[Federal Register Volume 63, Number 126 (Wednesday, July 1, 1998)]
[Notices]
[Pages 36018-36024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17492]


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DEPARTMENT OF TRANSPORTATION

Research and Special Programs Administration
[Docket No. RSPA-98-3891; Notice 12]


Pipeline Safety: Intent To Approve Project and Environmental 
Assessment for the Mobil Pipe Line Company Pipeline Risk Management 
Demonstration Program

AGENCY: Office of Pipeline Safety, Research and Special Programs 
Administration, DOT.

ACTION: Notice of Intent to Approve Project and Environmental 
Assessment.

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SUMMARY: As part of its Congressional mandate to conduct a Risk 
Management Demonstration Program, the Office of Pipeline Safety (OPS) 
has been authorized to conduct demonstration projects with pipeline 
operators to determine how risk management might be used to complement 
and improve the existing Federal pipeline safety regulatory process. 
This is a notice that OPS intends to approve Mobil Pipe Line Company 
(Mobil) as a participant in the Pipeline Risk Management Demonstration 
Program. This also provides an environmental assessment of Mobil's 
demonstration project. Based on this environmental assessment, OPS has 
preliminarily concluded that this proposed project will not have 
significant environmental impacts.
    This notice explains OPS's rationale for approving this project, 
and summarizes the demonstration project provisions (including affected 
locations, risk control and monitoring activities, and regulatory 
exemptions) that would go into effect once OPS issues an order 
approving Mobil as a Demonstration Program participant. OPS seeks 
public comment on the proposed demonstration project so that it may 
consider and address these comments before approving the project. The 
Mobil demonstration project is one of several projects OPS plans to 
approve and monitor in assessing risk management as a component of the 
Federal pipeline safety regulatory program.

ADDRESSES: OPS requests that comments to this notice or about this 
environmental assessment be submitted on or before July 31, 1998 so 
they can be considered before project approval. However, comments on 
this or any other demonstration project will be accepted in the Docket 
throughout the 4-year demonstration period. Comments should be sent to 
the Dockets Facility, U.S. Department of Transportation, Plaza 401, 400 
Seventh Street, SW, Washington, DC 20590-0001, or you can E-Mail your 
comments to [email protected]. Comments should identify the 
docket number RSPA-98-3891. Persons should submit the original comment 
document and one (1) copy. Persons wishing to receive confirmation of 
receipt of their comments must include a self-addressed stamped 
postcard. The Dockets Facility is located on the plaza level of the 
Nassif Building in Room 401, 400 Seventh Street, SW, Washington, DC. 
The Dockets Facility is open from 10:00 a.m. to 5:00 p.m., Monday 
through Friday, except on Federal holidays.

FOR FURTHER INFORMATION CONTACT: Elizabeth Callsen, OPS, (202) 366-
4572, regarding the subject matter of this notice. Contact the Dockets 
Unit, (202) 366-5046, for docket material.

SUPPLEMENTARY INFORMATION:

1. Background

    The Office of Pipeline Safety (OPS) is the federal regulatory body 
overseeing pipeline safety. As a critical component of its federal 
mandate, OPS administers and enforces a broad range of regulations 
governing safety and environmental protection of pipelines. These 
regulations have contributed to a good pipeline industry safety record 
by assuring that risks associated with pipeline design, construction, 
operations, and maintenance are understood, managed, and reduced. 
Preserving and improving this safety record is OPS's top priority. On 
the basis of extensive research, and the experience of both government 
and industry, OPS believes that a risk management approach, properly 
implemented and monitored, offers opportunities to achieve:
    (1) Superior safety, environmental protection, and service 
reliability;
    (2) Increased efficiency and reliability of pipeline operations; 
and
    (3) Improved communication and dialogue among industry, the 
government, and other stakeholders.
    A key benefit of this approach is the opportunity for greater 
levels of public participation.
    As authorized by Congress, OPS is conducting a structured 
Demonstration Program to evaluate the use of a comprehensive risk 
management approach in the operations and regulation of interstate 
pipeline facilities. This evaluation will be performed under strictly 
controlled conditions through a set of Demonstration Projects to be 
conducted with interstate pipeline operators. A Presidential Directive 
to the Secretary of Transportation (October 16, 1996) stated that in 
implementing the Pipeline Risk Management Demonstration Program: ``The 
Secretary shall require each project to achieve superior levels of 
public safety and environmental protection when compared with 
regulatory requirements that otherwise would apply.'' Thus, the process 
to select operators for this Demonstration Program involves a 
comprehensive review to ensure that the proposed project will provide 
the superior safety and environmental protection required by this 
Directive. OPS may exempt a participating operator from particular 
regulations if the operator needs such flexibility in implementing a 
comprehensive risk management program; however, regulatory exemption is 
neither a goal nor requirement of the Demonstration Program. This 
document summarizes the key points of this review for Mobil's 
demonstration project, and evaluates the safety and environmental 
impacts of this proposed project.

