```

[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

 
    REAUTHORIZATION OF THE NATURAL GAS PIPELINE SAFETY ACT AND THE 
                  HAZARDOUS LIQUID PIPELINE SAFETY ACT
=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON ENERGY AND AIR QUALITY

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION
                               __________

                             MARCH 19, 2002
                               __________

                           Serial No. 107-87
                               __________

       Printed for the use of the Committee on Energy and Commerce

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

                     U.S. GOVERNMENT PRINTING OFFICE
78-508                       WASHINGTON : 2002
________________________________________________________________________
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Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001

                    COMMITTEE ON ENERGY AND COMMERCE

               W.J. ``BILLY'' TAUZIN, Louisiana, Chairman

MICHAEL BILIRAKIS, Florida           JOHN D. DINGELL, Michigan
JOE BARTON, Texas                    HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio                RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania     EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California          FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia                 SHERROD BROWN, Ohio
RICHARD BURR, North Carolina         BART GORDON, Tennessee
ED WHITFIELD, Kentucky               PETER DEUTSCH, Florida
GREG GANSKE, Iowa                    BOBBY L. RUSH, Illinois
CHARLIE NORWOOD, Georgia             ANNA G. ESHOO, California
BARBARA CUBIN, Wyoming               BART STUPAK, Michigan
JOHN SHIMKUS, Illinois               ELIOT L. ENGEL, New York
HEATHER WILSON, New Mexico           TOM SAWYER, Ohio
JOHN B. SHADEGG, Arizona             ALBERT R. WYNN, Maryland
CHARLES ``CHIP'' PICKERING,          GENE GREEN, Texas
Mississippi                          KAREN McCARTHY, Missouri
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
TOM DAVIS, Virginia                  THOMAS M. BARRETT, Wisconsin
ED BRYANT, Tennessee                 BILL LUTHER, Minnesota
ROBERT L. EHRLICH, Jr., Maryland     LOIS CAPPS, California
STEVE BUYER, Indiana                 MICHAEL F. DOYLE, Pennsylvania
GEORGE RADANOVICH, California        CHRISTOPHER JOHN, Louisiana
CHARLES F. BASS, New Hampshire       JANE HARMAN, California
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska
-- -- (Vacancy)

                  David V. Marventano, Staff Director
                   James D. Barnette, General Counsel
      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
                                 ______

                 Subcommittee on Energy and Air Quality

                      JOE BARTON, Texas, Chairman

CHRISTOPHER COX, California          RICK BOUCHER, Virginia
  Vice Chairman                      RALPH M. HALL, Texas
RICHARD BURR, North Carolina         TOM SAWYER, Ohio
ED WHITFIELD, Kentucky               ALBERT R. WYNN, Maryland
GREG GANSKE, Iowa                    MICHAEL F. DOYLE, Pennsylvania
CHARLIE NORWOOD, Georgia             CHRISTOPHER JOHN, Louisiana
JOHN SHIMKUS, Illinois               HENRY A. WAXMAN, California
HEATHER WILSON, New Mexico           EDWARD J. MARKEY, Massachusetts
JOHN SHADEGG, Arizona                BART GORDON, Tennessee
CHARLES ``CHIP'' PICKERING,          BOBBY L. RUSH, Illinois
Mississippi                          KAREN McCARTHY, Missouri
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  THOMAS M. BARRETT, Wisconsin
ED BRYANT, Tennessee                 BILL LUTHER, Minnesota
GEORGE RADANOVICH, California        JOHN D. DINGELL, Michigan
MARY BONO, California                  (Ex Officio)
GREG WALDEN, Oregon
-- -- (Vacancy)
W.J. ``BILLY'' TAUZIN, Louisiana
  (Ex Officio)

                                  (ii)

                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Anderson, James D., National Vice-Chairperson, National 
      Association of Pipeline Safety Representatives.............    29
    Chipkevich, Robert, Director, Office of Railroad, Pipeline 
      and Hazardous Materials Investigations, National 
      Transportation Safety Board................................    17
    Engleman, Ellen G., Administrator, Research and Special 
      Programs Administration, Department of Transportation......    11
    Guerrero, Peter, Director, Physical Infrastructure, United 
      States General Accounting Office...........................    21
    Haener, William J., Vice President of Natural Gas, CMS 
      Engineer Corporation, on behalf of Interstate Natural Gas 
      Association of America.....................................    47
    Hereth, Mark L., Senior Vice President, HSB Solomon..........    43
    Kipp, Robert R., Executive Director, Common Ground Alliance..    89
    Morris, Herman, Jr., President and Chief Executive Officer, 
      Memphis Light, Gas and Water, on behalf of The American Gas 
      Association................................................    63
    Nilles, Bruce E., Staff Attorney, Earthjustice, Oakland 
      Regional Office............................................   101
    Shea, William, President and CEO, Buckeye Pipe Line Company, 
      L.P., on behalf of Association of Oil Pipe Lines...........    54
    Sullivan, Edward C., President, Building and Construction 
      Trades Department, AFL-CIO.................................    96

                                 (iii)

  

    REAUTHORIZATION OF THE NATURAL GAS PIPELINE SAFETY ACT AND THE 
                  HAZARDOUS LIQUID PIPELINE SAFETY ACT

                              ----------                              

                        TUESDAY, MARCH 19, 2002

                  House of Representatives,
                  Committee on Energy and Commerce,
                    Subcommittee on Energy and Air Quality,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2 p.m., in 
room 2318, Rayburn House Office Building, Hon. Joe Barton 
(chairman) presiding.
    Members present: Representatives Barton, Ganske, Norwood, 
Tauzin (ex officio), Sawyer, John, Markey, Gordon, Barrett, and 
Dingell (ex officio).
    Staff present: Bill Cooper, majority counsel; Andy Black, 
policy coordinator; Peter Kielty, legislative clerk; Sue 
Sheridan, minority counsel; and Rick Kessler, minority 
professional staff.
    Mr. Barton. The subcommittee will come to order. First, we 
wish to thank the Science Committee, which I also serve on in 
addition to serving on the Energy and Commerce Committee; and 
its chairman, the Honorable Sherwood Boehlert of New York, for 
allowing us to use the full committee hearing room of the 
Science Committee, since the Energy and Commerce Committee 
hearing room is currently under renovation.
    Today we are going to begin our review of the pipeline 
safety laws. It is time for Congress to reauthorize the Natural 
Gas Pipeline Safety Act and the Hazardous Liquid Pipeline 
Safety Act.
    We welcome our witnesses today to discuss the current 
status of existing laws, and hear about their recommendations 
about any changes, if any, that they would proffer to the 
subcommittee.
    As I said, I want to thank Chairman Boehlert for allowing 
us to use the Science Committee hearing room. At the staff 
level, we would like to thank David Goestand and Jeffrey 
Donnelly of the Science Committee and the Energy and Commerce 
Committee for helping us to use this room.
    I find pipelines to be an important part of our Nation's 
energy infrastructure and our energy future. Without a safe and 
consistently expanding system of pipelines, the Nation's 
economy would not fare as well, and American Consumers would 
have less fuel for heating and driving.
    Pipelines continue to be the safest method of transferring 
natural gas and liquid petroleum products over long distances. 
There are accidents and have been accidents in the past.
    Congress and regulators should do the very most that we can 
do to promote safety and prevent accidents in the future. I 
would expect later this spring that the subcommittee consider 
legislation reauthorizing the pipeline safety laws. As of 
today's hearing, it is not clear what bill or bills that we 
will consider.
    Chairman Tauzin of the full committee and myself are 
greatly interested in pursuing a consensus bill with Mr. 
Boucher and others on the subcommittee. My intention is to have 
the staffs work together over the next few weeks to see if such 
a consensus bill can be drafted.
    Chairman Tauzin and I have in the meantime co-sponsored 
H.R. 3609 with the Transportation Committee Chairman, Don 
Young, from Alaska. If consensus is not reached, some bill will 
have to be moved and chosen as the appropriate vehicle.
    I am going to invite the witnesses to discuss the recent 
regulations that have been promulgated by the Office of 
Pipeline Safety, and their responses to the General Accounting 
Office with suggestions on practical reforms that do not overly 
reduce the flow of precious commodities to waiting consumers or 
needlessly increase private transportation which the consumer 
ultimately pays.
    I would also be interested in hearing the Office of 
Pipeline Safety's response to the criticisms as to its 
responsiveness to mandates and recommendations. Finally, I want 
to inform the subcommittee members that Congressman Boucher has 
had some flooding in his district.
    And I talked to him by phone about 30 minutes ago, and it 
is very unlikely that he will make this hearing, but he stated 
that the Honorable Chris John of Louisiana is going to be a 
more than adequate substitute for him on this matter.
    I do want to thank Congressman Boucher for his and his 
staff's help in putting together today's hearing. We have 
worked very well together at the staff level, and we have a 
good group of witnesses to talk to us about pipeline safety.
    So with that, I would recognize the Honorable Chris John of 
Louisiana for any opening statements that he would wish to 
make.
    [The prepared statement of Hon. Joe Barton follows:]
Prepared Statement of Hon. Joe Barton, Chairman, Subcommittee on Energy 
                            and Air Quality
    Today the Subcommittee will begin its review of pipeline safety 
laws. It is time for Congress to reauthorize the Natural Gas Pipeline 
Safety Act and the Hazardous Liquid Pipeline Safety Act. I welcome the 
witnesses here today to discuss the current status of pipeline safety 
laws, regulations, and practices.
    I would like to thank Chairman Boehlert of the Science Committee 
for letting us use this hearing room today, and thank David Goldston 
and Jeffrey Donald of the Science Committee and Peter Kielty of the 
Energy and Commerce Committee for setting us up over here smoothly.
    Pipelines are an important part of our Nation's energy 
infrastructure and our energy future. Without a safe and consistently-
expanding system of pipelines, our Nation's economy would not fare as 
well and American consumers would have less fuel for heating and 
driving. Pipelines continue to be the safest method of transporting 
natural gas and liquid petroleum products over long distances. There 
have been accidents in the past, and Congress and regulators should do 
what we can to promote and improve appropriate best practices.
    Later this spring, I expect this subcommittee to consider 
legislation reauthorizing pipeline safety programs and laws. It is not 
clear what bill we will consider. Chairman Tauzin and I are greatly 
interested in pursuing a consensus bill with Mr. Boucher, Mr. Dingell, 
and all Members of the Subcommittee. I will direct my staff to work 
over the next few weeks to see if an agreement can be reached. Chairman 
Tauzin and I have cosponsored H.R. 3609 with the Transportation 
Committee leadership, as well. If a consensus is not reached, that bill 
or something like it could also be a markup vehicle.
    I invite witnesses to discuss the recent regulations promulgated by 
the Office of Pipeline Safety (OPS), the OPS response to reports by the 
General Accounting Office (GAO), and suggestions on practicable reforms 
that do not overly reduce the flow of precious commodities to wanting 
consumers or needlessly increase the price of transportation, which 
consumers ultimately pay. I am also interested in hearing OPS' response 
to the criticisms concerning its responsiveness to mandates and 
recommendations. While I am sure several were excellent, I am also 
quite certain that several may have been well-intended, but ill-
conceived.
    Finally, I want to thank my good friend Mr. Boucher for his help 
putting together today's hearing. I look forward to working with him on 
this important issue. He is not here because he is helping his district 
cope with some flooding. I wish he and his constituents well in their 
recovery. I want to thank Congressman John for being here to take his 
place. He too, is an important Member of the Subcommittee and has great 
interest in this issue.

    Mr. John. Thank you, Mr. Chairman. As you mentioned 
earlier, our colleague, Mr. Boucher, couldn't be with us today, 
and I was glad to sit in for him during today's hearing. I am 
really pleased to have the opportunity to preside over the 
hearing because pipeline safety is an important issue to 
constituents in the Seventh Congressional District of 
Louisiana.
    As you know, Mr. Chairman, I represent the Onshore Hub of 
the Offshore Oil and Gas Industry, which is in Louisiana's 
southwest corner. Many of the fuels, chemicals, and plastics 
that people in this room use begin their journey in the 
commerce of oil and natural gas that is produced right off-
shore of Louisiana in the Gulf of Mexico and along Louisiana's 
shoreline.
    From there it travels via pipeline into refineries, 
chemical plants, or power generating facilities in our State, 
and then from there across the country. Pipelines are the 
lowest cost, environmentally accessible, and in many instances 
the only feasible mode of transportation on land to distribute 
large volumes of petroleum and natural gas.
    It is clear that our Nation needs to expand and improve our 
pipeline system for our economy if we expect to meet future 
demands.
    We need a strong, flexible pipeline infrastructure policy 
to supply the liquid fuel and gas demands in every region of 
this great country.
    However, public support and public confidence for extending 
our pipeline infrastructure is in my mind directly tied to the 
public confidence that they have in pipeline safety.
    As you mentioned earlier in your statement, Mr. Chairman, 
pipelines are statistically the safest method of transportation 
for oil and oil products, and natural gas. However, accidents 
as you mentioned do happen, and every member of this committee 
and in this Congress is very sensitive to the concerns raised 
by members who experience major pipeline accidents in their 
districts.
    I feel that Congress has a legitimate role in making sure 
that our pipeline infrastructure is not only safe, but that the 
pipeline operators are qualified, and that reasonable efforts 
are undertaken by industry to minimize these accidents.
    Mr. Chairman, you are also aware that people have a 
tendency to lump all pipelines together, with little regard for 
the dramatic differences between liquid, gas transmission, and 
gas distribution systems.
    The facts are that each one of these systems vary quite 
differently in both design and also in operation. We cannot and 
should not regulate these different systems in the very same 
way.
    No engineering or scientific analysis has provided 
justification for a one size fits all approach to inspecting 
pipelines. I believe we can find consensus in this committee, 
and during this Congress on pipeline safety legislation.
    There are several legitimate legislative proposals out 
there, and quite frankly I think they have much more in common 
than some people are willing to acknowledge. There are some 
significant differences between the leading proposals, and the 
greatest is the frequency of pipeline inspections.
    I hope that this oversight hearing will pave the way for 
members over the Easter break to work on bridging the gaps so 
that we can move forward with a bipartisan consensus product 
out of this subcommittee.
    I am also committed to work with the ranking member of the 
full committee, Mr. Dingell, on finding a consensus that 
frankly we could not find in the 106th Congress. I look forward 
to the testimony today from the two panels, and I yield back 
the balance of my time, Mr. Chairman.
    Mr. Barton. The gentleman is welcome, and the chair now 
recognizes the distinguished ranking member of the full 
committee, the Honorable John Dingell of Michigan, for an 
opening statement.
    Mr. Dingell. Mr. Chairman, I thank you, and I commend you 
for holding this oversight hearing today on pipeline safety.
    I am particularly pleased that both the General Accounting 
Office, the GAO, and the National Transportation Safety Board, 
NTSB, are here today because they have attributed greatly to 
the effort to improve the regulation and safety of the Nation's 
pipelines.
    I also want to recognize the work in the current office of 
the Pipeline Safety, Director Stacy Gerard, who despite my 
strong and continued misgivings about OPS, there is no doubt 
that Ms. Gerard has worked hard to begin cleaning up the 
substantial mess left behind by her immediate predecessors.
    This subcommittee and this committee has had a long 
interest in pipeline safety, and I think it necessarily so. In 
1996, the Congress turned its back on the American people and 
the environment when it enacted legislation that substantially 
cut into our Nation's pipeline safety laws.
    And it put industry profits on the same level as human 
life, and worse, it was enthusiastically supported by the 
Federal Pipeline Safety Agency, which appeared to be much more 
interested in providing better service to its industry 
customers than in serving the public good.
    Unfortunately, the consequences of the Federal Government's 
neglect in this area are infamous. In August 2000, 12 people, 5 
of them small children, died in a natural gas explosion in 
Carlsbad, New Mexico.
    Before that a gasoline pipeline blast in Bellingham, 
Washington, killed three people, including two, 5 year olds. In 
the last 2 years, pipeline accidents caused millions of dollars 
in environmental damages, disrupted fuel supplies, contributed 
to price spikes, and forced people to evacuate their homes.
    Concerned that the combination of a weak law and an absence 
of regulation are also recipes for a disaster. Just over 3 
years ago, I asked the General Accounting Office to investigate 
the effectiveness of both OPS and the 1996 law.
    GAO's May 2000 report revealed an agency that places a 
disturbing amounts of faith in the industry that is supposed to 
regulate it, and it is either unable or unwilling to carry out 
the responsibilities that it has under the law.
    In its report to the General Accounting Office, it was 
found these unfortunate things. One, OPS had almost eliminated 
the use of fines, reducing the use of monetary penalties by 
more than 90 percent between 1990 and 1998.
    Two, at the same time that OPS stopped fining violators, 
major pipeline accidents increased by approximately 4 percent 
annually, and killing 226 people, and injuring over 1,030 
others, and resulting in about $700 million in property damage.
    Three, OPS was not complying with the law, and it failed to 
implement nearly half of the 49 requirements mandated by 
Congress since 1988 to improve the safety of pipelines.
    Four, OPS repeatedly ignored recommendations by NTSB. Five, 
OPS information on pipeline accidents is extremely limited and 
ill-managed. It seems like something should be done here.
    Six, OPS was moving ahead with a risk-based approach to 
safety regulation,despite a complete lack of quantifiable 
evidence to justify such a change. This last point continues to 
be of special concern to me.
    According to GAO, many of the companies participating in 
risk management demonstration programs, which by the way 
includes the bastion of corporate responsibility known in the 
press today as ENRON, are not even collecting the types of data 
necessary to support an evaluation of the program safety 
impacts.
    The fact is that there is no real empirical evidence to 
support OPS's risk-based approach to safety regulation. I would 
note that it was conceived in a rather curious kind of 
situation in the dark of night, without any consultation with 
anybody, and without ever having been properly considered in 
this body.
    I would note also that this ready, aim, fire approach 
strikes me as the same kind of reckless behavior that led to 
OPS's disastrous enforcement policy of the last few years. In 
the next year, OPS must take bold steps to clean up its act.
    Unfortunately, the administration's fiscal year 2003 budget 
pushes OPS's precisely in the wrong direction. It cuts overall 
pipeline safety funding by $5 million below last year's funding 
levels.
    Moreover, the administration's budget unwisely proposes to 
transfer OPS pipeline safety research work currently being 
conducted at the Department of Energy. Clearly, OPS cannot now 
handle its workload.
    To layer upon the agency still another mission is both 
foolish and dangerous. In closing, I note that prior to 1995, 
this committee, on a broadly bipartisan basis, led the Congress 
to enact legislation that required biannual inspections, 
increased the use of internal inspection devices, replacement 
of old pipe with new lines, and to accommodate the passage of 
smart things, and the creation of a national inventory of 
pipeline, and the licensing of operators amongst other things.
    Yet, 48 percent of the gas pipeline industry has failed to 
provide the Department of Transportation with maps of their 
pipeline system. Also, the gas industry have failed to ensure 
that old pipelines are replaced by new lines that can 
accommodate the smart things, and make possible a really good 
program of inspection and safety in this area.
    It does not need to be this way. I want you to know, Mr. 
Chairman, that I committed to working in good faith with both 
you and with our Chairman, Mr. Tauzin, as well as all of my 
colleagues, to enact meaningful pipeline safety reauthorizing 
legislation.
    I want you to know, however, that I am equally committed to 
fighting any legislation that would maintain the status quo, or 
worse, roll back the new protection of pipeline workers, the 
public, and the environment. Thank you, Mr. Chairman.
    [The prepared statement of Hon. John D. Dingell follows:]
    Prepared Statement of Hon. John D. Dingell, a Representative in 
                  Congress from the State of Michigan
    Mr. Chairman, thank you for holding this oversight hearing on 
pipeline safety. I am particularly pleased that both the General 
Accounting Office (GAO) and the National Transportation Safety Board 
(NTSB) are here today because they have contributed greatly to the 
effort to improve the regulation and safety of our pipelines. I also 
want to recognize the work of current Office of Pipeline Safety (OPS) 
Director Stacey Girard: despite my strong continued misgivings about 
OPS, there is no doubt that Ms. Girard has worked hard to begin 
cleaning up the substantial mess left behind by her immediate 
predecessors.
    In 1996, Congress turned its back on the American people and the 
environment when it enacted legislation that substantially gutted our 
Nation's pipeline safety laws and put industry profits on the same 
level as human life. Worse, it was enthusiastically supported by a 
Federal pipeline safety agency more interested in providing better 
service to its industry ``customers'' than in serving the public good.
    Unfortunately, the consequences of the Federal Government's neglect 
in this area are infamous. In August 2000, 12 people--five of them 
small children--died in a natural gas pipeline explosion in Carlsbad, 
New Mexico. Before that, a gasoline pipeline blast in Bellingham, 
Washington, killing three people--including two five-year-olds. In just 
the last two years, pipeline accidents caused millions of dollars in 
environmental damage, disrupted fuel supplies, contributed to price 
spikes and forced some people to evacuate their homes.
    Concerned that the combination of a weak law and an absent 
regulator was a recipe for disaster, just over three years ago I asked 
the General Accounting Office to investigate the effectiveness of both 
the OPS and the 1996 law. GAO's May 2000 report revealed an agency that 
places disturbing amounts of faith in the industry it is supposed to 
regulate, and is either unable or unwilling to carry out any of its 
responsibilities under the law. In its report GAO found that:

 OPS had almost eliminated the use of fines, reducing the use 
        of monetary penalties by more than 90 percent between 1990 and 
        1998.
 At the same time OPS stopped fining violators, major pipeline 
        accidents increased by approximately four percent annually, 
        killing 226 people, injuring over 1,030 others, and resulting 
        in about $700 million of property damage.
 OPS was not complying with the law, having failed to implement 
        nearly half of the 49 requirements mandated by Congress since 
        1988 to improve the safety of pipelines.
 OPS repeatedly ignored recommendations by NTSB.
 OPS information on pipeline accidents is extremely limited and 
        ill-managed.
 OPS was moving ahead with a risk-based approach to safety 
        regulation despite a complete lack of quantifiable evidence to 
        justify such a change.
    This last point continues to be of particular concern to me. 
According to GAO, many of the companies participating in the risk 
management demonstration program--which, by the way, include that 
bastion of corporate responsibility known as Enron--are not even 
collecting the types of data necessary to support an evaluation of the 
program's safety impacts. The fact is that there is no real empirical 
evidence to support OPS risk-based approach to safety regulation. This 
ready, fire, aim approach strikes me as the same kind of reckless 
behavior that led to OPS's disastrous enforcement policy of the past 
few years.
    In the next year, OPS must take bold steps to clean up its act. 
Unfortunately, the Administration's fiscal year 2003 budget pushes OPS 
in precisely the wrong direction by cutting overall pipeline safety 
funding by $5.0 million below last year's funding levels. Moreover, the 
Administration's budget unwisely proposes to transfer to OPS pipeline 
safety research work currently being conducted at the Department of 
Energy. Clearly, OPS cannot handle its current workload. To layer upon 
the agency still another new mission is both foolish and dangerous.
    In closing, I note that prior to 1995, this Committee, on a broadly 
bipartisan basis, led Congress to enact legislation that required 
biannual inspections, increased use of internal inspection devices or 
``smart pigs,'' the replacement of old pipe with new lines that could 
accommodate the passage of these smart pigs, the creation of a national 
inventory of pipelines, and the licensing of operators, among other 
things. Yet, 48 percent of the gas pipeline industry still has failed 
to provide the Department of Transportation with maps of their pipeline 
systems. Also, OPS and the industry have failed to ensure that old 
pipeline is replaced by new line that can accommodate smart pigs.
    It doesn't have to be that way. I want you to know, Mr. Chairman, 
that I am committed to working in good faith with Chairman Tauzin and 
you--as well as all my colleagues--to enact meaningful pipeline safety 
reauthorization legislation. I want you to know, however, I am equally 
committed to fighting any legislation that would maintain the status 
quo, or worse, roll back the few protections left to pipeline workers, 
the public, and the environment.

    Mr. Barton. I thank the gentlemen from Michigan. We are 
told that Dr. Norwood is here, and there he is. Would the 
gentleman from Georgia wish to make an opening statement?
    Mr. Norwood. Very briefly, Mr. Chairman, if I may. I'm 
sorry that I was late. Having these hearings on Tuesday 
afternoons makes one rush around a little bit, but I do commend 
you for holding this hearing today on what I believe to be a 
very important issue to all Americans.
    It is encouraging to me to see this committee work together 
in conjunction and coordination with the Transportation and 
Infrastructure Committee to ensure the safety and reliability 
of the pipeline network in this country.
    To me, public confidence in this expansive network is 
paramount to not only maintaining operability and reliability 
of the system itself, Mr. Chairman, but effectively meeting 
critical energy needs.
    Ensuring public safety of this system is a responsibility 
of Congress, and I am proud to be a co-sponsor of H.R. 3609. 
Again, let me thank you for holding this hearing today, and 
don't expect me to be this brief every time.
    Mr. Barton. We thank the gentleman and recognize the 
gentleman from Massachusetts, for an opening statement.
    Mr. Markey. Thank you, Mr. Chairman. All of us have a 
vested interest in the safety and purity of our Nation's 
pipeline. They crisscross our Nation, delivering 23 trillion 
cubic feet of natural gas, and 13 billion barrels of petroleum 
products per year, which is instrumental in keeping our economy 
running.
    Many of our constituents live in close proximity to these 
pipelines and are justifiably concerned about the risk that 
pipeline accidents or explosions could pose. While we have been 
spared the large death tolls that other countries have 
experienced, we are not immune from such events, as the El Paso 
Natural Gas accident in Carlsbad, New Mexico, demonstrated.
    In that case the corrosion of a segment of line that had 
not been inspected in 50 years appeared to have been the cause. 
According to today's testimony, over half of the pipelines in 
the U.S. were originally constructed more than 30 years ago.
    So the adequacy of inspections and missions of all the 
pipelines is something that I am particularly interested in 
hearing more about.
    Six months ago a discussion of reauthorizing the pipeline 
safety program would have drawn little interest beyond the 
effected industry, but in the last 6 months the public has 
begun to focus a lot more on infrastructure security issues 
following the terrorist attacks of September 11.
    Six months ago, we would have asked how the Office of 
Pipeline Safety was coping with its statutory backlog. Now we 
must ask if what OPS is doing, or what OPS is doing to decrease 
the vulnerability of our pipeline networks from premeditated 
attacks.
    The challenge to our panelists today is to help us 
understand what is necessary to mitigate both the ongoing 
risks, like accidental third-party damage, corrosion, and 
equipment failure, and the more sinister threats, like 
terrorist attacks to pipelines.
    When we last reauthorized the Natural Gas Pipeline Safety 
Act and Hazardous Liquid Pipeline Safety Act in 1996, the 
majority failed to emphasize the risk assessment and cost 
benefits requirement over traditional inspection and 
enforcement.
    I had posed a bill at the time because I feared that it 
would trap OPS in a paralysis by analysis that would prevent it 
from moving to addressing important safety issues. Six year 
gone, we still don't know if this program has worked.
    Our last hearing in 1999 provided an inclusive answer to 
this question, and so I hope that our panelists today will 
enlighten the committee so that we can correct any deficiencies 
in the current regulation.
    I am particularly concerned with the GAO's reported decline 
in OPS enforcement actions, and their use of fines for 
enforcement purposes without any evidence that this policy is 
improving compliance and pipeline safety.
    I am also very troubled by the OPS's continued foot-
dragging in responding to National Transportation Safety 
Board's safety recommendations. And finally in our post-
September 11 world, we are to think the unthinkable.
    We have to avoid, and how do we avoid, and in the worst 
case, deal with a well-planned attack on our energy 
infrastructure aimed at hurting citizens, and/or compromising 
our ability to supply critical energy resources to parts of the 
Nation.
    As some of today's testimony points out, no coordinated 
response plan exists for region-wide emergencies. I have seen 
in my own district the confusion that overlapping Federal, 
State, and local responsibilities can cause, leading to 
incomplete protection of communities near the Distrigas LNG 
facility in Everett, Massachusetts.
    I hope in this hearing that we can explore some of those 
problems, and work toward efficient preparation of a 
coordinated response plan. We must also address the balance 
between the public need to know about locations of hazardous 
pipeline and the security needs to keep critical knowledge from 
potential terrorists.
    But perhaps the overarching question is whether or not OPS, 
which has a dismal track record of implementing Congressional 
mandates, is capable of providing the added protections and 
safeguards to our pipeline infrastructure.
    And if they are incapable of providing this protection, who 
should. I look forward, Mr. Chairman, to today's testimony. I 
thank you for having this hearing.
    Mr. Barton. I thank the gentleman. We would like to welcome 
the gentleman from Ohio, Mr. Sawyer, and see if he has an 
opening statements.
    Mr. Sawyer. Thank you, Mr. Chairman. Just a brief one. I am 
grateful to you for holding this hearing. Pipeline accidents in 
the last few years have underscored the need for oversight of 
the 2.2 million miles of pipeline.
    Last week in Cleveland near my district, an intersection 
was engulfed by flames from a gas line that was broke during 
the course of repair of a nearby water line. It was an 
extraordinary experience.
    Fortunately, nobody was hurt, but over 100 homes and 
businesses had to be evacuated, and 2,000 people were left 
without power and heat the following night. I join in my 
colleagues concern if that is the type of damage that can be 
done by accident, just think of what could be done on purpose.
    About half the pipelines in this country were built before 
1970. Most of them are in very sound condition, and most of 
them operate under State requirements that generally tend to 
serve the public well.
    And Congress should not let another year pass without a 
meaningful pipeline safety bill. With that, I am going to 
conclude this opening statement and yield back the balance of 
my time, and submit the rest of my statement for the record. 
Thank you, Mr. Chairman.
    Mr. Barton. Seeing no other members present, the Chair 
would ask unanimous consent that all subcommittee members not 
present have the requisite number of days in which to put into 
the record their opening statements. Hearing no objection, so 
ordered.
    [Additional statements submitted for the record follow:]
 Prepared Statement of Hon. Greg Ganske, a Representative in Congress 
                         from the State of Iowa
    Thank you Mr. Chairman. Pipeline safety is an important issue for 
our country. Given that we are moving liquid and gaseous materials 
through more than one million seven hundred and fifty thousand miles of 
pipeline in our country, it is an extensive undertaking and one that 
must be taken very seriously. Recent events have caused the 
reexamination of safety and security issues related to all aspects of 
our society and pipelines are no exception. Meeting the demand for 23 
trillion cubic feet of natural gas and 13 billion barrels of petroleum 
products each year is a daunting undertaking. There is no question that 
moving the products by pipeline is the best and safest alternative. 
Therefore, we must make every effort to assure that we have taken all 
the prudent steps necessary to make pipelines even safer.
    I know that the General Accounting Office has in the past 
questioned the reaction time and responsiveness of the Office of 
Pipeline Safety to concerns which have been raised. I hope the 
testimony today will indicate that those concerns have been addressed 
and that the Department of Transportation has moved aggressively to 
implement all necessary steps to achieve a higher level of confidence 
in pipeline safety across the nation. I thank the witnesses who have 
taken the time to join us today and I look forward to their testimony. 
Mr. Chairman I yield back my time.
                                 ______
                                 
   Prepared Statement of Hon. George Radanovich, a Representative in 
                 Congress from the State of California
    Mr. Chairman, today's hearing is a vital step in restoring and 
maintaining confidence in America's pipeline network. We must continue 
to operate, upgrade, and expand our pipeline network in order to meet 
our nation's energy needs, and it is our duty to meet these needs with 
reasonably priced fuels.
    In my home state of California, pipeline capacity remains 
insufficient to meet the supply of natural gas from regulated pipelines 
entering the state. This problem leaves our state dependent on 
hydropower from other states and praying for rain and cool weather. I 
believe the hearing today will aid us in crafting a solution to 
California's intrastate pipeline problem, as well as help us to resolve 
other pipeline issues throughout the nation.
    It is also imperative that we upgrade and expand our pipelines 
without diminishing the reliability, efficiency and security of the 
delivery system. Collaborative research and development efforts must 
also be strengthened in order to enhance existing damage prevention 
programs, which will further reduce the amount of fatal accidents. 
Pipelines are the safest mode of transporting hazardous liquids and 
natural gas, but accidents are inevitable. Increased communication with 
the public regarding pipeline safety issues can minimize these 
accidents and their affects. This goal can be achieved without 
compromising security. However, state and local officials must be 
provided with adequate information.
    In the end, I hope we can work together to forge bipartisan 
legislation that will build on our Committees' recent progress and 
result in continued improvements in pipeline safety.
    Thank you, Mr. Chairman, for holding this hearing today. I look 
forward to the witnesses' testimony.
                                 ______
                                 
 Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee 
                         on Energy and Commerce
    Thank you Chairman Barton for holding what promises to be a very 
informative safety hearing today. The information we gather this 
afternoon will be most useful as we consider reauthorization of the 
federal pipeline safety program.
    We all recognize that pipelines play a critical role in our 
nation's energy infrastructure. They help enable our economic 
prosperity, moving nearly 23 trillion cubic feet of natural gas and 13 
billion barrels of petroleum products on a yearly basis.
    Compared with other modes of moving freight--such as barges, 
trucks, and railroads--pipelines represent the safest form of 
transportation available. But accidents do happen, which is why 
Congress has provided for federal pipeline safety regulation, and why 
we will be discussing safety today.
    And of course, safety concerns have become much more acute 
following the terrorist attacks of September 11. So I look forward in 
particular to the perspective both the government and industry can 
offer us on how best to enhance our infrastructure security.
    The Department of Transportations Office of Pipeline Safety (OPS) 
performs a vital function. It was authorized by Congress to issue and 
enforce regulations to provide for safety in the construction and 
operation of pipelines. Yet the OPS program's congressional 
authorization expired at the end of fiscal year 2000.
    Certainly, given our concerns about safety, given our duty to 
assure the public that this vital infrastructure meets the proper 
standards, certainly we must address reauthorization with some urgency. 
This hearing will help us move forward in this process, so we can 
assure that the safety programs can do the job.
    Now, views differ on the best way to regulate pipeline safety. But 
we all agree that a regulatory framework that protects the public and 
the environment, while recognizing the operational needs of pipelines, 
is not only desirable, but necessary.
    Therefore, I look forward to the discussion about measures the OPS 
is taking to keep up with the safety demands of the time. What security 
measures are necessary to reduce terrorist threats? How well is OPS 
responding to new statutory requirements and recommendations from other 
safety agencies?
    I appreciate the witnesses' willingness to give their time and 
views in this process. Thank you. And, Mr. Chairman, thank you again 
for holding this hearing.

    Mr. Barton. We are now going to hear from our first panel. 
We have Ms. Ellen Engleman, who is the Administrator for the 
Research and Special Programs Administration for the Department 
of Transportation, which is the administration which the Office 
of Pipeline Safety is located.
    She is going to give her opening statement, and as soon as 
she does that, then the other three members can come forward 
and give their statements, and we will ask all four questions.
    So we welcome you. Your testimony is in the record in its 
entirety, and we ask that you summarize it in 5 minutes.

 STATEMENTS OF ELLEN G. ENGLEMAN, ADMINISTRATOR, RESEARCH AND 
SPECIAL PROGRAMS ADMINISTRATION, DEPARTMENT OF TRANSPORTATION; 
 ROBERT CHIPKEVICH, DIRECTOR, OFFICE OF RAILROAD, PIPELINE AND 
  HAZARDOUS MATERIALS INVESTIGATIONS, NATIONAL TRANSPORTATION 
       SAFETY BOARD; PETER GUERRERO, DIRECTOR, PHYSICAL 
 INFRASTRUCTURE, UNITED STATES GENERAL ACCOUNTING OFFICE; AND 
    JAMES D. ANDERSON, NATIONAL VICE-CHAIRPERSON, NATIONAL 
         ASSOCIATION OF PIPELINE SAFETY REPRESENTATIVES

    Ms. Engleman. Thank you, Mr. Chairman, and members of the 
subcommittee. My name is Ellen Engleman, and I do have the 
privilege to serve as the Administrator for Research and 
Special Programs for the U.S. Department of Transportation.
    As you are aware the Office of Pipeline Safety is one of 
six major departments within RSPA. I appreciate the opportunity 
to inform you of the continued progress that we are making to 
improve the protection of the pipelines for our national energy 
infrastructure.
    I am encouraged by the passion and commitment by members of 
this committee and Congress as our common goal is the safety of 
the American people. As Secretary Mineta and President Bush 
have emphasized, our national transportation system plays a 
critical role in our Nation's economic strengths.
    Our oil and gas pipelines are the backbone of the Nation's 
energy infrastructure. Moving our resources for national 
defense, to heat and cool our homes, to generate power for 
business and to fuel an unparalleled national transportation 
system.
    As overseers of the Nation's 2.1 million miles of pipeline, 
we hold the people's trust to ensure that vital energy 
resources will be delivered safely and securely. We are using a 
number of statutory changes to achieve this. We are setting the 
designs for construction, testing, operation, maintenance and 
repair of pipelines. That is our job.
    Our job is to ensure the qualifications of personnel who 
perform pipeline safety and to respond to emergencies when the 
system fails. When those standards are not followed, we will 
enforce the law. We take our job seriously, and I assure you 
that we are on the job and we are not alone.
    Congress has given us the authority to share oversight of 
these tasks with the States, which are primarily responsible 
for overseeing intrastate pipeline systems. We also work 
closely with our regulatory community.
    This year the President's budget request reflects the 
importance the administration places on assuring the safety of 
pipelines, and has added significant additional resources to 
support more inspection and enforcement.
    In 2003, if the President's budget is accepted, we will 
have 89 inspectors, and it should be noted that 73 percent of 
our budget for the Office of Pipeline Safety is dedicated to 
enforcement and inspection.
    My prepared testimony is on the record, and let me just 
summarize some of the main points. First of all, at the start 
of my tenure in September of 2001, there were 65 outstanding 
mandates and recommendations from Congress and the National 
Transportation Safety Board, the General Accounting Office, and 
the Department of the Inspector General.
    By the end of this month, we believe that we will have 
addressed nearly 50 percent of these remaining open items in a 
meaningful way, as well as the Congressional mandates. In 
January, we completed four important rulemakings on integrity 
management, pipeline repair, accident reporting, and corrosion 
control for the housing for the pipelines.
    We will have the slate clean in 12 months--that I am 
dedicated to personally and professionally. We have executed an 
aggressive plan. Let me show you our plan. We will continue to 
fill regulatory gaps and particularly we will finish the 
integrity rule to complete our integrity management approach 
for oil and gas trasmission lines.
    This is performance based, to include pipeline safety. We 
will continue to strengthen our enforcement efforts through a 
better use of our tools, including fines. We have proposed $9 
million in civil penalties in the last 18 months, and processed 
six times the number of cases in the year 2001 over the 
previous year.
    Ten years ago, the average fines were $17,000. The average 
fine today is $171,000. We will continue to improve operator 
and regulator qualifications. We also must focus on reducing 
excavation damage to pipelines, one-third of the critical cause 
for pipeline failure.
    If you look at the pipeline incidents, and we have copies 
for you that have been given to you, please note that in the 
last 10 years there has been a 39 percent decrease in liquid 
pipeline accidents.
    In gas distribution pipeline incidents, a 15 percent 
decrease, and in gas transmission pipeline incidents, a 1 
percent increase, pretty much flatline.
    It also should be noted that given that third-party damage 
is critical, approximately one-third of the incidents caused by 
that, please note that there has been a 30 percent decrease in 
the last 10 years in excavation damages.
    And that is in spite of a 57 percent increase in housing 
starts, and a 13 percent increase in pipeline mileage. These 
actions are a beginning, and I am determined to further improve 
our record, again within the next 12 months.
    We are also focusing on research, and we need to develop 
advanced, innovative technology. We have developed a 
comprehensive plan, with a multi-year technology match that 
will provide a return on investment within 36 months.
    Finally, in security, we are looking at security and 
safety. Yes, prior to 9-11, we focused on safety and the 
accident; and since 9-11, we must focus on safety and the 
deliberate incident.
    On September 11, we made over 1,000 telephone calls to 
pipeline operators to assess the security of pipeline 
facilities and personally address security issues. We also 
supported security protocols, which were developed in 
coordination with the Department of Energy, the FBI, and the 
new Transportation Security Administration. We also focused on 
streamlining the communications process and reviewing all 
aspects of security for our pipelines.
    We are directing the pipeline industry to improve 
protection. We are also making sure that our standards for 
security practices are closely coordinated with the Office of 
Homeland Security.
    In summary, RSPA is facing our challenges with a vision and 
an action plan. We are cleaning up our record. We are 
strengthening our regulatory structure through a systematic, 
comprehensive approach to safety evaluation.
