A Call for Transparency in Pipeline Safety Enforcement – Ten Years Later

Question of the week: I’ve looked at some of the pipeline enforcement data online through PHMSA’s website, but don’t really understand it, and don’t see a lot of information available. Can you tell me how pipeline enforcement works, and what is available to the public when there is an enforcement case against a pipeline operator who has some sort of violation of the rules?

Answer: 

This question produced deja vu for us here. It turns out our very first newsletter in 2005 included on article on this topic, so we decided to have a look to see what had changed in the past 10 years. The article was about how the Pipeline and Hazardous Materials Safety Administration (PHMSA), Office of Pipeline Safety (OPS) civil fine enforcement works and why OPS should make it more transparent. While OPS has improved some things (like its percentage of assessed penalties that are eventually collected), the substance of the issues has not changed at all, and enforcement procedures still occur largely behind closed doors with only the regulators and industry present, and no public record of proceedings.

How It Works

OPS enforcement procedures are complex. In simple terms, there are three stages:

  1. Investigating — reaching a preliminary conclusion whether a company violated the law. This can happen as a result of an inspection or an incident.
  2. Proposing a fine — notifying the company of the allegation and what the fine could be.
  3. Hearing/Assessing/Collecting — giving the company an opportunity to present its views; deciding what the fine will be; collecting it.

The time from the first to the last step may take more than a decade. Meanwhile, there is no public input and the availability of documents is limited. According to the enforcement statistics,[1] over the past ten years OPS collected about 84 cents for every dollar of fines it proposed (up from less than 50 cents when we published the article nearly 10 years ago). These statistics leave out millions of dollars in fines that were proposed but never or not yet collected because cases either never made it to the final collection phase or still have unresolved compliance issues.[2]

What is most troubling to us is the way in which fines are reduced or unresolved. Without any public access, the pipeline operator goes behind a closed door with government officials and comes out paying less money than originally owed. What goes on behind that door? No one knows. PHMSA has made improvements in providing enforcement information in the last 10 years, and usually provides access to the corrective action order, the operator’s response or request for a hearing and the final order through links on its enforcement web page. However, between the time an operator requests a hearing on a penalty case and PHMSA issues a final order, none of the documents or arguments made in the enforcement hearing process are posted for public review, and PHMSA neither publishes notice of hearings nor allows the public or members of the press to attend if they happen to learn when a hearing is scheduled. Nor is there a requirement for a record of the hearing to be made, let alone made public. This is the stage where most of the reduction in proposed penalties occurs, and the public can only hope to be able to read between the lines of a Final Order to determine why the penalty was reduced and whether the reduction was legitimate.

The Need for Transparency

In this country, after the investigatory stage, law enforcement takes place in public for good reasons. Public scrutiny enhances credibility, accountability and fairness while preventing even the appearance of government corruption in the following ways:

Credibility — seeing OPS expeditiously enforce its regulations would instill confidence that safe operation is a requirement rather than a guideline.

Accountability — if companies successfully challenge fines because regulations are poorly crafted, the public could demand better rules.

Fairness — secret proceedings deny the public an opportunity to question fines and permit operators to make one-sided arguments without fear of rebuttal.

Prevention of corruption — while no one is suggesting that OPS is corrupt, any government agency that permits fines to be whittled down behind closed doors is just asking for trouble from a suspicious public.

How It Should Be

OPS should create an Internet accessible enforcement docket, like the existing DOT rule-making docket, where the public could view enforcement as it progresses. The docket would include the OPS Notice of Probable Violation, Corrective Action Order or other enforcement documentation, the company’s responses, documents exchanged between the parties before and during a hearing, transcripts of hearings and the final decision. OPS should permit intervention by aggrieved parties. The hearing dates should be on the docket, and the hearings themselves should be open to the public and members of the press.

When pipeline operators violate the law, they endanger the public. Therefore, the public has an interest in seeing operators held accountable. Open and transparent enforcement procedures would enhance public confidence and permit the public to work with OPS to make pipelines safer.

 

ENDNOTES:

[1] Data extracted from PHMSA-OPS website on March 26, 2015. See http://primis.phmsa.dot.gov/comm/reports/enforce/CivilPenalty_opid_0.html

[2] Only cases that have been closed by PHMSA with no outstanding compliance issues left unresolved from PHMSA’s Final Report are included in their statistics.

Technical Assistance Grant Opportunity – Apply Now

Question of the Week: I heard something about grants being offered to communities for hiring experts and promoting public participation in pipeline safety proceedings. Can you tell me more about how to access these funds?

Answer:

PHMSA recently announced a grant opportunity for Community Technical Assistance Grants – Applications are Due April 22, 2015. 

Community groups and local governments are eligible to apply for PHMSA Technical Assistance Grants (“TAG grants”) of up to $100,000 for technical advice on pipeline concerns, to enhance public involvement in official proceedings on pipeline safety, for production and implementation of local pipeline ordinances, or for a wide variety of other pipeline safety related projects. You can find an archive of the nearly 200 projects funded with these grants in past years here.