2. OPS Evaluation of Mobil's Demonstration Project Proposal

    Using the consultative process described in Appendix A of the 
Requests for Application for the Pipeline Risk Management Demonstration 
Program (62 FR 14719), published on March 27, 1997, OPS has reached 
agreement with Mobil Pipe Line Company on the provisions for a 
demonstration project to be conducted at a crude oil storage tank 
facility in Patoka, Illinois.

Company History and Record

    Mobil Pipe Line Company currently owns approximately 5409 miles of

[[Page 36019]]

hazardous liquid pipeline throughout nine states. The Patoka, Illinois 
crude breakout facility is located within the city limits of Vernon, 
Illinois, population about 150, in Mobil's East of the Rockies (EOR) 
operating region.
    Before entering into consultations with Mobil, OPS determined that 
Mobil was a good demonstration program candidate based on an 
examination of the company's safety and environmental compliance 
record, its accident history, and its commitment to working with OPS to 
develop a project meeting the Demonstration Program goals.
    In considering the merits of Mobil's proposal, OPS undertook a 
comprehensive review of the company's safety and compliance record for 
the demonstration project location, as well as Mobil's entire East of 
the Rockies (EOR) system. Mobil, like all operating companies, has 
experienced incidents at its facilities within and outside the United 
States. In the last five years, the only incident at Patoka of 
sufficient impact that required reporting to OPS occurred on March 7, 
1995. A roof drain hose failed due to ice formation during sub-zero 
temperatures. This event resulted in no injuries, and the company 
reported that 196 of the 200 barrels spilled were recovered.
    Considering the frequency, causes, and consequences of these 
events, together with Mobil's response to these events, OPS has 
concluded that Mobil has demonstrated the corporate commitment to 
safety and environmental protection required of demonstration program 
candidates.
    Mobil has also demonstrated a strong working relationship with 
emergency response personnel from federal and state agencies. Mobil 
recently participated in a successful emergency drill with 
representatives from OPS, the Environmental Protection Agency (EPA), 
and the Coast Guard. Local and state participants from Illinois and 
Missouri played active roles in this exercise.

Consultative Evaluation

    During the consultations, OPS headquarters and Central Region 
representatives, an Illinois pipeline safety official, and risk 
management experts, met with Mobil to discuss Mobil's Environment, 
Health, and Safety Management System (EHSMS). These discussions 
included the programmatic and technical processes associated with the 
risk management element of the EHSMS, the specific risk assessments 
that Mobil has or will perform as part of this program, other 
supporting analyses Mobil performed, proposed risk control activities 
to address identified risks, and proposed performance measures to 
ensure superior performance is being achieved. The discussions 
addressed the adequacy of Mobil's management systems and technical 
processes, demographics near the demonstration facility, communications 
with outside stakeholders, and monitoring and auditing of results once 
the demonstration project is underway. The consultation process also 
included an environmental assessment, which is described in the 
appendix to this notice.
    The consultation process was structured around three major review 
criteria:
    1. Whether Mobil's proposed risk management demonstration program 
is consistent with the Risk Management Program Standard and compatible 
with the Guiding Principles set forth in that Standard;
    2. Whether the specific risk control activities that will result 
from Mobil's proposed risk management program are expected to produce 
superior safety, environmental protection, and reliability of service 
compared to that achieved from compliance with the current regulations;
    3. Whether Mobil's proposed risk management demonstration program 
includes a company work plan and a performance monitoring plan that 
will provide adequate assurance that the expectations for superior 
safety, environmental protection, and service reliability are actually 
being achieved during implementation.
    The demonstration project provisions described in this notice 
evolved from these consultations, as well as any public comments 
received to date. Once OPS and Mobil consider comments received on this 
notice, OPS plans to issue an order approving the Mobil demonstration 
project.

