Pipeline Inspection Agency Chronically Undermanned

By Dan Frosch and Janet Roberts, The New York Times

10 September 11

his summer, an ExxonMobil pipeline carrying oil across Montana burst suddenly, soiling the swollen Yellowstone River with an estimated 42,000 gallons of crude just weeks after a company inspection and federal review had found nothing seriously wrong.

And in the Midwest, a 35-mile stretch of the Kalamazoo River near Marshall, Mich., once teeming with swimmers and boaters, remains closed nearly 14 months after an Enbridge Energy pipeline hemorrhaged 843,000 gallons of oil that will cost more than $500 million to clean up.

While investigators have yet to determine the cause of either accident, the spills have drawn attention to oversight of the 167,000-mile system of hazardous liquid pipelines crisscrossing the nation.

The little-known federal agency charged with monitoring the system and enforcing safety measures - the Pipeline and Hazardous Materials Safety Administration - is chronically short of inspectors and lacks the resources needed to hire more, leaving too much of the regulatory control in the hands of pipeline operators themselves, according to federal reports, an examination of agency data and interviews with safety experts.

They portray an agency that rarely levies fines and is not active enough in policing the aging labyrinth of pipelines, which has suffered thousands of significant hazardous liquid spills over the past two decades.

Transportation Secretary Ray LaHood, who oversees the pipeline agency, acknowledges weaknesses in the program and is asking Congress to pass legislation that would increase penalties for negligent operators and authorize the hiring of additional inspectors. That may be a tough sell in a Congress averse to new spending and stricter regulation.

"We need to know with great certainty that inspections and replacements have been done in a timely way that will prevent these kinds of spills from happening," he said.

Federal records show that although the pipeline industry reported 25 percent fewer significant incidents from 2001 through 2010 than in the prior decade, the amount of hazardous liquids being spilled, though down, remains substantial. There are still more than 100 significant spills each year - a trend that dates back more than 20 years. And the percentage of dangerous liquids recovered by pipeline operators after a spill has dropped considerably in recent years.

The industry, however, believes the current system works and points with pride to what it considers a record of improvement.

"Data shows that releases from pipelines have declined over the last decade as the result of stringent regulation and the industry's continued commitment to safety," wrote Peter Lidiak, pipeline director for the American Petroleum Institute, an industry group, in an e-mailed response.

Throwing more resources and money at the problem may not be the answer for the tiny agency, because there remain deeper concerns about how it works, especially its reluctance to mandate safety improvements or to level meaningful fines for wrongdoing.

Such concerns come at a critical time for the agency. The State Department last month gave a provisional green light to a controversial 1,661-mile pipeline from Canada to Texas, called Keystone XL, that will carry a trickier form of crude - and fall under the agency's purview. And a just-released National Transportation Safety Board report on a natural gas pipeline explosion in San Bruno, Calif., that last year cost eight people their lives, characterized the agency's regulatory practices as lax and inadequate. In the report, the safety board urged the Transportation Department to go back and audit many of the pipeline agency's safety and enforcement policies.

An analysis of federal reports and safety documents by The New York Times suggests that while the agency performs better than it did 10 years ago, it still struggles to safeguard a transport network laced with risks.

For example, the agency requires companies to focus their inspections on only the 44 percent of the nation's land-based liquid pipelines that could affect high consequence areas - those near population centers or considered environmentally delicate - which leaves thousands of miles of lines loosely regulated and operating essentially on the honor system. Meanwhile, budget limits and attrition have left the agency with 118 inspectors - 17 shy of what federal law authorizes.

Pipeline operators, critics argue, have too much autonomy over their lines, and too much wiggle room when it comes to carrying out important safeguards, like whether to install costly but crucial automated shut-off valves.

"The system as it presently exists, I don't think it really protects the public," said Representative Corrine Brown of Florida, the ranking Democrat on the House transportation subcommittee on railroads, pipelines and hazardous materials. "Self-reporting doesn't work. We need additional rules and regulations to make sure we're doing what we're supposed to be doing to protect communities."

She and other lawmakers want Congress and the Obama administration to bolster rules, hire more inspectors and reinvest in the pipeline infrastructure, much of which was laid from the 1950s to the 1970s.

New Project, New Risks

The Keystone XL project is different from most other pipelines in that it will carry a gritty mixture that includes bitumen, a crude drawn from Canadian oil sands that environmentalists argue is more corrosive and difficult to clean when spilled. In its report, the State Department cited 57 special conditions designed to keep the Keystone pipeline safe and wrote that it would have little environmental impact if operated according to regulations.