Here is the link to the full announcement: http://www.grants.gov/web/grants/view-opportunity.html?oppId=272688

From PHMSA:

The TAG program provides funding to communities for technical assistance and analyses of local pipeline safety issues. Technical assistance is defined as engineering or other scientific analysis of pipeline safety issues. The funding can also be used to help promote public participation in official proceedings. However, the funding may not be used for lobbying, in direct support of litigation, or for activities associated with regulatory compliance or typical operations and maintenance of pipeline facilities. Local projects can range from public awareness activities to technology solutions, such as the conversion of paper maps into electronic format. The awards have funded a broad range of activities, including:

o   Improvement of local pipeline emergency response capabilities

o   Improvement of safe digging programs

o   Development of pipeline safety information resources

o   Implementation of local land use practices that enhance pipeline safety

o   Community and pipeline awareness campaigns

o   Enhancements in public participation in official proceedings pertaining to pipelines

 

If you intend to apply for a grant, the preparation for doing so (obtaining online accounts and numbers and entering your proposal in the online system) takes quite a bit of effort and time, so plan accordingly to allow enough time before the deadline to get help if you need it.

 

We’re happy to help give you feedback on your TAG idea, or talk to you about what some other communities have done, so feel free to contact us for more information if you’re interested.

Background on the TAG Grants

When Congress began working to strengthen the nation’s pipeline safety laws in 2001, the forerunner of The Pipeline Safety Trust pushed for the creation of a federal program that would provide money to local governments and communities for hiring independent experts. These experts would help them obtain information so they could be informed and active participants in decision-making activities about pipelines running through—or proposed for siting in—their communities.

In the Pipeline Safety Improvement Act of 2002, Congress authorized the Technical Assistance Grant (TAG) program, which was based on a successful Superfund grant program that had been operating within the U.S. Environmental Protection Agency since 1988. However, Congress did not appropriate any program funds when it passed this law. Over the next four years, Congress failed to fund the TAG program, and the Office of Pipeline Safety (OPS), which is within the federal Pipeline and Hazardous Materials Safety Administration (PHMSA), didn’t move ahead to implement it. Consequently, the Pipeline Safety Trust worked with supporters in Congress to break this “logjam” and a provision was inserted in the Pipeline Inspection, Protection, Enforcement and Safety Act of 2006 to withhold funding from other activities until PHMSA established procedures and criteria for initiating the TAG program. In 2008, Congress provided $1 million in the federal budget for funding this program and in 2009 the Pipeline Safety Trust helped OPS develop criteria for evaluating grant applications.

Oil Pipelines by the Real Numbers

Reporters ask us a lot about numbers, and we see both accurate and misleading figures being thrown around in the press and even on unnamed official websites, so we’re expanding here on our February 10 blog post that touched on numbers. That post mentioned both numbers from the Pipeline and Hazardous Materials Safety Administration (PHMSA) and industry numbers published recently by API/AOPL (American Petroleum Institute / Association of Oil Pipe Lines) in their Pipeline Safety Excellence (PSE) initiative “Pipelines by the Numbers.” A fundamental concern the Trust has with these industry numbers is the lack of transparency about where their numbers come from.

The federal government through DOT- Pipeline and Hazardous Materials Safety Administration (PHMSA) collects information from pipeline operators annually and on incidents that occur (annual data and incident data, respectively). This data is fairly comprehensive and publicly available. PSE uses data from their own secret Pipeline Performance Tracking System (PPTS) with no public access to this data. The “Pipelines by the Numbers” report does not tell the reader what filters are used to pull the numbers, or why they differ so from the PHMSA incident data.

The data used by the Trust is typically based on PHMSA 20-year pipeline significant incident trends. In this example, we filtered that for onshore hazardous liquid (HL) pipelines (accessed on Feb 25, 2014), as we’re comparing our numbers to those of the liquid pipeline industry (API/AOPL). The Trust relies on the ‘significant incident’ dataset (rather than ‘all incidents’ or ‘serious incidents’) because we think it provides the most honest and transparent reflection of the incidents that show shortcomings in pipeline safety regulations and in operator safety cultures. Serious incidents only capture information when a death or serious injury occurs, and many catastrophic incidents are left out because the environmental destruction or personal property damage incurred is not enough to warrant the ‘serious’ categorization. The significant incidents dataset includes all incidents with $50,000 or more in total costs, measured in 1984 dollars, and including the value of the lost product; it also includes all serious incidents, any hazardous liquid release of 50 barrels or more, any HVL release of 5 barrels or more, and any liquid release resulting in a fire or explosion. We do not generally use the ‘all incidents’ dataset that captures the smaller accidents that occur, because reporting criteria for what a reportable incident is has changed quite a bit over time and can result in seemingly odd fluctuations when looking at all incidents.