    And we are aggressively enforcing our requirements. We are 
taking a leadership role in advancing technology for pipeline 
safety. And, in coordination with the Transportation Security 
Administration, we are addressing security and safety as 
combined goals.
    We need your help. We all agree that reauthorization is 
essential to raise the public's confidence in pipeline safety. 
Americans need to know that we are upholding their trust and 
doing everything possible to ensure the security and safety of 
pipelines.
    Toward these goals, we are pleased that Congress is 
renewing its efforts, and at the appropriate time I would be 
happy to answer any additional questions. Thank you.
    [The prepared statement of Ellen G. Engleman follows:]
 Prepared Statement of Ellen G. Engleman, Administrator, Research and 
                    Special Programs Administration
    Mr. Chairman, and Members of the Subcommittee, I am Ellen Engleman, 
Administrator of the Research and Special Programs Administration 
(RSPA) of the U.S. Department of Transportation. I appreciate this 
opportunity to provide you an overview of the Department's pipeline 
safety program and the progress we are making to improve the protection 
of our national energy infrastructure.
    As Secretary Mineta has emphasized, our national transportation 
system plays a critical role in our Nation's economic strength. Our oil 
and gas pipelines are the backbone of the Nation's energy 
infrastructure--these pipelines provide resources for our national 
defense; to heat and cool our homes; to generate the power for our 
business enterprises and to fuel an unparalleled national 
transportation system.
    As overseers of the nation's 2.1 million miles of pipelines, we 
hold the people's trust to ensure that vital energy resources will be 
delivered safely and securely. We execute this mission through a number 
of statutory charges. We are charged with setting standards for the 
design, construction, testing, operation, maintenance and repair of 
pipelines. We are charged with ensuring the qualification of personnel 
who perform pipeline safety responsibilities. We are charged with 
responding to emergencies when pipeline systems fail. And we are 
charged to enforce the law, when standards are not followed. We take 
our job very seriously and I assure you, we are on the job.
    Further, we are not alone in executing our mission. Through its 
wisdom, Congress sought fit to provide us with authority to share 
oversight of these tasks with state agencies, who through adoption and 
enforcement of our regulations, are primarily responsible for 
overseeing intrastate pipeline systems. It is a close working 
partnership we depend on and value. We also work closely with our 
regulated community, to ensure we understand the safety and security 
challenges they face and to ensure that limited resources are maximized 
for greatest safety benefit. However, make no mistake, if the law is 
broken, we will aggressively enforce it.
    This year, we identified the need for significant additional 
resources to help RSPA's Office of Pipeline Safety (OPS) fulfill our 
responsibilities, particularly the need for additional inspection and 
enforcement. The President's budget request for fiscal year 2003 
reflects the importance the Administration places on assuring the 
safety of pipelines. Considering the expectation that pipeline mileage 
will continue to grow at an unprecedented rate, we need to make clear 
to the American people and the pipeline industries that the pipeline 
safety regulator is on the job and equipped with adequate resources to 
do it properly.
    Understanding what the job is, RSPA clearly faces a number of 
challenges. Among the most important of these challenges is the need to 
improve OPS's record and responsiveness to outstanding mandates and 
recommendations. Additionally, the agency is poised to address the 
challenge of leading the way on research and development of innovative 
pipeline safety technologies. And finally, in the new security 
environment caused by the events of September 11, we must address the 
challenge of ensuring the nation's pipeline infrastructure is secure as 
well as safe. I will address each of these challenges in turn.
                                 record
    At the start of my tenure, there were 65 outstanding mandates and 
recommendations from Congress, the National Transportation Safety Board 
(NTSB), the General Accounting Office (GAO)and the Department's 
Inspector General (IG). In recent months we have made great progress in 
completing work on half of these outstanding recommendations. In 
January, we completed four important rulemakings on integrity 
management, pipeline repair, accident reporting and corrosion control 
for hazardous liquid pipelines. By the end of this month, we believe 
that we will address nearly 50% of the remaining NTSB, IG, and GAO 
recommendations in a meaningful way, as well as the remaining 
Congressional mandates, and intend to have the slate clean within a 
year. To accomplish this task, we have executed an aggressive plan 
involving various actions, currently underway.
    First, we are better defining pipeline safety problems and 
evaluating the results of solutions we put in place through regulatory 
and non-regulatory efforts. We broadened our reporting requirements, to 
provide better quality data and better control the accuracy of the 
data. This action will allow us to make more informed decisions 
regarding safety. Additionally, we improved our distribution of 
information to state and local agencies who assist us in safety 
oversight of pipeline operations.
    Next, we continue to fill gaps in regulation with updated 
requirements on integrity management, LNG facilities, breakout tanks, 
pipeline repair standards, personnel qualifications and pipeline 
corrosion control. Through the integrity management program, 
especially, we are improving safety standards by using systemic safety 
evaluation. This performance based approach will yield specific 
improvements for application to individual and unique pipeline systems, 
and will add value to the effect of the standards we have in place.
    We also strengthened our enforcement efforts by making better use 
of all of our tools, including fines. We are improving the enforcement 
process by updating internal procedures, providing increased 
enforcement training and expanding the use of automation in case 
processing. We also devoted more resources to enforcement in FY 2002, 
and as previously mentioned, requested further increases for FY 03. To 
date, we proposed over $9 million in civil penalties in the past year 
and a half. We processed six times the number of cases in 2001 over the 
prior year. And now, as our large hazardous liquid pipeline integrity 
management rule is in effect, RSPA is out enforcing it. Which means OPS 
inspectors have been out conducting inspections, reviewing about 70,000 
miles or about half of the mileage covered by the first rule. Based on 
our inspections, we estimate that as much as 80,000 to 120,000 miles of 
pipelines will receive added protections from this first phase of 
regulation.
    In the area of qualification, we are addressing the need to improve 
qualifications for both operators and regulators alike. We are 
particularly interested in improving the ability of operators to 
diagnose and treat safety problems. Additionally, our operator 
qualification rule is in effect, and we are in the field auditing its 
implementation, including the use of examination methods beyond the 
observation of on-the-job performance. RSPA and State agencies trained 
together for auditing implementation of the rule, and currently are in 
the process of thoroughly reviewing all operators' training programs.
    Also, as outside force damage is the primary cause of pipeline 
failures, we are focusing efforts on damage prevention. We are working 
in conjunction with the Common Ground Alliance (CGA), a national, non-
profit damage prevention organization that evolved from the initial 
one-call framework established by Congress in the TEA 21 Surface 
Transportation Reauthorization Act. And I am pleased to report that 
national efforts in this area are bearing fruit. Damages to pipelines 
associated with new construction are coming down--while construction of 
new housing is up 57 percent in the last ten years, and damages to 
pipelines resulting from excavation are down 30 percent.
    Finally, RSPA is creating a nationally uniform oversight program 
that makes better use of the State resources available to us. In 
September 2001, GAO closed two recommendations concerning our use of 
State agencies in the areas of inspection and enforcement. This was 
accomplished through RSPA's efforts to develop new guidelines for State 
participation in interstate pipeline oversight; by involving States in 
the development of integrity management programs; and by holding 
frequent conference calls with the States to seek input on our national 
security initiatives.
    As you can see, we are serious about cleaning up our record. To 
date, we are very proud of our results in these areas. However, these 
actions represent the beginning of our efforts; I am determined to 
further improve our record within 12 months. Our plan to address the 
remaining recommendations involve a number of RSPA actions, including: 
the completion of rulemakings on integrity management, which will 
address approximately one-third of the remaining recommendations; 
additional training for Federal and State inspectors in advanced 
testing, monitoring, management systems and processes; building on our 
expanded interstate agent program with our State partners; implementing 
information and management systems to support State/Federal cooperative 
oversight efforts; and increased enforcement.
    Additionally, through our joint actions with the CGA on damage 
prevention, education and outreach, we should satisfy about another 
third of the outstanding recommendations. These actions include the 
development of a public education standard to guide operators' 
evaluation of public information; promotion of additional ``best 
practices'' for preventing third party damage; development of a 
database on excavation activities; and review of State requirements for 
one-call programs. In this effort, it is critical to share 
responsibility for pipeline safety and protection of underground 
facilities with other utilities and local officials. We need to 
encourage communication among the various stakeholders and foster 
alliances in order to focus on this goal and identify specific 
practices amongst the stakeholders to reduce damage. We must also 
continue to broaden public awareness of safe excavation practices. 
Simply put, protection of pipelines from third party damage is a shared 
responsibility.
                                research
    Our next primary challenge is fulfilling a leadership role in 
research and development of innovative pipeline safety technologies. At 
RSPA we see a need for technological breakthroughs in the development 
and use of innovative technologies to provide true safety advances. 
Based on our success with previous collaborative efforts, such as one-
call, we recognized that we could facilitate a role in this area. 
Taking the initiative, RSPA developed a comprehensive research and 
development plan, or a multi-year ``blueprint'' or technology map, if 
you will. This action was done in cooperation with DOE, the Federal 
Energy Regulatory Commission and the Department of the Interior 
Minerals Management Service, as well as a broad-based group of State 
and industry stakeholders. As part of this plan, we established four 
areas of focus: Damage Prevention and Leak Detection; Enhanced 
Operations, Controls and Monitoring; Improved Materials; and Mapping 
and Information Integration. Based on this plan, we intend to have 80 
percent of the R & D identified in the plan, complete within three 
years or less. I want to be clear, that we are focused on near-term 
technology results that will be useful and competitively ready for the 
marketplace in a short time frame.
    Additionally, through the President's budget request for 2003, we 
are asking to consolidate pipeline safety research activities 
previously undertaken by DOE, within RSPA to reduce duplicative efforts 
among federal agencies. Within this consolidated approach, we will 
promote clear accountability for safety outcomes and ensure integration 
of activities among the public and private sector.
    In sum, through our R&D efforts, we will place greater emphasis on 
integrity management tools and practices for distribution companies; we 
will consider practical options for improved leak detection; we will 
continue development of techniques, particularly direct assessment, for 
evaluating pipelines that cannot be inspected with current in-line 
inspection techniques; and we will pursue development of improved 
techniques for real-time monitoring of pipelines, including use of 
satellites, acoustics and unmanned aerial vehicles.
                                security
    We are also addressing security issues for pipelines through our 
Office of Pipeline Safety. RSPA oversees the safety and security of the 
nation's 2.1 million miles of pipelines. The security of our pipeline 
system is of strategic importance due to the large volumes of materials 
transported by pipeline and their critical importance to the National 
economy as well as defense. The events of September 11 provided us a 
unique understanding of the state of security preparedness within the 
pipeline industry--and we discovered there is work to be done. To 
ensure that pipelines are secure to the maximum extent possible, we are 
now taking a number of measures. Additionally, we are cooperating with 
the new Transportation Security Administration, to ensure we provide a 
unified approach to meeting transportation security challenges.
    Initially, on September 11th, we responded immediately to security 
concerns for our Nation's pipeline systems by making over 1,000 
telephone calls jointly with our State partners to pipeline operators, 
to assess the security at pipeline facilities and to monitor events. In 
recent months, we streamlined this communication process, in 
coordination with the Department of Energy (DOE) and the Federal Bureau 
of Investigation, and incorporated it into our daily operations for 
distribution of security information and threat warnings.
    Along with improving our communications capabilities, we are 
securing our own information systems. One action on securing 
information concerns the National Pipeline Mapping System, accessed by 
a website. To reduce the opportunity for misuse, we limited 
accessibility to the website by installing a password protection 
system. We are also processing security clearances for key federal, 
state and industry security personnel, and conducting conference calls 
every two to three weeks with all the pipeline safety agencies to 
review recent developments, toward the goal of providing a seamless 
Federal and State oversight program of pipeline security.
    Realizing that we cannot address the security challenge alone, we 
called on the pipeline industries to work with us in further assessing 
vulnerabilities, identifying ways to improve protections for pipeline 
facilities, and developing plans to improve response and recovery 
preparedness. Based on this outreach effort, we encouraged the 
development of consensus standards for security practices. We 
participated in the development of these standards, and we included DOE 
and state pipeline safety agencies in this process. We are now 
incorporating these security practices into a pipeline contingency 
plan, and are tiered to correspond with the Office of Homeland 
Security's threat warning levels. We are also at the stage of 
implementing a coordinated set of protocols for our inspectors to use 
during inspections of pipeline facilities to ensure operators are 
putting security practices into place at critical facilities.
    Additional RSPA efforts are focused on improvements to public and 
private sector planning for response and recovery. The primary needs in 
this area include improved communications with local authorities and 
identification of methods/resources necessary to expedite the return to 
service of a pipeline, in the event of an attack. With regard to 
recovery, this involves identifying critical spare part inventories for 
rapid restoration of pipeline service, and establishing relationships 
among the operators to share their resources. The benefits of such 
actions will not be limited to terrorist incidents, but will also 
accrue in the event of natural disasters or pipeline accidents. 
Additionally, we formed a work group with DOE to assess the role of 
Federal-level emergency authorities in the rapid restoration of 
service.
    In sum, the experience we gained from the events of September 
convinced us of the need for an integrated role for safety, system 
integrity and security to maintain a reliable national pipeline system. 
The consequences of a major pipeline failure, whether intentional or 
unintentional are potentially the same--that is loss of life, injury, 
property loss, environmental damage and disruption of critical fuel 
supplies. I am pleased to inform you that OPS security activities are 
integrated fully within our safety operations.
                               conclusion
    RSPA is committed to addressing the many challenges before us and 
we have a vision of how to accomplish our goals. We have a plan to 
address the outstanding mandates and recommendations, and we are 
cleaning up our record. We are strengthening our regulatory structure 
through a systemic, comprehensive approach to safety evaluation; and 
aggressively enforcing our requirements. We are taking a leadership 
role in advancing technology for pipeline safety. And in coordination 
with the Transportation Security Administration, State agencies and the 
pipeline industries, we are addressing pipeline security issues. 
Overall, all of these efforts will provide greater accountability for 
safety outcomes, which can result in greater public confidence in the 
safety of America's pipeline systems.
    However, our efforts alone are not enough to raise the public's 
confidence in the pipeline safety program--we need reauthorization of 
the program. Commercial and residential energy demands are growing; 
urban centers are expanding and moving closer to rural pipelines; and 
our national defense demands a reliable energy supply--yet, citizen 
concerns over pipeline safety have resulted in delays of new 
construction or rehabilitation of existing pipelines. This does not 
serve the public's interest--and we must act. American citizens need to 
know we are upholding their trust. They need to know we are doing 
everything possible to ensure the safety and security of pipeline 
systems, and they need to know we are authorized and provided the 
resources necessary to accomplish our job. Toward this goal, we are 
very pleased that Congress is renewing its efforts on this front, and 
we offer our assistance in any way possible to complete your work.
    Again, I wish to thank the Subcommittee for this opportunity to 
share an overview of the pipeline safety program and our vision of how 
to accomplish pipeline safety, research and security efforts. I would 
be happy to answer any questions.

    Mr. Barton. Thank you. We will now like to have the other 
three members of the panel come forward. We have Mr. 
Chipkevich, who is the Director of the Office of Railroad 
Pipeline and Hazardous Materials Investigations for the 
National Transportation Safety Board.
    We have Mr. Peter Guerrero, who is the Director of the 
Physical Infrastructure Program at the U.S. General Accounting 
Office; and we have Mr. James D. Anderson, who is the National 
Vice-Chairman of the National Association of Pipeline Safety 
Representatives.
    Gentlemen, we welcome you to the subcommittee, and your 
statements are in the record. We will give each of you 5 
minutes to summarize, and we will start with Mr. Chipkevich.

                 STATEMENT OF ROBERT CHIPKEVICH

    Mr. Chipkevich. Thank you, Chairman Barton, and members of 
the subcommittee. I am pleased to represent the National 
Transportation Safety Board before you today to discuss the 
pipeline safety issues.
    Pipelines carry more hazardous materials in the United 
States than any other form of transportation, and nearly 
200,000 miles of hazardous liquid pipelines, delivering 14.4 
billion barrels of petroleum products annually.
    More than 21 trillion cubic feet of natural gas is 
delivered through 2 million miles of pipelines. RSPA's pipeline 
safety recommendation acceptance rate of 70 percent is the 
lowest of all model administrations, and for many years, the 
Safety Board has been critical of RSPA's delay in providing 
needed pipeline safety improvements.
    We are encouraged, however, with recent RSPA action, 
particularly in areas of pipeline integrity, data collection, 
and environmental damage protection.
    Continued operation of pipelines with discoverable 
integrity problems has been a recurring issue in safety board 
investigations, and our recommendations in this area date back 
to 1987.
    Recently published PIMHCA rules will require integrity 
assessments for liquid pipelines in high consequence areas. 
Although the Safety Board provided favorable comments to much 
of this rule, we believe that pipeline integrity management 
programs must ensure that pipelines located outside high 
consequence areas are also adequately assessed and maintained, 
which was not addressed in the final rule.
    Another pipeline integrity issue, corrosion, is a leading 
cause of hazardous liquid pipeline failures. On December 27, 
2001, OPS issued a final rule that we believe will improve the 
effectiveness of corrosion protection requirements for all 
hazardous liquid pipelines, and addresses other issues of 
corrosion included in our open recommendations.
    The Safety Board has for some time found RSPA's data 
collection to be inadequate for trend analysis and pipeline 
operator performance evaluations. In May of 2001, OPS issued 
new accident reporting requirements for gas transmission 
pipelines, and in January of this year issued new accident 
reporting requirements for hazardous liquid pipelines.
    The new reporting requirements include information that the 
Safety Board believes will assist with operator evaluation and 
trend analysis. We understand that OPS is now working on 
improving the accident data reporting requirements for gas 
distribution systems, and implementing which would be very 
important a quality control system to be sure that the 
information reported on the accident reports is accurate.
    Excavation damage remains the leading cause of pipeline 
accidents, and as a result the NTSB accident investigations 
over the years we have issued numerous safety recommendations 
on this issue.
    We are aware of research that is intended from OPS, 
including improved pipeline location technologies, and improved 
inspection technologies for finding pipeline defects, real time 
monitoring to detect mechanical damage and leaks, and improved 
technology to avoid potential damage to underground facilities.
    We are hopeful that the ongoing research which addresses 
many of the Safety Board recommendations, will lead to 
increased excavation prevention safety.
    As previously mentioned, we are encouraged by much of the 
work that RSPA has undertaken. However, the Safety Board 
believes that insufficient progress has been made in the 
qualification and training requirements for personnel operating 
pipelines.
    In 1987 and 1996, respectively, the Safety Board 
recommended that OPS require operators to develop training and 
testing programs to qualify employees, and asked RSPA to 
complete its rulemaking and operator qualification, training, 
and testing standards, and to require operators to test 
employees on safety procedures they are expected to follow, and 
to demonstrate that they can correctly perform that work.
    In January 1999, in comments to an OPS rulemaking, the 
Safety Board noted that the proposed rules failed to adequately 
address qualification requirements, or include requirements for 
training and testing.
    The final rule issued in April 2001 allows individuals to 
be evaluated by oral or written examinations, observations 
during on-the-job or work history. While the rule allows 
individuals to be evaluated solely on their work history only 
until October of this year, operators will not be required to 
reevaluate each individual using additional criteria until the 
next scheduled evaluation.
    The rule also allows the operators to determine what the 
interval time should be between those evaluations. We believe 
that a qualification rule should require that pipeline 
operators be tested or trained and tested to assess the success 
of the training, and that periodic retraining be required.
    Mr. Chairman, that completes my statement and I would be 
happy to respond to any questions.
    [The prepared statement of Robert Chipkevich follows:]
Prepared Statement of Robert Chipkevich, Director, Office of Railroad, 
      Pipeline, and Hazardous Materials Investigations, National 
                      Transportation Safety Board
    Chairman Barton and Members of the Subcommittee, I am pleased to 
represent the National Transportation Safety Board before you today to 
discuss pipeline safety issues.
    Pipelines carry more hazardous materials in the United States than 
any other form of transportation. Nearly 200,000 miles of hazardous 
liquid pipelines deliver approximately 14.4 billion barrels of 
petroleum products annually, and more than 21 trillion cubic feet of 
natural gas are delivered through nearly 2 million miles of pipe. Since 
its creation in 1967, the Safety Board has issued 257 pipeline safety 
recommendations to the Research and Special Programs Administration 
(RSPA).
    RSPA's pipeline recommendation acceptance rate, 70 percent, is the 
lowest of all modal administrations, and for many years, the Safety 
Board has been critical of RSPA's delay in providing needed pipeline 
safety improvements. We are encouraged, however, with recent RSPA 
action, particularly in the areas of pipeline integrity, data 
collection, and excavation damage protection.
                           pipeline integrity
    The continued operation of pipelines with discoverable integrity 
problems has been a recurring issue in Safety Board investigations. The 
Safety Board first issued a pipeline integrity recommendation in 1987, 
as a result of investigations into three pipeline accidents--two in 
Kentucky and one in Minnesota. The Safety Board recommended that RSPA 
require periodic inspections or tests of pipelines to identify 
corrosion, mechanical damage, or other time dependent defects that may 
be detrimental to the continued safe operation of the pipelines. We 
also recommended that RSPA establish criteria for use in determining 
the frequency for performing inspections and tests.
    In this regard, final rules--Pipeline Integrity Management in High 
Consequence Areas--were recently published that will require integrity 
assessments for liquid pipelines in high consequence areas. The new 
rules will require operators to assess the integrity of pipelines using 
in-line inspection tools, pressure tests, or other technologies that 
are demonstrated to provide equivalent results. According to the rule, 
a pipeline operator must prioritize pipeline segments for baseline and 
continual assessments and determine schedules for those assessments, 
based on all risk factors that reflect risk conditions. These factors 
must include results of previous assessments, defects that could be 
found and their growth rates; pipe size, material, manufacturing 
information, coating type and condition, and seam type; leak, repair, 
and cathodic protection history; product transported; operating stress 
level; activities in the area; local environmental factors; geo-
technical hazards; and physical support of the segment. It is our 
understanding that Office of Pipeline Safety (OPS) is in the process of 
drafting integrity assessment rules that will apply to gas transmission 
pipelines.
    Mr. Chairman, the Safety Board has provided favorable comments to 
much of this rule. It is unfortunate, however, that it has taken 15 
years following the issuance of our 1987 safety recommendation for RSPA 
to act.
    As a result of Safety Board investigations, the Safety Board has 
also advocated the increased use of valve automation to reduce the 
consequences of pipeline failures. The OPS' integrity management rules 
will also require operators to evaluate the benefits of valve 
automation in pipeline systems. According to this rule, operators must 
consider the swiftness of leak detection and shutdown capabilities, the 
type of commodity carried, the rate of potential leakage, the volume 
that can be released, topography or pipeline profile, the potential for 
ignition, proximity to power sources, location of nearest response 
personnel, specific terrain between the pipeline segment and the 
affected area, and the benefits expected by reducing the spill size.
    Risk management principles, if properly applied, can be powerful 
tools to identify the risks to pipeline integrity and should lead 
operators to take action to mitigate those risks. Quantifying inputs 
into various risk management models, however, can be difficult and 
subjective. In a competitive environment, it may not be economically 
feasible for a pipeline operator to conduct assessment and mitigation 
activities to prevent a possible, but not inevitable, future pipeline 
failure. To ensure that the new rules for risk-based integrity 
management programs are effectively employed throughout the pipeline 
industry, it is imperative that RSPA establish an effective evaluation 
program and aggressively examine and monitor operators' pipeline 
integrity programs.
    An effective program will require significant, qualified personnel 
and intense attention from OPS. We note that the Administration's 
budget provides RSPA with resources for additional pipeline personnel 
that should be helpful in establishing and maintaining an effective 
program.
    In addition, the principles of risk management assign highest 
priorities to locations subject to the greatest damage or consequences. 
As a result, a risk-based integrity management program will direct 
priority resources to those areas. Pipeline integrity management 
programs must ensure that pipelines located outside high consequence 
areas are also adequately assessed and maintained. The Safety Board is 
concerned that this was not addressed in the final rule.
    Another pipeline integrity issue, corrosion, is a leading cause of 
hazardous liquid pipeline accidents. In 1987, the Safety Board 
recommended that requirements for corrosion protection include criteria 
against which liquid pipeline operators can evaluate the adequacy of 
cathodic protection systems. As recently as 1998, as a result of its 
investigation of a hazardous liquid pipeline accident in 1996 near 
Lively, Texas, the Safety Board urged RSPA to require hazardous liquid 
pipeline operators to determine the condition of pipeline coating when 
pipe is exposed and again asked them to include criteria against which 
the adequacy of cathodic protection systems can be evaluated. On 
December 27, 2001, OPS issued a final rule that we believe will improve 
the effectiveness of corrosion protection requirements for hazardous 
liquid pipelines, and addresses other issues included in our 
recommendations.
                            data collection
    As a result of Safety Board investigations, we have for some time 
been critical of RSPA's collection of accident data. We have found its 
data collection to be inadequate for trend analyses and pipeline 
operator performance evaluations. On May 8, 2001, OPS issued new 
accident reporting requirements for gas transmission pipelines. 
Additionally, on January 8, 2002, OPS issued new accident reporting 
requirements for hazardous liquid pipelines. The new reporting 
requirements include information that the Safety Board believes will 
assist with operator evaluation and trend analyses. We understand that 
OPS is now working on improving accident reporting requirements for gas 
distribution systems, and is implementing quality control procedures to 
improve the accuracy of accident data reports.
                           excavation damage
    Excavation damage remains a leading cause of pipeline accidents, 
and as a result of NTSB accident investigations we have over the years 
issued numerous safety recommendations regarding this issue. We are 
aware that OPS is funding research in the following areas:

 Improved pipeline location technologies,
 Improved inspection technologies to find pipe defects,
 Real time monitoring to detect mechanical damage and leaks,
 Improved trenchless technologies to avoid potential damage to 
        underground facilities, and
 Technologies to increase the security of pipelines.
    Excavation damage prevention is an item on the Board's ``Most 
Wanted'' list of safety issues, and we are hopeful that the on-going 
research, which addresses many Safety Board recommendations, will lead 
to increased excavation prevention safety.
                qualification and training requirements
    Mr. Chairman, we mentioned previously, we are encouraged by much of 
the work that RSPA has undertaken. However, the Board believes 
insufficient progress has been made in the qualification and training 
requirements for personnel operating pipelines.
    Following the 1987 Kentucky and Minnesota accidents, the Safety 
Board recommended that OPS require operators to develop training and 
testing programs to qualify employees. Following a 1996 accident in San 
Juan, Puerto Rico, the Safety Board asked RSPA to complete its 
rulemaking on operator qualification, training, and testing standards. 
The Safety Board also asked RSPA to require operators to test employees 
on safety procedures they are expected to follow and to demonstrate 
that they can correctly perform the work.
    In January 1999, the Safety Board commented on OPS' rulemaking 
regarding operator qualifications. Our comments noted that the proposed 
rules failed to adequately address qualification requirements or 
include requirements for training and testing. The final rule, issued 
in April 2001, allows individuals to be evaluated by written or oral 
examinations, observation during on-the-job performance, or work 
history. The rule allows individuals to be evaluated solely by their 
work history only until October 28, 2002, and operators will not be 
required to re-evaluate each individual using additional criteria until 
the next scheduled evaluation. In addition, the rule allows operators 
to determine what the interval time should be between evaluations. It 
is conceivable that a pipeline employee may continue to perform 
indefinitely safety-related tasks based solely on work history.
    Following the issuance in April 2001 of the final rule on operator 
qualifications, the Safety Board closed its recommendations as 
unacceptable response. We believe a qualification rule should require 
that pipeline employees be trained and tested to assess the success of 
the training, and that periodic retraining should be provided.
    Mr. Chairman, that completes my statement and I will be happy to 
respond to any questions you may have.

    Mr. Barton. Thank you, Mr. Chipkevich.
    We will now hear from Mr. Peter Guerrero, and your 
statement is now in the record, and we would ask that you 
summarize it in 5 minutes.

                   STATEMENT OF PETER GUERRERO

    Mr. Guerrero. Thank you, Mr. Chairman. I appreciate the 
opportunity to testify here today on pipeline safety. 
Historically, as you have heard, the Office of Pipeline Safety 
has been slow to take action to improve its oversight of the 
pipeline industry, and to implement critical safety 
improvements. However, recently, the agency has initiated 
several actions, including requiring pipeline operators to 
implement integrity management programs that offer the 
potential to improve safety. Today, I will discuss OPS's 
progress in implementing these initiatives, its responsiveness 
to outstanding mandates and recommendations, and the 
outstanding challenges it faces.
    OPS has moved forward, as you heard, with a new risk-based 
approach that requires operators to focus on the greatest risks 
to pipeline safety. This is called integrity management, and 
requires pipeline owners and operators to conduct a baseline 
assessment of all pipelines that could affect high consequence 
areas, to periodically reassess these segments, to take prompt 
action to address problems, and to develop measures of program 
effectiveness.
    OPS has issued final rules requiring these programs for 
operators of hazardous liquid pipelines and plans to issue a 
final rule for operators of natural gas transmission pipelines 
by the end of the year.
    OPS has also made progress in other areas. First, it is 
taking action to improve its safety data. In the past its data 
has been limited and often inaccurate. As a result, OPS could 
not identify and focus on the causes of accidents, analyze 
industry trends, and compare the safety performance of 
operators. The revisions to incident reporting forms, as well 
as new procedures, should address the underlying problems. 
However, it will be several years before the agency has 
sufficient data to analyze trends.
    Second, OPS is allowing States to play a larger role in 
overseeing pipeline safety. We believe that this makes sense. 
State pipeline safety inspectors are an invaluable resource for 
OPS because they are familiar with pipeline safety issues 
unique to their States. Currently, 11 States, up from 8, are 
qualified to participate in all oversight activities and an 
additional four States can participate in short term oversight 
projects.
    Third, OPS appears more willing to use fines for safety 
violations, thereby reversing its former trend of relying more 
heavily on voluntary compliance. In the 1990's, OPS had 
dramatically decreased the number and amount of fines. We 
questioned this change in enforcement policy and recommended 
that the agency determine the impact of the reduced use of 
fines on safety. In response to our recommendations and other 
criticisms, OPS has changed its enforcement policies to make 
better use of its full range of enforcement tools, including 
fines for violations. However, OPS still needs to develop 
better information on the effect its enforcement approaches are 
having on pipeline safety.
    I would now like to turn to OPS's record in responsiveness 
in implementing pipeline safety improvements.
    As you know, OPS--as you heard from my colleague here--has 
one of the lowest records of implementing Safety Board 
recommendations, such as requiring periodic inspection of 
pipelines. We remain concerned that a significant number of 
recommendations and requirements that deal with critical safety 
issues are not yet complete, many of them more than a decade 
old. As of February of this year, OPS has not implemented 42 
recommendations and 9 statutory requirements. OPS hopes to 
fulfill most of these by the end of this year.
    Mr. Chairman, I have highlighted for you some of OPS's 
recent actions that demonstrate their willingness to improve 
safety oversight.
    However, the agency has a number of significant challenges 
that it faces, and I want to enumerate these. First, it needs 
to develop performance measures for the integrity management 
program. We believe that such measures are essential to 
determining whether the new approach is successful and what 
improvements may be needed.
    Second, it needs to ensure that it has sufficient resources 
and expertise to oversee more than 400 integrity management 
programs in various stages of development. The integrity 
management approach represents a fundamental shift in how OPS's 
oversees the pipeline industry. Inspectors used to a checklist 
approach will face a number of challenges, such as becoming 
familiar with a variety of inspection techniques and 
determining when it is appropriate to use them, and how to 
interpret the results.
    Third, OPS needs to ensure that integrity management 
programs are enforced consistently and effectively. To do so, 
they will need to develop a comprehensive set of inspection 
protocols that provide clear criteria for inspections and for 
making enforcement decisions.
    Finally, OPS needs to issue a final rule for natural gas 
transmission pipelines. To do so, it must resolve a number of 
technical issues. For example, many natural gas transmission 
pipelines cannot easily accommodate internal inspection devices 
and will require alternative inspection approaches.
    In conclusion, we are encouraged by OPS's recent efforts to 
improve its oversight of pipeline safety, and believe that 
those are steps in the right direction. However, significant 
challenges remain. Among other things, OPS needs better data 
and meaningful performance measures, sufficient resources and 
expertise to implement its integrity management approach, 
partnerships with States, and greater assurance that its 
enforcement approaches are improving pipeline safety. We 
believe that it is imperative for OPS to meet these challenges 
to ensure the safety of the Nation's pipelines.
    Mr. Chairman, this concludes my statement and I would be 
pleased to answer any questions at the end of this panel. Thank 
you.
    [The prepared statement of Peter Guerrero follows:]
       Prepared Statement of Peter Guerrero, Director, Physical 
             Infrastructure, U.S. General Accounting Office
    Mr. Chairman and Members of the Subcommittee: We appreciate this 
opportunity to testify on the Office of Pipeline Safety's (OPS) 
oversight of the safety of our nation's pipeline infrastructure. Our 
statement is based on reports we issued in May 2000 and September 2001, 
as well as ongoing work for Mr. Dingell of this 
Subcommittee.1
---------------------------------------------------------------------------
    \1\ U.S. General Accounting Office, Pipeline Safety: The Office of 
Pipeline Safety Is Changing How It Oversees the Pipeline Industry, GAO/
RCED-00-128 (Washington, D.C: May 15, 2000) and Pipeline Safety: 
Progress Made, but Significant Requirements and Recommendations Not Yet 
Complete, GAO-01-1075 (Washington, D.C.: September 28, 2001).
---------------------------------------------------------------------------
    OPS oversees the safety of 2.2 million miles of pipelines that 
transport potentially dangerous materials, such as oil and natural gas. 
Historically, OPS has been slow to take action to improve its oversight 
of the pipeline industry and implement critical pipeline safety 
improvements. As a result, OPS has the lowest implementation rate of 
any transportation agency for recommendations from the National 
Transportation Safety Board (the Safety Board). This lack of 
responsiveness has prompted Congress to repeatedly mandate basic 
elements of a pipeline safety program, such as requirements to 
periodically inspect pipelines. In recent years, OPS has initiated 
several actions to improve its oversight of the pipeline industry, 
including requiring ``integrity management'' programs for individual 
operators to assess their pipelines for risks, take action to mitigate 
the risks, and develop program performance measures. We are here today 
to discuss (1) OPS' progress in implementing integrity management and 
other initiatives, (2) OPS' progress in responding to recommendations 
from the Safety Board and statutory requirements, and (3) issues that 
are critical to the future success of OPS' initiatives to improve the 
safety and oversight of the pipeline industry.
    In summary: OPS has moved forward with its new risk-based 
regulatory approach--integrity management--that requires operators to 
develop programs that focus on the greatest risks to their pipelines. 
This approach differs significantly from its traditional approach of 
inspecting pipelines for compliance with uniform regulations 
establishing minimum standards. OPS plans to review and monitor these 
programs, which will be unique for each of more than 400 hazardous 
liquid and natural gas transmission operators. OPS has issued final 
rules requiring the phased implementation of these programs for 
operators of hazardous liquid pipelines. The agency also plans to issue 
a final rule for operators of natural gas transmission pipelines by the 
end of 2002.
    OPS has also made progress on other initiatives that are intended 
to improve the agency's oversight of the pipeline industry. These 
initiatives include:

 Revising forms and procedures to collect more complete and 
        accurate data, which will enable OPS to better assess the 
        causes of incidents and focus on the greatest risks to 
        pipelines. According to the Safety Board and industry 
        associations, these actions address the underlying problems 
        with OPS' data, such as limited data on the causes of 
        incidents. OPS hopes to implement most of its initiatives to 
        improve data in 2002. However, according to industry 
        associations, it may be several years before OPS has sufficient 
        data to thoroughly evaluate industry trends, especially for 
        hazardous liquid pipelines.
 Allowing more states to oversee a broader range of interstate 
        pipeline safety activities. State pipeline safety inspectors 
        are an invaluable resource for OPS because they are familiar 
        with pipeline safety issues unique to their states. OPS 
        responded to our May 2000 recommendations that the agency 
        better utilize this resource by allowing states to participate 
        in a wider range of oversight activities, such as reviewing 
        integrity management programs for pipelines in their individual 
        states.
 Increasing the use of fines, thereby reversing OPS' former 
        trend of relying more heavily on less severe corrective 
        actions. From 1990 through 1998, OPS decreased the number and 
        amount of fines while increasing the use of less severe 
        corrective actions, such as letters of concern. We questioned 
        this change in OPS' enforcement policy and recommended in May 
        2000 that the agency determine the impact of the reduced use of 
        fines on safety. According to OPS officials, the agency is not 
        able to determine this impact as we recommended because it does 
        not have sufficient data to link its compliance actions with 
        improvements in safety. Nevertheless, OPS determined that its 
        enforcement policy was perceived negatively and did not 
        adequately address safety concerns. OPS subsequently changed 
        its enforcement policy to make better use of its full range of 
        enforcement tools, including increasing the number and severity 
        of fines. According to OPS officials, the agency plans to 
        collect data that will allow it to link its compliance actions 
        with improvements in safety. We are evaluating OPS' response to 
        our recommendation.
    OPS has made progress in responding to recommendations from the 
Safety Board and statutory requirements, but still has not implemented 
some significant recommendations and requirements. In May 2000, we 
reported that OPS had the lowest rate of any transportation agency in 
responding to recommendations from the Safety Board and had not 
completed 22 out of 49 statutory requirements imposed since 1988. OPS 
has since improved its responsiveness to the Safety Board's 
recommendations and taken action on eight statutory requirements. 
However, some recommendations and requirements dealing with issues that 
are critical for pipeline safety--such as requiring pipeline operators 
to periodically inspect their pipelines--are more than a decade old and 
OPS still has not implemented them. According to OPS officials, the 
agency's ongoing initiatives should fulfill the majority of the open 
recommendations and requirements before the end of 2002.
    OPS faces major challenges in implementing its initiatives and in 
fulfilling the Safety Board's recommendations and statutory 
requirements. These challenges include (1) developing performance 
measures for the integrity management approach, (2) ensuring sufficient 
resources and expertise to oversee operators' integrity management 
programs, (3) providing consistent and effective enforcement of 
integrity management program requirements, and (4) issuing requirements 
for integrity management programs for operators of gas transmission 
pipelines. We are reviewing these issues as part of our ongoing work, 
and will address them in our final report.
                               background
    OPS regulates the safety of almost 2.2 million miles of pipelines, 
which is enough to circle the earth 88 times. There are three primary 
types of pipelines under OPS' jurisdiction. Natural gas transmission 
pipelines--about 322,000 miles--transport natural gas over long 
distances from sources to communities. An additional 1.7 million miles 
of natural gas distribution pipelines continue transporting the gas 
throughout the communities to consumers. Finally, about 155,000 miles 
of hazardous liquid pipelines generally transport crude oil to 
refineries and continue to transport the refined oil product, such as 
gasoline, to product terminals and airports.
    These pipelines transport the bulk of natural gas and petroleum 
products in the United States and are the safest mode for transporting 
these potentially dangerous commodities. Although pipeline incidents 
resulted in an average of about 24 fatalities per year from 1989 to 
2000, the number of pipeline incidents is relatively low when compared 
with those involving other forms of freight transportation. On average, 
about 66 people die each year in barge accidents, about 590 in railroad 
accidents, and about 5,100 in truck accidents. Despite the relative 
safety of pipelines, pipeline incidents can have tragic consequences, 
as evidenced by the incidents at Bellingham, WA, and Carlsbad, NM. 
These incidents, which caused 15 fatalities, highlighted the importance 
of pipeline safety and the need for more effective oversight by OPS.
    From 1989 through 2000, the total number of incidents per 10,000 
miles of pipeline decreased by 2.9 percent annually, while the number 
of major pipeline incidents (those resulting in a fatality, an injury, 
or property damage of $50,000 or more) per 10,000 miles of pipeline 
increased by 2.2 percent annually. (See fig. 1.) Over the same time 
period, pipeline mileage increased 1.6 percent annually from 1.9 to 2.2 
million miles of pipelines.

   Figure 1: Major and Total Incidents per 10,000 Miles of Pipeline 
[GRAPHIC] [TIFF OMITTED] T8508.001

    Traditionally, OPS carried out its oversight responsibility 
by requiring all pipeline operators to comply with uniform, 
minimum standards. Recognizing that pipeline operators face 
different risks depending on such factors as location and the 
product they carry, OPS began exploring the concept of a risk-
based approach to pipeline safety in the mid-1990s. In 1996, 
the Accountable Pipeline Safety and Partnership Act directed 
OPS to establish a demonstration program to test a risk-based 
approach. The Risk Management Demonstration Program went beyond 
OPS' traditional regulatory approach by allowing individual 
companies to identify and focus on risks to their pipelines. 
