U.S. INDUSTRY, GOVERNMENT EFFORTS SEEK TO IMPROVE PIPELINE SAFETY
Patrick CrowEnergy Policies Editor
A broad effort is under way in Congress and the U.S. Department of Transportation to make federal pipeline safety rules more reasonable.
Legislators, regulators, and pipeliners are seeking a better way to economically manage the risks of operating an aging U.S. gas pipeline network.
Risk assessment is the buzzword in Washington these days.
Pipeline officials say federal rules affecting their industry badly need to be reevaluated.
They say transportation by pipeline is safer than any other mode, and pipeline operators, not government, can best evaluate ways to prevent accidents. An often overlooked fact is that operators also have substantial financial incentives to prevent accidents on their systems.
Congress is working on the latest reauthorization of the Natural Gas and Hazardous Liquids Pipeline Safety Act, which expires Sept. 30.
And DOT is trying to convert to use of risk management programs, developing partnerships with industry and the states to seek the best approach to safety.
John Erickson, American Gas Association (AGA) operating and engineering vice-president, said, "We're very optimistic Congress and DOT will give us some flexibility this year."
ACCIDENTS AND RULES
Lobbyists say every time a pipeline accident occurs, Congress seems to enact a new legislative "fix." Because the accident is often spectacular, the public and legislators often overreact.
That's why, since the Natural Gas Pipeline Safety Act was enacted in 1968, it has been reauthorized or amended 13 times.
DOT's Office of Pipeline Safety (OPS) and the Research and Special Programs Administration (RSPA) are facing a backlog of congressional directives.
Gas lobbyists point out that Congress has issued 26 mandates for gas pipeline safety since 1988, but only four or five have made it into the Code of Federal Regulations.
"While the numbers fluctuate from year to year, there has been a significant decrease in injuries from gas incidents from around 400 in 1970 to around 60 in 1989," AGA said. "These figures are indicative of the fact that the natural gas pipeline system is not deteriorating but becoming safer over time."
Outside forces, so-called third parties, cause nearly two thirds of all pipeline accidents. In 1993, the last year for which full data are available, the gas industry had 123 reportable incidents on distribution systems and 97 on transmission lines. They resulted in 14 fatalities. (37403 bytes)
Reportable incidents involve property damage of $50,000 or more, including the value of lost gas.
FEDERAL ROLE
OPS has regulatory authority over about 1.6 million miles of natural gas pipelines managed by 2,800 gathering, transmission, and distribution pipeline operators, 52,000 master meter operators, and 106 liquefied natural gas operators. It also regulates about 155,000 miles of hazardous liquids pipelines managed by 250 operators.
OPS is authorized for 72 employees.
RSPA provides research, training, data collection, and analysis.
Federal pipeline safety rules provide a regulatory framework for interstate pipelines and facilities. States may impose additional standards for intrastate pipelines and facilities as long as they are compatible with minimum federal standards.
OPS provides grants to state agencies for intrastate gas and hazardous liquid pipeline safety programs, monitors performance of those agencies, and collects, compiles, and analyzes pipeline safety and operating data
It also conducts pipeline training programs for government and industry personnel through the Transportation Safety Institute. And it has a pipeline safety technology program with emphasis on applied research.
A House transportation and infrastructure committee memo notes, "The cornerstone of the federal pipeline safety program is the partnership established with the states. States may be reimbursed for up to 50% of reasonable expenses incurred in carrying out their pipeline safety programs.
"State adoption and enforcement of federal pipeline safety regulations, influenced by financial incentives provided by the grant program, result in a uniform, effective nationwide pipeline safety program.
"This approach also results in a very cost beneficial maximization of total resources dedicated to pipeline safety. Existing federal resources alone could not adequately address the safe operation of pipeline facilities, given the sheer numbers of operators and complexity of operations."
FOCUS ON RISKS
The House transportation and infrastructure committee has approved a bill that stresses risk assessment and management.
The House commerce committee is expected to mark up its legislation in late May or early June, about when the Senate commerce committee will begin work.
The Senate may take a tougher approach than the House. As a result of an Edison, N.J., pipeline accident last year (OGJ, Apr. 25, 1994, p. 29), Sens. Bill Bradley and Frank Lautenberg, both New Jersey Democrats, will push for stricter standards for pipelines in urban areas and more frequent testing and inspection of lines.
Lobbyists expect the House to pass its bill this summer, but the Senate will be preoccupied with "Contract with America" legislation, so the outlook for action there is uncertain.
The House transportation panel said its bill attempts to move the pipeline safety program away from a prescriptive, regulation based approach to a model based on risk assessment, risk management, and an industry-agency partnership.