3. Statement of Project Goals

    OPS and Mobil believe Mobil's demonstration project will improve 
safety and environmental protection through the application of the 
Mobil EHSMS, which includes numerous hazard and risk assessments and 
risk control activities beyond current regulatory requirements. 
Specifically, the project will focus on safety and environmental issues 
associated with breakout tanks and tank facilities, and will 
demonstrate the adequacy of Mobil's release prevention and tank 
integrity programs. The project will help demonstrate how Mobil's 
release prevention activities will work in conjunction with proposed 
American Petroleum Institute (API) aboveground storage tank standards 
and National Fire Protection Association (NFPA) codes on flammable and 
combustible liquids. OPS has issued a notice of proposed rulemaking 
that would incorporate by reference selected industry standards for 
breakout tanks into 49 CFR Part 195. (see Federal Register Notice 63 FR 
27903, published 05/21/98.) Information and insights from the Mobil 
project will help OPS determine if the proposed regulations effectively 
address the most important risks at tank facilities, and help operators 
define the most effective means of addressing these risks.
    The Patoka crude breakout tank facility will be the initial focus 
of the Mobil demonstration project. Mobil has conducted a thorough and 
systematic hazard analysis and risk assessment to identify hazards and 
risks associated with operating the facility. Mobil invited OPS to 
observe these assessments. Based on these risk assessments, Mobil has 
identified potential corrective actions for various systems at the 
facility, including piping, pumps, communications, fire water system, 
utility/support systems, and cast iron valves. During the demonstration 
project, Mobil will identify the specific risk control activities that 
are expected to result in reduced risk and superior safety and 
reliability at the facility. These risk control activities will exceed 
the requirements of the current regulations.
    Through these activities at Patoka, both Mobil and OPS will improve 
their understanding of risks associated with tanks and the most 
effective risk control activities to manage these risks. Mobil will use 
this information to assure superior performance at Patoka and, as 
appropriate, at other Mobil tank facilities. OPS will use the 
additional information to assure that Mobil and OPS fully understand 
the major risks of the Patoka facility and that Mobil is implementing 
effective risk control activities, specific to the Patoka facility.
    Mobil seeks no relief from current pipeline safety regulations 
governing the operation of the Patoka facility. The Patoka facility 
would be exempt from compliance with any new regulations that are not 
consistent with the approved risk management activities and OPS would 
continue to monitor Mobil's performance under the risk management order 
to assure that superior performance is being achieved.

4. Demonstration Project Facility:

    The Patoka facility is located within the city limits of Vernon, 
Illinois, a town with a population of about 150. The surrounding area 
is also low population density. The facility contains 22 vertical 
aboveground crude

[[Page 36020]]

storage tanks, plant transfer piping, transfer pumps, crude oil 
blenders, offices, a maintenance building, miscellaneous auxiliary 
pipeline station equipment, and the station manager's personal 
residence. Patoka is a self-contained facility, with no public roads 
traversing the property. The North Fork Creek, which runs along the 
south end of the Patoka facility, is a water supply for the city of 
Patoka. Mobil protects the creek by maintaining a second physical 
barrier surrounding each tank that is capable of holding more than the 
entire contents of the tank. Mobil has provided additional 
precautionary barriers to releases of product along the south end of 
its Patoka facility.
    The facility is used as a common carrier crude pipeline handling 
facility. Products handled at the facility include crudes of varying 
sulphur content from the US Gulf Coast and Canada, and petroleum 
condensate. The products include both ``sour'' crude (oil with a total 
sulphur content above one percent), and ``sweet'' crude (oil with 
little or no sulphur impurities).

5. Project Description

    In 1996, Mobil updated its Corporate Policy on Environment, Health, 
and Safety (EHS). To fulfill the commitments in the EHS Policy, Mobil 
has adopted an Environmental, Health, and Safety Management System 
(EHSMS). The EHSMS is the vehicle for institutionalizing a 
comprehensive and integrated risk management program throughout Mobil. 
The primary objective of the Mobil project is to demonstrate that 
implementing the EHSMS will lead to superior performance, improved 
safety and environmental protection.
    Mobil's environment, health, and safety program includes 11 key 
elements and 56 specific management ``expectations''. An 
``expectation'' within the EHSMS is a well-defined objective and 
includes identification of those accountable and responsible for 
achieving the objective, the documentation required to demonstrate 
achievement, performance indicators, and the key corporate resources 
that will be used to achieve the objective.
    The 11 elements are:
    1. Policy and Leadership.
    2. Continuous Improvement.
    3. Safety and Health.
    4. Risk Management.
    5. Incident Reporting and Investigation.
    6. Crisis Preparedness.
    7. Environmental Protection.
    8. Product Stewardship.
    9. Training.
    10. Community Relations.
    11. Legal Requirements.
    The Risk Management element of the program (Element #4) has four 
expectations:
    4.1  A system is in place to identify environment, health, and 
safety hazards and their potential consequences.
    4.2  A system is in place to assess and prioritize risks and manage 
them in a cost-effective manner.
    4.3  A system is in place to review the design of new and modified 
facilities to ensure the incorporation of appropriate environment, 
health, and safety protection measures.
    4.4  Risks associated with the acquisition, closure and divestment 
of facilities and operations are assessed and managed.
    Mobil has structured and documented processes in place for 
performing the hazards analyses, risk assessments, and job safety 
analyses, prioritizing risks, defining risk control activities, and 
evaluating and prioritizing risk control activities required to meet 
the corporate expectations. These structured analytical and management 
processes also satisfy the requirements of the Risk Management Program 
Standard.
    The Mobil EHSMS also includes structured processes for qualifying 
and training personnel in risk assessment, and integrating the risk 
assessment program with other Mobil operating and business systems, 
including those processes used by Mobil to ensure that proposed changes 
to the physical design of the system or to the maintenance and 
operating procedures of the system are carefully considered, 
documented, and communicated.
    Mobil's East of the Rockies (EOR) business unit, which is 
responsible for the Patoka facility, has defined the accountabilities, 
responsibilities, documentation requirements, and performance 
indicators for management expectations, including the four risk 
management expectations. A business unit review of how Mobil's EOR 
Business Unit is implementing the EHSMS was performed in the First 
Quarter of 1998, and no significant deficiencies were reported. 
Business unit reviews will occur annually.
    Mobil has performed the required hazards assessment, job safety 
analyses, and risk assessment of its Patoka facility. Mobil has 
identified a variety of potential risk control activities to address 
the identified risks including improvements to piping, pumps, 
communications, fire water system, utility/support systems, and cast 
iron valves. During the demonstration project, Mobil will identify the 
specific set of risk control activities that will best manage the risks 
identified. Mobil will continue to perform all of the preventive 
measures and risk control activities currently in effect. In addition, 
through the EHSMS process, Mobil has identified facility-specific 
hazards and concerns that were not specifically or adequately addressed 
through compliance with current DOT regulations. The risk analyses that 
Mobil has performed are beyond the requirements of the current 
regulations.
    Mobil has defined performance indicators for management 
expectations, including performance indicators for the four risk 
management expectations discussed previously. Mobil tracks several high 
level EHS performance indicators including the number of environmental 
incidents, DOT and OSHA reportable incidents, and lost work days. The 
financial compensation for Mobil employees is tied to these performance 
measures. Ongoing audits and assessments, conducted as part of the 
Continuous Improvement element (Element #2 of the EHSMS), assure that 
all expectations have been met.
    The activities below would be included in an Order formally 
approving the Mobil demonstration project:
     Share information with OPS concerning the use of hazards 
analyses, risk screening tools, and other risk assessment and 
prioritization tools;
     Share information with OPS concerning facility-specific 
risks at Patoka;
     Share information with OPS concerning the preventive and 
risk control activities Mobil has identified to address these risks and 
their relative priority;
     Implement the risk control activities selected for Patoka;
     Share information with OPS concerning the lessons learned 
on institutionalizing risk management programs to help OPS in 
evaluating the effectiveness of risk management programs; and
     Track, monitor, and report performance measures selected 
to determine the effectiveness of the risk control activities selected 
for Patoka, and the Mobil risk management program in general.