Since the program's initiation in 1997, OPS has approved six 
demonstration projects.

OPS HAS MADE PROGRESS IN IMPLEMENTING INTEGRITY MANAGEMENT PROGRAMS AND 
                           OTHER INITIATIVES

    Partly on the basis of OPS' experience with the Risk 
Management Demonstration Program, the agency has moved forward 
with a new regulatory approach that requires pipeline operators 
to comprehensively identify and address risks to the segments 
of their pipelines that are located in ``high consequence 
areas'' where a leak or rupture would have the greatest 
impact.2 This approach requires individual pipeline 
operators to develop and follow an integrity management 
program. Each program must contain specific elements, including 
a baseline assessment of all pipelines that could affect high 
consequence areas, periodic reassessment of these pipeline 
segments, prompt action to address any problems identified in 
the assessments, and measures of the program's effectiveness.
---------------------------------------------------------------------------
    \2\ For hazardous liquid pipelines, a high consequence area is 
defined as a populated area, an environmentally sensitive area, or a 
commercially navigable waterway. For natural gas transmission 
pipelines, OPS is developing a definition that focuses on populated 
areas.
---------------------------------------------------------------------------
    Although OPS has issued final rules requiring integrity 
management programs for operators of hazardous liquid 
pipelines, the agency has not issued a proposed rule for 
operators of gas transmission pipelines. In December 2000, OPS 
issued a final rule for operators of ``large'' hazardous liquid 
pipelines, defined as pipeline systems of at least 500 miles. 
Under this rule, individual operators were required by December 
31, 2001 to identify pipeline segments that can affect high 
consequence areas, and then develop a framework for their 
integrity management program and a plan for conducting baseline 
assessments by March 31, 2002. OPS issued a similar rule for 
operators of ``small'' hazardous liquid pipelines that are less 
than 500 miles long on January 16, 2002, with later deadlines. 
For natural gas transmission pipelines, OPS anticipates issuing 
a final rule in fall 2002.3
---------------------------------------------------------------------------
    \3\ OPS issued a proposed rule to define high consequence areas for 
natural gas transmission pipelines on January 9, 2002.
---------------------------------------------------------------------------
    OPS plans to review and monitor operators' programs for 
compliance with the integrity management requirements, but will 
not formally approve operator programs. OPS is currently in the 
first of a four-phase plan for reviewing and monitoring 
integrity management programs for operators of large hazardous 
liquid pipelines.4 In phase 1--scheduled to be 
completed by the end of April 2002--OPS is reviewing operators' 
identification of pipeline segments that impact high 
consequence areas. During phase 2--from July 2002 to July 
2004--OPS will inspect the more fully developed framework and 
assessment plans. After July 2004, OPS plans to monitor 
operators' implementation of their individual programs through 
periodic inspections in phase 3, and review and respond to 
notifications from operators of changes in their programs in 
phase 4.
---------------------------------------------------------------------------
    \4\ OPS anticipates following a similar process to review and 
monitor integrity management programs developed by operators of small 
hazardous liquid and natural gas transmission pipelines.
---------------------------------------------------------------------------
    OPS is hiring and training additional inspectors to review 
and monitor operators' programs. OPS had 56 inspectors in 
fiscal year 2001 and plans to hire an additional 30 
inspectors--a 54-percent increase--by the end of fiscal year 
2003. OPS plans to augment its inspection force with contractor 
and state support as it develops the necessary expertise to 
review and monitor operators' programs. OPS has also developed 
a list of training courses that will be required for federal 
and state inspectors, and it is currently scheduling this 
training. OPS officials anticipate that it will take about 2 
years to provide this training to all federal and state 
inspectors.
    In addition to the integrity management programs, OPS is 
making progress on other initiatives for improving data, 
involving states, and increasing the use of fines. These 
initiatives are intended to improve pipeline safety and the 
agency's oversight.

OPS Is Taking Action to Improve Data

    DOT's Inspector General, the National Transportation Safety 
Board, and others have reported that OPS' data on pipeline 
incidents and infrastructure are limited and sometimes 
inaccurate. For example, in the past, OPS' incident report 
forms have used only five categories of causes for incidents on 
natural gas distribution pipelines, four categories for those 
on natural gas transmission pipelines, and seven categories for 
those on hazardous liquid pipelines. As a result, about one-
fourth of all pipeline incidents were attributed to ``other 
causes,'' which limited OPS' ability to identify and focus on 
the causes of incidents. In addition, data on the amount of 
pipeline mileage in various infrastructure categories (such as 
age or size) are necessary for a meaningful comparison of the 
safety performance of individual pipeline companies. OPS did 
not require hazardous liquid pipeline operators to submit this 
type of data and did not collect complete data from natural gas 
pipelines. Finally, the information on incident reports filed 
by operators sometimes changes as the incident investigation 
proceeds. OPS did not have a procedure for ensuring that 
operators submitted revised reports when needed.
    OPS is taking action to collect data that will allow it to 
more accurately determine the causes of incidents, analyze 
industry trends, and compare the safety performance of 
operators. For example, OPS revised its incident report forms 
in 2001 for hazardous liquid and natural gas transmission 
incidents to include 25 categories of causes and plans to 
revise the form for natural gas distribution incidents by the 
end of 2002. Furthermore, OPS is assigning an inspector in each 
region to review incident report forms for completeness and 
accuracy, and has instituted new electronic notification 
procedures to ensure that operators submit revised incident 
reports, if necessary. OPS also plans to institute annual 
reports for hazardous liquid pipeline operators, and is in the 
process of revising annual report forms for all natural gas 
pipeline operators. Finally, OPS is conducting studies of 
incident information to improve its understanding of the causes 
of incidents. According to OPS officials, most of these 
improvements will be implemented for 2002 data.
    According to the Safety Board and industry groups, OPS' 
initiatives address the underlying data problems and will 
enable OPS to better understand the causes of incidents so the 
agency can focus its efforts to improve safety. However, 
officials from industry groups told us that it will be several 
years before OPS has sufficient data to analyze trends in 
incidents. Officials from the Safety Board also noted that 
these initiatives are merely a first step, and they emphasized 
that OPS should periodically reassess its forms and procedures 
and take steps to revise them as necessary. We are evaluating 
OPS' data improvement initiatives as part of our ongoing work.

States Are Taking a Greater Role in Overseeing Interstate Pipeline 
        Safety Activities

    OPS is allowing more states to help oversee a broader range 
of interstate pipeline safety activities. Although OPS relies 
heavily on state inspectors to oversee intrastate pipelines, it 
reduced its reliance on states to inspect interstate pipelines 
in the mid-1990s when it moved to a more risk-based, system-
wide approach to inspecting pipelines. At that time, OPS 
believed it would be too difficult to coordinate participation 
by individual states in the new inspection process. However, in 
our May 2000 report, we found that allowing states to 
participate in interstate pipeline safety inspections could 
improve pipeline safety by increasing the frequency and 
thoroughness of inspections to detect safety problems. 
Additionally, state pipeline safety inspectors are likely to be 
familiar with pipelines in their jurisdictions and the 
potential risks faced by these pipelines. We recommended that 
OPS work with state pipeline safety officials to determine 
which activities would benefit from state participation and, 
for states that are willing to participate, integrate their 
activities into the safety program. We also recommended that 
OPS allow state inspectors to assist in reviewing the integrity 
management programs developed by the companies that operate in 
their states to help ensure that these companies have 
identified and adequately addressed safety risks to their 
systems.
    OPS responded to our recommendations in 2001 by encouraging 
more states to oversee the safety of interstate pipelines in 
their states. These states may perform a broad range of 
oversight activities, such as inspections of new construction, 
oversight of rehabilitation projects and integrity management 
programs, incident investigation, standard inspections, and 
participation in nonregulatory program initiatives. Other 
states that want to participate on a smaller scale may apply 
for specific, short-term projects, such as inspecting new 
pipeline construction projects. As of January 2002, 11 states--
up from 8 in 2000--have been approved to participate in all 
oversight activities, and an additional 4 states have been 
approved to participate on short-term projects.5
---------------------------------------------------------------------------
    \5\ Arizona, California, Connecticut, Iowa, Michigan, Minnesota, 
New York, Ohio, Virginia, West Virginia, and Washington.
---------------------------------------------------------------------------

OPS Is Increasing its Use of Fines

    OPS is increasing its use of fines for safety violations, 
thereby reversing a trend of relying more heavily on less 
severe corrective actions. From 1990 to 1998, OPS decreased the 
proportion of enforcement actions in which it proposed fines 
from about 49 percent to about 4 percent. During this time, the 
agency increased the proportion of warning letters and letters 
of concern from about 33 percent to about 68 percent. OPS made 
this change in order to place more emphasis on ``partnering'' 
to improve pipeline safety rather than on punishing 
noncompliance. As of May 2000, OPS could not determine whether 
this approach was effective in maintaining compliance with 
safety regulations. Consequently, we recommended that DOT 
determine whether OPS' reduced use of fines had maintained, 
improved, or decreased compliance with pipeline safety 
regulations.
    According to OPS officials, the agency is not able to 
determine the impact of its compliance actions on safety as we 
recommended because it does not have sufficient data. 
Nevertheless, OPS concluded that its decreased reliance on 
fines was perceived negatively by the public and Congress, and 
that the letters of concern did not allow OPS to adequately 
address safety concerns. OPS subsequently changed its 
enforcement policy to make better use of its full range of 
enforcement tools, including increasing the number and severity 
of fines. According to OPS officials, the agency plans to 
collect data that will allow it to link its compliance actions 
with improvements in safety. We will follow up on OPS' progress 
in this area during our current review.

 OPS HAS NOT IMPLEMENTED SIGNIFICANT SAFETY BOARD RECOMMENDATIONS AND 
                         STATUTORY REQUIREMENTS

    OPS is taking action on open recommendations from the 
Safety Board and statutory requirements, but has still not 
implemented important recommendations and requirements. In May 
2000, we reported that OPS historically had the worst response 
rate--about 69 percent--of any transportation agency to Safety 
Board recommendations. These recommendations dealt with a 
variety of issues that are critical for pipeline safety, such 
as requiring operators to periodically inspect pipelines and 
install valves to shut down the pipeline in an emergency. Some 
of these recommendations were more than a decade old. OPS has 
been working to improve its responsiveness over the last 
several years by initiating activities in response to the 
recommendations and improving communications with the Safety 
Board. The Safety Board has been encouraged by OPS' efforts to 
improve its responsiveness, particularly in the areas of 
excavation damage, corrosion control, and data quality. 
However, the Safety Board remains concerned about the amount of 
time OPS has been taking to implement recommendations. As of 
February 2002, OPS had not implemented 42 recommendations, 
several of which date from the late 1980s and deal with issues 
considered critical to pipeline safety, such as requiring 
operators to inspect their pipelines.
    OPS maintains that its progress is better than the Safety 
Board indicates. According to OPS officials, the majority of 
the recommendations deal with integrity management and 
excavation damage prevention, which the agency's ongoing 
initiatives should fulfill before the end of 2002.
    We also reported in May 2000 that OPS had not implemented 
22 out of 49 statutory requirements that were designed to 
improve pipeline safety. Similar to the open Safety Board 
recommendations, several of these unfulfilled requirements 
dated from the late 1980s and early 1990s and were related to 
important pipeline safety issues, such as internal inspections 
and identification of pipelines in populated or environmentally 
sensitive areas. Since May 2000, OPS has been working to 
complete these requirements. As of February 2002, 8 of the 22 
requirements were closed as a result of OPS' actions, 9 
requirements were still open, and the remaining 5 were 
reclassified as ``closed'' because OPS considered them to be 
superseded by amendments or other requirements or because the 
agency did not believe it was required to take further action. 
OPS plans to fulfill the majority of the open requirements 
before the end of 2002.

       OPS FACES MAJOR CHALLENGES IN IMPLEMENTING ITS INITIATIVES

    In our ongoing work, we are examining several issues that 
could affect OPS' ability to implement its integrity management 
and data improvement initiatives and, ultimately, fulfill the 
Safety Board's recommendations and statutory requirements. 
These issues include (1) performance measures for the integrity 
management approach, (2) sufficient resources and expertise to 
oversee operators' integrity management programs, (3) 
consistent and effective enforcement of integrity management 
program requirements, and (4) requirements for integrity 
management programs for operators of gas transmission 
pipelines.
    Performance measures: In May 2000, we reported that OPS had 
not developed programwide performance measures for the Risk 
Management Demonstration Program, even though the act required 
such measures to demonstrate the safety benefits of the 
program. OPS still has not developed such measures. Despite the 
lack of quantifiable performance measures for the demonstration 
program, OPS moved forward with integrity management programs 
and faces the challenge of developing performance measures for 
this new approach to regulating pipeline safety. Such measures 
are essential to determine whether the new approach is 
successful and what improvements may be needed. However, OPS 
does not have a complete and viable database of information on 
pipeline incidents and an inventory of pipeline infrastructure 
on which to establish certain performance measures. OPS has 
taken steps to improve its data, but it may be several years 
before the agency can accumulate sufficient data to evaluate 
trends in the pipeline industry.
    Resources and expertise: Pipeline operators are in the best 
position to develop integrity management programs that are 
tailored to their pipelines; however, it is critical for OPS to 
have adequate resources and expertise to oversee the programs. 
After OPS issues a final rule on integrity management programs 
for natural gas transmission pipelines, the agency estimates 
that there will be more than 400 hazardous liquid and natural 
gas pipeline operators with individual programs in various 
stages of development. OPS must ensure that it has a sufficient 
number of inspectors to oversee these programs while 
maintaining its other oversight responsibilities. Moreover, 
while OPS has resolved to include states in reviewing and 
monitoring operators' programs, the agency faces a challenge to 
determine how best to leverage federal and state resources and 
provide training to state inspectors.
    Furthermore, OPS' integrity management initiative 
represents a fundamental shift in how it oversees the pipeline 
industry. Federal and state inspectors that are accustomed to 
using a checklist approach for inspecting pipelines for 
compliance with uniform regulations will have to be trained to 
evaluate programs that are unique to individual operators. For 
example, under the new requirements, operators may use a 
variety of inspection techniques to assess the safety of their 
pipelines. Inspectors must be familiar with all of these 
inspection techniques, know when it is appropriate to use them, 
and know how to interpret the results.
    Enforcement: The variability of individual operator 
programs will make it difficult for OPS to enforce the 
requirements of the integrity management program. OPS' 
integrity management requirements for hazardous liquid 
pipelines allow pipeline operators flexibility to design and 
implement integrity management programs based on pipeline-
specific conditions and risks.6 However, this 
flexibility will result in unique programs for each operator 
and require more judgment on the part of inspectors. To ensure 
that the program requirements are consistently and effectively 
enforced, OPS is developing a comprehensive set of inspection 
protocols that are intended to provide clear criteria to 
inspector staff for evaluating the adequacy of operator actions 
and making enforcement decisions. As noted previously, OPS 
believes its staff will need increased training and expertise 
to make these types of judgments.
---------------------------------------------------------------------------
    \6\ Pipeline operators must also maintain compliance with uniform 
regulation establishing minimum safety requirements.
---------------------------------------------------------------------------
    Final rule for natural gas transmission pipelines: OPS has 
issued the final rules requiring integrity management programs 
for operators of hazardous liquid pipelines; however, 
significant differences between natural gas transmission 
pipelines and hazardous liquid pipelines present challenges for 
OPS in developing a similar rule for operators of natural gas 
transmission pipelines. For example, to facilitate the movement 
of natural gas under pressure, transmission pipelines tend to 
vary more in diameter than hazardous liquid pipelines. These 
variations make it more difficult for natural gas transmission 
pipelines to accommodate internal inspection devices. The 
Interstate Natural Gas Association of America estimates that 
about 45 percent, or about 145,000 miles, of natural gas 
transmission pipelines would require alternative inspection 
methods because modifying the pipelines to accommodate internal 
inspection devices would not be feasible. OPS plans to identify 
alternative inspection methods that would be effective in 
assessing the integrity of these pipelines. OPS has 8 months to 
resolve this issue if it is to meet the goal of issuing a final 
rule by the end of 2002.

                              OBSERVATIONS

    We are encouraged by OPS' recent efforts to improve its 
oversight of pipeline safety and believe they are steps in the 
right direction. However, a number of challenges remain. These 
challenges include developing performance measures for the 
integrity management approach, ensuring sufficient resources 
and expertise to oversee operators' integrity management 
programs, providing consistent and effective enforcement of 
integrity management program requirements, and issuing 
requirements for integrity management programs for operators of 
gas transmission pipelines. It is imperative for OPS to meet 
these challenges to ensure the safety of the nation's 
pipelines.
    Mr. Chairman, this concludes my testimony. I would be 
pleased to answer any questions you or Members of the 
Subcommittee may have.

                      CONTACTS AND ACKNOWLEDGMENTS

    For information about this testimony, please contact Peter 
F. Guerrero at (202) 512-4907 or [email protected]. This 
statement is available on GAO's home page at http://
www.gao.gov. Individuals making key contributions to this 
testimony were Helen Desaulniers, Susan Fleming, Judy 
Guilliams-Tapia, Michael Horton, Wyatt Hundrup, and Sara 
Vermillion.

    Mr. Barton. Thank you.
    We would now like to hear from Mr. Anderson, and your 
testimony is in the record, and we would ask you that you 
summarize it in 5 minutes.

                 STATEMENT OF JAMES D. ANDERSON

    Mr. Anderson. Yes, sir. Mr. Chairman and members of the 
subcommittee, we are pleased to file this document addressing 
pipeline safety reorganization. The National Association of 
Pipeline Safety Representatives is an organization of each 
States' regulatory oversight pipeline safety personnel.
    We represent the States, including the District of Columbia 
and the Commonwealth of Puerto Rico, pipeline safety directors, 
managers, and inspectors, and technical personnel responsible 
for assuring that pipelines are operating in a manner that 
assures safety to the public.
    NAPSR's mission is to strengthen States' pipeline safety 
programs for promotion of improved pipeline safety standards, 
education, training, and technology. Several initiatives have 
been and are ongoing.
    First and foremost is damage prevention. The leading cause 
of pipeline failure is third-party damage. NAPSR believes that 
the best practices as identified in the report: ``Common 
Ground: Study of One-Call Systems and Damage Prevention Best 
Practices,'' should be used and encourages this subcommittee to 
support States' adoption and implementation of the best 
practices into State and private stakeholder's underground 
facility damage prevention programs.
    In addition to supporting the adoption of the best 
practices, we encourage the subcommittee to increase funding 
from $1 million to $2 million for the States' One-Call Grants 
that are available to the State's pipeline safety programs. 
These grant monies are utilized to enhance various projects and 
programs in the States.
    Data collection. Compiling records of third-party damages 
is another damage prevention initiative. We believe this is an 
important step to better identify the causes of damages to 
pipelines and other underground facilities.
    This data collection will focus damage prevention efforts 
and campaigns toward those specific problems. We support the 
use of Federal grant monies from general revenue funds for 
damage prevention awareness campaigns and voluntary data 
gathering efforts.
    Public Education/First Responders. Finally, in an issue 
that is related to pipeline damage, NAPSR supports the use of 
damage prevention monies to support efforts toward public 
education and/or training to first responders.
    Due to their emergency response capabilities, first 
responders, local law enforcement agencies and fire 
departments, are usually the first personnel to arrive on the 
scene of a pipeline failure.
    If properly trained, their abilities to quickly arrive at 
the scene should enhance safety by proper assessment of the 
situation and maintaining a safety zone around the area when 
pipeline personnel arrive.
    Security. NAPSR supports the new security and anti-
terrorism legislation measures. We believe it is important to 
have a consistent, national policy developed and identified 
that, in cooperation with the pipeline industry and regulators, 
will establish guidelines and standards for pipeline security 
that are easily recognizable throughout the country.
    For that reason, we support designation of the United 
States Department of Transportation's Office of Pipeline Safety 
as the Federal agency to take the lead in pipeline security 
matters.
    Operator Qualification. NAPSR supports the qualification of 
pipeline personnel. Members of our association, in cooperation 
with the pipeline industry, associations, and other regulatory 
personnel, participated in the negotiated rulemaking process 
that created the current Federal regulations for qualification 
of operator personnel.
    National Mapping System. The current voluntary National 
Mapping Program has not been successful in obtaining the 
participation of the pipeline operators needed to produce a 
national map of pipeline facilities.
    For this reason, we would support mandatory participation 
by pipeline operators in a national mapping system. However, 
with the events of September 11 in mind, we believe this 
information should be treated as pipeline security sensitive 
information with appropriate limitations placed on access, 
supplied on a need-to-know basis and not a right-to-know basis.
    Amendments to H.R. 3609 Regarding Emergency Waivers. There 
has been an amendment to Section 60118 offered that would give 
the State authority the ability to waive compliance from the 
safety standard, in emergencies as determined by the State, and 
provides a shorter timeframe for approval than is currently 
allowed.
    The State authority would have to notify the Office of 
Pipeline Safety within 48 hours, and the Office of Pipeline 
Safety would have 10 days to direct the State to rescind the 
waiver.
    State Jurisdiction for Interstate Pipelines. NAPSR supports 
and encourages willing States' oversight and participation in 
interstate regulatory activities of those facilities in their 
States.
    The Federal and State partnership is a cornerstone for 
assuring uniform implementation of pipeline safety programs 
nationwide.
    The ability to inspect these facilities using OPS 
guidelines and training will assist OPS in performing more 
frequent and thorough inspections than have normally been 
performed by OPS in the past.
    In summary, in addition to our specific comments, NAPSR 
believes that a strong and equal partnership between the States 
and OPS is vital to assure the highest level of pipeline safety 
possible.
    Continued support by Federal grant in aid funding to the 
States will continue to protect the Nation's infrastructure. 
Thank you very much.
    [The prepared statement of James D. Anderson follows:]
   Prepared Statement of James D. Anderson on Behalf of the National 
             Association of Pipeline Safety Representatives
    Mr. Chairman and members of the Subcommittee, we are pleased to 
file this document pertaining to the Pipeline Safety Reauthorization. 
The National Association of Pipeline Safety Representatives (NAPSR) is 
an organization of each States' regulatory oversight pipeline safety 
managers. We represent the state (including the District of Columbia 
and the Commonwealth of Puerto Rico) pipeline safety directors, 
managers, inspectors, and technical personnel responsible for ensuring 
that pipelines are operated in a manner that ensures the safety of the 
public. NAPSR's mission is to strengthen states' pipeline safety 
programs through promotion of improved pipeline safety standards, 
education, training, and technology. We are the ``state agency 
partners'' noted by Ms. Ellen G. Engleman, Administrator of DOT's 
Research and Special Programs Administration in her statements at the 
Subcommittee on Highways and Transit's hearing for HR3609 on February 
13, 2002. The various states' pipeline safety programs directly 
regulate 90% of the pipelines and liquefied natural gas facilities in 
the country.
    The Association supports, encourages, develops, and enhances 
pipeline safety, through the Federal/State Pipeline Safety programs as 
established and defined by the Natural Gas Pipeline Safety Act of 1968, 
the Hazardous Liquids Pipeline Safety Act of 1979, and all subsequent 
amendments. This partnership has been the most successful relationship 
between states' and the federal government in providing security in 
supply and safety to the public.
                           damage prevention
    The leading cause of pipeline failures is third party damage. NAPSR 
believes that the ``best practices'' identified in the report, Common 
Ground: Study of One-Call Systems and Damage Prevention Best Practices 
should be used and encourages this Subcommittee to support states' 
adoption and implementation of the ``Best Practices'' into state and 
private stakeholder underground facility damage prevention programs. 
The Common Ground Study was initiated by the U.S. Department of 
Transportation's Office of Pipeline Safety (an element of RSPA). This 
study developed ``Best Practices'' by consensus agreement of 160 
individuals representing a wide range of interests, organizations, and 
viewpoints on preventing damage to underground facilities. The existing 
``Best Practices''' in the report are real world experiences that can 
help prevent damage to all underground facilities. Several of our NAPSR 
members participated in the study and release of the final report to 
members of Congress.
    In addition to supporting adoption of the ``Best Practices'', we 
would encourage the Subcommittee to increase funding from $1 million to 
$2 million for the State One-Call Grants, that are available to the 
state pipeline safety programs. These grant monies are utilized to 
enhance various individual projects and programs in the states. The 
programs and projects supported by the grant monies are developed on 
the state level and are initiatives that regulators in the field 
believe are very effective. Additional support of these types of 
programs would help us address specific needs that have been identified 
in our states.
                            data collection
    Compiling records of third party damages is another damage 
prevention initiative. We believe this is an important step to better 
identify the causes of damage to pipelines and other underground 
facilities. This data collection will focus damage prevention efforts 
and campaigns toward those specific problems. We therefore encourage 
efforts toward compilation of information on damage to pipelines so 
that data can be used to reduce third-party damage. We support the use 
of federal grant monies from general revenue funds for damage 
prevention awareness campaigns and voluntary data gathering efforts. 
This is a wise investment in determining the causes of all underground 
facility damages. The Common Ground Alliance (CGA), a national non-
profit damage prevention organization, has developed public education/
awareness materials that can be used by anyone nationwide. The CGA 
organization is continuing its damage prevention efforts through data 
collection, education and best practices and we encourage this broad-
based national approach to addressing damage to all underground 
facilities. One of our NAPSR members serves on the CGA Board of 
Directors as the ``State Regulator Board'' member and others on various 
CGA Committees.
                   public education/first responders
    Finally, in an issue that is related to pipeline damage, NAPSR 
supports the use of damage prevention monies to support efforts toward 
public education and/or training to ``first responders''. Due to their 
emergency response capability, first responders (local law enforcement 
agencies and fire departments) are usually the first personnel to 
arrive on the scene of a pipeline failure. If properly trained, their 
ability to quickly arrive at a scene could enhance safety by proper 
assessment of the situation and making the area safe until pipeline 
personnel arrive. In addition, training of the first responders would 
enhance the coordination of efforts with pipeline personnel at the 
scene and further allow the pipeline personnel to concentrate their 
efforts on making the area safe.
                                security
    NAPSR supports the new security and anti-terrorism legislation 
measures. We believe it is important to have a consistent, national 
policy developed/identified that, in cooperation with the pipeline 
industry and regulators, will establish guidelines and standards for 
pipeline security that are easily recognizable throughout the country. 
For that reason, we support designation of the U.S. Department of 
Transportation's Office of Pipeline Safety as the Federal agency to 
take the lead in pipeline security matters. Absent a lead Federal 
agency and national guidelines/standards, it will be almost impossible 
to coordinate security efforts and communication across the nation.
                  qualification of pipeline operators
    NAPSR supports the qualification of pipeline personnel. Members of 
our association (in cooperation with the pipeline industry, 
associations, and other regulatory personnel) participated in the 
negotiated rulemaking process that created the current Federal 
regulations for qualification of operator personnel. Current 
regulations require that operator qualification plans were to be 
developed by April 27, 2001, and the personnel qualified by October 28, 
2002. Therefore, qualification of the pipeline personnel is being 
conducted at this time. We believe the current operator qualification 
process established by Subpart N in Part 192 of the Federal Pipeline 
Regulations should be allowed to continue and regulatory over-site of 
the qualification of operations personnel be evaluated before the 
requirements are changed. We would support the addition of programs for 
the qualification of pipeline product flow controllers.
                        national mapping system
    The current voluntary National Mapping Program has not been 
successful in obtaining the participation of the pipeline operators 
needed to produce a national map of pipeline facilities. For this 
reason, we would support mandatory participation by pipeline operators 
in a National Mapping System. However, with the events of September 
11th in mind, we believe this information should be treated as pipeline 
security sensitive information with appropriate limitations placed on 
access (supplied on a ``need-to-know'' basis, not on a ``right-to-
know'' basis).
            amendment to hr3609 regarding emergency waivers
    There has been an amendment to Section 60118 offered that would 
give the ``State authority'' the ability to waive compliance from the 
safety standard, in emergencies as determined by the state, and 
provides a shorter time frame for approval than is currently allowed. 
The State authority would have to notify DOT within 48 hours and DOT 
would have 10 days to direct the state to rescind the waiver. NAPSR 
believes this provision is needed and supports the amendment. Even 
though occurrences are rare, when certain emergencies occur, quick 
action is needed to continue or quickly restore service that may not 
fully comply with the regulations. This amendment would allow the State 
authority to determine those emergencies and to take needed action when 
consistent with pipeline safety and allow quick receipt of notice from 
DOT.
              state jurisdiction for interstate pipelines
    NAPSR supports and encourages willing states' oversight and 
participation in interstate regulatory activities of those facilities 
in their states after meeting OPS requirements. The ability to inspect 
these facilities using OPS guidelines and training will provide 
assistance to the OPS in performing more frequently and thorough 
inspections than have normally been performed due to lack of OPS 
resources. The states have the ability due to their location to respond 
in an emergency and make the area safe.
                                summary
    In addition to our specific comments, NAPSR believes that a strong, 
and equal, partnership between the states and OPS is vital to assure 
the highest level of pipeline safety possible. Continued support by 
federal grant in aid funding to the states will continue to protect the 
nation's infrastructure. The people in the NAPSR organization are 
directly involved in assuring the safety and security of a large 
portion of our nation's pipeline system. We appreciate the opportunity 
to supply our input to this important legislation and give our support 
to reauthorize the pipeline safety program.

    Mr. Barton. Thank you, Mr. Anderson, and the Chair would 
recognize himself for the first 5 minutes of questions.
    Ms. Engleman, would it be fair to say that prior to 1996 
that the theory in pipeline safety was to catch them after the 
fact and punish them?
    And that since 1996, we have tried to change the theory to 
work with the pipeline industry before the fact to prevent the 
accidents in the first place?
    Ms. Engleman. Yes, sir, it is. Prior to that time, there 
was an approach where one would inspect and one would look at a 
checklist, and its ability, exclusive of the opportunity for 
proactive performance on safety measures.
    From that, there was a time if you will--and I can show you 
a time line. If you look at the time line that we are 
presenting here, you will see a trend that has evolved, and we 
are continuing to operate with pipeline inspections, and all 
regulations are in effect and in force.
    But as you can see the trend, we are adding both the 
security and local police involvement, and attention to the 
environment, and a list of implementations, and damage 
prevention issues.
    Mr. Barton. Now, the number of incidents that has been 
reported, there is a chart somewhere of pipeline incidents, and 
if you could put that back up. There you go. Now, that is based 
on a period that begins in 1986, and goes to 2001.
    But what we are really interested in is the period after 
1996, and as we change the theory. Now, I am not a 
statistician, but it looks to me just looking at 1997, 1998, 
1999, and 2000, and 2001, that the blue line stops and the 
trend line is obviously down in terms of the number of 
incidences.
    The gray line, the gas distribution pipeline, honestly I 
would have to say is going up some, and then the bottom line, 
the gas transmission pipeline, I would say is basically 
slightly--I would say it is neutral or slightly up ahead 1 year 
in 1998 that it definitely went up.
    So how many years do you think your agency would need to 
transition to this need theory before you could really give it 
a fair evaluation?
    Ms. Engleman. Sir, I don't have a specific number to give 
you. I can only say that unfortunately accidents do happen, and 
when one happens, it affects us obviously statistically.
    However, I do believe that the overall trend of using a 
holistic approach and using performance metrics will ensure 
that we can eliminate as many accidents as can be eliminated.
    If I can just make reference to one issue. A few years ago 
I had the privilege to become a commissioned officer in the 
Navy Reserves; and a lesson that I was told at that time in 
leaving the civilian world is as follows.
    In the Navy, 98 percent does not give them a minus. It 
means that two people were hurt or killed, or two people were 
affected. So our goal will always be 100 percent. Whether we 
can achieve it in 2 years or 4 years, or ever, I can't address.
    But I will say that when we look at a holistic approach, 
and when we implement a systematic approach for liquid and gas, 
I believe the trend will continue to go downward.
    Mr. Barton. Now, much has been made of the fact that a 
number of recommendations and mandates have not been 
implemented. I won't comment on that other than to say that I 
wish we would hold EPA to the same standards as they have--it 
is appalling of the number of Congressional mandates that they 
have not attempted to implement in the last 10 years.
    I want to go to you, Mr. Chipkevich. There are a number of 
outstanding national transportation safety board 
recommendations that have been made through the OPS. I am told 
that as they respond that your organization as a rating system 
where you rate the responses as open-accessible, open-
unaccessible. Is that true?
    Mr. Chipkevich. Yes, sir.
    Mr. Barton. Based on the responses that have actually been 
made to your agency, could you give us an idea of how many of 
those responses your agency considered acceptable, and how many 
they considered to be unacceptable?
    Mr. Chipkevich. Overall, the acceptance rate has been a 
little over 80 percent, 82 percent.
    Mr. Barton. So, 82 percent acceptable, and 18 percent 
unacceptable?
    Mr. Chipkevich. Yes, sir.
    Mr. Barton. What kind of coordination or communication, if 
any, do you have in the drafting stage with OPS before they 
actually make a formal recommendation? Is there some 
interchange before the fact?
    Mr. Chipkevich. When we conduct our accident investigation, 
we identify and parties participate in our investigation 
through the entire fact finding and the technical reviews of 
our accident data.
    We do ask for input from all parties, including the 
regulatory organizations, like RSPA, about any of their 
proposed conclusions, and the types of recommendations that 
they think would be effective, and also their recommendations 
on probable cause.
    So we do seek their input when we are looking at types of 
recommendations, yes, sir.
    Mr. Barton. And generally would you say that OPS attempts 
to work with your agency are positive and productive, or 
negative and unproductive?
    Mr. Chipkevich. I think over the last couple of years it 
has been very positive. We have had several meetings with them 
to talk about the recommendations in the other areas. There has 
been a lot of positive movement in some of those 
recommendations, and in particular in the last 2 years.
    Mr. Barton. Finally, Ms. Engleman, there are a number of 
members on this subcommittee that when we come to drafting a 
bill that we are going to want to move this back toward the old 
catch-them-after-the-fact regulatory approach. Do you think 
that is a good idea or a bad idea?
    Ms. Engleman. Sir, we don't have to do either/or, because 
please note that the regulations remain in effect as we go 
forward with a holistic principle. If you compare what we are 
looking at, say, in one health's system, I think it is 
important to continue with the holistic, systematic approach.
    After all, an EKG cannot tell you if you have diabetes, any 
more than a mammogram can tell you if you have a disease other 
than what it is created for.
    So I believe the holistic, systematic approach is 
appropriate to continue the level of work, and so please again 
keep in mind that this is added to the regulations. This is in 
addition to the regulations which we will continue to enforce 
and enforce successfully.
    Mr. Barton. I am going to interpret that that you don't 
want to go back to the old approach, and that we have 
regulations on the books that have to be enforced, but at the 
same time it is a good idea to try to work to prevent accidents 
in the first place.
    Ms. Engleman. Yes, sir.
    Mr. Barton. Good enough. Mr. John.
    Mr. John. Thank you, Mr. Chairman. Ms. Engleman, at the 
time of the GAO report back in 2000, your office or the OPS 
office was moving to really discontinue the use of the States 
to help them conduct their inspections of the interstate 
pipeline.
    This brought obviously a great deal of concern amongst 
Members of Congress and the States. And since 2000, I think 
that OPS has taken steps to restore some of the relationship 
that they have had with the States.
    As it relates to your integrity management approach, how 
exactly are you going to integrate the States--question one--as 
to your plans; and second, when are the State inspectors going 
to receive any training as it relates to your new program, or 
your program?
    Ms. Engleman. Thank you, sir. The States are our most 
significant partners in our goal of pipeline safety. With 
approximately 400 State Inspectors, we add to that 89 Federal 
Inspectors, or almost 500 field inspectors that we can utilize.
    The field inspectors have an average of 20 years of 
experience each. That gives us 9,500 man-years of experience to 
put to task, and it is a critical aspect of how valuable our 
State partnerships can be.
    Mr. John. So you feel that a move back toward a partnership 
is a good thing, which is contrary to what would happen prior 
to just 2 years ago?
    Ms. Engleman. Yes, sir. We support State partnerships and 
try exceedingly hard to get input. Please note that the States 
participate with us in all of our rulemaking, and they 
participate in many of our inspections.
    They have access to the data that we have, and we 
participate in side-by-side training. We utilize the 
Transportation Safety Institute in Oklahoma, which is again 
part of the RSPA program.
    And we do the same training for the State inspectors as we 
do with our Federal inspectors. To answer your second question, 
continued training of State inspectors and increased training 
for them is part of our plan.
    Mr. John. Well, I think that is a positive move toward the 
safety inspections. Mr. Chipkevich, is it the authority of the 
NTSB or the responsibility of NTSB to inspect accidents that 
happen in pipeline incidents across the country; is that 
correct?
    Mr. Chipkevich. To investigate accidents, yes.
    Mr. John. Yes, to investigate accidents. It is my 
understanding that the two accidents that were referred to 
several times up here by some of my colleagues, the one in 
Washington in 1999, and the one in Carlsbad, New Mexico, in 
2000, that you have not issued a final report as to findings of 
what went on, and how we can use some of these findings to 
enter into the debate as we develop a piece of legislation.
    Can you maybe expand on why we have not received a final 
report on your findings?
    Mr. Chipkevich. Yes, sir. In the Bellingham accident 
investigation, there was a significant delay because of a 
criminal investigation that was ongoing, and almost immediately 
from the time that we began our investigation on the scene.
    There were from the onset 17 people that we wanted to 
interview, including the pipeline operator who would not speak 
to us, and in fact noted that they would take the Fifth 
Amendment.
    We also had to delay our ability to do laboratory testing 
and examination on the actual pipe that failed in that 
particular accident until the criminal investigation side was 
satisfied.
    We have been able to thus far interview all but four 
witnesses, who have since been given immunity on that 
particular accident. As a matter of fact, last month we 
interviewed the last witness that was made available to us, and 
we don't expect to be able to interview the last four witnesses 
any time soon.
    But we are moving forward with the investigation and expect 
to complete it this summer.
    Mr. John. And that is in the Washington case?
    Mr. Chipkevich. Yes, sir.
    Mr. John. And it is the criminal investigation that has 
hampered your investigation is what I am hearing?
    Mr. Chipkevich. Yes, sir, that is what has substantially 
delayed our work on it.
    Mr. John. Do you have any idea as to when that will be 
completed so that we can use some of that information?
    Mr. Chipkevich. We expect to have our factual reports all 
finished on that investigation this month, and hopefully 
available and in the docket by April for all the disciplines; 
and the Board's complete report by this summer.
    Mr. John. And what about the other incident?
    Mr. Chipkevich. The next incident has been a matter of the 
lack of resources, the number of people able to work on the 
investigation. That investigation also will be finished by this 
summer.
    And as was noted earlier, in that particular accident, 
there was significant internal corrosion found in that specific 
pipe.
    Mr. John. And that is preliminary information?
    Mr. Chipkevich. That is factual information that there was 
significant internal corrosion found in that pipe.
    Mr. John. Thank you, Mr. Chipkevich.
    Mr. Barton. I thank the gentleman from Louisiana. I 
recognize the gentleman from Massachusetts for 5 minutes of 
questions.
    Mr. Markey. Thank you, Mr. Chairman. Ms. Engleman, I am 
concerned about the harbor at the Distrigas LNG facility in 
Everett, Massachusetts, which I represent. As you know, I wrote 
Secretary Mineta on this issue last September, and to the 
Homeland Security Director Ridge in October.
    Secretary Mineta responded to my letter, which was very 
helpful, and unfortunately I have yet to hear back from 
Governor Ridge since October is my concern.
    So I would like to raise with you an issue that I posed to 
Governor Ridge. What was seen in Boston is that when an LNG 
tanker is going into the harbor and heads for the Distrigas 
facility the Coast Guard is involved in providing security.
    There is a coordinated security and emergency response plan 
involving the Coast Guard, and State, and local police, fire, 
and emergency responders. But after the ship docks, unloads, 
and leaves, there is no coordinated plan.
    The Everett Police and Fire Department are on their own, 
and the Distrigas security does not appear adequate. Your 
office appears to have some authority over safety and security 
at this facility, and the Department of Energy has also gotten 
involved in examining the issue, although their statutory basis 
for involvement is unclear.
    What are you doing to ensure that the Distrigas LNG 
facility is protected from terrorist attacks on those days when 
an LNG tanker is not docked at the facility?
    Ms. Engleman. Thank you, sir. More than any other area, we 
specify physical security requirements in our regulations, 
specifically for LNG facilities. This includes access issues, 
including gates, guards, and so forth.
    We have been to that specific plant three times in recent 
history; for inspections in November 1996, April 1999, and 
November 2001. I am pleased to say that in the November 2001 
inspection, concerns had been corrected that had been raised in 
previous inspections.
