILLER, Michigan
HEATH SHULER, North Carolina         MARY FALLIN, Oklahoma
MICHAEL A. ARCURI, New York          VERN BUCHANAN, Florida
HARRY E. MITCHELL, Arizona           BRETT GUTHRIE, Kentucky
CHRISTOPHER P. CARNEY, Pennsylvania  ANH ``JOSEPH'' CAO, Louisiana
JOHN J. HALL, New York               AARON SCHOCK, Illinois
STEVE KAGEN, Wisconsin               PETE OLSON, Texas
STEVE COHEN, Tennessee               TOM GRAVES, Georgia
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey
DONNA F. EDWARDS, Maryland
SOLOMON P. ORTIZ, Texas
PHIL HARE, Illinois
JOHN A. BOCCIERI, Ohio
MARK H. SCHAUER, Michigan
BETSY MARKEY, Colorado
MICHAEL E. McMAHON, New York
THOMAS S. P. PERRIELLO, Virginia
DINA TITUS, Nevada
HARRY TEAGUE, New Mexico
JOHN GARAMENDI, California
HANK JOHNSON, Georgia
     SUBCOMMITTEE ON RAILROADS, PIPELINES, AND HAZARDOUS MATERIALS

                   CORRINE BROWN, Florida Chairwoman
DINA TITUS, Nevada                   BILL SHUSTER, Pennylvania
HARRY TEAGUE, New Mexico             THOMAS E. PETRI, Wisconsin
NICK J. RAHALL II, West Virginia     JERRY MORAN, Kansas
JERROLD NADLER, New York             GARY G. MILLER, California
ELIJAH E. CUMMINGS, Maryland         HENRY E. BROWN, Jr., South 
GRACE F. NAPOLITANO, California          Carolina
JASON ALTMIRE, Pennsylvania          TIMOTHY V. JOHNSON, Illinois
TIMOTHY J. WALZ, Minnesota, Vice     SAM GRAVES, Missouri
    Chair                            JIM GERLACH, Pennsylvania
MICHAEL A. ARCURI, New York          CHARLES W. DENT, Pennsylvania
CHRISTOPHER P. CARNEY, Pennsylvania  LYNN A. WESTMORELND, Georgia
ALBIO SIRES, New Jersey              JEAN SCHMIDT, Ohio
MARK H. SCHAUER, Michigan            CANDICE S. MILLER, Michigan
BETSY MARKEY, Colorado               VERN BUCHANAN, Florida
MICHAEL E. McMAHON, New York         BRETT GUTHRIE, Kentucky
THOMAS S. P. PERRIELLO, Virginia     AARON SCHOCK, Illinois
PETER A. DeFAZIO, Oregon             ANH ``JOSEPH'' CAO, Louisiana
JERRY F. COSTELLO, Illinois          PETE OLSON, Texas
BOB FILNER, California               VACANCY
EDDIE BERNICE JOHNSON, Texas
LEONARD L. BOSWELL, Iowa
RICK LARSEN, Washington
MICHAEL H. MICHAUD, Maine
DANIEL LIPINSKI, Illinois
STEVE COHEN, Tennessee
LAURA A. RICHARDSON, California
JAMES L. OBERSTAR, Minnesota
  (ex officio)











                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               TESTIMONY

Adams, Richard, Vice President, U.S. Operations, Liquids 
  Pipelines, Enbridge Pipelines..................................    18
Guttenberg, Hon. David, House District 8 - Area of Fairbanks, 
  Alaska, Alaska State House Minority Whip.......................    18
Jones, Greg, Senior Vice President, Technical Support Division, 
  Alyeska Pipeline Service Co....................................    18
Kuprewicz, Richard B., Public Member, PHMSA's Technical Hazardous 
  Liquid Pipeline Safety Standards Committee and President of 
  Accufacts, Inc.................................................    18
Quarterman, Hon. Cynthia L., Administrator, Pipeline and 
  Hazardous Materials Safety Administration......................     2

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Richardson, Hon. Laura, of California............................    45

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Adams, Richard...................................................    51
Guttenberg, Hon. David...........................................    57
Jones, Greg......................................................    60
Kuprewicz, Richard B.............................................    70
Quarterman, Hon. Cynthia L.......................................    79

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


 
HEARING ON THE SAFETY OF HAZARDOUS LIQUID PIPELINE (PART 2): INTEGRITY 
                               MANAGEMENT

                              ----------                              


                        Thursday, July 15, 2010

 House of Representatives, Subcommittee on 
       Railroads, Pipelines, and Hazardous 
                                 Materials,
    Committee on Transportation and Infrastructure,
                                            Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2167, Rayburn House Office Building, Hon. Corrine Brown 
[Chairman of the Subcommittee] presiding.
    Ms. Brown of Florida. The Subcommittee on Railroads, 
Pipelines, and Hazardous Materials will come to order.
    The Subcommittee is meeting today to hear testimony on 
pipeline operation management of the safety of hazardous liquid 
pipelines, more common known as ``integrity management.'' This 
hearing is the third in a series of oversight hearings the 
Subcommittee will hold as we look toward reauthorizing the 
Department's pipeline safety program.
    On February 1, 2000, in the wake of several tragic pipeline 
ruptures, PHMSA issued a Final Ruling, requiring pipeline 
operators to develop and implement a written Integrity 
Management Program. Under the program, operators are required 
to identify all of their pipeline segments that could affect a 
high-consequence area, such as a high-population area, an 
environmentally sensitive area, evaluate the integrity of such 
pipeline segments and repair and report certain defects 
identified as a result of these evaluations.
    A lot of successes came out of the Integrity Management 
Program. For example, operators have reported to PHMSA that 
they have made more than 31,000 repairs to hazardous liquid 
pipeline segments, that if left unaddressed, could have 
resulted in a spill. Of these, about 7,000 detects were 
considered to be so serious that immediate repairs were 
required under the regulations. Another 25,000 detects had to 
be repaired within a 60- to a 180-day time period.
    This is a real success, and I anticipate that we will see 
similar successes from the gas Integrity Management Program, 
but there is always room for improvement, and that is why we 
are here today.
    I hope we can get some of the areas that might need some 
refined tuning up front. We do have concerns about the 
Integrity Management Program of BP Exploration and Alyeska 
Pipeline Service. BP, as evidenced by the Deepwater Horizon 
spill, has a long history of taking too many risks and cutting 
corners to pursue economic growth and profits. BP Exploration 
was invited to this hearing, but could not attend.
    Recent press reports allege that Alyeska, at the direction 
of BP, which owns almost 50 percent of the company, is 
following in BP's footsteps by making dangerous cuts in safety 
and inflating the amount of money the company is spending on 
corrosion control. A day after these reports surfaced, the 
Alyeska President, who has worked for BP for almost 27 years, 
announced his resignation. Alyeska stated that his retirement 
was already planned, but the timing of this most recent 
announcement is questionable.
    I am concerned about a few recent incidents at Alyeska, one 
of which was a near miss indicident that resulted in the 
release of flammable vapors. According to PHMSA's Corrective 
Action Order, Alyeska did not verify the safety of the pipeline 
before it restarted operations.
    Another incident occurred at Pump Station 9, which lost 
power during firing testing. As a result, the station dropped 
off the radar screen at Alyeska Pipeline's control center. 
Crude oil began to flow without anyone realizing it, and in the 
end, 22,000 barrels of oil flowed into a relief tank and then 
spilled over, spilling another 5,000 barrels of oil onto the 
ground. Alyeska seemed to minimize the significance of this 
spill in its written testimony, stating that, because the oil 
spilled into secondary containment, no environmental damage or 
injuries occurred. The fact is, while the lining of the 
containment area is designed to prevent oil from leaking into 
the soil, when crude oil meets the air, it releases toxic gas. 
These gases have been proven to cause significant health 
effects in humans, and workers involved in the cleanup of this 
spill suffered the highest level of exposure.
    This last month, the National Institute of Environmental 
Health Sciences testified before Congress that, historically, 
the workers involved in the cleanup have reported the highest 
level of exposure and most acute symptoms when compared to 
subjects exposed in different ways. So I would caution Alyeska 
against minimizing the impact of this incident.
    With that, I welcome today's panelists, and thank you for 
joining us. I look forward to this hearing.
    I am pleased to introduce the Honorable Cynthia Quarterman, 
who is the Administrator of the Pipeline and Hazardous Material 
Safety Administration.
    Welcome. We are pleased to have you here with us this 
morning. Your entire written statement will appear in the 
record. Madam Administrator, please proceed.

  STATEMENT OF THE HON. CYNTHIA L. QUARTERMAN, ADMINISTRATOR, 
     PIPELINE AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION

    Ms. Quarterman. Thank you. Good morning.
    Chairwoman Brown, Ranking Member Shuster, if he should show 
up, and Members of the Subcommittee, thank you for the 
opportunity to appear today.
    Secretary LaHood, the employees of Pipeline and Hazardous 
Material Safety Administration, and the entire Department of 
Transportation all share public safety as their top priority. 
The Department is committed to preventing spills on all 
pipelines through aggressive regulation, oversight and 
enforcement.
    PHMSA is focused on improving the integrity of pipeline 
systems and reducing the risk of pipeline failure. Integrity 
Management Programs were created to ensure pipeline integrity 
in areas with the highest potential for adverse consequences, 
promote a more rigorous and systematic management of pipeline 
integrity and risk, improve the government's prominent role in 
the oversight of integrity plans, and assure the public's 
confidence in the safe operation of the Nation's pipeline 
network.
    PHMSA's regulations consist of prescriptive measures 
pipeline operators must follow and perform at standards that 
consider a pipeline's unique characteristics and operating 
conditions. Together, these regulations seek to prevent the 
leading causes of pipeline failure, and require operators to 
implement corrosion prevention, leak detection, and leak 
containment technologies.
    Integrity Management Programs ensure pipeline operators 
adequately identify, evaluate, and address risks of the entire 
pipeline systems. The integrity management rule specifies how 
pipeline operators must identify, prioritize, assess, evaluate, 
repair, and validate the liability of hazardous liquid 
pipelines in or near high-consequence areas. That rule also 
emphasizes the prompt detection of leaks through the monitoring 
of operational parameters and engineered leak detection 
systems. In addition, Integrity Management Programs are 
intended to improve an operator's analytic processes and risk 
management. We are proud to say integrity management is 
working.
    Since this program has been mandated, all hazardous liquid 
pipelines within high-consequence areas have been assessed. 
That assessment resulted in the identification and repair of 
over 35,000 dangerous conditions. In addition, 86 percent of 
hazardous liquid pipeline mileage has been assessed, and an 
additional 78,000 anomalies outside of high-consequence areas 
have been remedied.
    PHMSA has also ensured that operators comply with corrosion 
standards through inspection and aggressive enforcement. Since 
2000, PHMSA has issued 657 probable violations or procedural 
inadequacy notices involving corrosion, and has proposed $1.7 
million in fines.
    PHMSA has taken unprecedented steps to inform the public 
and all stakeholders about the protections provided by the 
Integrity Management Program and PHMSA's oversight. PHMSA has 
an integrity management Web site to provide information to the 
public on the rule as well as PHMSA's oversight of the program. 
This publicly accessible Web site includes hundreds of 
frequently asked questions to explain the rule's provisions and 
PHMSA's expectations. This transparency helps PHMSA improve its 
oversight and increase its stakeholder understanding and 
evaluation of its program.
    PHMSA looks forward to working with Congress to address 
issues related to hazardous liquid pipeline safety, including 
finding ways to be more effective in preventing pipeline 
failures and mitigating the effect of any failure. PHMSA very 
much appreciates the opportunity to report on hazardous liquid 
pipeline Integrity Management Programs.
    I would be happy to answer any questions that you might 
have today. Thank you.
    Ms. Brown of Florida. Thank you.
    Mr. Walz, you can ask any questions or make any opening 
statement that you want.
    Mr. Walz. Thank you, Madam Chairwoman, and thank you for 
holding this important hearing. I certainly wish more of my 
colleagues were here.
    Ms. Quarterman, thank you for coming back here again. You 
have been a regular up here, and I appreciate that. Just a 
couple of thoughts for you.
    In 2006, the Inspector General over at DOT reported 
concerns about operators' overreliance on integrity management 
assessments. Is that a concern of yours or have we fixed that 
in the subsequent 4 years?
    Ms. Quarterman. I don't believe there were any specific 
recommendations that came out as a result of the IG's findings. 
However, the program did go in and try to remediate the 
concerns that were addressed by the Inspector General by 
following up on reporting errors that had been made by 
operators, and now it is a regular part of our inspection 
protocol that they should review reports that have been made 
and whether the data has been accurate or not.
    Mr. Walz. OK. Tell me through this procedure, if you can, 
Ms. Quarterman: How do I know of the integrity and of the 
safety of the pipelines in southern Minnesota today? How would 
I go about finding that out? How do I know? How do I verify? 
How do I assure that somebody is not just checking the block on 
a form? How do I know that that integrity is real, in the 
ground, and how do we verify that?
    Ms. Quarterman. Well, the operator is the first person 
responsible for ensuring that the integrity of a pipeline is 
sound. Historically, the program had produced a series of 
regulations that were very prescriptive in nature and 
essentially required or allowed a pipeline operator to just 
comply with those minimal technical requirements. The 
inspectors at the time would go out and do what you said, 
essentially check a box to make sure that those prescriptive 
requirements were met.
    The Integrity Management Program was intended to create a 
systematic approach for pipeline operators, one in which the 
inspectors could check what they were doing. The Integrity 
Management Programs should take into account the individual 
characteristics of each operator's pipeline--size, location, 
product being shipped, all of that.
    As a result of that program being in place, we have created 
a new inspection protocol, and I will tell you our Integrity 
Management Program inspections usually include three to five 
engineers on a team, and they go out for 3 to 4 weeks. This is 
the inspection protocol that they go through. It is extremely 
thorough, extremely complicated.
    Mr. Walz. This comes to a good point, and I was going to 
ask: Are all pipeline operators created equal? Obviously not in 
terms of size, product and all that. Are they created equal in 
their culture of safety?
    Ms. Quarterman. Unfortunately not.
    Mr. Walz. OK. Does the Integrity Management Program 
compensate for that in terms of assuring public safety if we do 
have--for lack of a better term--a bad actor in this business? 
Are we capturing that or does it come back to the issue, as you 
said, of fundamentally when I asked the question of southern 
Minnesota, and you said it basically falls upon the operator?
    Ms. Quarterman. Well, that is the first line of defense. We 
do have inspectors to go out and inspect, obviously. The 
purpose of the Integrity Management Program was to do just what 
you said, to try to help embed into the industry a culture of 
safety by requiring them to look at the details of their 
operations and go through an assessment of their pipeline and 
of the situation surrounding their pipelines to come up with 
the best plan for their particular pipelines as opposed to just 
abdicating responsibility altogether and saying, OK, well, our 
pipeline meets a certain recommended practice in terms of the 
type of steel, and that is it.
    Mr. Walz. Is it unfair for us to draw conclusions to 
Deepwater Horizon and how the integrity management there was 
given over to the operators, obviously, to a point where we 
didn't catch an error? Is that unfair? Is it apples to oranges 
here or is it similar in terms of the culture and the 
redundancies of safety to say, yes, Deepwater Horizon should 
show us something about pipelines?
    Ms. Quarterman. Well, I think there are lessons for all of 
us to learn from the Deepwater Horizon incident.
    One of those lessons--and I know there is an ongoing 
investigation, but based on the public information that has 
been made available is the role of contractors in industry, and 
it is not just in offshore operations. It is true across all 
industries, and it is also true in the pipeline industry and 
one in which we have to take a very close look at how operators 
are managing their contractors.
    We are reviewing opportunities to create a further system 
for quality management systems to ensure the contractors that 
are hired by companies meet the same requirements as those 
people who are on the ground every day--or who should be on the 
ground.
    Mr. Walz. Very good. Thanks, Ms. Quarterman.
    I yield back.
    Ms. Brown of Florida. Thank you.
    Mr. Shuster.
    Mr. Shuster. I thank the Chairwoman, and I welcome the 
administrator. You have become a regular guest with us here. I 
appreciate your coming up here and spending time with us.
    I really don't have any questions for you. I think I will 
probably ask you many times over all the questions that I have.
    I am not going to read my whole statement, but I would like 
for the entirety to be put in the record.
    I would like to point out that, of course, today's hearing 
is on Integrity Management Programs and that pipelines are only 
required by law to test the high-risk areas, but in practice, 
many of them do much more than that. Our next witness from 
Enbridge will talk about how only 40 percent of their system is 
in high-risk areas, but they perform internal inspections on 
nearly 100 percent of their pipelines. Only 40 percent of the 
Transatlantic Pipeline passes through high-risk areas, but they 
hold the entire pipeline to the high-risk standard. So I think 
that is important to point out.
    Again, thank you, Administrator Quarterman, for being here, 
and I look forward to hearing our other panel of witnesses.
    I yield back.
    Ms. Brown of Florida. Thank you.
    Mr. Cummings.
    Mr. Cummings. Thank you very much, Madam Chairlady, and 
thank you for holding this hearing.
    Ms. Quarterman, let me just ask you a few questions.
    According to your Web site, since the integrity management 
rule was implemented in 2001--is that right? Was it 2001?
    Ms. Quarterman. It essentially started around 2000, 2001, 
2002. There was a layering of who it was applied to.
    Mr. Cummings. Since that time, pipeline operators have made 
almost 32,000 repairs to hazardous liquid pipeline segments 
that could have affected a high-consequence area if there was a 
release. How does PHMSA verify that each of these repairs has, 
in fact, been made and made to a standard that would be 
satisfactory?
    Ms. Quarterman. During our integrity management inspection 
process, we review the data that the operators have that show 
where these particular anomalies were and the fact if they were 
repaired or not. There may be spot-checking on a particular 
repair, but we certainly are not there every day to review it 
as a repair is done. We do, during our inspection process, do a 
thorough review of those particular incidents where they should 
have done a repair to ensure that it has been performed.
    Mr. Cummings. But is that spot-checking? I mean do you 
actually go out and look at each situation?
    Ms. Quarterman. We don't have the personnel to go out and 
look at each situation.
    Mr. Cummings. So it is just a matter of taking somebody's 
word. Is that basically it?
    Ms. Quarterman. On an annual basis, the management of each 
pipeline operator has to certify the reports of repairs that 
have been performed on their pipeline. So, while we can't go 
out there individually, if it were the case that someone 
fraudulently wrote down that they had done a repair, we would 
be, obviously, able to go after them on criminal charges.
    Mr. Cummings. Well, you know, one of the things that we 
have seen with BP is--and I am trying to put this nicely. There 
have been some questionable integrity issues, and the sad part 
is, when these issues come along, they cannot only be harmful--
they can be deadly--and I guess sometimes management has to say 
to themselves, you know, do I take the risks? I mean is profit 
more important than safety?
    I guess I am just asking: Has there ever been a time when 
folks actually went out and even spot-checked, I mean at any 
time? Do you follow me?
    Ms. Quarterman. Yes, I follow you.
    Mr. Cummings. We are talking about verifying. Just going 
back to Ronald Reagan, you know, you can believe them, but you 
have got to verify.
    I guess the only reason I am raising this is because of the 
situation that we find ourselves in right now where we assume--
see, sometimes in this country, I think we assume too much. We 
assume, assume, assume, and we assume that when the rubber 
meets the road that everything is going to be fine. Then when 
the rubber comes to meet the road, we discover there is no 
road. I think that is what happened in Katrina. I think that is 
what has happened here.
    Also, as Chairman of the Coast Guard Subcommittee, I talk 
about this whole idea of making sure that there is integrity in 
all of our systems. So I was just wondering.
    Go ahead.
    Ms. Quarterman. Yes, we do do field inspections that spot-
check repairs. When an inspector goes in to look at the 
integrity management plan, they look at the list of locations 
where these significant anomalies were found as well as the 
repair record to double check and make sure that there is 
support for the fact that a repair was done. In addition, there 
are spot-checks done in the field.
    Mr. Cummings. You know, the IRS, when you talk to them 
about why they audit people, there are certain things that they 
put in their computer, certain information that triggers 
inspections. I was wondering, is there any triggering 
information, mechanisms, data, whatever, that would 
automatically cause alarm bells to go off and for you all to do 
these spot checks you are talking about other than your routine 
ones?
    Ms. Quarterman. Well, certainly, if in looking at the 
paperwork something were to appear to be amiss--and I can tell 
you there has been an instance where some welding records were 
amiss, and we are following up on that--then they would go and 
check it.
    So, yes. The inspectors are engineers, and they are trained 
to look at this data, and if something looks weird--for 
example, if a record keeps repeating itself over and over and 
over again and it is clear it is not addressing the issue--
then, yes, there are triggering mechanisms.
    Mr. Cummings. Thank you very much, Madam Chair.
    Ms. Brown of Florida. Thank you.
    Mr. Teague.
    Mr. Teague. Yes. Thank you, Madam Chairwoman, for having 
this meeting and for letting me be here.
    A couple of questions, I guess, were already asked, but I 
wanted to ask them a little bit differently.
    In talking about the integrity test that we run, is there a 
standard frequency of time that we run those tests depending 
upon the size of the line or the pressure of the line?
    Ms. Quarterman. Under the Integrity Management Program, 
there was a requirement that operators do an assessment, most 
of which were inline inspections with pigging instruments 
within a certain time period. That time for most operators 
ended either at the end of 2008 or at the beginning of 2009, 
and this was in high-consequence areas, and then they had to 
reassess again 5 years later. They had to start with their 
riskiest 50 percent and then do the last 50 percent, look at 
those assessments and determine which ones, based on our 
standards, were the most problematic, fix those first, and go 
from there. Most operators are now in that reassessment period, 
meaning that they are beginning to do a second run of those 
high-consequence areas.
    Mr. Teague. Do we know the way that it is set up in that 5-
year time frame? Is every single line tested?
    Ms. Quarterman. Every line that is in a high-consequence 
area must have a test, and I said 5 years. Five years is the 
outlying number. If an operator determines that, because of the 
attributes of their particular line that it should be tested 
more frequently than that, then they should do that. That would 
be part of their plan. In 5 years--or I think it is 68 months 
at the outside--they must be retested.
    Mr. Teague. But we know that every line is tested at least 
once every 5 years?
    Ms. Quarterman. Right. In high-consequence areas, yes.
    Mr. Teague. Are we ever on site when they test the lines?
    Ms. Quarterman. Not always, no. Occasionally, we go after, 
usually, the assessment has been done to see what has occurred 
and what anomalies have been found and how they have remediated 
it.
    Mr. Teague. When do we get the test results? Like, if they 
test the line today, when do you get the test results?
    Ms. Quarterman. We do not receive the data in-house at the 
time it is tested. When we go out on an inspection, we review 
their records there, so we don't have a repository of their 
data.
    Mr. Teague. When you do go out and do the on-site testing, 
do you just go to their office and review the test results from 
that or are you actually there like when they put the pig in 
the line and drive down the road and be there when they pick 
the pig up?
    Ms. Quarterman. Most of what we do is reviewing the paper 
records. We do do spot tests, and we are there on occasion when 
people are pigging their line. We simply don't have the 
resources to be at every assessment.
    Mr. Teague. But you are at some on-site tests to see them 
put the pig in and see them take the pig out?
    Ms. Quarterman. Yes. Yes.
    Mr. Teague. Are there any other tests or requirements to 
the pipeline as to the type of material, the wall thickness or 
anything else when it is installed?
    Ms. Quarterman. Before a pipeline is installed, this is in 
the construction phase, it has to go through a hydrostatic test 
to ensure they can operate above the maximum allowable 
operating pressure on the line.
    Mr. Teague. You said a while ago that we had collected a 
large amount of money, millions of dollars in fines. What 
happens with that money?
    Ms. Quarterman. That money is returned to the Treasury.
    Mr. Teague. OK. You know, there was a question asked about 
how comparable this should be to the Deepwater Horizon, and was 
it apples and oranges. You know, I do think that it is apples 
and oranges. I don't think there is much more comparison to 
this and the Deepwater Horizon than there is to this and 
driving unless, maybe, the Pipeline and Hazardous Material 
Safety Administration--we are not in any comparison to MMS or 
anything in the way that we are operating.
    I mean, if there are comparisons to pipeline safety and 
Deepwater Horizon, is there a comparison also to Pipeline and 
Hazardous Material Safety Administration and MMS?
    Ms. Quarterman. MMS regulates drilling operations, and 
PHMSA regulates pipeline operations. The differences between 
the two are that, in the instance of a drilling operation, as 
we have seen it in Deepwater Horizon, there is the opportunity 
for a blowout, which has an unlimited flow of oil. In the 
instance of a pipeline, it is sort of like a garden hose in 
that it has a finite amount--well, it is not like a garden hose 
in that it is finite, but it does have a finite amount of 
product in it. There are valves that can be shut off, so there 
is a finite amount of spill that can occur as a result of an 
incident.
    Mr. Teague. OK. In regards to our testing and spot-checking 
and stuff like that, do you think we are a lot more efficient 
than MMS apparently was in what they were doing?
    Ms. Quarterman. I can't really speak to that.
    Mr. Teague. Thank you.
    Ms. Brown of Florida. Ms. Richardson.
    Ms. Richardson. Thank you, Madam Chair, and thank you for 
having this very timely hearing in the series that we have been 
going through.
    Administrator, thank you for being here. I have about four 
or five questions if we could go through them as quickly as 
possible.
    From 2000-2008, the U.S. DOT Pipeline and Hazardous 
Material Safety Administration reported on its Web site that 21 
oil spills occurred in my district, California's 37th 
Congressional District. Between 2005-2009, the national average 
stated that 68 percent of the total incidences were reported to 
your administration but were not made public via your Web site. 
My questions are:
    How many oil spills or incidents have occurred in the 37th 
Congressional District? I would like to know the number of what 
was reported and not reported.
    Ms. Quarterman. I will have to get you the details for your 
particular district. I can tell you that the reporting 
requirements have changed and have been reduced over time, so 
now 5-barrel spills are being reported, and maybe that is the 
difference between the data, but I am not sure about that. We 
would have to verify that for you.
    Ms. Richardson. Who are they reported to besides your Web 
site? Are the Members notified?
    Ms. Quarterman. They are reported to us, and we put it on 
the Web site, and it is available to the public. If you would 
like to have notification of every instance that occurs in your 
district, we would be happy to do that.
    Ms. Richardson. Well, I think, for this Committee's 
jurisdiction, it might be helpful to have an ongoing report on 
a periodic basis and then, that way, Members who have this 
interest would have the ability to check, but I would like my 
district's information.
    Ms. Quarterman. Absolutely.
    Ms. Richardson. My next question is: Do you believe that 21 
spills are large enough to change the current process and 
consider that that is probably not an acceptable number and how 
communities should be maybe more engaged in what is happening?
    Ms. Quarterman. Well, I think there should be no spills, 
and that is our goal and what we are working towards. I can 
tell you that the number of spills has been reduced by about 50 
percent over the past decade or so.
    Ms. Richardson. These were 21 within this decade, 2000-
2008.
    Ms. Quarterman. I am just saying from the beginning of the 
decade until today that the number of spills has gone down 
dramatically, but it has not gone to zero, which is our 
ultimate goal.
    In terms of how communities can be involved, there are a 
number of grants that PHMSA provides to communities, especially 
those interested in being involved in the pipeline safety 
program, one of which is a base grant to a State if they would 
like to assist by having an agreement with PHMSA. California is 
a State that has an agreement with PHMSA to oversee the 
pipelines within their State. On top of that, there are State 
damage prevention grants that are provided to States so they 
can help ensure that pipelines are not damaged within their 
communities.
    There are also 811, or One Call Grants, that are useful, 
because one of the leading causes of pipeline incidents is 
excavation damage, and that is to assist communities in 
providing information to the public about calling 811, so 
before they dig, they know the location of a pipeline. There 
are also----
    Ms. Richardson. I am down to a minute and 30 seconds. If 
you could supply that to us, that would be sufficient.
    Ms. Quarterman. Absolutely.