Monitoring Demonstration Project Effectiveness

    The Mobil Demonstration Project includes a comprehensive approach 
to performance monitoring that assures the superior protection of 
public safety and the environment, and achieves other project 
objectives. A key element of this monitoring plan is a set of 
programmatic performance measures that would track the growth and 
institutionalization of

[[Page 36021]]

risk management within the company, measure the effectiveness of the 
EHSMS in achieving stated expectations, and measure the effectiveness 
of specific risk control activities. Mobil uses a simple, three point 
scale to score performance in implementing the Mobil EHSMS:

0=No Evidence That Expectation is Being Met
1=Expectation is Partially Met
2=Expectation is Fully Met
B=Best Practice (equivalent to a ``2'' for roll-up purposes)

    Mobil will report performance measurement data and project progress 
quarterly to OPS throughout the four year demonstration period. This 
information, as well as periodic OPS audits, will assure accountability 
for improved performance.

6. Regulatory Perspective

Why Is OPS Considering This Project?

    OPS is considering Mobil's proposed project for the Demonstration 
Program because, after extensive review, OPS is satisfied that the 
proposal:
    1. Provides superior safety and environmental protection for the 
Patoka facility. Mobil has adequately demonstrated that the risk 
control activities it will perform at Patoka go beyond current pipeline 
safety regulatory requirements and, thus, provide a higher level of 
public safety and environmental protection than exists today.
    2. Offers a good opportunity to evaluate risk management as a 
component of the Federal pipeline safety regulatory program. OPS 
believes the Demonstration Program could benefit from Mobil's 
participation, given some of the distinguishing features of its 
proposed demonstration project, including:
     A fully-institutionalized, integrated, corporate-wide risk 
management program with documented roles, responsibilities, and 
accountabilities;
     Comprehensive evaluation of the hazards and risks of the 
facility;
     A structured and documented approach for identifying and 
evaluating the relative merits of risk control activities through a 
multi-attribute decision process;
     A good illustration of how companies can use risk 
management to improve safety and environmental protection over and 
above current regulatory requirements;
     Willingness to share information with OPS and state 
pipeline safety agencies on the specific risks associated with the 
facility, as well as its risk management program and processes.
    3. Provides valuable information about the risks and effective risk 
control activities for aboveground storage tanks. This additional 
information will allow OPS to more effectively ensure
    4. Safe operation of Patoka, and be better able to develop, apply, 
and enforce regulations related to aboveground storage tanks.

How Will OPS Oversee This Project?