    We are looking at all aspects of security. We have issued 
several security advisories, and we have put together a direct 
action group with industry, local responders, State officials, 
and a variety of participants to identify and inspect security 
issues that you raised.
    We think it is very important to first understand what are 
the vulnerabilities, and to look at daily operating procedures, 
and to look at action plans and response plans that are in 
place.
    And to heighten the awareness of the individual employees, 
as well as anyone who would be involved in interaction with the 
product in question. This is literally a daily activity for us 
as we continue to operate in conjunction with the Office of 
Homeland Security and our new Transportation Security 
Administration.
    From that, we have weekly and biweekly conversations with 
owner-operators, and individual facilities that we believe to 
be at risk. So we have a very aggressive--and though it is not 
publicized, but a very aggressive security overview and 
response that we are looking at.
    Mr. Markey. Okay. So you visited there once since September 
11; is that correct?
    Ms. Engleman. Yes. There was an inspection in November of 
2001.
    Mr. Markey. Now, was that to implement the standards that 
have been in place prior to September 11, or was it to evaluate 
what the security level was post-September 11 given the new 
level of threat which the plant obviously now had to prepared 
against?
    Ms. Engleman. Sir, that inspection was based on prior 
inspection concerns that had been raised.
    Mr. Markey. So, it did not raise, in other words, the new 
level of security threat. It was before September 11 that 
terrorists arrived in waves of three, and they were technically 
unsophisticated, and they were non-suicidal, and they were not 
heavily armed.
    We know that since September 11 that they arrived in waves 
of perhaps 19, that they are suicidal, highly technically 
skilled, and very heavily armed, and suicidal. Have you 
upgraded, in other words, or did the inspection in November of 
2001 take into account that level of threat?
    Ms. Engleman. Yes, sir, and in fact they greatly exceeded 
the minimum requirements, if you will, at that particular 
plant.
    Mr. Markey. So there has been an enhancement since 
September 11 of the security requirements?
    Ms. Engleman. There has been an enhancement of response by 
the facilities themselves. We have not enhanced the security 
requirements in a regulatory fashion.
    Mr. Markey. Well, why have you not increased the minimal 
requirements that each of these facilities have to put forth?
    Ms. Engleman. We are in the process of reviewing all 
applications in a formal way, and informal way, sir, through 
individual correspondence, individual discussion, individual 
inspections, as well as the direct action group. These efforts 
have increased the awareness of the issue of security.
    So while regulations may not be formally on the books as a 
result of the heightened awareness, on an inspection in 
November 2001 we found that facility had exceeded the minimum 
requirements.
    Mr. Markey. Did you provide all correspondence which you 
have had with LNG Distrigas since September 11 to the 
subcommittee?
    Ms. Engleman. Yes, sir.
    [The following was received for the record:]

    Following the events of September 11, RSPA sent Security Alert 
Notices to all natural gas and hazardous liquid pipeline and LNG 
facility operators, including LNG District Gas (Distrigas). On December 
5, 2001, RSPA received a letter from Distrigas describing the actions 
taken at the facility as a result of the November 26-30 inspection by 
the RSPA Office of Pipeline Safety (OPS). These actions included 
updating of the Fire Protection Plan, the establishment of semi-annual 
drills, and specific security training for security officers. (Copy 
enclosed)
    Additionally, RSPA/OPS has actively been involved with Distrigas 
and other Federal and State agencies regarding LNG facility concerns, 
since September 11:

--Between 9/11 and October 1, RSPA/OPS held numerous telephone 
        conversations with Distrigas and Federal officials (Coast 
        Guard, FERC, DOE) about security issues regarding LNG ships and 
        the LNG plant. For example, RSPA/OPS learned of additional 
        security staffing, coordination with local authorities, and 
        more stringent entry procedures to the LNG plant.
--On October 5, OPS participated in a security meeting in Boston with 
        DOE, FERC, Massachusetts Emergency Management Agency (MEMA), 
        USCG, City of Everett, and Distrigas to discuss a vapor 
        dispersion and fire radiant study prepared by Quest (at the 
        request of DOE and RSPA/OPS), and other security concerns. At 
        this time, an RSPA/OPS inspector also checked to see that 
        additional safety precautions were in place at the plant. 
        Security enhancements include hiring additional security 
        guards, working with the City of Everett to assign local police 
        to help protect the perimeter of the plant, and installation of 
        ``Jersey Barriers'' to restrict traffic.
--On October 10-11, DOE personnel from the Office of Security and 
        Emergency Office and the Office of Independent Oversight and 
        Performance Assurance conducted a security review of procedures 
        and protection measures in place at the LNG facility in 
        Everett, Massachusetts. It is important to note that this 
        review focused on the LNG facility and not on a LNG tanker or 
        tanker transit. DOE's overall assessment reflects that 
        Distrigas's industrial security practices and procedures at the 
        LNG Everett facility are consistent with or exceed those in 
        place at other industrial facilities. Distrigas informed RSPA/
        OPS that all existing Distrigas employees and security 
        contractor employees' background checks were completed and that 
        all new Distrigas employees and contractors will receive 
        background checks.
--On November 26-30, OPS staff conducted an inspection of the Distrigas 
        LNG plant and reviewed operations and maintenance procedures. 
        New Security procedures for the LNG plant were verified to be 
        in place. During this inspection the RSPA/OPS inspector noted 
        that contract security guards needed additional training 
        regarding existing Distrigas security procedures. Distrigas 
        reported to RSPA/OPS, in a letter dated December 5, that this 
        security training was conducted by December 1, 2001. These 
        security training records were reviewed by RSPA/OPS with an 
        onsite inspection on April 11, 2002. RSPA/OPS is currently 
        developing the appropriate correspondence to be issued to 
        Distrigas as a result of the November 2001 and April 2002 
        inspections.

    Mr. Markey. Do you require force on force exercises to test 
security at the facility?
    Ms. Engleman. Not at this time. However, one of the things 
that we are addressing in our training program that we are 
developing is the issue of exercise and that very type of thing 
that you are talking about, where we actually go in and have 
specific exercises, and these are being discussed as part of 
our training.
    Mr. Markey. You have not decided yet whether or not force-
on-force exercises are necessary to determine the actual 
security at facilities, at the LNG facility?
    Ms. Engleman. It is part of that which is on the table, and 
it is part of the discussion on how we can best frame and 
prepare for a response.
    Mr. Markey. I would recommend very strongly that you adopt 
a force-on-force exercise test for LNG facilities, and I think 
that it would be eye-opening to you to find how ill-prepared 
these facilities are for such drills.
    Do you ever do surprise inspections at LNG facilities to 
see if the security at Distrigas or the other two LNG 
facilities in the United States is adequate?
    Ms. Engleman. Surprise inspections do occur. I am not aware 
of any specific surprise inspections that have occurred at that 
facility.
    Mr. Markey. Since September 11, have you conducted any 
surprise inspections at this LNG facility or the other two in 
the United States?
    Ms. Engleman. Not surprise inspections, sir, not to my 
knowledge.
    Mr. Markey. I recommend to you that you do in fact conduct 
surprise inspections. I recommend that you do it at 
approximately 5:30 a.m. in the morning. In other words, the 
time at which a terrorist attack is likely to occur at these 
facilities.
    I think you would be shocked at the low level of resistance 
which a surprise mock terrorist assault would receive at this 
facility. Do you know whether there are any foreign nationals 
employed at the Distrigas LNG facilities, or in its security 
force?
    Ms. Engleman. Sir, I am not aware of that, but I will be 
happy to gather that information and respond accordingly.
    [The following was received for the record:]

    No, we do not know if foreign nationals are employed at the 
Distrigas LNG facilities. Our regulations do not prohibit the 
employment of foreign nationals. Distrigas has informed OPS 
that all initial background checks have been completed and that 
all new employees and contractors received background checks. 
Distrigas did not distinguish between foreign nationals or U.S. 
citizens.

    Mr. Markey. I appreciate that. Do you know how many 
security guards are employed at the facility and what their 
qualifications or training is?
    Ms. Engleman. Sir, I do not have the specific data on that 
facility, but I would be happy to provide it to you. However, 
if I may, when we have been looking at security overall, the 
majority, if not all of the facilities and industry 
participants that we have spoken to, had implemented new 
security profiling and plans, and have addressed these issues, 
and are doing so on a case-by-case basis.
    I am very encouraged by industry's response to security 
issues.
    [The following was received for the record:]

    Since 9/11, Distrigas more than quadrupled the security 
guard force at the plant and additional security guards 
supplemented by the Everett Police Department are also deployed 
when a LNG ship is in port for security reasons. However, due 
to security concerns, we cannot provide the specific number of 
guards deployed at a plant. This information is considered 
security sensitive information not to be disclosed in a public 
document.
    The Federal LNG Safety Code requires a written training 
plan for personnel responsible for security. The initial 
training must include instruction in recognizing breaches of 
security, conducting security patrols, methods to identify all 
persons entering the plant, and instructions for notification 
of other plant personnel and law enforcement officials when 
there is any indication of an actual or attempted breach of 
security. The written security training plan must include 
continuing instruction at intervals of not more than two years. 
Distrigas reported that all contract security guards, including 
the additional guards deployed after 9/11, completed the 
required training by December 1, 2001.

    Mr. Markey. I don't want you to be spies, but I have many 
reports that guards at Distrigas are asleep in construction 
trailers at the site, and that guards bring in sleeping bags 
into work so that they can sleep on the job, and that access 
badges are not turned in. Would any such allegations be of a 
concern to you?
    Ms. Engleman. Absolutely, sir.
    Mr. Markey. Do you have any process to investigate in and 
evaluate such concerns when unsure of the adequacy of the 
security at the Distrigas LNG facility, or to ensure that if 
there was a terrorist attack against a facility that there 
would be a combination of physical safeguards and trained guard 
forces, and a coordinated Federal, State, and local force to 
protect these facilities?
    Ms. Engleman. Sir, we are establishing new protocols for 
that very issue, and if I could share with you that in all 
inspections, whether it is oil or gas, we have procedural 
reviews, and we have come in and have record evaluations and 
physical inspections.
    So this is ongoing for safety issues, and as you are aware, 
many security issues are a component of safety.
    Mr. Markey. When can I tell my constituents in Everett that 
you will have a formal set of requirements in place that 
guarantee that a high level of security is guaranteed at the 
facility? What is that date?
    Mr. Barton. This will have to be the gentleman's last 
question.
    Ms. Engleman. Sir, first of all, we work in conjunction 
with the Transportation Security Administration, the Office of 
Homeland Security, and the other appropriate agencies on all 
security issues.
    Second, I can never suggest to you that I could guarantee 
functional 100 percent security on every aspect of it.
    Mr. Markey. I am not suggesting that, but I am suggesting 
that I need a date. Will it be completed by the first 
anniversary of September 11? Will there be in place a protocol 
for LNG facilities such as the Distrigas by the first 
anniversary?
    Ms. Engleman. Sir, I cannot guarantee any specific date; 
however, I can guarantee that we are on the job and we are 
looking to address all security and safety issues as soon as 
possible.
    Having lived through September 11, sir, and having 
participated in all the aspects of it, I assure you that we 
take it very, very seriously.
    Mr. Markey. If I may indulge the chairman for 30 seconds 
and say that is an inadequate response. The people who live 
near these facilities are entitled to know that there is a date 
upon which the Federal Government has settled that will 
guarantee that as best as humanly possible a new set of safety 
guides have been put in place and has been implemented.
    I don't think we can leave you with the misimpression that 
your answer satisfies us that you are going to do the best that 
you can. I think that you have to give us a date and meet that 
deadline so that we have some level of expectations against 
which we can match the actual plan which you put in place.
    And at this point I think your testimony is leaving us with 
an unanswered question that is very important to the safety and 
security of the people who live near these facilities.
    Ms. Engleman. Sir, again, I cannot give you a time 
specific. However, we will work to address these issues and 
problems.
    Mr. Markey. Thank you.
    Mr. Barton. Thank you. We are going to excuse this panel. 
There may be additional written questions, and for the record, 
we do plan to go to mark-up some time this spring, and so if we 
submit written questions, we would hope that you would answer 
them expeditiously.
    Thank you for your time and effort, and thank you for your 
testimony, and you are excused. We will now call forth our 
second panel.
    Well, welcome, gentleman. We apologize for the crowded 
situation. We have now in our second panel, we have Mr. Mark 
Hereth, who is the Senior Vice President of HSB Solomon, in 
Atlanta, Georgia, and we appreciate you being here.
    And Mr. William Haener, who is a Vice President of Natural 
Gas for CMS Engineer Corporation, appearing on behalf of 
Interstate Natural Gas Association of America. We appreciate 
you being here.
    And Mr. William Shea, who is President and CEO of Buckeye 
Pipeline Company, who is here on behalf of the Association of 
Oil Pipe Lines.
    And Mr. Herman Morris, Jr., who has testified before our 
subcommittee before, and he is the President and Chief 
Executive Officer of Memphis Light, Gas, and Water, and he is 
here on behalf of the American Gas Association. Good to see you 
again, sir.
    And Mr. Robert Kipp, who is the Executive Director for the 
Common Ground Alliance, in Chantilly, Virginia. Welcome. Mr. 
Edward Sullivan, who is the President of the Building and 
Construction Trades Department of the small organization known 
as the AFL-CIO. Glad to have you, sir.
    And last, but not least, Mr. Bruce Nilles, who is a Staff 
Attorney for Earthjustice, in Oakland, California. We have your 
statements in the record, and we will start with Mr. Harris, 
and give each of you 5 minutes to summarize, and then we will 
have some questions.

   STATEMENTS OF MARK L. HERETH, SENIOR VICE PRESIDENT, HSB 
SOLOMON; WILLIAM J. HAENER, VICE PRESIDENT OF NATURAL GAS, CMS 
   ENGINEER CORPORATION, ON BEHALF OF INTERSTATE NATURAL GAS 
   ASSOCIATION OF AMERICA; WILLIAM SHEA, PRESIDENT AND CEO, 
 BUCKEYE PIPE LINE COMPANY, L.P., ON BEHALF OF ASSOCIATION OF 
    OIL PIPE LINES; HERMAN MORRIS, JR., PRESIDENT AND CHIEF 
 EXECUTIVE OFFICER, MEMPHIS LIGHT, GAS AND WATER, ON BEHALF OF 
    THE AMERICAN GAS ASSOCIATION; ROBERT R. KIPP, EXECUTIVE 
     DIRECTOR, COMMON GROUND ALLIANCE; EDWARD C. SULLIVAN, 
  PRESIDENT, BUILDING AND CONSTRUCTION TRADES DEPARTMENT, AFL-
CIO; AND BRUCE E. NILLES, STAFF ATTORNEY, EARTHJUSTICE, OAKLAND 
                        REGIONAL OFFICE

    Mr. Hereth. Good afternoon. My name is Mark L. Hereth, and 
I am a senior vice president of HSB Solomon, a subsidiary of 
the Hartford Steam Boilers Inspection Insurance Company.
    I am here today on behalf of my company to share our 
perspectives on how we are taking the tools and processes that 
we use historically to help our customers manage adversity by 
applying them to group safety, reliability, and profitability 
of their operations.
    Improving pipeline safety is not a 1 year, a 5 year, or 
even a 10 year project. It is a journey on which you must 
strive for continuous improvement.
    I believe I can speak of a journey as I work for a company 
that has been on a journey to improve safety and reliability of 
industrial equipment since the Civil War.
    Our founders examined the historical experience of steam 
boilers in a number of applications in the early 1860's 
following a number of fatal accidents.
    They developed processes to inspect how operators designed, 
built, operated, and maintained boilers. They believed in this 
enough to indemnify operators in the event of accidents through 
an insurance policy.
    These processes were the predecessors of what have become 
the ASME standards for pressure containing equipment. Periodic 
analysis of historical experience remains as important today as 
it was in the 1860's.
    An examination of experience with respect to leaks and 
spills will address areas where there are gaps in technology, 
or the processes demanding integrity. Additional research and 
development will develop and demonstrate technology to improve 
the way in which integrity is managed.
    And likewise technology is demonstrated, as technology is 
demonstrated, or where it is necessary to ensure that work is 
conducted in a manner to ensure safe operation, or produce 
quality data, the national consensus standards organizations 
will develop applicable standards.
    We have entered a time when it is more important than ever 
that we continually work to gain and maintain public trust and 
confidence. One of our clients has described the way in which 
they view the importance of ensuring that work is conducted the 
same way, regardless of who is doing the work.
    They recognize that a supervisor cannot be with his or her 
employees day in and day out, all day long. They have developed 
a simple phrase to capture this intent, and it is ``you would 
do as I would do.''
    I would share with this subcommittee that this simple phase 
probably has applicability far beyond pipeline safety and 
liability in ensuring the public interest is being met. But we 
certainly see its value in the context in which we speak today.
    The consensus standards developing organizations are 
leading the way in furthering ``you would do as I would do,'' 
and they are developing these standards for integrity 
management, for hazardous liquids, and natural gas pipeline.
    They are working on standards for in-line inspections, 
pressure testing, direct assessment, as well as communications 
in public awareness programs. These standards will become 
integral parts of integrity management programs.
    We have seen that as this information becomes more and more 
prevalent, operators and Office of Pipeline Safety have about 
risk in the condition of pipelines, the expectation and demand 
on the tools that an operator can apply demand that pipeline 
integrity grow.
    We are concerned in the aftermath of the Bellingham 
accident that as many parties had grabbed on to internal 
inspection as a apparent silver bullet. While inspection does 
play a key role, it alone is not the answer.
    Our experience is that sustainable improvement is best 
realized by applying prevention, detection, and mitigation in a 
comprehensive systematic fashion. We encourage you to set 
expectations through legislation, and to put the spotlight on 
those areas that need improvement.
    And to ensure that we are making progress on the journey to 
improvement pipeline safety and reliability. This will 
encourage operators in the Federal Government to engage in 
cooperative research to develop better tools, and to improve 
prevention, detection, and mitigation measures to protect our 
pipeline infrastructure.
    This will provide guidance for consensus standards 
developing organizations to development standards needed to 
ensure that ``you would do as I would do.'' We encourage you to 
enable the Office of Pipeline Safety to develop rules that meet 
your expectations and those of your constituents.
    Mr. Chairman, I want to thank you and the other members of 
this subcommittee for providing me with the opportunity to 
share our perspectives this afternoon. Thank you.
    [The prepared statement of Mark L. Hereth follows:]
   Prepared Statement of Mark L. Hereth, Senior Vice President, HSB 
                                Solomon
    My name is Mark L. Hereth. I am a senior vice president of HSB 
Solomon, a subsidiary of The Hartford Steam Boiler Inspection and 
Insurance Company. I have been an employee of the company for 23 years. 
I served as a project engineer on engineering and environmental 
projects, as a department head, as the business unit manager of our Oil 
and Gas insurance operations, and now as the business unit manager of 
our energy pipeline consulting practice. I lead a business today that 
is taking the tools and the processes we have used historically to help 
our customers manage adversity, by applying them to helping improve the 
safety, reliability and profitability of their operations.
    Improving pipeline safety is not a one-year, a five-year or even a 
ten-year project. It is a journey on which you must strive for 
continuous improvement.
    I believe I can speak of a journey as I work for a company that has 
been on a journey to improve safety and reliability of industrial 
equipment since the Civil War. Our founders noted the increase in the 
frequency of steam boiler explosions in the early 1860s. They examined 
the historical experience of steam boilers in a number of applications 
and developed an engineering basis for reducing and possibly even 
eliminating boiler explosions. They believed that with the appropriate 
materials to construct the boiler, fine workmanship, careful operation 
and periodic inspection, boiler explosions could be eliminated. They 
believed in this enough to indemnify boiler operators in the event of 
accidents through an insurance policy. They developed processes to 
inspect how operators designed, built, operated and maintained boilers. 
It is from this that our company name was derived; we inspect before we 
insure, hence the name, Hartford Steam Boiler Inspection and Insurance 
Company.
    Our founders later codified these ideas into the Hartford Code and 
the Hartford Standard. These documents were the predecessors of the 
Code developed by the American Society of Mechanical Engineers (ASME) 
for boilers and pressure-containing equipment. The ASME Code, as 
embodied in Sections B31.4 and B31.8, serves today as the foundation 
upon which pipeline safety regulations are based for hazardous liquid 
and natural gas pipelines.
    Periodic analyses of historical experience remains as important 
today as it was in the 1860s. Even though we have been able to evaluate 
historical performance and demonstrate improvements with the data 
collected over the time, many stakeholders recognized that the incident 
reporting data forms could be improved and as such so could the 
analyses. The Office of Pipeline Safety recently issued notices 
updating the incident reporting forms. We especially commend OPS for 
updating the forms during the same time it was finalizing and 
promulgating rules for integrity management in high consequence areas 
for hazardous liquid pipelines and proposing rules for the definition 
of high consequence areas for natural gas pipelines. New reporting 
forms will provide additional data and more precise data regarding the 
cause of incidents. Periodic examination of historical experience with 
respect to leaks and spills will continue to be of value in 
understanding where we are on the journey. It will enable each party, 
the Office of Pipeline Safety, State pipeline safety organizations, 
pipeline operators and the public to provide input on where they can 
provide additional improvements.
    We have learned through the years that way to improve safety is 
through the use of risk assessment. Risk assessment is applied to 
identify and evaluate threats to the integrity of the pipeline, whether 
it outside force and corrosion, among others. It is then through the 
application of prevention, detection and mitigation measures that one 
can continually improve safety.
    I have applied risk assessment techniques for over twenty years of 
my professional career; in environmental applications related to 
industrial point source emissions and hazardous waste disposal, in 
evaluating the risk of failure and loss in insurance underwriting, and 
in managing pipeline integrity. However, I never appreciated the value 
of risk assessment and risk management any more than the day I walked 
down the hill from the water treatment plant in Bellingham and into the 
ravine where the product flowed along a stream where two boys were 
playing and another was fishing. It was so apparent at that moment that 
this is why we assess risk, both the likelihood and consequence; and it 
is why it is important to understand not just what is the condition of 
the pipe, but where is the pipe. For those of you that may have been 
skeptical of the value of the risk management demonstration program, 
take a walk down from the water treatment plant and into the ravine.
    The rules related to integrity management that the Office of 
Pipeline Safety has been developing over the past three years, build 
upon the risk management efforts undertaken in the mid-1990s. Risk 
assessment is now a key part of the process for managing integrity as 
reflected in API RP-1160 for hazardous liquid pipelines and ASME B31.8S 
for natural gas pipelines.
    We have seen that as information that operators and the Office of 
Pipeline Safety have about risk and the condition of pipelines, the 
expectations and demands on the tools an operator can apply to managing 
pipeline integrity grow. We were concerned in the aftermath of the 
Bellingham accident as many parties grabbed onto internal inspection as 
an apparent silver bullet. While inspection does play a key role, it 
alone is not the answer. In our experience, sustainable improvement is 
best realized by applying prevention, detection (inspection) and 
mitigation in a comprehensive, systematic and integrated fashion.
    Examination of experience with respect to leaks and spills can help 
address areas where there are gaps in technology or the processes for 
managing integrity. Additional research and development can be 
undertaken to develop and demonstrate technology to improve the way in 
which integrity is managed. Likewise as technology is demonstrated or 
where it is necessary to ensure that work is conducted in a manner to 
ensure safe operation or produce quality data, the national consensus 
standards organizations can develop applicable standards and 
recommended practices. In talking about the importance of training and 
qualification programs, one of our clients described how they view the 
importance of ensuring that work is conducted the same way, regardless 
of who is doing the work. They recognized that a supervisor cannot be 
with each of his or her employees all day long, day in and day out. 
They have developed a simple phrase to capture the intent; it is,
        ``You would do, as I would do''
    That phrase probably has applicability far beyond pipeline safety 
and reliability in ensuring that the public's interest is being met, 
but we certainly see its value in the context in which we speak here 
today.
    The consensus standards developing organizations are leading the 
way in furthering, ``You would do, as I would do.'' There have 
developed and issued standards for integrity management for hazardous 
liquid and natural gas pipelines. They are working on standards for in-
line inspection, pressure testing as well as direct assessment. They 
are also working on standards for qualification of in-line inspection 
tools as well as the analysts who analyze and interpret the tool run 
data. And they are working on standards for communications and public 
awareness programs. These standards will become integral parts of 
integrity management programs.
    I have spoken today about historical analyses and I will finish 
with a review of an example that we believe demonstrates what we have 
spoken of today. We believe that Congress established an effective 
model in the design of the Transportation Equity Act for the 21st 
Century in 1998. It put the spotlight on unintentional damage to 
underground facilities as a leading cause of natural gas and liquid 
hazardous pipeline accidents. It recognized that excavations performed 
without prior notification or with inaccurate or untimely marking of 
underground facilities can cause damage that results in serious 
injuries, fatalities, harm to the environment and disruption of vital 
services to the public. Finally, it recognized that protection of the 
public and the environment can be enhanced by a coordinated national 
effort to improve one-call notification programs, as well as the 
effectiveness and efficiency of such programs. Congress then 
established its expectations, as a set of minimum standards, as 
follows:

1. appropriate participation by underground facility operators;
2. appropriate participation by all excavators; and,
3. flexible and effective enforcement under State law with respect to 
        participation in, and use of one-call notification systems.
    Understanding these expectations, pipeline operators, excavators, 
one-call centers, locators, state pipeline safety organizations, 
utility contractors and others involved in damage prevention for 
underground facilities took steps to improve their existing programs. 
This was accomplished by a numerous initiatives including the Dig 
Safely Campaign, as well as public outreach and public education 
programs, among others. Representatives from the Office of Pipeline 
Safety, State pipeline safety organizations, natural gas and hazardous 
liquid pipeline operators and members of the public had undertaken an 
effort to examine and report on the best practices used in preventing 
damage to pipeline infrastructure. This group spent over two years 
evaluating and documenting best practices from across all types of 
energy pipeline systems. These best practices were shared in a report 
referred to as Common Ground, Damage Prevention Best Practices Report 
in 1999.
    We are now beginning to see the benefits of this model in reduced 
numbers of incidents caused by outside force. We have seen a reduction 
of more than 25% in the annual incidents from outside force from 1996 
through 2001, when examining reportable incidents recorded by the 
Office of Pipeline Safety.
    We encourage you to set expectations and where you deem appropriate 
minimum standards. This will provide the guidance for consensus 
standards developing organizations to develop the standards needed to 
ensure that ``you would do what I would do.'' This will also encourage 
pipeline operators and the Federal government to engage in cooperative 
research to develop better tools and improve prevention, detection and 
mitigation measures for protection of pipelines. We encourage you to 
enable the responsible regulatory agency to develop the performance and 
prescriptive-based rules that meet the expectations and minimum 
standards. Operators that truly seek a competitive advantage will do so 
by complying with and going beyond those rules. We believe that 
managing integrity is the price of admission to play in the energy 
game, a game that has undergone fundamental change and will continue to 
do so for years to come.
    Mr. Chairman, I want to thank you and the other Members of the 
House Commerce Subcommittee on Energy and Air Quality for providing me 
the opportunity to share our perspective this afternoon.
    Thank you.

    Mr. Barton. Thank you, Mr. Hereth.
    Next we will have Mr. William J. Haener, the Vice President 
of Natural Gas of CMS Engineer Corporation. Mr. Haener, you 
have 5 minutes.

                 STATEMENT OF WILLIAM J. HAENER

    Mr. Haener. Thank you, Mr. Chairman. My name is Bill 
Haener, and I am the Executive Vice President of the Natural 
Gas of CMS Energy Corporation, and President of CMS Gas 
Transmission.
    I am testifying both on the behalf of CMS Energy and the 
Interstate Natural Gas Association of America, the trade 
association that represents interstate natural gas industry. My 
written testimony focuses on the commitment of the interstate 
natural gas pipeline industry to improve the safety and 
security of our pipeline systems, as well as to improve 
communications with the public.
    We support the issuance of a pipeline integrity rule and 
hope that the rulemaking process will be finalized this fall. 
We support the efforts of this subcommittee and the 
Transportation and Infrastructure Committee to develop and 
introduce legislation that provides for additional improvements 
in our already strong safety record.
    And hope that as you move forward that you will continue to 
recognize practical limitations in technology and the need to 
maintain safe and reliable service to our customers.
    Natural gas pipelines are the safest form of transportation 
and we have a very good safety record, but we are committed to 
continuous improvement and incident free operations.
    We have and will continue proactively to support research 
programs, while working to improve risk assessment and risk 
analysis to reach this goal. For example, outside force, or 
third party damage, has been a significant cause of damage to 
natural gas pipelines, and the incident that Congressman Sawyer 
just pointed out in his opening remarks.
    And this is the cause of the majority of our serious 
accidents. We have participated in OPS's review of one-call 
best practices and the development of the common ground 
alliance to help reduce outside force damages to our pipelines.
    We have also been involved in the Risk Assessment Quality 
Action Team, the Mapping Quality Action Team, and have 
participated in other activities proposed by OPS, including 
efforts to coordinate and improve research on pipeline safety.
    OPS has released a notice of proposed rulemaking on the 
definition of high consequence areas as an important component 
of the natural gas integrity rulemaking process. INGAA provided 
constructive comments in an effort to insure the rule is 
practical, workable, and enforceable.
    Integrity management has always been a key component of our 
safety plan. The industry recognizes the need for a national 
technical standard with greater emphasis on risk analysis and 
sophisticated risk assessment that will provide a 
comprehensive, systematic and integrated program to further 
improve the safety of pipeline systems.
    The interstate pipeline industry has been working with the 
American Society of Mechanical Engineers, ASME, the National 
Association of Corrosion Engineers, NACE, and the American 
Society for Non-Destructive Testing, ASNT, to develop technical 
standards.
    ASME has issued a comprehensive standard which natural gas 
pipelines, will use to perform their integrity inspections. We 
recommend that OPS adopt this standard in their natural gas 
integrity rulemaking, with a transition period to minimize 
consumer impacts.
    INGAA supports three alternative methods to assess the 
integrity of natural gas pipelines; hydrostatic testing, 
internal inspection devices, smart pigs, and direct assessment. 
Each of these methods, including their benefits and drawbacks, 
is described in my written testimony.
    INGAA, however, does not support a mandated 5 year 
integrity inspection program. Complying with such a requirement 
would have detrimental effects on the consumer. It does not 
have a technical justification, would require an unprecedented 
effort of material and service providers, and would result in 
minimal safety improvements.
    A Gas Technology Institute report prepared by Battelle, 
Proposed Re-Verification Intervals for High Consequence Areas, 
asserts that under worst-case conditions, a periodic review 
interval of 15 years would be scientifically and structurally 
appropriate for 95 to 98 percent of all natural gas pipelines.
    What we are asking for is flexibility in timing and 
methodologies to make sure our inspections and repairs occur 
when the demand for natural gas is lower and we can work with 
our customers to assure that they have other supply options.
    Another aspect of pipeline safety that the industry is in 
the process of implementing is operator qualification. OPS has 
recently adopted an Operator Qualification rule that is 
expected to enable OPS to document that employees who operate 
and maintain the pipeline are and continue to be qualified for 
these tasks.
    The interstate pipeline industry is currently in the 
process of completing the initial qualification of individuals 
performing covered tasks. The deadline for this effort is 
October 28, 2002.
    We have also developed a common methodology to qualify 
contractors and service providers so we can be effective and 
efficient at verifying their qualifications. Regarding accident 
reporting by cause, OPS has adopted a more detailed and 
specific reporting system with 25 categories.
    This new system should provide both OPS and industry with 
more specific information to better refine risk assessment 
technologies.
    We are also focusing on security of our infrastructure in 
light of September 11 terrorist attacks and the potential 
threat of subsequent attacks on our industry. Immediately after 
September 11, our industry responded to security and began an 
assessment of ways to reduce and respond to these terrorists.
    As part of this effort, INGAA formed a Board Task Force, 
which I chair, to oversee the security efforts for the 
interstate natural gas pipelines, and our focus is on critical 
onshore and offshore pipelines and related facilities, as well 
as liquefied natural gas facilities.
    We are working with numerous government agencies, including 
OPS, DOE, FERC, and Homeland Security. Three issues where we 
may need government assistance are the need for pre-approved 
waivers for response and recovery to a terrorist attack to 
occur; relief from antitrust provisions for regional planning 
and coordination of a critical spare parts inventory; and 
exemption from the Freedom of Information Act for sensitive 
information pipelines are required to file with FERC or OPS, 
while assuring that hose with a need to know can obtain the 
information they need to participate in the regulatory process.
    In closing, Mr. Chairman, I want to assure you that the 
interstate natural gas pipeline industry takes safety 
seriously, and we are committed to safety. Thank you.
    [The prepared statement of William J. Haener follows:]
  Prepared Statement of William J. Haener, Executive Vice President--
Natural Gas, CMS Energy Corporation on Behalf of the Interstate Natural 
                       Gas Association of America
    Mr. Chairman and Members of the Committee, my name is William J. 
Haener. I am Executive Vice President--Natural Gas, of CMS Energy 
Corporation and President of CMS Gas Transmission, its pipeline and 
field services division. CMS Energy Corporation has annual sales of 
more than $6 billion and assets of about $15 billion throughout the 
U.S. and around the world with businesses in electric and natural gas 
utility operations; independent power production; natural gas 
pipelines, gathering, processing and storage; oil and gas exploration 
and production; and energy marketing, services and trading.
    CMS Panhandle Companies, a unit of CMS Gas Transmission, operates 
over 10,800 miles of mainline natural gas pipeline extending from the 
Gulf of Mexico to the Midwest and Canada. These pipelines access the 
major natural gas supply regions of the Louisiana and Texas Gulf Coasts 
as well as the Mid-continent and Rocky Mountains. The pipelines have a 
combined peak day delivery capacity of 5.4 billion cubic feet per day 
and 85 billion cubic feet of underground storage facilities. In 
addition, Consumers Energy, an affiliate of CMS Gas Transmission, owns 
and operates a local distribution company and an intrastate pipeline 
and storage company located in Michigan.
    I appreciate this opportunity to appear at this oversight hearing 
before the Subcommittee today on behalf of the Interstate Natural Gas 
Association of America (INGAA). INGAA is the trade association that 
represents interstate natural gas pipelines in the United States, the 
inter-provincial pipelines in Canada and PEMEX in Mexico. These 
pipeline systems transport 90 percent of the natural gas consumed in 
the United States from the producing areas to the local gas companies.
    Millions of Americans rely on clean, efficient natural gas to fuel 
homes and workplaces, with no thought about the vast network of 
pipelines that criss-cross the country transporting this abundant 
source of clean energy from the wellhead to the burner tip. The 
companies that build and operate interstate natural gas pipelines have 
created the safest mode of transportation today--safer than highway, 
rail, aviation and marine transport.
    This record is the product of a great deal of hard work and 
dedication to continuously improve the performance of our industry. 
While the interstate natural gas pipeline industry has had only 31 
deaths and 91 injuries in the last sixteen years, we need to keep 
working to have none. The interstate natural gas pipeline industry has 
a long-standing commitment to target zero failures as evidenced by our 
financial and physical investments not only in the facilities and the 
people that operate them, but to research and development as well. We 
have supported research and development of new technologies to help to 
improve safety for over sixty years mainly through two research groups, 
the Pipeline Research Council International (PRCI) founded by the 
natural gas pipeline industry in 1952, and the Gas Technology Institute 
(GTI), formerly GRI, which was organized in the 1970s. We have 
voluntarily spent more that $100 million in the last five years, mainly 
through these organizations in the development of improved 
technologies, materials, industry consensus standards and operation and 
maintenance practices to improve safety.
    I want to commend this Subcommittee for holding this oversight 
hearing on pipeline safety. I would like to give this Subcommittee some 
background on our industry regarding pipeline safety as well as an 
update on recent developments regarding integrity management, pipeline 
security and other actions taken either by OPS or the interstate 
pipeline industry over the last few years.
                               background
    From the inception of the natural gas pipeline industry in the 
1930s to current day, pipeline companies have utilized consensus 
standards to improve the level of pipeline safety. In 1968, Congress 
paved the way to adopting and augmenting these standards by passing the 
Natural Gas Pipeline Safety Act and establishing the Office of Pipeline 
Safety (OPS).
    Currently, natural gas pipeline operators monitor and control 
safety in many ways. These safety measures include, but are not limited 
to the use of high quality pipelines materials and corrosion coatings, 
the use of cathodic protection (a low voltage electric charge) to 
prevent corrosion of below-ground pipelines, ground and aerial surveys 
to identify and report unusual activity or to detect leaks through use 
of gas detectors or discoloration of plants and grasses, hydrostatic 
pressure testing of new and existing facilities, the use of internal 
inspection devices (smart pigs) and by following all of OPS's 
prescriptive regulations.
    For example, natural gas pipeline operators are required to 
constantly monitor the area around the pipeline for changes in 
population density, a process commonly known as class location 
analysis. These categories of population density or ``class locations'' 
range from rural (Class 1) to heavy urban (Class 4). Natural gas 
pipelines are required to increase the level of safety of pipelines as 
the population density around a pipeline increases. When these changes 
occur, the pipeline operator is required to insure that the installed 
pipeline design characteristics are commensurate with the new class 
location design requirements. If it does not meet these requirements, 
the installed pipe is replaced with new pipe with the appropriate 
design characteristics or the operating pressure is reduced to increase 
the safety margin and the frequency of inspections within the new class 
location is increased. OPS has refined these regulations over the years 
as additional knowledge is gained.
    I also want to assure you that interstate natural gas pipelines' 
practices are continually being inspected by OPS. As an example, the 
Panhandle Companies pipeline systems have been inspected by OPS 
nineteen (19) times, which required approximately forty-eight (48) days 
over the last two years.
                        pipeline integrity rule
    As we have stated in our comments to OPS, INGAA and its member 
companies support development of a natural gas pipeline integrity rule. 
We are pleased that OPS has released a Notice of Proposed Rulemaking 
(NOPR) on the definition of ``high consequence areas'' as an important 
component of the natural gas integrity rulemaking process. The comment 
period on this NOPR closed last week. INGAA, as well as members 
companies and others, have provided what we hope are constructive 
comments in an effort to insure that the rule is practical, workable 
and enforceable. We hope that we will see a NOPR on the integrity rule 
itself in April or May. We would like to have this rulemaking process 
finalized sometime this fall.
    While integrity management has always been a key component of our 
business plan, the interstate natural gas pipeline industry recognizes 
the need for a technical standard with greater emphasis on risk 
analysis and sophisticated risk assessment that will provide a 
comprehensive, systematic and integrated program to further improve the 
safety of pipeline systems. The standard should provide a consistent 
process that an operator of a pipeline system can use to assess and 
mitigate risks in order to reduce both the likelihood and consequences 
of incidents. It should require documentation that the inspections, and 
any necessary follow-up, have been performed. It should also provide a 
method to enable an operator to allocate resources for prevention, 
detection and mitigation activities that will result in improved safety 
and a reduction in the number of incidents.
    Over the past few years, the natural gas pipeline industry, along 
with the American Society of Mechanical Engineers, the National 
Association of Corrosion Engineers and others, has undertaken a number 
of technical initiatives to provide answers and solutions to the 
engineering and scientific issues related to the integrity process. 
After two years of intensive work by a number of technical and 
scientific experts under the auspices of the Gas Technology Institute, 
20 reports have been issued that now provide the technical basis for an 
integrity management standard. These reports have been shared with OPS 
and the state pipeline safety regulatory bodies. The American Society 
of Mechanical Engineers has just now issued a comprehensive standard 
for natural gas pipelines regarding integrity inspections. As OPS 
develops their integrity rule for natural gas pipelines, OPS can chose 
to adopt this standard in whole or in part.
    During the course of these initiatives, INGAA has assessed the 
effectiveness of our present integrity management practices from three 
perspectives--scientific analysis, impact on consumers and actual 
results. As a result, INGAA has recommended to OPS that three 
alternative methods be used to assess the integrity of pipeline systems 
on a periodic basis: hydrostatic testing, use of internal inspection 
devices (smart pigs) and direct assessment. Each of these methods has 
advantages and disadvantages.
    For example, although hydrostatic testing is a useful tool to prove 
structural integrity, a pipeline must be taken out of service for a 
number of days and sealed off during the test. Water is pumped into the 
pipe and pressurized to approximately 125 percent of the design 
operating pressure of the pipeline. This pressure is maintained for at 
least 8 hours and the pipeline is checked for water leaks. At the 
conclusion of the test, the water is released in a manner that ensures 
safety and compliance with approved environmental requirements; the 
pipeline is then dried and placed back in service.