"Such an approach is particularly suited to the pipeline safety regulatory regime, which has the safest record of any mode of transportation and is particularly appropriate to quantifications of risk.
"In prior reauthorizations, the pipeline safety program was driven by successive reactions to accidents, whereby Congress would impose additional prescriptions on the pipeline industry to remedy what were perceived to be safety programs.
"For this (present) reauthorization, the administration and the pipeline industry have proposed to move the program away from the prescriptive model towards a risk based approach."
Any new OPS standard or rule that would cost industry more than $25 million/year would be subject to a cost/benefit analysis.
DOT would have to determine the risk reduction benefits related to incremental costs and conclude that other options were less cost effective or less flexible. Independent advisory committees would review DOT risk assessment analyses.
The bill calls for analyses of rules on gathering lines, pipeline inspection and maintenance, identification of lines in urban and environmentally sensitive areas, excess flow valves, and customer owned gas service lines.
DEMONSTRATION PROJECT
Under the House committee bill, OPS would conduct a risk management demonstration project, allowing companies to fashion individual safety programs if they achieve equal or greater levels of safety than projected under existing regulations.
The transportation and infrastructure committee said, "This project establishes a voluntary program within OPS whereby a participant may submit a risk management safety plan, for approval by the Transportation secretary, which would achieve an equal or greater level of safety than existing regulations."
Companies participating in the demonstration project would not be subject to pertinent existing or new standards.
"For example, rather than inspect all segments of pipeline at equivalent intervals, a participant may propose to inspect a segment through a heavily populated area more frequently but a segment traversing a remote area less often. The goal of risk management is focusing on the areas that have the greatest risk."
The committee said the demonstration project would include training, testing, new technologies, and community awareness and use risk models to demonstrate the application of risk assessment and risk management methodologies.
The risk management pilot would continue until the law was reauthorized again in fiscal 1999. At that time, DOT would report to Congress on the results of the demonstration project.
The reauthorization bill makes a number of technical and minor policy changes in existing law. Two are significant.
It authorizes criminal penalties for persons who damage a pipeline facility and do not report the damage promptly to the owner or operator.
And it clarifies that in existing law, Congress intended that when a segment of pipeline is being replaced, only the newly replaced segment must be designed to accommodate smart pigs.
OIL PIPELINE PROGRAM
The committee bill's demonstration program is patterned after a new oil pipeline project.
In early 1994, the American Petroleum Institute and OPS agreed to explore the use of formalized risk management programs in the liquid pipeline industry.
A risk assessment quality team made up of pipeline operators, OPS officials, and public sector participants investigated risk assessment/risk management methods to determine the best ones for the pipeline industry and ways to mesh those methods with government regulations and practices.
The quality team is due to report this month.
Larry Thomas, president of BP Oil Pipeline Co., testified about the project at a congressional hearing.
He said the pipeline industry is so complex that no single regulatory solution can be effective and efficient.
"It's time to stop mandating one-size-fits-all solutions to a sophisticated industry that is capable of evaluating risks and applying specific solutions to specific problems," Thomas said.
"The report of the quality team envisions a future state in which OPS and the pipeline industry can demonstrate that risks to the public and the environment are being effectively managed, a future in which pipeline operators can seek case-specific solutions to identified risks, and in which OPS can measure the overall effectiveness of an operator's solutions.
"We believe OPS and industry need to be given the opportunity to demonstrate that operators' risk management programs can be used by other operators and regulators to continue to improve industry performance and its safety record."
Thomas said the voluntary program would be overseen by the Transportation secretary. During the 4 year period, participants will not be required to adhere to new DOT regulations.
FEDERAL VIEW
George Tenley, former associate administrator for pipeline safety in RSPA, told a congressional hearing, "Risk management has numerous advantages over traditional regulatory approaches. It acknowledges the unique nature of pipeline systems and pipeline segments.
"It places more pipeline safety decisionmaking with the pipeline industry, which has the greatest understanding of the risks inherent in pipeline transportation and the methods available to mitigate those risks. It allows the government to leverage its available resources to the areas with the greatest potential for risk reduction.
"Risk management also frees industry and government from using only 'minimum safety standards' to judge whether operators are making the best decisions about their systems.
"At the same time, it enables government to better understand bow and why industry makes certain safety decisions and yields better data about specific pipeline systems and the unique risks generated and faced by those systems.
"Finally, risk management allows government to employ positive performance measures to judge industry performance. Rather than dictating requirements that may not minimize risks in all situations, industry can use the best means practical to continually meet risk assessment standards, thereby achieving steady improvement in the integrity of pipeline systems."
He said risk management should recognize that each pipeline system is distinct, each risk does not pose the same probability of occurrence and consequence, and given the right tools and maximum technical discretion possible, operators will do what is right to preserve their systems.