    OPS retains its full authority to administer and enforce all 
regulations governing pipeline safety. Mobil is not requesting any 
regulatory exemptions. The Patoka facility will be subject to the 
routine OPS inspection to ensure compliance with the applicable Federal 
Pipeline Safety Regulations. In addition, subsequent to approval, a 
Project Review Team (PRT) consisting of OPS headquarters and regional 
staff and state pipeline safety officials who have been reviewing the 
proposal, will continue to monitor the project. The PRT is designed to 
be a more comprehensive oversight process which draws maximum technical 
experience and perspective from all affected OPS regional and 
headquarters offices as well as any affected state agencies that would 
not normally provide oversight on interstate transmission projects.
    One of the primary functions of this Team will be to conduct 
periodic risk management audits. These risk management audits will be 
used to ensure company compliance with the specific terms and 
conditions of the OPS Order authorizing this Demonstration Project. OPS 
is developing a detailed audit plan, tailored to the unique 
requirements of the Mobil Demonstration Project. This plan will 
describe the audit process (e.g., types of inspections, methods, points 
of disclosure of risk assessment information, frequency of audit), as 
well as the specific requirements for reporting information and 
performance measurement data to OPS.

Information Provided to the Public

    OPS has previously provided information to the public about the 
Mobil project, and has requested public comment, using many different 
sources. OPS aired an electronic town meeting on September 17, 1997 
that enabled viewers of the two-way live broadcasts to pose questions 
and voice concerns about candidate companies (including Mobil). An 
earlier Federal Register notice (62 FR 53052; October 10, 1997) 
informed the public that Mobil was interested in participating in the 
Demonstration Program, provided general information about technical 
issues and risk control alternatives to be explored, and identified the 
geographic areas the demonstration project would traverse.
    Since August 1997, OPS has used an Internet-accessible data system 
called the Pipeline Risk Management Information System (PRIMIS) at 
http://www.cycla.com/opsdemo to collect, update, and exchange 
information about all demonstration candidates, including Mobil.
    At a November 19, 1997, public meeting hosted by OPS in Houston, 
TX, Mobil officials presented a summary of the proposed demonstration 
project and answered questions from meeting attendees. (Portions of 
this meeting were broadcast on January 15, 1998, 2:00 p.m. Eastern 
Standard Time, via satellite to locations nationwide and via Internet 
to individuals at their personal computers). OPS featured members of 
the Patoka community on a satellite/Internet nationwide broadcast which 
aired March 26, 1998. The school superintendent, fire chief, and mayor 
were among the citizens who remarked on community relations, training 
programs, exercises, spill drills, and other interactions between the 
company and citizens. In addition to viewers of the live broadcast at 
sites throughout the nation, the Internet broadcast received over 4300 
hits.
    OPS has provided a prospectus, which includes a map of the 
demonstration sites, to State officials and community representatives 
who may be interested in reviewing project information, providing 
input, or monitoring the progress of the project. This notice is OPS's 
final request for public comment before OPS intends to approve Mobil's 
demonstration project. So far, the public has not raised any issues or 
concerns related to the Mobil proposal.

    Issued in Washington, DC on June 25, 1998.
Richard B. Felder,
Associate Administrator for Pipeline Safety.

Appendix--Environmental Assessment

A. Background and Purpose

    A Presidential Directive to the Secretary of Transportation 
(October 16, 1996) stated that in implementing the Pipeline Risk 
Management Demonstration Program: ``The Secretary shall require each 
project to achieve superior levels of public safety and 
environmental protection when compared with regulatory requirements 
that otherwise would apply.'' Thus, the process to select operators 
for this Demonstration Program involves a comprehensive review to 
ensure that the proposed project will provide the superior safety 
and environmental protection required by this Directive. This 
document summarizes the key points of this review for Mobil Pipe 
Line Company's (Mobil)

[[Page 36022]]

demonstration project, and evaluates the safety and environmental 
impacts of this proposed project.
    This document was prepared in accordance with section 102(2)(c) 
of the National Environmental Policy Act (42 U.S.C. Section 4332), 
the Council on Environmental Quality regulations (40 CFR Sections 
1500-1508), and Department of Transportation Order 5610.1c, 
Procedures for Considering Environmental Impacts.

