[Federal Register Volume 63, Number 126 (Wednesday, July 1, 1998)]
[Notices]
[Pages 36024-36030]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17493]


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DEPARTMENT OF TRANSPORTATION

Research and Special Programs Administration (RSPA), DOT.
[Docket No. RSPA-98-3892; Notice 13]


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

AGENCY: Office of Pipeline Safety, 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 Phillips Pipe Line Company 
(Phillips) as a participant in the Pipeline Risk Management 
Demonstration Program. This also provides an environmental assessment 
of Phillips'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 Phillips 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 
Phillips 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 four 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-98-3892. 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 Phillips's 
demonstration project, and evaluates the safety and environmental 
impacts of this proposed project.

2. OPS Evaluation of Phillips'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 Phillips Pipe Line Company on the provisions for a 
demonstration project to be conducted along Phillips's Sweeny-Pasadena 
system in Texas.

Company History and Record

    Phillips Pipe Line Company is headquartered in Bartlesville,

[[Page 36025]]

Oklahoma, and employs over 580 people and operates and maintains 
approximately 7500 miles of pipelines in 9 states. Phillips transports 
approximately 750,000 barrels of crude oil, refined products, 
petrochemicals, and natural gas liquids each day.
    Before entering into consultations with Phillips, OPS determined 
that Phillips 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 Project goals.
    In December 1992, during an excavation project, a contract 
equipment operator punctured a pipeline operated by Phillips in Aurora, 
Colorado. This accident resulted in a release of 1,665 barrels of 
natural gas liquids, injuring six people. Because of concerns raised by 
OPS over company procedures, Phillips developed a risk based approach 
to improve the safety of pipeline excavations and implemented an 
Excavation Risk Assessment process. Lessons learned from this incident 
as well as other company and industry incidents led Phillips to the 
development and implementation of a formal risk management program. 
This event was also a major driver behind the development of the 
Phillips Excavation Risk Assessment Process which is a focal point of 
its proposed demonstration project.

Consultative Evaluation

    During the consultations, representatives from OPS headquarters and 
Southwest Region, pipeline safety officials from Texas, and risk 
management experts met with Phillips to discuss Phillips's overall risk 
management process. This included discussion of Phillips's risk 
assessment, risk analyses, and risk control processes and tools, its 
performance measures, and the philosophy and administration of risk 
management within the company. This also included a discussion of 
Phillips's excavation risk assessment process, including a review of 
the proposed demonstration project activities; population, terrain, and 
infrastructure along the affected pipelines; 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 an Appendix to this 
notice.
    The consultation process focused on three major review criteria:
    1. Whether Phillips's proposed risk management demonstration 
project is consistent with the Risk Management Program Standard and 
compatible with the Guiding Principles set forth in that Standard;
    2. Whether Phillips's proposed risk management demonstration 
project is expected to produce superior safety, environmental 
protection, and reliability of service;
    3. Whether Phillips's proposed risk management demonstration 
project includes a company work plan and a performance monitoring plan 
that will provide adequate assurance that superior safety, 
environmental protection, and service reliability are being achieved.
    Once OPS and Phillips consider and address comments received on 
this notice and environmental assessment, OPS plans to issue an Order 
approving the Phillips demonstration project.

3. Statement of Project Goals

    Phillips has been managing risk on its pipeline systems using a 
combination of personnel knowledge and experience, as well as Phillips 
and industry-wide operating data for many years. In 1995, Phillips 
Petroleum Company (Phillips's corporate parent) created the Process for 
Safety and Environmental Excellence (PSEE) to achieve a more 
consistent, formalized approach to ensuring the safe and 
environmentally responsible operation of its facilities. Within the 
framework of the PSEE, Phillips has implemented a formal risk 
management program. Formalizing Phillips's risk management program has 
involved developing more sophisticated tools to comprehensively 
identify and evaluate the most important risks associated with the 
design, construction, operation, and maintenance of Phillips's pipeline 
systems. Phillips is evaluating all of its pipelines using these tools, 
to identify the nature and location of the most significant risks.
    During this demonstration project, Phillips will share information 
about its evolving risk management program with OPS. This will enable 
OPS to acquire an improved understanding of the methods and techniques 
the company is using to manage risk on its system, and obtain far more 
information about the company's management processes, pipeline 
operations, and potential safety and environmental risks than is 
normally observed during OPS inspections to ensure compliance with the 
regulations.
    A key element of Phillips's risk management program is a risk-based 
approach to managing the risks associated with pipeline excavations. 
The Phillips Excavation Risk Assessment Process is a formal, ongoing 
process that has been in use system-wide since 1993 to identify and 
control the unique risks associated with each excavation on or near 
Phillips's pipelines. The process goes beyond the existing pipeline 
safety regulatory requirements for damage prevention.
    For its risk management demonstration project, Phillips proposes to 
comprehensively evaluate the application and effectiveness of the 
Excavation Risk Assessment Process to all company and third-party 
excavations that occur on and across the pipeline segments included in 
the project. Phillips's demonstration project will involve:

--requirements that an excavation risk assessment be conducted prior to 
each excavation project (whether the excavation is performed by 
Phillips employees or outside parties proposing to dig near Phillips's 
lines);
--requirements that outside parties excavating along the Phillips 
right-of-way prepare work plans and obtain Phillips's approval prior to 
initiating excavation;
--increased work plan formality, level of detail, and management 
approval required for higher risk excavations, including where 
appropriate, coordination with local emergency response personnel;
--enhanced monitoring of excavation work;
--gathering of performance measurement data and developing a more 
quantitative assessment of the benefits of performing excavation risk 
assessments; and,
--enhanced communications with One-Call centers, excavators, and the 
public.

    Phillips and OPS expect this project to demonstrate that risk 
management techniques can be successfully applied toward improving 
pipeline excavation safety.

4. Demonstration Project Pipeline Segments

    Phillips has proposed a 60-mile segment of two pipelines for 
inclusion in its demonstration project.
    Phillips's Sweeny-Pasadena products pipeline system consists of two 
interstate pipelines, 12'' and 18'', that deliver refined products 
(e.g., gasolines, distillates, and naphtha) from Phillips's Sweeny 
Refinery in Sweeny, Texas, to Phillips's Pasadena Terminal in Pasadena 
Texas. These products have varying properties and if released under 
certain conditions are flammable. They could also affect human health 
and the

[[Page 36026]]

environment if significant exposures occur.
    The 12'' and 18'' pipelines have been in operation since 1959 and 
1979, respectively. This system runs roughly Northeast from the Sweeny 
Refinery to the Pasadena Terminal, passing near the northern edge of 
Friendswood, Texas. The two lines parallel each other over the entire 
60-mile distance. The lines run through sparsely populated areas for 
about the first 45 miles and through heavily populated areas for the 
last 15 miles. The lines cross the Brazos and San Bernard rivers, 
several major roadways and railroad lines, and pass underneath the 
Texas State Department of Corrections' Ramsey facility.
    The 12'' line began service in 1956 and has a maximum operating 
pressure (MOP) of 1270 psi. It has had two leaks: one in 1992 and 
another in 1993. These leaks resulted in localized surface 
contamination near the line. Phillips quickly detected the leaks and 
stopped the release of product. The contaminated areas were 
satisfactorily remediated. There were no fatalities, injuries or 
adverse health effects to any member of the public or to any Phillips 
employees from these events. Both of these leaks were associated with 
material defects that developed because of the manufacturing process 
used to bend sections of the pipe. As a result of these events, 
Phillips conducted a comprehensive review of all pipe bends, that 
included an internal inspection for geometric defects. All piping bends 
with characteristics similar to those that had failed were replaced or 
heat treated to eliminate the condition that created the leaks. The 
12'' line also has some history of coating problems. To resolve this 
problem, Phillips has placed additional rectifiers to provide enhanced 
cathodic protection.
    The 18'' line was placed in service in 1979 and has a MOP of 680 
psi. The 18'' line has not had any leaks.