    Ms. Richardson. I have several other questions along the 
same line.
    After the first round of operator-performed assessments 
that were completed in February of 2009, pipeline operators 
reported to your organization that they had made 31,855 repairs 
in high-consequence areas. My question is:
    How many repairs were performed in my district, and do you 
have a map or data that informs people of exactly where the 
repairs are made?
    Building on that same question, in my district we contain 
643 total pipeline miles, and 558 of those consist of hazardous 
liquid pipeline. My question is:
    Are these pipelines regulated? Have they been inspected? 
What type of inspection has been done, and what is the 
condition that has been found?
    Then finally--I have got about 34 seconds--I recently had 
the opportunity this last weekend to spend some time in the 
Gulf for about 2-1/2 days. One of the things that I saw that 
seemed to be a problem is we could have had the companies 
better required to have the resources in place to handle a 
spill better. I don't know if that is a shared resource that 
companies in the area all have, you know, those devices. So my 
question would be and if you could supply it to this Committee:
    What materials are required? If in the event you were to 
have an incident, what are those that you know of?
    One of the things we found out in the Deepwater Horizon 
situation is we found out that many of the things we were using 
weren't effective. So to what degree has your group documented? 
What resources would be needed? Are they being stockpiled 
appropriately in the areas that need them? Because we didn't 
have enough booms. We are still in, you know, day 80-something, 
and we don't have enough boom material. We don't have enough 
skimmers. They are now getting this air-conditioned kind of mat 
material, and we shouldn't be doing that after the incident. We 
should know what is needed, and it should be sufficiently 
available so we can respond.
    So, if you could provide this Committee that information, 
it would be helpful. Thank you very much for your time.
    Ms. Quarterman. Sure. Thank you.
    Ms. Brown of Florida. Would you like to respond to any part 
of her questions?
    Ms. Quarterman. Well, as to the specifics with respect to 
the district, we will provide that to the record.
    On the oil spill response, I will say that PHMSA issued a 
safety advisory a few weeks ago to all of the onshore oil 
pipeline operators. That is our responsibility to make sure 
that those plans are in place, asking them to review their oil 
spill response plan in light of Deepwater Horizon to make sure 
that their worst case spill is accurate and that the personnel 
that they have identified and the resources they have 
identified are available and capable of responding to a spill 
if it is a worst case spill. We gave them an exception for, 
obviously, a response that is necessary for Deepwater Horizon, 
but we want to make absolutely sure that the oil spill plans 
that are in existence for the onshore pipelines are the best 
they can possibly be.
    Ms. Richardson. Madam Chair, if I could just respond to 
that very briefly.
    I think, though, the problem is we need more than a plan. 
We need to know: Do you physically have the boom? Do you 
physically have the skimmers? Do you physically have whatever 
it is, and is someone within your organization checking to see 
that it is there? Because, if there is anything we have 
learned, it is that we need more than a plan. We need to know 
that it is not just a plan and that it is actually something 
that is ready to do.
    Thank you, though, and I do appreciate your efforts in 
these tough times.
    Ms. Brown of Florida. Thank you, Ms. Richardson.
    If the Members would like, we could have another round.
    Mr. Sires.
    Mr. Sires. Thank you, Madam Chair, for holding this 
hearing, and I apologize if this question was asked before.
    I come from a very congested area. Just to give you an 
idea, the town that I live in is 1 square mile, and we have 
50,000 people, so pipelines going through some of this area is 
one of my biggest concerns, especially in a congested area.
    I know that we check the pipelines every 5 years. I was 
just wondering if it is prudent in heavily congested areas to 
increase that and make it less than 5 years. I was just 
wondering what you think of that. I am concerned about the 
safety feature of it, the safety factor of it.
    Ms. Quarterman. I am concerned as well.
    A congested area, as you referred to, a highly populated 
area--and I live in one as well--is one that would be 
considered a high-consequence area. In those instances, the 
operator should be considering whether it is appropriate to do 
more frequent assessments of those pipelines in those areas 
given the situations that they run into in that particular 
area. Whether or not doing it more frequently would make a 
bigger difference, I don't know. We haven't looked at that 
issue.
    Mr. Sires. Can you handle more frequent inspections? You 
know, can you handle the paperwork and all the things that go 
with it?
    Ms. Quarterman. Well, now I am talking about assessments. 
This is something that the operators, themselves, do with these 
tools.
    Mr. Sires. Right.
    Ms. Quarterman. Then we go in and inspect after the fact. 
We would probably require more inspectors in order to do more 
frequent inspections, absolutely.
    Mr. Sires. What can we do in Congress to make that happen 
for you? Don't ask for too much.
    Ms. Quarterman. Well, additional resources are always 
welcome.
    Mr. Sires. Just additional resources?
    It is just that, you know, in my district, every time you 
dig something up, there is a problem. I am talking now as a 
former local mayor. Even to do a sidewalk, you have got to 
worry about cables and so forth. So, as to the fact that 
excavating in many of these areas may not damage the pipe right 
then and there, it might just make it where, down the line, it 
would be a problem. So that is when I ask you, in terms of 
heavily populated areas, that I think we need to make it more 
often. I think I pointed out to you the Edison accident years 
ago. That is how dangerous it is.
    So I don't have any further questions. Thank you very much.
    Ms. Brown of Florida. Thank you.
    Ms. Quarterman, according to your Web site, pipeline 
operators report 32,000 defects were found outside of high-
consequence areas.
    Is this reporting a requirement by regulations or is it 
voluntary? If operators find defections outside of that area, 
the high-consequence area, do the operators have to repair 
these defects in accordance with the integrity management rule? 
If not, do you think they should report on it and repair these 
defects?
    Ms. Quarterman. There is no requirement that they report 
that information. I imagine that people are reporting it to get 
credit to show that they were doing, not just what is required 
by the rule, but above and beyond what is required by the rule.
    There are no requirements that those anomalies that have 
been found in areas out of high-consequence areas meet the 
terms of the integrity management rule. I would say that a 
prudent operator and one with a strong safety culture, once 
they find the indication of an anomaly of great concern, would 
repair those. If not and there were an incident, they would, 
obviously, be subject to great penalties from PHMSA, and 
hopefully, everybody is aware of that.
    Ms. Brown of Florida. What do you think would be our 
responsibility as we rewrite the law? Not the rule. Our 
responsibility as lawmakers as we move forward.
    Ms. Quarterman. Well, I think you are doing the right thing 
to hold this hearing to ask questions about how the program is 
working and how we might improve it.
    We are at a point in time when we have identified that 44 
percent of oil pipelines could affect an HCA. It appears as 
though operators have assessed about 86 percent of those 
pipelines, so the vast majority--86 percent of all pipelines. 
Sorry. The vast majority of all pipelines, hazardous liquid 
pipelines, have been assessed at least once.
    We are in the process of a reassessment. Forgive me for 
this analogy, but I think of it a little bit like a mammogram. 
You have the baseline, and then the next assessment shows you 
the change that has happened and whether there is cause for 
concern.
    At the end of this reassessment period, which would be 5 
years from the end of the first assessment, I think we will 
have a much better picture of pipelines in those high-
consequence areas, and we should consider what the next step 
should be for the other areas.
    Ms. Brown of Florida. You mentioned that DOT issued 
enforcement letters for 85 percent of all the integrity 
management inspections. What are the top three or four problems 
DOT has found?
    Ms. Quarterman. The number one problem--and there were 
about four or five that were close to the top--was the 
evaluation of their leak detection capability to protect the 
HCAs. We found that operators had not done enough to ensure 
that their leak detection system was adequate. That was number 
one.
    Shortly after that, we were concerned that they had not 
done an adequate analysis and documentation supporting their 
program. There was not enough to show that they had gone into 
great detail considering, for example, what is a high-
consequence area.
    We initially put out some baseline information about the 
locations of high-consequence areas, and the requirement was 
that operators would go the next step with respect to their 
particular line and the neighborhoods associated with it and 
look deeper and not just at the immediate vicinity; but if 
there is, for example, a water intake point where, you know, 
liquid flows down that would flow down further away from the 
area that we have identified, they would do a deeper analysis 
of that, and we found some inadequacies in those kinds of 
analyses.
    Third, we were concerned about the process that they used 
to qualify personnel for assessment results review. This is a 
key part of the analysis. They run the inline inspection tools 
or do hydrostatic tests or whatever. It is extremely technical 
analysis that is shown, and it is very difficult to determine 
what exactly you are being shown in one of these runs. We were 
concerned that the people who were reviewing the runs because 
we essentially put up this new requirement, and everybody in 
industry had to then get up to speed in order to do that, and 
some of the people were not as qualified as we might like to 
see them.
    So those were the top three.
    Ms. Brown of Florida. Last question.
    If we find a company that is not in compliance, what kinds 
of penalties or fines do we have? What kind of enforcement 
mechanisms are in place?
    Ms. Quarterman. We do have penalties that were instituted 
in the PIPES Act of 2006. I would say those penalties have not 
been updated according to inflation over time. At the moment, 
we are probably maxing out on the penalties at about $100,000 a 
day, I think.
    Ms. Brown of Florida. OK.
    Congressman Young.
    Mr. Young. Thank you, Madam Chairman.
    My interest in this, of course, is the TAPS line, the 
Alyeska line. For the Committee, I am not going to ask her any 
questions. I am just going to suggest respectfully--and this is 
a creation of myself--that a little history, a little 
institutional memory, in this body does serve.
    When we discovered oil in Alaska--when I say ``we,'' it was 
discovered in Alaska by the oil companies--at that time, we had 
to pass the Trans-Alaska Pipeline. In this Congress in 1973, 
the industry itself wanted to, in fact, operate the pipeline. 
They do not do so. Contrary to what some of your staff have 
said, they own parts of the pipeline, but they do not run it. 
It is a separate entity, entitled by itself to run itself, and 
it does run itself by itself. There have been three incidences 
in that pipeline where there have been, in fact, spills.
    One was being shot at. It took them seven shots, by the 
way, with a .338 Magnum. The problem that arose then was the 
fact that they thought it was a terrorist attack, which was 
right after 9/11. It was an irate individual who just decided 
to do it. If we could have stopped it at that time, instantly, 
there would have been no spill at all, but the automatic 
shutoff valve did work. The oil did come through the bullet 
hole, and by the time they got done, there was a spill. That 
was not the fault of the pipeline.
    In the recent one that we have had, it worked. There was a 
human error factor. There was a breaker that was forgotten to 
be checked. The oil that did spill at the pump station was 
contained, as it was designed. It worked excellently, and there 
was no environmental damage. I have to say that again because, 
according to the report I read from your staff, there was. In 
fact, there was not.
    Thirdly, I take great pride in this pipeline. It was built 
in 1976. It was built in 3 years, and it has supplied oil to 
the United States of America. It has all gone to America but 
two tankers. This pipeline has been under scrutiny constantly, 
and to somehow tie this in with BP I think is piling on.
    We have a lot of great Americans who work for BP, and for 
some reason now, if you work for BP, you are a bastard. I am 
saying that is totally wrong. These are honorable people. The 
company may have done something wrong in the Gulf. I am not 
going to defend them in that area, but as far as the Alyeska 
Pipeline, I am quite excited about their record, and I know 
some people in this room who are going to testify later will 
say, Well, they have transferred people out of Fairbanks. Yes, 
they have. I do not like that, but in reality they are a 
business, and they have the opportunity and the responsibility 
to make sure that the business is run correctly, and they have 
not had any damages.
    So let's not tie this Alyeska Pipeline in. They have 
supplied 17 billion barrels of oil to America--to Americans--to 
be utilized there, and they have run this operation 
extraordinarily well. I just want everybody to understand that. 
This company is dependent on itself. It may be funded by oil 
companies, but it is independent on itself, and that is the way 
it was constructed.
    If you want to check the record, Ralph Nader called me the 
most powerful freshman Congressman in Congress because he 
didn't think I would vote for that, to have an independent 
agency run the pipeline and not the oil companies, themselves.
    So I just want to remind people, when we start pointing 
fingers, make sure you point them in the right direction. This 
is not BP's problem. It is not a problem. This is a good 
pipeline. It has supplied us with 17 billion barrels of oil 
without any incident at all.
    I yield back the balance of my time.
    Ms. Brown of Florida. I ask unanimous consent that Mr. 
Young be permitted to participate in today's hearing and sit 
and ask questions of the witness.
    Without objection.
    Ms. Richardson.
    Ms. Richardson. Well, after that, I will tell you. Welcome, 
Mr. Young.
    Mr. Young. I always add a little bit of spice to any 
Committee meeting. I will guarantee you that.
    Ms. Richardson. All right. Well, I won't speak to Alaska 
because I don't live in Alaska, and I haven't studied it, but I 
have been to the Gulf, and I have been studying that, and I 
don't think you can call it ``honorable'' at all.
    Ms. Administrator, I just want to go back to my question 
and make sure we have your commitment on two things.
    One, the raw data of all spills on your Web site today are 
perceived by laymen--I am not a chemist. I am not a biologist. 
I am not an engineer-- so, in my mind, they are basically 
unreadable--a bunch of codes--but it is not really clear. In 
fact, the only ones that can really be read are the incidences 
and spills that are referenced as ``significant'' or as 
``serious incidences.''
    It is my understanding that the Committee has brought this 
to your attention and that there has been a verbal 
understanding that you will make the changes and make sure that 
all of the spills and incidences which are listed on the Web 
site are readable in layman's terms and are clearly, obviously, 
available to this Committee on a regular basis; is that 
correct?
    Ms. Quarterman. That is correct. The Committee has brought 
it to our attention that it could be improved. We appreciate 
those comments, and we will ensure that the data is accessible. 
The purpose of it is for the public to be able to review it and 
understand what it means, and if it is not doing that, we need 
to fix it.
    Ms. Richardson. Thank you.
    Then my last question is: It has also been brought to my 
attention that, with your department, many of the regulations 
and standards that have been adopted don't provide a specific 
certain date that the regulations must be met.
    Then, further, if someone in the public or even in my 
office, in a government office, contacts and wants to get a 
copy of a particular standard, they are told that they have to 
buy the information from an industry association, and that 
seems completely contrary. Specifically, what I am referencing 
are standards--when we were looking into the issue, we couldn't 
find the API Standard 1130. When we contacted your 
organization, the response was that staff had to purchase it 
from API.
    Safety advocates have raised this concern with your 
organization on numerous occasions, including hearings in this 
Committee. They have been told that they have to purchase the 
document from the industry association. Needless to say, I 
think that is absurd. So I would also appreciate your looking 
into that and the information being available to the public, 
whether it be electronic or that we be able to get from your 
department.
    Ms. Quarterman. We had talked about this a little bit at 
the last hearing.
    The standards that you are referring to are industry 
standards across, for example, engineering organizations, and 
they are ones that are--there is a statute that requires--or 
encourages the government to use these standards. OMB 
encourages them to use it. It is not just a PHMSA issue. It is 
a government-wide issue. Any organization or government agency, 
regulatory agency, that oversees an industry has adopted these 
kinds of standards.
    I agree with you that it would be more pleasing if they 
were available for free to anyone who would want to see them. 
They are not available for free. We will commit to looking at 
ways in which we might make some of the standards that have 
been adopted more available to the public, and we have done 
that in many instances by either explaining in detail what is 
in the standards or providing them at our offices for people to 
come and inspect them or having them available electronically.
    Ms. Richardson. Well, it is my understanding my office was 
told to buy it from an industry. So we look forward to your 
updating and improving that system.
    Thank you very much.
    Ms. Brown of Florida. Ms. Quarterman, there have been 
incidents, to my understanding, involving both Alyeska and BP, 
and BP does own 47 percent of the company, and their budget and 
management decisions have to be approved. I don't know.
    Do you have the information that you can get to the 
Committee on the incidents that have occurred?
    Ms. Quarterman. Do you mean all pipeline safety incidences 
associated with the Trans Alaska Pipeline System?
    Ms. Brown of Florida. Yes.
    Ms. Quarterman. I think that we can do that to the extent 
that they are available.
    The most recent incident is still under investigation, and 
we are in the process of an enforcement action with respect to 
that one, but as to any of the historic incidents, we can 
certainly give you information on those, and there have not 
been many.
    Ms. Brown of Florida. And you said there have not been 
many?
    Ms. Quarterman. There have not been many.
    Ms. Brown of Florida. Well, we have found out from the Gulf 
we only need one. You know, one is just too many, and one can 
destroy the environment and destroy industry. So what we have 
to do is--we can't afford not even one.
    Ms. Quarterman. I agree.
    Mr. Young. Madam Chairman.
    Ms. Brown of Florida. Yes, sir.
    Mr. Young. Madam Chairman, may I suggest respectfully, the 
recent incident, what they are investigating, was human error. 
A breaker was not checked. That is what happened. Then, 
unfortunately, there is the double standard there. The breaker 
was not checked by a human being.
    Again, though, the oil that was spilled there was collected 
as it was designed to do so. It has been built to do that in 
containment areas. This is a classic example of something that 
is engineered to do the right thing. That is why I am so 
defensive about the line. We built it. We designed it, and it 
has worked through two earthquakes, one an 8.8, and it did not 
have any spills.
    Now we had this spill caused by human error that was, in 
fact, contained as it should be. There was no dispersement of 
any oil. So there was no accident in the pipeline, per se.
    Is that correct, Madam Quarterman?
    Ms. Quarterman. I am sorry. What is your question?
    Ms. Brown of Florida. There was an investigation, is my 
understanding.
    Mr. Young. Yes. The investigation is why the human error 
occurred but not on the pipeline, itself.
    Ms. Quarterman. The investigation is ongoing.
    Mr. Young. Yes.
    Ms. Brown of Florida. Yes.
    Thank you for your testimony and you will get back with us 
and answer those additional questions.
    What I would like to do is to call up the second panel. We 
have a vote, or should we just wait until we come back?
    Mr. Young. Madam Chair, start it because it will be 45 
minutes, don't you think?
    Ms. Brown of Florida. Let's call up--it is just one vote.
    Mr. Young. One vote or two votes?
    Ms. Brown of Florida. Let's have the one vote and then come 
right back. I thank you all very much, and the second panel, 
you can take your seat and we will get started. We can stand 
informally in recess, and we are looking forward to a lively 
discussion of the second panel. All right.
    [Recess.]
    Ms. Brown of Florida. Will the Subcommittee come back to 
order, please.
    I am pleased to introduce our second panel of witnesses. 
First, we have Mr. Richard Kuprewicz, who is the Public Member 
of PHMSA's Technical Hazardous Liquid Pipeline Safety Standards 
Committee and President of ACCUFACTS, Inc.
    We have Mr. Greg Jones, who is Senior Vice President of the 
Technical Support Division of Alyeska Pipeline Service Company.
    And we have Representative David Guttenberg, who is the 
House Minority Whip of Alaska State House. He represents House 
District 8 in the area of Fairbanks, Alaska.
    And we have Mr. Adams, Vice President of U.S. Operations, 
Liquids Pipelines, Enbridge Pipelines.
    I want to welcome all of you here today and we are pleased 
to have you all here this morning. First let me remind each of 
you that under Committee rules oral statements must be limited 
to 5 minutes. Your entire statement will appear in the record.
    Mr. Kuprewicz, you can start your testimony. Did I 
pronounce your name right?
    Mr. Kuprewicz. Kuprewicz. But I have been called a lot 
worse for 40 years. But that is very close, thank you.
    Ms. Brown of Florida. OK.