B. Description of Proposed Action

    Mobil will conduct its demonstration project at its crude oil 
breakout storage tank facility in Patoka, Illinois. Mobil has 
adopted an Environment, Health, and Safety Management System (EHSMS) 
to institutionalize a comprehensive and integrated risk management 
program throughout the company. The proposed project's primary 
objective is to demonstrate that implementing the Mobil EHSMS will 
lead to superior performance, improved safety and environmental 
protection. The project will focus on safety and environmental 
issues associated with breakout tanks and tank facilities, and will 
demonstrate the adequacy of Mobil's release prevention and tank 
integrity programs.
    As a result of a comprehensive review of Mobil's risk management 
demonstration project, the Office of Pipeline Safety (OPS) proposes 
to approve this project for participation in the Demonstration 
Program.
    The Risk Management element of Mobil's EHSMS (Element #4) 
contains four expectations:
    4.1  A system is in place to identify environment, health, and 
safety hazards and their potential consequences.
    4.2  A system is in place to assess and prioritize risks and 
manage them in a cost-effective manner.
    4.3  A system is in place to review the design of new and 
modified facilities to ensure the incorporation of appropriate 
environment, health, and safety protection measures.
    4.4  Risks associated with the acquisition, closure and 
divestment of facilities and operations are assessed and managed.
    Each ``expectation'' within the EHSMS contains a well-defined 
objective and includes identification of those accountable and 
responsible for achieving the objective, the documentation required 
to demonstrate achievement, performance indicators, and the key 
corporate resources that will be used to achieve the objective.
    Mobil has structured and documented processes in place for 
performing the hazards analyses, risk assessments, job safety 
analyses, prioritizing risks, defining risk control activities, and 
evaluating and prioritizing risk control activities required to meet 
the corporate expectations. These structured analytical and 
management processes also satisfy the requirements of the Risk 
Management Program Standard.
    The Mobil EHSMS also includes structured processes for 
qualifying and training personnel in risk assessment, and 
integrating the risk assessment program with other Mobil operating 
and business systems, including those processes used by Mobil to 
ensure that proposed changes to the physical design of the system, 
or to the maintenance and operating procedures of the system, are 
carefully considered, documented, and communicated.
    Mobil is performing the required hazards assessment, job safety 
analyses, and risk assessment of its Patoka facility and will 
identify a set of risk control activities to effectively manage the 
risks identified. Mobil requests no exemptions from the current 
pipeline safety regulations. Mobil will continue to perform all of 
the preventive measures and risk control activities that are 
presently in effect. In addition, through the EHSMS process, Mobil 
has identified facility-specific hazards and concerns that were not 
specifically or adequately addressed through compliance with current 
pipeline safety regulations. The analyses that Mobil has performed 
and the risk control activities that Mobil will perform are beyond 
the requirements of the current regulations.
    Mobil will define performance indicators for each of the 56 
management objectives in the EHSMS. The financial compensation for 
Mobil employees is tied to these performance measures. Ongoing 
audits and assessments, conducted as part of the Continuous 
Improvement element of EHSMS (Element #2), will assure that all 
expectations are being met.
    The activities below would be included in an Order formally 
approving the Mobil demonstration project:
     Share information with OPS concerning the use of 
hazards analyses, risk screening tools, and other risk assessment 
and prioritization tools;
     Share information with OPS concerning the facility-
specific risks at Patoka;
     Share information with OPS concerning the preventive 
and risk control activities Mobil has identified to address these 
risks and their relative priority;
     Implement the risk control activities selected for 
Patoka;
     Share information with OPS concerning the lessons 
learned on institutionalizing risk management programs to help OPS 
in evaluating the effectiveness of risk management programs;
     Track, monitor, and report performance measures 
selected to determine the effectiveness of the risk control 
activities selected for Patoka, and the Mobil risk management 
program in general.

Monitoring Demonstration Project Effectiveness

    The Mobil Demonstration Project includes a comprehensive 
approach to performance monitoring that assures the superior 
protection of public safety and the environment, and achieves other 
project objectives. A key element of this monitoring plan is a set 
of programmatic performance measures that would track the growth and 
institutionalization of risk management within the company, measure 
the effectiveness of the EHSMS in achieving stated expectations, and 
measure the effectiveness of specific risk control activities.
    Mobil will report performance measurement data and project 
progress regularly to OPS throughout the four year demonstration 
period. This information, as well as periodic OPS audits, will 
assure accountability for improved performance.
    More detailed descriptions of all aspects of the Mobil proposal 
and OPS rationale for approving the project are available to the 
public via the Pipeline Risk Management Information System (PRIMIS), 
at http://www.cycla.com/opsdemo.

C. Purpose and Need for Action

    As authorized by Congress, OPS is conducting a structured 
Demonstration Program to evaluate the use of a comprehensive risk 
management approach in the operations and regulation of interstate 
pipeline facilities. This evaluation is being performed under 
strictly controlled conditions through a set of demonstration 
projects being conducted with interstate pipeline operators. Through 
the Demonstration Program, OPS will determine whether a risk 
management approach, properly implemented and monitored through a 
formal risk management regulatory framework, achieves:
    (1) Superior safety and environmental protection; and
    (2) Increased efficiency and service reliability of pipeline 
operations.
    In June, 1997, Mobil submitted a Letter of Intent to OPS, asking 
to be considered as a Demonstration Program candidate. Using the 
consultative process described in Appendix A of the Requests for 
Application for the Pipeline Risk Management Demonstration Program 
(62 FR 14719), published on March 27, 1997, OPS is satisfied that 
Mobil's proposal will provide superior safety and environmental 
protection, and is prepared to finalize the agreement with Mobil on 
the provisions for the demonstration project.