We’re going to use this space to compare what we see in the PHMSA numbers, to what the hazardous liquid pipeline industry has published through their API/AOPL PSE initiative “Pipelines by the Numbers.” For shorthand purposes, when we say the word “industry” below in this post, we are referring to the hazardous liquid pipeline industry and the numbers put forth by API/AOPL.

1    FACT: More than 5 million gallons of hazardous liquids spilled in 2013 (including crude oil, refined products like gasoline, highly volatile liquids and others).

Industry states 99.999% of all hazardous liquid products are delivered safely each year, equating to all but .001% of the 14.9 billion barrels delivered in 2013. That means 5,009,524 gallons (we use PHMSA numbers here, but using industry numbers it would be 6,258,000 gallons) were spilled in 2013 in hazardous liquid pipeline incidents. (This is the one time we do use the ‘all incidents’ dataset to portray the volume that does, in fact, NOT get delivered safely each year.) Even if we filter the data for only the significant incidents, that figure remains close to 5 million gallons (4,978,706 gallons) spilled that year. By way of comparison, that’s equivalent to five spills the size of Marshall Michigan just for the volume spilled in 2013.

2    FACT: Greater than 67% of incidents since 2002 were caused by things within the operator’s control.

PHMSA collects incident data from operators, including a designation of what caused the incident, and that information is posted on PHMSA’s website. Among the causes are several that are entirely within the operator’s control: Corrosion, Incorrect Operation, Material/Weld/Equipment Failure, and Excavation Damage by the operator or its contractor. Together, these incident cause categories account for an average of 75% of all incidents since 2002 being within the operator’s control (1,622 total significant incidents from 2002-2014; 1,214 of those caused by things within the operators control). And things are not improving over time: every other year since 2002, more than 2/3 of significant incidents have been caused by things within the operators’ control.

3    FACT: 315 million residents are at risk of pipeline failures.

Industry reports that 315 million US consumers and workers benefit from pipelines daily – roughly the US Census population. Both are hyperboles adding nothing to what should be an important discussion about pipeline safety.

4    FACT: Over 50% increase in significant onshore HL pipeline incidents between 2001-2013.

Industry states a 50% DROP in incidents from 1999-2013. Frankly, we have no idea where they got this number, unless they only considered incidents that occurred off company property on Sundays (we’re kidding, kind of). 1999 had the highest number of significant pipeline incidents between 1995-2012 (142), so it was a convenient year to begin if looking to find a drop, but even starting at that relatively high point, there has been a 13% increase in significant hazardous liquid pipeline incidents.

5    FACT: 119 people killed or injured by onshore HL pipeline incidents since 1999 and $2.4 billion in property damages from pipeline spills in the past 10 years.

These are numbers they’d rather you not think about, preferring instead some variation of “everything is awesome”.

6    FACT: $141 million spent by oil & gas industry to lobby Congress last year.

Again, industry points out how much money the industry spends on pipeline maintenance and safety initiatives; and yet the industry spends 14 times the amount on lobbying than HL operators spend on pipeline safety research and development in any given year. Is “getting to zero” as important as “influencing” politicians?

7    FACT: 1.5 regulators review spill response plans for 192,000 miles of pipelines    and                             0 unannounced spill response drills held by federal regulators.

Under the Oil Pollution Act of 1990, HL pipeline operators are required to produce an ‘oil spill response plan’ or ‘facility response plan’ that details their preparations for a spill and submit this plan to PHMSA every 5 years. Only 1.5 PHMSA staff members are assigned to review these plans that cover 192,000+ miles of pipelines, the lowest by far of any of the four agencies who review these types of plans. The low staffing level results in PHMSA failing to require unannounced drills, as is required.

8    FACT: Corrosion caused more incidents in each of the last 3 years than in any year since 1997.

Industry claims that corrosion-caused pipeline incidents are down 75% since 1999. What??! PHMSA tracks corrosion as a cause (out of 7 overall cause categories) of incidents. We simply don’t understand where the industry claim could have come from. See for yourself; we’ve included the PHMSA data below so you can see both the numbers and percentages of incidents caused by corrosion each year. It’s remained a fairly steady 25%, but of late the total number of corrosion-caused incidents has been higher, not lower, than in previous years.

 

  1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
# onshore HL sig. incidents 154 171 153 131 142 128 107 129 122 125
# corrosion-caused subset 32 51 44 31 24 29 32 34 28 35
% corrosion-caused 20.8% 29.8% 28.8% 23.7% 16.9% 22.7% 29.9% 26.4% 23.0% 28.0%
 
  2005 2006 2007 2008 2009 2010 2011 2012 2013  
# onshore HL sig. incidents 120 104 107 119 107 119 137 126 160  
# corrosion-caused subset 27 32 26 31 26 27 38 36 38  
% corrosion-caused 22.5% 30.8% 24.3% 26.1% 24.3% 22.7% 27.7% 28.6% 23.8%