    Pipeline Safety: The Office of Pipeline Safety Is Changing How It
    Oversees the Pipeline Industry (Letter Report, 05/15/2000,
    GAO/RCED-00-128).

    Pursuant to a congressional request, GAO reviewed the Department of
    Transportation Office of Pipeline Safety's (OPS) performance in
    regulating pipeline safety, focusing on: (1) the extent of major
    pipeline accidents from 1989 through 1998; (2) OPS' implementation of
    the 1996 Accountable Pipeline Safety and Partnership Act's risk
    management demonstration program; (3) OPS' inspection and enforcement
    efforts since the act's implementation; and (4) OPS' responsiveness to
    recommendations from the National Transportation Safety Board and to
    statutory requirements designed to improve pipeline safety.

    GAO noted that: (1) from 1989 through 1998, pipeline accidents resulted
    in an average of about 22 fatalities per year; (2) the total number of
    major pipeline accidents (those resulting in a fatality, an injury, or
    property damage of $50,000 or more) increased by about 4 percent
    annually over this 10-year period; (3) most fatalities and injuries
    occurred as a result of accidents on pipelines that transport natural
    gas to homes and businesses, while most property damage occurred as a
    result of accidents on pipelines transporting hazardous liquids; (4)
    OPS's data indicate that damage from outside forces, such as excavation,
    is the primary cause of such accidents; (5) OPS has implemented a risk
    management demonstration program and has approved six demonstration
    projects; (6) OPS issued guidance on performance measures for the
    overall program and for individual projects but has not established
    specific measures of the program's impact on safety, as the act
    requires; (7) even though the projects are not complete and their safety
    benefits have not been quantified, OPS is moving ahead with a risk-based
    approach to safety regulation based partially on preliminary qualitative
    results of the program; (8) specifically, OPS has proposed a rule that
    would require some companies that operate hazardous liquid pipelines
    that run through high-risk areas to implement a program to
    comprehensively examine pipelines in these areas to identify and address
    potential risks, including assessing the current condition of their
    pipelines; (9) OPS also plans to take several actions that are necessary
    to implement the new approach, such as devising a method to review the
    companies' programs and hiring and training additional staff to conduct
    the reviews; (10) since the act's implementation, OPS has modified its
    inspection and enforcement approach so that entire pipelines are
    inspected in order to provide a comprehensive assessment of safety
    risks; (11) OPS has revised its enforcement of compliance with
    regulations by reducing its use of fines, and instead, working with
    operators to identify and correct safety problems; (12) OPS has not
    implemented some of the Safety Board's recommendations and requirements
    because it believes they would be too costly for the pipeline industry
    compared with the expected benefits; and (13) the OPS has recently taken
    action on some issues covered by outstanding recommendations and
    requirements, such as identifying countermeasures for preventing damage
    to pipelines from excavation and requiring pipeline operators to inspect
    their pipelines for corrosion.

    --------------------------- Indexing Terms -----------------------------

     REPORTNUM:  RCED-00-128
         TITLE:  Pipeline Safety: The Office of Pipeline Safety Is Changing
    	     How It Oversees the Pipeline Industry
          DATE:  05/15/2000
       SUBJECT:  Pipeline operations
    	     Transportation industry
    	     Transportation safety
    	     Hazardous substances
    	     Gas pipeline operations
    	     Accident prevention
    	     Inspection
    	     Performance measures
    IDENTIFIER:  Bellingham (WA)
    	     DOT Risk Demonstration Program

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    GAO/RCED-00-128

    Appendix I: The Bellingham, Washington, Pipeline Accident

    40

    Appendix II: Maps of Natural Gas Transmission and Hazardous
    Liquid Pipelines

    47

    Appendix III: Status of Risk Management Demonstration Projects

    49

    Appendix IV: OPS' Action on Statutory Requirements,
    1988-2000

    51

    Appendix V: GAO Contacts and Staff Acknowledgements

    61

    Table 1: Relative Occurrence of Transportation Accidents Per
    Ton-Mile of Oil Transported, 1992-97 10

    Table 2: Milestones for Implementing a Risk Management Approach
    for Regulating Large Hazardous Liquid Pipelines 21

    Table 3: Transportation Agencies' Implementation Rates for Safety
    Board Recommendations, 1967-99 30

    Table 4: Status of Implementation of Statutory Requirements,
    1988-2000 34

    Table 5: Projects Approved for the Risk Management Demonstration Program 49

    Table 6: Federal Cost of the Risk Management Demonstration
    Program, by Fiscal Year 50

    Table 7: Pipeline Safety Reauthorization Act of 1988 (P.L. 100-561,
    Oct. 31, 1988) 51

    Table 8: Oil Pollution Act of 1990 (P.L. 101-380, Aug. 18, 1990) 53

    Table 9: Offshore Pipeline Navigational Hazards (P.L. 101-599,
    Nov. 16, 1990) 53

    Table 10: Pipeline Safety Act of 1992 (P.L. 102-508, Oct. 24, 1992) 55

    Table 11: Accountable Pipeline Safety and Partnership Act of 1996
    (P.L. 104-304, Oct. 12, 1996) 58

    Table 12: Transportation Equity Act for the 21st Century (P.L. 105-178,
    June 9, 1998) 60

    Figure 1: Components of Natural Gas Transmission and Distribution Pipelines
    7

    Figure 2: Number of Pipeline Accidents Resulting In Fatalities,
    Injuries, and/or $50,000 or More in Property Damage,
    1989-98 11

    Figure 3: Number of Fatalities and Injuries and Amount of Property Damage
    From Pipeline Accidents, 1989-98 13

    Figure 4: Number of Major Pipeline Accidents, Miles, and Major
    Accidents per 10,000 Miles of Pipeline, 1989-98 15

    Figure 5: OPS' Inspection Activity, by Type of Inspection, 1990-99 24

    Figure 6: Warning Letters/Letters of Concern and Fines as
    Percentages of Total Enforcement Actions, 1990-98 27

    Figure 7: Location of Olympic Pipe Line Rupture 41

    Figure 8: Locations of Natural Gas Transmission Pipelines 47

    Figure 9: Locations of Hazardous Liquid Pipelines 48

    OPS Office of Pipeline Safety

    DOT Department of Transportation

    Resources, Community, and
    Economic Development Division

    B-283653

    May 15, 2000

    The Honorable John D. Dingell
    Ranking Minority Member
    Committee on Commerce
    House of Representatives

    Dear Mr. Dingell:

    Pipelines are inherently safer to the public than other modes of freight
    transportation for natural gas and hazardous liquids (such as oil products)
    because they are, for the most part, located underground. Nevertheless, the
    volatile nature of these products means that pipeline accidents can have
    serious consequences. For example, when a pipeline ruptured and spilled
    about 250,000 gallons of gasoline into a creek in Bellingham, Washington, in
    June 1999, three people were killed, eight were injured, several buildings
    were damaged, and the banks of the creek were destroyed along a 1.5-mile
    section.

    The Office of Pipeline Safety, within the Department of Transportation,
    administers the national regulatory program to ensure the safe
    transportation of natural gas and hazardous liquids by pipeline. The Office
    has traditionally carried out its responsibility by issuing minimum
    standards and enforcing them uniformly across these pipelines. The
    Accountable Pipeline Safety and Partnership Act of 1996 directed the Office
    to establish a demonstration program to test a risk management approach to
    pipeline safety. This approach involves identifying and addressing specific
    risks faced by individual pipeline companies rather than applying uniform
    standards regardless of risks. The act allowed the Office to exempt
    companies in the program from the uniform standards but did not eliminate
    the standards.

    Concerned about the recent accident in Bellingham, you asked us to review
    the Office's performance in regulating pipeline safety. Accordingly, we
    examined (1) the extent of major pipeline accidents from 1989 through 1998
    (the most recent data available), (2) the Office's implementation of the
    1996 act's risk management demonstration program, (3) the Office's
    inspection and enforcement efforts since the act's implementation, and
    (4) the Office's responsiveness to recommendations from the National
    Transportation Safety Board (the Safety Board) and to statutory requirements
    designed to improve pipeline safety. In addition, you asked us to provide
    information on the current status of the investigation of the accident in
    Bellingham. This latter information is provided in appendix I.

    From 1989 through 1998, pipeline accidents resulted in an average of about
    22 fatalities per year. Fatalities from pipeline accidents are relatively
    low when compared with those from accidents involving other forms of freight
    transportation: On average, about 66 people die each year from barge
    accidents, about 590 from railroad accidents, and about 5,100 from truck
    accidents. While these statistics provide an indication of the relative
    safety of pipelines for transporting natural gas and hazardous liquids, the
    total number of major pipeline accidents (those resulting in a fatality, an
    injury, or property damage of $50,000 or more) increased by about 4 percent
    annually over this 10-year period. Most fatalities and injuries occurred as
    a result of accidents on pipelines that transport natural gas to homes and
    businesses (primarily intrastate pipelines), while most property damage
    occurred as a result of accidents on pipelines transporting hazardous
    liquids (primarily interstate pipelines). Furthermore, pipelines that
    transport hazardous liquids account for nearly eight times as many major
    accidents per mile of pipeline as do pipelines that transport natural gas to
    homes and businesses. The Office of Pipeline Safety's data on the causes of
    pipeline accidents are limited to a few categories, but these limited data
    indicate that damage from outside forces, such as excavation, is the primary
    cause of such accidents.

    The Office has implemented a risk management demonstration program, as the
    1996 act requires, and has approved six demonstration projects, which are
    ongoing. The Office issued guidance on performance measures for the overall
    program and for individual projects but has not established specific
    measures of the program's impact on safety, as the act requires. Even though
    the projects are not complete and their safety benefits have not been
    quantified, the Office is moving ahead with a risk-based approach to safety
    regulation based partially on preliminary qualitative results of the
    program. Specifically, the Office has proposed a rule that would require
    some companies that operate hazardous liquid pipelines that run through
    high-risk areas (populated areas, environmentally sensitive areas, and
    commercially navigable waterways) to implement a program to comprehensively
    examine pipelines in these areas to identify and address potential risks,
    including assessing the current condition of their pipelines. The proposed
    rule will supplement, not replace, the existing minimum standards. The
    Office also plans to take several actions that are necessary to implement
    the new approach, such as devising a method to review the companies'
    programs and hiring and training additional staff to conduct the reviews.
    Office officials estimate that pipeline companies will develop plans for
    assessing the condition of their pipelines by September 2001 and that the
    assessments will be complete by September 2007. While we agree that a risk
    management approach offers the potential to improve pipeline safety, several
    critical steps--such as issuing a final rule and hiring staff--must be
    completed before the Office can implement such an approach.

    Since the act's implementation, the Office has modified its inspection and
    enforcement approach. With respect to inspections, it has moved toward
    inspecting entire pipelines rather than segments of pipelines. Since 1996,
    the Office has decreased its use of "unit" inspections--inspections of
    individual pipeline segments--and has begun inspecting companies' entire
    pipeline operating systems at one time to provide more comprehensive
    assessments of safety risks. As a result, the Office has reduced its
    reliance on states to inspect interstate pipelines because it is difficult
    to coordinate participation by individual states in systemwide inspections.
    However, state pipeline safety officials who currently inspect interstate
    pipelines for the Office are concerned that their diminishing role has
    resulted in fewer and less thorough inspections of pipelines. The Office has
    also revised its enforcement of compliance with regulations by reducing its
    use of fines and, instead, working with operators to identify and correct
    safety problems. From 1990 to 1998, the Office decreased the proportion of
    enforcement actions in which it proposed fines from about 49 percent to
    about 4 percent. Some state safety regulators agree with this strategy;
    others do not. We are recommending that the Secretary of Transportation
    direct the Office to work with states to determine how state inspectors
    could be used to more effectively oversee pipeline safety and evaluate the
    effectiveness of its strategy of reducing the use of fines.

    The Office's responsiveness to the Safety Board's recommendations and
    statutory requirements has been mixed. The Office has historically had the
    lowest rate of implementation for these recommendations of any
    transportation agency and has not implemented 22 statutory requirements, 12
    of which date from 1992 or earlier. It has not implemented some of the
    recommendations and requirements because it believes they would be too
    costly for the pipeline industry compared with the expected benefits.
    However, according to the Safety Board, some of the Office's analyses of
    costs and benefits are flawed because the Office did not consider all of the
    benefits. The Office has recently taken action on some issues covered by
    outstanding recommendations and requirements, such as identifying
    countermeasures for preventing damage to pipelines from excavation and
    requiring pipeline operators to inspect their pipelines for corrosion.
    Safety Board officials say they are encouraged by these recent efforts but
    note that some of the Office's actions are incomplete and may not fully
    address the Safety Board's recommendations.

    Pipelines transport the bulk of natural gas and hazardous liquids (such as
    oil products) in the United States.1 Specifically, pipelines carry nearly
    all of the natural gas and about 65 percent of the crude oil and refined oil
    products. Three primary types of pipelines form a network of nearly
    2.2 million miles.

    � Natural gas transmission pipelines transport natural gas over long
    distances from sources to communities. These pipelines--about
    325,000 miles--are primarily interstate.

    � Natural gas distribution pipelines continue to transport natural gas from
    transmission pipelines to residential, commercial, and industrial customers.
    These pipelines--about 1.7 million miles--are primarily intrastate.

    � Hazardous liquid pipelines transport crude oil to refineries and continue
    to transport the refined oil product, such as gasoline, to product terminals
    and airports. These pipelines--about 156,000 miles--are primarily
    interstate.

    In addition, pipelines include several components that aid in the collection
    and transportation of products. (See fig. 1.) For example, gathering
    pipelines collect natural gas or crude oil from producing wells and carry
    the product to a natural gas transmission or hazardous liquid pipeline.2
    Compressor stations (for gas) and pumping stations (for liquids) keep the
    product flowing smoothly.

    Figure 1: Components of Natural Gas Transmission and Distribution Pipelines
    Source: Office of Pipeline Safety.

    The extensive network of natural gas transmission and hazardous liquid
    pipelines appears in appendix II.3

    Several federal and state agencies have roles in pipeline safety. The Office
    of Pipeline Safety (OPS) develops, issues, and enforces pipeline safety
    regulations for natural gas and hazardous liquid pipelines. These
    regulations contain minimum safety standards that the pipeline companies
    that transport these products must meet for the design, construction,
    inspection, testing, operation, and maintenance of pipelines. OPS' fiscal
    year 2000 budget is about $37 million, funded primarily from industry user
    fees. In fiscal year 1999, OPS employed 105 people, 51 of whom were pipeline
    inspectors.

    In general, OPS retains full responsibility for inspecting and enforcing
    regulations on interstate pipelines but certifies states to perform these
    functions for intrastate pipelines. Certified states are allowed to impose
    safety requirements for intrastate pipelines that are stricter than the
    federal regulations. As of March 2000, 47 state agencies, the District of
    Columbia, and Puerto Rico were certified for intrastate natural gas pipeline
    inspections, and 12 state agencies were certified for intrastate hazardous
    liquid pipeline inspections.4 Certified states are authorized to receive
    reimbursement of up to 50 percent of the costs of their pipeline safety
    programs from OPS. In fiscal year 1999, these states received about
    $13 million from OPS in state pipeline safety grants, or an average of about
    44 percent of their estimated budgets. In fiscal year 1998, the states
    employed about 300 pipeline inspectors.