5. Project Description

    In 1995, the Phillips Petroleum Company (Phillips Corporate) 
created the Process for Safety and Environmental Excellence (PSEE) to 
achieve a more consistent, formalized approach to ensuring safe and 
environmentally responsible operation of its facilities. The PSEE is 
designed to manage environmental, safety and health risks in a manner 
that is integral to and not separate from the overall business process. 
The Phillips Corporate PSEE is a comprehensive business process 
applicable to every Phillips Corporate business unit (e.g., Phillips 
Pipe Line Company). Within this framework, each business unit is 
required to implement a formal risk management program.
    As part of formalizing its risk management program for pipelines, 
Phillips has identified and uses a variety of tools to identify and 
manage pipeline risks. These include: hazards analysis, environmental 
impact reviews, internal (pipeline) inspection tools, incident 
investigations, safety, health and environmental audits, contractor 
assessments, design reviews and others. To support a more integrated 
evaluation of the potential risks represented by its pipelines, the 
company also developed the Phillips Pipeline Risk Assessment System 
(PRAS). PRAS is a computerized indexing model that predicts the 
relative risk different pipe segments represent based on numerous 
factors that influence the likelihood and consequences of pipeline 
failure. The model synthesizes data and information on pipe design, 
operation, maintenance, pipe condition, population and activity near 
the line, and external environmental conditions. PRAS has been in use 
since 1995 and has been applied to all of Phillips's regulated pipeline 
systems (approximately 5500 miles of pipe). During the course of the 
demonstration project, Phillips will be enhancing PRAS, and evaluating 
improved approaches to integrate the PRAS results with the output from 
the other tools noted previously to comprehensively and consistently 
assess risks across its pipeline.
    During this demonstration project, Phillips will share information 
about its evolving risk management program with OPS.
    This will enable OPS to improve its understanding of the methods 
and techniques the company is using to manage risk on its system, and 
obtain far more information about the company's management processes, 
pipeline operations, and potential safety and environmental risks than 
is normally observed during OPS regulatory compliance inspections.
    The primary focus of Phillips's proposed demonstration project is 
to reduce pipeline risks resulting from excavations on or near 
Phillips's pipelines. Phillips hopes to demonstrate superior risk 
control and risk reduction mechanisms by applying its Excavation Risk 
Assessment Process. This process includes specific procedures relative 
to pipeline excavations and requires that an excavation site inspection 
and risk assessment be conducted prior to each excavation project. A 
risk assessment matrix is used to assess the potential risks associated 
with each excavation project. This matrix examines various risk factors 
for each excavation, including nearby population density, the presence 
of roads and railways, the existence of other utilities in the vicinity 
of the pipeline, the type of excavation equipment being used, and the 
properties of the product in the pipeline.
    Phillips uses a graded approach based on combinations of risk 
factors to evaluate the level of Phillips's project review and 
approvals required for the excavation plan.
    Phillips plans to communicate the details, progress, and results of 
the demonstration project, both externally and internally. Internally, 
Phillips will implement a formal communication program for company 
personnel involved with the demonstration project. Phillips will also 
implement excavation risk assessment refresher training prior to the 
start of the project, that will include the demonstration project 
communication plans and performance measures to be monitored and 
tracked during the project.
    Externally, Phillips will contact the affected local emergency 
planning committees (LEPCs) at the beginning of the demonstration 
project to communicate the details of the project and to identify how 
Phillips will communicate progress and results during the project. 
Phillips will also contact city and county planning committees for the 
towns that the demonstration segments cross to communicate Phillips's 
excavation requirements. Phillips will conduct surveys regarding the 
effectiveness and benefits of its excavation risk management process. 
Phillips also plans to seek input from contractors and developers 
involved during the demonstration project to help determine the cost 
effectiveness for the level of safety achieved. They plan to 
communicate throughout the project with OPS, the Texas Railroad 
Commission, city and county planning committees, affected LEPCs, and 
contractors and developers.
    Phillips's intended approach to performance monitoring of the 
project will include formal data collection and performance measures 
related to excavations along the demonstration segments. Phillips has 
proposed an initial set of performance metrics for the project and has 
an excavation risk assessment data collection worksheet to generate 
data and information relative to these metrics. Phillips's proposed 
performance metrics include:

 total number of one-call requests
 total number of excavation projects broken down by
  --Phillips's excavation projects (planned and unplanned),

[[Page 36027]]

  --third party excavations planned, and
  --other, unplanned excavation activities.
 initial and final risk ranking of each excavation that 
required a formal risk assessment
 level of approval obtained to complete the excavation
 number and type of risk control activities implemented
 number of excavations completed, changed, or terminated
 categorization and characterization of the number of 
excavations by
  --successful excavation (i.e., no damage)
  --damage incurred,
  --damage resulting in a leak, and
  --effectiveness of emergency response plans to a leak.

