The Continuing Education of the New Deputy Director

Bill Caram, Deputy Executive Director, Pipeline Safety Trust

Bill Caram, Deputy Executive Director, Pipeline Safety Trust

I’m now in my 4th week, and the state of our nation’s pipeline safety continues to shock me.  I have seen many examples of the industry writing its own rules.  Why the regulators abdicate this important work is beyond me.  Expect to hear more from Carl on this soon.

But I’d like to focus on something else in my space this week.  As I dig into each area of pipeline safety, I continually run into the same question in my head – Why on earth don’t these regulations go far enough!?  Surprisingly, there is generally one answer – the Cost-Benefit Requirement. 

Why is it that in response to a Congressional Mandate after the catastrophic failures of Enbridge in Michigan and PG&E in San Bruno, CA does PHMSA come back with such a tepid response that barely scratches the surface of what is truly needed?  The Cost-Benefit Requirement.  Any new proposed regulation must make economic sense for the industry.  Any proposed rule must not cost too much relative to the benefits.  I’d like to clearly state here that the benefits we are talking about are not just protecting our clean water and natural world, but also human life.  I’m morbidly curious what dollar value is placed on a human life in their calculations.  And on the cost side of the equation, who calculates what a new proposed rule would cost?  The industry groups do.  I don’t know about you, but this shocked me.

Also embedded in this requirement is a classic Catch-22, on par in absurdity with much of the novel’s circular logic:

  • New regulations need to pass the cost-benefit test.
  • In order to pass the cost-benefit test, the agency needs to calculate benefits (read human lives saved).
  • In order to calculate benefits, incidents need to be reported.
  • In order to be reported, incidents need to be part of a regulated system.
  • In order to be part of a regulated system, we need to pass new regulations.
  • Return to the top and repeat

This system is maddening, broken, and needs an overhaul.

How did we get here?  Are other regulatory agencies similarly hamstrung?  To answer these questions, we need to revisit the mid-1990’s and Newt Gingrich’s “Contract with America”.  House Republicans had an ideological belief that “overburdensome” regulations were counterproductive and believed instead in “Rationalism” when it came to environmental, health, and safety standards – cost-benefit requirements comprising a core tenet of this “rationalist” approach.  It turns out that their power to induce change was relatively short-lived and they were able to apply this mandate to only one piece of legislation – The Pipeline Safety Act of 1996, passed in response to the explosion on a pipeline owned by the Texas Eastern Transmission Corporation in Edison, NJ.  Our nation’s pipeline industry is the only industry protected by such an explicit and codified cost-benefit test.

We can blame this requirement for much of our regulatory shortfall.  Why aren’t our more than 400,000 miles of natural gas gathering lines regulated at all?  Why don’t we have better standards for leak detection and responsive shut-off?  Why aren’t pipeline segments that cross rivers sufficiently protected?  Largely, because of the cost-benefit requirement.

It is irreconcilable to have a regulatory agency and industry group tout the goal of “zero-incidents” while hiding behind this requirement that explicitly allows for incidents.  It is unfathomable to trust industry to calculate costs.  It is unconscionable to assign a dollar value to a human life.  We need to abolish the cost-benefit requirement.

I believe that our safety, health, and environment should be subject to more vigilant standards that are responsive to public values, not oil and gas companies’ bottom lines.

 

A Few Early Thoughts From The Pipeline Safety Trust’s New Deputy Director

I am honored and excited to join the Pipeline Safety Trust as Deputy Director.  I want to thank the board for the trust they are placing in me and the staff for the warm welcome and assistance with this transition.  I certainly did not imagine starting this new position in the middle of a global crisis but, while challenging in many ways, it has allowed me much more time to soak up information about our nation’s pipeline safety systems.

I want to take this opportunity to introduce myself and what I’m working on.  My family and I love books, bikes, mountains, forests, rivers, and the ocean and believe that the Pacific Northwest is a truly special place.  My last position was Director of Finance and Development for the Deschutes River Conservancy in Bend, Oregon.  The DRC is a consensus-based organization dedicated to working collaboratively to improve streamflow and water quality in the Deschutes River Basin.  I am no stranger to holding industry accountable to a values-based mission in a complex technical and regulatory environment and I’m excited to use those skills here at the Pipeline Safety Trust.

I’m in my second week and Carl and Rebecca have been pointing the firehose at me, helping me get up to speed quickly as I roll up my sleeves.  So far two big issues have required our attention.  The first is producing comments on PHMSA’s proposed rules on Valve Installation and Minimum Rupture Detection Standards.  Back in 2010, 10 years ago now, America saw two catastrophic pipeline failures.  The first was the Enbridge oil spill in Marshall Michigan, resulting in the spill of more than 800,000 gallons of crude oil into the Kalamazoo River, wreaking ecological havoc.  It took the operator 18 hours to finally confirm the rupture and shut down the line.  18 hours of dumping crude oil into the beautiful Talmadge Creek, Kalamazoo River, and surrounding wetlands.  Then, less than two months later, a PG&E gas line ruptured in San Bruno, CA.  This incident resulted in the uncontrolled release of natural gas for 95 minutes, an uncontrollable fire, 8 deaths, 51 injuries requiring hospitalization, the destruction of 38 homes, damage to 70 other homes, and the evacuation of approximately 300 houses.

As a result of these two horrific incidents, Congress issued a mandate to PHMSA, the federal agency charged with regulating our nation’s pipelines, to issue new regulations to prevent incidents like these from occurring and to mitigate the harm when they do.  And now, nearly 9 years after that mandate (!), we have proposed rules to review.  The proposed rules don’t go nearly far enough to truly respond to Congress’s mandate nor do they fulfill the recommendations made by the National Transportation Safety Board following the San Bruno incident.  The proposed rules would only apply to new and replaced lines and are full of loopholes.  I am shocked at the federal regulator’s tepid response to a Congressional mandate.

The next issue we’ve been working on is the proposed regulation of natural gas gathering lines.  There are over 400,000 miles of natural gas pipelines in this country that don’t fall under any level of regulation.  These are called gathering lines and they collect raw gas from producing areas and deliver it to gas processing plants.  It is crazy to me that these lines, containing every bit the potential for catastrophe as many regulated transmission lines, are completely unregulated.  A 10-inch gathering line failed in Midland, TX in 2018, killing a 3-year-old girl.  The cause – unknown; since these lines aren’t regulated, failures don’t need to be investigated.

The American Petroleum Institute (API), the oil and gas industry trade association, has issued proposed industry-developed standards for its members that might choose to apply them to the gathering lines in their systems.  Unfortunately, API did not follow its own process on developing these standards and had very little input from non-industry stakeholders.  The process was so flawed that the State Regulators (NAPSR) withdrew from the effort, citing serious concerns with the process.  Not surprisingly, these voluntary standards are minimal, applying to less than 4% of the more than 400,000 miles of currently unregulated gas lines, and only if the owners of those lines choose to use them.  This is shocking and unacceptable.

After my first two weeks, I am mostly shocked.  I am shocked at how little these proposed rules and standards attempt to tackle.  I am shocked to see how paralyzing the cost-benefit analysis requirement is to these processes.  And I am shocked to see the extent to which the industry is allowed to write its own rules. 

There is plenty of hard work to do but I believe it is accomplishable.  As stakeholders in our nation’s energy infrastructure, we are all on the same side with the goal of zero incidents.  No one wants people to die and no one wants to destroy ecosystems.  We need to develop fair processes to create a clear, enforceable regulatory framework where companies can deliver our energy needs without danger to human life and our environment, and where regulators hold responsible those who fail to do so.  Let’s work together to make this a reality!