    OPS also uses some states to help inspect interstate pipelines. These
    states, or "interstate agents," inspect segments of interstate pipelines
    within their boundaries. However, OPS handles any enforcement actions
    identified through inspections conducted by these interstate agents. As of
    March 2000, eight states were acting as interstate agents--five states for
    natural gas pipelines, one state for hazardous liquid pipelines, and two
    states for both types of pipelines. These states do not receive additional
    federal funds for inspecting interstate pipelines.

    Other federal agencies, such as the Minerals Management Service within the
    Department of the Interior and the Environmental Protection Agency, also
    have some regulatory authority related to pipeline safety. The Minerals
    Management Service has jurisdiction over producer-operated oil pipelines on
    the Outer Continental Shelf. The Environmental Protection Agency regulates
    tanks used to store hazardous liquids or transfer them to or from other
    modes of transportation. In contrast, OPS regulates storage tanks used to
    store hazardous liquids for continued transportation by pipeline at a later
    date or to relieve surges in the pipeline system. A single storage tank or a
    facility with multiple tanks may have uses that fall under the authority of
    both the Environmental Protection Agency and OPS. As of April 2000, the
    agencies were working to clarify the circumstances under which each agency
    has authority.

    The National Transportation Safety Board investigates transportation
    accidents, including significant pipeline accidents (such as those involving
    fatalities). On the basis of these investigations, the Safety Board issues
    recommendations to OPS and other federal agencies aimed at preventing future
    accidents. Finally, several federal statutes enacted since 1988 contain
    requirements designed to improve pipeline safety and enhance OPS' ability to
    oversee the pipeline industry. Many of these requirements address the same
    issues as the Safety Board's recommendations.

    Increased From 1989 Through 1998

    Pipelines have an inherent safety advantage over other modes of freight
    transportation because they are primarily located underground, away from
    public contact. From 1989 through 1998, pipeline accidents resulted in an
    average of about 22 fatalities per year, compared with about 66 from barge
    accidents, about 590 from railroad accidents, and about 5,100 from large
    truck accidents.5 A 1999 study comparing modes of oil transportation from
    1992 through 1997--pipeline, rail, tank ship, barge, and truck--found that
    the likelihood of fatality, injury, or fire and/or explosion is generally
    lowest for pipelines.6 The rate of fatalities, injuries, and
    fires/explosions per ton-mile of oil transported for all other modes is
    typically at least twice--and in some cases more than 10 times--as great as
    the rate for pipelines. (See table 1.)

    Table 1: Relative Occurrence of Transportation Accidents Per Ton-Mile of Oil
    Transported, 1992-97

     Event          Pipelinea  Rail  Tank ship  Barge Truck
     Fatality       1.0        2.7   4.0        10.2  87.3
     Injury         1.0        2.6   0.7        0.9   2.3
     Fire/explosion 1.0        8.6   1.2        4.0   34.7

    aThe rates of occurrence are based on a value of 1.0 for pipeline. Values of
    less than 1.0 indicate a better safety record.

    Source: Association of Oil Pipelines.

    While pipelines are relatively safe compared with other transportation
    modes, the number of major pipeline accidents increased overall from 1989
    through 1998.7 In total, there were 2,241 major accidents (those causing a
    fatality, an injury, or more than $50,000 in property damage) during this
    period. Although the number of major accidents varied from year to year,
    these accidents increased by approximately 4 percent annually. 8 (See
    fig. 2.) According to OPS officials, the increase in major accidents over
    this period can be attributed to a 10-percent overall increase in pipeline
    mileage, growth in the volume of products transported by pipelines (due to
    an increase in the nation's energy consumption), and population growth near
    pipelines.

    Figure 2: Number of Pipeline Accidents Resulting In Fatalities, Injuries,
    and/or $50,000 or More in Property Damage, 1989-98
    Source: GAO's analysis of OPS' data.

    From 1989 through 1998, 226 people died and 1,030 people were injured in
    major pipeline accidents.9 (See fig. 3.) Accidents on natural gas
    distribution pipelines (which are primarily intrastate) accounted for
    173--or
    77 percent--of the fatalities and 743--or 72 percent--of the injuries from
    1989 through 1998. Because these pipelines are primarily located in populous
    areas, it is not surprising that accidents on them affect humans more than
    accidents on other types of pipelines. In addition, major pipeline accidents
    caused about $700 million in property damage. From 1989 through 1998,
    hazardous liquid pipelines (which are primarily interstate) accounted for
    about $350 million, or 50 percent, of this property damage because the
    liquids do not dissipate into the atmosphere, as does natural gas.

    Figure 3: Number of Fatalities and Injuries and Amount of Property Damage
    From Pipeline Accidents, 1989-98
    Source: GAO's analysis of OPS' data.

    Representatives from environmental groups believe that property damage from
    pipeline accidents is understated because not all damage to the environment
    may be reported to OPS by pipeline operators. For example, over 1.5 million
    barrels of hazardous liquids--primarily crude oil and gasoline--were spilled
    from pipelines as a result of all pipeline accidents reported to OPS.
    However, the total amount spilled from pipelines and, thus, the
    environmental damage, is actually greater because OPS does not require
    pipeline operators to report spills of less than 50 barrels. Although there
    is no complete source of information on these smaller spills, the
    Environmental Protection Agency maintains data on oil pipeline spills in
    areas where such spills could cause pollution to navigable waters. These
    data show that more than 16,000 spills of less than 50 barrels occurred from
    1989 through 1998.

    Of the major pipeline accidents occurring from 1989 through 1998,
    most--about 43 percent--occurred on natural gas distribution pipelines.
    These pipelines also account for the majority of pipeline mileage. However,
    hazardous liquid pipelines, which account for the smallest portion of total
    pipeline mileage, have nearly eight times as many major accidents per mile
    of pipeline as do natural gas distribution pipelines. (See fig. 4.)

    Figure 4: Number of Major Pipeline Accidents, Miles, and Major Accidents per
    10,000 Miles of Pipeline, 1989-98
    Source: GAO's analysis of OPS' data.

    OPS does not collect comprehensive information on the causes of pipeline
    accidents. However, OPS' available data indicate that the primary cause of
    pipeline accidents from 1989 through 1998 was damage from external forces,
    such as an outside party digging near a pipeline or a natural force like an
    earthquake or a landslide. These data are limited because OPS uses only five
    categories of causes for accidents on natural gas distribution pipelines,
    four categories for those on natural gas transmission pipelines, and seven
    categories for those on hazardous liquid pipelines. As a result, a large
    proportion of accidents are attributed to "other causes" that range from
    failed gaskets or seals to faulty valves. According to these data, from 1989
    through 1998, the three most prevalent causes of pipeline accidents were
    damage from outside forces (45 percent), "other" (25 percent), and corrosion
    of the pipe (15 percent).

    OPS Is Moving Ahead With a New Regulatory Approach

    As a result of the Accountable Pipeline Safety and Partnership Act of 1996,
    OPS has implemented a risk management demonstration program to investigate
    whether formalized risk management programs for individual pipeline
    companies can provide an alternative to the current regulatory approach and
    achieve a superior level of safety and environmental protection.10 However,
    OPS has not established performance measures for the program's impact on
    safety, as required by the act. OPS maintains that the ongoing program has
    already produced some qualitative improvements, such as directing resources
    to the areas posing the greatest safety risks. Partially as a result of its
    experience with the demonstration program, OPS has proposed a rule that
    would require some companies that operate hazardous liquid pipelines that
    run through populated areas, environmentally sensitive areas, or
    commercially navigable waterways to implement a program to comprehensively
    examine pipelines in these areas to identify and address potential risks.

    of Going Beyond Minimum Regulatory Standards

    The 1996 act, together with a presidential memorandum to the Secretary of
    Transportation, requires OPS to evaluate, through a demonstration program,
    whether a risk management approach to pipeline safety can achieve a level of
    safety and environmental protection that is greater than the level
    achievable through compliance with the current pipeline safety
    regulations.11 The current regulations establish minimum safety requirements
    for all pipeline companies, such as a requirement for a protective coating
    on all pipelines to mitigate corrosion. A risk management approach goes
    beyond the minimum requirements by identifying and focusing resources on
    risks to individual pipelines that may not be fully addressed in the
    regulations. For example, identifying emergency response capability as a
    risk and subsequently developing an electronic system that would notify
    emergency officials of a pipeline leak or rupture would exceed current
    regulations.

    The act further required OPS to develop performance measures for the program
    to evaluate its safety and environmental benefits. The act also authorized
    OPS to exempt companies participating in these projects from all or a
    portion of the existing regulations.12 Finally, the act required OPS to
    report by March 31, 2000, on the results of the demonstration program,
    including its safety and environmental benefits.

    To address the requirement for demonstrating an improved level of safety and
    environmental benefits, OPS issued guidance that identified superior safety,
    environmental protection, and service reliability as one of three primary
    objectives for the program. The guidance also identified increased
    efficiency of pipeline operations and improved communication among industry,
    government, and other stakeholders as two additional primary objectives. To
    measure progress toward these objectives, the guidance describes potential
    programwide measures, such as accident data, risk awareness, and customer
    service. The guidance also recognizes the need for project-specific measures
    intended to document starting conditions, changes during the program, and
    expected outcomes for each project. According to the guidance, the
    project-specific measures were to be developed by the pipeline operators
    before the projects were approved by OPS.

    As of January 2000, OPS had approved six projects for the program. The
    projects vary in scope, ranging from examining the risks associated with
    excavation work on a single pipeline at one company, to a comprehensive risk
    management plan designed to assess all risks associated with the operation
    of two multistate pipeline systems owned by another company. (App. III
    provides more details on the individual projects and the program's overall
    costs.)

    Program

    OPS has not complied with the act's requirements or its own guidance on
    developing performance measures for the risk management demonstration
    program. Specifically, OPS has not developed programwide measures and has
    approved five of the six demonstration projects without project-specific
    measures in place, even though OPS' guidance required pipeline operators to
    develop such measures before the agency would approve a project. OPS
    officials and representatives of participating companies told us that they
    have been unable to develop performance measures because the impact on
    safety cannot easily be isolated from the effects of other safety activities
    outside the program, especially given the relatively short duration of the
    program. For example, an increase in the number of defects found over a
    period of years may indicate a growing risk of pipeline failure, or it may
    reflect the results of targeting inspections to identify weaknesses or of
    introducing new technologies to detect defects. In addition, OPS officials
    told us that the measures have been difficult to develop because the
    participating companies have unique pipeline systems and the demonstration
    projects involve different aspects of the systems. Moreover, according to
    the officials, many companies are not collecting the types of data necessary
    to support an evaluation of the program's overall impact on safety.

    Only one program participant, Philips Pipe Line, has developed performance
    measures and generated data for its project. According to OPS officials,
    this project is limited in scope and has thus far generated little data. The
    other participants are trying to develop performance measures for their
    projects.

    While OPS has not developed any programwide or project-specific measures to
    evaluate the program's performance, OPS officials told us that the program
    has yielded many qualitative benefits related to its three objectives. For
    example, each company is performing safety activities that exceed the
    requirements in the current regulations, such as conducting periodic
    internal inspections of pipelines and installing additional valves to
    prevent hazardous liquids from flowing into rivers. Officials with one
    company said that the company has allocated its resources more effectively
    by using a risk-based computer model to develop funding priorities for its
    valve modification and replacement efforts. To improve communication and
    information flow, two companies have conducted "hands-on" workshops for OPS,
    and another company is developing a computerized method of exchanging
    information with OPS.

    Although the act required OPS to issue a report on the results of the
    demonstration program in March 2000, OPS plans to issue a report in spring
    2000 on the progress of the program. OPS officials do not know when the
    program will be complete. According to OPS officials, the projects took
    longer to implement than planned because, among other things, (1) the
    participating companies did not already have vigorous, formalized risk
    management programs in place; (2) OPS took longer than expected to review
    and approve individual projects; and (3) several of the applicant companies
    underwent corporate mergers that created uncertainties about whether the
    companies would continue to participate in the program.

    Framework

    Even though the demonstration program is still ongoing and its safety and
    environmental benefits have not yet been quantified, OPS has proposed a rule
    that draws, in part, on the agency's experiences with the demonstration
    program to incorporate the use of a risk management approach in pipeline
    safety regulations.13 The proposed rule would affect hazardous liquid
    pipeline companies (companies that operate systems of 500 miles or more)
    that have pipelines in "high-consequence areas." The rule defines these
    areas as populated areas, environmentally sensitive areas, or commercially
    navigable waterways.14 OPS estimates that the rule would apply to 66
    pipeline companies that operate about 87 percent of the nation's hazardous
    liquid pipeline mileage. All pipeline operators would still be required to
    follow the current minimum regulations.

    Companies affected by this rule would be required to develop an "integrity
    management program" to comprehensively examine pipelines in high-consequence
    areas to identify and address potential risks. Such a program would include,
    among other things, (1) a plan for assessing the condition of pipelines in
    these areas, (2) periodic reassessments of the pipelines,
    (3) criteria for repairing deficiencies discovered through the assessments,
    and (4) measures of the program's effectiveness. Methods to assess the
    condition of the pipelines include internal inspections using "smart pigs"
    (devices that can travel through the pipelines to detect flaws) and
    hydrostatic testing (draining the pipeline, filling it with water, and
    increasing the pressure within the pipeline to identify weak points).

    OPS intends to review companies' integrity management programs, including
    the risks identified by the companies and their strategies for addressing
    the risks. Although OPS officials have not determined exactly how these
    reviews will be integrated into the agency's periodic inspections of
    pipeline companies, they told us the reviews would require additional
    personnel. OPS officials could not estimate how many additional staff would
    eventually be needed. The agency has requested four additional staff for
    fiscal year 2001, and OPS officials expect to request more in future years.
    In addition, agency officials told us that OPS is considering hiring
    contractors to assist with these reviews.

    Several actions must occur before OPS can fully implement this new approach
    to regulating pipeline safety. OPS issued a proposed rule on
    April 24, 2000, and must incorporate comments from the industry and the
    public in a final rule. OPS must also complete another rule on the
    definition of areas that are unusually sensitive to environmental damage
    before it can identify high-consequence areas.15 In addition, OPS must
    develop guidelines for reviewing companies' integrity management programs
    and hire and train the additional staff needed to conduct the reviews.
    Meanwhile, the companies that have pipelines in high-consequence areas must
    develop their programs and assess the current condition of their pipelines.
    OPS estimates that pipeline companies will develop plans for assessing the
    condition of their pipelines by September 2001 and that the assessments will
    be complete by September 2007. (See table 2.)