    Internal inspection devices or smart pigs provide another integrity 
assessment tool. They have been in use over the last two decades. Smart 
pigs are large cylindrical vehicles containing sophisticated sensors 
and data collection devices that measure the wall thickness and 
internal geometry of the pipe. The information a pig run provides is 
used to determine the structural integrity of the pipe. Smart pigs have 
a limited application because they can typically only be utilized in 
pipelines with a constant inside diameter and they have difficulty 
traversing around sharp bends. Much of the industry's pipeline system 
was designed and constructed long before the concept of smart pigging 
was developed. Such pipeline systems contain reduced-sized valves and 
lack the facilities required for launching and receiving smart pigs. 
Because of these restrictions, only about 30 percent of interstate 
natural gas pipelines are designed or have been modified to be 
piggable, i.e., capable of accommodating the passage of a smart pig. 
Approximately 25 percent more can be made piggable by adding launchers 
and receivers, i.e., the facilities required to insert and remove a 
smart pig from the pipeline, and minor modifications (we expect a great 
deal of this will be made piggable as a result of the rule). Another 43 
percent can only be made piggable with very extensive modifications 
(changing out of pipes, valves, bends, etc), while 2 percent cannot be 
pigged at all. After modifications are made, the smart pigging of a 
pipeline can be completed with the pipeline in-service and only 
requires a pressure reduction at the time of inspection.
    Hydrostatic testing and modifying a pipeline to make it 
``piggable'' require that the pipeline be taken out of service for a 
period of time (average 18 days for the former and 30 days for the 
latter).
    The third integrity assessment process is the direct assessment 
inspection process. In this instance, electronic measurements of the 
pipeline--including data from the cathodic protection system--are 
combined with statistical methods to identify portions of a pipeline to 
be excavated and exposed. The pipeline is visually inspected for loss 
of coating, external corrosion, etc, measurements are made to detect 
the presence of internal corrosion and other tests are performed. This 
occurs while the pipeline remains in service, though often at a reduced 
pressure. This avoidance of pipeline downtime is a critical factor in 
many system operations.
    The rule should permit pipeline operators to avail themselves of 
new technology as it becomes proven and practical. New technologies may 
improve an operator's ability to prevent certain types of failures, 
detect risks more effectively or improve the mitigation of risks. As I 
had mentioned earlier, the natural gas pipeline industry has spent 
approximately $100 million over the last five years on pipeline safety 
and OPS is obtaining additional funding this year for R&D. INGAA is 
also working to obtain funding for DOE pipeline R&D. A coordinated 
effort amongst all of these organizations will be imperative to insure 
that available research funds are optimized in order to bring new 
technologies to bear on the challenges that face the industry.
    Congress should not mandate that the rule require a specific 
frequency of inspection, such as five years, as this can have 
detrimental effects on the consumer, does not have technical 
justification and has minimal safety impact. The GTI report prepared by 
Battelle, ``Proposed Re-Verification Intervals for High-Consequence 
Areas'' asserts that, under worse case conditions, a periodic re-
verification interval of 15 years would be scientifically and 
structurally appropriate for 95 to 98 percent of all natural gas 
pipelines.
    Energy and Environmental Analysis, Inc. has prepared a new report 
called ``Consumer Effects of the Anticipated Integrity Rule for High 
Consequence Areas'' for the INGAA Foundation. This study reports that 
the price impact to consumers due to pipeline capacity reductions is 
the sum of mainline and delivery lateral impacts and is dependent on 
the frequency of testing. Under the best circumstances, the projected 
impact ranges from $6.3 billion for the 14-year inspection cycle to 
$17.6 billion for the 5-year inspection cycle. These costs, for the 
most part, would result when demand for natural gas is high and the 
pipeline capacity to deliver the natural gas is not available because 
of these inspections or modifications. These costs would be incurred by 
consumers on pipelines that run at high capacity and/or on laterals 
that are the sole source of supply for a local distribution company, 
gas-fired electric generation or an industrial load.
    There are additional costs to consumers that are not accounted for 
in the study. The study does not include the cost to the pipeline 
companies or local distribution companies of implementing the integrity 
management rule. These costs are expected to be $2.5 billion over 10 
years for transmission pipelines and $4.5 billion over 10 years for 
local distribution companies. The study also does not include cost 
impacts to industrial users such as the need to reduce output or shut 
down a plant due to lack of needed capacity during integrity 
inspections.
    In spite of this point, I do want to emphasize that the industry 
can and will support the integrity management rule. However, what we 
need is flexibility in timing and methodologies to make sure our 
inspections and repairs occur when the demand for natural gas is lower. 
That way we can work with our customers to assure that they have 
alternate supplies or sufficient storage to meet their short-term needs 
and allow us to use the technology and processes that are effective.
    OPS has received a significant increase in their budget over the 
last two years. This will enable them to improve their risk analysis 
and risk assessment protocols as well as improve the training that they 
give their inspectors and state inspectors to better prepare these 
inspectors to oversee implementation of the integrity rule by pipeline 
companies.It is clear that OPS has the statutory authority to implement 
these rules, given the fact that they have issued rulemakings for 
hazardous liquid pipelines and are moving forward on a rule for natural 
gas transmission pipelines. INGAA encourages OPS to move quickly on 
this rule.
                    operator qualification standards
    The Operator Qualification rule required that pipeline operators 
must have a written qualification program by April 27, 2001. This new 
program is expected to enable OPS to document that employees who 
operate and maintain the pipeline are and continue to be qualified for 
these tasks. The interstate pipeline industry is currently in the 
process of completing the initial qualification of individuals 
performing covered tasks and the deadline for this effort is October 
28, 2002. INGAA and its member companies have also developed a common 
methodology to qualify contractors and service providers, so we can be 
effective and efficient at verifying their qualifications.
                  pipeline accident reporting by cause
    The natural gas pipeline industry has been reporting detailed 
information regarding pipeline accidents by, in essence, five 
categories of causes--outside force damage, construction/material 
defect, external corrosion, internal corrosion and a category called 
``other'' since the inception of the OPS program. We have been and 
continue submitting an annual report to OPS regarding all accidents 
that occurred within that year along with an inventory of our pipe. 
This information has been used by OPS and the industry for extensive 
data analysis and trending.
    OPS has now adopted a more detailed and specific reporting system. 
This new system will have 25 categories. These categories are basically 
grouped into three headings: time dependent--examples are internal and 
external corrosion; time independent--examples are third party damage, 
operator excavation damage and earth movement; and stable--such as pipe 
manufacturing or construction defects. This will provide both OPS and 
the industry with more specific information on causes of accidents to 
better refine our risk assessment technologies and to make other 
necessary changes to further mitigate accidents.
                             communications
    INGAA is sensitive to the importance of public perception. The 
demand for natural gas is growing and is anticipated to increase 32 
percent (from 22.8 Tcf today to 30 Tcf) by about 2010 to 2012. The 
current natural gas pipeline infrastructure cannot support this 
increase in demand. New pipelines will need to be built.
    The current environment provides both opportunities and challenges 
for growth of natural gas use. INGAA and its member companies are 
undertaking a project to improve our communications with the public. We 
are convening member company representatives to collect and develop 
``best practices'' that will then be deployed by holding industry 
workshops. We will also be working with OPS/RSPA and FERC. Out of these 
efforts, we expect to improve our communication with the public so that 
they can better understand pipeline safety and other issues. We hope to 
complete this effort before the end of this year.
                           pipeline security
    In the wake of the September 11 attacks, our industry immediately 
increased security and began an assessment of ways to reduce and 
respond to terrorist threats. As part of this effort, INGAA formed a 
Board Task Force, which I chair, to oversee the security efforts for 
interstate natural gas pipelines. The focus is on critical onshore and 
offshore pipelines and related facilities, as well as liquefied natural 
gas (LNG) facilities. We have reached out beyond our membership to 
others in the industry who have these types of natural gas transmission 
pipeline facilities and included them on the task force.
    To date we have ensured that every INGAA company has designated a 
member of its senior management and made them responsible for security. 
Our task force has assessed our industry security practices, given the 
new threats, and are developing common risk based practices that can be 
utilized by our members. These practices will cover preparation (having 
a plan), detection, deterrence, response to an incident and recovery 
from an incident. We are categorizing those facilities that are 
critical either to the operation of the pipeline or in areas where 
there is high population density near the pipeline. We are also 
categorizing those facilities that are critical to public service, 
i.e.; provide needed service to the military, government, industrial 
complexes, electric power plants and communities.
    INGAA has been working with our customers and suppliers, AGA, APGA, 
EEI and API to develop a common understanding and nomenclature for 
threats and security practices. We are working with DOT and DOE and 
others in the natural gas industry on consensus security practices that 
all pipelines will implement. This should be completed later this 
spring. We have determined that we can be more prepared to respond to a 
terrorist incident if we formalize cooperation among companies on spare 
parts exchange. Additionally, we are assessing the need for separate 
regional inventory systems of critical items. We are also reviewing the 
effectiveness of our present communications concerning security with 
the public, local emergency planning committees, local, state and 
federal law enforcement and government officials. We are working 
cooperatively with a number of federal departments and agencies 
including the Office of Pipeline Safety, DOE, FERC, the FBI, Homeland 
Security, and CEQ. INGAA would like to work with the Committee so that 
any legislation regarding security reflects the efforts being made with 
government agencies and others in the natural gas industry.
    We are also currently working with the Administration on issues 
that need resolution and that may require assistance from Congress. The 
first issue is the need to have pre-approved permit waivers for 
response and recovery to a terrorist attack. If a facility experiences 
a terrorist attack, it will become a crime scene and we will be denied 
access. However, the need will exist for us to continue transporting 
natural gas and we will have to quickly find a new site upon which to 
rebuild at the minimum, a temporary facility. Physically, we can 
reconstruct quickly and we are verifying the availability of the needed 
spare equipment, but we need a quick permit approval process to 
expedite the reconstruction.
    Our second issue is the possible implication of antitrust law to 
industry/regional planning to deal with supply disruptions as well as 
development and coordination of a critical spare parts inventory. We 
are currently performing a review of antitrust implications and are 
preparing to talk to the Department of Justice and others about what 
flexibility we may have under the laws to participate in regional 
table-top tests to better coordinate planning for and reaction to a 
terrorist event. Our industry needs to be assured that we can 
communicate among pipelines, with producers, our customers and others 
to ensure the flow of natural gas in the event of a significant 
incident.
    Finally, under these extraordinary conditions, INGAA has concerns 
with the tension between the need to restrict access to sensitive 
pipeline infrastructure and operational information and the public's 
right to know. We want to make sure that this sensitive information 
about pipelines is exempt from disclosure under the Freedom of 
Information Act (FOIA) and, therefore, will not able to be distributed 
or displayed to permit easy access by terrorist groups. This type of 
information includes detailed pipeline maps, information that can make 
a specific area attractive to a terrorist (such as pipeline locations 
near hospitals, schools, etc.), and engineering information that 
identifies the strategic importance of a pipeline facility including 
schematic flow charts. We need assurance that FOIA specifically exempts 
the release of critical energy infrastructure information. If not, once 
an agency releases the information for legitimate requests under FOIA, 
it cannot prevent its release to any other requestor--even a terrorist.
    But we also need to make sure that those who have the ``need to 
know'' about a pipeline in their local area have adequate access to 
information. This includes emergency responders, our neighbors who live 
next to a pipeline, and key state and federal officials. However, under 
FOIA, once the information is released to them, it is then considered 
to be ``public'' and released to anyone who asks for it. For example, a 
recently published National Environmental Policy Act (NEPA) report for 
a new pipeline shows exactly where the pipeline is in relationship to 
schools, hospitals, etc. Although it is clearly of importance to a 
community to know where there is underground infrastructure, such 
information, in the wrong hands, could pose a security threat. 
Pipelines and our regulators need to walk a fine line to assure that 
those who need the information get it (perhaps with requirements that 
they can't release it or put it on their websites) while limiting 
general distribution of detailed information so that it does not get 
into the wrong hands.
    There are other issues on which we are working with the 
Administration and hope that they will be resolved. We are pleased 
about the recent announcement by the Head of Homeland Security Governor 
Tom Ridge regarding a government-agreed upon alert system and the use 
of comment nomenclature. This is a good step forward.
                               conclusion
    I want to thank this Subcommittee for inviting me to testify today. 
INGAA and its member companies take pipeline safety and security as top 
issues of importance. We want to work with this Subcommittee and the 
full Committee to obtain sound pipeline safety reauthorization 
legislation in this Congress.

    Mr. Barton. Thank you, sir.
    We now would like to hear from Mr. Shea.

                    STATEMENT OF WILLIAM SHEA

    Mr. Shea. Mr. Chairman, and members of the subcommittee, my 
name is Bill Shea, and I am President and CEO of Buckeye 
Pipeline Company. Buckeye owns and operates facilities in 11 
States in the Northeast, Midwest, Texas, Louisiana, and 
Florida. Buckeye is headquartered in Emmanaus, Pennsylvania.
    I am here today representing the Association of Oil 
Pipelines and the Liquid Pipeline Companies of the American 
Petroleum Institute. Together, these two organizations 
represent the vast majority of domestic oil pipelines.
    The 200,000 miles of crude oil and petroleum product 
pipelines in this country are essential to keeping our economy 
moving. Oil pipelines provide about 68 percent of domestic 
transportation for crude oil and petroleum products.
    Another 27 percent is moved by water, and about 5 percent 
by truck or rail. Pipelines are also very efficient. While 
gasoline prices vary considerably from time to time, and place 
to place, average pipeline transportation costs is consistently 
around 2 to 3 cents per gallon.
    The oil pipeline industry also has the best safety record 
of any of the transportation modes and one that is getting 
safer as this chart, or the two charts over to your left would 
indicate.
    The industry is committed to improving that record until 
all incidents are eliminated. In order to achieve that goal the 
liquid pipeline industry has undertaken first to use 
comprehensive risk management tools and techniques to reduce 
the likelihood of pipeline incidents and eventually to 
eliminate them.
    Second, collect, analyze, and understand the industry's 
safety and environmental performance, and use that information 
to reduce risks and drive accidents to zero.
    Third, to take responsibility for all aspects of excavation 
damage prevention, even those that pipeline operators can only 
influence and not control. Fourth, provide the best possible 
geographic information on pipeline systems to be used by all 
stakeholders and pipeline safety.
    And fifth to drive industry sponsored initiatives for 
improved safety and environmental performance that exceed 
government requirements.
    As a result of a 1994 pipeline safety summit, OPS and 
industry undertook a collaborative effort to explore risk-based 
solutions as a way to drive continuous improvement in safety.
    Congress approved that effort and authorized the risk 
demonstration program to test and measure the application of 
risk management to the concepts of pipeline safety. OPS found 
those approved risk demonstration projects enhanced safety on 
the individual systems, and enabled OPS to learn much more 
about the operations of the affected pipeline and the pipeline 
operator, than would have been learned from periodic 
inspections.
    The Office of Pipeline Safety's integrity management rule 
build on those lessons. These rules, the last of which became 
final earlier this year, stress risk assessment, 
prioritization, data and information integration from multiple 
sources, and performance measurement and tracking.
    OPS has already begun assessing the progress under the 
rulemaking in a series of quick hit reviews reviewing 
individual operator's programs for effectiveness. Now, I have 
had the personal experience with the quick hit program, as 
Buckeye was the first pipeline operator to go through this 
process.
    We believe that our focus on risk-based approaches is 
showing results. The number of liquid pipeline incidents in 
2000 and 2001 significantly declined, and may signal the 
beginning of a new long term trend.
    OPS has also issued a number of recent risk-based 
rulemakings and undertaken other initiatives aimed at fostering 
improved risk management.
    Our industry has supported these efforts, which include 
enhanced data collection, support for the Common Ground 
Alliance, and improved mapping in the form of a GIS based 
national pipeline mapping system, stronger corrosion rules, and 
operator qualification rules that require operators to 
objectively demonstrate to regulators that their employees, 
and/or contractors are qualified to perform specific tasks and 
can recognize and respond to conditions that may be abnormal.
    But the liquid pipeline industry is not only working with 
OPS to foster continuous improvement through regulation. 
Industry recognizes that there are still significant advances 
to be made in the understanding of pipeline performance and 
have formed an industry-wide environmental and safety 
initiative.
    Our efforts in 2002 aim at fostering strong and effective 
Federal regulation of pipelines, refining data management, and 
performance methods, engaging with Common Ground Alliance to 
target improvement and underground damage prevention, and many 
other initiatives.
    In summary, we believe that the movement to a risk-based 
approach in pipeline safety regulation has resulted in 
significant achievement and enhancements in DoT's pipeline 
safety program, improvements in pipeline management by 
operators, and what we believe is a trend in an improved safety 
record.
    Congress should foster these improvements through 
appropriate support for risk based decision and a rulemaking 
process aimed at addressing the greatest risks first. Thank 
you.
    [The prepared statement of William Shea follows:]
 Prepared Statement of Bill Shea, President and CEO, Buckeye Pipe Line 
 Company, L.P. on Behalf of the Association of Oil Pipe Lines and the 
                      American Petroleum Institute
                              introduction
    Mr. Chairman, Members of the Subcommittee, my name is Bill Shea. I 
am President and CEO of Buckeye Pipe Line Company, L.P. Buckeye owns 
and operates nearly 3,900 miles of pipelines carrying refined petroleum 
products, including gasoline, jet fuel, diesel fuel, heating oil and 
kerosene. We also operate approximately 1,200 miles of pipeline for 
other owners. We own or operate facilities in 10 states: Illinois, 
Indiana, Ohio, New York, Pennsylvania, New Jersey, Connecticut, 
Massachusetts, Texas, and Florida. Buckeye is headquartered in Emmaus, 
Pennsylvania.
    Currently I serve as Chairman of the Executive Committee of the 
Association of Oil Pipe Lines (AOPL) and a member of the Pipeline 
Committee of the American Petroleum Institute (API). I am here today 
testifying on behalf of both AOPL and API. The Association of Oil Pipe 
Lines is a trade association of owners and operators of crude oil and 
refined petroleum product pipelines. AOPL's members move over 80% of 
the oil transported in this country. The American Petroleum Institute 
represents over 400 companies involved in all aspects of the oil and 
gas industry, including exploration, production, transportation, 
refining, and marketing. Together, these two organizations represent 
the vast majority of domestic oil pipelines.
                      the liquid pipeline industry
    Mr. Chairman, the background information for my testimony is 
presented in the information packet included with my testimony. I am 
also releasing to the Committee our most recent publication, The U.S. 
Oil Pipeline Industry's Performance, an updated report prepared by 
Cheryl J. Trench of Allegro Energy Group.
    There are approximately 200,000 miles of crude oil and petroleum 
products pipelines in this country. This liquid pipeline infrastructure 
is an essential tool in keeping our economy moving. On a barrel-mile 
basis, pipelines provide about 68% of the crude oil and petroleum 
products transportation domestically. Another 27% is moved by water and 
about 5% by truck or rail. (One barrel transported one mile is a 
barrel-mile.)
    The gasoline you put in your car most likely gets to you in large 
part by pipeline. Pipelines deliver directly to our nation's military 
bases and airports the jet fuel that powers our air force and our 
aviation industry. The trucking system relies on diesel fuel delivered 
by pipeline. Millions of heating oil and propane customers rely on 
pipelines to bring fuel into their area. Industries across America rely 
on pipelines to deliver the feedstock they use to make many products 
that are essential to our homes and businesses, like plastics and 
pharmaceuticals.
    Pipelines are an extremely efficient petroleum transportation 
system. While gasoline prices at the pump may vary considerably from 
time to time and place to place, the pipeline transportation 
contribution to the cost is consistently around 2-3 cents. We 
accomplish our job so efficiently that America's oil pipelines 
transport 16.8% of all U.S. freight, but represent only 1.9% of the 
nation's freight bill.
    Pipelines also have very low air emissions compared to other modes 
of transportation. Pipelines move oil in a closed environment, usually 
underground, propelled by centrifugal force motors, usually electric. 
For this reason, pipelines are able to move huge amounts of fuel 
without contributing to our ambient air pollution problems.
                      the industry's safety record
    The U.S. liquid pipeline industry has a strong safety record. Yet 
it is a record that we in the industry are striving constantly to 
improve. In the ten years ending with 2001, there were 21 deaths and 
117 injuries associated with liquid pipeline accidents. In three of 
those years, including 2001, there were no fatalities, and that is the 
goal we seek. Pipeline transportation of fuel is far and away the 
safest form of transportation. For example, on a per gallon basis, 
deaths are 60 times more likely to occur when transportation is by 
truck rather than by pipeline. Many industries would be envious of our 
record. However, we industry members believe that pipeline incidents, 
especially those that involve injury to persons or the environment, are 
unacceptable. In this way, we are like those impacted by these 
incidents. We would like to see them eliminated.
    Our efforts to improve safety have shown results over the long 
term. Real trends in safety performance take a long time to see. As the 
chart here demonstrates, over the last 30 years, our safety performance 
has improved markedly, whether measured in number of spills or volumes 
released. The number of pipeline incidents has decreased by 56% and the 
volume released has gone down by more than 60%. These improvements have 
occurred at the same time that the volume transported to serve our 
nation's energy needs has increased. Viewed on a barrel-mile basis, 
volumes spilled have decreased by over 70%.
    The year 2000 set record lows for both the number of incidents and 
the volumes spilled, and 2001 looks even better. The low numbers have 
not happened coincidently. They reflect a concerted effort by the 
industry and its regulator to improve safety over the long term. The 
records set in 2000 and 2001 are encouraging, but we are determined to 
do all we can to turn these recent promising short-term results into a 
new long-term trend. No spill of any size should be tolerated, and our 
goal must be to eliminate spills entirely.
                       goal for today's testimony
    It is wise periodically to step back and review long term 
objectives and our progress towards those objectives. Today I would 
like to review five major long-term objectives the pipeline industry 
has undertaken and our progress toward meeting those objectives.
    Those five objectives are:

 To focus the pipeline industry on risk reduction as a better 
        way to eliminate incidents, rather than on chasing individual 
        actions or activities directed at preventing specific types of 
        accidents;
 To collect, analyze, and understand the pipeline industry's 
        safety and environmental performance and use that information 
        to reduce risk and drive accidents to zero;
 To take responsibility for all aspects of excavation damage 
        prevention, even those which pipeline operators can only 
        influence, not control;
 To provide the best possible geographic information on 
        pipeline systems to be used by all stakeholders in pipeline 
        safety; and
 To undertake an industry driven initiative focused on improved 
        safety and environmental performance.
    As an oversight committee, it is your charge to evaluate the 
overall progress the industry has made and the role of the federal 
government through the Office of Pipeline Safety in policing the 
pipeline industry.
               risk reduction--changing our expectations
    Today's pipeline safety record is the result of a long-range plan 
that had its inception back in the early nineties. There were several 
initiating events. In 1992, the Congress reauthorized the pipeline 
safety program to add protection of the environment to the mandate of 
the Department of Transportation's Office of Pipeline Safety (OPS) 
pipeline safety program. This was similar to mandates imposed on the 
maritime industry by the Oil Pollution Act of 1990.
    The OPS is a relatively small agency that had previously been 
responsible primarily for public safety as it relates to pipeline 
operations. In addition to expanding the scope of the OPS's 
responsibilities, the 1992 act had also included a number of 
prescriptive directives to the agency and to the industry, each a 
specific solution to a single accident.
    After a number of proposed rules were severely criticized, the OPS 
called a Pipeline Safety Summit in June 1994 to discuss with all 
stakeholders the state of pipeline safety. The public, state and local 
regulators, and members of the pipeline industry expressed significant 
concerns over the acceptability of then operational practices, 
regulations, and their enforcement. Participants also identified 
evolving environmental sensitivities and priorities as a factor 
affecting pipeline risks and operations, and the limited resources 
available to the agency and the industry to address the many 
expectations of Congress and the public. The OPS and the liquid 
pipeline industry recognized the need to address these risk-related 
concerns in a thoughtful way, with an emphasis on reducing risks while 
communicating and demonstrating to all stakeholders that industry and 
government can work together in a responsible manner.
    The OPS and the API's General Committee on Pipelines formed the 
Risk Assessment Quality Action Team as a cooperative joint venture to 
explore the applicability and potential benefits to the liquid pipeline 
industry of formalized risk management programs, such as those that had 
been used successfully by the nuclear, chemical and refining industries 
to improve safety performance. For over a year, the Team sought input 
from many risk management experts including those at the Harvard Center 
for Risk Analysis. On June 20, 1995, the Team issued a formal report on 
the use of risk management in the liquid pipeline industry, identifying 
a number of areas within the OPS program and the liquid pipeline 
industry that would benefit from risk management techniques and 
practices. The Team adopted a number of action items aimed at improving 
the management of pipeline risk, including development of industry 
guidelines on the application of risk management, a decision to 
initiate training of OPS and industry personnel in risk management 
techniques, and adoption of collaborative efforts to improve the 
quality of risk models and pipeline failure and operating data 
necessary to support these models. The Team also agreed to move forward 
with risk management demonstration projects to test the validity of 
using risk management in the administration of a pipeline safety 
program.
                 risk-based integrity management rules
    After Risk Assessment Quality Action Team finalized its 
recommendations, OPS began considering how to incorporate the concept 
of risk reduction into the pipeline regulatory program. OPS began by 
developing a program for risk-based demonstration projects to test and 
measure the application of these new concepts into pipeline safety. 
Congress sanctioned these efforts through revisions to the pipeline 
safety program adopted as part of the reauthorization of the pipeline 
safety act in 1996. Ultimately, OPS approved seven demonstration 
projects testing alternatives to the pipeline safety regulations that 
offered equal or greater safety than the prescribed rules. Under the 
program, companies volunteering to participate also agreed to 
significant involvement in their operations by OPS inspectors and other 
personnel. At the end of the demonstration period, OPS found these 
projects had enhanced safety on the individual systems and had enabled 
OPS to learn much about the operations of the affected pipeline, as 
well as the pipeline operator, beyond the portion of the pipeline 
involved in the demonstration project.
    OPS then focused on developing new regulations around managing 
system integrity, and concentrated on four desired outcomes:

 Accelerating integrity assessment of pipelines in High 
        Consequence Areas;
 Improving integrity management systems within companies;
 Improving the government's role in reviewing the adequacy of 
        integrity plans; and
 Providing increased public assurance that risks are being 
        effectively reduced.
    As now published, the hazardous liquid integrity management rules 
propose initial, or baseline, inspections of all pipeline systems that 
are in or could affect High Consequence Areas. These inspections, 
typically conducted using sophisticated electronic in-line inspection 
tools or physical strength tests of the pipeline, will be concentrated 
in areas where hazardous liquid pipeline releases could have more 
severe consequences. Based on the initial assessment, operators will be 
required to repair defects, take specific mitigative actions to protect 
certain High Consequence Areas, reevaluate response plans, as well as 
integrate other integrity improvement efforts and activities, such as 
the effectiveness of one-call programs, into post assessment risk 
reduction actions.
    One of the major efforts under this rulemaking was defining those 
resources that require additional protective measures. OPS assembled a 
team of government and private stakeholders to develop definitions 
based on the guidance offered by Congress in the 1996 reauthorization. 
This multi-year effort resulted in the final rule defining specific 
areas based on their ecological sensitivity or their use as drinking 
water supplies.
    Under the integrity management rules, operators of more than 500 
miles of pipelines must develop a baseline integrity plan by March 31, 
2002. Smaller operators are required to have their plan in place by 
February 13, 2003. In the baseline plan, an operator must identify the 
highest risk 50% of segments covered under the rule and schedule those 
segments for inspection and evaluation within three and a half years. 
The remaining 50% must be evaluated within seven years. Subsequent 
inspections must then occur on a cycle of no longer than five years. 
Many operators are finding that the efficient use of internal 
inspection tools and the tool vendors' resources will lead to as much 
as 90% of the actual mileage being inspected in the early period.
    OPS has already moved to enforcement of the new rule and is 
conducting a series of ``Quick Hit'' inspections to review operators' 
diligence in identifying High Consequence Areas along their pipeline 
systems and taking a first look at baseline assessment plans. These 
inspections, generally conducted by three inspectors visiting the 
offices of the affected pipeline, are more in-depth and require a 
better understanding of pipeline operations than traditional pipeline 
inspections. The Quick Hit inspection teams are not only identifying 
strengths and weaknesses in the operators' baseline plans, but also are 
training inspectors to conduct comprehensive reviews of pipeline 
systems. The Quick Hit inspections will be completed by the end of 
April and comprehensive reviews of operator integrity management plans 
will follow.
    The comprehensive risk-based approach under the new rules requires 
a real change in culture for many operators and inspectors. OPS is 
stressing risk assessment, prioritization, data and information 
integration from multiple sources and performance measurement and 
tracking. Judging from other industries where this approach has been 
proven, real risk reduction and improved system integrity will be the 
result. However, the effectiveness of this approach can only be proven 
over time. We hope that the significantly reduced number of incidents 
in 2000 and 2001 are the beginning of a long-term trend that shows a 
steady improvement in pipeline integrity and a decrease in pipeline 
incidents.
                       using data to reduce risk
    The recommendations from the Risk Assessment Quality Action team 
also formed the basis for a new set of initiatives. Risk-based 
decision-making is very much dependent on data that can be used to 
identify and prioritize risk. The OPS and industry began to look at 
existing data in new ways and tried to determine what additional 
information might need to be collected. OPS data was reviewed and 
analyzed to look for strengths, weaknesses, and means to improve the 
data that would support analytical work.
    As a result, the industry (with the encouragement of OPS) initiated 
in 1999 the Pipeline Performance Tracking System (PPTS), a 
groundbreaking effort to collect more meaningful data on spills, 
information that would first aid in understanding spills and thus in 
preventing them. Participants in this voluntary program (currently more 
than 50 oil pipeline operators) report any spill of five gallons or 
more, and any smaller spills to water. For spills of five barrels or 
more, participants provide detailed data on the incident's causes and 
consequences. In addition to accident information, PPTS collects 
system-wide information once a year on mileage, commodities moved, 
decade of construction, pipeline diameter and so forth that will allow 
industry also to look at rates of incidents, not just total numbers.
    OPS has taken advantage of the industry's experience with data 
collection to develop a new regulation reducing the federal reporting 
threshold from 50 barrels (2100 gallons) to 5 gallons, requiring more 
concise cause differentiation, and providing greater detail about 
specific accidents. The final rule revising the pipeline incident 
reporting form--issued January 8, 2002 (FR Doc. 02-266)--is designed to 
gather much better information from which the causes and consequences 
of accidents can be assessed.
    OPS is also planning to move forward with a rule to collect 
infrastructure information about hazardous liquid pipelines that will 
enable OPS to conduct accident evaluations, including trend analysis. 
The hazardous liquid pipeline industry supports this effort.
          a holistic approach to underground damage prevention
    Excavation damage is the cause of the largest amounts of lost 
volumes on liquid pipelines and the greatest cause of gas pipeline 
incidents. Pipeline operators must often depend on the actions of 
others to reduce and eventually eliminate excavation accidents. The 
work on risk assessment and risk management provided a model for 
another major joint OPS/industry effort--the Damage Prevention Quality 
Action Team. OPS worked first with the liquid pipeline industry and 
then with all stakeholders to develop recommendations on reducing 
excavation damage to pipelines--and ultimately to all underground 
facilities. The key to preventing excavation damage is to ensure that 
every party does its job well, using proper procedures and 
understanding the impact of their task. At the center of excavation 
damage prevention is the ``one-call'' program. Under a one-call 
program, an excavator (or homeowner) telephones the state or regional 
one-call notification center to give notice of intent to dig in a 
specific area. The center then acts as a clearinghouse, informing the 
operator of any potentially-affected underground facility: liquids and 
natural gas pipelines, utility and telecommunications cables, and water 
and sewer lines. The facility operator then provides specific location 
information to the excavator and marks its underground facility in the 
area of the proposed digging. One-call programs are generally governed 
by state law. One-call centers are typically funded by the underground 
utility operators, usually on a per call basis.
    The excavator must make a phone call, the operator must understand 
whether its facilities are involved in the area of work, the locating 
service must mark utilities accurately, and the excavating contractor 
must dig with care. Any breakdown in the chain can lead to accidents.
    One of the keys to preventing excavation damage to underground 
facilities through one-call centers is awareness. OPS and the industry 
next turned to developing and testing a new communications program to 
raise excavator awareness of underground utilities. The Dig Safely 
campaign, now in use nationwide, has developed a video, a national 800 
number where excavators can obtain information about their local one-
call program, and a universal dig safely logo that all excavation 
companies and equipment rental companies are encouraged to place on all 
equipment.
    All parties to the damage prevention effort also supported the 
passage of Subtitle C of Title VII of the Transportation Equity Act for 
the 21st Century (P.L. 95-178), a one-call notification program to 
promote enhancements in state underground damage prevention programs. 
This statute also authorized a multi-stakeholder study of underground 
damage prevention best practices that came to be called the ``Common 
Ground'' study. Building on the success of this study process in 
brining together the key interests in underground damage prevention, 
OPS and the participants in the damage prevention effort created the 
Common Ground Alliance to provide for an ongoing private sector based 
focus on damage prevention best practices. The purpose of this 
nonprofit organization is to ensure public safety, environmental 
protection, and the integrity of services by promoting effective damage 
prevention practices. The Common Ground Alliance provides a forum where 
all affected interests can participate as equals to address issues in 
underground damage prevention. The Alliance's activities include the 
promotion of R&D efforts to develop new damage prevention technologies, 
the identification and dissemination of best practices, and acting as a 
clearinghouse for the collection, analysis and dissemination of damage 
prevention data. The Alliance has also taken responsibility for 
implementing the Dig Safely campaign.
    OPS and industry are also seeking further improvements to 
underground damage prevention in the current reauthorization of the 
pipeline safety program. Among these are increased penalties for those 
who fail to contact their one-call system and damage a pipeline 
facility as a result. We also seek broaden application of these proven 
one-call systems to all excavation activities, including requiring use 
of one-call systems by state and municipal excavators and their 
contractors. In many states, government excavators and contractors are 
not required to use the one-call system.
 geographic information--creating the national pipeline mapping system
    Critics of the pipeline industry, including the National 
Transportation Safety Board, Congress, public safety advocates and 
communities expressed a desire for much better geographic and system 
information about pipelines. Building again on the team approach, the 
OPS formed a Mapping Quality Action Team to determine how best to 
address these concerns and expectations. The result of the multiyear 
team effort was the creation of the voluntary National Pipeline Mapping 
System (NPMS). Under this program, pipelines provide information in 
certain prescribed formats to state-based pipeline mapping information 
depositories. This information is then incorporated into a GIS-based 
National Pipeline Mapping System.
    The liquid pipeline industry (through its individual operators) has 
voluntarily provided necessary information on 90% of systems to the 
NPMS. The natural gas industry, which has significantly more mileage 
than the liquid pipelines, has supplied information on 50% of the 
industry's mileage.
    This information was available on-line until the events of 
September 11, 2001. The OPS has taken this information off the publicly 
accessible internet based NPMS and now provides access to emergency 
responders, local officials, industry members and others upon a 
specific determination based on need. As appropriate security measures 
are put in place, OPS expects to make more of this information 
available upon request, if not on-line.
                  improved and updated corrosion rules
    A detailed review of incident data revealed that corrosion 
(internal, external, micro-biological) is the leading cause liquid 
pipeline incidents (although more volume is released through third 
party damage). Industry engages in a number of different activities to 
combat corrosion ranging from the application of enhanced coatings to 
cathodic protection, and from the performance of close interval surveys 
to internal inspections. Corrosion control is a challenge for the 
entire pipeline industry. OPS also initiated a number of different 
approaches focused on reducing corrosion on pipelines, with mixed 
success. In 1998, OPS began a coordinated rulemaking process seeking 
input from corrosion experts, particularly the National Association of 
Corrosion Engineers, and all stakeholders. The resulting rule, issued 
December 27, 2001, updates and expands OPS regulations designed to 
prevent pipeline incidents involving corrosion.
                        operator qualifications
    Today's pipeline workforce is very well qualified. Operator error 
is not a significant contributor to accidents when compared with 
excavation damage or corrosion, for example. Even so, we recognize OPS 
needs to be able to assure the public that operators do have a 
qualified workforce and that federal inspectors are routinely 
evaluating employee capabilities and knowledge. Under rules promulgated 
several years ago, OPS crafted a set of requirements based on specific 
tasks required to be performed under the pipeline safety regulations.
    OPS has not mandated a single procedure or test by which operators 
are qualified. Instead, OPS's rule requires the operator to demonstrate 
that its employees and/or contractors are qualified to perform specific 
tasks and that they can recognize and respond to conditions that may be 
abnormal. These skills must be demonstrated using various types of 
evaluations, including written and performance testing. The burden is 
on the operator to demonstrate to OPS that employees or contractors 
will be able to perform as expected.
    The pipeline industry, through the API Subcommittee on Training and 
the Consortium on Operator Qualifications, has developed guidance 
materials, a recommended practice, and standardized assessments, and is 
developing supporting curricula for all the pipeline safety and 
maintenance tasks that fall under the operator qualifications 
requirements.
                           pipeline security
    In the aftermath of the terrorist attacks of September 11, 2001, 
liquid pipeline operators took prompt action to protect the public, 
employees and facilities. Employees were made aware of the severity of 
the threat and the operator's commitment to address this newly defined 
risk. Operators went on alert and remain on alert. Operators began 
reviewing procedures, reducing and restricting access to facilities, 
tightening security procedures, rerouting transportation patterns near 
key facilities, closely monitoring visitors and activities near key 
facilities and making capital improvements to harden facilities. These 
actions were undertaken without direction from government but in 
coordination with the Office of Pipeline Safety and later, the 
Department of Energy and the Office of Homeland Security. Pipeline 
operators, like other industries, are looking to government to provide 
information about threats wherever possible, to deploy police power 
quickly and intelligently, and to assist in recovery in the event of an 
attack.
    The federal government could provide additional assistance in the 
aftermath of an attack to ensure quick restoration of critical pipeline 
services and to minimize the disruption of energy supplies to 
consumers. With regard to recovery, we believe there is a particular 
need for the government to review its emergency authorities and develop 
workable plans for emergency access to provide alternate rights-of-way 
around attack sites. After a successful terrorist attack, the attack 
site may be inaccessible to the pipeline operator for some time due to 
contamination or because it has become a crime scene. Yet the public 
interest will be in the earliest resumption of service possible. 
Without emergency rerouting authority, service resumption may be 
unnecessarily delayed.
    With respect to pipeline security, there is little question in our 
minds that planning for and putting deterrence in place against 
potential terrorist attacks, and planning for recovery from such 
attacks fit well into a risk based approach to pipeline integrity. 
Without government mandate, the pipeline industry is developing 
specific guidance for incorporating security planning into operator 
pipeline integrity plans. This is being done in consultation with the 
Office of Pipeline Safety and other federal agencies with experience 
and expertise in security planning and implementation. Liquid pipeline 
operators are familiar with the techniques of risk management in safety 
planning, so it seems to us entirely appropriate and natural to extend 
these techniques to security planning.
                          industry initiatives
    The development and implementation of all of these rulemakings and 
standards have absorbed significant resources over the last several 
years. But industry recognizes that progress has been made in pipeline 
integrity management and that there have been significant advancements 
in the understanding of pipeline performance. The liquid pipeline 
industry is determined to continue the effort. Thus, chief executive 
officers of leadership operators in the liquid pipeline industry began 
in December 2000 and recently expanded an Environmental and Safety 
Initiative.
    The Environmental and Safety Initiative is guided by a shared 
vision of the oil pipeline industry. We use the vision as a preface to 
communications with the public and internally in our companies to 
communicate at all levels a clear statement of purpose and priority for 
our work on a day-to-day basis.
    Our vision is an oil pipeline industry that--
 conducts operations safely and with respect for the 
        environment;
 respects the privilege to operate granted to it by the public; 
        and
 provides reliable transportation of the crude oil and refined 
        products upon which America and all Americans rely.
    We commit to fulfill this vision by:

 supporting effective federal oversight of pipeline operations 
        in cooperation with states and local communities;
 promoting cooperation among communities, public officials, 
        employees and companies by sharing information on pipelines and 
        pipeline safety;
 employing proven pipeline safety technologies and investing in 
        new technologies to further improve performance; and
 achieving operational excellence through sound risk management 
        approaches.
    The Initiative is made up of multiple teams, each captained by a 
CEO and focusing on one aspect of pipeline safety and performance. The 
Initiative in 2002 consists of multiple teams with the purposes stated 
below:
1. Pipeline Safety Reauthorization and Pipeline Integrity:
    Promote strong, effective and credible federal regulation of the 
liquid pipeline industry by the Office of Pipeline Safety (OPS); 
understand the agenda of OPS and be proactive in cooperating with the 
OPS, its stakeholders and its regulatory oversight of liquid pipelines; 
support fair and effective enforcement of OPS regulations to establish 
a floor of performance for all companies; and improve procedures for 
permitting necessary to perform pipeline inspections and repairs.