The National Wildlife Federation and other environmental groups assailed that conclusion, saying the State Department had not sufficiently accounted for the impacts of a major spill. More than 1,200 people were arrested during two weeks of protests against Keystone XL outside the White House this summer.

Richard Kuprewicz, a former pipeline engineer for the oil company Arco who serves on an advisory committee to the pipeline agency, said the current regulatory system was not fully prepared to monitor a project like Keystone XL, given the number of leaks the agency already contends with.

"We're seeing too many ruptures," Mr. Kuprewicz said. "The numbers are too high."

Since 1990, more than 5,600 incidents were reported involving land-based hazardous liquid pipelines, releasing a total of more than 110 million gallons of mostly crude and petroleum products, according to analysis of federal data. The pipeline safety agency considered more than half - at least 100 spills each year - to be "significant," meaning they caused a fire, serious injury or fatality or released at least 2,100 gallons, among other factors.

Pipeline operators reported recovering less than half of all hazardous liquids spilled over the last two decades, according to federal records. And the ratio is not improving: after recovering more than 60 percent of liquids spilled in 2005 and 2006, operators recovered less than a third between 2007 and 2010.

Nearly half of all incidents since 2002 arose from malfunctioning equipment, construction flaws and other technical problems with pipelines. Corrosion, which the agency considers to be different from equipment failure, is the second leading cause, and to blame nearly one-quarter of the time.

In written testimony to Congress after the Yellowstone spill, Cynthia L. Quarterman, the pipeline agency's top official, emphasized oversight upgrades like increased money for state safety agencies and more extensive training for agency employees. She also noted a decline in significant incidents.

Yet a recent report by the Congressional Research Service, while acknowledging progress, also outlined problems, noting that "recent pipeline incidents suggest there continues to be room for improvement."

The report said the pipeline agency was hampered by a chronic inspector shortage. Fifteen states are certified to perform their own liquid pipeline inspections, but budget problems within state agencies are also a matter of "great concern," it said.

The National Transportation Safety Board report on San Bruno said the pipeline agency's monitoring of state oversight programs and its own enforcement program had been "weak."

And when something goes wrong, very little happens in the way of penalties, The Times found. For every five significant incidents reported at a hazardous liquid pipeline between 2002 and 2010, the agency issued one fine.

The fines for that period, about $14 million, ranged from $1,000 for an inspection violation to a high of $2.4 million for the oil fire and Enbridge Energy pipeline spill in November 2007 that killed two people near Clearbrook, Minn. In May, BP was fined $25 million after two spills of more than 213,000 gallons of crude in Alaska in 2006 - in a case handled by the Justice Department. Federal regulators found that in the aftermath of the spills, the company failed to make prescribed corrections to the pipelines in question. But most of the pipeline agency's fines do not exceed $25,000, records show.

Relying on Self-Policing

The Enbridge line that ruptured last year in Michigan, which was transporting oil sands crude, had a history of problems. Inspections in 2007 and 2009 identified 390 anomalies with the line. But the company had repaired only 61 when the spill occurred.

Regulators typically inspect pipeline operators once every three to five years, according to the agency. However, they also rely on "integrity management programs" that require companies to draw up their own plans to assess risks like leaks and corrosion, and how to address them.

But even those self-policing plans are only mandated for lines that could affect high-consequence areas. Moreover, the safety board report found that the agency needed to more effectively measure whether a company was sufficiently monitoring its lines.

Carl Weimer, executive director of the Pipeline Safety Trust, a nonprofit group based in Washington State that advocates for safer pipelines, noted that the programs, for example, only require operators to verify they have leak-detection mechanisms, but do not demand proof that they work.

On May 7, a pumping station accident in Sargent County, N.D., along TransCanada's Keystone pipeline, which would one day connect to the company's proposed XL line, spilled nearly 17,000 gallons of oil sands crude. Pipeline agency documents show it was a local resident who alerted TransCanada, prompting a shutdown of the line.

An internal pipeline agency report from 2009 concluded that regulators depend too much on the oil and gas industry for information and its investigations of accidents had exposed "some significant differences between what the company reports and an objective view of these events."

The agency is currently considering whether to require automated shutoff valves for pipelines and minimum standards for leak detection systems.

"Starting a decade ago, we went with a system of regulations that allows the pipeline companies to decide how to best maintain their pipelines," Mr. Weimer said. "Now it's become clear we need to tell them how to do it better."