  STATEMENTS OF RICHARD B. KUPREWICZ, PUBLIC MEMBER, PHMSA'S 
TECHNICAL HAZARDOUS LIQUID PIPELINE SAFETY STANDARDS COMMITTEE 
   AND PRESIDENT OF ACCUFACTS, INC.; GREG JONES, SENIOR VICE 
PRESIDENT, TECHNICAL SUPPORT DIVISION, ALYESKA PIPELINE SERVICE 
  CO.; THE HON. DAVID GUTTENBERG, HOUSE DISTRICT 8 - AREA OF 
 FAIRBANKS, ALASKA, ALASKA STATE HOUSE MINORITY WHIP; RICHARD 
  ADAMS, VICE PRESIDENT, U.S. OPERATIONS, LIQUIDS PIPELINES, 
                       ENBRIDGE PIPELINES

    Mr. Kuprewicz. I would like to thank the Committee for the 
opportunity to comment this morning. My name is Richard B. 
Kuprewicz, and I am President of ACCUFACTS, Incorporated. I 
have over 37 years experience in the industry, and I have 
represented numerous parties within the U.S. and 
internationally concerning sensitive pipeline matters. I am 
currently a member of the Technical Hazardous Liquid Pipeline 
Safety Standards Committee representing the public.
    My comments today focus on two major pipeline integrity 
management, or IM, issues and apply to both liquid and gas 
pipelines. One, changes are needed in reporting IM performance 
measures. And two, pipeline corrosion regulations are 
inadequate.
    Given the many repairs, more public transparency is 
required in IM performance data gathering and reporting to 
assure this method is thorough and, more important, 
appropriate. This is especially true as more risk-based 
performance measures are applied by pipeline companies in both 
high consequence and non-high consequence areas.
    The Gulf of Mexico offshore release tragedy clearly 
underscores what can happen when risk-based performance 
approaches step into the realm of the reckless and prudent 
regulation and check and balances don't come into play to 
prevent such tragedies.
    What is missing in the area of IM performance reporting 
from PHMSA are summaries by type of repair condition; for 
example, for liquid pipelines immediate repair, 60-day, 180-
day, and other; by kind of threat; for example, internal 
corrosion, external corrosion, third party damage, 
construction, pipe material, et cetera, actually found at each 
repair site, by State. Congress should require changes in IM 
reporting, as I have just summarized, and should also require 
PHMSA to recompile and restate the anomalies repaired to date, 
as I believe critically important hindsight will be gained by 
this effort.
    PHMSA is also now taking a more active role in inspecting 
pipeline construction activities and has discovered very 
disturbing observations related to some new pipeline--poor 
manufacturing quality, poor girth welding and other 
construction-related activities that can seriously effect a 
pipeline's integrity and IM program over its life cycle.
    Congress should assure that PHMSA has sufficient resources 
to perform these important construction inspections without 
harming other important efforts. All IM programs obviously 
should track and report to PHMSA any related new construction, 
introduced integrity threats, to assure that they have been 
properly rectified or are under control during the long 
lifecycle of a pipeline.
    In reauthorizing the Federal pipeline safety laws, Congress 
should also take stronger action on reducing the risk that 
corrosion poses to the integrity of hazardous liquid and gas 
transmission pipeline. PHMSA has found wide variation and 
operators' interpretation of how to meet the requirements of 
pipeline safety regulations in assessing, evaluating and 
remediating corrosion anomalies. This raises serious concerns 
related to how consistent corrosion anomaly evaluations are and 
stresses the importance of modifying the reporting of IM 
performance measures as discussed earlier.
    It is clear that additional corrosion regulatory standards 
are required for pipelines both in high consequence areas and 
non-high consequence areas. For example, mandatory uses of 
cleaning pigs and avoiding over reliance on corrosion 
inhibitors that can become ineffective.
    Some companies appear to be diluting their corrosion 
control programs to save money as they overly rely or missrely 
on IM inspections to catch such risks before failure. It is 
incumbent upon the pipeline operator to have corrosion and 
maintenance programs to assure corrosion is under control in 
all segments of their pipeline and not just rely on IM 
inspection. Congress should also require that special 
regulatory focus be directed towards the much higher rate 
selective corrosion, both internal and external, that can lead 
to pipeline failure well before the next IM regulatory 
reassessment, and it is not prudently handled correctly in 
current regulations.
    Given the shortcomings identified in my testimony, it is 
too early to address the issue of modifying the IM minimum 
reassessment intervals required by Congress. The matter is 
especially important for gas pipelines where IM requirements in 
many areas are less stringent and cover much fewer pipeline 
miles than that for liquid pipelines.
    I would especially advise that Congress pay special 
attention to gas pipelines, especially those capable of putting 
more tonnage of hydrocarbon into residential neighborhoods in a 
form that can cause greater destruction than many liquid 
pipelines.
    Gas transmission pipelines have yet to complete their 
baseline assessments, have longer reinspection intervals and 
different special requirements for scheduling remediation 
reporting than liquid pipelines.
    I thank you for your time.
    Ms. Brown of Florida. Thank you.
    Mr. Jones.
    Mr. Jones. Chairwoman Brown, Ranking Member Shuster, and 
Members of the Subcommittee, thank you for the opportunity to 
appear to discuss the Alyeska Pipeline's Integrity Management 
Program. I am Greg Jones, Senior Vice President of the 
Technical Support Division for Alyeska Pipeline. My division 
includes engineering; health, safety and environmental quality; 
projects and security.
    I have worked for Alyeska for 13 years. Before joining 
Alyeska, I served for 20 years as an officer in the United 
States Coast Guard. I am here representing the 1,600 people who 
operate and maintain the 800-mile Trans-Alaska Pipeline System, 
transporting crude from Alaska's North Slope to Valdez, where 
it is shipped to the West Coast.
    Safety and integrity of the pipeline are core values at 
Alyeska and a top priority for every employee. Over the past 
decade we have continually improved our safety and 
environmental performance, with 2009 being our best year on 
record. Although we are proud of our progress, we know that we 
have to perform well every single day. Regrettably, we did have 
a significant incident recently, which I will discuss in a 
moment.
    We are here today regarding the integrity management 
regulations that govern liquid pipelines. We have found the 
current pipeline safety regulations rigorous, comprehensive and 
appropriate. Federal regulations require a comprehensive 
corrosion control program. Alyeska's program is extensive and 
is monitored by PHMSA.
    Our Integrity Management Program is also closely monitored 
by the Joint Pipeline Office, a unique consortium of 11 Federal 
and State agencies that provide oversight of TAPS. Our program 
is subject to inspections by PHMSA. The most recent inspection 
occurred on August 2009. The inspection team's written exit 
summary included the following statement: The Alyeska Integrity 
Management Program document is well organized and addresses the 
important management system characteristics that are required 
for a successful program.
    Our Integrity Management Program is focused on maintaining 
the integrity of the pipeline and protecting public safety and 
the environment. While Alyeska implements and complies with 
Federal standards, many internal procedures exceed these 
requirements. We monitor the pipeline through visual 
inspections, overflights and valve inspections; we conduct 
internal inspections using smart pigs every 3 years. The 
regulatory standards require runs every 5 years.
    We are required to investigate pipeline segments that could 
affect high consequence areas when our data tells us there is a 
wall loss of 50 percent or greater. We actually go by a more 
rigorous standard of 40 percent. In addition, our corrosion 
control program includes numerous other elements. A cathodic 
protection system protects the below ground pipe from external 
corrosion. Other program elements include our valve maintenance 
program, river and flood plain maintenance and control. We also 
have an earthquake preparedness program, a leak detection 
system, and an over pressure protection system.
    Should TAPS experience a pipeline discharge, we have worked 
diligently to be prepared to respond to an incident. We 
exercise our personnel and equipment on a regular basis through 
company and agency-directed drills and under the scrutiny of 
regulators.
    Our spill response preparedness was demonstrated on May 
25th, when during a scheduled shutdown of the system a breakout 
tank overflowed, resulting in a spill to secondary containment 
that surrounds the tank. There were no injuries and the spill 
did not escape into the environment. While the response went as 
required, we clearly find the incident unacceptable. We have 
done a full investigation into the event and are now working to 
implement recommendations to ensure that it will not happen 
again.
    As I have outlined, our Integrity Management Program draws 
on a number of methods that we believe best protect Alaska's 
environment and keeps the pipeline operating safely and 
reliably. In Alyeska's 33 years of operations we never 
experienced a leak on the mainline pipe due to corrosion. We 
credit the skills and experience of our people, the current 
regulatory framework, the tools and strategies we use to 
protect the pipeline, and our aggressive attention to 
investigation and intervening whenever needed in order to 
ensure the integrity of TAPS.
    I will be happy to answer any questions.
    Ms. Brown of Florida. Thank you, Mr. Jones. I want to point 
out that Mr. Jones and Mr. David Guttenberg came all the way 
from Alaska. So I really, really do appreciate it.
    And now the Honorable David Guttenberg, House District 8, 
Fairbanks, Alaska.
    Mr. Guttenberg. Thank you, Chairwoman Brown, Ranking Member 
Shuster, other Members of the Committee and Representative 
Young, my Congressman. Thank you for the opportunity to speak 
with you today.
    As you said, I am State Representative David Guttenberg and 
I represent House District 8, which is comprised of the west 
side of Fairbanks and goes all the way to the community of 
Cantwell, and the district includes the entire Denali National 
Park, including Mount McKinley, the highest point on North 
America.
    I spent 25 years of my life working around the pipeline and 
oil industry. As a young man in 1974, I joined the Labors Union 
and went pipelining. My first job for Alyeska was with a 
clearing crew clearing the right-of-way where the pipeline was 
going to be built. Prior to that I worked on a seismic crew out 
of Umiat for minimum wage, 14 hours a day at 40 below 
temperatures, and that is not unusual but here it certainly is.
    The next 25 years I worked for various contractors who 
worked for Alyeska, BP, Exxon and whoever else had a contract 
with the industry to build whatever was needed to be done. At 
one point I worked offshore building an island for development 
and exploration. My last job with Alyeska was in 1996, when we 
took Pump Station 6 offline.
    I am here today on behalf of Alyeska employees that have 
contacted me with concerns of the safety and integrity of the 
pipeline, and these concerns they feel have been largely 
ignored.
    My involvement specifically in this began in December of 
2009 when I received word that Alyeska was planning to transfer 
a group of employees from Fairbanks to Anchorage. The proposed 
transfer raised alarms for me. First of all, for two reasons, 
they were good jobs and they were leaving my community. 
Secondly, I couldn't figure out what standard Alyeska used to 
determine that moving these personnel who were responsible for 
pipeline safety integrity 350 miles from the pipeline would be 
prudent and responsible. My initial thought is that it didn't 
make any sense. When something goes wrong, it needs to be 
checked on the pipeline. These are the employees who get to the 
problem, the problem and location quickly. The pipeline goes 
through Fairbanks; it is 350 miles from Anchorage.
    When I began speaking out publicly, several Alyeska 
employees contacted me and confirmed my concerns. It was 
explained to me that many in the company shared my sentiment 
and attempts to express those concerns were squashed at the 
highest level by senior management who feared retaliation for 
going against the mandate of Alyeska's then President. At that 
point it became clear to me that Alyeska's open work 
environment was not working. Allowing poor decisions to go 
unchecked could have severe consequences for the State of 
Alaska.
    Alyeska's predicted loss of almost 50 percent of the 
company's integrity management unit group if the company moved 
forward with a transfer. This is a long-term negative impact on 
Alyeska's Integrity Management Program, including deteriorating 
morale of remaining personnel, a significant loss of expertise 
and institutional knowledge, and the return to Alyeska's 
previous history of compliance problems with integrity 
management issues.
    In 1997, under the direction of then Alyeska President Bob 
Malone, Alyeska transferred employees from Anchorage to 
Fairbanks to increase pipeline safety and enhance environmental 
reliability. This was the right move to make and it is 
difficult to understand how Alyeska's claim of synergy and 
efficiency justified reversing Malone's decision. Common sense 
and Alyeska's internal documents suggest that they are making 
the wrong decision on this one.
    Alyeska frequently mentions its recent safety or 
environmental record when trying to reflect recent criticisms 
related to the management of its Integrity Management Program; 
for example, low accident rates. Alyeska's definition of safety 
refers to the prevention of bodily harm or fatalities to 
employees or contractors performing work. This safety attribute 
has little or no bearing on the likelihood of TAPS having a 
significant spill, which is the issue that brings us here today 
for this hearing.
    For example, a pipeline operator could have an excellent 
work safety record because there is little or no maintenance 
being performed on the pipeline, while at the same time it is 
about to fall apart in 20 locations. The same logic could be 
applied to Alyeska's environmental record, which can have 
little or no bearing on the likelihood of a pipeline having a 
significant spill event.
    Finally, I would like to address Alyeska's recent public 
commentary about emergency spill response capabilities in the 
first 12 or 24 hours.
    Alyeska no doubt continues to have adequate employee and 
contractor support, but it is not the primary concern related 
to the transfer integrity manager and personnel. The Trans-
Alaskan Pipeline carries an overwhelming majority of Alaskan 
State revenue and is an integral part of the U.S. Energy 
infrastructure. With a declining throughput, the line is no 
less important now than it was 30 years ago. Even through the 
declining input, the line is no less important now. However, 
the TAPS infrastructure is rapidly aging and problems are bound 
to occur. Now is not the time for Alyeska to skimp on pipeline 
safety and integrity lest we have a significant spill.
    Thank you.
    Ms. Brown of Florida.  Thank you.
    And Mr. Adams.
    Mr. Adams. Thank you, Chairwoman Brown, Ranking Member 
Shuster, Chairman Oberstar, my Congressman, and Members of the 
Subcommittee. I am Rich Adams of Enbridge Energy Pipeline 
Company and appreciate the opportunity to participate in this 
hearing. I am Vice President, U.S. Operations for Enbridge 
Liquids Pipeline and have more than 20 years of experience 
working for Enbridge in various engineering, operating, and 
leadership positions with Enbridge's North America natural gas 
and liquids petroleum pipeline businesses.