6. Regulatory Perspective

Why Is OPS Considering This Project?

    The OPS Project Review Team evaluated Phillips's proposed project 
according to review protocols and criteria. OPS has concluded the 
Phillips project will:
    1. Provide superior safety and environmental protection for the 
pipeline segments proposed for the demonstration project; and
    2. Offer a good opportunity to evaluate risk management as a 
component of the Federal pipeline safety regulatory program.
    Phillips is not proposing any alternative to or requesting any 
regulatory exemption from existing pipeline safety regulations in this 
demonstration project. Rather, Phillips's proposed project goes beyond 
the regulations and is considered to provide superior protection.
    Phillips's proposed project offers a good opportunity to evaluate 
risk management as a component of the Federal pipeline safety 
regulatory program. It also provides an opportunity to evaluate a risk-
based pipeline damage prevention methodology that could have broad 
potential application. The damage prevention focus could also offer 
benefits to the current joint government/industry initiative on damage 
prevention education.
    While the overall safety record for pipeline transportation is 
excellent, third party damage still presents a significant problem. 
Education on damage prevention is essential to reducing the incidence 
of third-party damage to underground facilities. OPS is currently 
sponsoring a joint government and industry Damage Prevention Quality 
Action Team to evaluate how to best utilize education resources to 
prevent pipeline damage. Phillips's proposed demonstration project is 
consistent with OPS's goals concerning pipeline damage prevention. The 
potential synergies between the Phillips project and the Damage 
Prevention Quality Action Team should enhance the benefits from both 
efforts.
    OPS believes the Demonstration Program could benefit from 
Phillips's participation, given some of the distinguishing features of 
its proposed demonstration project, including:

--An emphasis on improving damage prevention and emergency response 
coordination;
--Plans for concentrated public outreach and risk communications 
efforts;
--A good illustration of how companies can use excavation risk 
management to improve safety without seeking to reduce costs incurred 
by existing regulations;
--Phillips's willingness to share information with OPS and state 
pipeline safety agencies on the specific risks associated with the 
demonstration line segments and the Company's overall risk management 
program and processes. This additional information will allow OPS to 
more effectively ensure safe operation, and help OPS understand how 
risk management might be employed to supplement the existing regulatory 
framework.

How Will OPS Oversee This Project?

    The demonstration segments will be subject to routine OPS 
inspection to ensure compliance with the applicable Federal pipeline 
safety regulations. Additionally, the Demonstration Project will be 
monitored by a Project Review Team (PRT) consisting of OPS headquarters 
and regional staff, and state pipeline safety officials. The PRT is 
designed to implement 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 PRT's primary functions will be to conduct periodic risk 
management audits. These audits will ensure Phillips's compliance with 
the specific terms and conditions of the OPS Order authorizing 
Phillips's demonstration project, and will be performed in addition to 
the normal OPS inspections. OPS is developing a detailed audit plan, 
tailored to the unique requirements of Phillips's demonstration 
project. This plan will describe the audit process (e.g., types of 
inspections, methods, and their frequency), as well as the specific 
requirements for reporting information and performance measure data to 
OPS.
    Phillips is not requesting any regulatory exemptions, and OPS 
retains full authority to administer and enforce all regulations 
governing pipeline safety.

Information Provided to the Public

    OPS has previously provided information to the public about the 
Phillips project, and has requested public comment, using many 
different sources. OPS aired several electronic ``town meetings'' 
enabling viewers of the two-way live broadcasts to pose questions and 
voice concerns about candidate companies (including Phillips). An 
earlier Federal Register notice (62 FR 53052; October 10, 1997) 
informed the public that Phillips 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, 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 Phillips.
    At a November 19, 1997, public meeting OPS hosted in Houston, TX, 
Phillips 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, and March 26, 1998.)
    OPS has provided a prospectus, which includes a map of the 
demonstration segments, to State officials and community 
representatives who may be interested in reviewing project information, 
providing input, or monitoring the progress of the project. At this 
point, OPS has received no public comment on the Phillips's proposal.
    This notice is the last public comment opportunity prior to 
approval of Phillips's demonstration project.