2. Data Management and Performance Metrics:
    Continue efforts begun in 1999 to improve OPS incident reporting; 
continue to expand and refine the voluntary Pipeline Performance 
Tracking System incident and infrastructure database; use both industry 
and OPS databases to foster credible analyses of important data-driven 
policy issues; develop metrics for evaluating changes in pipeline 
performance upon implementation of the integrity management rules; and 
evaluate and set leading (as opposed to lagging) performance measures 
for the pipeline industry.
3. Underground Damage Prevention/Rights-of-Way
    Assume a full and enthusiastic role in the Common Ground Alliance 
(CGA) in cooperation with other industries with interest in underground 
damage prevention; foster enhanced data collection and analysis by CGA 
to better target improvements in damage prevention; help develop land 
use best practices and industry standards on setbacks; and work to 
improve zoning ordinances to protect pipeline rights-of-way from 
encroachment.
4. Research and Development
    Help design and identify funding for a liquid pipeline integrity 
technology research and development program and establish an 
appropriate organizational home for the program; work with the 
Department of Transportation and the Department of Energy to facilitate 
collaboration in research and development on pipeline integrity issues; 
and identify liquid pipeline integrity research and development 
projects of the highest priority.
5. Public Information and Communication
    As part of an industry-wide communications plan, develop guidance 
for activities that each member company would deploy to communicate 
with elected officials and the public to foster understanding of 
pipeline operations; make maximum use of the internet to make 
information available; establish outreach and active liaison with key 
state and local groups; exceed OPS requirements for availability of 
information and communication with need-to-know constituencies; and 
establish mechanisms to assess the effectiveness of communications 
efforts on a continuous basis.
6. Liquid and Natural Gas Pipeline Coordination
    Continue to use industry connections at the company level to 
increase communications between liquid and gas industries on the issues 
of integrity management, corrosion control, communications and other 
pipeline safety initiatives.
7. Pipeline Security
    Finalize drafted security conditions and countermeasures and 
industry guidance document on security; conduct an evaluation of the 
vulnerability of the industry to escalating levels of threats resulting 
from possible terrorist activity; work with OPS and other federal 
agencies on security issues (background checks, critical facilities, 
threat information, etc); and address other security issues as they 
arise.
8. Integrity/Operational Best Practices
    Promote inter-company learning to improve pipeline operations and 
integrity; develop integrity and operational best practices for 
adoption by the industry drawing upon the resources of the Pipeline 
Performance Tracking System, the OPS audits of Integrity Management 
Programs and company experience in implementing risk-based integrity 
management programs.
    These team efforts are direct progeny of that initial Risk 
Assessment Quality Action Team begun in 1995 and the primary focus of 
the industry in 2002. All are aimed at finding the necessary tools to 
constantly improve pipeline safety and environmental performance.
                                summary
    We believe the movement to a risk-based approach to new pipeline 
safety regulations since the early 1990s has resulted in significant 
advancements and enhancements in the DOT's pipeline safety program, 
improvements in pipeline management by operators and what we believe is 
a trend in an improved safety record. Risk management has at times been 
controversial in Congress. We hope many of these concerns are behind 
us, because risk assessment, risk-based decision-making and risk 
management are essential to addressing the risks of pipeline operation 
under normal times and are vital in preparing for the never-to-be-
normal-again world we are part of since September 11th.

    Mr. Barton. Thank you, Mr. Shea.
    We will now hear from Mr. Morris, and both Mr. Bryant and 
Mr. Gordon send you their best. They are both attempting to get 
here, but they wanted me to let you know that they appreciate 
you being here.

                 STATEMENT OF HERMAN MORRIS, JR.

    Mr. Morris. Thank you, Mr. Chairman, and members of the 
committee, I am pleased to appear here before you here today, 
and I want to thank the committee for calling this hearing on 
this very important matter of pipeline safety and the Nation's 
natural gas distribution system.
    My name is Herman Morris, and I am president and CEO of 
Memphis Light, Gas, and Water Division. We are the largest 
three-service municipally owned utility in America, as well as 
having the lowest combined rates thanks to a very abundant 
source of God's best water.
    I have spoken to this committee before on the issues of 
importance to our electric customers, some 400,000. I am here 
today to testify on behalf of the American Gas Association and 
the American Public Gas Association on behalf of our 300,000 
gas customers.
    We currently transport gas across two interstate pipeline 
companies to MLGW from Williams Texas Gas Transmission Corp and 
from CMS Truck Line Gas Company. We transmit more than 60 
billion cubic feet of gas per year.
    Together, AGA and APGA represent the gas utilities like our 
local distribution company, LDC, that deliver virtually all of 
the natural gas to consumers in the United States. In a 
municipal utility like ours, the mayor or some elected 
official, is usually the chief chairman of the board.
    Mr. Chairman, many U.S. energy experts consider natural gas 
an ideal energy solution for our country. It is home grown, and 
it is efficient, and it is the cleanest fuel, fossil fuel, 
possible.
    And over the next two decades going into the natural gas 
market will bring tremendous benefits for all Americans. But 
industry faces some interesting challenges. Local distribution 
companies are the last critical link in the natural gas 
delivery chain.
    We are the face of the industry for our customers, and we 
place a high priority on being safe and efficient providers of 
these services.
    Regulatory Authorities. As part of an agreement with the 
Federal Government, State pipeline safety authorities, which 
have primary responsibility to regulate natural gas utilities, 
as well as interstate pipelines, routinely adopt as minimum 
standards the Federal safety standards promulgated by the DOT.
    In addition to our strong voluntary programs, we as LDCs 
comply with regulatory programs that provide stringent 
attention to design, construction, testing, maintenance, 
operation, replacement, and inspection, and monitoring 
practices.
    Natural gas utilities spend an estimated $6.4 billion each 
year on safety related activities. We all know the leading 
cause of accidents on distribution pipelines comes from 
excavators unintentionally striking lines, commonly called 
third-party damages.
    Sixty percent of the total ruptures of utility lines over 
the past few years, and the vast majority of injuries, resulted 
from such problems. While many may lump all gas pipelines 
together, there are indeed significant differences between the 
liquid transmission systems and natural gas transmission 
systems, and natural gas distribution systems like our own.
    We believe that natural gas utilities should not support 
and do not support prescriptive legislative approaches. In 
fact, we believe that the one size fits all solutions simply do 
not work and divert limited resources from areas that could 
most benefit ultimately the customers, and could affect the 
reliability of gas delivered to consumers.
    As of September 11, we all know that our world changed. And 
in our industry, first and foremost, a step needs to be taken 
to establish a single point of contact in the government from 
which consistently defined threat levels are disseminated to 
the industry.
    It is critical that there is a coordinated effort 
throughout the agencies that have jurisdiction over natural gas 
transmission and distribution sectors. The current rules which 
require operator qualifications encompass evaluation, testing, 
qualification, and additional training if needed.
    This rule, when fully implemented in October of 2002, we 
believe will provide an appropriate approach to this critical 
concern. We strongly recommend that no further action be taken 
in this area of operator qualification until the DOT and 
Congress have sufficient time to review the rules' impact on 
pipeline safety.
    We also recognize the Nation's heightened security 
concerns, and we urge Congress to consider carefully what 
information should be released to the public at large, and what 
information should be restricted to those public officials and 
emergency and law enforcement agencies that need it.
    We support the research and development efforts, and 
particularly the NARUC water commission committee's meeting and 
resolution supporting Congressional legislation for operation 
safety, research, and development, and we encourage the 
Congress and this committee to consider that.
    In conclusion, I would thank you for providing the 
opportunity to present our views on the important matter of 
pipeline safety, and we look forward to working with the 
Congress, Federal and State, and local authorities in that 
regard in the future.
    [The prepared statement of Herman Morris, Jr. follows:]
Prepared Statement of Herman Morris, President and CEO, Memphis Light, 
 Gas and Water Division on Behalf of the American Gas Association and 
                  the American Public Gas Association
    Good morning, Mr. Chairman and members of the Committee. I am 
pleased to appear before you today and wish to thank the Committee for 
calling this hearing on the important matter of pipeline safety and the 
nation's natural gas distribution system. My name is Herman Morris, and 
I am President and CEO of Memphis Light, Gas & Water (MLGW). MLGW was 
founded in 1939 and serves more than 400,000 households and customers 
in Memphis and Shelby County, Tennessee. We are the largest three-
service municipal utility system in the nation. Additionally, we 
recently instituted a telecom division.
    MLGW currently transports natural gas to Memphis across two 
interstate pipeline companies, Williams Texas Gas Transmission Corp. 
and CMS Trunkline Gas Co. MLGW transports more than 60 billion cubic 
feet of gas per year by pipeline to our 300,000 gas customers.
    I am testifying on behalf of the American Gas Association (AGA) and 
the American Public Gas Association (APGA). We look forward to working 
with Congress, the Administration, the states and other stakeholders to 
reach consensus on a bipartisan pipeline safety reauthorization bill 
this year.
    AGA is a national trade association representing 187 natural gas 
utilities collectively serving over 52 million consumers. The APGA 
represents 480 of the 1000 municipally owned gas companies across the 
nation. They include municipal gas distribution systems, public utility 
districts, county districts, and other public agencies that own and 
operate natural gas distribution facilities. Together AGA and APGA 
represent the gas utilities or local distribution companies (LDCs) that 
deliver virtually all of the natural gas to consumers in the United 
States. MLGW is a member of both organizations.
    Unlike most gas utilities, the chairman of the board of the 
municipal utility often is usually the mayor or some other locally 
elected public official. Local governments operating utility systems 
view that Congress, the regulators and utilities need to find safety 
solutions that are responsible, balanced, and cost effective.
Natural Gas Use Benefits Americans
    Mr. Chairman, many U.S. energy experts consider natural gas the 
ideal energy solution for our country. It's a homegrown fuel, it's 
efficient and it's the cleanest-burning fossil fuel. Over the next two 
decades, growing the natural gas market will bring tremendous benefits 
for all Americans.
    Increasing the use of natural gas over the next 20 years could cut 
foreign oil imports by more than 4.5 million barrels per day. And since 
natural gas is the cleanest fossil fuel, using more of it could reduce 
carbon dioxide in the air we breathe by 930 tons per year--about 10 
percent of total emissions. Fifty-five percent of America's homes are 
heated with natural gas and nearly 70 percent of all new single-family 
homes are equipped with natural gas. Abundant at home, clean to use and 
highly efficient, its perfectly suited to meet our nation's energy 
needs today, tomorrow and beyond.
``Face of the Industry''
    Local distribution companies are the last, critical link in the 
natural gas delivery chain. To most customers, utilities are the ``face 
of the industry''. Our mission is to continue to deliver natural gas to 
our communities safely, reliably and affordably. Our companies and 
facilities are a vital part of the communities we serve. We participate 
in many community programs and charitable activities. We fuel area 
businesses and therefore, the local economy. The health of the 
community is the health of our company.
Regulatory Authorities
    Natural gas pipelines are thoroughly regulated. As part of an 
agreement with the Federal government, State pipeline safety 
authorities have primary responsibility to regulate natural gas 
utilities as well as intrastate pipelines. However, state governments 
routinely adopt as minimum standards the federal safety standards 
promulgated by the U.S. Department of Transportation (DOT). Therefore, 
what Congress does will affect state regulations and our companies.
Safety Is Our Top Priority
    Natural gas utilities are committed to safety. Year in and year 
out, safety is our top priority. Indeed, delivering natural gas safely 
and reliably to our customers is essential for us to continue 
conducting our business. That is why our industry is constantly working 
to develop technologies that will enhance the safety, reliability and 
efficiency of the nation's gas delivery system. Our industry's 
commitment to safety is borne out each year through the National 
Transportation Board's annual statistics. Delivery of energy by 
pipeline is consistently the safest mode of energy transportation. 
Natural gas utilities are dedicated to seeing this continue.
Safety Record and Expenditures
    In addition to our strong voluntary programs, LDCs comply with a 
regulatory program that devotes stringent attention to design, 
construction, testing, maintenance, operation, replacement, inspection 
and monitoring practices. We continually refine our safety practices. 
Natural gas utilities spend an estimated $6.4 billion each year in 
safety-related activities. Approximately half of this money is spent in 
compliance with federal and state regulations. The other half is spent, 
as part of our companies' voluntary commitment to ensure that our 
systems are safe and that the communities we serve are protected.
    Safety is a top priority, a source of pride and a matter of 
corporate policy for every company. These policies are carried out in 
specific and unique ways. Each company employs safety professionals, 
provides on-going employee evaluation and safety training, conducts 
rigorous system inspections, testing, maintenance, repair and 
replacement programs, distributes public safety information, and 
complies with a wide range of federal and state safety regulations and 
requirements. Individual company efforts are supplemented by 
collaborative activities in the safety committees of regional and 
national trade organizations. Examples of these groups include the 
American Gas Association, the American Public Gas Association and the 
Interstate Natural Gas Association of America.
Clarification of GAO Reports
    Some pipeline safety critics have seized on a statement in the May 
2000 U. S. General Accounting Office (GAO) Report entitled ``The Office 
of Pipeline Safety is Changing How It Oversees the Pipeline Industry'', 
that indicated that ``major'' pipeline safety incidents (those causing 
a fatality, injury, or more than $50,000 in property damage) have 
increased by 4% per year over the 10-year period 1989-1998. This 
implies that accidents are increasing and that pipelines are becoming 
increasingly unsafe. This information needs to be put into context.
    What the GAO report does not recognize is the fact that the 
increase in ``major'', or reportable incidents, is due to the ever-
increasing cost of ``property damage'' associated with accidents that 
include loss of product and remediation costs. These have increased 
drastically over the time period examined. Further, the $50,000 
threshold is not adjusted overtime for inflation and therefore the 
trend lines are skewed.
    The GAO report does recognize (see footnote on page 10 of this 
report) that the total number of accidents has decreased by 1.5 percent 
annually over this same timeframe. This trend continues. According to 
AGA's study of the data, incidents involving natural gas distribution 
systems decreased by over 10 percent while the volume of natural gas 
used nationwide has increased by 25 percent over the period of 1987-
1999. Thus, while more citizens are now enjoying the benefits of using 
natural gas, the safety of the delivery system continues to improve.
    While, our industry is rightly proud of our excellent safety 
record, we are constantly striving to improve it.
The Leading Cause of Accidents--Excavation Damage
    The leading cause of accidents on distribution pipelines comes from 
excavators unintentionally striking our lines. It is known as 
excavation damage, also commonly called third-party damage. Year after 
year, these strikes cause over 60% of the total ruptures on utilities 
and the vast majority of injuries and fatalities. This problem has been 
highlighted again in two recent accidents--one in Perry, Oklahoma and 
another in Marble Heights, Ohio.
    While we work very hard to provide for safety, we cannot do it 
alone. Excavators and other underground utility operators need to work 
with us to provide for safe and reliable natural gas service. Congress 
should urge states to require government agencies and their contractors 
to participate in One-Call programs. This would help eliminate some 
exemptions some state agencies currently have in several states from 
participation in One-Call.
    The 105th Congress recognized this problem and created a federal 
program to reward States with strong One-Call laws. These laws require 
excavators to call before they dig, and utilities to mark their 
underground facilities accurately. The Committee also directed DOT to 
gather all stakeholders together to produce a ``best practices'' study. 
This effort was completed last year, and we are working to help 
implement the best practices to improve field operations of One-Call 
systems. DOT has also supported the creation of a broad-based public/
private organization--the Common Ground Alliance--to promote the 
adoption of the best practices across the nation. This group includes 
underground pipelines, utility owners, constructors, excavators, and 
One-Call organizations, with over 400 current members.
    We support efforts to provide for additional funding for both state 
grants and promotion of best-practices adoption. This additional 
funding is provided through general revenue funding as the efforts 
provide for clear public benefit and include other utilities beyond 
just gas and oil pipelines. Reduction of third party damage incidents 
provides for the safety of the public and also helps ensure the 
unimpeded flow of natural gas to consumers.
Other Distribution Safety Initiatives
    Natural gas utilities are working with federal and state 
governments on a variety of new safety initiatives. These include the 
creation of a voluntary data gathering effort on performance of older 
plastic pipe materials; pipeline system integrity standards; operator 
fatigue surveys; improved data gathering on transmission and 
distribution systems, and many other efforts. We view these as 
investments in our customers and the communities we serve.
Collaboration and Professional Organizations
    Company safety professionals also participate in a variety of 
professional and national standard-setting organizations dedicated to 
advancing the practice of work place and public safety. A partial list 
of the leading groups include the following: National Association of 
Corrosion Engineers (NACE), National Fire Protection Association 
(NFPA), National Safety Council (NSC), American Petroleum Institute 
(API), American Welding Society (AWS), American Society of Testing 
Materials (ASTM), American Society of Non-Destructive Testing (ASNT), 
American Society of Mechanical Engineers (ASME), American Society of 
Civil Engineers (ASCE), and the American Society of Safety Engineers 
(ASSE).
Natural Gas Systems are Different From Liquid Systems
    There are important differences between the natural gas and liquid 
pipeline systems that Congress should recognize and understand when 
crafting new requirements. While many may unintentionally link all 
``pipelines'' together, there are indeed significant differences 
between the liquid transmission systems, natural gas transmission 
systems and natural gas distribution systems. Each industry faces 
different challenges, operating conditions and consequences of 
ruptures.
    Interstate transmission systems are generally made up of long runs 
of generally straight pipelines, having large diameter, and operated at 
high volumes and high pressures. Distribution systems, in contrast, are 
constructed in configurations that look like a network or web, use 
smaller diameter pipe, and operate at lower volumes and pressures.
    Federal regulations recognize the differences between these three 
types of systems, and different sets of rules have been created for 
each. 49 CFR Part 192 sets out the regulations for natural gas 
transmission and distribution and the rules discriminate between the 
two. 49 CFR Part 195 sets out the regulations for liquid transmission 
lines.
    Natural gas pipelines move a single product, which is mainly 
methane, by periodic compression along the length of the pipelines. 
Natural gas transmission lines take our product from the producing 
areas to our towns where the utility receives it and delivers our gas 
to homes and businesses. Liquid transmission pipelines, in contrast, 
move several different commodities such as crude oil, gasoline, heating 
oil, jet fuel, diesel, propane and other liquids. These products are 
physically pumped, sometimes in different batches, through the pipeline 
to distribution terminals, refineries, and end-users.
Legislation
    Congress must periodically reauthorize the natural gas pipeline 
safety act. The current authorization has expired. Last year, Congress 
began the reauthorization process but was unable to pass a bill. Today, 
we are once again fully engaged in this process. In addition, the 
Department of Transportation is in the process of issuing significant 
new integrity management rules for natural gas and is expected to 
complete the effort this year. And all of our natural gas utilities are 
on schedule to comply with DOT's new Operator Qualification rule by 
completing the qualification of natural gas utility and contractor 
workers performing safety-related jobs by the rule's October 2002 
deadline. The industry also is engaged actively in finding new 
mechanisms to fund research, development and demonstration projects for 
pipeline safety technologies.
    Mr. Chairman and members of the Committee, we urge you to frame the 
current debate by recognizing that the world has changed since this 
committee held its last congressional hearing on this topic in 1999. 
Much progress has been made on several important new regulations. 
Further, the September 11 terrorist attacks have brought about a new 
focus on security for preventing, deterring, detecting and responding 
to potential attacks. Companies now must focus significant attention on 
security issues, in addition to safety matters.
``One Size Fits All'' Does Not Fit Our Pipelines
    Natural gas utilities do not support prescriptive legislative 
approaches. In fact, we believe that ``one-size-fits-all solutions'' 
divert limited resources from the areas that could most benefit and 
ultimately, could affect the reliability of gas deliveries to 
consumers. All pipelines are not the same. They vary physically and 
operationally and face unique challenges related to their locations, 
trajectories, construction and operating characteristics.
    Given this context, I would like to comment on several issues and 
suggest reasonable approaches for addressing them for municipally and 
investor owned natural gas distribution utilities.
    The issues that I will cover are:

 Security from Terrorist Attacks
 Causes of Accidents
 System Integrity Rule
 Operator Qualification
 Public Education/Community Right to Know
Security from Terrorists Attacks
    The industry has been actively involved in addressing the security 
of the natural gas transmission and distribution system since the 
events of September 11. In addition to taking immediate steps to secure 
critical facilities, the industry has been meeting--through the trade 
associations--to determine appropriate threat levels and responsible 
actions that reflect the current heightened state of security.
    Additionally, utilities are coordinating and cooperating fully with 
federal and state law enforcement and regulatory authorities to find 
ways to protect our natural gas pipeline system. The effectiveness of 
security-response measures is dependent on the threat levels that 
trigger their execution. The first and foremost step in this process is 
to establish a single point of contact in the government from which 
consistently-defined threat levels are disseminated to the industry. It 
is critical that there is coordination throughout the agencies that 
have jurisdiction over the natural gas transmission and distribution 
sector, including DOT, DOE, FEMA and FERC. This will result in commonly 
understood and effective operator response actions.
    We are committed to identifying further additional practices for 
the current state of condition and higher threat levels, as well as 
refining vulnerability assessments to assist in the identification of 
critical facilities. At this time, our companies have in place, or are 
developing, plans to respond to higher alert levels, including 
activating corporate security plan(s), emergency response plan(s) and 
business recovery plan(s); engaging emergency personnel; and securing 
facilities as appropriate.
    Ensuring security of the nation's natural gas infrastructure is a 
fundamental part of the industry's ordinary course of business. We are 
constantly refining methods, performing risk assessment and reviewing 
our practices.
    We encourage Congress to focus on a coordinated approach to the 
protection of energy infrastructure--recognizing the growing 
interdependencies between different industry and government sectors.
    To achieve this, we recommend that industry and government work 
together to:

 Heighten efforts in providing the tools and access necessary 
        to help assure critical infrastructure protection from 
        potential terrorist activities;
 Ensure all public dissemination of infrastructure and business 
        information is reviewed, in advance, with respect to potential 
        security concerns, and;
 Develop a coordinated strategy with a clearly delineated 
        organizational structure to protect our nation's infrastructure 
        against potential terrorist attack, while minimizing redundancy 
        in information collection and government reporting.
System Integrity Rule
    DOT has responded to congressional and public concerns and has 
moved forward aggressively in this area. Having issued a new set of 
integrity management rules for liquid pipelines, DOT is moving 
expeditiously on new rules for natural gas transmission lines. As 
outlined above, the liquid and natural gas transmission systems are 
very different from one another. The system integrity rule for natural 
gas transmission is going to be issued soon, but it is important to 
understand that it will be different from the one for liquid 
transmission.
    We urge Congress to allow DOT to finish its work on developing a 
new rule for increased inspection requirements for natural gas 
transmission pipelines in high-consequence areas. DOT is well on its 
way to completing its work on this matter and issued a proposed rule 
for the definition of high-consequence areas for natural gas in January 
2002. DOT is expected to issue a Notice of Proposed Rulemaking for the 
integrity management plan for natural gas transmission lines in these 
areas in mid-2002. Legislating in advance of DOT's rule seems hasty and 
unnecessary. DOT understands the distinguishing characteristics between 
liquids and gas systems and is taking these into consideration in the 
rulemaking process.
    Natural gas utilities own and operate 40,000 of the 300,000 miles 
of transmission pipeline in the United States. Most of these 
transmission lines are smaller in diameter than the typical interstate 
transmission line and operate at lower pressures. However, almost 40% 
of these 40,000 miles of transmission lines are likely to fall within 
``high consequence areas,'' and therefore utilities will be greatly 
affected by the new rules. Unlike most liquid transmission lines, the 
physical characteristics of natural gas transmission and distribution 
lines preclude the use of internal inspection devices in many cases. 
Thus, natural gas distribution companies must use a variety of 
inspection tools and methodologies to ensure the integrity of their 
lines.
    Some would like to require that natural gas transmission lines be 
inspected with specific tools and within a mandatory inspection period. 
We strongly oppose this type of approach, as it does not provide 
necessary flexibility needed to the operator in order to maintain the 
integrity of the system. Further, requiring utility-owned transmission 
lines to be tested with smart pigs or hydrostatically would result in 
these lines being out of service for extended periods of time. This 
poses a separate problem, as many of these lines are the sole source 
for natural gas delivery to systems serving large numbers of consumers. 
This would not increase safety; in many ways it could, in fact, 
undermine many of the safety-related measures that are in place for 
distribution systems. For residential customers, interruption of 
service can cause additional problems and risks as each individual 
service must be isolated, re-lit inside the house and then inspected 
again. This is a time consuming and laborious process, and expensive.
    Utilities know that their lines must be inspected regularly but 
inspection decisions, including the types or tools used and inspection 
frequencies, should be based on objective risk analysis and resources 
directed accordingly. It is important to note that the regulatory 
requirements for natural gas transmission lines already incorporate 
additional operational safety and increased inspection requirements 
based on the population levels around the pipeline.
    Pipelines are required to have personnel patrol and inspect their 
lines each year and account for the houses and buildings along the 
right-of-way. The segment of pipeline in question is ``classed'' 1, 2, 
3 or 4, with Class 1 being rural and Class 4 being the most urban. As 
population around the pipeline increases regulations require pipelines 
to lower operating pressure, increase pipeline wall thickness, and 
inspect more frequently. This class location system for natural gas 
transmission lines recognizes that pipelines must provide greater 
safety margins when operating in more populated areas. The new 
integrity management rules will add to these existing requirements. 
Inspection methods and inspection intervals under the new integrity 
management rule should be based on an assessment of risks balanced by 
the need to maintain reliability of gas service at a reasonable cost to 
consumers.
    Some critics base their demand for a statutorily required 
inspection period or use of specific inspection technology or methods 
on the fear that without them pipelines will not be inspected. Nothing 
could be further from the truth. Pipelines are continually inspected 
today. A natural gas utility company's greatest asset is its reputation 
for the safe and reliable service of natural gas. We actively monitor 
our systems on a continuous basis. This is an essential part of doing 
business.
Operator Qualification
    Concerns have been raised about expertise and the abilities of the 
natural gas industry's workforce. Even though our excellent safety 
record shows that our employees are qualified to do their jobs, 
utilities are fully participating in the new Operator Qualification 
(OQ) rule that was issued by DOT in August 1999. For the first time 
operators will be required to verify and document this qualification in 
writing. There are two parts to this rule.
    Phase 1. Written Plan. Phase 1 is complete. All pipeline operators 
were required to have a written OQ Plan in place by April 2001. All OQ 
Plans are now subject to audit by the state regulatory authorities. In 
the event of an accident, the operator's OQ Plan is subject to 
discovery in court.
    Phase 2. Qualification of Individuals. Using the written plan, all 
pipeline operators must qualify every individual who performs a covered 
task on the pipeline, under the provisions set forth in the operator's 
OQ Plan. This requirement is effective October 27, 2002.
    Some have suggested that we shift the focus from ensuring an 
individual is qualified to perform their operations and maintenance 
tasks on the pipeline, to a requirement for training and/or federal 
certification. The current rule already encompasses evaluation, or 
testing, and qualification, which may mean additional training if 
needed, and further testing. Thus, employees are actually certified by 
the company under an enforceable federal rule. This rule is not yet 
fully implemented. We strongly recommend that no further action be 
taken in the area of operator qualification until DOT and Congress have 
had sufficient time to review the rule's impact on pipeline safety.
    It is estimated that pipeline operators will incur over $500 
million in compliance costs associated with this rule. This is both a 
significant undertaking for pipeline operators and another cost for 
natural gas consumers.
    Some of the House bills that have been introduced call for some 
form of federal certification of these employees. We do not agree that 
this approach is warranted or the best use of limited federal and 
company resources. We urge Congress to allow the Operator Qualification 
Rule to be implemented fully before deciding whether it needs to be 
significantly changed or additional requirements layered over it.
    The fact that there are still very few accidents on our nation's 
1.5 million miles of natural gas pipelines is in itself a testament to 
the workers' skills and qualifications. Issues such as training 
requirements, portability of qualifications, qualification process 
modifications and the overall effectiveness of the rule are most 
appropriately worked out among the stakeholders and federal and state 
regulators. Utilities are actively engaged in this process and do not 
believe that further legislative action is justified at this time.
Public Education/Community Right-to-Know
    Given the nation's heightened security concerns, we urge Congress 
to consider carefully what information should be released to the public 
at large and what information should be restricted to those public 
officials and emergency and law enforcement agencies that need it. 
Typically, in the utility industry, those that need the information can 
readily obtain it from the operator upon request. We also support 
planning officials understanding how pipelines interact with their 
communities to allow them to incorporate needed safeguards into their 
land use decisions.
    We support advanced preparation and training for fire, police and 
emergency service personnel who are often first to arrive at a 
hazardous site. It is critical for them to know and understand the 
nature of a natural gas incident and how best to manage it.
    AGA and APGA support the public's right to know and understand how 
and where the natural gas system operates. An informed public will be 
better able to contribute to accomplishing the objectives of improved 
public safety. However, detailed information such as very accurate 
locations, product flow rates, valve placement, control center 
locations, accident scenarios and other potentially sensitive 
information should be restricted. A balance needs to be found and 
implemented.
    In many instances, improving public information is a cooperative 
effort between the natural gas utility and communities it serves. 
Whether new efforts extend or improve existing programs, utilities will 
participate in their development and implementation. However, we ask 
that our unique relationship with our state regulatory agencies and 
local communities be recognized and any new requirements be crafted in 
a way that takes this into consideration.
Research, Development and Demonstration
    AGA and APGA support increased funding for research and 
development. However, the current funding for the Office of Pipeline 
Safety is provided through user-fee assessments on pipeline operators. 
We urge Congress to authorize and appropriate funds from general 
revenues for additional pipeline research and development dollars. 
Where user fees are used to fund research and development, the Office 
of Pipeline Safety should coordinate with the industry to help make 
sure that efforts focus in areas where needs exist in the field and are 
used as efficiently and effectively as possible.
    Several focus groups have been held with government, industry and 
research organizations to identify the areas of most interest for RD&D. 
These groups have consistently suggested that RD&D funding address the 
development of better technologies and improvements for excavation 
damage prevention and detection, in-line inspection tools, small leak 
detection, monitoring and technologies for meeting any new security 
requirements.
    Utilities contribute to research and development through such 
organizations as the Gas Technology Institute where advanced safety 
devices and technologies are designed and tested. Interstate pipeline 
and local distribution companies invest millions in non-construction 
safety-specific activities. We are always seeking better technologies 
to use in our safety activities and will continue with these 
initiatives.
    Last month at NARUC's Winter Committee Meetings here in Washington 
D.C., NARUC passed a resolution entitled ``Resolution Supporting 
Congressional Legislation for Operations and Safety Research and 
Development (R&D) Funding for Gas Distribution Utilities''. A copy of 
that resolution is attached to my testimony.
    In summary, NARUC's R&D Resolution 1) expresses NARUC support for 
Congressional legislation establishing an R&D funding program for gas 
distribution utilities to ensure essential research for distribution 
delivery systems in the amount of approximately $65 million per year; 
2) states that the annual funding of $65 million would be collected 
through a legislatively designed volumetric charge designed to collect 
an average of less than $1 per year for residential customers, and 
average $5 per year for commercial customers, with a cap of $250 per 
year for very large volume customers; and 3) states that funds 
collected for R&D would be focused on improving infrastructure 
security, safety, reliability and efficiency. This research will 
benefit all users of natural gas by improving the delivery systems. The 
funds will not be used to conduct R&D for end use applications and will 
not be used to promote natural gas usage by advertising. We believe 
that this research program will enable utilities to directly address 
those safety and security related concerns that Congress has raised 
over the course of the pipeline safety debate. Clearly, this program is 
critical to the utility industry meeting expectations of an enhanced 
safe, secure and reliable system. As several members of this and other 
committees have proposed, there is going to have to be a significant 
and dynamic change in the way we currently fund research.
State Jurisdiction for Interstate Pipelines
    Utilities are concerned that different requirements imposed by 
States on interstate transmission could lead to supply disruption to 
our customers. One state could make a requirement that could in fact 
cause customer shut-offs in another state. Uninterrupted flow is 
critical to natural gas systems. If interstate gas flows are 
interrupted, the ability of a utility to maintain adequate pipeline 
pressure to serve customers is immediately and often severely impaired. 
In such situations, our companies must manually turn off service to 
each individual customer in the area affected by the gas outage. When 
gas flows resume, we must then restore service and re-light each gas 
appliance in every affected home and business. The process is a long 
and tedious one, and is obviously not without its own risks. 
Unnecessary disruptions should be avoided.
Summary
    In summary, the natural gas utility industry is proud of its safety 
record. Natural gas has become the recognized fuel of choice by both 
citizens and the federal government. Customer growth and confidence 
also carry with them an added responsibility.
    Public safety is the top priority of natural gas utilities. We 
invite you to visit our facilities and observe for yourselves our 
employees' dedication to safety. We will continue our dedication and 
efforts to operate safe and reliable systems and to strengthen One-Call 
laws and systems in every state.
    Thank you for providing the opportunity to present our views on the 
important matter of pipeline safety. We look forward to working with 
federal, state and local authorities and representatives, as well as 
within our industry, to achieve the highest possible level of public 
and employee safety. 
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      Pipeline Operator Qualification and Training Briefing Paper
by the american gas association and the american public gas association
                             March 19, 2002
Background
    The Accountable Pipeline Safety and Partnership Act of 1996 amended 
the statute to broaden a requirement for testing and certification of 
operations personnel, law required DOT to adopt regulations requiring 
that ``all individuals who operate and maintain pipeline facilities 
shall be qualified to operate and maintain the pipeline facilities'' 
and ``shall address the ability to recognize and react appropriately to 
abnormal operating conditions that may indicate a dangerous situation 
or a condition exceeding design limits'' (49 U.S.C. 60102(a)).
    The Department of Transportation issued a final Operator 
Qualification Rule on August 27, 1999. Companies are currently required 
to have their written qualification plan completed by April 27, 2001 
(49 CFR Part 192, Sec. 192.805 Qualification Program). All employees 
performing ``covered tasks'' are required to be qualified by the 
operators by October 27, 2002.
Qualification Encompasses Training
    Rather than only requiring training to an individual, the DOT 
Operator Qualification (OQ) rule was designed to focus on ensuring that 
an individual is qualified. This means a candidate for qualification 
must have the knowledge, skills, experience and demonstrated ability to 
perform covered tasks.
    A task is covered by the OQ rule if it meets all four of the 
criteria below:

 Performed on a pipeline facility,
 It is an operations and maintenance task,
 It is performed as a requirement of the pipeline safety code 
        (49 CFR Part 192), and
 Affects the operation or integrity of the pipeline.
    Qualification is the process of acquiring and demonstrating the 
ability to perform a covered task. Training is an enabling process that 
helps an individual acquire only the knowledge and skills to perform a 
covered task. But training alone may not be enough; after training, the 
individual must gain the experience and demonstrate the ability to 
perform a covered task in order to be qualified. So, the OQ rule is 
broader in scope than a rule that only emphasizes training.
     An individual who acquired the ability to perform a task 
by regularly performing it prior to the effective date of this rule may 
be evaluated and determined to be qualified in accordance with 
evaluation methods and criteria established by the operator.
     An individual who will be performing a new task must also 
acquire the ability. This may be by training or any other appropriate 
means. The rule is flexible as to how this is to be done. Under the 
rule the individual must be evaluated to verify their ability to 
perform the covered task.
     In the event an individual is not able to qualify 
(demonstrate through evaluation their ability to perform a covered 
task), the operator may elect to help that individual acquire the 
ability through training or other appropriate means. After acquiring 
the ability the employee may be periodically evaluated to verify his/
her qualification.
    Recognizing that the great majority of the of individuals in gas 
utilities are already qualified to perform covered tasks, the OQ rule 
was designed to be flexible as to the type of process needed to acquire 
the qualification, emphasizing also those areas where additional 
efforts are need by the operator in order to improve the safety of its 
pipeline system operations and maintenance.
    During the negotiated rulemaking that took place in developing the 
OQ rule, it was determined that a national qualification program 
conducted by the Research and Special Programs Administration, another 
federal agency, or a state agency, would not be an appropriate or 
practical response to the 1996 Act. While such a system would offer the 
advantages of national consistency, including the ability of contractor 
employees to work for different operators under a single qualification 
regime, the complexity and cost of administering such a system, coupled 
with the difficulty of devising a system appropriate for the wide 
variations in the operations and maintenance procedures and facilities 
of individual operators, precluded this from being an effective option. 
It was determined the mandate would best be met by a non-prescriptive, 
performance based regulation requiring each operator to have, a written 
program for the qualification of individuals. This would allow operator 
programs to be tailored for some to their unique operations and 
practices, without precluding others, including contractors, from 
joining each other to agree on specific common aspects of 
qualification.
    A straightforward, performance oriented rule was developed that 
applies to both gas and hazardous liquid pipeline operators. It 
contains five sections that include the scope, definitions, 
requirements of the qualification program, record-keeping and specifies 
the schedule for compliance.
    In the requirements section (49 CFR Part 192, Sec. 192.805 
Qualification Program), the OQ rule requires operators to identify 
covered tasks, to carry out evaluation of individuals, and to identify 
periods of reevaluation of individuals along with the corresponding 
covered tasks for which they have to be qualified. It also has 
provisions for changes in covered tasks, and what is required in 
special situations involving individuals that are not or may not be 
qualified.
    The OQ rule also includes a requirement for evaluation of 
individuals. An integral part of these evaluation methods is the 
requirement that training be performed if an employee fails the 
qualification test.
    Acceptable evaluation methods are subject to certain restrictions 
and include, written exam, oral exam, work performance history, 
observation during:

 performance on the job,
 on the job training,
 simulations,
 or other forms of assessment.
    Many operators in industry have been carrying out training and 
qualification of their workforce in connection with operation of their 
systems. They may not necessarily have their plans or carry out 
qualification in the format that the OQ rule requires. Operators have 
been given 18 months to prepare written plans for compliance with the 
rule and an added 18 months to comply by completing the qualification 
of their workforce.
Critical Tasks Are Further Covered
    The rule also recognizes that there are specific critical tasks 
with a high level of specialized ability that may have to be performed, 
such as welding of a pipeline, fusion/joining of plastic pipes, or 
ensuring corrosion protection of steel piping. These tasks are already 
prescribed in detail the existing pipeline safety code. They are left 
intact by the OQ rule, with the added requirement that the individual 
qualified to perform them must also have the ability to recognize and 
react to abnormal conditions that may be encountered in connection with 
these tasks.
OQ Efforts Are Under Way
    Preparations for the qualification process are well under way 
within a great majority of the gas industry. Taking advantage of 
similarity in some aspects of their operations and maintenance 
activities, some companies have joined together to develop common 
covered tasks or processes for qualification. Other companies are 
working by themselves. Both are supported by a cadre of recognized 
experts in instruction and training developing additional specialized 
teaching curriculums and evaluation materials and methods. The great 
majority of the operators are working with their state regulators to 
develop measurement criteria to verify compliance with the rule.
Let the DOT OQ Rule Run Its Course
    Requiring operators to submit plans for training beyond those 
required in the OQ rule could result in the premature submittal of 
plans in a wide variety of formats. Because of the large variation in 
the scope of programs in effect by various operators, this would be 
making it very difficult to evaluate the adequacy of the operator 
qualification programs in existence and under development today. This 
could in turn lead regulators and legislators to the wrong conclusions. 
Alternatively, imposing more prescriptive requirements under the DOT 
rule deadline would result in inefficient and wasteful use of resources 
by the stakeholders involved, without added benefit to safety. 
Therefore, it is suggested that implementation of the DOT OQ rule be 
allowed to run its course.
                                 ______
                                 
                 List of Currently Mandated Inspections
    The following list includes most but not all periodic inspections 
mandated by 49 CFR Part 192. This list does not include mandated 
inspections and tests performed as part of construction, or repairs on 
the pipeline.
Transmission Pipelines & Facilities
    1. Buried pipeline corrosion protection electrical current readings 
at test stations spaced along the pipeline must be checked at least 
once a year
    2. Buried pipeline external corrosion control systems must be 
checked at least 6 times a year
    3. Equipment monitoring for internal corrosion at points where the 
risk of such exists must be checked at least once in 6 months
    4. On shore pipelines exposed to the atmosphere must be checked for 
external corrosion at least once in every 3 years; off-shore pipes 
exposed to the atmosphere must be checked at least once a year.
    5. Operator carries out continuing surveillance of its facilities 
to determine and take appropriate action concerning changes in 
population density near the pipeline, failures, leakage history, 
corrosion and other unusual operating and maintenance conditions.
    6. If a segment of pipe is determined to be in unsatisfactory 
condition, but no immediate hazard exists, the operator must initiate a 
program to recondition that segment or phase it out. If this is not 
possible, the operator must reduce the operating pressure of the 
pipeline, in accordance with prescribed guidelines. If an immediate 
hazard exists, the operator must take prompt action to repair the 
segment.