FEES ISSUE
OPS relies on user fees to fund its operations, about 75% coming from gas lines and the rest from hazardous liquids lines.
After the Edison, N.J., accident, OPS increased gas pipeline fees to $97/mile from $44/mile, supporting a budget of $37.6 million. Gas industry officials said under the political climate at the time, they could not object.
For fiscal 1996, which will begin Oct. 1, OPS has proposed an increase to $110/mile, supporting a $4.1 million, or 13%, budget increase.
The Interstate Natural Gas Association of America has urged Congress to deny that and withdraw $6.9 million from OPS' current budget.
The House transportation panel's reauthorization bill would reduce OPS funding to $20.7 million in fiscal 1996 and allow increases of 6%/year after that until 2000.
Jerald Halvorsen, Ingaa president, recently argued any funding increase would give the agency more money than it can prudently spend and would duplicate industry programs.
Halvorsen said, "After a doubling of OPS's 1994 budget last year, it is totally ridiculous, unnecessary, and wasteful to increase funding again."
He told a House appropriations subcommittee, "We want an effective OPS, but we don't want user fee money spent on redundant or unnecessary programs. When you throw money at a government program this way, much of it tends to be wasted.
"Money spent to support OPS is money operators could spend on their own safety program. We have to realize there is a bottom to this barrel."
Ingaa has been working with DOT to leverage investments in industry R&D and use industry expertise to minimize duplicity and inefficiency in data collection.
"We are surprised to see that DOT has not taken this opportunity to reflect upon the efficiencies to be gained through this continued partnership."
AGA said ever since 1986, when user fees were $24/mile, (30946 bytes) "we have been concerned that once user fees were assessed, there would be little restraint shown to keep increases to a minimum. Now, what we have always feared has come to pass."
ONE CALL
Last session, Congress failed to pass a bill requiring state operated one call systems to protect gas and hazardous liquids pipelines from being damaged by excavations.
The House passed legislation, but it was not taken up on the Senate floor.
Presently, 48 states and the District of Columbia operate 74 one call programs, although the scope of coverage and level of participation varies. In 34 states, a call to the pipeline is required before digging.
RSPA has launched a campaign to encourage states to adopt improved one call systems.
The programs can be effective. Pennsylvania says pipeline accidents dropped 75% since it enacted a one call law in 1987.
The House bill last year would have required states to consider federal one call guidelines and determine if it is an appropriate system for their states. It would not have overridden existing programs in the states.
Oil and gas producers who owned gathering lines objected to some of the provisions in the bill, but apparently the major roadblock was Senate concerns that the bill would be an unfunded federal mandate for state action.
National one call standards are again a top legislative priority for gas pipeline associations in this session of Congress.
The associations say one call systems can be effective if one call could notify all utility operators, all excavators were required to use it, and penalties were enforced for not using the one call.
Ingaa said, "An improved one-call system is the cornerstone of the natural gas pipeline industry's safety program because third party damage is the leading cause of pipeline accidents."
But Ingaa and AGA aren't pressing for action just yet.
One lobbyist explained, "We intend to push that after the pipeline safety bill has been put to bed."
A one call bill is unlikely to progress very far until next year, and it may meet familiar objections about being an unfunded mandate.
PIGS AND VALVES
Although various bills in Congress have proposed greater use of smart pigs and remotely or automatically activated valves, industry says the benefits of widespread use of those technologies are questionable.
This spring, OPS said it would not issue a final rule requiring installation of excess flow valves on certain gas service lines but instead will issue technical specifications for the valves.
AGA said because natural gas is compressed, more than 20 MMcf of gas could escape from a 36 in., 8 mile section of pipe even if an automatic valve is used.
Almost all damages from a pipeline rupture occur in the first few minutes after the leak occurs and would not be significantly reduced by rapid closure of valves.
AGA said the reliability of such valves is a major concern, and installation "would cost $80,000-250,000/valve with dubious potential to reduce damages."
It said, "Smart pigs are a promising technology for detecting certain types of metal loss, typically corrosion, before they jeopardize pipeline integrity. Corrosion is responsible for about 12% of natural gas pipeline incidents reported to DOT since 1970 and less than 10% of reported fatalities from pipeline accidents.
"Therefore, it is significantly less of a problem than third party damage.
"The expense involved in rebuilding pipelines to accommodate smart pigs and then running smart pigs is very large.
"A 1992 DOT study estimates it will cost more than $4 billion just to modify natural gas transmission lines to allow smart pigs to pass through the pipe. Costs to run magnetic flux leakage pigs, the current technology for smart pigs, ranges from $1,000 to $4,000/mile.