    Our liquids pipeline business unit delivers more than 11 
percent of overall U.S. oil imports, stretching from Canada 
into United States refined hubs, delivering about 50 percent of 
the crude oil refined in the Great Lakes region. More 
information is included in my written testimony.
    The pipeline integrity management regulations respond to 
societal expectations of safety and build on advances of new 
technology and pipeline operating experience. The result, a 
measurable significant reduction infrequency and severity of 
releases from liquid pipelines. This is a strong indication 
that Congress' passed mandate of a risk-based integrity safety 
reg regime is working, and while we are encouraged by this 
record, our overall goal is zero. Zero releases, zero injuries, 
zero fatalities, and zero operational interruptions.
    To continue this encouraging trend, I urge Congress and the 
Office of Pipeline Safety to remain focused on a risk-based 
approach that has delivered this overall performance. The 
current regulations are extensive and recognize that safety 
starts with the design stage and continues with a broad range 
of operating, maintenance, reporting, inspection, and worker 
qualification requirements.
    Reduction of risk considers both the probability of a 
pipeline failure as well as the potential consequence of such a 
leak. Congress was on the right track more than a decade ago in 
focusing regulatory and industry attention on high consequence 
areas to protect people and the environment. The focus imposed 
additional protective measures for pipelines at high 
consequence areas, or HCAs, regardless of whether a pipeline 
operations in a HCA or non-HCA area, comprehensive Federal 
regulations still apply to the entire pipeline regarding 
design, construction, operating, maintenance, and emergency 
preparedness standards. As such, we cannot agree with those who 
suggest that non-HCA segments somehow receive little oversight 
simply because they do not fall under the integrity management 
plan mandate associated with HCAs.
    The whole point of risk management is to aggressively apply 
our best engineering skills and science to determine the 
probability and consequence of a potential pipeline failure at 
any single point along a pipeline.
    While only 40 percent of Enbridge's liquids pipeline system 
could affect an HCA, nearly 100 percent of the mileage has been 
inspected with internal inspection inline devices. So you might 
ask why wouldn't the industry just support an expansion of the 
integrity management rules beyond HCAs. We believe such a 
mandate would effectively take the industry back to a 
prescriptive, one-size-fits-all requirement that would abandon 
the entire science behind risk management, suggesting that the 
likelihood and consequence of a pipeline incident are 
essentially the same no matter where they occur.
    Collectively, we have been successful at implementing a 
risk-based approach that directs additional resources to HCAs 
where a potential release would have the greatest consequence 
on the public and the environment.
    In summary, I think the data shows that Congress, OPS, and 
industry have been on the right path in the current 
comprehensive pipeline safety rules and the supplementary 
Integrity Management Program implementation. When the overall 
record and trends are taken in context, we have shown 
noteworthy, continuous improvement in pipeline safety, leading 
to today's record that is second to none in transportation 
safety of petroleum.
    This concludes my testimony, and I am happy to answer any 
questions that Members of the Committee may have.
    Ms. Brown of Florida.  Thank you.
    The Chairman of Committee the Full Committee has joined us, 
Mr. Oberstar, and we want to recognize you for any openings 
statements and we are so happy that you are here.
    Mr. Oberstar. Thank you. The Committee got disrupted at the 
beginning with a vote on the floor. I was delayed getting here 
working on other Committee matters, including our aviation 
bill. We are hoping to get some progress from the Senate in 
reaching an agreement on an aviation bill.
    Ms. Brown of Florida. Well, Mr. Chairman, I just want you 
to know the whole country appreciates you all moving forward 
and the Senate moving forward, the other body. We need that 
aviation bill.
    Mr. Oberstar. If we can get the Senate to move anything, 
including time of day, that would be an achievement.
    I appreciate you holding these hearings and the 
participation of Mr. Shuster, but also I was having a 
conversation, as you turned to me, with Mr. Young, who was 
Chairman at the time he wrote the most recent pipeline safety 
bill, but I have been involved with this for at least 25 years, 
with pipeline safety, from the time that pipeline leaked 
gasoline in the City of Mounds View just outside my district. A 
7-foot long crack in the pipeline leaked gasoline for hours 
until an automatic shutoff valve finally detected and cut off 
the flow. But by that time the volatiles had moved up through 
the soil to the surface, and because those are heavy aromatics 
they stayed close to the pavement surface. And at 2:00 in the 
morning a car driving along the street had a loose tailpipe 
that struck the pavement, the spark ignited the volatiles, the 
entire street erupted in flame, buckled, melted the pavement, 
and a mother and her 6-year-old emerged from the house to see 
what was happening and they were engulfed by flames as they 
emerged from the front door. Their father-husband took their 
son and went out the back door and they were the two victims, 
but houses were burned, the street melted, trees burned. It was 
a horrific scene. Cause: Corrosion, corrosion that went 
undetected.
    That is what happened with the BP pipeline in 2006, 
corrosion. It went undetected. We had hearings on that issue in 
this Committee in 2006. 33,000 barrels it turns out spilled, 
most of it into a containment vessel but then it spilled over, 
5,000 barrels spilled over that containment tank into 
understandably a contained area, but it was still on the ground 
and the volatiles just evaporated into the air. They are a 
hazard to the environment as well. It took three orders from 
the Office of Pipeline Safety to get BP to take the action they 
needed to take to correct that problem, and an order, and in 
fact to DOT's credit at the time, Secretary Mineta, moved the 
Administrator of PHMSA out, brought in a retired Coast Guard 
admiral, Admiral Barrett, to take charge of pipeline safety and 
bring to it the skills of a Coast Guard safety officer, his 
career had been in safety, and set the Pipeline Safety 
Administration right.
    And then they had to order BP to remove that section of 
pipeline and replace it altogether. That is something good 
management should have done on its own; it should not have 
yaken an order. I have said this in all of the areas of safety 
under the jurisdiction of this Committee. There has to be a 
corporate culture of safety; safety starts in the board room. 
The role of government is to set standards that must be met, 
but the government doesn't run these corporations. Corporations 
have to have people in charge whose first concern is safety.
    I grew up with understanding safety in an iron ore miners 
family. My father worked in the Godfrey underground mine. The 
lives of miners were at risk every day when they were down 300, 
600 feet. Now they don't have methane as we have in coal mines, 
but you have the risk of cave-ins and failures of pilings, of 
support columns or they are using wood that isn't properly kiln 
dried and the mine can cave in on people, and there are many 
other hazards in the underground mines that require a corporate 
culture of safety. We had the Steelworkers Union that insisted 
on safety. They didn't have a mine safety and health 
organization until I was elected to Congress and I authored 
that legislation to create it.
    The same with pipelines. Pipelines, we have nearly 3 
million miles in America, they run through communities, in many 
cases communities built up around the existing pipeline, but 
that doesn't mitigate the company's responsibility to be 
vigilant and to take action and to watch over corrosion. That 
is the enemy of safety. Corrosion is the culprit in most of the 
pipeline failures.
    And then response by organizations--I just want to ask this 
question, Mr. Kuprewicz, Mr. Jones, Representative Guttenberg, 
thank you for traveling all the way from Alaska. Mr. Adams, I 
was at the ceremony for Enbridge in Carlton in my district 
where I saw more steel pipe in one place than I have seen 
anywhere in my lifetime. It all looks good now, or then. We 
want to watch and see what happens to it after it has been 
buried for a while.
    What do you mean by risk management? Mr. Kuprewicz, I will 
start with you.
    Mr. Kuprewicz. Well, I think it embodies the concept of a 
corporate culture that knows the difference between speculative 
risk and risk based on sound engineering principles that don't 
violate the laws of science. If you assume--like an example 
would be in corrosion. If regulations have been written, let's 
say, for general corrosion, the corrosion rate is 12 mills per 
year, 12 thousandths of an inch per year, and you have 
selective corrosion like microbiological induced or influenced 
corrosion and it is 200 mills per year, you are way out of 
line. And I think there is a lot of science and technology out 
there that everybody understands and most corporate cultures 
and risk management understand general corrosion. What we have 
found in too many instances that resulted in failure there has 
been a misunderstanding of what I call selective corrosion. And 
I believe the Minnesota event you described in 1986 was also an 
example of a selective type corrosion attack. And by selective 
corrosion it is a different animal. It can really--first of 
all, it isn't constant over time and it can change. A lot of 
the regulations and standards are written as if we have general 
type corrosion. Now I want to be very clear here there are 
companies who are way ahead of this curve. They understand this 
science isn't rocket science, it has been around for many 
decades, and they apply rational risk management, and if they 
believe they have selective corrosion they are saying I 
reassess at more frequent intervals. That is a long winded way 
and I am sorry.
    Mr. Oberstar. No, it is very important, but the underlying 
issue is can risk management and in fact doesn't it slip into 
just a paper management based on historical records, previous 
experience, and if you have very few incidents then we are 
going to relax the oversight and relax the requirements. Isn't 
that an outcome of risk management?
    Mr. Kuprewicz. Well, that can be an outcome, but I would 
say the more prudent pipeline companies, and they are out 
there, I want to be very clear about that, this science has 
been around and developing well for 60 years. They don't drop 
their guard, they don't make this assumption that it is a paper 
science. They will look at it and say, looking at our systems, 
we have different types of risk here. And while we need the 
paperwork to be sure that we know what we are doing, they don't 
drop their guard and they will look for signs. Now after enough 
times you can say I don't have selective corrosion of certain 
types, for example, but they don't drop their guard, it is a 
continual evaluation. So I would say the really good companies 
don't just make it a paper exercise it is an integrated 
process.
    Mr. Oberstar. That is the concern I have and that is where 
we need the constant vigilance on management of risk, and in 
aviation there was a drift toward this kind of historical 
experience, will have confidence in if you have had a good 
record of management instead of the constant reporting and 
recordkeeping and day-to-day oversight of maintenance.
    Mr. Jones, I will give you and Representative Guttenberg 
and Mr. Adams on it, and then I will stop at this point because 
other Members have questions. 
    Mr. Jones. I would look at risk management as a way of 
looking at the things you have to do, the likelihood of 
something occurring, of incidents happening and then of course 
the consequences if they do occur. So you are weighing 
priorities, and of course a robust integrity management program 
does exactly that. And we have that at Alyeska. The program--
when we run a smart pig, we take a look at and we basically 
analyze the data and we determine which anomalies need to be 
investigated first and we follow that sequence in everything. 
We are also more conservative than the regulations and it has 
produced very good results.
    Mr. Oberstar. Does that also include running cleaning pigs 
in addition to smart pigs?
    Mr. Jones. Yes, it does.
    Mr. Oberstar. That was the problem in 2006, that BP had not 
run a cleaning pig through that line and had allowed waxes and 
other corrosive elements to build up within the pipeline.
    Mr. Jones. Well, my understanding from reading is that is 
what happened. For Alyeska we run a cleaning pig every 7 to 14 
days, and when we are going to do a smart pig run, we actually 
run a series of those ahead of the smart pig to make sure that 
we get good data.
    Mr. Oberstar. Are those practices what you understand by 
and include in risk management, periodic, whether you have had 
a failure or not a periodic run of the cleaning pig through the 
pipeline and periodic on schedule of running a smart pig 
through the line; is that included in the risk management?
    Mr. Jones. Correct.
    Mr. Oberstar. OK, Representative Guttenberg.
    Mr. Guttenberg. Thank you, Congressman. You are always 
going to have risk management no matter what you do, but my 
concern is when you take it out of the hands of the qualified 
engineers that we have on projects like this and put in 
budgetary concerns for a yearly budget cycle, it might 
influence something on a budget influence instead of what is 
the most efficient thing for integrity management and safety. 
So when we look at those things and are dealing with them in 
that aspect I think that should probably be--not be part of the 
review is have the budgetary influence overwhelming the 
engineering.
    Mr. Oberstar. When you are operating in what is essentially 
a hostile environment--I understand that somewhat. We don't 
have as many months of hostility in northern Minnesota as you 
do in Alaska, but certainly understand a hostile environment--
you need an increased level of vigilance, right?
    Mr. Guttenberg. Yes, not just certainly for personal safety 
but for everything that you do, because little things turn into 
big things very fast, and in Alaska they are in your face all 
the time.
    Mr. Oberstar. What was the significance of Alyeska moving 
personnel from checkpoints along the line out of those areas 
where they would be available for quick response and 
consolidating them into Anchorage?
    Mr. Guttenberg. Well, I think that was the point to begin 
with why they were moved there in 1997 by then President 
Malone, is that is where the job is, that is where the response 
capabilities come from. If you can put somebody there 
immediately, you might not have a problem. But if you move them 
350 miles away, it is going to take a lot longer to do the 
analysis and to get there and to figure out that if you were 
there 3 hours ago this would have never happened.
    Mr. Oberstar. Mr. Adams.
    Mr. Adams. Congressman, I think certainly when Enbridge and 
our industry talks about risk management what we are trying to 
do is we are trying to apply resources where they will have the 
biggest mitigation of risk. And I think we need to look at our 
facilities on a case-by-case basis. We have pipelines that have 
different risks. We have pipelines because perhaps the product 
that carry or the original installation practices that demand a 
lot more diligence around corrosion type issues. We have other 
pipelines that may run through a very populated area that have 
a very--that transport a very friendly product that have 
excellent coating, an excellent cathodic protection system that 
we focus on third-party damage perhaps.