    Table 2: Milestones for Implementing a Risk Management Approach for
    Regulating Large Hazardous Liquid Pipelines

     Date                 Action

     April 2000           OPS issued a proposed rule requiring enhanced
                          protection of high-consequence areas
     October 2000         OPS issues the final rule
     Beginning October    OPS hires and trains additional staff to review
     2000                 companies' integrity management programs
                          OPS completes the final rule on the definition of
     December 2000        areas unusually sensitive to environmental damage and
                          makes mapping information available to pipeline
                          companies on the Internet

     September 2001       Pipeline companies complete plans for assessing the
                          condition of pipelines

     September 2004       Individual companies' assessments are 50 percent
                          complete
     September 2007       Assessments are 100 percent complete

    Source: GAO's analysis of OPS' data.

    While we agree that a risk management approach offers the potential to
    improve pipeline safety, we believe that OPS' proposed rule to broadly
    implement it is not supported by quantifiable evidence (intended to be
    obtained through the demonstration program) that such an approach has
    led--or could lead--to a higher level of safety and environmental
    protection. In addition, OPS plans to require performance measures for
    pipeline companies' integrity management programs, even though OPS and
    pipeline operators were not able to develop such measures for the risk
    management demonstration program. Nevertheless, the rulemaking process could
    give the safety community, the regulated industry, and affected states and
    communities the opportunity to shape the final rule so as to establish
    evidence of the approach's impact on safety and provide for reporting on
    outcomes and periodic assessments of its effectiveness.

    With Regulations

    OPS is moving toward inspecting entire pipelines rather than segments of
    pipelines and is reducing its reliance on fines to enforce compliance with
    its regulations. Since 1996, OPS has conducted 10 "systemwide inspections"
    to identify safety risks to companies' entire pipeline systems. These
    inspections require more time and resources per inspection than OPS'
    traditional approach, which is based on inspecting segments or "units" of
    pipelines. Partly because it was emphasizing systemwide inspections, OPS
    reduced the number of unit inspections by 47 percent from 1996 through 1999.
    Also as a result of systemwide inspections, OPS has decreased its reliance
    on state regulators to inspect interstate pipelines because the agency
    prefers to use a team of federal inspectors to conduct the systemwide
    inspections rather than coordinate the activities of federal inspectors and
    inspectors from multiple states. However, some state regulators are
    concerned that their diminishing role has resulted in fewer and less
    thorough inspections.

    For enforcement, OPS has been decreasing its use of fines for pipeline
    companies' violations of safety regulations since before the 1996 act. From
    1990 through 1998, OPS' use of fines decreased from 49 percent of total
    enforcement actions to 4 percent. According to OPS officials, this strategy
    allows them to focus their efforts and the companies' resources on
    correcting problems, but they have not evaluated whether their reduced
    reliance on fines is effective in achieving compliance with regulations.

    Systems

    Traditionally, OPS has inspected pipeline companies by conducting "unit
    inspections"--a checklist approach verifying that an individual operating
    unit of a company's entire pipeline system is in compliance with pipeline
    safety regulations. A unit inspection is generally conducted by one OPS
    inspector in about 3 days. Instead of relying primarily on a unit-by-unit
    approach to inspections, OPS is now inspecting pipelines through "systemwide
    inspections"--reviewing all of a company's related operating units at once.
    Because systemwide inspections can cover hundreds of miles of pipeline in
    various regions of the country, OPS uses a team of inspectors from all OPS
    regions that contain part of the operator's system to inspect all of the
    operating units. According to OPS officials, a systemwide inspection is the
    equivalent of multiple unit inspections. OPS conducted six systemwide
    inspections in 1998 and four in 1999; it plans to conduct eight in 2000.

    According to OPS officials, systemwide inspections provide a better
    assessment of the potential safety risks to pipelines than do unit
    inspections because systemwide inspections can uncover problems that unit
    inspections would not identify. For example, according to OPS officials, one
    pipeline company did not coordinate its corrosion prevention activities with
    information it was obtaining from another part of the company on external
    damage. Such damage--e.g., a nick in a pipeline's protective coating--can
    lead to corrosion. During a systemwide inspection, OPS identified this lack
    of communication as a potential threat to the pipeline's safety.

    Besides moving to systemwide inspections, OPS is spending more time on
    construction inspections to reduce the risk that defects will be built into
    pipelines during construction. Construction inspections also involve more
    OPS resources than do unit inspections because months may be needed to build
    a pipeline and inspectors must review plans and observe crucial points in
    the construction. Since 1995, both the number of pipeline construction
    inspections and the time OPS inspectors have spent on such inspections have
    increased. In 1999, OPS inspectors spent 546 days on
    65 construction inspections, compared with 102 days on 30 inspections in
    1995.

    As a result of its change in inspection philosophy, OPS is conducting fewer
    unit inspections. The number of unit inspections conducted by OPS decreased
    by 47 percent from 1996 through 1999. (See fig. 5.) (The number of
    inspections increased sharply during 1995 and 1996 because additional
    inspectors were hired during that period; since that time, the staffing has
    remained level.) According to OPS officials, this decrease is due to the
    increased emphasis on systemwide and construction inspections, as well as an
    increase in the number of accident investigations and in the resources
    devoted to risk management projects. In addition, OPS officials told us that
    each unit inspection now takes more time than it did in the past because the
    agency has modified its inspection form to obtain more in-depth information
    on how the pipeline company is ensuring the pipeline's safety. For example,
    the new form requires the inspector to evaluate the overall quality of the
    operator's corrosion-control program.

    Figure 5: OPS' Inspection Activity, by Type of Inspection, 1990-99
    Note: "Other" includes failure investigations, complaint investigations, and
    systemwide inspections.

    Source: GAO's analysis of OPS' data.

    Also as a result of its change in inspection philosophy, OPS is relying less
    on states to inspect interstate pipelines. Although OPS is responsible for
    inspecting these pipelines, it certified some states to act as interstate
    agents in the early 1980s because it did not have enough inspection
    resources. From 1990 through 1994, about 12 interstate agents conducted
    between 20 and 26 percent of all interstate inspections. In 1995 and 1996,
    OPS hired additional inspectors and started taking back responsibility for
    these inspections. By 1999, only 8 percent of all interstate inspections
    were conducted by 10 interstate agents. In December 1999, OPS canceled its
    interstate agent agreements with Arizona and Nevada, leaving eight
    interstate agents--California, Connecticut, Iowa, Michigan, Minnesota, New
    York, Ohio, and West Virginia.16

    According to OPS officials, the state agencies have performed well as
    interstate agents, but it is difficult to coordinate inspections by
    interstate agents--each responsible for the portion of a multistate pipeline
    system within its own borders--into a systemwide inspection. Rather than
    coordinating the activities of federal and state inspectors, OPS prefers to
    use a team of federal inspectors to conduct a systemwide inspection. In
    addition, OPS officials told us that devoting less time to their
    responsibilities as interstate agents would allow the states to focus their
    efforts on intrastate distribution pipelines, where most fatalities from
    pipeline accidents occur.

    Some state officials do not agree with OPS' decision to eliminate interstate
    agents because they are concerned about its impact on safety. Even though
    interstate agents do not receive additional federal funds for inspecting
    interstate pipelines, officials from these states prefer to inspect these
    pipelines because it allows them to oversee the safety of all pipelines
    within their boundaries. Some current and prior interstate agents we
    contacted told us that they inspect operators more frequently than
    OPS--generally once every year compared with once every 1 to 4 years for
    OPS--and spend 2 to 4 times longer performing the inspections than does OPS.
    According to these officials, more frequent and more thorough inspections
    improve their ability to detect safety problems.

    In addition, some state officials are concerned that because OPS schedules
    all of its inspections in advance, some violations could go undiscovered.
    For example, a Connecticut pipeline safety official told us that the state's
    no-notice inspections on intrastate construction projects have discovered
    three times as many violations as advance-notice inspections. (According to
    an OPS official, OPS notifies the companies of the anticipated date of
    inspections so the companies can have the appropriate manuals and
    representatives available, but it does not tell the companies which portions
    of the pipelines will be examined.)

    The Department of Transportation (DOT) has proposed legislation to
    reauthorize the pipeline safety program.17 Among other things, this
    legislation would increase the ability of states to participate in the
    oversight of interstate pipeline transportation (including new construction
    inspections or accident investigations) and funding for these activities.

    Since 1990, OPS has decreased its use of fines and increased its use of less
    severe corrective actions. According to OPS officials, this strategy allows
    them to work more constructively with companies to address problems. For
    example, instead of issuing a fine, OPS required a pipeline operator to
    hydrostatically test 350 miles of pipeline following an accident in 1993.
    The test revealed seven additional areas that were susceptible to future
    leaks. Fines are reserved for severe violations, such as those that have
    resulted in fatalities or substantial environmental damage, or for failures
    to address problems previously identified by OPS. OPS has not assessed the
    impact of this approach on safety.

    The number of enforcement actions OPS has taken increased from 94 in 1990 to
    218 in 1998--a 132-percent increase. However, OPS has also decreased the
    proportion of enforcement actions in which it proposed fines from about 49
    percent in 1990 to about 4 percent in 1998. During this time, it increased
    the proportion of warning letters and letters of concern that are used to
    inform pipeline companies of probable violations of safety regulations or
    other pipeline safety risks but do not assess a fine. The proportion of
    enforcement actions in which these letters were sent increased from about 33
    percent in 1990 to about 68 percent in 1998. (See fig. 6.)

    Figure 6: Warning Letters/Letters of Concern and Fines as Percentages of
    Total Enforcement Actions, 1990-98
    Note: The percentages for letters and fines do not add to 100 percent
    because OPS also uses other enforcement actions, such as compliance orders,
    to specify the actions a company must take to correct a violation. In
    addition, an enforcement action may include multiple actions, such as a fine
    and a compliance order.

    Source: GAO's analysis of OPS' data.

    According to OPS officials, the proportion of warning letters and letters of
    concern has increased because letters are now used to inform companies not
    only of compliance problems, but also of "best practices" that OPS believes
    would improve the safety of the companies' pipelines. These officials told
    us that the agency also relies heavily on other enforcement actions that do
    not involve fines, such as compliance orders requiring pipeline companies to
    take action to correct safety violations. However, OPS officials were not
    able to identify (1) how many letters addressed "best practices" rather than
    safety violations and (2) how many other enforcement actions did not involve
    fines.

    OPS has not assessed the effectiveness of its reduced reliance on fines.
    However, OPS reported in 1997 that some other federal agencies--including
    the Federal Railroad Administration, the Federal Aviation Administration,
    and the Occupational Safety and Health Administration--share OPS' philosophy
    concerning the use of fines. For example, the report noted that the Federal
    Railroad Administration generally gives a rail carrier the opportunity to
    correct a safety problem before formally citing the carrier for violations
    and suspends proposed penalties in return for the carrier's agreeing to take
    immediate corrective action. The report did not assess the extent to which
    federal agencies that agree with OPS' approach have reduced their reliance
    on fines.

    While some state pipeline regulators share OPS' enforcement approach for the
    intrastate pipelines under their jurisdiction, others continue to use fines
    extensively as a deterrent to noncompliance. For example, a Michigan
    official told us that Michigan pipeline safety regulators typically do not
    impose fines. In 1998, the state imposed no fines, and in 1999, it imposed
    only three of about $1,000 each. According to the Michigan official,
    Michigan regulators have always believed that civil penalties are not a
    strong deterrent to noncompliance and the few fines that Michigan does
    impose are for more serious violations. In contrast, Ohio pipeline safety
    regulators believe fines are an effective enforcement tool. According to one
    Ohio pipeline safety official, over the past 7-8 years, Ohio has imposed an
    average of one fine per year for approximately $50,000. In Ohio, the amount
    of the civil penalty depends on the seriousness of the violation and the
    size of the operator, and the penalties have ranged from $300 to $125,000.

    Statutory Requirements Has Been Mixed

    OPS has a mixed record in responding to the Safety Board's recommendations.
    Historically, it has had the lowest rate of any transportation agency for
    implementing these recommendations. Some of the recommendations that OPS has
    not fully implemented have dealt with issues that the Safety Board has
    repeatedly reported on, such as the use of safety valves to rapidly shut
    down pipelines after ruptures and periodic internal inspections of pipelines
    to identify defects. OPS has recently taken action to improve its
    responsiveness in several other areas that the Safety Board has addressed,
    including excavation damage, corrosion control, and data quality. While
    Safety Board officials are encouraged by these recent efforts, they remain
    somewhat skeptical of OPS because, in the Safety Board's opinion, OPS has
    not followed through on past promises to implement the Safety Board's
    recommendations.

    Several federal statutes also address pipeline safety issues, including a
    number of those covered by the Safety Board's recommendations. Specifically,
    since 1988, the Congress has imposed 49 requirements designed to improve
    pipeline safety. OPS has not implemented 22 of these requirements, 12 of
    which date from 1992 and prior years.

    but May Be Improving Its Responsiveness

    Since 1967, the Safety Board has made 243 recommendations to OPS in response
    to its investigations of significant pipeline accidents (such as those in
    which a fatality has occurred). According to the Safety Board, OPS
    implemented only 69 percent of these recommendations and has historically
    had the lowest response rate of any transportation agency. (See table 3.)
    However, because this measure includes data from over 30 years, it may not
    accurately reflect OPS' current efforts to implement the Safety Board's
    recommendations.18

    Table 3: Transportation Agencies' Implementation Rates for Safety Board
    Recommendations, 1967-99

     Transportation agency         Total number of        Implementation rate
                                   recommendations        (percent)
     Maritime Administration       17                     100
     Secretary of the Department
     of Transportation             247                    88
     Federal Highway
     Administration                446                    87
     National Highway Traffic
     Safety Administration         278                    87
     Federal Aviation
     Administration                3,756                  83
     Federal Transit
     Administration                66                     82
     United States Coast Guard     1,162                  74
     Federal Railroad
     Administration                483                    73
     Research and Special Programs
     Administration                374                    72
     Office of Pipeline Safety
     (within the Research and
     Special Programs              243                    69
     Administration)
     Total/average rate            6,829                  81

    Note: The Research and Special Programs Administration also includes the
    Office of Hazardous Materials Safety, which has received 131 recommendations
    and whose implementation rate was 75 percent from 1967 through 1999.

    Source: National Transportation Safety Board.

