GAO: FERC SHOULD CLAMP DOWN ON GAS PIPELINES

The General Accounting Office has admonished the Federal Energy Regulatory Commission to tighten its monitoring of U.S. gas pipelines' use of marketing affiliates and pipelines' compliance with environmental rules. GAO, a congressional watchdog agency, studied those issues at the request of Rep. Mike Synar (D-Okla.), chairman of a government operations subcommittee. FERC requires pipelines to file data on transportation services they provide to their marketing affiliates and other firms

July 12, 1993

3 min read

GAO, a congressional watchdog agency, studied those issues at the request of Rep. Mike Synar (D-Okla.), chairman of a government operations subcommittee.

FERC requires pipelines to file data on transportation services they provide to their marketing affiliates and other firms so FERC and the industry can watch for discriminatory practices.

But, GAO said, between Jan. 1, 1989, and July 31, 1992, about 3,850 or 27% of the reports were submitted an average of 61 days late, and 3,400 or 41% of the reports were submitted an average of 228 days late.

It said FERC has not been referring late filings to its lawyers for possible enforcement action. It also said reports pipelines must file on their services to marketing affiliates are often incomplete.

"Without timely and complete submission of these reports, efforts by FERC and the industry to detect and deter discriminatory practices are hampered."

In April 1992 FERC began requiring pipelines to report data on transactions with marketing affiliates and others on publicly accessible electronic bulletin boards so discriminatory practices can be detected and deterred.

"However," GAO said, "FERC staff determined in an audit of 43 companies' electronic bulletin boards that most did not contain the required information."

And it said FERC has not been using information that suggests discriminatory practices as a factor in determining the scope and timing of audits of pipeline companies.

GAO recommended the agency aggressively enforce compliance with bulletin board requirements and revise its audit criteria.

ENVIRONMENTAL VIOLATIONS

On another topic, GAO said FERC conducted environmental compliance inspections on 79 of 271 construction projects it approved between Oct. 1, 1987, and June 30, 1992.

"In at least 37 of these projects, or 47% of the total inspected in this period, inspectors found violations of FERC's environmental requirements. In several cases, inspectors found repeated violations.

"Typical violations were failure to properly maintain erosion and sediment control devices or revegetate areas affected by construction. Some cases involved serious violations such as improperly storing hazardous waste products used during construction."

It said FERC's policy has been to target the initial compliance inspection when the construction project first crosses a major or sensitive environmental area such as a river.

"In spite of this policy, GAO found that FERC frequently failed to conduct inspections at this time, in part because of time and resource constraints and in part because the commission did not always know when construction was taking place.

"FERC policy requires pipeline companies to give stated authorities 48 hr notice before constructing a pipeline through a major stream, but it does not itself require similar notification."

GAO said its review of 15 pipeline construction projects revealed FERC's records show repeated instances of noncompliance even after FERC staff acted to bring the pipeline companies into compliance. The report recommended FERC require pipelines to give it notice of construction through environmentally sensitive areas and require them to submit periodic environmental compliance reports for construction projects.

GAO also said FERC should ask Congress for civil penalty authority in cases of environmental violations.