    I think even Congress, in applying what they have done in 
recent years, has looked at pipeline management, integrity 
management from that risk-based approach. If you look back some 
years ago, our risks were around third-party damage. That was 
the number one risk that pipelines had. There has been 
legislation, there is one called changes that have been enacted 
that have reduced that and overall risk and all aspects of 
pipelines have dropped, but certainly in that area it has 
dropped more than others. We think there are some things that 
can be done to even enhance that further, but I think all in 
all that is the attack we need to take to mitigate the risk 
associated with pipelines.
    Mr. Oberstar. Thank you, Mr. Chairman. I yield at this 
point.
    Mr. Walz. [Presiding.] Thank you, Mr. Chairman. Mr. Shuster 
is recognized.
    Mr. Shuster. I am going to let myself be passed over for 
Mr. Young.
    Mr. Walz. Mr. Young is recognized.
    Mr. Young. Mr. Jones, how are you picked for the job you 
have got?
    Mr. Jones. I am picked for the job that I have because at 
Alyeska we have to be competent, we work hard, and we have very 
professional people, and actually as a leader you surround 
yourself with good people. That is what I have tried to do 
and----
    Mr. Young. How are you specifically picked, you are now 
what----
    Mr. Jones. You mean to be here today?
    Mr. Young. Yes.
    Mr. Jones. I am the head of the group that does our 
Integrity Management Program as the Senior Vice President of 
Technical Support, and Mr. Hostler asked me to come here.
    Mr. Young. Who do you respond to, Mr. Hostler?
    Mr. Jones. I respond to Mr. Hostler. He is the CEO.
    Mr. Young. And he is picked by whom?
    Mr. Jones. He is a BP employee.
    Mr. Young. But not for Alyeska?
    Mr. Jones.  He is picked by the board, the board that 
basically oversees Alyeska, but he is a BP employee.
    Mr. Young. I know, but what I am trying to get across, we 
set this up specifically so you are not dependent upon the oil 
companies. When you take that job, if you were to take that job 
you respond to the Alyeska board and that board is independent 
of the oil companies.
    Mr. Jones.  That is correct.
    Mr. Young. And that is the way it is set up?
    Mr. Jones.  That is correct.
    Mr. Young. Now in your statement you said you have never 
had a spill since 1976; is that correct? It wasn't--you know, I 
admit to two, the one being shot at and the other one the 
recent one. I think--when was that, that was last--4 months 
ago, 5 months ago?
    Mr. Jones.  It was May 25th.
    Mr. Young. That at a pump station?
    Mr. Jones. Pump Station 9.
    Mr. Young. Am I correct it was a breaker, someone hadn't 
checked the breaker and the pump didn't work or something like 
that? Physically there was a person there?
    Mr. Jones.  Yes, there were people there and it was--we did 
have a failure of a circuit breaker that caused total power 
loss and that resulted in the relief tank overflowing.
    Mr. Young. And the relief tank overflowed into a 
containment area.
    Mr. Jones.  That is correct.
    Mr. Young. Now this oil that we pumped through that 
pipeline of 600 and I believe, David, you can tell me, 620,000 
barrels a day now or 640,000 barrels?
    Mr. Jones. About 640,000 barrels a day.
    Mr. Young. Are there any additives added to that oil 
different than had been added before?
    Mr. Jones. No, but what we are experiencing with declining 
throughput, we are having to deal with changing crude 
characteristics.
    Mr. Young. It is a natural change?
    Mr. Jones. Right.
    Mr. Young. Now is that more corrosive?
    Mr. Jones. It can be, yes.
    Mr. Young. And In reality are you running your pigs more 
often because of that probably added corrosive factor?
    Mr. Jones.  Yes, we are. In fact we steadily had to reduce 
the period there that we are running our cleaning pigs because 
we are experiencing more waxing and everything as throughput 
comes down.
    Mr. Young. You know we have come a long ways though, Mr. 
Jones, because I can remember the first time Mr. Chairman, 
Madam Chairman, when I was in this chair actually sitting in 
this room, I said that we were going to use pigs to go through 
the pipeline, and someone said, oh, those poor little piggies. 
Had no knowledge of what we were talking about, but that shows 
how far we have progressed in this business of pipeline and 
safety and what we do to find out.
    The question, as Mr. Guttenberg has said, the movement of 
people that was not your decision?
    Mr. Jones. The movement of people was a decision supported 
by the senior leadership team, it was certainly one that Mr. 
Hostler made but we basically supported as his executive team.
    Mr. Young. Now was that a business decision or was that a 
safety decision?
    Mr. Jones.  It was a business decision and it did not 
affect safety.
    Mr. Young. Now this is where I question--I happen to like 
the idea and I don't like to interfere with his private 
business, but when you say it doesn't affect safety, how do you 
justify that when the representative said you are 300 miles 
away. Did you move the pipeline operators from the stations or 
did you move people out of the Fairbanks region that were in 
management?
    Mr. Jones.  We moved people that were in the Fairbanks 
office. Their duties were principally office based. We still 
have our full complement of people. There are over 200 people 
on any given day that are spread throughout the pipeline that 
are basically----
    Mr. Young. Do you have people on site. Let's say the 
question about 300 miles away, do you have people on site that 
can respond to the bullet hole?
    Mr. Jones. Yes, we do.
    Mr. Young. How soon?
    Mr. Jones.  Well, we have 69 people who are ready basically 
for immediate response, they are 24/7, you know both shifts, 
all the time.
    Mr. Young. All right. The alarm system goes off because of 
lack of pressure or increased pressure at one of the stations, 
goes through the management arena, you have the whole computer 
board, I have seen it. I am in Fairbanks, how long do it take 
me to get to pump station let's say--what would it be, Dave, 6, 
5?
    Mr. Guttenberg. Well, 7 or 8.
    Mr. Young. How long would it take me to get there?
    Mr. Jones.  Well, to go to Pump Station 7 you can drive.
    Mr. Young. But the one that I can't drive is what I am 
leading up to.
    Mr. Jones.  Right.
    Mr. Young. Between 1 and 3.
    Mr. Jones. Between 1 and 3? Well, we would have the 
responders that are based out of 4 and we have some people at 
Pump Station 3, but we have a response base----
    Mr. Young. You have people onsite to respond to that.
    Mr. Jones.  Right. We have them at all active pump 
stations. They all have personnel and----
    Mr. Young. You have them in all active pump stations now?
    Mr. Jones.  Correct.
    Mr. Young. And when you say active, the ones that are not 
active they have been shut down because of a lack of need of 
oil or what is that?
    Mr. Jones.  Well, yeah, as throughput has been coming down 
we don't need the same pumping capacity. So again for business 
reasons we take out of service the stations that we don't need.
    Mr. Young. And lastly, the Chairman mentioned this, Mr. 
Oberstar, the illusion of what happened with BP was they were 
collective lines, weren't they, that had the corrosion in them?
    Mr. Jones. Correct.
    Mr. Young. And they have been replaced?
    Mr. Jones.  Right now----
    Mr. Young. That has really nothing to do with you does it?
    Mr. Jones.  That is correct. I was going to say, I don't 
work with them.
    Mr. Young. You don't work with them, that is a different 
unit?
    Mr. Jones.  Correct.
    Mr. Young. And this is Alyeska and not the collective 
pipelines?
    Mr. Jones.  That is correct.
    Mr. Young. I am out of time. Thank you, Mr. Chairman.
    Mr. Walz. Thank you, Mr. Young. I said always with the 
Chairman and with Mr. Young here I feel like I should pay 
tuition for the lessons and the learning I get. And I want to 
commend Mr. Young. I think when he talked about his vision of 
having Alyeska having a separate entity was visionary, was wise 
in that. I think the point I am trying to get at is since that 
time of that inception has there been a morphing, a loss of 
that autonomy? That is what I am trying to get at. I certainly 
don't want to pile on, I don't want to make the assumption, but 
I think it is a fair assumption. Alyeska is a for-profit 
company, correct?
    Mr. Jones.  That is incorrect. We are not.
    Mr. Walz. It is incorrect. So you make nothing then. The 
issue is to stay there. So the autonomy issue of having these 
experts from BP and things is to bring in their expertise but 
not to necessarily have day-to-day say over the pipeline 
operation?
    Mr. Jones. Well, they are one of five companies that 
comprise our board, and so they could not dominate the 
decisions even if they wanted to. We are an independent 
consortium. We run our company, we have a distinct culture. Our 
employees are uniquely Alaskan. In fact we are a very diverse 
company, we hire 20 percent Alaska Natives, the laborers and 
crafts that work on our pipeline actually choose to want to 
come work for us due to our safety culture. So we are very 
distinct. We are proud of all the employees.
    Mr. Walz. I want to get at this point. I think Chairman 
Oberstar and many others, and yourself, Mr. Jones, with your 
military history, and I spent about a quarter century as a 
senior enlisted soldier. There is culture of safety in risk 
management. It is the air we breathe. I think the Chairman is 
right, it starts at the top, it starts as a culture. It starts 
being engrained in every decision that is made. And I just want 
to ask you, Mr. Jones, if you can see why some people were 
concerned, the statement that out of the Fairbanks paper 
November 17th of last year where you indicated--and this move 
we are talking about, movement of employees, and am I right 
there were integrity management employees that were part of 
this move?
    Mr. Jones.  Yes, sir, there were.
    Mr. Walz. OK. It said all support groups should be looking 
at Valdez in addition to Fairbanks and asking what the business 
purpose is for the staff to be based at these locations, Jones 
wrote. The bias needs to be in favor of them working in 
Anchorage unless there is a compelling business case to the 
contrary. Is there not room also for this idea that there is 
not a mutually exclusive delineation between safety and the 
smooth running of the company and of the pipeline; why 
stressing the business case on this as the sole purpose?
    Mr. Jones.  Well, we were talking specifically about people 
that are based in offices, we were not talking about our field-
based people. And so we had an opportunity to consolidate 
office buildings there. We were paying for almost 60 percent 
more space than we were utilizing. And so we--and we had also 
been involved in a centralization effort back towards Anchorage 
since 2002. This was just a continuation of that effort.
    Mr. Walz. So the 1997 decision in your opinion was wrong or 
the situation changed since that time to warrant a review of 
policy?
    Mr. Jones. I would say the 1997 decision was right for that 
time. Today we are in a different business environment with 
throughput declining 6 percent every year, so we need to be as 
efficient as we can.
    Mr. Walz. So this was Alyeska and their board's decision 
alone. What input, explain to me so we can explain to our 
constituents, do BP or the other owner companies, what input do 
they have, sign off, budgeting, things like that, where do they 
have a role in this?
    Mr. Jones. Well, we have an approval authority guide that 
specifies what levels of authorities and everything that we 
have as officers of the company and then what things that we 
have to send to the board for approval. But in this particular 
case for the office that was an Alyeska decision and it was 
supported by the senior leadership team.
    Mr. Walz. OK. I want to go to you, Mr. Adams, and ask on 
this. Where are your integrity management personnel placed? 
Alaska is big, real big. North Dakota is pretty big, and your 
pipeline operations. Where are your integrity management people 
placed? Do you centralize that location?
    Mr. Adams. There is some centralization. We have many of 
our integrity management people certainly at higher levels and 
technical levels actually out of Edmonton, Canada. They provide 
some overall support. And then strategically based throughout 
the system within regional areas we do have some integrity 
management folks. We do have field folks that have 
responsibility for some parts of integrity management, things 
such as cathodic protection systems and those sort of things, 
and they are on the pipe end themselves, via the technician 
level.
    Mr. Walz. OK, I just have one more before we move to Mr. 
Shuster. Talking about this May 25th incident, and Mr. Young 
did a good job of elaborating to us and I think there are some 
positives in this in containment. One of the questions--and we 
are seeing this again. I think we would be remiss when one of 
my colleagues said there is nothing, what is happening with BP 
in the Gulf, that has relationship to this. I think there is in 
terms of response and in terms of response plans. I know those 
best laid plans and I am glad to hear--and one of things, Mr. 
Jones, you talked about that they gave you flying colors on 
your document when they looked at it. It is still a document, 
and I want to know what the indication is on the ground.
    My question is the workers that responded to that May 25th 
incident, do you have a plan for long range watching their 
health concerns? Is there anything we should be concerned about 
of vapors, of contact, with was released or anything like that.
    Mr. Jones. Well, we do have a plan where we would monitor 
that, but in this particular case we kept our personnel away 
from the area until the volatiles were able to essentially 
flash off. That is one of the things you do in a response, is 
you look at the hazards and we keep our people out of harm's 
way.
    Mr. Walz. Will there be a follow-up on those folks to see 
if there is a cohort of these folks who responded to this 
thing, if they develop any abnormalities or health conditions?
    Mr. Jones. Well, we certainly would, but we were very 
careful, we did atmospheric monitoring to make sure that we did 
not put our people in harm's way.
    Mr. Walz. Last thing I would say, Mr. Guttenberg, would you 
respond on any of these that you maybe have a difference of 
opinion on these questions that were asked as this applied?
    Mr. Guttenberg. Well, the placing of personnel is a key 
part of this equation that is ongoing for me. If you have 
agency people that need to respond with other agency people, 
they need to be in proximity to them, but the integrity 
management people that need to be in the field or in proximity 
to it that is very important. And I think that is a key to what 
is a concern for a lot of employees internally. Think there is 
something wrong, we have a difference of opinion, we are the 
people that do--they are the people that do the work. And the 
senior management made a decision that they felt was not in the 
best interest in the safety and integrity of the pipeline.
    Mr. Walz. You stated, and I will end on this, that there is 
a culture of folks--I have looked at some these from screen 
names--I know for protection of integrity, afraid of spill, and 
some of these folks have written to your and some of the names 
have come out there. Is there a culture that they fear 
retribution on this? I know in a military setting that Mr. 
Jones is familiar with, and everyone else, is that anyone can 
call a ceasefire, anyone call a safety violation. You can shut 
down an operation from the lowest private to the general based 
on that. Do you feel that is not present in this operation?
    Mr. Guttenberg. Well, I am kind of the cynic when it gets 
to the top anyway. My history in construction is you sit in a 
meeting where they say priority is top and the most important 
thing and you can stop it right now. But when you get to the 
point when you have to do something, it has to get done. But 