    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

[[Page 36028]]

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 Phillips Pipe Line Company's (Phillips) proposed 
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

    OPS intends to approve Phillips as a participant in the Pipeline 
Risk Management Demonstration Program. Phillips has proposed a 60-
mile segment of two pipelines for inclusion in its demonstration 
project. Phillips's Sweeny--Pasadena products pipeline system 
consists of two interstate pipelines, 12'' and 18'', that deliver 
refined products (e.g., gasolines, distillates, and naphtha) from 
Phillips's Sweeny Refinery in Sweeny, Texas, to Phillips's Pasadena 
Terminal in Pasadena Texas. As the primary focus of its risk 
management demonstration project, Phillips proposes to 
comprehensively evaluate the application and effectiveness of its 
Excavation Risk Assessment Process to all company and third-party 
excavations that occur on and across the pipeline segments included 
in the project. OPS believes the Phillips demonstration project will 
provide superior safety and environmental protection by applying 
excavation risk control measures that exceed regulatory 
requirements.
    In 1995, the Phillips Petroleum Company (Phillips Corporate) 
created the Process for Safety and Environmental Excellence (PSEE) 
to achieve a more consistent, formalized approach to ensuring safe 
and environmentally responsible operation of its facilities. The 
PSEE is designed to manage environmental, safety and health risks in 
a manner that is integral to and not separate from the overall 
business process. The Phillips Corporate PSEE is a comprehensive 
business process applicable to every Phillips Corporate business 
unit (e.g., Phillips Pipe Line Company). Within this framework, each 
business unit is required to implement a formal risk management 
program.
    As part of formalizing its risk management program for 
pipelines, Phillips has identified and uses a variety of tools to 
identify and manage pipeline risks. These include: hazards analysis, 
environmental impact reviews, internal (pipeline) inspection tools, 
incident investigations, safety, health and environmental audits, 
contractor assessments, design reviews and others. To support a more 
integrated evaluation of the potential risks represented by its 
pipelines, the company also developed the Phillips Pipeline Risk 
Assessment System (PRAS). PRAS is a computerized indexing model that 
predicts the relative risk different pipe segments represent based 
on numerous factors that influence the likelihood and consequences 
of pipeline failure. The model synthesizes data and information on 
pipe design, operation, maintenance, pipe condition, population and 
activity near the line, and external environmental conditions. PRAS 
has been in use since 1995 and has been applied to all of Phillips's 
regulated pipeline systems (approximately 5500 miles of pipe). 
During the course of the demonstration project, Phillips will be 
enhancing PRAS and evaluating improved approaches to integrate the 
PRAS results with the output from the other tools noted previously 
to comprehensively and consistently assess risks across its 
pipeline.
    During this demonstration project, Phillips will share 
information about its evolving risk management program with OPS. 
This will enable OPS to improve its understanding of the methods and 
techniques the company is using to manage risk on its system, and to 
obtain far more information about the company's management 
processes, pipeline operations, and potential safety and 
environmental risks than is normally observed during OPS regulatory 
compliance inspections.
    A key element of Phillips's risk management program, and the 
primary focus of Phillips's proposed demonstration project, is a 
risk-based approach to managing the risks associated with pipeline 
excavations. The Phillips Excavation Risk Assessment Process is a 
formal, ongoing process that has been in use system-wide since 1993 
to identify and control the unique risks associated with each 
excavation on or near Phillips's pipelines. The process goes beyond 
the existing pipeline safety regulatory requirements for damage 
prevention.
    The Phillips Excavation Risk Assessment Process includes 
specific procedures relative to pipeline excavations and requires 
that an excavation site inspection and risk assessment be conducted 
prior to each excavation project. A risk assessment matrix is used 
to assess the potential risks associated with each excavation 
project. This matrix examines various risk factors for each 
excavation, including nearby population density, the presence of 
roads and railways, the existence of other utilities in the vicinity 
of the pipeline, the type of excavation equipment being used, and 
the properties of the product in the pipeline. Phillips uses a 
graded approach based on combinations of risk factors to evaluate 
the level of Phillips's project review and approvals required for 
the excavation plan.
    For its risk management demonstration project, Phillips proposes 
to comprehensively evaluate the application and effectiveness of the 
Excavation Risk Assessment Process to all company and third-party 
excavations that occur on and across the pipeline segments included 
in the project. Phillips's demonstration project will involve:

--requirements that an excavation risk assessment be conducted prior 
to each excavation project (whether the excavation is performed by 
Phillips's employees or outside parties proposing to dig near 
Phillips's lines);
--requirements that outside parties excavating along the Phillips 
right-of-way prepare work plans and obtain Phillips's approval prior 
to initiating excavation;
--increased work plan formality, level of detail, and management 
approval required for higher risk excavations, including where 
appropriate, coordination with local emergency response personnel;
--enhanced monitoring of excavation work;
--gathering of performance measurement data and developing a more 
quantitative assessment of the benefits of performing excavation 
risk assessments; and,
--enhanced communications with One-Call centers, excavators, and the 
public.

    Phillips plans to communicate the details, progress, and results 
of the demonstration project, both externally and internally. 
Internally, Phillips will implement a formal communication program 
for company personnel involved with the demonstration project. 
Phillips will also implement excavation risk assessment refresher 
training prior to the start of the project, that will include the 
demonstration project communication plans and performance measures 
to be monitored and tracked during the project.
    Externally, Phillips will contact the affected local emergency 
planning committees (LEPCs) to communicate the details of the 
project and to identify how Phillips will communicate progress and 
results during the project. Phillips will also contact city and 
county planning committees for the towns that the demonstration 
segments cross to communicate Phillips's excavation requirements. 
Phillips will conduct surveys on the excavation risk management 
process effectiveness. Phillips plans to communicate throughout the 
project with OPS, the Texas Railroad Commission, city and county 
planning committees, affected LEPCs, and contractors and developers.
    Phillips's intended approach to performance monitoring of the 
project will include formal data collection and performance measures 
related to excavations along the demonstration segments. Phillips 
has proposed an initial set of performance metrics for the project 
and has an excavation risk assessment data collection worksheet to 
generate data and information relative to these metrics. Phillips's 
proposed performance metrics include:

 total number of one-call requests
 total number of excavation projects broken down by
  --Phillips excavation projects (planned and unplanned),
  --third-party excavations planned, and
  --other, unplanned excavation activities.
 initial and final risk ranking of each excavation that 
required a formal risk assessment
 level of approval obtained to complete the excavation
 number and type of risk control activities implemented

[[Page 36029]]

 number of excavations completed, changed, or terminated
 categorization and characterization of the number of 
excavations by
  --successful excavation (i.e., no damage),
  --damage incurred,
  --damage resulting in a leak, and
  --effectiveness of emergency response plans to a leak.
    Phillips and OPS expect this project to demonstrate that risk 
management techniques can be successfully applied toward improving 
pipeline excavation safety. During this demonstration project, 
Phillips will share information about its evolving risk management 
program with OPS. This will enable OPS to acquire an improved 
understanding of the methods and techniques the company is using to 
manage risk on its system, and obtain far more information about the 
company's management processes, pipeline operations, and potential 
safety and environmental risks than is normally observed during OPS 
regulatory compliance inspections.
    OPS intends to approve Phillips as a participant in the Pipeline 
Risk Management Demonstration Program. OPS believes the Phillips 
demonstration project will provide superior safety by applying 
excavation risk control measures that exceed regulatory 
requirements.
    Phillips is not requesting any regulatory exemptions, and OPS 
retains full authority to administer and enforce all regulations 
governing pipeline safety. The demonstration segments will be 
subject to routine OPS inspection to ensure compliance with the 
applicable Federal Pipeline Safety Regulations. Additionally, the 
Demonstration Project will be monitored by a Project Review Team 
(PRT) consisting of OPS headquarters and regional staff and state 
pipeline safety officials. The PRT is designed to implement 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 PRT's primary functions will be to conduct periodic 
risk management audits. These audits will ensure Phillips's 
compliance with the specific terms and conditions of the OPS Order 
authorizing Phillips's demonstration project, and will be performed 
in addition to the normal OPS inspections. OPS is developing a 
detailed audit plan, tailored to the unique requirements of 
Phillips's demonstration project. This plan will describe the audit 
process (e.g., types of inspections, methods, and their frequency), 
as well as the specific requirements for reporting information and 
performance measure data to OPS.