    Many of the Safety Board's recommendations deal with recurring issues, such
    as the use of valves to rapidly shut down pipelines after a rupture, the
    need for periodic internal inspections of pipelines, and the need to ensure
    that pipeline operators are adequately trained to respond to emergencies.
    According to OPS officials, OPS rarely disagrees with the Safety Board on
    the issues covered in the recommendations. However, strong differences exist
    between the agencies on whether and how to implement the recommendations, as
    the following examples show:

    � The Safety Board has issued 11 recommendations since 1971 on using valves
    to rapidly shut down the flow of product to a ruptured pipeline to mitigate
    damage. The Safety Board has recommended that OPS require the use of excess
    flow valves--valves that stop the flow of gas on smaller service lines, such
    as natural gas distribution lines, when the flow exceeds a specified
    amount--on all new single-family residential high-pressure service lines. In
    addition, the Safety Board continues to recommend that OPS require the use
    of automatic or remotely operated valves on high-pressure pipelines in urban
    or environmentally sensitive areas. OPS has been opposed to requiring the
    widespread use of valves because several cost/benefit studies showed that
    the costs to the industry of installing valves are generally greater than
    the expected benefits. However, according to Safety Board officials, OPS
    does not always consider the full range of benefits in its analyses. For
    example, OPS concluded that there was no significant benefit from installing
    remotely controlled valves on natural gas transmission pipelines because the
    gas ignites upon escape and a rapid shutdown would not prevent fire.
    However, in March 1994, a rupture on a natural gas transmission pipeline in
    Edison, New Jersey, resulted in a fire that injured 112 people and destroyed
    eight buildings. Damage from the accident exceeded $25 million. The Safety
    Board reported that operators of the pipeline were unable to shut down the
    gas flow to the rupture for 2- hours. Had the operator been able to promptly
    shut it down, the Safety Board stated, firefighters could have extinguished
    the fire sooner and the damage to the apartment buildings would have been
    significantly reduced. The proposed rule on enhanced protection of pipelines
    in high-consequence areas would require pipeline companies to consider the
    use of remotely operated valves in these areas.

    � Three Safety Board recommendations in 1987 called for OPS to require
    operators to conduct periodic internal inspections of all pipelines to
    identify weaknesses or defects. Although OPS required, in 1994, that new
    pipelines be built to accommodate internal inspection tools, such as smart
    pigs, it has not yet established requirements for conducting internal
    inspections. OPS believes that its proposed rule on the enhanced protection
    of pipelines in high-consequence areas would address these recommendations.
    However, this rule would address pipelines only in areas with the highest
    risk of harming people or the environment. According to officials from the
    Safety Board, this rule would represent progress in improving the safety of
    pipelines in areas where the consequences of accidents are greatest, but it
    would not fully address the Safety Board's 1987 recommendation that OPS
    require periodic inspections of all natural gas and hazardous liquid
    pipelines for corrosion or other damage.

    � Since 1987, the Safety Board has issued two recommendations urging OPS to
    ensure that operators are adequately trained to construct and operate
    pipelines and to respond to emergencies. In 1994, OPS issued a proposed rule
    that specified training requirements for operators. The pipeline industry
    and OPS' advisory committees responded that the training requirements in
    this proposed rule were too specific. Because of the negative response to
    the proposed rule, OPS began a negotiated rulemaking and issued a final rule
    in August 1999 that allows various methods of demonstrating that an operator
    is qualified. For example, the rule states that, until October 28, 2002,
    pipeline companies can rely solely on an operator's past performance to
    certify that the operator is qualified. However, the Safety Board was
    dissatisfied, noting that if an operator has not needed to respond to an
    emergency in the past, the operator's past performance might not be an
    accurate measure of emergency preparedness. According to OPS officials, the
    agency is more concerned with ensuring that pipeline operators are qualified
    than with the specific methods pipeline companies use to qualify their
    personnel.

    In other areas, OPS has recently taken actions that are responsive to the
    Safety Board's recommendations on excavation damage, corrosion control, and
    data quality.

    � Excavation damage--the leading cause of pipeline ruptures--has been the
    topic of 13 recommendations issued by the Safety Board since 1989. OPS has
    two primary initiatives to address this issue. As required by the
    Transportation Equity Act for the 21st Century, enacted in 1998, OPS issued
    a report in August 1999 that identified existing best practices to prevent
    damage to underground facilities. Furthermore, OPS unveiled a national
    public education campaign in June 1999, called "Dig Safely," that helps
    communities teach their citizens how to prevent damage to pipelines and
    underground utilities.

    � To control corrosion, the Safety Board recommended in 1987 that OPS
    require operators of natural gas transmission and hazardous liquid pipelines
    to periodically conduct inspections capable of identifying corrosion-caused
    damage to pipelines. At that time, OPS required natural gas and hazardous
    liquid pipeline operators to inspect for corrosion on buried metallic pipe
    that had been exposed by excavation and, if corrosion was found on a
    hazardous liquid pipeline, the operator was required to dig up additional
    pipeline to determine the full extent of the corrosion. In October 1999, OPS
    issued a final rule that requires natural gas operators to follow the same
    procedures as hazardous liquid pipeline operators. OPS also plans to update
    corrosion-control practices for both gas and liquid pipeline regulations to
    incorporate the latest safety practices for protecting steel pipe from
    corrosion.

    � OPS has several initiatives under way to improve the quality of the
    accident data reported by pipeline operators. OPS is conducting a pilot
    project with the American Petroleum Institute to encourage oil pipeline
    operators to voluntarily report more detailed information than OPS normally
    collects on accidents. For example, the pilot uses 20, rather than 5,
    categories of accident causes and lowers the threshold of accidents to be
    reported from 50 barrels of product spilled to 5 gallons spilled. Data from
    this pilot, which should begin to be available in the spring of 2000, may be
    better for analyzing trends in areas such as causes, property damage, and
    remediation costs. OPS has also drafted a new accident-reporting form for
    liquid pipeline accidents that incorporates the expanded categories of
    accident causes that are being used in the pilot, and it plans to modify the
    forms for natural gas transmission and natural gas distribution pipeline
    accidents. Finally, in a recent report, the Department of Transportation's
    Inspector General recommended that OPS collect more complete, detailed
    information on the causes of accidents, and OPS agreed to do so.19

    OPS and Safety Board officials have been meeting biannually to discuss
    outstanding recommendations and work to resolve disagreements between the
    agencies. Safety Board officials have been pleased with many of OPS' actions
    and the improved communications between the agencies during the last year.
    However, many of the actions are incomplete, and some, such as OPS' proposed
    rule requiring the enhanced protection of high-consequence areas, will not
    fully address the recurring pipeline safety issues that have prompted the
    Safety Board's recommendations. Therefore, Safety Board officials are
    waiting to see the results of OPS' promised actions before assessing the
    extent to which OPS' responsiveness has improved.

    In addition to the Safety Board's recommendations, 49 congressional
    requirements have been imposed since 1988 to improve the safety of pipelines
    and enhance OPS' ability to oversee the pipeline industry.20
    (App. IV lists these pipeline safety statutory requirements and their
    status.) Twenty-two of these requirements have not been implemented, and 12
    of them date from 1988 to 1992. (See table 4.) Ten of these 12 requirements
    were to be completed by deadlines stated in the statutes and are now between
    about 5 and 11 years past these deadlines.

    Table 4: Status of Implementation of Statutory Requirements, 1988-2000

                                      Total                Number of
                                      number of            requirements
     Legislation                      requirements         not complete
     Pipeline Safety Reauthorization
     Act of 1988                      11                   3
     Oil Pollution Act of 1990        1                    0
     Offshore Pipeline Navigational
     Hazards (1990)                   6                    1
     Pipeline Safety Act of 1992      15                   8
     Accountable Pipeline Safety and
     Partnership Act of 1996          15                   10
     Transportation Equity Act for the
     21st Century (1998)              1                    0
     Total                            49                   22

    Source: GAO's analysis of pipeline safety legislation from 1988-2000.

    The statutory requirements often addressed the same issues as the Safety
    Board's recommendations. For example, three requirements from 1988, 1992,
    and 1996 called for periodic inspections of pipelines, five requirements
    from 1988, 1992, and 1996 addressed the use of safety valves, and four
    requirements from 1988, 1992, 1996, and 1998 addressed excavation damage.
    These requirements also cover other issues. For example, in October 1992,
    the Congress required OPS to define by October 1994 areas unusually
    sensitive to environmental damage from a hazardous liquid pipeline rupture.
    According to OPS officials, the agency did not meet the statutory deadline
    because reaching a consensus with other federal agencies and environmental
    groups on a definition of these areas has been complicated by the broad
    range of definitions currently in use. OPS issued a proposed rule on a
    definition of areas unusually sensitive to environmental damage on December
    30, 1999, and expects to complete the final rule by the end of 2000.

    Both OPS and the Safety Board agree that there is a need to increase
    pipeline safety in the areas where the Safety Board has made
    recommendations--areas that are also frequently addressed by statutory
    requirements. The agencies' disagreement over several of the Safety Board's
    recommendations focus on how best to achieve that result. Although some
    disagreements remain, the Safety Board has been encouraged by OPS' recent
    actions to implement its recommendations and the statutory requirements. We
    believe that it is essential for OPS and the Safety Board to continue to
    work together to resolve their differences.

    We are concerned that OPS is discontinuing the use of states to help conduct
    inspections of interstate pipelines primarily because of logistical
    difficulties in scheduling systemwide inspections when states are involved.
    States' familiarity with pipelines in their jurisdictions could aid in
    identifying the very risks that OPS is hoping to mitigate through its
    planned risk management approach to safety regulation. This familiarity
    could argue for states' participation in reviewing integrity management
    programs that pipeline companies would be expected to develop under a risk
    management approach. In addition, a combined federal and state approach to
    overseeing pipeline safety could better leverage federal resources.

    OPS' approach of working constructively with pipeline companies and reducing
    its reliance on monetary penalties to enforce its regulations is consistent
    with the actions of several other federal regulators, such as the Federal
    Railroad Administration, as well as several state pipeline regulators.
    However, a reduction in enforcement actions that result in fines from nearly
    50 percent to 4 percent represents a significant change in how OPS obtains
    compliance with pipeline safety regulations. If pipeline companies are
    achieving compliance through less punitive actions, then OPS' reduced
    reliance on fines may be reasonable. However, OPS has not assessed whether
    (1) less punitive actions are effective in achieving the desired results or
    (2) its actions to reduce reliance on fines go farther than other agencies'
    actions. An assessment of the degree to which OPS' change in approach to
    enforcement actions has maintained, improved, or lessened compliance with
    safety regulations could provide a basis to judge whether the agency is
    moving in the right direction.

    We recommend that the Secretary of Transportation direct OPS to work with
    state pipeline safety officials to determine which federal pipeline safety
    activities would benefit from state participation and, for those states
    willing to participate, integrate state participation into these activities.

    We further recommend that, if OPS issues a final rule requiring individual
    pipeline companies to develop integrity management programs, the Secretary
    should direct OPS to allow state inspectors to help review the programs
    developed by the companies that operate in their states to ensure that these
    companies have identified and adequately addressed safety risks to their
    systems.

    Finally, we recommend that the Secretary of Transportation determine whether
    OPS' reduced use of fines has maintained, improved, or decreased compliance
    with pipeline safety regulations.

    We provided a draft of this report to DOT for its review and comment. We met
    with officials from DOT, including OPS' Director, Office of Policy,
    Regulations, and Training, to obtain their comments. The DOT officials
    generally agreed with the draft report's recommendations. The officials
    stated that ongoing regulatory and legislative activities demonstrate that
    efforts are under way to implement the draft report's recommendation that
    OPS work closely with the states and their pipeline inspectors to further
    improve the level of pipeline safety. For example, DOT's proposed
    legislation to reauthorize the pipeline safety program would include
    specific authority for states to participate in new construction inspections
    and accident investigations on interstate pipelines. The officials told us
    that DOT's initiatives are intended to enable state inspectors to better
    focus their oversight efforts and to improve OPS' interactions with the
    states. The officials also told us that DOT is moving to substantially
    increase the funding available for state inspection activities and, for the
    first time, provide funding for certain state inspection activities on
    interstate pipelines. We are pleased that DOT recognizes the importance of
    working cooperatively with the states in overseeing pipeline safety.
    However, we continue to believe that, in addition to new pipeline
    construction and accident investigations, DOT should specifically allow the
    states to participate in reviews of interstate pipeline companies' integrity
    management programs, as we recommended in the draft report.

    According to the officials, while OPS increasingly favors the use of
    corrective action and other compliance orders, it maintains all traditional
    enforcement tools and applies them when necessary. Furthermore, the
    officials told us that DOT's proposal to reauthorize the pipeline safety
    program is intended to strengthen the enforcement tools available to OPS.
    The officials maintain that the new enforcement approach has obtained more
    immediate and thorough corrective and remedial actions than would have been
    obtained through an approach based solely on increased fines. We recognize
    that DOT's pipeline safety program reauthorization proposal is intended to
    strengthen the enforcement tools available to OPS. However, while DOT
    officials claim that OPS' new approach of using corrective action and other
    compliance orders in lieu of fines has achieved benefits that would not have
    been obtained otherwise, a formal assessment of this new approach, as we
    recommended in the draft report, is needed to determine whether it is
    providing an equal, greater, or lesser level of compliance with the
    regulations.

    Finally, the officials emphasized that DOT will continue to require full
    regulatory compliance even as it moves to further refine its focus on risk.
    Under OPS' integrity management program for the enhanced protection of
    pipelines in high-consequence areas, DOT plans to supplement regulatory
    compliance with a comprehensive examination of individual pipeline systems
    to identify and act on potential risk factors. DOT told us that this
    approach will make use of expertise from all aspects of pipeline design,
    construction, and operation to integrate information in a supplemental
    evaluation of systemwide risk factors. Once the risks are identified,
    operators will be required to act on the assessment through repair,
    prevention, and mitigation. We modified our draft report to further clarify
    that OPS' proposed integrity management program for the enhanced protection
    of pipelines in high-consequence areas is intended to be a supplement to,
    rather than a replacement of, the existing pipeline safety regulations.

    DOT officials also provided technical clarifications, which were
    incorporated as appropriate.

    To determine the extent of pipeline accidents from 1989 through 1998 (the
    most recent year for which data were available), we collected and analyzed
    OPS' data on pipeline accidents. We did not independently verify the
    reliability of the data. To ensure an objective comparison across all types
    of pipelines, we included in our analysis only those accidents that met the
    reporting criteria common to all types of pipelines--accidents that resulted
    in a fatality, an injury requiring hospitalization, or $50,000 or more in
    property damage. We defined these accidents as "major accidents." We also
    reviewed more extensive data on the causes of accidents compiled by the
    Association of Oil Pipe Lines, the American Petroleum Institute, and the
    American Gas Association.

    To determine OPS' implementation of the risk management demonstration
    program, we reviewed the statutory requirements for the program and program
    documents maintained on OPS' web-based document management system, including
    program guidance and project applications. We also interviewed OPS officials
    and representatives from the pipeline companies participating in the
    program.

    To describe OPS' inspection and enforcement efforts since the 1996 act, we
    reviewed data on OPS' inspections and enforcement actions from 1990 through
    1998 and analyzed trends in these activities. We interviewed OPS officials
    and representatives from the pipeline industry and environmental groups. We
    conducted telephone interviews with state pipeline safety officials in 12
    states that have acted as interstate agents within the last
    5 years--Arizona, California, Connecticut, Iowa, Michigan, Minnesota,
    Nevada, Ohio, New York, Rhode Island, Utah, and West Virginia. We also
    visited three states--Texas, Virginia, and Washington--where major pipeline
    accidents were investigated by the Safety Board and officials have sought a
    greater role for states in pipeline safety.