    7. Each operator must patrol its transmission pipeline trajectory, 
at intervals between 4 times and once a year, depending on certain risk 
factors.
    8. Transmission pipelines carrying odorized gas must be checked for 
leaks at least once a year.
    9. Emergency shutdown devices at gas compressor stations must be 
tested at least once a year.
    10. Each pressure limiting and pressure regulating station on the 
transmission pipeline must be inspected and tested at least once a 
year. This includes inspecting the gas pressure history recorded at 
these stations.
    11. Pressure relief devices on the pipeline or at compressor 
stations to must be tested at least once a year for the ability to 
protect the pipeline from overpressure.
    12. Each transmission line valve must be inspected and partially 
operated at least once a year.
    13. If larger than 200 cubic feet in size, each underground vault 
housing pressure regulating or pressure limiting equipment must be 
tested for gas leaks at least once a year.
Distribution Systems
    1. Buried pipeline corrosion protection electrical current readings 
at test stations spaced along the pipeline must be checked at least 
once a year
    2. Buried pipeline external corrosion control systems must be 
checked at least 6 times a year
    3. Equipment monitoring for internal corrosion at points where the 
risk of such exists must be checked at least once in 6 months
    4. Distribution pipelines exposed to the atmosphere must be checked 
for external corrosion at least once in every 3 years.
    5. Operator carries out continuing surveillance of its facilities 
to determine and take appropriate action concerning changes in 
population density near the pipeline, failures, leakage history, 
corrosion and other unusual operating and maintenance conditions.
    6. If a segment of pipe is determined to be in unsatisfactory 
condition, but no immediate hazard exists, the operator must initiate a 
program to recondition that segment or phase it out. If this is not 
possible, the operator must reduce the operating pressure of the 
pipeline, in accordance with prescribed guidelines. If an immediate 
hazard exists, the operator must take prompt action to repair the 
segment.
    7. Distribution pipelines in places or structures where anticipate 
physical movement or external loading could take place must be 
patrolled at least 4 times a year in business districts and twice a 
year outside business districts.
    8. Distribution pipelines in business districts must be checked for 
leaks at least once a year including tests for gas presence in 
subterranean facilities and other areas in the vicinity of a leak.
    9. Distribution pipelines outside business districts must be 
checked for leaks at least once every 5 years. Where electrical 
readings for corrosion protection are impractical, the leak checks must 
be at least once every 3 years.
    10. Disconnected gas service lines must be re-tested before being 
reconnected.
    11. Each distribution line valve that may be necessary for the safe 
operation of the system must be inspected at intervals not exceeding 
one year.
    12. If larger than 200 cubic feet in size, each underground vault 
housing pressure regulating or pressure limiting equipment must be 
tested for gas leaks at least once a year.
                      how a pipeline is inspected
    Pipeline right-of-way is driven or walked to check for evidence of 
excavation or other activity over or in the vicinity of the buried 
pipeline. Special attention is paid to construction areas, highway and 
railroad crossings, populated areas, business districts, areas where 
ground movement is likely, or where water may erode the ground above 
the pipeline.
    Changes in population (e.g. housing density) in the vicinity of the 
pipeline are also observed and noted, if the pipeline is in a sparsely 
populated location.
    Where permitted by regulation, visual evidence of gas leaks is 
first sought. If preliminary evidence of a gas leak is found, the 
location is then checked with an instrument, if not previously done. 
The rate of leakage is established and monitored to determine the 
criticality of the leak (depends on location of leak, pressure inside 
line, size of line and rate of gas leak).
    Depending on initial the criticality, the location may then be made 
secure and immediately excavated to find the cause of the leak. If it 
is corrosion, the exposed portion of line is checked for corrosion 
until the location where there is no evidence of corrosion.
    The exposed portion of the line may be checked with x-ray or 
ultrasound equipment to determine the extent of the anomaly and its 
effects on the pipe wall.
    If no immediate hazard exists, the operator establishes a program 
to repair or recondition that portion of the pipeline.
    Above-ground sections of line are visually inspected for corrosion 
or other damage (e.g. vandalism, erosion, vehicular damage). Mechanical 
piping joints are checked for leaks.
    Corrosion protection electrical current readings are taken at 
stations on the pipeline and checked for evidence of unusual readings. 
Where corrosion readings are impossible (e.g. near other electrical 
facilities, or under extensive paved areas), leak surveys with leak 
detector equipment are conducted to check for evidence of gas leaks 
over and near the pipeline path.
    Equipment for monitoring internal corrosion is checked.
    Each transmission line valve is inspected visually and checked for 
operability.
    Each pressure relief device on the pipeline is checked for proper 
setting and operation, to ensure the maximum pressure on the pipeline 
is not exceeded.
    Pressure recording charts at specific locations are retrieved and 
inspected for evidence of unusual pressure excursions.
    Maintenance records are filled out to record the observations made 
and the conditions found.

    Mr. Barton. Thank you, Mr. Morris.
    We will now hear from Mr. Kipp.

                   STATEMENT OF ROBERT R. KIPP

    Mr. Kipp. Thank you, Mr. Chairman, and members of the 
committee. My name is Bob Kipp, and I am the Executive Director 
of the Common Ground Alliance, an alliance of 15 stakeholder 
groups created some 2 years ago.
    Common Ground Alliance is a non-profit organization 
dedicated to shared responsibility and damage prevention to 
underground facilities. The CGA was created upon the completion 
of a common ground study of one-call systems, and damage 
prevention best practices.
    This landmark study, sponsored by the U.S. Department of 
Transportation, Office of Pipeline Safety, was completed in 
1999 by 161 experts from the damage prevention stakeholder 
community.
    And in my comments today, I would like to focus on three 
key areas. First, NTSB recommendations to risk to the Office of 
Pipeline Safety. As stated in the written testimony, the CGA 
comprises members from 15 stakeholder groups, and they are gas, 
oil, road builders, excavators, one-call systems, locators, 
engineers, regulators, insurance, electric, telecom, private 
water, equipment manufacturers, railroad and public works.
    When the CGA makes a recommendation to the Office of 
Pipeline Safety, or any other government or private body, all 
15 stakeholder groups have agreed to the wording in those 
recommendations. We believe this to be a very powerful 
statement.
    Our recommendations are not those of any one industry, but 
those of a group of industries, with belief that damage to our 
infrastructure is a shared responsibility. In the past few 
months, we have undertaken a review of eight NTSB 
recommendations to risk by OPS.
    We believe that the first of these recommendations P0001, 
related to the use of E-911 when damage to a pipeline results 
in the release of gas or other hazardous substance, has been 
resolved with a change to the best practices and 
recommendations to OPS earlier this year.
    The second NTSB recommendation, P-0101, on the separation 
of gas and electric utilities in common trenches, is under 
review and a recommendation will be forthcoming later this 
year, which we believe will satisfy the action outstanding and 
close this recommendation.
    Of the six remaining items under review, P-97-16, 17 and 
18, and P-97-22, 23, and 24, three relate to data gathering, 
while the three others have to do with locating technologies 
and the certification of these.
    Both of these series of recommendations will take more 
time, and may or may not completely satisfy the NTSB 
recommendation, and in the case of data gathering 
recommendations will require fairly substantial funding.
    Our more than 700 members, of which some 200 are currently 
working on five committees and numerous subcommittees, 
volunteered their time and traveling expenses to work through 
the issues and recommendations.
    We are thankful to OPS for the seed money in getting the 
CGA off the ground, and are working with the office of pipeline 
safety toward a 2002 cooperative agreement to help fund the 
above work and a great number of other initiatives in the CGA.
    We are also hopeful that the grants that the CGA proposed 
in 3609 will be passed as proposed to help us continue our 
work. The second item, 3 or 4 digit dialing. Three digit 
dialing, or in the case of call dig, four digits, is of great 
interest to our industry.
    It is generally accepted by infrastructure owners that 
between 33 percent and 60 percent of third-party damages are 
caused by individuals who did not call prior to digging. There 
are numerous reasons why people do not call before digging.
    And included in the various reasons are the lack of 
knowledge or awareness of the need to call, or the number to 
call. The CGA believes that a single nationwide 3 or 4 digit 
number would increase awareness and consequently increase calls 
to various one-call centers, resulting in fewer instances of 
third-party damage.
    A number of wireless companies have programmed some of 
their switches to direct pound dig to the appropriate one call 
center served by these various switches. We believe that the 
extension of this program to all wireline and wireless switches 
in the country would be a major step in the direction of damage 
prevention to the infrastructure.
    The CGA also realizes that such a program would be costly 
to the various call center providers, and hope that a solution 
to this potential issue in deployment of the truncated 
universal number can soon be implemented.
    Item 3, regional CGAs. Like many other programs, much of 
the success and payoff is derived from the buying at local 
levels.
    The CGA has as one of its key programs the assistance to 
local groups in creating regional damage prevention committees, 
be they State CGAs, regional damage prevention organizations, 
or any other form of group interested in the implementation of 
best practices, and bringing industries together to work toward 
damage prevention.
    We are thankful to OPS for making State grants available 
for those working toward best practices implementation, and are 
grateful to the provision in 3609 to make a million a year 
available to States from 2002 to 2005.
    In summary, we have numerous other activities under way. 
Our education committee has pages of initiatives stated for 
2002. Our best practice committee is tackling the issue of 
security with respect to our stakeholders, and the CGA mandate.
    Last, damage prevention is truly a shared responsibility, 
and no one industry should be singled out in the general 
discussion of incidents. The CGA believes that stakeholders 
working together at both national and regional levels will make 
a difference in reducing damage to our underground 
infrastructure. Thank you.
    [The prepared statement of Robert R. Kipp follows:]
 Prepared Statement of Robert Kipp, Executive Director, Common Ground 
                                Alliance
    Good afternoon, Mr. Chairman and members of the Committee. My name 
is Robert Kipp and I am the Executive Director of the Common Ground 
Alliance (CGA). I am pleased to appear before you today to represent 
the CGA.
    Background: The Common Ground Alliance is a nonprofit organization 
dedicated to shared responsibility in the damage prevention of 
underground facilities. The Common Ground Alliance was created just 
over two years ago at the completion of the ``Common Ground Study of 
One-Call Systems and Damage Prevention Best Practices.'' This landmark 
study, sponsored by the U.S. Department of Transportation Office of 
Pipeline Safety, was completed in 1999 by 161 experts from the damage 
prevention stakeholder community.
    The ``Common Ground Study'' began with a public meeting in 
Arlington, VA in August 1998. The study was prepared in accordance 
with, and at the direction and authorization of the Transport Equity 
Act for the 21st Century signed into law June 9, 1998 that authorized 
the Department of Transportation to undertake a study of damage 
prevention practices associated with existing one-call notification 
systems. Participants in the study represented the following 
stakeholder groups: oil; gas; telecommunications; railroads; utilities; 
cable TV; one-call systems and centers; excavation; locators; equipment 
manufacturers; design engineers; regulators; federal, state, and local 
government. The Common Ground Study concluded on June 30, 1999 with the 
publication of the ``Common Ground Study of One-Call Systems and Damage 
Prevention Best Practices.''
    At the conclusion of the study, the Damage Prevention Path Forward 
initiative led to the development of the nonprofit organization now 
recognized as the Common Ground Alliance (CGA). Building on the spirit 
of shared responsibility resulting from the Common Ground Study, the 
purpose of the CGA is to ensure public safety, environmental 
protection, and the integrity of services by promoting effective damage 
prevention practices. The CGA works to prevent damage to the 
underground infrastructure by: fostering a sense of shared 
responsibility for the protection of underground facilities; supporting 
research; developing and conducting public awareness and education 
programs; identifying and disseminating the stakeholder best practices 
such as those embodied in the Common Ground Study; and serving as a 
clearinghouse for damage data collection, analysis and dissemination.
    The CGA now counts more than 700 individuals representing 15 
stakeholder groups and over 120 member organizations. Each of the 15 
stakeholder groups has one seat on the CGA Board of Directors, 
regardless of membership representation or financial participation. CGA 
members populate the organization's five working committees: Best 
Practices, Research & Development, Educational Programs, Data Reporting 
& Evaluation, and Marketing, Membership, & Communications.
                           working committees
    The CGA working committee guidelines include:

 All stakeholders are welcomed and encouraged to participate in 
        the Committees' work efforts.
 Committee members represent the knowledge, concerns and 
        interests of their constituents.
 A ``primary'' member is identified within each Committee for 
        each particular stakeholder group as the spokesperson for 
        consensus decisions.
A. Best Practices Committee
    It is important that all stakeholders implement the damage 
prevention Best Practices. The Best Practices Committee:

 Identifies Best Practices appropriate for each stakeholder 
        group to minimize the possibility of damages;
 Gauges current levels of implementation and use of Best 
        Practices in each industry;
 Encourages and promotes increased implementation;
 Updates Best Practices to incorporate recent developments in 
        damage prevention processes, procedures, practices, and 
        technology.
Current Activities:
    Resulting from the NTSB report, ``Natural Gas Pipeline Rupture and 
Subsequent Explosion, St. Cloud, Minnesota, December 11, 1998''--a 
review of safety recommendations regarding the use of E-911 when 
excavation damage occurs for inclusion to CGA Best Practices. As a 
result of this report, the Office of Pipeline Safety requested that the 
CGA review the existing Best Practice and determine if the NTSB 
recommendation P-00-1 should be included as a ``New Best Practice''.
    The recommendation from the NTSB report read: ``To advise 
excavators to call `911' if the damage to the pipeline results in a 
release of gas or other hazardous substance or potentially endangers 
life, health or property.''
    Prior to the Recommendation the Best Practice on this issue left it 
to the excavator to determine if the release of gas or hazardous 
substance posed a danger, and if so, to determine if 911 should be 
called.
    The CGA Best Practices Committee reviewed the recommendation and 
unanimously approved a change to the Best Practice to reflect the 
following:
    Practice Statement (Best Practices Committee Approved by Consensus 
11/27/01)
    ``If the damage results in the escape of any flammable, toxic, or 
corrosive gas or liquid or endangers life, health, or property, the 
excavator responsible immediately notifies 911 and the facility owner/
operator.''
    The CGA Board of Directors subsequently unanimously approved the 
change to this practice. The Executive Director wrote Ms. Stacey Gerard 
of the Office of Pipeline Safety earlier this year informing her of 
this change.
    Resulting from the NTSB report, ``Natural Gas Explosion and Fire in 
South Riding, Virginia, July 7, 1998''--a review of July 1, 2001 
Virginia State legislation regarding minimum separation of utilities 
located in common trenches;
        The Office of Pipeline Safety wrote the CGA regarding the NTSB 
        recommendation P-01-1 on the separation of gas and electric 
        utilities in common trenches. It is expected that our Best 
        Practices committee will soon approve a change to the existing 
        practice increasing the distance in radial separation of the 
        gas and electric in common trenches, similar to what has been 
        recommended by the NTSB, and consistent with the National 
        Electric Safety Code.
    The review of the HDD Consortium Horizontal Directional Drilling, 
(HDD) Good Practices Guidelines, for potential endorsement by the CGA;
    The review of NULCA and APWA ``Address Marking, Color Codes and 
Marking Paint'';
    Condensing language of current Best Practices document.
    The Best Practices Committee has begun an in-depth review of 
Security Practices across the stakeholder groups. Once assembled, these 
practices will be reviewed, and if appropriate, either integrated into 
the existing Best Practices, or implemented as a separate section in 
the Common Ground Alliance Best Practices document.
    Though all of the work is done voluntarily through the members, the 
Office of Pipeline Safety has been instrumental in funding start `` up 
costs associated with getting the CGA up and running. The CGA is 
currently negotiating a cooperative agreement with the Office of 
Pipeline Safety to enable the CGA to pay for support, materials, and 
external services required to accomplish its ambitious mandate.
    It is important to note that any changes to the Best Practices have 
unanimous approval from the 14 industry groups represented on the 
committee, and subsequent approval of a minimum of 10 of the14 Board 
members.
B. Research and Development Committee
    The CGA promotes damage prevention R&D and serves as a clearing 
house for information on damage prevention technologies and practices. 
The Research and Development Committee's mandate is to:

 Seek to identify new and existing technologies that can be 
        adapted to improve damage prevention efforts;
 Encourage the sharing of non-proprietary information 
        concerning technologies;
 Search for opportunities, including sponsoring conferences, 
        for the CGA to promote damage prevention R&D.
Current Activities:
 Standardized National Mapping--Standardized mapping 
        technologies are being reviewed. Vendors are being invited to 
        make presentations to the committee. Existing mapping 
        technologies in railroads and pipelines are being studied.
 One-Call Center 3-digit dialing `` review and recommendation--
        Three digit-dialing (or 4 digits such as #DIG) is of great 
        interest to our industry. It is generally accepted by 
        infrastructure owners that between 33% and 60% of third party 
        damages are caused by individuals who did not call prior to 
        excavating (digging). There are numerous reasons people do not 
        call before digging. Included in the various reasons is the 
        lack of knowledge or awareness of the need to call or the 
        number to call. The CGA believes that a single nation-wide, 3 
        or 4 digit number, would increase awareness and consequently 
        increase calls to the various One-Call Centers resulting in 
        fewer instances of third-party damage. A number of wireless 
        companies have programmed some of their switches to direct #DIG 
        (#344) to the appropriate One-Call Centers served by these 
        various switches. We believe that the extension of this program 
        to all wireline and wireless switches in the country would be a 
        major step in the direction of damage prevention to the 
        infrastructure. The CGA also realizes that such a program would 
        be costly to the various Telecom providers and hope that a 
        solution to this potential issue and deployment of the 
        truncated universal number can soon be implemented.
 Compendium of Locating Technologies under review--The 
        committee is reviewing and compiling all available Locating 
        Technologies and locating products. The committee working in 
        concert with NULCA ( National Utility Locating Contractors 
        Association), hope to make available on both websites and 
        available to the stakeholders of all industries involved, a 
        complete library of all products and technologies. We are 
        working with OPS and the NTSB in order to attempt to satisfy 
        NTSB recommendations P-97-16, P-97-17, and P-97-18 addressing 
        the Certification of Locating Technologies. Again, we are 
        working closely with the OPS on a cooperative agreement to help 
        defray external costs associated with this initiative.
 Root Cause of Damage--The R&D Committee requests that the Data 
        Reporting and Evaluation Committee have begun to initiate 
        collection of comprehensive data on the root cause of 
        underground utility damage. The R&D committee suggests that 
        each stakeholder group encourage their members to use the form 
        developed in Best Practices (figure 9.1 of the Common Ground 
        Best Practices Study) to report root cause data. The 2 
        committees will now negotiate the work to be done. If 
        successful, the CGA will have the first comprehensive database 
        of the causes of damage to our underground infrastructure 
        across all industries.
 Encroachment Monitoring
 Uniform One Call Laws--The task team is working on a survey to 
        be used to interact with one-call centers to gather information 
        on uniformity in one-call laws. They are looking for 100% 
        participation and some of the data will include answers to the 
        following questions: What type of software do One-Call centers 
        use? Who will use the results after the information is 
        gathered? Which Best Practices are being used by the One-Call 
        center? These answers will facilitate the decision-making 
        regarding the development of a nation-wide mechanized database 
        of calls to the One-Call Centers.
C. Educational Programs Committee and Dig Safely Sub-committee
    One of the purposes of the CGA is to develop and conduct public 
awareness and education programs to promote damage prevention. The 
Educational Programs Committee:

 Identifies existing programs for opportunities where the CGA 
        can have significant impact in furthering their reach and 
        effectiveness;
 Evaluates aspects of existing programs for areas where 
        additional emphasis is needed; and
 Continues to promote Dig Safely and develop other educational 
        programs to reduce damage to underground facilities
Current Activities:
 Create 8 Best Practices brochures summarizing best practices 
        from Common Ground Study:

      LOCATING AND MARKING BEST PRACTICES
      MAPPING BEST PRACTICES
      ONE-CALL CENTER BEST PRACTICES
      PLANNING AND DESIGN BEST PRACTICES
      PUBLIC EDUCATION AND AWARENESS BEST PRACTICES
      REPORTING AND EVALUATION BEST PRACTICE
      COMPLIANCE BEST PRACTICES
      EXCAVATION BEST PRACTICES
 Dig Safely video--``Get the Dirt''
 Public Dig Safely Awareness Survey
 Working with M&MC to coordinate participation at various shows 
        and conventions
 Best Practices on CD Rom
 Public Dig Safely Awareness Survey
 Work with MM&C to coordinate participation at various shows 
        and conventions
 Review of Corporate Dig Safely Programs
 Damage Prevention State Laws
 Develop materials to target specific stakeholder groups, in 
        addition to the current materials that reflect the best 
        practices in general;
 Review and evaluate homeland and evaluate homeland and 
        infrastructure security as an underlying benefit/purpose for 
        damage prevention education;
 Develop videos, DVDs and other media depicting each individual 
        best practice ``in action'';
 Develop the ``Locate Accurately'' educational program;
 Develop materials for priority audiences
 Seek data on damage causes (note the R&D and Data Reporting 
        Committees' efforts);
 Establish graphics standards for the CGA and Dig Safely logos;
 Analyze the results of the latest public Dig Safely survey and 
        develop and implement appropriate recommendations;
 Finalize criteria for the CGA endorsement or ``seal of 
        approval'' for 2nd party materials;
 Resolve and begin the production and distribution of a CGA 
        newsletter; and
 Evolve/improve the distribution process for CGA materials
 In summary, this large committee has an extremely ambitious 
        program. We are working closely with OPS on funding issues 
        associated with the dissemination of educational information.
D. Data Reporting and Evaluation Committee
    The Common Ground Study determined that consistent & meaningful 
damage data is needed. The Data and Reporting Evaluation Committee 
looks at available data, data gaps, and how data can best be gathered 
and disseminated. Reporting and evaluation of damage data is important 
to:

 Measure effectiveness of damage prevention programs;
 Assess the risks and benefits of different damage prevention 
        practices being implemented by various stakeholders;
 Assess the needs and benefits of education and training 
        programs.
Current Activities:
 Survey on available damage data and reporting
 Studying requirements for funding to establish mechanized 
        database for damage reporting `` NTSB Recommendations P-97-22, 
        P-97-23, and P-97-24
 It is essential that data gathering on a mechanized objective 
        basis, and a substantial nation-wide report on the analysis of 
        all damages be developed. The CGA, in concert with and through 
        a co-operative agreement from OPS have begun the work necessary 
        to determine the parameters and feasibility of such a report or 
        series of report. An RFP will be issued in March/April to 
        companies specializing in data gathering. Once the responses 
        have been received we will evaluate the submissions and 
        determine our next course of action.
 Our intent is to work with OPS in an effort to respond to NTSB 
        Recommendations P-97-22, P-97-23, and P-97-24. These 
        recommendations deal with the development of a method to gather 
        damage data, consistently gather the data, and utilize the data 
        to periodically assess the effectiveness of various excavation 
        damage prevention programs.
E. Marketing, Membership, & Communication Committee
    The Committee: Identifies opportunities and needs for promoting the 
organization to increase sponsorship and membership; Identifies 
opportunities for obtaining outside funding such as grants to promote 
the development of the organization; Evaluates communication 
opportunities and methods to ensure the CGA is effectively 
communicating with its members, sponsors, and all other stakeholders.
Current Activities:
 Ongoing booth presence and presentations at trade shows
 This year the CGA will make presentations to more than 50 
        companies, municipalities, associations, trade-show attendees 
        and conventioneers.
 Regional CGA effort
 Partner with existing DP entities.
 Disseminate CGA information.
 Collect local information.
 Strengthen cooperation amongst stakeholders.
 Create opportunities for stakeholder involvement.
 Establish new councils where none exist.
 Find new members.
 Purpose is NOT to absorb or control any existing Damage 
        Prevention organization!
 Support in recruiting new sponsors and members
 Development of booth theme and promotional materials
 Development and distribution of press releases
 Publication of a bi-monthly CGA newsletter
 Website monitoring and development
h.r. 3609 `` pipeline infrastructure protection to enhance security and 
                               safety act
    In December of 2001, Mr. Young as well as Mr. Petri, Mr. Tauzin, 
and Mr. Barton tabled H.R. 3609, the Pipeline Infrastructure Protection 
to Enhance Security and Safety Act.
    The CGA supports this Bill. In addition to recognizing the Best 
Practices developed by the 161 volunteer experts across the stakeholder 
groups, it also encourages States through financial incentives, to 
implement these Best Practices. The Bill also recognizes the work of 
the CGA and encourages continued funding of the CGA from 2002 through 
2005.
    We encourage the committee to delete reference to ``construction-
related'' damages, as our goal is to reduce all damages regardless of 
the circumstances. Lastly, we recommend that the final version of the 
Bill include language encouraging the implementation of a nation-wide 3 
or 4 digit number to call before digging.
                                summary
    The Common Ground Alliance is a true member-driven organization. 
Members from the 15 stakeholder groups work together to determine 
direction and problem-solve, making the CGA a truly unique forum. We 
would not exist without the immense dedication and effort of our 
members as well as the financial and logistical support of Ellen 
Engleman and Stacey Gerard of RSPA and OPS.
    Our greatest strengths can be summarized as follows: When the CGA 
proposes a policy, solution or response to a government or corporate 
body, the wording of such a proposal has been agreed to by primary 
members representing every stakeholder group within the CGA. The 
receiving body of a CGA proposal knows that no one industry has a 
vested interest, and that all stakeholder groups agree with the content 
and wording of such a proposal.
    In addition, the CGA has brought together industry leaders on a 
National basis to work together and help fund the Alliance in its 
effort to reduce damage to our nation's underground infrastructure.
    Lastly, in addition to all of the wonderful accomplishments in 
education, best practice development, data gathering, and research and 
development, the CGA is now reaching for and succeeding in bringing 
together stakeholders at a local effort. We believe to be successful, 
we must continue to encourage and promote communication, problem 
resolution, and the following of the Best Practices at a local level.
    Thank you.

    Mr. Barton. Thank you, Mr. Kipp, and now we will hear from 
Mr. Sullivan.

                 STATEMENT OF EDWARD C. SULLIVAN

    Mr. Sullivan. Thank you, Mr. Chairman. On behalf of the 3 
million members and 14 affiliated unions of the Building and 
Construction Trades Department, I am pleased to be here to help 
this committee and inform this committee about the current 
status of the pipeline industry.
    Let me take this opportunity to thank Chairman Tauzin, 
Ranking Member Dingell, Subcommittee Chairman Barton, and 
Ranking Member Boucher, for holding this hearing.
    All our members care very deeply about passing an effective 
pipeline safety bill that will protect the public, the pipeline 
workers, and the environment, from pipeline accidents, and from 
new national security threats.
    The building trades represent a large contingent of members 
in different crafts who work on and around pipelines. They 
construct, operate, and maintain gas, oil, and other pipelines 
all over this country.
    It is critically important to our workers that these 
pipelines are safe and secure. Unfortunately, after the events 
of September 11, protection of the pipelines and their related 
facilities from terrorist attack have become a new concern.
    The building trades men and women who work on pipelines 
have one priority, and that is safety. We want to protect our 
country's pipelines from new terrorist threats, and protect 
communities from future accidents, like the tragedies that 
occurred in Bellingham, Washington, and in New Mexico.
    While the building trades is actively working with Congress 
to help shape the best pipeline safety bill possible, today I 
would like to talk about our biggest safety concerns.
    I request that the committee please enter my entire 
statement into the record, even though I won't have time to 
speak on all of the aspects of the bill today. In general, a 
worker on a pipeline will tell you that the standards issued by 
the Office of Pipeline Safety are good enough.
    The problem lies in the enforcement. More enforcement is 
needed to make sure that the pipelines are tested for leaks, 
but more importantly are tested for integrity. When a leak is 
detected, pipeline companies notify a contractor with whom they 
have an agreement to do repair work.
    The contractor is usually called out to replace only the 
section of the line that is leaking and not the entire line. 
This often leaves our members wondering when will they be 
called on to fix the other sections of the same pipeline.
    Although leaks often pose a threat to public safety, when a 
pipeline rupture occurs, human lives are put at risk. A 
pipeline will come apart when its integrity fails. When your 
product is flowing through a pipe that has a compromised 
integrity at a high pressure, heat is created, and an explosion 
is imminent.
    The best means of testing the integrity of a pipeline is 
called hydrostatic testing. This is accomplished by purging the 
section of pipe to be tested, and then filling the pipe with 
water, and putting it under constant pressure for a specified 
number of hours.
    Pipeline companies will complain that this test is costly, 
and it will shut a line down and interrupt service. It will put 
pressure on the pipe that is above its normal operating 
pressure and may damage the pipe.
    These are all true. If the pipe is damaged, however, it is 
because the pipe's integrity was failing. But wouldn't the 
members of this committee rather have water spilling out of a 
weak and deteriorating pipe than have it blow up and only then 
find out that the integrity was failing.
    This test will tell you if the pipe integrity is in good 
condition, and the pipeline in Bellingham, Washington had been 
tested only weeks before the pipe ruptured by the smart pig 
testing.
    A pig test only reveals corrosion and leaks, and it does 
not conclusively tell an operator how the integrity of the 
pipeline is holding up. A pipeline's integrity must be tested. 
Testing for leaks only is not sufficient.
    Although half of the Nation's pipelines were originally 
constructed before 1970, those lines are subject both to 
external and internal corrosion, and their integrity must be 
periodically tested.
    The building trades support require periodic inspection of 
pipelines that look for leaks and integrity failures. The 
building trades is also aware of the major cost factor to the 
operating companies to do this type of testing.
    We are therefore also suggesting for the safety of the U.S. 
citizens and in these times of uncertainty the U.S. Government 
should give these pipeline operators some type of incentive or 
tax relief to perform these tests on a periodic basis.
    Pipelines are not a national security issue because there 
are approximately 2.2 million miles of them in the United 
States. They are a unique national security concern because 
many of them run underneath communities and the above ground 
pumping stations are visible with little protection.
    Just as in New York City when the planes struck the Twin 
Towers, construction workers from all over New York State 
dropped their tools to help with the rescue and recovery.
    If a pipeline would be attacked, our members would again be 
rushing to the site to help with the rescue and recovery.
    Our members know how to clear debris, shut down a pipe, and 
repair it, and restore product flow. If a pipeline in Upstate 
New York was blown up by terrorists in the middle of winter, 
thousands of people would go without heat until the pipeline 
operators and constructors could repair the lines to restore 
service.
    How long would it take to repair the line and restore full 
service? The answer to that question depends on the cooperative 
response of local fire fighters, Federal, State, and local 
emergency management officials, and the area's pipeline 
workers.
    Apparently, we are not aware of coordinated response plans 
already in place in the majority of this country's communities. 
If such an attack were to take place, we would have difficult 
responding because of the following obstacles.
    Only pipeline workers who are certified to work on that 
company's pipeline would be allowed to do the repair work. 
Workers on a nearby line employed by another company would not 
be able to help because they are not certified by that company 
to work on their lines.
    This presents the problem of having enough workers 
immediately on the scene. Chances are that replacement pipe 
would not be nearby and would take time to locate and retrieve.
    Large bodies of tools and operating equipment would have to 
be easily accessible in a plan to redirect product flow would 
need to be in place. These are just a few of the immediate 
concerns that would have to be dealt with for an effective 
response.
    The building trades believes that the emergency response 
teams need to be assembled and coordinated as soon as possible. 
The building trades men and women and contractors working on 
pipelines today are ready and willing to work with officials to 
enhance safety around the pipeline and to create an emergency 
response plans.
    We believe that the new Office of Homeland Security should 
be consulted and involved in helping communities create an 
emergency plan and response teams to aid in this effort.
    We would like to see national standards put in place that 
would give workers certification to come on different company 
lines during an emergency. The building trades strongly urges 
Congress to pass a pipeline safety bill as soon as possible.
    Our members fear that without better enforcement effective 
pipeline integrity and detection of leaks another explosion 
will certainly happen again. Emergency response teams must also 
be coordinated immediately around the country to help prevent 
terrorist attacks on pipelines and to create swift and 
effective responses to such attacks.
    We are committed to making sure that this country's 
pipeline infrastructure is operated properly, safely, and is 
protected from national security threats. As pipeline 
legislation evolves in the House, we look forward to working 
with the members of this committee to pass the best pipeline 
safety bill possible. Thank you.
    [The prepared statement of Edward C. Sullivan follows:]
   Prepared Statement of Edward C. Sullivan, President, Building and 
                Construction Trades Department, AFL-CIO
    On behalf of the three million members and fourteen affiliated 
unions of the Building and Construction Trades Department, I am pleased 
to be here to help inform this committee about the current status of 
the pipeline industry. Let me take this opportunity to thank Chairman 
Tauzin, Ranking Member Dingell, Subcommittee Chairman Barton and 
Ranking Member Boucher for holding this hearing. Our workers care very 
deeply about passing an effective pipeline safety bill that will 
protect the public, pipeline workers and the environment from pipeline 
accidents and from new national security threats.
    The Building Trades represent a large contingent of workers in 
different crafts who work on and around pipelines. They construct, 
operate and maintain gas, oil, and other pipelines all over the 
country. It is critically important to our workers that these pipelines 
are safe and secure. Unfortunately, after the events of September 11, 
protection of the pipelines and their related facilities from terrorist 
attack has become a new concern. The Building Trades men and women who 
work on pipelines have one priority: safety. We want to protect our 
country's pipelines from new terrorist threats, and protect communities 
from future accidents like the tragedies that occurred in Bellingham, 
Washington and New Mexico.
    While the Building Trades is actively working with Congress to help 
shape the best pipeline safety bill possible, today I'd like to talk 
about our biggest safety concerns. I request that the committee please 
enter my entire statement into the record even though I won't have time 
to speak to all the aspects of the bill today.
    In general, a worker on a pipeline will tell you that standards 
issued by the Office of Pipeline Safety are good enough. The problem 
lies in the enforcement. More enforcement is needed to make sure that 
pipelines are tested for leaks, but more importantly that they are 
tested for integrity.
    When a leak is detected, pipeline companies notify a contractor 
with whom they have an agreement to do repair work. The contractor is 
usually called out to replace only the section of the line that is 
leaking and not the entire line. This often leaves our members 
wondering, when will they be called on to fix the other sections of the 
same pipeline?
    Although leaks often pose a threat to public safety, when a 
pipeline rupture occurs human lives are put at risk. A pipeline will 
come apart when its integrity fails. When you have products flowing 
through a pipe that has a compromised integrity, at a high pressure, 
heat is created and an explosion is imminent.
    The best means of testing the integrity of a pipeline is called 
hydrostatic testing. This is accomplished by purging the section of 
pipe to be tested and then filling the pipe with water and putting it 
under a constant pressure for a specified number of hours. Pipeline 
companies will complain, that this test is costly, it will shut a line 
down and interrupt service, it will put pressure on the pipe that is 
above its normal operating pressure and may damage the pipe. These are 
all true. If the pipe is damaged however, it's because the pipe's 
integrity was failing. But wouldn't the members of this committee 
rather have water spilling out of a weak and deteriorating pipe than 
have it blow up, and only then find out that the integrity was failing? 
This test will tell you if the pipe's integrity is in good condition. 
The pipeline in Bellingham, Washington had been tested weeks before the 
pipe ruptured by a smart pig testing device. A pig test only reveals 
corrosion and leaks, it does not conclusively tell an operator how the 
integrity of the pipeline is holding up.
    A pipeline's integrity must be tested. Testing for leaks only is 
not sufficient. Over half of the nation's pipelines were originally 
constructed before 1970. Those lines are subject to both internal and 
external corrosion and their integrity must be periodically checked. 
The Building Trades supports required periodic inspections of pipelines 
that look for leaks and integrity failures. The Building Trades is also 
aware of the major cost factor to the operating companies to do this 
type of testing. We are therefore also suggesting for the safety of 
U.S. Citizens and in these times of uncertainty the U.S. Government 
should give these pipeline operators some type of incentive or tax 
relief to perform these tests on a periodic basis.
    Pipelines are now a national security issue because there are 
approximately 2.2 million miles of them in the United States. They are 
a unique national security concern because many of them run underneath 
communities and the above ground pumping stations are visible with 
little protection. Just as in New York City when the planes struck the 
twin towers, construction workers from all over New York State dropped 
their tools to help with rescue and recovery, if a pipeline were to be 
attacked, our members would again be rushing to the site to help with 
rescue and recovery. Our members know how to clear away debris, shut 
down a pipe, and repair it to restore product flow.
    If a pipeline in upstate New York was blown up by terrorists in the 
middle of winter, thousands of people would go without heat until the 
pipeline operators and constructors could repair the lines to restore 
service. How long would it take to repair the line and restore full 
service? The answer to that question depends on the cooperative 
response of local fire fighters, federal, state and local emergency 
management officials and the area's pipeline workers.
    Currently, we are not aware of coordinated response plans already 
in place in the majority of this country's communities. If such an 
attack were to take place, we would have difficulty responding because 
of the following obstacles. Only pipeline workers who are certified to 
work on that company's pipeline would be allowed to do the repair work. 
(Workers on a nearby line employed by another company would not be able 
to help because they are not certified by that company to work on their 
lines, this presents the problem of having enough workers immediately 
on the scene.) Chances are, that replacement pipe would not be nearby 
and would take time to locate and retrieve. Large volumes of tools and 
operating equipment would have to be easily accessible and a plan to 
redirect product flow would need to be in place. These are just a few 
of the immediate concerns that would have to be dealt with for an 
effective response.
    The Building Trades believes that emergency response teams need to 
be assembled and coordinated as soon as possible. Building Trades men 
and women and contractors working on pipelines today are ready and 
willing to work with officials to enhance safety around pipelines and 
to create emergency response plans. We believe that the new Office of 
Homeland Security should be consulted and involved in helping 
communities create emergency plans and response teams. To aid this 
effort, we would like to see national standards put in place for 
workers that would give them certification to work on different company 
lines during an emergency.
    The Building Trades strongly urges Congress to pass a pipeline 
safety bill as soon as possible. Our members fear that without better 
enforcement for testing pipeline integrity and detection of leaks 
another explosion will certainly happen again. Emergency response teams 
must also be coordinated immediately, around the country, to help 
prevent terrorist attacks on pipelines and to create swift and 
effective responses to such attacks.
    The Building Trades are committed to making sure this country's 
pipeline infrastructure is operated properly, safely and is protected 
from national security threats. As pipeline legislation evolves in the 
House, we look forward to working with the members of this committee to 
pass the best pipeline safety bill possible.
    Thank You.
    The Building and Construction Trades Department is committed to 
working with Members of Congress to make sure that all pipelines are 
safe and secure. To craft the best pipeline safety bill possible and in 
order to take steps to protect our pipelines from new threats, the 
Building Trades would like to see a pipeline safety bill pass the House 
that includes the following provisions.

 Required periodic inspections of pipelines, with priority 
        going to those lines that are at the greatest threat to life 
        and property (based on proximity to persons and property, age, 
        and time since last inspection). The use of independent third 
        party inspectors should be encouraged to help do inspections. 
        Congress should consider setting up a system of monetary 
        incentives to help operators perform efficient, periodic 
        inspections.
 Community right to know, worker right to know and emergency 
        preparedness provisions must be included. Municipalities must 
        have secure access to maps of local pipelines.
 Whistleblower protections for employees. This is already 
        included in the McCain-Murray bill and must be included in a 
        House passed bill.
 We support the certification of safety programs and standards; 
        in addition individual employees performing safety-sensitive 
        work on pipelines should also be certified. We also support a 
        national standard to certify workers to work on any line in 
        case of an emergency.
 Pipeline Integrity Management Programs that include the best 
        leak detection technologies and detection for integrity 
        failures. The Secretary of Transportation needs to continue 
        with or initiate further research and development to identify 
        innovative technology that can aid in leak detections and in 
        detecting pipeline integrity failures.
 Federal studies to recommend and implement solutions for the 
        multifaceted problems of population encroachment. There need to 
        be adequate amounts of pipeline right-of-way so that pipeline 
        construction, operation and maintenance work may be performed 
        safely. This should also be taken into consideration in future 
        planning and permitting processes.
 Language that would give the Secretary of Transportation, in 
        consultation with the Office of Homeland Security, the 
        authority to work with industry, labor, communities, federal 
        and state agencies to implement new safety and security 
        measures in light of the new threats to our nation's energy 
        infrastructure after September 11.
 Increased security around pumping stations and metering 
        facilities is a must. There also needs to be a special team of 
        people from the pipeline crafts to assist along with the 
        firefighters and state, local, and federal officials in 
        drafting a plan to help control and repair any problems that 
        may arise. Based on the recent experience with key building 
        trade craft unions at the World Trade Center and at the 
        Pentagon, we know first hand many of the problems which arise 
        for emergency first responders.