"Neither remote or automatic valves nor smart pigs have the potential to significantly improve upon the already outstanding safety record of natural gas pipelines. Only actions to prevent third party damage have potential for significant improvement to pipeline safety," AGA said.
DOT REFORMS
Regardless of what Congress does in the reauthorization bill, DOT intends to change the way it regulates pipelines.
RSPA has scheduled hearings to garner comments on regulatory reform and improved customer service as part of the Clinton administration's general search for unnecessary or outdated regulations.
The hearings will be conducted Apr. 25 in Dallas, Apr. 27 in Lakewood, Colo., and May 15 in Houston. Sites and times were detailed in an Apr. 5 Federal Register notice.
RSPA also has launched a pipeline risk assessment prioritization process to help guide it on how best to commit its resources. It is considering public comments on what its priorities should be.
Last June, Transportation Sec. Frederico Pena held a "pipeline summit" in Newark, N.J., to explore the state of pipeline safety following the Edison accident.
And on the anniversary of that accident last month, DOT issued a rule requiring hazardous liquid pipeline operators to set excavation damage programs and gas operators to expand excavation damage programs.
DOT also proposed a rule to require operators of interstate and intrastate pipelines to participate in qualified one call systems. Until the rule is adopted, it urged operators to participate voluntarily.
Both rules were published in the Mar. 20 Federal Register.
Pena said, "Since the explosion a year ago, we have worked with experts to improve the safety of people who live and work near pipelines and increase public awareness about underground pipelines. And, in partnership with industry, we have worked to reduce the risks associated with the operation of pipelines."
Meanwhile, Ingaa is implementing its pipeline safety action plan as a reaction to the Edison pipeline accident (OGJ, Nov. 14, 1994, p. 100).
TWO KEY RULES
Pipeline lobbyists are anticipating a May 2-3 meeting of the Technical Hazardous Liquid Pipeline Safety Standards Committee (Thlpssc) and the Technical Pipeline Safety Standards Committee (Tpssc) at DOT headquarters in Washington.
Both are DOT advisory groups, consisting of representatives from the public sector, government, and industry.
At the meetings, Tpssc is scheduled to discuss and vote on whether DOT should proceed with rules governing qualifications of pipeline personnel and the use of smart pigs.
AGA's John Erickson said OPS has expanded on a congressional requirement that rebuilt pipeline sections must accommodate smart pigs. OPS has proposed that if any part of the pipeline is rebuilt, the whole line section must be opened to smart pigs.
In a Feb. 7 Federal Register notice, RSPA partially stayed the final rule on smart pigs relating to gas pipelines in rural areas.
Also, last year RSPA said it would not enforce the requirement that operators remove all obstructions in the "line section" to accommodate smart pigs until the issues were resolved.
Lobbyists say some Washington decisionmakers have seized on smart pigs as a panacea for pipeline problems, while in fact their use is limited and the technology needs to be improved if they are to satisfy industry needs.
Erickson said, "They took a rule that everyone supported and came back and went way beyond what Congress intended, making it very controversial."
He said the rule would cost pipelines $700 million/year, raising the cost of gas 1% for consumers.
"We hope Tpssc will tell DOT that they went beyond congressional intent."
Similarly, Erickson said, DOT took a legislative mandate for qualification of pipeline operators "and turned it into a 'full employment for pipeline operator trainers rule.'"
In an Aug. 3, 1994, Federal Register notice, RSPA proposed qualification and training standards for all pipeline personnel and mandated periodic refresher training.
Erickson said AGA supports the goal of a qualified workforce, but ensuring that they are qualified does not mean that all employees must be retrained continually.
He said on the job experience is the best training an employee can get, and pulling them from the job for periodic classroom sessions may not be practical or effective.
Erickson said the rule would cost industry $600 million in the first year alone.
THE FUTURE
Although Congress, the administration, and industry seem to agree it is time to shift from traditional "command and control" regulation to risk management, a change is not assured.
The process could be derailed if a few key senators object or if another major pipeline accident occurs while lawmakers are deliberating the reauthorization bill.
Lobbyists also are concerned that federal scrutiny of one of the nation's newest pipelines, the Iroquois Gas Transmission System in New York and Connecticut, could provide ammunition for stricter controls.
The U.S. Attorney's office in Syracuse has been investigating whether Iroquois violated pipeline construction standards when it laid the 375 mile line in 1991.
Federal investigators last fall excavated 22 sites on the pipeline. If serious violations were found, they could seek criminal indictments against Iroquois officials.
"That sort of publicity this summer would make it very difficult to argue for less federal control of pipelines," a lobbyist said.
Copyright 1995 Oil & Gas Journal. All Rights Reserved.