    To determine OPS' responsiveness to the National Transportation Safety
    Board's recommendations and statutory requirements, we reviewed the Safety
    Board's reports and recommendations since 1989, analyzed statistics on the
    recommendations since 1967, and discussed the results of our analysis with
    Safety Board and OPS officials. We did not assess the merits of the Safety
    Board's recommendations or the adequacy of OPS' response. We reviewed
    pipeline safety statutes, annual appropriations acts, related congressional
    committee reports, and reports by OPS to identify statutory requirements
    since 1988. We reviewed OPS' reports and analyses of the status of the
    requirements. We did not assess the adequacy of OPS' response to statutory
    requirements or independently verify the status of the requirements.

    To determine the status of the ongoing investigation of the accident in
    Bellingham, Washington, we interviewed representatives and reviewed
    documents from the following agencies and groups: the National
    Transportation Safety Board, OPS' Western Region, the Washington Utilities
    and Transportation Commission, the Washington State Governor's Fuel Accident
    Prevention and Response Team, the city of Bellingham, SAFE Bellingham, and
    Olympic Pipe Line Company.

    We conducted our work from August 1999 through April 2000 in accordance with
    generally accepted government auditing standards.

    As arranged with your office, unless you publicly announce its contents
    earlier, we plan no further distribution of this report until 30 days after
    the date of this letter. At that time, we will send copies of the report to
    congressional committees and subcommittees responsible for transportation
    safety issues; the Honorable Rodney E. Slater, Secretary of Transportation;
    the Honorable Kelley S. Coyner, Administrator, Research and Special Programs
    Administration; the Honorable Jim Hall, Chairman, National Transportation
    Safety Board; the Honorable Jacob Lew, Director, Office of Management and
    Budget; and other interested parties. We will make copies available to
    others upon request.

    If you or your staff have any questions about this report, please contact me
    at (202) 512-3650. Key contributors to this report are listed in appendix V.

    Sincerely yours,
    Phyllis F. Scheinberg
    Associate Director, Transportation Issues

    The Bellingham, Washington, Pipeline Accident

    The Olympic Pipe Line Company operates a pipeline system consisting of about
    400 miles of pipelines that transport petroleum products from refineries at
    Cherry Point, Ferndale, and Anacortes in northwestern Washington to
    Portland, Oregon, and intermediate delivery points. Products transported
    include gasoline, distillates (heating oil and diesel fuel), and jet fuel.
    The system is operated by remote control from an operations center located
    in Renton, Washington.

    On June 10, 1999, one of Olympic's pipelines transporting gasoline ruptured
    in the Whatcom Falls Park area of Bellingham, Washington. About
    250,000 gallons of gasoline from the pipeline entered the Hannah Creek and
    Whatcom Creek where the fuel was ignited, resulting in three fatalities and
    eight injuries. In addition, the banks of the creek were destroyed over a
    1.5-mile section, and several buildings adjacent to the creek were severely
    damaged.

    Although the investigation of the accident is ongoing, the National
    Transportation Safety Board (the Safety Board) and the Department of
    Transportation's Office of Pipeline Safety (OPS) have preliminarily
    reconstructed the events leading up to the pipeline rupture. Shortly before
    the rupture occurred, pipeline operators attempted to start a pump at the
    Woodinville pumping station to facilitate the smooth flow of gasoline
    through the pipeline. (See fig. 7.) The pump did not engage, and pressure
    started to build within the pipeline. A relief valve at the Bayview station
    was designed to divert the gasoline from the pipeline to a tank to relieve
    the increasing pressure, and a block valve, also located at the Bayview
    station, was designed to close and stop the flow of gasoline. The Safety
    Board believes that the block valve closed as it should have done. However,
    gasoline continued to be pumped into the pipeline at Cherry Point, causing
    the pressure in the pipeline segment between Cherry Point and Bayview to
    continue increasing. The pipeline subsequently ruptured about midway along
    the segment at the Bellingham water treatment plant, near Whatcom Creek.

    Figure 7: Location of Olympic Pipe Line Rupture
    Source: National Transportation Safety Board.

    According to the Chairman of the Safety Board, preliminary data show that
    when the rupture occurred, the pressure in the pipeline was well above
    normal operating levels. However, the pressure was substantially below the
    maximum pressure that a pipe of this design and size should have been able
    to withstand, and it was below the maximum allowable surge pressure
    permitted by regulatory standards.

    According to Safety Board officials, the pipeline shut down after the
    rupture. However, Olympic Pipe Line controllers restarted the pipeline about
    45 minutes later, and gasoline was pumped into the damaged segment for about
    17 minutes. Between 250,000 and 300,000 gallons of gasoline (from the
    initial rupture and the subsequent restart of the pipeline) flowed from the
    damaged pipeline to the Hannah Creek and Whatcom Creek. Whatcom Creek--a
    salmon habitat--flows through Whatcom Falls Park in Bellingham.

    Investigators from the Safety Board are examining several factors that may
    have caused or contributed to the accident, including excavation damage,
    valve malfunctioning, operator training, and computer issues. However,
    several key activities in the Safety Board's investigation have been
    suspended because (1) Olympic Pipe Line Company employees with direct
    knowledge of the events have exercised their Fifth Amendment rights and have
    not responded to the Safety Board's questioning and (2) the Department of
    Justice halted destructive testing of the pipeline segment in order to
    preserve evidence. On April 5, 2000, the Safety Board was authorized to
    proceed with the testing of the pipeline segment.

    The Safety Board's preliminary visual inspection of the ruptured pipeline
    segment indicated external damage to the pipeline at the point of rupture
    and additional damage to the area. In 1993 and 1994, a contractor working on
    behalf of the city of Bellingham installed new water lines across Olympic's
    pipeline at points approximately 20 feet and 10 feet south of the rupture.
    In 1991, an internal inspection of the pipeline did not identify any
    anomalies in the immediate vicinity of the rupture. However, two internal
    inspections conducted in 1996 and 1997 after the construction of the water
    lines identified several anomalies in the vicinity of the rupture. According
    to the Chairman of the Safety Board, Olympic Pipe Line indicated that the
    anomalies did not meet the applicable criteria for excavating the pipeline
    for a closer examination. The Safety Board is determining what criteria were
    used and plans to meticulously test the ruptured pipeline segment to
    determine whether external damage may have contributed to the rupture.

    The Safety Board is also investigating the performance of the relief valve
    and the block valve at the Bayview station. Because Olympic modified the
    relief valve when it was installed, the Safety Board is examining whether
    the company followed the manufacturer's specifications for the modification.
    In addition, preliminary information indicates that the block valve had
    closed over 50 times in the 6 months prior to the accident, often because of
    pressure buildups similar to the one that occurred before the accident on
    June 10. The Safety Board is evaluating these events to determine the
    pressures involved, the functioning of the relief valve, and the possible
    impact of the pressure buildups on the overall integrity of the pipeline
    segment that ruptured.

    The Chairman of the Safety Board also stated that the Safety Board wants to
    document and analyze the data available to controllers at the time of the
    accident. According to the Chairman, the controllers seem to have been
    unaware of the rupture for an extended period of time and the fact that they
    restarted the pipeline after the rupture suggests a significant performance
    failure. The Chairman noted that the Safety Board does not know whether this
    can be traced to insufficient training, inadequate qualifications, equipment
    malfunctions, poor design in the computer-based control system, or some
    other undetermined factor.

    Finally, Olympic initially reported that the computer system that controls
    the pipeline experienced a "slowdown" during the accident that affected the
    ability of the controllers to observe the pipeline's functions and to change
    settings. The Safety Board's preliminary analysis of the computer tapes did
    not identify a slowdown. Olympic has reported that such a slowdown cannot be
    verified or reproduced.

    On June 18, 1999, OPS issued a corrective action order to Olympic Pipe Line
    Company (owned and operated by Equilon Pipeline Company, LLC) which directed
    Olympic not to operate the damaged pipeline segment until the company, among
    other things, reviewed its computer system to determine the cause of the
    slowdown and take corrective action, tested mainline valves, and submitted a
    plan to OPS addressing factors that contributed to the rupture. The order
    also restricted the operating pressure on the remainder of the pipeline
    until OPS approves a return to normal operating pressure. The order was
    amended on August 10, 1999, and again on September 24, 1999, to address
    safety issues identified during the ongoing investigation. For example, the
    subsequent orders required Olympic to further reduce the pressure on certain
    pipeline segments, develop and implement a training program for controllers
    on the use of the computer system (including abnormal operations), and
    conduct hydrostatic tests of certain segments of the pipeline (draining the
    pipeline, filling it with water, and increasing the pressure within the
    pipeline to identify weak points). In addition to the corrective action
    order, OPS issued an advisory to all pipeline operators to check the
    adequacy of the computer resources devoted to monitoring and controlling
    their pipeline operations.

    OPS inspectors have been monitoring Olympic's corrective actions. The
    inspectors are (1) working as a party to the Safety Board's investigation,
    (2) conducting an enforcement investigation, and (3) monitoring upgrades and
    repairs to the pipeline in accordance with the corrective action order. OPS
    also retained an independent expert to evaluate complex data from the
    internal inspections conducted in 1996 and 1997. In addition, OPS stationed
    a pipeline inspector in Washington State. This inspector will oversee the
    safety and environmental integrity of pipelines in the upper Northwest
    region and work on issues related to the Bellingham accident.

    On January 18, 2000, Olympic asked OPS for permission to restart the
    pipeline. As of April 2000, OPS officials had sent a response to Olympic
    detailing areas where it needed to take additional actions before the
    pipeline could be returned to limited service. When OPS decides to allow
    Olympic to restart the pipeline, the pipeline will be brought back into
    service in incremental steps.

    Within a week after the accident, officials from the city of Bellingham
    realized that the agreement under which Olympic operated its pipeline within
    the city limits had expired. According to city officials, the need for
    Olympic to re-obtain the city's permission to operate its pipeline gave them
    some added leverage in negotiating several agreements with Olympic. The city
    extended the expired agreement until May 4, 2000, provided that Olympic
    complied with two other agreements between the city and Olympic--a safety
    action plan and a master agreement.

    The safety action plan includes safety-related activities to be performed by
    Olympic before the section of the pipeline that ruptured can be restarted at
    reduced pressure, as well as activities to be performed at various stages
    after restarting the pipeline. These activities include (1) the testing of
    existing valves and installation of new valves; (2) hydrostatic testing of
    the pipeline; (3) computer testing and modifications; (4) the installation
    of an additional leak detection system; (5) an internal inspection of the
    pipe within 3 months of startup (and in any event no later than 6 months
    after startup); (6) field inspections and repairs based on the results of
    the internal inspection, and (7) a management audit to be performed by an
    independent party. OPS incorporated participation in the management audit
    into the September 24, 1999, amendment to its corrective action order.

    On February 11, 2000, Olympic sent a letter to the city of Bellingham
    responding to the conditions for restarting the pipeline. The city continues
    to have concerns about Olympic's response.

    The master agreement specifies that Olympic cannot restart the pipeline
    until it has satisfied the requirements in the city's safety action plan and
    OPS' corrective action order. In addition, the master agreement requires
    Olympic to study the feasibility of rerouting the pipeline around
    Bellingham. On February 1, 2000, Olympic submitted a report to the city in
    which it concluded that rerouting the pipeline was not feasible because it
    was unlikely that a new route would gain permitting approval from state and
    federal agencies. As of April 2000, the city had not responded to the
    report's conclusions.

    One week after the accident, a group of citizens from Bellingham formed a
    group--SAFE Bellingham--to ensure that the creek would be restored, that
    Olympic would be held accountable, and that actions would be taken to
    mitigate future accidents. SAFE Bellingham has organized a coalition of
    communities that have experienced pipeline accidents to promote changes to
    federal pipeline safety regulations and has drafted a proposal for a local
    advisory committee to monitor pipeline safety within states.

    The governor of Washington established a task team after the accident to
    evaluate pipeline safety within the state. The task team issued a report in
    December 1999 that recommends changes in law and practice at the federal,
    state, and local levels and changes in practice by fuel transmission
    pipeline operators in Washington. For example, the report recommends that
    the state pursue (1) federal regulation that would allow states to regulate
    the portions of interstate pipelines within their borders using standards
    more stringent than OPS', (2) federal legislation that would authorize
    states to receive higher levels of grant support from OPS, and
    (3) state executive branch and legislative changes that would strengthen
    pipeline safety.

    As of April 2000, the state was working on an agreement with OPS regarding
    the inspection of interstate pipelines. On March 28, 2000, the governor
    signed a bill that establishes a statewide program to improve pipeline
    safety in Washington by having, among other things, the state's Utilities
    and Transportation Commission adopt new regulations and provide technical
    assistance to local governments. The bill also establishes a citizen
    advisory committee to help the public, local governments, and the industry
    work with the state on pipeline safety. Finally, the bill increases the
    penalties for failing to call a central number to identify the location of
    pipelines before digging.

    In addition to responding to OPS' corrective action order and the city of
    Bellingham's safety action plan, Olympic issued a corridor safety action
    plan in October 1999 that applied many of the same actions being taken in
    the Bellingham area to the entire pipeline corridor from Ferndale to
    Portland. For example, Olympic's action plan includes requirements for valve
    testing and internal inspections along the entire pipeline.

    Representatives from Olympic are on a committee with representatives from
    the city of Bellingham and other consultants to restore and improve Hannah
    and Whatcom creeks. Olympic has provided the initial funding for restoration
    and improvement efforts, which include erosion control, replanting, and
    building new salmon spawning pools. According to a member of the committee,
    Whatcom Creek's water quality has been restored and several species of
    salmon have been observed in the creek.

    Barge and truck transport are being used to deliver petroleum products
    during the shutdown of the damaged pipeline segment. According to attorneys
    representing Olympic, maintaining delivery has been difficult at times,
    especially since Olympic is the sole supplier of jet fuel to the
    Seattle-Tacoma Airport.

    Maps of Natural Gas Transmission and Hazardous Liquid Pipelines

    Figure 8: Locations of Natural Gas Transmission Pipelines
    Source: OPS, based on data from MAPSearch Services.

    Figure 9: Locations of Hazardous Liquid Pipelines
    Source: OPS, based on data from MAPSearch Services.

    Status of Risk Management Demonstration Projects

    Since the inception of the risk management demonstration program, OPS has
    approved six pipeline companies' risk management projects for the program.
    These individual projects are designed to demonstrate the benefits of risk
    management under a variety of conditions, including differences in products,
    the ages of pipeline systems, environments, geography, and operating
    conditions (see table 5).