D. Alternatives Considered

    OPS has considered three alternatives: approval of the Mobil 
risk management demonstration project as proposed in Mobil's 
application; denial of the Mobil demonstration project; or approval 
of the project with certain modifications to Mobil's application.
    OPS's preferred alternative is to approve the Mobil 
demonstration project. OPS is satisfied that the proposal protects 
the Patoka facility and surrounding environment. The risk assessment 
findings disclosed from Mobil's hazard and risk analyses already 
exceed the information that would have been available to OPS through 
the current regulatory process. As a result of the assessments, 
Mobil is considering potential corrective actions for various 
systems at the facility, including piping, pumps, communications, 
fire water system, utility/support systems, and cast iron valves. 
Because Mobil will continue to perform the activities currently 
required by the regulations, the set of proposed risk control 
activities will go beyond the current regulatory requirements to 
provide a higher level of protection than exists today. OPS and 
Mobil will monitor and, if necessary, improve the effectiveness of 
the risk control activities throughout the demonstration period.

[[Page 36023]]

    Denial of the project would result in OPS's considerable loss of 
valuable information concerning the sources of risks at Patoka and 
other similar breakout tank facilities and the most effective means 
of managing these risks. Denial would also significantly diminish 
OPS's ability to evaluate the effectiveness of an institutionalized, 
integrated, and comprehensive risk management program in producing 
superior performance, and would hinder OPS's ability to satisfy the 
objectives of the Risk management Demonstration Program, and the 
requirements of the previously-mentioned Presidential Directive.
    All of the issues raised by OPS, state regulators, stakeholders, 
and the public about Mobil's proposed project have been discussed 
within the consultative process, resolved to OPS's satisfaction, and 
reflected in Mobil's application. Therefore, OPS does not believe 
that modifications to Mobil's application are required.

E. Affected Environment and Environmental Consequences

    The Patoka facility is located within the city limits of Vernon, 
Illinois, a town with a population of about 150. The area around the 
facility is low population density. The facility contains 22 
vertical aboveground crude storage tanks, plant transfer piping, 
transfer pumps, crude oil blenders, offices, a maintenance building, 
miscellaneous auxiliary pipeline station equipment, and the station 
manager's personal residence. Patoka is a self-contained facility, 
with no public roads traversing the property.
    The North Fork Creek, which runs along the south end of the 
Patoka facility, is a water supply for the city of Patoka. Mobil 
protects the creek by maintaining a second physical barrier 
surrounding each tank that is capable of holding more than the 
entire contents of the tank. Mobil has provided additional 
precautionary barriers to releases of product along the south end of 
its Patoka facility.
    The facility is used as a common carrier crude pipeline handling 
facility. Products handled at the facility include crudes of varying 
sulphur content from the U.S. Gulf Coast and Canada, and petroleum 
condensate. The products include both ``sour'' crude (oil with a 
total sulphur content above one percent), and ``sweet'' crude (oil 
with little or no sulphur impurities). If a tank leak or rupture 
were to occur, the crude product could possibly spill into the 
immediate surrounding area within the facility, and in the presence 
of an ignition source, could ignite releasing fumes into the air. 
The likelihood of such spills and the levels of associated 
environmental consequences are already very low, as evidenced by 
both Patoka-specific and industry-wide operating history. The 
performance of the risk demonstration project will result in 
additional risk control activities over those currently required, 
reducing even further the likelihood of events that could impact the 
environment and the potential levels of those impacts.
    In considering the merits of Mobil's proposal, OPS undertook a 
comprehensive review of the company's safety and compliance record 
for the demonstration project location, as well as Mobil's entire 
East of the Rockies (EOR) system. Mobil, like all operating 
companies, has experienced incidents at its facilities within and 
outside the United States. In the last five years, the only incident 
at Patoka of sufficient impact that required reporting to OPS 
occurred on March 7, 1995. A roof drain hose failed due to ice 
formation during sub-zero temperatures. This event resulted in no 
injuries and the company reported that 196 of the 200 barrels 
spilled were recovered.
    Considering the frequency, causes, and consequences of these 
events, together with Mobil's response to these events, OPS has 
concluded that Mobil has demonstrated the corporate commitment to 
safety and environmental protection required of demonstration 
program candidates.
    Mobil has also demonstrated a strong working relationship with 
emergency response personnel from federal and state agencies. Mobil 
recently participated in a successful emergency drill with 
representatives from OPS, the Environmental Protection Agency (EPA), 
and the Coast Guard. Local and state participants from Illinois and 
Missouri played active roles in this exercise.