Alyeska does have a good history, they do have a good dialogue 
with employees and project employees over the years, but I am 
not in those offices watching and witnessing what happens.
    Mr. Walz. OK. Well, I thank you all.
    Mr. Shuster.
    Mr. Shuster. Mr. Jones, first of all, I just want to point 
out based on what the Chairman said and Mr. Walz about your 
military background, you are a former commander in the Coast 
Guard, which I think brings great knowledge and that culture of 
safety to bear on the organization that you work with and work 
for.
    I understand that Alyeska has a major maintenance shutdown, 
is that accurate?
    Mr. Jones. Correct.
    Mr. Shuster. And how significant is that to the operation, 
to the safety and to the integrity plan that you have in place?
    Mr. Jones.  Well, it is very significant. We have been 
actually doing two major maintenance shutdowns per year where 
we may do valve work, we may do piping work. And so it is 
usually major work to where we have to actually be able to 
isolate a valve or piping from pressure, which is why you do 
the shutdown, but it is all part of our overall effort for 
integrity management.
    Mr. Shuster. As an event is it one of the most significant 
things you do, those two shutdowns all year?
    Mr. Jones. It is a big event and we do tremendous planning 
to make sure that we can do that safely.
    Mr. Shuster. When will that occur?
    Mr. Jones.  The next one will be July 31st.
    Mr. Shuster. And so I would imagine you have all hands on 
deck?
    Mr. Jones. It is all hands on deck.
    Mr. Shuster. Everybody is working?
    Mr. Jones. From top management right on down. It is a 
serious thing.
    Mr. Shuster. I want to point out to the Committee that 
sometimes in Washington in general there is a disconnect on 
what goes on in the real world and what goes on in Washington. 
I would have hoped that we would have taken that into 
consideration and maybe brought you here after the major 
maintenance was done, so you probably have spent a number of 
hours preparing, researching to be before us here today. So 
when we talk about here in Congress a culture of safety it 
needs to be start here also in Congress. So again I would hope 
in the future that the Committee staff and the majority would 
take those kind of events into consideration because taking you 
away, being the Senior Vice President for Technical Support, 
you probably have a lot to do with the maintenance coming up 
and here you are in Washington when you would better serve the 
safety culture and the culture of safety back there in Alaska. 
I just want to make that point.
    The question, back to the moving of the staff, I just want 
to put into the record, ask unanimous consent to put in the 
Joint Pipeline Office of the Federal-State organization that 
oversees, has oversight up there in Alaska, put out this letter 
on--I don't know the date--July 14th and just one paragraph, to 
read that ``We consider Alyeska's transfer of integrity 
environmental staff from Fairbanks to Anchorage is a business 
decision because it does not involve first responders.''
    So I would like the entire letter to be in the record to 
make sure that we have that because as I think it has been 
pointed out a number of times this is a business decision, it 
doesn't effect safety. And with technological changes from 
computers to monitoring devices to the transportation system, 
you don't always--in a business model you have got to make 
decisions to make sure you are efficient. I want to point out 
when you say nonprofit I think a lot of people think you don't 
make any money. But a nonprofit has to have more revenue or it 
should have more revenue than it does expenses or it is going 
to go down the tubes or you will come to Washington, D.C. And 
ask for us to bail you out. We need to make sure it is on the 
record that people know that you have got to be self-
sustaining. So you have got to have a positive revenue flow 
over expenses.
    Also, we wanted to ask how does Alyeska spending--how much 
do you spend annually on your integrity management activities 
to comply with the Federal pipeline safety laws and 
regulations?
    Mr. Jones. Well, since 2005 coming up to present, we have 
had a steady increase in the funding for our Integrity 
Management Program. 2005 expenses were right around $45 million 
total. And then leading up to today where it will be a little 
over $60 million.
    Mr. Shuster. Do you exceed the Federal standards, the 
Federal requirements, safety requirements?
    Mr. Jones. Well, you know, I don't have a breakdown of 
that, but that is, you know, comprehensively everything that we 
are putting into the Integrity Management Program. The program 
is very effective, and, you know, we can see that also in our 
performance.
    Mr. Shuster. One final question for you.
    Have you ever had a leak on the 800-mile pipeline that was 
due to corrosion?
    Mr. Jones. No, we have not.
    Mr. Shuster. If I could, I will ask one final question of 
Mr. Adams.
    In your testimony, you claim, in the effort to strive 
towards the industry goal of zero releases, zero injuries, zero 
fatalities, no operation interruptions, that Enbridge holds 
managers accountable for those performance measurements 
designed to meet those goals during their personal performance 
evaluations.
    If somebody fails to hit those goals, what actions do you 
take to rectify this?
    Mr. Adams. Certainly, it depends on the position, but it is 
incorporated into our overall performance in terms of our bonus 
structure's pay for employees, and it depends on the level of 
the organization. Certainly, as you get to higher levels within 
your organization, there is a bigger impact on that 
compensation related to safety performance and pipeline 
integrity performance.
    Mr. Shuster. I certainly think our goal should be zero 
fatalities, zero injuries. We certainly want to strive to do 
that. It is my view, though, that we are going to have human 
error and the possibility of mechanical breakdowns in striving 
for that goal as we should do; but I think the only way, 
realistically, that we can get to that point--and in talking to 
a company that has a stellar safety record--is you just don't 
do it. That is the only way we get to zero fatalities. It is 
the only way we get to zero injuries, unfortunately. I mean 
would you agree with that?
    Mr. Adams. Absolutely. I think, traditionally, industry is 
looked at in terms of safety overall, a pyramid. If you get rid 
of the small issues, then you can eliminate the big ones in the 
long term. I think that conventional thinking has changed a 
little bit as a result of BP and what has happened in our own 
company with the issues that we have had. What we find is that 
any breakdown in the management system anywhere along the way--
I think Congressman Oberstar mentioned that senior management 
in the boardroom has to believe in it, but every single one of 
your leaders within the organization has to believe in it, and 
when you get a breakdown at any level in that organization, you 
can have an issue.
    I think we, as an industry, and everywhere can get to the 
point where we can't blame anything on human error because, if 
our management system works, we have those people trained. We 
have the right people in the right place doing the right job.
    Mr. Shuster. Well, I just thank both of you for being 
here--all four of our witnesses--but these are two great 
examples of companies that have cultures of safety.
    Again, I just want to reiterate that I hope we on the 
Committee here in the future take under consideration when a 
pipeline has a major maintenance shutdown, that we bring them 
to Washington after they have done this major maintenance 
safety situation that they are going under right now and not 
drag then down here to Washington to take their eye off the 
ball on safety.
    So thank you very much.
    Mr. Walz. Well, I thank the gentleman.
    Also, though, I take my responsibility of oversight 
seriously. Maybe the gentleman can arrange for us to get to 
Alaska and make it easier for Mr. Jones and to make sure we are 
doing our job.
    Mr. Shuster. I think Mr. Young has made a standing offer, 
and Mr. Oberstar has, I think, participated many times in that 
trip up to Alaska to see it firsthand. It should be done by all 
Members.
    Mr. Walz. We really appreciate it. I think there is little 
doubt that this entire Committee wants, as I said, to be able 
to move the petroleum that powers our country, at the same time 
doing it safely and protecting our workers and the environment.
    The one thing I would bring back is this move of employees, 
though. I want to get at the decisions that were made in this 
because Alyeska asked its engineering director and the 
engineering integrity manager, who supervises the Fairbanks 
employees, to review the risks of moving integrity management 
personnel to Anchorage, which is exactly what was done.
    They generated a report, and the findings--and I quote--
stated: There are significant safety and integrity risks 
associated with movement of the current IM teams to Anchorage.
    What overrode those inputs? I would think the engineering 
integrity manager and the engineering director would be pretty 
heavyweights in the decision on this. What was the decision 
then as it was being balanced out, Mr. Jones, to decide to do 
that?
    Mr. Jones. Right. Well, of course, this was not the only 
consideration, you know, that we looked at.
    In the report, they did not have any--we didn't ask them 
how to mitigate measures or to look at things, and when we went 
through our analysis, we had lots of discussion. We involved 
some of those engineers in discussions, and what we came up 
with was a balance to where we left some people who definitely 
had more of a role in the field. We left them in Fairbanks--
that was three of the engineers--and then the people who had 
essentially office responsibilities were the ones who we 
brought in to Anchorage.
    I had a conversation with one of the authors of that report 
just last week, and we talked about this issue. He has assured 
me, in how we have handled this, that we do not have a safety 
or integrity problem on the pipeline.
    Mr. Walz. Would that person be willing to state that to us 
for the record and provide that to me?
    Mr. Jones. Well, I can't speak for him, but based on what 
he told me, I would think he would.
    Mr. Walz. OK. I would like to see if we can follow up on 
that to get these people who wrote this report. I would like to 
see if they have changed their position from this, and you are 
stating that they have. I would like to have them say that, if 
that is OK.
    Mr. Jones. Just to be clear, I am stating that the 
integrity management manager, who was one of the authors of 
that report, has told me that.
    Mr. Walz. Very good.
    Mr. Shuster hit on this, the $60 million on compliance and 
safety. Is that a greater percentage of your budget or less in 
terms of what you put into this? You stated that the number 
went up, but I think it is important in the context of things. 
Is maintenance being deferred because it is OK to do that and 
that the maintenance didn't need to be done at that time or is 
it being deferred to keep the costs down?
    So Mr. Shuster talked about the $60 million. It sounds like 
a lot, but it depends on how big the pipeline is. It depends on 
how much needs to be done. It depends on what percentage of the 
budget that is.
    Are you increasing funding on compliance and maintenance in 
terms of your overall expenditures?
    Mr. Jones. We have been on our, what we call, baseline 
expenses. It has been relatively flat. You would have to look 
at individual components.
    The bottom line is we fund the essential work, and so we 
prioritize it, and we use that risk-based approach. That was 
one of the first questions that we had. So we always make sure 
that we go after the safety and integrity work. That is 
paramount, and it gets our utmost attention. We also know that 
if we had to go back for additional funding from the board in 
order to do that work that we could do so.
    Mr. Walz. The last thing I would ask:
    Is there overregulation on pipelines? Is there 
overregulation? Are we stepping in there? Are we hurting your 
ability to operate by having too much regulation? I hear this a 
lot. There is too much government. There is too much 
regulation. There is too much cost to you or whatever. Is there 
too much? I will ask each of you, if you can. I know it is 
subjective, but I would like to hear how you would respond to 
it.
    Mr. Kuprewicz. Do you just want to go down the line?
    Mr. Walz. Yes.
    Mr. Kuprewicz. No.
    Mr. Walz. OK.
    Mr. Jones. What we look for are regulations that provide a 
very clear target, that are not moving, and that also get 
consistent application and enforcement of those clear targets. 
So, to the extent that regulation can do that, then, you know, 
we will take that on. We are not afraid of strict standards. 
You know, we understand that, but we need things to be very 
clear and uniformly enforced.
    Mr. Walz. Are they that way now, in your opinion, Mr. 
Jones, or not?
    Mr. Jones. Well, there are issues. You know, there are 
definitely things that can be worked on.
    Mr. Walz. OK.
    Mr. Guttenberg. Thank you.
    You know, my legislative career is similar to yours. One of 
the things, the caveats, that I put in is that it has to work. 
In some hearings, when people have come in and complained about 
being overregulated, some of my colleagues from the other side 
of the table have said, ``Give me an example.'' ``Tell me what 
the regulation is that is in the way or too cumbersome.'' I 
don't see the answer, and I sit on the Reg. Review Committee in 
the legislature, and I haven't witnessed a lot of it. So, if 
they have something, they should come forward and be specific 
about it.
    Mr. Adams. My comments would mirror, certainly, Mr. Jones'.
    I would just add that I think there are some areas--and I 
mentioned them briefly--where I think we could use some 
additional regulation, and that is really around third-party 
damage and in some of the exclusions that exist out there, 
through municipalities or whatever, and I think that is 
certainly an area that we would like to see looked at from this 
body.
    Mr. Walz. Great.
    Mr. Shuster, do you have any follow-up? Then we will see if 
the Chairman has anything.
    Mr. Shuster. Just on the third party, can you elaborate a 
little more on that?
    Mr. Adams. Yes.
    What exists out there--there are a number of different One 
Call-type programs from State to State, and there are certainly 
some variations.
    Mr. Shuster. Speak into the mike more.
    Mr. Adams. Yes.
    There are a number of One Call Systems that vary from State 
to State, certainly, but within those, from municipalities in 
some cases, there are exemptions given to certain contractors 
that are actually digging out there that aren't required to 
utilize those One Call Systems. From an industry perspective, 
or at least from an Enbridge perspective, we would like to have 
those exemptions eliminated.
    Mr. Shuster. And why are they exempted?
    I mean, from a commonsense standpoint, if I am a 
contractor--well, I just--there was a point a couple months ago 
when I was digging up trees in my backyard. I made the call 
because I didn't want to make the mistake of hitting a gas line 
and blowing myself up or something like that.
    Mr. Adams. Yes, I am not sure why those exemptions exist.
    Mr. Shuster. OK. Thank you.
    Mr. Walz. Chairman Oberstar.
    Mr. Oberstar. Yes. Thank you, Mr. Chairman.
    I thank the witnesses for their responses to the previous 
questions. I want to come to Representative Guttenberg.
    These passages in your statement are very troubling to me, 
not troubling that you said them, but troubling about the 
condition of safety, that the move of personnel, which Mr. 
Jones described as a business decision and you described as a 
cost-saving measure, the company said would result in a onetime 
savings of $4 million, but then you go on to say that it would 
significantly decrease work efficiencies, increase travel 