    Table 5: Projects Approved for the Risk Management Demonstration Program

     Operator       Regions        Project focus                   Date
                    affected                                       approved
                                   Equilon is including two
                                   separate interstate pipeline
                                   systems in its project: a
                                   205-mile segment of an
                                   ethylene pipeline and a
                                   260-mile segment of a carbon
                                   dioxide pipeline. For these
     Equilon                       pipeline segments, Equilon is
     Pipeline       Southwest      developing a comprehensive      March 1998
                                   risk management program for
                                   assessing all hazards and
                                   risks associated with the
                                   operation of these pipelines.
                                   A major focus of the project
                                   is damage prevention during
                                   excavation and construction.
                                   Exxon Mobil is demonstrating
                                   its release prevention (tank
                                   integrity) program at its
                                   crude oil breakout facility in
     Exxon Mobil    Central        Patoka, Illinois. The project   August 1998
                                   will examine how Exxon Mobil's
                                   release prevention measures
                                   will work in conjunction with
                                   OPS' proposed standards for
                                   aboveground storage tanks.
                                   Phillips is using risk
                                   management along a 60-mile
                                   segment of both an
                                   18-inch and a 12-inch refined
     Phillips Pipe                 oil products pipeline. The
     Line Company   Southwest      project will explore ways of    August 1998
                                   minimizing the risks
                                   associated with excavation
                                   work along the pipelines to
                                   reduce or eliminate damage
                                   from outside forces.
                                   The company is incorporating
                                   risk management into a
                                   13,000-mile natural gas
                                   pipeline system. It hopes to
     Kinder Morgan, Central,       form a comprehensive risk       December
     Inc.           Southwest      management program based on     1998
                                   existing company programs such
                                   as pipeline integrity,
                                   regulatory compliance
                                   management, and emergency
                                   response.
                                   Chevron is including a
                                   330-mile portion of its Salt
                                   Lake Products Pipeline System
                                   in the program. The system
                                   consists of two 8-inch product
     Chevron Pipe                  pipelines, one transporting     February
     Line           Western        gasoline and the other          1999
                                   distillates such as diesel and
                                   jet fuel. Among other tasks,
                                   Chevron will conduct internal
                                   pipeline inspections and
                                   geologic hazard assessments of
                                   the pipelines for its project.
                                   Northwest is developing a risk
                                   management program for its
                                   entire
                                   3,900-mile natural gas system.
                                   The project will explore means
     Northwest                     of assessing and addressing
     Pipeline       Western        risks presented by a pipeline   January 2000
                                   in rugged terrain susceptible
                                   to land movement and
                                   investigate the risk-reduction
                                   benefits of certain new
                                   technologies.

    Source: GAO's analysis of information from OPS.

    The direct federal costs of the risk management demonstration program are
    expected to be nearly $8 million from fiscal year 1996 through fiscal year
    2000. According to OPS officials, OPS has not funded the participant
    companies' costs for the risk management demonstration projects but has
    incurred direct support costs for personnel, travel, and contractor support
    for evaluating and auditing the demonstration projects. In addition, OPS has
    provided grants to states totaling about $340,000 for travel costs
    associated with the projects. These direct support costs decreased from a
    total of about $1.8 million in fiscal year 1996 (the first year of the
    program) to about $1.4 million in fiscal year 1999, but they are expected to
    increase to about $1.6 million in fiscal year 2000, primarily because of
    increases in contractor support costs. (See table 6.)

    Table 6: Federal Cost of the Risk Management Demonstration Program, by
    Fiscal Year

                                     Fiscal year
     Description   1996       1997      1998       1999       2000      Total
     Federal
     salary and $355,000   $363,000   $379,000   $393,000  $425,000   $1,915,000
     benefitsa
     Estimated
     travel     200,000    200,000    200,000    200,000   200,000    1,000,000
     costs
     Contractor
     support    1,249,956  1,069,053  811,599    708,346   900,000b   4,738,954
     costs
     State
     grants     0          40,000     100,000    100,000   100,000    340,000
     Total      $1,804,956 $1,672,053 $1,490,599 $1,401,346$1,625,000 $7,993,954

    aEstimated salary and benefits for five full-time equivalent employees per
    year.

    bAccording to OPS officials, this is an amount obligated for the 15-month
    period from Oct. 1, 1999, through Dec. 31, 2000.

    Source: GAO's analysis of OPS' documents.

    OPS' Action on Statutory Requirements,
    1988-2000

    This appendix consists of tables that summarize (1) the requirements for OPS
    established in six statutes and (2) the actions OPS has taken since 1988 in
    response to these requirements.

    Table 7: Pipeline Safety Reauthorization Act of 1988 (P.L. 100-561, Oct. 31,
    1988)

    Continued from Previous Page

        Section        Statutory requirement                 Status
                                                 Closed: 49 C.F.R. 192 and 195
                                                 require gas and hazardous
                                                 liquid pipeline operators to
                                                 (1) maintain records of the
                                                 characteristics and
                                                 maintenance history of their
                                                 pipelines and (2) prepare an
                                                 operations manual and an
                                                 emergency manual. In addition,
                                                 OPS, in conjunction with the
                                                 National Pipeline Mapping
                                                 System, has developed and
                                                 published standards for
                                                 collecting information on
                   Reporting standards: Within 1 pipelines and their
                   year, establish standards for environment. OPS and the
                   operators to provide          states are now receiving data
                   information, including the    from the pipeline companies.
     102 (gas)     following: Name, address,
     202 (liquid)  phone number; Map; Pipeline   In addition, OPS is working
                   characteristics; Description  with the hazardous liquid
                   of products transported;      pipeline industry to develop a
                   Operations manual; Emergency  voluntary annual report that
                   response plan.                contains more information than
                                                 is currently required, by
                                                 regulation, from natural gas
                                                 pipeline companies. This
                                                 information will be provided
                                                 to OPS by the end of 2000
                                                 through a voluntary data
                                                 initiative of the American
                                                 Petroleum Institute. The
                                                 information anticipated from
                                                 this ongoing initiative will
                                                 likely make it unnecessary to
                                                 require an annual report from
                                                 hazardous liquid pipeline
                                                 companies.
                                                 Open: OPS formed a data team
                                                 with the hazardous liquid
                                                 pipeline industry to provide
                                                 for the voluntary submission
                                                 of data on pipeline
                                                 facilities. During 1999, the
                   Pipeline inventory: Establish hazardous liquid pipeline
                   standards to require          industry pilot-tested a system
                   operators, within 1 year, to  to assess the effects of the
     102 (gas)     complete and maintain an      team's data collection
     202 (liquid)  inventory of all types of     recommendations; an analysis
                   pipe used, including the      of the results will soon be
                   materials used and a history  completed. Pipe inventory
                   of any leaks.                 standards for voluntary
                                                 reporting are subject to
                                                 further development. In 2000,
                                                 OPS revised its annual report
                                                 forms for gas and hazardous
                                                 liquid transmission pipeline
                                                 companies to provide better
                                                 inventory information.
                                                 Closed: OPS coordinates
                                                 accident response procedures
                                                 with the National
                                                 Transportation Safety Board,
                                                 the Environmental Protection
                                                 Agency, the Occupational
                                                 Safety and Health
                                                 Administration, the Coast
                                                 Guard, the Federal Railroad
                                                 Administration, and the
                                                 Minerals Management Service
                   Accident coordination: Within through memorandums of
                   1 year, establish procedures  understanding, letters of
     105(2) (gas)  to more effectively           agreement, and informal
     209 (liquid)  coordinate the response of    undertakings. Parts 192 and
                   federal agencies and the      195 both require pipeline
                   states to pipeline accidents. companies to provide
                                                 information to local emergency
                                                 response organizations to
                                                 improve coordination during
                                                 accidents. Liquid pipeline
                                                 companies coordinate with
                                                 federal response agencies and
                                                 state and local agencies in
                                                 planning for pipeline spills
                                                 under the Oil Pollution Act.
                                                 OPS participates in emergency
                                                 response exercise programs.
                   Inspection frequency: Inspect
                   and, as appropriate, require
                   the testing of pipeline
                   facilities at specified
                   intervals, but no less
                   frequently than once every    Closed: The Accountable
     108(a)(2)     2 years; master meter         Pipeline Safety and
     (gas)         operators can be inspected    Partnership Act of 1996 (49
     207(a)        less frequently; the          U.S.C. 60108(b)) eliminated
     (liquid)      frequency and type of         the requirement for testing at
                   inspections shall be          2-year intervals.
                   determined on a case-by-case
                   basis, considering factors
                   such as location,
                   characteristics, and
                   materials transported.
                                                 Open for certain gas
                                                 pipelines: A final rule for
                                                 all pipelines was published
                                                 (59 F. R. 17275, 4/12/94).
                                                 Notice 2 (59 F.R. 49896,
                                                 9/30/94) extended the
                                                 compliance date for existing
                                                 gas transmission lines and
                                                 modified the requirement for
                   Smart pig accommodation:      offshore and rural gas
     108(b) (gas)  Establish standards requiring transmission lines. Notice 3
     207(b)        that new and replacement pipe (60 F.R. 7133, 2/7/95)
     (liquid)      shall accommodate the passage suspended enforcement of the
                   of smart pigs.                final rule's requirements for
                                                 modifications to sections of
                                                 onshore gas transmission lines
                                                 and for new and existing
                                                 offshore gas transmission
                                                 lines. A final rule in
                                                 response to petitions for
                                                 reconsideration is being
                                                 prepared for publication in
                                                 5/00.
                                                 Open: A final report, An
                                                 Analysis of Natural Gas Master
                                                 Meter Systems (Definition and
                                                 Program) from a Federal
                   Master meter study: Assess    Perspective, was issued
                   the need for an improved      6/15/79. An additional study
     108(c)(gas)   inspection program for master on master meter systems was
                   meter systems and issue a     drafted following a survey of
                   report within 18 months.      the states. The data on master
                                                 meter systems included in the
                                                 report are being updated. The
                                                 report will be finalized and
                                                 issued by the end of 2000.
                   Carbon dioxide: Regulate
                   carbon dioxide transported by
     211(a)        pipeline and amend            Closed: 49 C.F.R. part 195 was
     (liquid)      regulations as appropriate to amended for carbon dioxide on
                   ensure the safe               6/21/91.
                   transportation of carbon
                   dioxide by pipeline.
                   One-call systems: Within 18   Closed: 49 C.F.R. 198, Subpart
                   months, issue regulations     C, 9/20/90 addresses one-call
                   establishing minimum federal  notification; also, 49 C.F.R.
     303(a)        requirements for establishing 192.614 and 49 C.F.R. 195.442,
                   and operating one-call        11/19/97, mandate states'
                   notification systems for      participation in one-call
                   adoption by states.           systems.
                   Smart pig feasibility study:
                   Assess the feasibility of
                   requiring the inspection of   Closed: OPS issued a report,
     304           transmission facilities with  Instrumented Internal
                   smart pigs at periodic        Inspection Devices, in 11/92.
                   intervals and issue a report
                   within 18 months.
                   Emergency flow valve
                   feasibility study: Study the  Closed: A study sponsored by
                   safety, cost, feasibility,    the Research and Special
     305           and effectiveness of          Programs Administration,
                   requiring operators to        Emergency Flow Restricting
                   install emergency             Devices Study, was issued in
                   flow-restricting devices and  3/91.
                   issue a report within 1 year.
                   Feasibility of regulating
                   excavation activity: Assess
                   the feasibility of regulating Closed: A report, Examination
     306           persons whose excavation      of the Feasibility of
                   activities may result in      Regulating Excavators, was
                   damage to pipeline facilities issued in 10/90.
                   and issue a report within 1
                   year.

    Source: For columns 1 and 2, GAO's analysis of pipeline safety statutes; for
    column 3, status reports from OPS.

    Table 8: Oil Pollution Act of 1990 (P.L. 101-380, Aug. 18, 1990)

     Section         Statutory requirement       Status
                                                 Closed: An interim final rule
                                                 on onshore facilities was
                     Response plans for onshore  published (58 F.R. 244,
                                                 1/5/93). Response plans have
     4202(a)(6),     oil pipelines: Issue        been submitted under this
     (b)(4)          regulations for oil spill   interim rule. The final rule,
                     response plans for onshore
                     oil pipelines by 8/18/92.   incorporating experience in
                                                 operating spill response
                                                 systems and reviewing plans,
                                                 is to be issued in 5/00.

    Source: For columns 1 and 2, GAO's analysis of pipeline safety statutes; for
    column 3, status reports from OPS.

    Table 9: Offshore Pipeline Navigational Hazards (P.L. 101-599, Nov. 16,
    1990)

    Continued from Previous Page

       Section      Statutory requirement                  Status
                 Reporting standards: Within
     1(a) (gas)  6 months of 11/16/90,
     1(b)        establish standards defining Closed: 49 C.F.R. 192.3 and 195.2
     (liquid)    "exposed pipeline facility"  define these terms.
                 and "hazard to navigation."
                                              Closed: 49 C.F.R. 191.27,
                 Hazardous conditions:        192.612, 195.57, and 195.413
                 Establish, by regulation, a  specify reporting procedures for
                 program requiring operators  pipelines in the Gulf of Mexico
                 of offshore and navigable    and its inlets. In addition, OPS
     1(a) (gas)  water pipelines to report    issued alert notices to the
     1(b)        potential or existing        offshore fishing industry
     (liquid)    navigational hazards         (ALN-90-01) warning of hazards to
                 involving pipeline           fishing vessels from exposed
                 facilities to the Secretary  pipelines and to Gulf of Mexico
                 through the Coast Guard (as  operators (ALN-98-03) warning of
                 enacted, limited to the Gulf the possibility of exposed
                 of Mexico and its inlets).   pipelines after Hurricane
                                              Georges.

                 Permanent inspections:       Open: OPS signed a memorandum of
                 Establish an inspection      understanding with the Minerals
                                              Management Service to define
     1(a) (gas)  program for offshore and     inspection responsibilities for
     1(b)        navigable water pipelines no offshore pipelines. A proposed
     (liquid)    later than 30 months after   rule for periodic underwater
                 11/16/90 (as enacted,
                 limited to the Gulf of       pipeline inspections is now being
                 Mexico and its inlets).      prepared for publication by
                                              mid-2000.
                 Burial: Require, by
                 regulation, that exposed or
                 hazardous pipelines be
     1(a) (gas)  buried within 6 months after Closed: 49 C.F.R. 192.612 and
     1(b)        the date that the condition  195.413 impose requirements for
     (liquid)    of the pipeline is reported  pipelines in the Gulf of Mexico
                 to the Secretary (unless the and its inlets.
                 Secretary extends the time
                 period for compliance).
                                              Closed: 49 C.F.R. 191.23, 191.25,
                                              192.27, 192.612, 192.615,
                                              195.52-.58 establish procedures
                                              for reporting accidents and
                                              safety-related conditions for
                                              both gas and hazardous liquid
                                              pipelines. OPS issued a report,
                                              Safety-related Condition
                                              Reporting, in 7/88. In addition,
                                              OPS issued alert notices to the
                                              offshore fishing industry
                 Navigational hazards:        (ALN-90-01) warning of hazards to
                 Establish a program to       fishing vessels from exposed
                 encourage fishermen and      pipelines and to Gulf of Mexico
                 other vessel operators to    operators (ALN-98-03) warning of
     2           report potential or existing the possibility of exposed
                 navigational hazards         pipelines after Hurricane
                 involving pipelines to the   Georges. Fishermen in the Gulf of
                 Secretary through Coast      Mexico now voluntarily provide
                 Guard field offices.         reports on fishing net snags
                                              (which may or may not be on a
                                              pipeline), known as "hang"
                                              reports. These reports may result
                                              in compensation if the Minerals
                                              Management Service determines
                                              that a hang is on a pipeline
                                              facility. Louisiana also
                                              maintains its own Fisherman Gear
                                              Fund to compensate fishermen for
                                              lost nets and equipment in case
                                              of hangs on pipelines or
                                              production facilities.
                                              Closed: OPS (1) informed
                                              operators and fishermen of the
                                              problems posed by exposed
                                              underwater pipelines and required
                                              the reporting of safety-related
                                              conditions, (2) completed its
                                              collection of computer-assisted
                                              maps of all offshore oil and gas
                                              lease blocks, (3) contracted with
                                              Texas A&M University for a study,
                 Study: Study several issues  issued in 1/98. The study
                 related to underwater        recommended that OPS (1)
     3           pipelines and report to the  establish regulations requiring
                 Congress on the results of   the inspection of pipelines to
                 actions no later than 6      determine their depth of burial
                 months after 11/16/90.       and any need for reburial, (2)
                                              use risk analysis to determine
                                              the periodicity of future
                                              surveys, and (3) require
                                              operators to maintain pipelines 3
                                              feet below the natural bottom and
                                              develop a mandatory one-call
                                              system for marine pipelines. OPS
                                              is drafting a proposed rule that
                                              will incorporate these
                                              recommendations.