 The Building Trades recommend that this Committee consider 
        amending Section 4(b) of the Accountable Pipeline Safety and 
        Partnership Act of 1996, 49 U.S.C. 60102(b), so that it 
        provides that the courts may not review a minimum safety 
        standard adopted by the Office of Pipeline Safety solely on the 
        basis of the standard's satisfaction of the cost-benefit 
        analysis requirement. In 1996, Congress adopted a requirement 
        that the Office of Pipeline Safety must perform a risk 
        assessment and a cost-benefit analysis whenever it prescribes a 
        new minimum safety standard. Cost-benefit analysis is an 
        inappropriate means of controlling federal administrative 
        agencies, because such provisions often require estimates of 
        hard-to-measure things like human lives and environmental 
        amenities. The Building Trades are concerned about the effect 
        that the cost-benefit analysis requirement in the current 
        pipeline safety statute has on the ability of the Office of 
        Pipeline Safety effectively to prescribe minimum safety 
        standards at all. That is, there is nothing in the current 
        pipeline safety statute that prohibits judicial enforcement of 
        the cost-benefit analysis requirement. Consequently, the single 
        greatest impediment to the adoption of a minimum safety 
        standard may well be the threat of judicial challenge by 
        opponents of the standard. This proposed change in the law 
        would enable Congress and the President to retain control over 
        the agency's incentives to comply with the cost-benefit 
        analysis requirement rather than leave it to the courts.

    Mr. Barton. Thank you, Mr. Sullivan.
    Last, but not least, we will hear from Mr. Nilles, and he 
is going to summarize his testimony in 5 minutes.

                  STATEMENT OF BRUCE E. NILLES

    Mr. Nilles. Good afternoon, Mr. Chairman, and 
Representative John. My name is Bruce Nilles and I am very 
pleased to have this opportunity to meet with you to discuss 
pipeline safety.
    I am currently a staff attorney with Earthjustice in 
Oakland, California. Earthjustice is a non-profit public 
interest law firm that presents without charge hundreds of 
public interest clients, both large and small, throughout this 
country.
    We work through the courts to safeguard public lands, to 
reduced air and pollution, to preserve endangered species, and 
to achieving environmental justice for all Americans. Before 
joining Earthjustice 2 years ago, I had the pleasure of working 
at the United States Department of Justice in the Environment 
and Natural Resources Division, where I spent 6 years working 
on pipelines.
    It was in this position that I had the primary 
responsibility for the Department to review all pending 
pipeline legislation, and all regulations that were being 
proposed by the Office of Pipeline Safety, to determine how 
effectively the existing law could be changed to improve 
compliance, as well as how the civil and criminal enforcement 
provisions could be strengthened to enforce the law and ensure 
that our communities are safe.
    My testimony today focuses solely on the issue of 
enforcement, and how, as you reauthorize this bill, that there 
might be ways to improve historical problems that have been 
experienced in the Office of Pipeline Safety.
    By any measure the Office of Pipeline Safety has failed, 
and continues to fail, in its most basic mission of adopting 
and enforcing this regulation. It has one of the very worst 
enforcement records of any agency in the U.S. Government.
    I know of no other agency that has a worse enforcement 
record than the Office of Pipeline Safety. GAO calculated in 
1998 that OPS proposed and not imposed, but proposed a penalty 
in only 1 out of every 25 cases that it brought.
    Imagine how many people would be speeding illegally if 
every time you got pulled over there was only a 4 percent 
chance that you might get a fine proposed. There is literally 
no enforcement going on at these critical pipeline safety 
regulations at the Office of Pipeline Safety.
    More important than this lack of enforcement is showing up 
in terms of the number of spills reported by GAO has maintained 
about four every week. There are four major oil and gas spills 
every week where there is either an injury, a death, or more 
than $50,000 worth of damage.
    Every week there are four of those kinds of incidents. More 
alarming, GAO reports that incidents are increasing and not 
decreasing, at about 4 percent per year. So the trend is 
exactly in the wrong direction.
    So why is it occurring? I would suggest because of a lack 
of enforcement, and there is three primary things that could 
happen to improve this situation. First of all, OPS does lack, 
and the Federal Government as a whole, lacks some of the very 
basic elements of a modern enforcement program.
    Any kind of meaningful enforcement program, like you have 
in the Clean Water Act, has a full range of tools that allow 
Federal officials to bring to or ensure compliance.
    There are some basic elements that are missing in the 
Office of Pipeline Safety, or in the regulations that oversee 
pipeline safety.
    For example, criminal sanctions in the Office of Pipeline 
Safety. The Office of Pipeline Safety has one of the highest 
burdens of criminal prosecutors to be able to bring a case.
    Ignorance of the law in most situations is not a defense 
unless you happen to be a pipeline operator, and then the way 
the pipeline statute is constructed, it is practically 
impossible for Federal prosecutors to bring a criminal case.
    It requires the prosecutors to show that the person knew 
what the law was and the law was violated. It is the only 
difference from most other environmental statutes.
    The second thing is that there needs to be a modern 
equipment program in place so that the laws can actually be 
enforced. The second is that if we look at the laws that had a 
tremendous impact on building pipelines, one of the most 
successful to date is the Oil Pollution Act that was passed in 
1990 in response to the Exxon Valdez oil spill.
    Since that time the number of major spills from oil 
pipelines to water in the United States has decreased. The Oil 
Inclusion Act provides for penalties per barrel, across the 
line, of $1,000 per barrel, or if it is gross negligence, 
$3,000 per barrel for oil spills to water.
    We need that same provision as to ground water and land, 
and that would provide the same deterrence that is shown to be 
successful in reducing the amount of oil spills in water in the 
United States.
    Third, training for OPS. Congress has been on the record 
since 1979, for 23 years, Congress has identified the inability 
by the Department of Transportation to enforce the very laws 
that you have passed.
    Without a strong and rigorous enforcement program, the laws 
that you have passed are unable to be implemented and provide 
the protections that we desperately need. We recommend that 
enough is enough.
    What we are dealing with is 2.2 million miles of pipeline 
that undermine all of our communities. Every one of our 
constituents has pipelines that run through their communities. 
It is time to say that if the Office of Pipeline Safety is not 
up to the task of doing its job to enforcing these laws, then 
they should not be in the business.
    What we recommend is to give them 24 months to show that 
they can run an effective enforcement program, and that they 
know how to do civil and criminal enforcement. To my knowledge 
they have never in that entire district referred a single civil 
case to the Department of Justice.
    In 23 years there have been no civil enforcement cases to 
the Department of Justice. They have been basically unable to 
do the basic job as an enforcement agency. So it is critical 
that they been given a time line to shape up or get out of the 
business.
    There is too much riding on the line between security and 
environmental protection.
    So in closing I have some additional suggestions in my 
written testimony about how Congressman Young's Bill, H.R. 
3609, and others bills may be strengthened. I think you have a 
tremendous opportunity to really improve the safeguards that 
have been placed to protect the American people.
    And I would urge you to move quickly before we have another 
Bellingham or New Mexico tragedy, and with that I want to thank 
you for the opportunity to testify here today.
    [The prepared statement of Bruce E. Nilles follows:]
  Prepared Statement of Bruce E. Nilles, Staff Attorney, Earthjustice
    Mr. Chairman and Ranking Member Boucher, I am very pleased to have 
this opportunity to meet with you and the Members of this Subcommittee 
to discuss pipeline safety and reauthorization of the existing pipeline 
statutes.
    I am currently a staff attorney with Earthjustice in Oakland, 
California. Earthjustice is a non-profit public interest law firm 
dedicated to protecting the magnificent places, natural resources, and 
wildlife of this earth, and to defend the right of all people to a 
healthy environment. We bring about far-reaching change by enforcing 
and strengthening environmental laws on the behalf on hundreds of 
organizations and communities.
    We represent--without charge--hundreds of public interest clients, 
large and small. Earthjustice works through the courts to safeguard 
public lands, national forests, parks, and wilderness areas; to reduce 
air and water pollution; to prevent toxic contamination; to preserve 
endangered species and wildlife habitat; and to achieve environmental 
justice. In short, with almost fifty lawyers in nine regional offices 
nationwide, we have extensive experience enforcing many of the laws 
that you enact.
    Prior to joining Earthjustice in early 2000, I worked for four 
years as an attorney at the U.S. Department of Justice, in the 
Environment and Natural Resources Division. In my last year at the 
Justice Department I was Special Counsel to the former Assistant 
Attorney General. In this position I was intimately involved in various 
aspects of pipeline safety. First, I had the primary responsibility for 
coordinating the Department's review of all pending pipeline 
legislation, including the Administration's pipeline bill. My charge 
was to determine how the existing law could be changed to improve 
compliance, as well as how the civil and criminal enforcement 
provisions could be strengthened. Second, I worked very closely with 
the Office of Pipeline Safety (``OPS''') in the promulgation of the 
hazardous liquid pipeline Integrity Management Rule. 67 Fed. Reg. 75378 
(Dec. 1, 2000). And, third, I coordinated the Department's review of 
several of OPS's Risk Management Demonstration Projects.
    Today, I would like to discuss the importance of a robust 
enforcement program, OPS's history of nonenforcement, and then offer 
some suggestions as to how the enforcement situation could be improved. 
Finally, I will give some initial views on how Representative Young's 
pipeline bill, H.R. 3609, could be strengthened.
             a. the importance of environmental enforcement
    Environmental and public safety statutes promote and encourage 
voluntary compliance. But it is a vigorous and fair enforcement program 
that drives widespread compliance. While many people may comply with 
the law for the good of the community, there are always some bad actors 
that would not comply but for the threat of meaningful sanctions. How 
many people would send the IRS their tax checks this April if tax 
violations carried no penalty? People comply with the tax laws in part 
because they run the risk of being caught, and sanctioned, if they do 
not. So too, we cannot expect voluntary compliance with environmental 
and public safety laws unless those laws are enforced, and enforced 
rigorously.
    Enforcement actions are brought for several important reasons 
relating to achieving better compliance rates: to protect the 
environment and the public's health, to remedy environmental harm, to 
punish wrongdoers, to deter future violations, and to compel reluctant 
agencies to comply with their nondiscretionary duties.
    Achieving compliance is important because environmental and public 
safety violations have real victims. When a toxic waste site pollutes 
an underground drinking water supply it can threaten the health of 
thousands of people. An oil spill that damages an entire ecosystem--
such as the Exxon Valdez spill in Alaska--may undermine the economic 
foundation of surrounding communities. The harm from environmental 
violations may extend far into the future, affecting the healthy of 
generations yet unborn. Damage to natural resources can be permanent, 
as when a species is lost forever, a productive wetland is destroyed, 
or a drinking water aquifer or fishery is contaminated beyond repair. 
Thus, strong enforcement is critical if we are to reduce the number of 
victims harmed and the natural resources that are destroyed when 
pipeline operators fail to comply with federal law.
b. ops's history of non-enforcement is having serious public safety and 
                       environmental consequences
    OPS administers the national regulatory program established to 
ensure the safe operation of nearly 2.2 million miles of natural gas 
and hazardous liquid pipelines in the United States. The mission of OPS 
is to develop, issue and enforce pipeline safety and environmental 
protection regulations. By any measure, OPS has failed, and continues 
to fail, in fulfilling this important mission. OPS has one of the very 
worst enforcement records of any federal agency. GAO calculated in 1998 
that OPS proposed a civil penalty in just one out of every twenty-five 
enforcement actions.1 This record was a precipitous decline 
from 1990 when OPS proposed a penalty in fifty percent of its 
enforcement actions.2 Imagine how seriously anyone would 
take speed limits if each time you were pulled over for speeding that 
there was only a four percent chance that a fine would even be 
proposed, let alone collected? So too, pipeline operators facing such a 
low risk of any sanctions have little incentive to comply with safety 
and environmental protections.
---------------------------------------------------------------------------
    \1\ Pipeline Safety The Office of Pipeline Safety Is Changing How 
It Oversees the Pipeline Industry, U.S. General Accounting Office, GAO/
RCED-00-128, May 2000, p.26 (``2000 GAO Report'').
    \2\ Id.
---------------------------------------------------------------------------
    This lack of enforcement may be one reason why pipelines incidents 
are increasing. The GAO reported in May 2002 that there were over four 
major oil and natural gas incidents per week between 1989 and 1998, 
with a major incident defined as one causing a death, an injury, or 
more than $50,000 in property damage.3 Even more alarming, 
GAO determined that pipeline incidents were increasing at an average 
rate of four percent per year.4
---------------------------------------------------------------------------
    \3\ Id. at 10
    \4\ Id.
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c. recommendations to improve compliance with safety and environmental 
                              protections
    To reverse the upswing in pipeline incidents, and to make sure 
pipeline incidents become increasingly rare events, Congress should 
undertake five prudent actions: 1) Provide OPS, the Justice Department, 
and citizens with the full range of modern enforcement authorities 
necessary to enforce existing laws; 2) Keep the pressure on OPS to 
issue long overdue protections and comply with NTSB recommendations; 3) 
Extend the penalty provision of the Oil Pollution Act to include 
hazardous liquid spills to land and groundwater; 4) Give OPS twenty-
four months to demonstrate it is operating an effective civil and 
criminal enforcement program, and if it fails, transfer OPS's 
enforcement functions to a more responsive agency; and 5) Sunset the 
incredibly wasteful Risk Management Demonstration Projects Program--
instead redirect the resources currently being used for this program 
towards OPS's basic mission of developing, issuing and enforcing 
pipeline safety and environmental rules.
1) Modernize the Pipeline Safety Enforcement Program
    Pipeline operators have for too long operated in a world where the 
regulators are struggling to protect communities with one hand tied 
behind their backs. The current enforcement scheme lacks many of the 
basic aspects of a modern enforcement program, and so inhibits the 
ability of regulators to do their job. For example, under the current 
statute, the Department of Justice may not seek civil penalties in a 
judicial enforcement action. Instead, penalties may only be sought 
through a separate administrative proceeding. Thus, to bring a basic 
enforcement case to compel compliance with safety requirements and to 
impose a penalty it is currently necessary to commence two separate 
proceedings. This is both unwieldy and ineffective from the perspective 
of an efficient enforcement program. Citizens are barred from seeking 
penalties altogether. Another outdated aspect is that the criminal 
enforcement provision establishes a much higher burden on criminal 
prosecutors than other environmental statutes. Recommendations 
5:
---------------------------------------------------------------------------
    \5\ Many of these recommendations were proposed two years ago by 
the prior Administration based on input from seasoned civil and 
criminal prosecutors.
---------------------------------------------------------------------------
    * Authorize the Justice Department and citizens to seek civil 
penalties in a judicial action for violations of the pipeline safety 
statute up to $27,500 per violation without any limit on the total 
penalty for related violations. See e.g. Sections 311(b) and 304 of the 
Clean Air Act (``CAA''), 42 USC Secs. 7413(b) & 7604. Multi-million 
dollar penalties are sometimes necessary to serve as a meaningful 
sanction and deterrent against large corporations. This was the case in 
United States v. Smithfield Foods in which the judge imposed a fine of 
$12,600,000 for more than 5,000 violations of the Clean Water Act. 972 
F.Supp. 338 (E.D. Va, 1997).
    * Lower the mens rea threshold for criminal prosecutions to a 
straightforward ``knowing'' standard to mirror other environmental 
statutes. See e.g. CAA Section 311(c), 42 USC Sec. 7413(c).
    * Add ``economic benefit'' as a factor for a court and the agency 
to consider when calculating the appropriate size of a civil penalty. 
Such an improvement would ensure that a bad actor that gained an unfair 
competitive advantage over its competitors by violating the law could 
be required to disgorge its ill-gotten gains. See e.g., CAA Section 
113(e), 42 USC 7413(c). For example, just last month a federal judge in 
Pennsylvania imposed a $8,250,000 penalty against Allegheny Ludlum 
Steel Corporation for 1,122 days of Clean Water Act violations. Most of 
this penalty was based on the economic benefit that Allegheny achieved 
over its competitors by violating the law.
    * Increase the number of civil and criminal inspectors. This could 
be done by both an increase in overall resources, as well as 
redirecting existing OPS resources away from its Risk Management 
Demonstration Projects and other similarly wasteful projects.
2) Keep the Pressure On OPS to Issue Long Overdue Protections and NTSB 
        Recommendations
    As the GAO reported in September 2001, OPS has begun to make modest 
progress in addressing its substantial backlog of overdue 
regulations.6 However, GAO also found that OPS still has not 
implemented eleven regulations--including some significantly overdue 
regulations.7 Moreover, as of September 2001, there were 
forty-four open recommendations from NTSB--or five more than were open 
in May 2000.8
---------------------------------------------------------------------------
    \6\ Pipeline Safety: Progress Made, but Significant Requirements 
and Recommendations Not Yet Complete, GAO-01-1075, Sept., 2001, at 1.
    \7\ Id.
    \8\ Id. at 2.
---------------------------------------------------------------------------
    Overdue regulations include integrity management rules for natural 
gas pipelines; leak detection performance standards for oil pipelines 
to ensure that leaks of a particular size are rapidly discovered; 
specific requirements for shut-off valve location and used for oil and 
natural gas lines (as Congress mandated in 1992 and 1996, 
respectively); regulation of gathering lines (as Congress mandated 
in1992); enhanced regulation of low-stress lines given their potential 
for serious environmental impacts; requirements that operators submit 
revised incident reports once the full impact of the incident is 
determined (as recommended by the DOT IG); and failsafe requirements to 
prevent over-pressurization.
    In addition to OPS failing to focus sufficient resources on 
rulemaking, OPS's ability to expeditiously issue new rules is impeded 
by the cost-benefit provision added to the pipeline statute in 1996. 
This provision bars OPS from issuing a new standard unless if can first 
determine that the ``benefits of the intended standard justify its 
cost.'' 49 USC Sec. 60102(b)(5). All agencies, including OPS, should be 
mindful of the relative costs of their programs; however, OPS should 
not be hamstrung with an onerous cost/benefit requirement, which 
further impedes its already atrocious progress in issuing new 
protections.
Recommendations:
    * Require GAO to report on OPS's progress in issuing the overdue 
rules and responding to NTSB recommendations every six months until all 
rules and recommendations are either adopted or responded to.
    * Remove the onerous cost/benefit mandate in Section 60102(b)(5), 
and instead require the agency to select the most cost-effective 
protections.
3) Establishing Civil Penalties for Hazardous Liquid Spills to Land and 
        Groundwater
    One of the most serious gaps in pipeline regulation is the absence 
of meaningful penalties when hazardous liquids are spilled on land and 
into groundwater. Without the threat of meaningful penalties for such 
spills, operators have little incentive to prevent spills; instead 
there is an incentive to simply clean up the spill after-the-fact, and 
patch the pipeline. The industry's tendency to react to spills, rather 
than prevent spills, may explain why, as GAO reported, pipeline 
incidents are increasing by four percent per year.9
---------------------------------------------------------------------------
    \9\ 2000 GAO Report at 10.
---------------------------------------------------------------------------
    The Oil Pollution Act of 1990 (``OPA'') imposes a flat penalty on a 
per barrel basis for oil spills to water--$1,000 per barrel unless the 
spill was the result of gross negligence and the fine increases to 
$3,000 per barrel. 33 USC 1321(b)(7). This penalty structure provides a 
tremendous incentive for companies to prevent spills to water in the 
first instance, and if spills should occur, to minimize the spills as 
much as possible. In fact, an EPA study showed that after passage of 
OPA that the number of large pipeline spills to water decreased by 43 
percent.
    Recommendation: Extend the penalty provisions of OPA to include 
spills of hazardous liquid to land and groundwater.
4) Give OPS Twenty-Four Months To Fix Its Enforcement Program
    The history of OPS's failure to enforce the most basic public 
safety and environmental protections is legendary. Its record has been 
criticized by the public, states, DOT's IG, GAO and Congress. In fact, 
it appears everyone is unhappy with its performance except, of course, 
the pipeline operators who enjoy operating without any accountability.
    Congress has been on record since at least 1979 regarding OPS's 
terrible enforcement record. The Senate Report to the bill that became 
the Hazardous Liquid Pipeline Safety Act (``HLPSA'') criticized the OPS 
for ``not doing an adequate job of regulating [liquefied natural gas] 
and [liquefied petroleum gas] safety . . . [T]he Committee has been 
concerned for several years that DOT has not placed sufficiently high 
priority on . . . programs in general.'' S. Rep. 96-182, 96th Cong. 1st 
sess. at 3 (1979), reprinted in 1979 U.S.C.C.A.N 1971, 1973.
    Congressional criticism of OPS's enforcement efforts has continued 
to the present. In the House Report for the 1984 Amendments to the 
HLPSA, the House Committee criticized the pipeline safety program as a 
``poorly managed program that needs a reevaluation of its direction.'' 
H. Rep. 98-780, 98th Cong. 2nd sess. at 10 (1984), reprinted in 1984 
U.S.C.C.A.N. 3154, 3163. See also, H. Rep. 102-247, 102nd sess. at 14 
(1991) (``DOT's performance in implementing the laws since the last 
authorization in 1988 has been mixed.''), reprinted in 1992 U.S.C.C.A.N 
264, 2644. More recently Congress has removed its gloves in criticizing 
OPS during the debates on the Pipeline Safety Act of 2000 and the 
Pipeline Safety Improvement Act of 2001:
        [T]here is little to no enforcement of existing regulations. 
        The General Accounting Office found that the Office of Pipeline 
        Safety had not enforced 22 of the 49 safety regulations that 
        are already on the book [sic] ...It is enough to make me wonder 
        if there is some collusion of some kind going on behind the 
        scenes. Why else would this Federal agency be so lax in 
        enforcing its own regulations? Madam Speaker, this inaction of 
        the Office of Pipeline Safety will not be excused by this 
        Congress.
146 Cong. Rec. H7841-42 (Rep. Pascrell)(200). See also, 147 Cong. Rec. 
S524 (Sen. Dominici) (``Unfortunately, the Office of Pipeline Safety 
has had a poor history of regulation and enforcement. It is true that 
the Office has traditionally been slow to act.'') 2001).
    Against this backdrop of uniform condemnation regarding its 
enforcement programs, there are some very preliminary indications the 
agency may be finally making some progress: Administrator Engleman has 
testified that the agency has completed a comprehensive review of its 
enforcement program, and has made several improvements. In addition, 
Ms. Engleman testified that the agency has proposed $9 million in fines 
in the past year and a half. These are important baby steps, but are 
far from building the type of robust enforcement program necessary to 
ensure all 2.2 million miles of pipeline are operating safety, and that 
pipeline incident rates decline rapidly.
Recommendations:
    * Give OPS twenty-four months to build a robust enforcement program 
that is delivering results. If it does not make substantial progress, I 
strongly urge Congress to reassign the entire enforcement program to 
another, more responsive agency. OPS's progress should be measured 
against very clear performance standards, including: 1) the number of 
civil and criminal enforcement cases referred to the Justice Department 
(I am unaware of OPS ever referring a civil enforcement case to the 
Justice Department); 2) the number of cases where civil penalties are 
actually imposed, not just proposed; 3) the average size of the civil 
penalties imposed (not just proposed); and 4) the number of OPS staff 
reassigned from other duties to its enforcement program.
    * As an interim measure I would suggest asking GAO and the DOT 
Inspector General to review OPS's internal review of its enforcement 
program, and determining if the improvements proposed are meaningful 
and achievable.
5) Congress Should Immediately Sunset OPS's Risk Management 
        Demonstration Projects
    As I described above, one of my prior tasks at the Justice 
Department was to review OPS's proposed Risk Management Demonstration 
Projects. The Justice Department's primary interest was how OPS 
exercised its authority to waive regulatory requirements for specific 
companies, and how such waivers would affect other enforcement actions. 
For example, the criminal section was concerned about its ability to 
argue to a jury in a criminal enforcement case the seriousness of a 
pipeline operator violating an OPS rule if at the same time OPS has 
granted a waiver of the same rule to another company.
    In addition to undermining enforcement, the risk management program 
had two other serious defects. First, it consumed an inordinate amount 
of OPS resources. Second, the program never appeared to yield any 
meaningful data that was in turn used to promulgate additional, more 
protective regulations. There were even projects, such as the Equilon 
Demonstration Project where after years of investment of time and 
resources by OPS, the pipeline company never even exercised its option 
to operate under the OPS waiver. All the ``risk management'' projects 
undertaken by Equilon certainly appeared like good ideas, and generated 
good press for the company, but there was absolutely no need for any 
investment of OPS resources. OPS has much more important and pressing 
demands on its time than the feel-good activities of its Risk 
Management Demonstration Project.
    Recommendation: Congress should immediately sunset OPS's Risk 
Management Demonstration Project program. As long as OPS cannot perform 
its most basic mission of developing, issuing and enforcing safety 
regulations, it should not be engaging in new and unproven activities.
                   d. initial assessment of h.r. 3609
    To strengthen the enforcement provisions of existing law, H.R. 3609 
should include provisions implementing the recommendations listed 
above. In addition, I would propose three changes to the bill as 
currently drafted:
    1) Delete proposed Section 60133(f), which would modify the 
National Environmental Policy Act (``NEPA'') by allowing OPS to exclude 
the input of other agencies during the NEPA review process if the input 
is not timely. This provisions would have the exact opposite effect 
desired by its author--it would cause more, not less, delay. The most 
certain way to ensure a project is delayed and that it can be 
successfully challenged in court is to conduct an incomplete 
environmental review. The same streamlining goal of this provision 
could be achieved by ensuring that commenting agencies, such as the 
U.S. Fish and Wildlife Service, have the resources necessary to be able 
to participate early and fully in all environmental reviews.
    2) Clarify Section 14 to ensure that OPS must provide all security 
sensitive information relating to a pipeline's vulnerability to EPA and 
the Justice Department, two agencies that serve a critical role in 
overseeing the nation's pipeline system.
    3) Require OPS to extend the protections required by its hazardous 
liquid integrity management rule to the entire network of hazardous 
liquid pipelines. Currently, the reach of the rule is limited to 
approximately twenty percent of the nation's hazardous liquid 
pipelines. This is far too narrow, and excludes such important areas as 
many rivers and streams.
    Thank you very much for inviting me to testify on the important 
issues surrounding pipeline safety. I am happy to answer any questions 
you may have.

    Mr. Barton. The Chair recognizes itself for 5 minutes of 
questions. Mr. Morris, you are here on behalf of the AGA, and 
you have heard what Mr. Nilles has said. If it is true that 60 
percent of the accidents are third-party people out digging 
without checking.
    What can OPS really do to prevent that? Take a few out and 
shoot a few every now and then?
    Mr. Morris. I believe a more vigorous encouragement and 
enforcement of what we have in our area a one-call system, a 
call before you dig. There are several jurisdictions where 
perhaps it is a little more lax than in our State of Tennessee, 
but I think more attention and more effort to encourage and 
enforce a vigorous one-call, a call before you dig effort will 
solve that.
    Mr. Barton. What about Mr. Nilles saying that you just need 
a stronger penalty, and that we ought to refer some of these 
cases to the Justice Department?
    Mr. Morris. Well, the referral of operators to the Justice 
Department for what is in effect a third-party trauma to a 
system I think is a bit extreme. And I don't believe quite 
frankly that the person doing the digging, although many may 
call without digging or intentionally trying to rupture a gas 
line.
    I think that perhaps a system of more aggressive 
communication and requirement, or encouragement that all States 
impose and enforce that kind of call before you dig policy, or 
philosophy, or statute, would improve the performance on that 
particular industry.
    Mr. Barton. Now Mr. Kipp's testimony says we ought to go to 
this one-call system, and Mr. John up here spontaneously had 
the same idea without reading your testimony.
    And when he saw that you were going to testify as to that, 
he felt pretty smart. Is there anybody who disagrees with this 
national one-call? Is that one thing that we all agree on?
    Mr. Kipp. If I may, I am not proposing a national one call. 
I am proposing one number. But one-call centers, and there are 
67 of them, would remain as is, but by dialing the number, the 
switch would point it to the right one-call center. It is not a 
national one-call center.
    Mr. Barton. Exactly what Mr. John said. Does anybody oppose 
what Mr. Kipp has said about this? Now, Mr. Sullivan puts in 
his testimony--I believe he is the only one that says that we 
should in some way use hydrostatic testing, where actually take 
the product out of the pipeline, and put water in, and 
pressurize it above the operating system's normal operating 
pressure. Mr. Hereth, what do you think of that idea?
    Mr. Hereth. I think that's only one of the methods that are 
viable and we use and should be reserved for applications. The 
successes--whatever method is applicable.
    It is expensive, and it is the best in terms of assessing 
if there has been other damage to the pipeline, and it takes 
the pipeline out of service for an extended period of time. 
There are environmental problems in controlling the water and a 
number of issues. It is not the----
    Mr. Barton. So there is no problem with making that an 
option as long as it has mandatory requirements?
    Mr. Hereth. It certainly is an option and is a tool 
available to us, and my company does use it.
    Mr. Barton. Mr. Sullivan, what do you think about that?
    Mr. Sullivan. Well, I think the pig testing that uses an 
imaging that can show its effect, and it cannot determine with 
a great deal of accuracy the pipeline integrity.
    Mr. Barton. Define integrity for me.
    Mr. Sullivan. I will give an example. If you do the 
hydrostatic testing, and you use water as a medium, and then 
you pressurize it, you pressurize the entire pipeline, either 
25 to 50 percent over what it is supposed to take.
    If there is a problem that is going to come in the future, 
a very short time, this will show it because you will have to 
hold that pressure for a certain amount of hours. But instead 
of oil or gas leaking out on to the ground, you will have water 
leaking out on to the ground.
    Like in my testimony, that line was tested in Washington 
just shortly before it went, and I just think that the 
hydrostatic testing is much better.
    Mr. Barton. Is there any other way to test? I guess when 
you say integrity, you mean the strength of the wall at that 
time?
    Mr. Sullivan. Yes, where there may be some corrosion, 
either inside the pipe that the pig testing won't show. The 
hydrostatic testing will because it puts a little more, 25 or 
50 percent more, pressure than is normally there. And the heat 
will make those things happen.
    Mr. Barton. But that is the only way? You can't test the 
pipe in a different way?
    Mr. Sullivan. He mentioned that there was a third way and 
the industry may have some other tests today that I am unaware 
of, but I have only been told about the pig testing, and the 
hydrostatic testing.
    Mr. Shea. Mr. Chairman, with improvements in in-line 
inspection tools that have been realized in the past few years, 
you are actually able to now project the remaining strength in 
a pipe. So there are tools that are available are now in a 
position where they can provide a lot better information on the 
remaining integrity of a pipe.
    Mr. Barton. What tools?
    Mr. Shea. Typically high resolution tools.
    Mr. Barton. Well, is there any industry data on aid to 
pipelines that correlates to integrity? I mean, I would assume 
that pipelines built last year would have more integrity than a 
pipeline built 50 years ago.
    Is it 4 years ago that they were 4 inches thick and a year 
ago they are a half-inch thick? So there is really no 
correlation to age integrity?
    Mr. Haener. It depends on the maintenance. It would depend 
on what kind of coating and what kind of soil it is in, and if 
it is constructed properly, and tested periodically, there 
shouldn't be any difference at all. Pipelines should last for 
100 years.
    Mr. Barton. Mr. Sullivan.
    Mr. Sullivan. Well, the pipe that is put in prior to 1970 
does not have any cathodic protection and soil conditions, such 
as limestone, also offer high risks. Now, the pipe put in after 
1970 has that protection.
    It is protected against electrolysis, which will rot a pipe 
that is in the ground because of the soil conditions.
    With the cathodic protection, that does not happen, but any 
pipe put in before 1970 doesn't have that.
    Mr. Shea. Mr. Chairman, I would disagree with that. At the 
Buckeye Pipeline, we have pipeline that has been in service 
since the turn of the century, the other century, 1900, and 100 
percent of our pipeline is cathodically protected.
    There have been studies that have been done on a decade of 
construction and whether or not there is----
    Mr. Barton. Well, the problem is that it was not required 
until 1970.
    Mr. Shea. Well, I am speaking for my company, but I believe 
most are cathodically protected 100 percent. It is a proven way 
to maintain pipeline integrity, and there are decades of 
construction of pipeline studies that have been done.
    And as you would imagine, they indicate that older pipe has 
a higher incidence of failure, or potential failure. But 
maintenance as Mr. Haener said, maintenance is a key to the 
entire thing. We do have pipeline that has been in service for 
60 or 70 years, and it is as good as pipeline that we have put 
in place in the last 10 or 15 years.
    Mr. Morris. If I might add to that from the local 
distribution company perspective. It is just good business to 
maintain the infrastructure so that you continue to operate and 
stay in business, and continue to service your customers.
    So we would suggest and encourage a number of options, and 
whatever seems appropriate for a given system at a given time 
to address their needs be available, but not that any of them 
be specifically mandated.
    Mr. Barton. Mr. Haener.
    Mr. Haener. I just wanted to echo Mr. Shea's comments.
    Mr. Barton. Mr. John.
    Mr. John. Thank you, Mr. Chairman. Mr. Haener, I think you 
were here earlier when Mr. Markey raised some concerns about 
the security of the district LNG facility?
    Mr. Haener. Yes.
    Mr. John. So obviously you know that CMS might have a small 
facility in my district, but LNG is all over the country. And I 
actually had the opportunity to go visit the facility down 
there, and it is quite a facility, but do you believe that the 
OPS and/or the Office of Homeland Security provided enough 
assistance relative to what Mr. Markey was talking about with 
security?
    Mr. Haener. I do believe that. The second day after 
September 11, I was on an airplane with a man in charge of our 
nuclear security, and we implemented our security rolls, and we 
followed up with local authorities, the Coast Guard, and we had 
very good cooperation with local people, and the Coast Guard 
has been excellent, and we did change some operating 
procedures.
    I did bring in an outside control and beyond that said you 
guys did a great job, but I think that Lake Charles is very 
safe, but we have made necessary changes to ensure that, and I 
feel very good about it.
    Now, can I give 100 percent assurance that we won't have an 
incident? No. I think the other thing you have to understand is 
that LNG is not that big a problem. It is not explosive. It is 
very difficult.
    Mr. Barton. It's cold?
    Mr. Haener. It is cold, but you won't get the right air 
mixture to make it explode. Will it burn? Yes.
    Mr. John. Thank you.
    And I shared some of Mr. Markey's same concerns myself, and 
of course being from Louisiana, we are somewhat vulnerable 
because of the petro-chemical industry, and being on top of the 
Gulf of Mexico, and the security meetings that I have been 
involved in with the government, and Mr. Tauzin, and other 
agencies across the State, I have been very proud on how they 
have handled things in Louisiana.
    I would really like to direct the next question back to 
you, Mr. Haener, and also to Mr. Morris. As I mentioned in my 
opening statement, I believe that we have to recognize that 
there are differences between natural gas transmission lines, 
and natural gas distribution lines, or pipelines.
    I really want to share with you the views of the 
subcommittee and some of my colleagues that we have had in 
discussing legislation about a date certain, and that seems to 
be a very contentious part of where we are hung up at this 
point in time.
    What I would like to do is really get your opinion about 
how we maneuver through this issue, and how we get ourselves 
out of a seemingly four-sided box that is closing in on us to 
try to resolve this particular problem.
    And I would address this to Mr. Shea, but obviously with 
the rule in place on integrity of oil pipelines, my final 
question is going to be to you and maybe you can shed some 
light on it.
    Mr. Shea. I would be glad to start. First of all, I think 
we should start with the facts and have some scientific backup 
for those facts. I think when we start setting arbitrary rules 
and one size fits all, you are going to have consequences.
    And I think the consumer is going to get hurt, and I think 
we are going to get a false sense of security, because I don't 
think that the industry, in terms of supplying inspection 
devices, and inspectors, including the results, can keep up 
with the demand.
    We have already got the liquid rule going into effect in 5 
years, and we have got that situation, that is putting a real 
stress on the industry.
    And I have to tell you that my company has spent $25 
million this year on safety and integrity of our pipeline 
system, and part of that is requiring new line inspections, and 
getting results back now. We just can't get them on a timely 
basis.
    I think there is some kind of answer, but I think it is 
going to depend upon really the circumstances, and what kind of 
inspection devices are used, and what were those results, and 
when was it inspected before.
    And I think that is probably the best answer, and we will 
probably be able to even come up with consensus that makes 
sense for all of us, and I would be glad to work with you on 
that. We do have some time certains, but it is not one size 
fits all based on the data, and improving the pipeline system 
without really hurting the consumer.
    Mr. John. I think it is very helpful to hear you say that 
this is something that we can talk about, because I think that 
is where compromises start. Mr. Morris.
    Mr. Morris. I would for the most part agree. We tend to 
think in our system that we have got a list of various types of 
inspections and tests that we conduct from every perspective, 
and the idea is to do it in such a manner that it doesn't cause 
any great problem for our infrastructure or for our customers.
    Some of the tests or inspections that are being proposed 
would require us to basically shut down significant parts of 
our system, and shut down significant numbers of our 300,000 
customers, and then have to go back and go through the process 
of bringing them back up, relighting pilot lights, and et 
cetera, and that creates a lot of anxiety for our customers 
when we have to do that.
    We have got a system of review and analysis of our system 
that we think serves us, and I would dare say that most LDCs 
have similar protocols in place that are specifically tailored 
to address the needs of their system.
    One example that I will offer is about 10 years ago we 
embarked on an effort through inspection to replace a lot of 
our cast iron system with plastic pipes, and we did it in 
response to perceived risk of earthquake.
    This is ahead of any mandate or any requirement that it be 
done, but because of the knowledge of our system and our area 
suggested that this was an appropriate thing for us to do.
    It is a 30 year project, and we are 10 years into it, and 
we are better than halfway there, but the point that I am 
making is that we know our system as most LDCs do. We know what 
the system needs, and we live with it every day, and we 
maintain it, and we keep it operational because that is what 
our customers demand, and that is what is good for business, 
and it is also what is good for safety.
    And we think that guidelines and perhaps even options, 
alternatives, are far superior to any specific mandates, even 
in terms of time and specific dates, and tests.
    Mr. John. Okay. Thank you. Mr. Shea, if you could--you were 
right in the middle of implementing a similar program. Could 
you maybe shed your experiences and some light and giving us 
some direction as we move through?
    Mr. Shea. Certainly I will try. As you know, the liquid 
pipeline industry has had rules that are now in effect. We have 
to within 3\1/2\ years test 50 percent of our systems, which 
are prioritized as being the highest 50 percent risk pipeline, 
and then do the other 50 percent in the next 3 to 4 years, for 
a total of a 7 year cycle.
    And at that point forward, we test every 5 years. What we 
have found is that there appears today anyways, and this is 
before the natural gas industry has to begin their program, 
that there are enough smart pigs out there and crews actually 
to run the smart pigs through the pipeline.
    Of course, a lot of times that requires us to make 
modifications to our pipeline for various sized diameter pipes 
to be able to get the pigs in and out of the pipeline. Where 
the problem has been, and it has not been overly severe, but 
the issue has been in the interpretation of the data.
    I mean, very sophisticated computer programs that are 
analyzing the data that is coming out of these tools, and the 
people and systems required to analyze and interpret the data 
are in short supply.
    And so while you can run as many miles of smart pigs that 
you would like, getting the data back in a timely fashion to be 
able to then go out and inspect your pipeline where the 
anomalies are the greatest, there has been a time lag there.
    Mr. John. I think the three responses from the gentlemen 
here show a stark contrast in what I said earlier, and that it 
is almost impossible to try to cookie-cut the regulations.
    And finally for Mr. Kipp, I want to congratulate you for 
putting in your testimony about my idea of (inaudible) and the 
way for a national one-call, and I appreciate you getting on 
that project very quickly. Thank you.
    Mr. Barton. Great idea. Well, I want to thank the panel. We 
do hope to move the markup of the bill sometime this spring. I 
can say with some degree of certainty that it is not going to 
be 100 percent consent bill.
    We hope to work with Chairman Young and the Transportation 
Committee, and hopefully on a bipartisan basis come up with a 
House bill, and I would like to do that sooner rather than 
later.
    I might also just say for those of you who are wondering 
what we are going to do on Thursday, we were scheduled to have 
a hearing on the nuclear waste issue at Yucca Mountain, and in 
consultation with Mr. Boucher and the Secretary of Energy, we 
have postponed that hearing.
    It is expected that the House will not be in session on 
Thursday. Quite frankly, I didn't relish having myself and Mr. 
Boucher stay over as the only members that sit on that 
subcommittee. So we postponed that to some time in April, and 
April 16 is the last date that the Governor of Nevada can veto 
the site selection at Yucca Mountain.
    So we would assume our hearing would be on or near April 
16th. Again, thank you, gentlemen, and this hearing is 
adjourned.
    [Whereupon, at 4:20 p.m., the subcommittee was adjourned.]

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