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.
    On July 21, 1997, Phillips Pipe Line Company 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 Phillips's proposal will provide superior 
safety and environmental protection, and is prepared to finalize the 
agreement with Phillips on the provisions for the demonstration 
project.

D. Alternatives Considered

    OPS has considered three alternatives: approval of the Phillips 
risk management demonstration project as proposed in Phillips's 
application; denial of the Phillips demonstration project; or 
approval of the project with certain modifications to Phillips's 
application.
    OPS's preferred alternative is to approve the Phillips 
demonstration project as proposed in Phillips's application. OPS is 
satisfied that the proposal provides superior protection for the 
demonstration project segments and the surrounding environment. The 
Phillips Excavation Risk Assessment Process provides a higher level 
of protection than exists under the current regulatory requirements. 
Phillips is not requesting any regulatory exemptions and OPS retains 
full authority to administer and enforce all regulations governing 
pipeline safety. The demonstration segments will be subject to 
routine OPS inspection to ensure compliance with the applicable 
Federal Pipeline Safety Regulations. OPS and Phillips will monitor 
and, if necessary, improve the effectiveness of the risk control 
activities throughout the demonstration period.
    Denial of the project would result in OPS's considerable loss of 
valuable information concerning the effectiveness of the proposed 
methodology for assessing and controlling excavation risks and 
reducing third-party damage. 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 aforementioned 
Presidential Directive.
    All of the issues raised by OPS, state pipeline safety 
officials, stakeholders, and the public about Phillips's proposed 
project have been discussed within the consultative process, 
resolved to OPS's satisfaction, and reflected in Phillips's 
application. Therefore, OPS does not believe that modifications to 
Phillips's application are required.

E. Affected Environment and Environmental Consequences

    The 12'' and 18'' Sweeny--Pasadena pipelines proposed for this 
demonstration project transport refined products (e.g., gasolines, 
distillates, and naphtha) from Phillips's Sweeny Refinery to 
Phillips's Pasadena Terminal in Pasadena, Texas. These products are 
stable, flammable liquids. Product spills could result in the 
accumulation of highly flammable, heavier than air vapors in low 
areas. These vapors could also spread along the ground away from the 
spill site and could ignite. The resulting fire could create 
localized damage in the vicinity of the release. These products form 
carbon oxides and various hydrocarbons which are dispersed into the 
atmosphere when burned. These products will float on water (their 
solubility in water is negligible), and large spills have been known 
to result in kills of fish and other aquatic life.
    However, it should be noted that the transport of these products 
is already protected by all existing, applicable pipeline safety 
regulations and safe industry practices, which have contributed to a 
good pipeline industry safety record. The proposed risk management 
measures are intended to improve upon this safety record.
    The Sweeny-Pasadena system pipelines have been in operation 
since 1959 and 1979, respectively. This system runs roughly 
Northeast from the Sweeny Refinery to the Pasadena Terminal, passing 
near the northern edge of Friendswood, Texas. The lines parallel 
each other over the entire 60-mile distance to be included in the 
demonstration project. The lines run through sparsely populated 
areas for about the first 45 miles and through heavily populated 
areas for the last 15 miles. The lines cross the Brazos and San 
Bernard rivers, several major roadways and railroad lines, and pass 
underneath the Texas State Department of Corrections' Ramsey 
facility.
    Both of these lines have a good leak history. The 12'' line 
began service in 1956 and has a maximum operating pressure (MOP) of 
1270 psi. It has had two leaks: one in 1992 and another in 1993. 
These leaks resulted in localized surface contamination near the 
line. Phillips quickly detected the leaks and stopped the release of 
product. The contaminated areas were satisfactorily remediated. 
There were no fatalities, injuries or adverse health effects to any 
member of the public or to any Phillips employee from these events. 
Both of these leaks were associated with material defects that 
developed because of the manufacturing process used to bend sections 
of the pipe. As a result of these events, Phillips conducted a 
comprehensive review of all pipe bends, that included an internal 
inspection for geometric defects. All piping bends with 
characteristics similar to those that had failed were replaced or 
heat treated to eliminate the condition that created the leaks. The 
12'' line also has some history of coating problems. To resolve this 
problem, Phillips has placed additional rectifiers to provide 
enhanced cathodic protection.
    The 18'' line was placed in service in 1979 and has a MOP of 680 
psi. The 18'' line has not had any leaks.