F. Environmental Justice Considerations

    In accordance with Executive Order 12898 (Federal Actions to 
Address Environmental Justice in Minority and Low-Income 
Populations), OPS has considered the effects of the demonstration 
project on minority and low-income populations. As explained above, 
OPS believes this project will provide superior safety and 
environmental protection at the Patoka facility. The risk control 
activities will provide greater protection than compliance with 
existing regulations. The Patoka facility is located within the city 
limits of Vernon, Illinois, population about 150. Residents of 
Vernon will be afforded greater protection than they presently have, 
regardless of the residents' income level or minority status. 
Therefore, the proposed project does not have any disproportionately 
high or adverse health or environmental effects on any minority or 
low-income populations near the demonstration facility.

G. Information Made Available to States, Local Governments, and 
Individuals

    OPS has made the following documents publicly available, and 
incorporates them by reference into this environmental assessment:
    (1) ``Demonstration Project Prospectus: Mobil Pipe Line 
Corporation'', June 1998, available by contacting Elizabeth M. 
Callsen at 202-366-4572. Includes a map showing the location of the 
demonstration project site. Purpose is to reach the public, local 
officials, and other stakeholders, and to solicit their input about 
the proposed project. Mailed to several hundred individuals, 
including Local Emergency Planning Committees (LEPC) and other local 
safety officials, Regional Response Teams (RRT) representing other 
federal agencies, state pipeline safety officials, conference 
attendees, and members of public interest groups.
    (2) ``Mobil Pipe Line Company--Application for DOT-OPS Risk 
Management Demonstration Program'', available in Docket No. RSPA-98-
3891 at the Dockets Facility, U.S. Department of Transportation, 
Plaza 401, 400 Seventh Street, SW, Washington, DC 20590-0001, (202) 
366-5046.
    (3) ``OPS Project Review Team Evaluation of the Mobil 
Demonstration Project''.
    (4) ``Notice of Intent to Approve Project'', published 
concurrently with this Environmental Assessment.
    OPS has previously provided information to the public about the 
Mobil project, and has requested public comment, using many 
different sources. OPS aired four electronic broadcasts (June 5, 
1997; September 17, 1997; and December 4, 1997; and March 26, 1998.) 
reporting on demonstration project proposals (the last three of 
which provided specific information on Mobil's proposal). An earlier 
Federal Register notice (62 FR 53052; October 10, 1997) informed the 
public that Mobil was interested in participating in the 
Demonstration Program, provided general information about technical 
issues and risk control alternatives to be explored, and identified 
the geographic areas the demonstration project would traverse.
    Since August, 1997 OPS has used an Internet-accessible data 
system called the Pipeline Risk Management Information System 
(PRIMIS) at http://www.cycla.com/opsdemo to collect, update, and 
exchange information about all demonstration candidates, including 
Mobil.
    At a November 19, 1997, public meeting OPS hosted in Houston, 
TX, Mobil officials presented a summary of the proposed 
demonstration project and answered questions from meeting attendees. 
(Portions of this meeting were broadcast on December 4, 1997.) OPS 
featured members of the Patoka community on a satellite/Internet 
nationwide broadcast which aired March 26, 1998. The school 
superintendent, fire chief, and mayor were among the citizens who 
remarked on community relations, training programs, exercises, spill 
drills, and other interactions between the company and citizens. In 
addition to viewers of the live broadcast at sites throughout the 
nation, the Internet broadcast received over 4300 hits. This 
broadcast is available on demand via the OPS website ops.dot.gov/
tmvid.htm. So far, the public has not raised any issues or concerns 
related to the Mobil proposal.

H. Listing of the Agencies and Persons Consulted, Including Any 
Consultants

Persons/Agencies Directly Involved in Project Evaluation

Stacey Gerard, OPS/U.S. Department of Transportation
Tom Fortner, OPS/U.S. Department of Transportation
Ivan Huntoon, OPS/U.S. Department of Transportation
Donald Moore, OPS/U.S. Department of Transportation
Linda Daugherty, OPS/U.S. Department of Transportation
Bruce Hansen, OPS/U.S. Department of Transportation
Elizabeth Callsen, OPS/U.S. Department of Transportation
Steve Smock, Illinois Commerce Commission
Mary McDaniel, Railroad Commission of Texas

[[Page 36024]]

Jim vonHerrmann, Cycla Corporation (consultant)
Andrew McClymont, Cycla Corporation (consultant)

Persons/Agencies Receiving Briefings/Project Prospectus/Requests 
for Comment

    Regional Response Team (RRT), Region 5, representing the 
Environmental Protection Agency; the Coast Guard; the U.S. 
Departments of Interior, Commerce, Justice, Transportation, 
Agriculture, Defense, State, Energy, Labor; Health and Human 
Services; the Nuclear Regulatory Commission; the General Services 
Administration; and the Federal Emergency Management Agency (RRT Co-
Chairs: Richard Karl, EPA and Captain Gregory Cope, Coast Guard).

 I. Conclusion

    Based on the above-described analysis of the proposed 
demonstration project, OPS has determined that there are no 
significant impacts associated with this action.

[FR Doc. 98-17492 Filed 6-30-98; 8:45 am]
BILLING CODE 4910-60-P