    Source: For columns 1 and 2, GAO's analysis of pipeline safety statutes; for
    column 3, status reports from OPS.

    Table 10: Pipeline Safety Act of 1992 (P.L. 102-508, Oct. 24, 1992)

    Continued from Previous Page

       Section        Statutory requirement                  Status
                                                 Open: On 4/24/00, OPS issued a
                                                 proposed rule requiring
                                                 additional testing,
                  High-density population areas  inspection, and remediation of
                  (for gas and liquid) and       hazardous liquid pipelines in
                  environmentally sensitive      high-consequence areas. The
     102(a)(2)    areas (for liquid): Within 2   agency issued, on 12/30/99, a
     (gas)        years, issue regulations       proposed rule defining U.S.
     202(a)(2)    establishing criteria for the  areas unusually sensitive to
     (liquid)     identification of all pipeline environmental damage (64 F.R.
                  facilities that are located in 73464). (Comments are due on
                  high-density and               6/27/00). An additional
                  environmentally sensitive      proposed rule for the
                  areas.                         inspection and testing of gas
                                                 transmission pipelines in
                                                 high-consequence areas will be
                                                 issued in 2000.
                  Update inspections/smart pigs:
                  Within 3 years, issue
                  regulations requiring the
                  periodic inspection of
                  pipelines in high-density and
                  environmentally sensitive
                                                 Open: A proposed rule to
     103(5) (gas) areas, specifying the          require periodic inspections
     203(5)       circumstances, if any, under   of hazardous liquid pipelines
     (liquid)     which inspections should be    in high-consequence areas was
                  conducted using smart pigs;
                  when smart pigs are not        issued on 4/24/00.
                  required, require an
                  inspection method that is at
                  least as effective in
                  providing for the safety of
                  the pipeline.
                  Excess flow valves: (1) Within
                  18 months, issue regulations
                  prescribing the circumstances,
                  if any, under which operators
                  must install excess flow
                  valves; (2) within 2 years,
                  issue regulations requiring
                  operators to notify, in
                  writing, customers whose lines Closed: A study found that
                  do not require but can         excess flow valves were not
                  accommodate excess flow valves cost-effective, and OPS did
                  that such valves shall be      not require operators to
                  installed at the request of    install excess flow valves.
     104 (gas)    the customer if the customer   However, 49 C.F.R. 192.383,
                  will pay all costs; (3) if     2/3/98, addresses requirements
                  there are no circumstances     for notifying customers of the
                  under which operators must     availability of excess flow
                  install excess flow valves,    valves, and 49 C.F.R. 192.381,
                  issue a report within 30 days  6/20/96, addresses performance
                  of such a determination on the standards for the valves.
                  reason for the determination;
                  and (4) within 18 months,
                  develop standards for the
                  performance of excess flow
                  valves used to protect lines
                  in natural gas distribution
                  systems.
                                                 Open: OPS issued a proposed
                                                 rule to solicit data (59 F.R.
                                                 2802, 1/19/94). A study
                                                 sponsored by the Research and
                                                 Special Programs
                                                 Administration on emergency
                  Emergency flow restriction     flow restriction devices was
                  devices: (1) Within 2 years,   issued on 9/29/95. A public
                  survey and assess the          workshop was held in 10/95.
                  effectiveness of emergency     The American Petroleum
                  flow restriction devices       Institute's leak detection
                  (including remotely controlled practices were adopted in 49
                  valves and check valves) and   C.F.R. part 195 on 7/6/98. A
                  other procedures, systems, and proposed rule to require
                  equipment used to detect and   additional testing,
     212 (liquid) locate pipeline ruptures and   inspection, and remediation of
                  minimize product releases from hazardous liquid pipelines in
                  pipeline facilities; (2)       high-consequence areas was to
                  within 2 years after the       be issued by 3/31/00. The
                  survey and assessment, issue   American Petroleum Institute
                  regulations prescribing the    is to develop an industry
                  circumstances under which      standard on U.S. areas
                  operators must use emergency   unusually sensitive to damage
                  flow restriction devices and   from a pipeline spill, which
                  other procedures, systems, and may help define pipeline
                  equipment.                     segments, including those in
                                                 high-consequence areas, that
                                                 are candidates for emergency
                                                 flow restriction devices and
                                                 other inspection, testing, and
                                                 integrity assurance
                                                 approaches.
                                                 Closed: A final rule, to
                                                 require all pipeline
                  Operator testing: Require      operations and maintenance
                  testing and certification that workers to be qualified to
                  addresses the ability to       perform their tasks and to be
     106(1) (gas) recognize and appropriately    able to recognize and react to
     205(1)       react to abnormal operating    abnormal operating conditions,
     (liquid)     conditions that may indicate a was published on 8/27/99 (64
                  dangerous situation or a       F.R. 46853). Operators must
                  condition exceeding design     have qualification plans
                  limits.                        prepared by 4/27/01 and all
                                                 workers must be qualified by
                                                 10/28/02.
                                                 Closed: OPS issued an alert
                                                 notice (ALN-91-02) reminding
                                                 all operators of natural gas
                                                 distribution systems to have a
                                                 program to identify and
                                                 replace cast iron piping
                                                 systems that may threaten
                  Replacement of cast iron       public safety. The agency also
                  pipelines: Publish a notice as informed operators of
                  to the availability of         guidelines and computer
                  industry guidelines for the    programs that were available
                  replacement of cast iron pipe  to help operators determine
                  and, within 2 years after the  the serviceability of cast
                  guidelines are available,      iron pipe and schedule its
                                                 replacement. Cast iron is used
     107 (gas)    survey operators with cast     exclusively by gas
                  iron piping systems to
                  determine the extent to which  distribution operators that
                  each operator has adopted and  are regulated under state
                  followed a plan for the safe   pipeline safety programs.
                  management and replacement of  Therefore, OPS' annual
                  cast iron, the elements of the auditing of the state pipeline
                  plan, and the progress that    safety programs ensures that
                  has been made.                 the states are monitoring
                                                 distribution pipeline
                                                 operators' plans for
                                                 inspecting, managing, and
                                                 replacing cast iron pipe. A
                                                 survey of cast iron pipe in
                                                 use by operators was completed
                                                 in 1992 and is now being
                                                 revised.
                  Gathering lines: Within 2
     109(b) (gas) years, issue a regulation      Open: A proposed rule defining
     208(b)       defining a "gathering line"    a gas gathering line is
     (liquid)     and within 3 years, issue a    expected by mid-2000.
                  regulation defining a
                  "regulated gathering line."
                  Customer-owned service lines:
                  (1) Within 1 year, issue
                  regulations requiring
                  operators that do not maintain
                  customer-owned service lines
                  up to the walls of customers'
                  buildings to advise their
                  customers of the requirements
                  for maintaining those lines;
                  (2) within 18 months, review   Closed: 49 C.F.R. 192.16,
                  the Department of              8/14/95, imposes requirements
                  Transportation's and states'   for notifying customers. The
                  rules, policies, procedures,   requirement to take action to
                  and other measures concerning  promote the adoption of
     115 (gas)    the safety of customer-owned   measures to improve the safety
                  service lines and their        of customer-owned service
                  effectiveness and survey the   lines was eliminated in the
                  owners of customer-owned       Accountable Pipeline Safety
                  service lines regarding the    and Partnership Act of 1996
                  operation and maintenance of   (49 U.S.C. 60113).
                  such lines; (3) within 2
                  years, issue a report on the
                  results of the review and
                  survey; and (4) within 1 year
                  after transmitting the report,
                  take action to promote the
                  adoption of measures to
                  improve the safety of such
                  service lines.
                  Periodic underwater
                  inspections: Require operators
                  to conduct periodic
                  inspections of offshore        Open: A proposed rule (based
     108(5) (gas) pipelines and those in         on the Texas A&M University
     207(5)       navigable waterways; within 2  report's recommendation for a
     (liquid)     years, define what constitutes risk-based approach) is to be
                  an exposed underwater pipeline issued by 7/00.
                  and what constitutes a hazard
                  to navigation or public
                  safety.
                  Opportunity for state comment:
                  Provide to appropriate state
                  officials in any state in
                  which a pipeline facility is   Closed: OPS provides an
                                                 opportunity for state
     113(a) (gas) located notice and an          officials to comment before
     213(a)       opportunity to comment on any  any agreement with a pipeline
     (liquid)     agreement proposed to be       company is finalized. This is
                  entered into by the Secretary
                  to resolve a proceeding        required by OPS' enforcement
                  initiated under this section   manual.
                  with respect to such a
                  pipeline facility.
                  Underwater abandoned pipeline
                  facilities: Identify what
                  constitutes a hazard to
                  navigation with respect to     Open: A proposed rule was
     117 (gas)    underwater abandoned pipeline  published on 8/30/99 (64 F.R.
     216 (liquid) facilities and, within 18      47157). The final rule was to
                  months, specify the manner in  be published by 4/00.
                  which operators shall report
                  underwater abandoned pipeline
                  facilities.
                                                 Closed: A final rule, issued
                                                 on 7/12/94, eliminated an
                  Low internal stress hazardous  exemption from regulation
                  liquid pipeline facilities: In based solely on low internal
                  exercising discretion, the     pipe stress (59 F.R. 35465).
                  Secretary shall not provide an Subsequently, questions were
     206 (liquid) exception to regulation for    raised about the applicability
                  any pipeline facility solely   of the rule to very short
                  on the basis of the fact that  segments of pipeline carrying
                  such a pipeline facility       petroleum between plant sites.
                  operates at low internal       A proposed rule (63 F.R. 9993,
                  stress.                        2/27/98) and a final rule (63
                                                 F.R. 46692, 9/2/98) addressed
                                                 very short plant lines.

                  One-call enforcement:          Closed: OPS monitors telephone
                  Establish procedures to notify reports from pipeline
                  the Occupational Safety and    operators on a daily basis.
                  Health Administration of any   Any report of an accident
     304          pipeline accident in which an  involving damage by an
                  excavator, by causing damage   excavator or outside force is
                  to a pipeline, may have        reported to the appropriate
                  violated the Administration's  Occupational Safety and Health
                  regulations.                   Administration regional
                                                 office.
                                                 Open: Funding for research on
                                                 pipeline-locating and
                                                 -monitoring technologies is
                  Underground utility location   included in OPS' fiscal year
                                                 2001 budget request as part of
     306          technologies: Carry out a      the agency's proposed research
                  research and development
                  program on these technologies. program. The funding is not
                                                 for a specifically authorized
                                                 item but is included as part
                                                 of OPS' research plan for
                                                 preventing excavation damage.
                                                 Open: The Research and Special
                                                 Programs Administration
                                                 analyzed the extent and nature
                                                 of the hazards posed by
                                                 underwater abandoned pipelines
                                                 and surveyed federal policies
                                                 and state activities involving
                                                 abandoned pipelines in
                  Underwater abandoned pipeline  navigable waters. The
                  facilities: Undertake a study  collected information proved
                                                 to be insufficient to fully
     307          of such facilities and, within address the issue. Therefore,
                  3 years, submit a report to
                  the Congress on the results of the Administration issued a
                  the study.                     proposed rule (64 F.R. 47157,
                                                 8/30/99) to require the
                                                 reporting of abandoned
                                                 pipelines. The Administration
                                                 intends to continue analyzing
                                                 the hazards posed by abandoned
                                                 pipelines after it issues the
                                                 final rule requiring the
                                                 reporting of abandoned
                                                 pipelines, expected by 6/00.

    Source: For columns 1 and 2, GAO's analysis of pipeline safety statutes; for
    column 3, status reports from OPS.

    Table 11: Accountable Pipeline Safety and Partnership Act of 1996 (P.L.
    104-304, Oct. 12, 1996)