[[Page 36030]]

    The OPS Project Review Team carefully reviewed Phillips's 
proposed excavation risk management activities and concluded that 
superior protection would be provided for the pipeline systems 
during the demonstration project. The Phillips Excavation Risk 
Assessment Process goes beyond the existing regulations in providing 
additional assurance of safety. OPS has concluded that the enhanced 
risk control activities will reduce the likelihood of pipeline 
accidents and leaks, especially those resulting from third party 
damage. Should a leak or rupture occur, the enhanced communication 
efforts should improve the responsiveness of company and local 
officials to an event, and diminish the consequences of any such 
leak or rupture. In summary, based on expected reductions in both 
the likelihood and consequences of leaks and ruptures, OPS has 
concluded that the proposed risk control activities will clearly 
reduce safety and environmental risks.

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 along the demonstration project lines. The 
pipeline segments proposed for the project are routed mostly through 
rural, sparsely populated areas, but include about 15 miles of 
pipeline which runs through industrial and developing residential 
areas. A mixture of income levels resides along the segments.
    The risk control activities provide greater protection than mere 
compliance with existing regulations. Because the proposed risk 
management activities will be applied uniformly along the lines, 
residents and communities near the lines will be afforded greater 
protection, 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 along the demonstration 
segments.

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

    OPS has recently (in January and February 1998) made the 
following documents publicly available, and incorporates them by 
reference into this environmental assessment:
    (1) ``Demonstration Project Prospectus: Phillips Pipe Line 
Company'', June, 1998, available by contacting Elizabeth M. Callsen 
at 202-366-4572. Includes maps of the demonstration segments. 
Purpose is to reach the public, local officials, and other 
stakeholders, and to solicit their input about the proposed project. 
Mailed to over 500 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) ``Phillips Pipe Line Company--Application for DOT-OPS Risk 
Management Demonstration Program'', available in Docket No. RSPA-98-
3982 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 Phillips 
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 
Phillips project, and has requested public comment, using many 
different sources. OPS aired several electronic broadcasts reporting 
on demonstration project proposals, including Phillips's proposal. 
An earlier Federal Register notice (62 FR 53052; October 10, 1997) 
informed the public that Phillips 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 project candidates, 
including Phillips.
    At a November 19, 1997, public meeting OPS hosted in Houston, 
TX, Phillips 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, and on 
March 26, 1998. This broadcast is available on demand via the OPS 
website at http://ops.dot.gov/tmvid.htm.) No issues or concerns 
about Phillips's proposal have been raised.

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
James C. Thomas (retired), OPS/U.S. Department of Transportation
Linda Daugherty, OPS/U.S. Department of Transportation
Carl Griffis, OPS/U.S. Department of Transportation
Anne Marie Joseph, OPS/U.S. Department of Transportation
Rod Seeley, OPS/U.S. Department of Transportation
Bruce Hansen, OPS/U.S. Department of Transportation
Elizabeth Callsen, OPS/U.S. Department of Transportation
Mary McDaniel, Gas Services Division, Railroad Commission of Texas
Jim vonHerrmann, Cycla Corporation (consultant)
Robert Brown, Cycla Corporation (consultant)
Herb Wilhite, Cycla Corporation (consultant)

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

    Regional Response Team (RRT), Region 6, 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: Charles Gazda, EPA Region 6 and Cdr. Ed Stanton, Coast Guard 
8th District).

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. 98-17493 Filed 6-30-98; 8:45 am]
BILLING CODE 4910-60-P