Pipeline safety bill approved amid energy bill debate

On a 423-4 vote, the US House of Representatives this week decisively passed a compromise pipeline safety measure largely supported by industry.

Maureen Lorenzetti
Washington Editor

WASHINGTON, DC, July 25 -- On a 423-4 vote, the US House of Representatives this week decisively passed a compromise pipeline safety measure largely supported by industry, as House and Senate leaders continued negotiations on a much larger energy reform bill.

"From providing (the Office of Pipeline Safety) with appropriate funding for its regulatory, training, inspection, and enforcement responsibilities, to strengthening collaborative research, to improving communication with local officials and the public about pipeline safety without compromising security, Congress needed to act—and now both chambers have," said Ben Cooper, executive director of the Association of Oil Pipe Lines.

The Senate's energy bill contains a pipeline safety provision first passed as a stand-alone measure by the Senate by an almost unanimous vote last year (S 235, sponsored by Sen. John McCain (R-Ariz.). Frustrated with what they saw as the House's inaction on the issue, McCain and other supporters of that measure had the entire bill added on to the pending Senate energy bill this spring to "shame" the House into addressing the matter, in the words of Senate congressional staff familiar with the issue.

House staff, meanwhile, blame part of the delay on the mammoth Enron Corp. scandal, which "sucked out a lot of time from the legislative calendar." Two committees in the House held jurisdiction on the issue: the Transportation and Energy and Commerce committees.

Long, winding road
Senate sources predicted that, due to the overwhelming bipartisan support for a pipeline safety measure, House and Senate lawmakers may hold a separate conference just on pipeline safety to ensure the provision gets passed into law before the session ends in October, before the fall elections. House sources, however, said there is strong interest by their leadership, including Energy Conference Committee manager Billy Tauzin (R-La.), to preserve the pipeline safety measure within the larger HR 4 bill.

Tauzin was scheduled to meet with lawmakers today on the sweeping energy package.

Lawmakers say they are still hopeful a final energy reform bill can be passed, although the timing remains unclear; some congressional staff predict legislation may come in a "lame-duck" session in late fall after the November elections.

The Department of Energy's chief congressional liaison and a former aide of Tauzin's, Dan Brouillette, predicted this week that Tauzin would set a mid-September deadline for lawmakers to reconcile differences between the House and Senate bills. House energy staff, however disputed that timeframe.

On the table
Controversial issues such as oil leasing on the Arctic National Wildlife Refuge coastal plain and corporate average fuel economy standards are not expected to be even addressed until early September, although Bush administration and congressional sources have indicated the White House may be willing to sign a bill without a House provision for ANWR coastal plain leasing.

What is crucial to the success of the bill are provisions relating to the wholesale electricity market. The White House supports the pending Senate version, but it is unclear whether the House may want to consider its own provisions, championed by Rep. Joe Barton (R-Tex.).

Commenting on the recent capital drain experienced in the power marketing sector, administration and congressional sources say a final bill must have electricity reform to send a signal to Wall Street that "we're serious about this," in the words of DOE's Brouillette.

Iraq import ban
One issue of interest to industry that appears to be resolved is over Iraqi oil imports.
A Senate provision championed by Sen. Frank Murkowski (R-Alas.) that bans Iraqi oil imported into the US via the United Nations oil-for-aid program is unlikely to be part of any final energy bill, congressional and administrative sources predicted (OGJ Online, July 12, 2002).

The White House and key congressional leaders in the Republican-led House and Democrat-controlled Senate oppose the provision. The House's energy bill does not include an Iraqi oil imports ban.

Oil companies never publicly lobbied against the amendment but were clearly troubled by the Senate's action, which approved the plan by an 88-10 margin in April.
They privately told the White House the measure could exacerbate gasoline price spikes because several refineries are optimized to run on Iraqi crude.

Industry pipeline reaction
Industry officials were not yet prepared to predict how Congress will consider pipeline safety, but oil and gas groups all said they are "hopeful" President George W. Bush will sign something this year, either as part of a larger energy bill or as stand-alone legislation. Industry likes the House version more than the Senate's, although companies think a compromise between the two can be had fairly easily, at least by Washington standards.

"Pipeline companies understand that oversight is a cornerstone to building and maintaining public confidence. And this confidence is a prerequisite for operating, upgrading, and expanding America's pipelines to meet the nation's growing energy needs," AOPL's Cooper said.

Natural gas groups also offered support
"We're delighted to see the House act so decisively to pass a tough new pipeline safety bill," said David N. Parker, president and CEO of the American Gas Association. "Natural gas utilities support the House action. We're pleased to have taken this giant step closer to congressional passage of a pipeline safety bill. We hope that the differences between House and Senate versions of the two pipeline safety bills can be worked out speedily as the legislation moves forward."

A gas pipeline group also was supportive, but made clear a preferencefor the House version.

"We are very pleased with last night's vote," said Martin Edwards, vice-president of the Interstate Natural Gas Association of America, on July 24. "The vote speaks for itself. We are clearly at a broad compromise, and we hope that the bill passed last night is the basis for an agreement between the House and Senate,"

Legislative details
The House bill reflects months of negotiations between the House committees on transportation and energy and commerce. It requires all pipeline facilities in and near population centers be inspected within 10 years, with reinspections every 7 years. The proposal increases penalties for violators (OGJ Online, July 14, 2002). There's also a measure for industry that streamlines permitting of new pipelines.

The Department of Transportation, which oversees OPS, would also have to adopt new antiterrorism pipeline security rules.

The Senate bill is viewed by industry as more constrictive; it requires companies to inspect their pipelines at least once every 5 years. There are also higher penalties than the House bill. Both bills offer whistle-blower protection for employees who find safety problems but fear recriminations if they bring the issue up with management.

Future of pipeline safety
With or without new legislation, the nation's oil pipeline operators expect the pace of internal inspections to accelerate greatly in the years ahead, and they worry about the inspection industry's ability to handle the increased workload.

In a public meeting held by pipeline regulators, Marty Matheson, general manager for pipelines for the American Petroleum Institute, made those observations as she reported the results of a survey of the inline inspection plans of 15 major pipeline operators with about 70% of the interstate oil pipeline mileage regulated by OPS.

API said that, under terms of federal integrity management rules now in effect, the industry is accelerating integrity assessments near navigable waters, populated areas, and environmentally sensitive areas and further improving integrity management systems within companies.

Matheson reported that the rate of inspections for oil pipeline systems will more than double under the integrity management rule to 16,000 miles/year with the peak year, 2003, at almost 19,000 miles. If this rate is projected to the entire universe of US oil (crude oil and refined products) pipeline mileage, 23,000 miles out of the industry total of 160,000 miles would be inspected each year.

While Matheson believes the inspection industry will catch up with demand in time, she thinks the inspection tool vendors "are going to be stretched" at the beginning of the acceleration. The inspection industry is facing "a tremendous rate of growth for a relatively small industry." In addition, there will be increased demand when natural gas pipelines become subject to similar integrity management rules.

Contact Maureen Lorenzetti at maureenl@ogjonline.com

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