    Continued from Previous Page

        Section         Statutory requirement                Status
                                                  Open: OPS is consulting with
                     Gathering lines: Amend the   the gas pipeline industry and
     49 U.S.C.       requirement to define        gathering line operators on
     60101(b)(2)     "regulated gathering line"   alternative approaches to
     3(b)            by changing "shall" to       clearly identify gathering
                     "shall, if appropriate."     lines. A proposed rule is
                                                  expected by 7/00.
                     Operator qualification:
                     Change a requirement to
                     ensure that individuals
                     performing operations and
                     maintenance on pipelines are Closed: A final rule was
                     properly qualified by        published on 8/27/99.
     60102(a)        replacing the words "test    Operators must have plans
     4(a)(2),(3)     and certify" with            prepared by 4/27/01, and all
                     "qualified" and define       workers must be qualified by
                     qualifications to include    10/28/02.
                     the ability to recognize and
                     react appropriately to
                     abnormal operating
                     conditions.
                                                  Closed: OPS' cost-benefit
                                                  analyses were already in
                                                  compliance with most of these
                                                  requirements. In 2/99, OPS
                     Factors for consideration,   published guidance for
                     including risk assessment    cost-benefit analyses, Final
                     and cost/benefit analysis:   Report: A Collaborative
                     Clarify requirements to      Framework for Office of
                     consider risk assessment,    Pipeline Safety Cost-Benefit
                     the environment,             Analyses, developed with
                                                  input from the pipeline
     60102(b)        cost-benefit analysis, and   industry and opportunity for
     4(b)            the recommendations of       public comment. The advisory
                     advisory committees when
                     prescribing standards, as    committees are acting as
                     well as a general            "peer reviewers" for all risk
                     requirement that standards   assessments and cost-benefit
                     be practicable and designed  analyses prepared by OPS to
                     to meet needs for safety and support rulemaking actions.
                     environmental protection.    OPS provided the advisory
                                                  committees with training in
                                                  risk assessment and pipeline
                                                  technologies to enable the
                                                  committees to fulfill their
                                                  roles.
                     Risk assessment: Not later
                     than 3/31/00, transmit to
                     the Congress a report that   Open: OPS provided an interim
                     (1) describes the            report, Beyond Compliance:
                     implementation of the act's  Creating a Responsible
                     risk assessment requirements Regulatory Environment that
                     and (2) includes any         Promotes Excellence,
     60102(b)(7)     recommendations that would   Innovation, and Efficiency: A
     4(b)            make the risk assessment     Progress Report on the
                     process a more effective     Pipeline Risk Management
                     means of assessing the       Demonstration Program, to the
                     benefits and costs           Congress and the public in
                     associated with alternative  5/99. The agency is now
                     regulatory and nonregulatory clearing a final report for
                     options in prescribing       issuance.
                     standards.
                                                  Open for certain pipelines: A
                                                  final rule was published (59
                                                  F.R. 17275, 4/12/94). Notice
                                                  2 (59 F.R. 49896, 9/30/94)
                                                  extended the compliance date
                                                  for existing gas transmission
                     Standards on accommodating   lines and modified the
                     smart pigs: Require new and  requirement for offshore and
                     replacement natural gas      rural gas transmission lines.
                                                  Notice 3 (60 F.R. 7133,
     60102(f)(1)     transmission and hazardous   2/7/95) suspended OPS'
     4(e)            liquid pipelines to          enforcement of the final
                     accommodate "smart pigs";
                     allow the extension of such  rule's requirements for
                     standards to existing        modifications of sections of
                     pipelines.                   onshore gas transmission
                                                  lines and for new and
                                                  existing offshore gas
                                                  transmission lines. A final
                                                  rule addressing a petition
                                                  for reconsideration is being
                                                  prepared for publication in
                                                  5/00.
                     Periodic inspections: Modify
                     the requirement for the
                     Secretary to prescribe
                     periodic inspections of each Open: A proposed rule to
     60102(f)(2)     pipeline identified in       require periodic inspections
     4(e)            high-density and             of hazardous liquid pipelines
                     environmentally sensitive    in high-consequence areas was
                     areas by inserting "if       issued on 4/24/00.
                     necessary, additional" after
                     "shall prescribe."
                     Updating standards: To the
                     extent appropriate and
                     practicable, update the
     60102(l)        standards incorporated by    Open: OPS planned to issue a
     4(f)            the industry that have been  proposed rule in 12/99.
                     adopted as part of the
                     federal pipeline safety
                     regulatory program.
                     Promoting public awareness:
                     (1) By 6/1/98, survey and
                     assess certain public
                     education and public safety
                     programs and determine their
                     effectiveness; (2) not later
                     than 1 year after the survey Closed: A survey of damage
                     and assessment are           prevention programs was
                     completed, institute a       completed in 1998, and a
                     rulemaking to determine the  damage prevention pilot
     60102(c)(4)     most effective components of project has been completed in
     4(g)            a public safety and          three states. OPS is working
                     education program and        with the pipeline industry to
                     promulgate, if appropriate,  evaluate existing public
                     standards implementing these education programs. In 6/99,
                     components on a nationwide   OPS "rolled out" a national
                     basis; (3) if the            promotional campaign.
                     promulgation of such
                     standards is not
                     appropriate, report to the
                     Congress the reasons for
                     that finding.
                     Remotely controlled valves:
                     (1) By 6/1/98, survey and
                     assess the effectiveness of
                     remotely controlled valves   Open: OPS published a report
                     to shut off the flow of      in 9/99 concluding that
                     natural gas in the event of  remotely controlled valves
                     a rupture and (2) determine  are technically, but not
                     whether the use of remotely  economically, feasible. At a
                     controlled valves is         public meeting on 11/4/99,
     60102(j)(3)     technically and economically OPS proposed that criteria,
     4(b)            feasible and would reduce    such as a definitive time to
                     the risks associated with a  shut off a ruptured section
                     rupture; (3) within 1 year   in a high-consequence area,
                     of completing the survey and be considered. This issue
                     assessment, if the use of    will be considered further
                     valves is feasible and would after high-consequence areas
                     reduce risks, prescribe      for gas transmission
                     standards for the use of     pipelines are defined.
                     these valves, including
                     requirements for their use
                     in densely populated areas.
                     Unusually sensitive areas:
                     Change language from "shall
                     include" to "shall consider" Open: A proposed rule on the
                     under areas to be included   definition of unusually
     60109(b)        as unusually sensitive; add  sensitive areas was issued
     7(b)            drinking water and wildlife  (64 F.R. 73464, 12/30/99).
                     resources as considerations; (Comments are due on
                     and delete earthquakes and   6/27/00.)
                     other ground movement as
                     considerations.

                     Excess flow valves: Consider Closed: OPS adopted
                                                  performance standards for
     60110(b)(4)     the costs of operation and   excess flow valves and issued
     8(2)            maintenance in promulgating  a rule requiring that
                     regulations requiring excess
                     flow valves.                 customers be notified of the
                                                  availability of such valves.
                     Risk management: Establish
                                                  Open: These projects are
     60126           risk management              ongoing; OPS was preparing a
     5(a)            demonstration projects and   final report for publication
                     report on the results of
                     such projects by 3/31/00.    by 4/30/00.
                     Biennial reports: Not later
                     than 8/15/97 and every
                     2 years thereafter, submit
     60124           to the Congress a report on  Open: The first report was
     15(2)           how this chapter was carried issued in 8/97; the next
                     out during the               report was due in 8/99.
                     2 immediately preceding
                     calendar years for gas and
                     hazardous liquids.
                     Population encroachment: (1)
                     Make available to each state
                     the land-use recommendations
                     in the Transportation
                     Research Board's special
                     report entitled Pipelines
                     and Public Safety (No. 219);
                     (2) evaluate the             Open: OPS sent the
                     recommendations, determine   Transportation Research
     60127(a)        the extent to which they are Board's report to all states.
     16(a)           being implemented, consider  An evaluation was to be
                     ways to improve their        prepared and published in
                     implementation, and consider early 2000.
                     other initiatives to make
                     local planning and zoning
                     entities more aware of
                     issues involving the
                     encroachment of population
                     along pipeline
                     rights-of-way.
                     User fee assessment: Within
                     1 year, transmit to the
                     Congress a report analyzing  Closed: A draft report was
                                                  approved by the pipeline
     60301(nt)       the present assessment of    safety advisory committees in
     17              pipeline safety user fees    5/97. A final report was
                     solely on the basis of
                     mileage to determine whether prepared and submitted to
                     this or another measure      Congress in 3/98.
                     would be more appropriate.

    Source: For columns 1 and 2, GAO's analysis of pipeline safety statutes; for
    column 3, status reports from OPS.

    Table 12: Transportation Equity Act for the 21st Century (P.L. 105-178, June
    9, 1998)

      Section       Statutory requirement                  Status
                                              Closed: A study of best practices
                One-call notification         to prevent damage to underground
                systems: If information is    facilities, Common Ground: Study
                readily available, undertake  of One-Call Systems and Damage
                a study of damage prevention  Prevention Best Practices, was
     7302(a)    practices associated with     published in 8/99. More than 160
     49 U.S.C.  existing one-call             government employees and
     6105       notification systems and,     underground facility operators
                within 1 year of enactment of contributed to the report.
                this chapter, publish a       Follow-up action to establish a
                report on the practices that  foundation for implementing the
                are most and least            recommendations and best
                successful.                   practices is now being
                                              established.

    Source: For columns 1 and 2, GAO's analysis of pipeline safety statutes; for
    column 3, status reports from OPS.

    GAO Contacts and Staff Acknowledgements

    Phyllis F. Scheinberg (202) 512-3650
    James Ratzenberger (202) 512-3650

    In addition to those named above, Sumikatsu Arima, Ryan T. Coles, Helen
    Desaulniers, Deena Richart, and Sara Vermillion made key contributions to
    this report.

    (348187)

    Table 1: Relative Occurrence of Transportation Accidents Per
    Ton-Mile of Oil Transported, 1992-97 10

    Table 2: Milestones for Implementing a Risk Management Approach
    for Regulating Large Hazardous Liquid Pipelines 21

    Table 3: Transportation Agencies' Implementation Rates for Safety
    Board Recommendations, 1967-99 30

    Table 4: Status of Implementation of Statutory Requirements,
    1988-2000 34

    Table 5: Projects Approved for the Risk Management Demonstration Program 49

    Table 6: Federal Cost of the Risk Management Demonstration
    Program, by Fiscal Year 50

    Table 7: Pipeline Safety Reauthorization Act of 1988 (P.L. 100-561,
    Oct. 31, 1988) 51

    Table 8: Oil Pollution Act of 1990 (P.L. 101-380, Aug. 18, 1990) 53

    Table 9: Offshore Pipeline Navigational Hazards (P.L. 101-599,
    Nov. 16, 1990) 53

    Table 10: Pipeline Safety Act of 1992 (P.L. 102-508, Oct. 24, 1992) 55

    Table 11: Accountable Pipeline Safety and Partnership Act of 1996
    (P.L. 104-304, Oct. 12, 1996) 58

    Table 12: Transportation Equity Act for the 21st Century (P.L. 105-178,
    June 9, 1998) 60

    Figure 1: Components of Natural Gas Transmission and Distribution Pipelines
    7

    Figure 2: Number of Pipeline Accidents Resulting In Fatalities,
    Injuries, and/or $50,000 or More in Property Damage,
    1989-98 11

    Figure 3: Number of Fatalities and Injuries and Amount of Property Damage
    From Pipeline Accidents, 1989-98 13

    Figure 4: Number of Major Pipeline Accidents, Miles, and Major
    Accidents per 10,000 Miles of Pipeline, 1989-98 15

    Figure 5: OPS' Inspection Activity, by Type of Inspection, 1990-99 24

    Figure 6: Warning Letters/Letters of Concern and Fines as
    Percentages of Total Enforcement Actions, 1990-98 27

    Figure 7: Location of Olympic Pipe Line Rupture 41

    Figure 8: Locations of Natural Gas Transmission Pipelines 47

    Figure 9: Locations of Hazardous Liquid Pipelines 48

    1. Hazardous liquid pipelines carry products such as crude oil, diesel fuel,
    gasoline, jet fuel, anhydrous ammonia, and carbon dioxide.

    2. Some gathering lines and segments of gathering lines in rural areas are
    excluded from federal pipeline safety regulation. The Office is developing a
    definition of natural gas gathering lines that may result in the regulation
    of some rural gathering lines. The mileage statistics above include
    gathering lines that are subject to federal regulation.

    3. No map is available for the natural gas distribution pipeline network,
    which is too extensive to map because it is located in populated areas.

    4. In addition, four state agencies--Delaware for natural gas and Kentucky,
    New Mexico, and South Carolina for hazardous liquid--have agreements with
    OPS to inspect intrastate pipelines, but OPS handles any enforcement
    actions.

    5. In its regulations, OPS refers to the release of natural gas from a
    pipeline as an "incident" and a spill from a hazardous liquid pipeline as an
    "accident." For simplicity, this report will refer to both as "accidents."

    6. Cheryl J. Trench, The U.S. Oil Pipeline Industry's Safety Performance,
    Allegro Energy Group report prepared for the Association of Oil Pipelines
    and the American Petroleum Institute (May 1999) (Rev.).

    7. All natural gas and hazardous liquid pipeline operators are required to
    report accidents that result in a fatality, an injury, or $50,000 or more in
    property damage (which this report defines as "major"). In addition, natural
    gas pipeline operators are required to report events that result in an
    emergency shutdown of a liquefied natural gas facility and may report any
    accident they consider "significant," even if it does not meet any reporting
    threshold. Furthermore, hazardous liquid operators are required to report
    any accident that results in an explosion or a fire, the release of 50 or
    more barrels of hazardous liquid or carbon dioxide, or the escape into the
    atmosphere of more than 5 barrels per day of highly volatile liquids. There
    were 1,801 accidents from 1989 through 1998 that did not meet the definition
    of a major accident.

    8. The total number of accidents, major and nonmajor, reported to OPS
    decreased by about 1.5 percent annually over this period.

    9. This figure does not include the injuries that occurred during one series
    of accidents caused by severe flooding near Houston, Texas, in Oct. 1994. We
    excluded these injuries because OPS' and the Safety Board's data disagree on
    the number of people injured. OPS' data indicate 1,851 injuries, while the
    Safety Board reported that a total of 547 persons were treated, primarily
    for smoke and vapor inhalation. We also excluded this accident from our
    analysis because we could not determine to what extent the injuries were the
    result of explosions of petroleum and petroleum products released from the
    ruptured pipelines or of the controlled burn of these products by the spill
    response team.

    10. The act also required, among other things, that OPS conduct risk
    assessments when prescribing new regulations. In addition to identifying the
    costs and benefits of the new regulation, OPS must identify the regulatory
    and nonregulatory options considered, explain its reasons for choosing the
    selected option instead of the others, and identify the information on which
    the risk assessment and selected option are based. The status of OPS'
    actions on these additional requirements is included in app. IV.

    11. The 1996 act contained no limitation on the number of demonstration
    projects and required that risk management plans be designed to achieve a
    level of safety equivalent to or greater than the level that would otherwise
    be achieved. However, when signing the 1996 act, the President directed the
    Secretary of Transportation to limit the number of projects to 10 and to
    ensure that the projects demonstrate superior, not just equal, safety and
    environmental benefits.

    12. One company that operates a natural gas pipeline has received an
    exemption from the current regulations. If the population density increases
    near a pipeline, the current regulations require the pipeline company to
    install a thicker-walled pipe or reduce the operating pressure. In exchange
    for the exemption from this requirement, OPS is requiring the company to
    take additional precautions, such as conducting internal inspections of the
    pipelines in these areas, while maintaining the existing pipe at the
    original pressure.

    13. The proposed rule also draws on the agency's experiences in inspecting
    pipeline companies' entire operating systems (described in the next
    section), investigating accidents, and conducting system integrity
    initiatives.

    14. According to OPS officials, the initial rule would affect operators of
    large hazardous liquid pipeline systems because OPS has gained familiarity
    with their operations through the risk management demonstration program.
    Subsequent rules would affect operators of small hazardous liquid pipelines
    and natural gas transmission pipelines in high-consequence areas.

    15. OPS issued a proposed rule on the definition of areas unusually
    sensitive to environmental damage on Dec. 30, 1999. Comments on the proposed
    rule are due by June 27, 2000.

    16. In Mar. 2000, OPS proposed an agreement with the state of Washington
    involving the inspection of interstate pipelines, but, according to OPS
    officials, the state will not be an interstate agent.

    17. The Pipeline Safety and Community Protection Act of 2000 was introduced
    in the Senate on Apr. 12, 2000 (S. 2409) and the House on Apr. 13, 2000
    (H.R. 4276).

    18. According to Safety Board officials, a measure to capture an agency's
    recent (e.g., within the last 5 years) efforts would not be meaningful
    because (1) many of the agency's actions in response to the recommendations
    would probably not be complete and (2) the agency might not follow through
    on promises to implement recommendations.

    19. Pipeline Safety Program, Office of Inspector General, U.S. Department of
    Transportation, RT-2000-069 (Mar. 13, 2000).

    20. The Senate and House Appropriations Committees have also directed OPS to
    carry out various activities in reports accompanying OPS' annual
    appropriations. Several of these directives reiterate the statutory
    requirements.
    *** End of document. ***