costs. It would be the--and you point to an internal review by 
Alyeska that the loss of almost 50 percent of the company's 
integrity management group would occur if the company moved 
ahead with the transfer and that it would have the effect of 
deteriorating morale for the remaining personnel and in a loss 
of expertise and institutional knowledge and would return to 
Alyeska's previous history of compliance problems with 
integrity management.
    That seems very much to be at odds with what Mr. Jones is 
saying, trying to sort of brush this over as just a little 
business decision. This is substantively more than a business 
decision, right?
    Mr. Guttenberg. Thank you. That is my feeling as well.
    I know the report that Alyeska had done, which was 
referenced by the Chairman, is where some of that information 
comes out of. The morale and the loss of employees is--you 
know, they moved people from Fairbanks to Anchorage. Now they 
are moving them back. A certain number of them decided not to 
take that move. I know they were looking for positions at other 
places. Up until today, it has still been an ongoing situation, 
but if you are an employee and if you are a highly skilled, 
trained, educated, experienced engineer, working in integrity 
management, and you see a situation in front of you that says, 
``I am not going to be able to do my job if I move to 
Anchorage, the way it is defined for me in looking at what I 
need to do,'' then doing this job is no longer ever going to be 
satisfactory because I am not going to be able to do it. I am 
going to have to have more travel time. That is the increased 
cost. Then you are going to have a loss, and I think the 
institutional memory cannot be undervalued.
    Mr. Oberstar. What is the travel time from Anchorage to 
these outposts along the pipeline where personnel were 
stationed?
    Mr. Guttenberg. Well, if you were driving, it would be 
about 8 hours. If you were flying, it would be an hour plus.
    Mr. Oberstar. But you wouldn't be driving anyone to respond 
to an oil spill. You would fly them up there.
    Mr. Guttenberg. Well, that is not my decision. That is Mr. 
Jones' decision, but how you get there, whether you go by 
Glennallen or anywhere in between or any of those small 
communities or even north, you know, there might not be an 
airstrip for 20 miles.
    Mr. Oberstar. That is the other question of mine.
    Are there airstrips close to those checkpoints where 
personnel were located?
    Mr. Guttenberg. Well, since the construction of the 
pipeline--and I, you know, was involved in some of that--there 
are periodic airports and old construction camps all along the 
pipeline.
    Mr. Oberstar. Mr. Kuprewicz, you have been involved in 
pipeline safety for a great deal of your career.
    What do you think about the effect of moving personnel with 
the skills, the expertise, and the institutional knowledge, as 
Representative Guttenberg stated, and the effect on vigilance 
and response time and safety in this environment of the 
pipeline in Alaska?
    Mr. Kuprewicz. Well, first of all, you need to understand 
the history of Alyeska is they have developed issues that have 
set some of the original technology because they had serious 
corrosion risks and problems. They didn't have leaks, but they 
had corrosion, and those are well publicly known issues.
    Mr. Oberstar. Yes.
    Mr. Kuprewicz. So they have advanced the field in some of 
those areas, which are real important, so I don't want to take 
that away from them.
    The other side of it is, as you tend to create chaos in an 
organization, you have to be real careful with this because 
there is importance to things likes institutional memory, and 
that is one of the roles of government--to be sure, I think, 
that you don't reinvent the wheel. Some of the regulations 
should set certain minimums, and so you have got to be careful 
with all of this chaos, if it is real, and I am not up there, 
so I can't say how this has affected that organization, but you 
did lose 50 percent of your group.
    Now, what was the group, and what were their skills? Those 
are the kinds of things.
    When you create this kind of chaos for a technically 
cultural-based knowledge skill required, you want to be real 
careful with that. It doesn't mean you don't have to make those 
decisions, but you want to be real careful. In some cases, I 
have seen it in other companies. They have missed that. They 
have missed that complication with the confusion that they can 
cause, and they have had to reinvent through various field 
errors--and some of them not always catastrophic, but they have 
had to reinvent their learning curve.
    So I would just caution folks on that. It is an issue. It 
is an issue your folks are pursuing. You need to understand 
that and be comfortable with it. That would be my advice.
    Mr. Oberstar. Thank you.
    Mr. Adams, what is Enbridge's policy on the response and 
stationing of personnel? This is a very long pipeline that goes 
from Athabasca in northern Alberta, all the way to the 
Headwaters of the Great Lakes.
    Mr. Adams. Yes.
    What we have is we have our own emergency response 
personnel. Effectively, those emergency response groups are 
spaced probably 3 or 4 hours apart within our pipeline system. 
So, really, we can get people to the site sooner than that 
because we have technical-type people that are on call, but the 
emergency response crew, with equipment and certainly boom and 
recovery equipment, can be there in a 3- to 4-hour period 
typically.
    Mr. Oberstar. Three to 4 hours apart by what measurement?
    Mr. Adams. By initial reporting, reporting of the leak or 
the area of the leak. In some instances, that can be a phone 
call from a third party. It can be our own pilots or aviation 
observing that there is a leak along the pipeline or an issue. 
There are a number of different ways we can get notified 
through our control center.
    Mr. Oberstar. When the Koch Pipeline burst near Little 
Falls in Minnesota, it was a person driving by, going home from 
work, who saw this black geyser shooting into the air alongside 
Highway 10. He was astute enough to realize that they don't 
have oil. There are no oil wells there. It is not likely that 
oil just spurt out of the ground, and he realized it and 
smelled it.
    He called the county sheriff's office, and the sheriff's 
office then had a phone number for the pipeline company, called 
``Pipeline Company.'' Then they called their office in Oklahoma 
to shut off the valve that controlled that segment of the 
pipeline.
    You know, the time frame was relatively short, but I just 
wonder what would have happened if that had been the dark of 
night and no one had seen that going. I asked that question of 
Koch, and they said, Eventually our sensors would have detected 
a decrease in pipeline pressure, and eventually that would have 
caused a shut-off.
    Is that what you are talking about? Are those the kinds of 
automatic valves that are periodically located along the 
pipeline?
    Mr. Adams. Yes. We certainly have valves along our pipeline 
system, and in recent years, we have had programs where we are 
installing additional valves, automatically operated valves, on 
each side of the sensitive areas.
    Mr. Oberstar. But, that 3 to 4 hours, is that response time 
from the time someone hears or knows of it and is on scene?
    Mr. Adams. Yes, that would be getting people on scene.
    Mr. Oberstar. By driving? By flying?
    Mr. Adams. By driving, typically, in most of our areas.
    Mr. Oberstar. You measure your response time in hours on 
the road, driving?
    Mr. Adams. Yes, a response to have people physically at the 
site. Certainly, our response time from our control center can 
be almost instantaneous, and our large leaks are typically 
detected by our control center personnel. They have enough 
experience and training that, with usually a leak of any size, 
they can view that there is a change in the operating system, 
and there are provisions that, if there is uncertainty, they 
have to shut down within a period of time, and that would 
include the closing of automatic valves.
    Mr. Oberstar. The valve structure that you have on your 
pipeline and the frequency of valves is that there are more in 
urban settings and fewer in rural areas. Is that by your 
standards or are those by the Office of Pipeline and Hazardous 
Material standards or by State standards or what?
    Mr. Adams. Yes, there are some standards in place, but we 
go beyond those standards and set our own standards. We have a 
risk management group that evaluates our pipeline flows. It 
evaluates the terrain that the pipeline is going through. 
Obviously, if you are on flat terrain, if there is a leak that 
drains up, even if the pipeline is shut down, is relatively 
small. If you are in a large area where there are large hills, 
you probably would want to install more valves. You would want 
to install valves on each side of a river, for example. If, 
indeed, there were a break in the river, you would close those 
valves.
    So it is very dependent, again, on where the pipelines run 
and the terrain, and we try to be prudent and, again, looking 
at where we can minimize the impact if, indeed, we did have a 
leak.
    Mr. Oberstar. Now, Mr. Jones, you said in the course of 
your testimony that there was no effect on people of that 
spill. Yet the reports that we have are that an employee 
reported smelling crude, so somebody had to be affected by it. 
Clearly, somebody was--at least one person, maybe more--and 
volatiles are carried by wind, and they go considerable 
distances.
    Mr. Jones. Well, that is true that volatiles do travel with 
the wind. I am not familiar with that particular case.
    What I do know is, in responding to that incident, we made 
safety and the concern about those vapors basically boiling 
off--you know, since it was a pool in secondary containment, it 
was important to us to not let our people, you know, get in 
there, and we waited a considerable amount of time. Then we did 
atmospheric monitoring, and we made sure that our people were 
outfitted in the appropriate gear before making site entry. 
That is a standard part of our response procedures. We actually 
had a very excellent response in this. It was very timely.
    Mr. Oberstar. Well, as to the cost-saving measure or 
business decision you made to bring personnel from the various 
locations on the pipeline into a consolidated area and to 
reduce the number of personnel, what is your time frame of 
moving personnel on scene?
    You heard what Representative Guttenberg said. What is your 
plan? Do you fly them? Do you drive them? Do you use a fixed-
wing or a helicopter to get people on site? Have you done a 
risk management evaluation of time frames and moving personnel 
on scene in case of failures?
    Mr. Jones. We actually do extensive planning to know how 
long it takes us to respond to certain sites, and we have----
    Mr. Oberstar. What is that time?
    Mr. Jones. Well, it varies depending on where you would 
have a spill, but we actually get into looking at all of the 
sensitive areas, and we develop very detailed plans to know 
exactly what we would need to do for a given scenario.
    One thing I need to correct here--and this is where I think 
there is some confusion--is that the people that we moved from 
Fairbanks to Anchorage were office-based. They were not part of 
our initial response team that we have. We have not changed any 
of our response capability for first responders. We have 69 
people, as I said earlier, 24/7 that are ready to go 
immediately. They are dispersed throughout the stations, along 
the pipeline and also at the Valdez Marine Terminal. I would 
rate our response capability as ``best in class.''
    Mr. Oberstar. So how many integrity management personnel 
does that leave on the pipeline on scene at various 
checkpoints?
    Mr. Jones. We don't have integrity management personnel at 
the pump stations. We never did. These personnel were in the 
Fairbanks office. There are about 20 total that are in the 
group. We currently have six vacancies. We have interim 
measures in place to cover those duties, and we are going 
through hiring and are actually doing interviewing right now. 
So I am very confident that we will replace the talent gap that 
we have, and we will not have safety or integrity impacted.
    Mr. Oberstar. So your plan is to fill those positions and 
bring it up to full steam.
    Does that satisfy you, Representative Guttenberg?
    Mr. Guttenberg. We will just have to see, at the end of the 
day, who is there. You know, where it hits the road is when 
something happens, and then you discover whether there were 
competent people in place who could actually do the response, 
not just the first response, but the secondary response to 
assess and take action on a spill or a problem.
    Mr. Oberstar. Now, your constituents in the area of the 
pipeline where they have seen spills, are they comfortable with 
these management decisions now?
    Mr. Guttenberg. You know, Alyeska has been there for a long 
time. There is a history of taking care of problems. You know, 
there haven't been any major spills. Spills at Pump Station 9 
were contained within the bladder, but there were problems with 
how that happened as well.
    People are concerned, but, you know, we are an oil State at 
the end of the day, and we look upon that as our flow of 
revenue, and people are at times really concerned about what 
would happen if there was a problem. So we are all over the 
place as far as how we review Alyeska.
    Mr. Oberstar. I think what this hearing shows us all is 
vigilance, consistency, a high standard of safety management by 
the company, a high level of oversight by the Pipeline Safety 
Management Agency, both Federal and State in a cooperative 
relationship, particularly in a hazardous environment, all of 
which were absent in the Gulf.
    It is just intolerable that the Minerals Management 
Service, under the previous administration, exempted BP from 
filing a blowout failure response plan. None was prepared. None 
was developed. They are showing today, even today, this very 
day, that they are still experimenting with containment and 
protection because they didn't think of it and they weren't 
required to think of it ahead of time. They were exempted from 
thinking about how to contain a failure at the wellhead and in 
the water column.
    That failure jeopardizes 50 percent of the fish and 
shellfish resources of the United States, 300,000 jobs and the 
future livelihoods of millions of people in the Gulf area, and 
it stretches all the way up to the Chesapeake Bay where 
oystermen were counting on oysters from the Gulf off Louisiana 
to serve their customers here.
    I was up on Eagles Nest Lake last week, just after the 4th 
of July, just on the edge of the boundary waters of the Cuyuna 
area, with my son and granddaughters, listening to the call of 
the loons. In 4 months, those loons are going to be migrating 
to the Gulf, and they are going to meet with a terrible fate if 
that oil isn't cleaned up, and it won't be cleaned up by that 
time because that is where they winter. They will be flying 
right into those marshes where the oil is gathered, and they 
are going to be Minnesota casualties, Minnesota loon 
casualties. If those loons don't return next spring, then BP is 
going to be to blame.
    I will leave it at that.
    Mr. Walz. Well, thank you to the Chairman for that 
summation.
    I want to thank each of you on behalf of myself and the 
Committee for being here, helping us to understand this, 
helping to be partners in getting this right, as we said, to 
move a precious resource to fuel our country as well as doing 
it in a safe manner. It is invaluable.
    To Mr. Jones and Mr. Guttenberg, thank you. I don't want to 
make light of the long travel you made. It truly was.
    The hearing will be open for 14 days for Members who wish 
to make additional statements or to ask further questions. 
Unless there is further business today, this Subcommittee is 
adjourned.
    [Whereupon, at 12:55 p.m., the Subcommittee was adjourned.]

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