Pipeline Safety: Management of the Office of Pipeline Safety's Enforcement Program Needs Further Strengthening
Published: 2004-07-23T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: While pipelines are inherently safer to the public than other modes of freight transportation, pipeline accidents involving natural gas and hazardous liquids (such as gasoline) can have serious consequences. For example, a natural gas pipeline ruptured near Carlsbad, New Mexico, in 2000, killed 12 people, and resulted in $1 million in damages or losses. The Office of Pipeline Safety (OPS) administers the national regulatory program to ensure safe pipeline transportation. OPS uses its enforcement program, when safety problems are found, as one means to do so. This study reports on (1) the effectiveness of OPS's enforcement strategy and (2) OPS's actions for assessing monetary sanctions (civil penalties), among other things.
section_title: What GAO Found
paragraphs: The effectiveness of OPS's enforcement strategy cannot be determined because the agency has not set goals for its enforcement program, fully defined its strategy, or established performance measures linked to goals that would allow an assessment of results. These are key elements of effective management. Without these elements, the agency cannot determine whether recent changes in its strategy are having the desired effects on pipeline safety. Over the past several years, OPS has placed priority on other areas--developing a new risk-based regulatory approach--and it believes these efforts will change the safety culture of the industry. OPS now intends to devote more attention to strengthening the management of the agency's enforcement program. In particular, OPS is developing an enforcement policy that will help define its enforcement strategy and has made some initial steps toward identifying new performance measures. However, OPS does not anticipate finalizing such a policy until sometime during 2005 and lacks a systematic approach for incorporating some of the key practices identified for achieving successful performance measurement systems. OPS has increased both the number and the size of the penalties it has assessed against pipeline operators over the last 4 years (2000 through 2003) following its decision to be "tough but fair" in assessing penalties. During this period, OPS assessed an average of 22 penalties per year, compared with an average of 14 per year for the previous 5 years (1995 through 1999), a period of more lenient enforcement. In addition, the average penalty amount increased from $18,000 to $29,000 over the two periods. While civil penalty use and size has increased, it is not clear whether this action will help deter noncompliance with the agency's safety regulations. Stakeholders expressed differing views: some thought that any penalty had a deterrent effect if it kept the pipeline operator in the public eye, while others told us that the penalties were too small to be effective sanctions. About 94 percent of the 216 penalties levied from 1994 through 2003 have been paid. However, OPS lacks effective management controls to assure that penalties are collected. For example, OPS does not routinely inform its collection agent of penalties it has assessed.

section_title: Letter
paragraphs: While pipelines are inherently safer to the public than other modes of  freight transportation, the volatile nature of the products they carry means  that pipeline accidents can have serious consequences. For example, when  a natural gas pipeline ruptured near Carlsbad, New Mexico, in 2000, the  released gas ignited and killed 12 people. Property and other damages or  losses totaled almost $1 million.
The Office of Pipeline Safety (OPS), within the Department of  Transportation’s Research and Special Programs Administration (RSPA),  administers the national regulatory program to ensure the safe  transportation of natural gas and hazardous liquids by pipeline. The office  attempts to ensure the safe operation of pipelines through regulation,  national consensus standards, and oversight of the industry through  inspections and enforcement actions when safety problems are found. The  office uses a variety of enforcement tools, including some, such as  compliance orders, that require pipeline operators to correct underlying  safety violations. OPS may also impose monetary sanctions (civil penalties)  on pipeline operators for violations of its pipeline safety regulations.
In May 2000, we reported, among other things, that OPS had reduced its use  of civil penalties and increased its use of administrative actions (such as  warning letters) without assessing the effects of these changes on pipeline  safety compliance. The Pipeline Safety Improvement Act of 2002 directed  that we (1) evaluate the effectiveness of OPS’s enforcement strategy and  (2) examine OPS’s assessment of civil penalties. These topics form the  major focus of this report. To meet other requirements of the act and your  interests, we are also reporting on how OPS enforces pipeline safety and  how its enforcement policies and procedures have changed over time,  whether OPS substitutes civil penalties for another form of enforcement,  and how OPS’s use of civil penalties compares with that of the Federal  Aviation Administration (FAA), which oversees aviation safety. These  issues are discussed in appendix II. Finally, we are reporting on how the  office responded to the recommendations in our May 2000 report and  whether industry and economic trends have influenced OPS’s enforcement  actions. These issues are discussed in appendixes III and IV.
To evaluate the effectiveness of OPS’s enforcement strategy, we  determined the extent to which the office’s strategy incorporates several  elements that are important for effective program management:  clear  program goals, a well-defined strategy for achieving goals, and  performance measures that are linked to program goals. We identified  elements of effective program management by reviewing our products on  this topic as well as other key literature, such as Office of Management and  Budget guidance, on this subject. We interviewed OPS officials and  reviewed documents about the agency’s activities and plans related to each  of these elements. We interviewed pipeline safety stakeholders, including  industry trade associations, federal agencies, state pipeline agencies and  associations, a local representative from Virginia, and pipeline safety  advocacy groups, to determine their views on the effectiveness of OPS’s  enforcement efforts. To examine OPS’s assessment of civil penalties  against pipeline operators, we analyzed the extent to which OPS proposed  and assessed civil penalties from 1994 through 2003 and pipeline operators  have paid them.  (FAA’s general accounting division collects civil penalties  for OPS.)  We also analyzed data from OPS on its enforcement actions and  from FAA on its collection of civil penalties. We examined OPS’s  procedures and actions to ensure that the safety violations that lead to civil  penalties are remedied. We interviewed stakeholders on whether OPS’s  civil penalties help deter safety violations. As part of our review, we  assessed the internal controls and the reliability of the data elements  needed for this engagement. We determined that the data elements were  sufficiently reliable for our purposes, except for those that would allow us  to determine the timeliness of civil penalty payments. This exception did  not create a major impediment in reporting on OPS’s use of civil penalties.  We performed our review in accordance with generally accepted  government auditing standards from June 2003 through July 2004. (See app.  I for additional details on our scope and methodology.)
subsections: section_title: Background
paragraphs: Pipelines transport the bulk of natural gas and hazardous liquids in the  United States. Specifically, pipelines carry nearly all of the natural gas and  about two-thirds of the crude oil and refined oil products. Three primary  types of pipelines form a 2.4-million-mile network across the United States.
Natural gas transmission pipelines transport natural gas over long  distances from sources to communities (about 327,000 miles, primarily  interstate).
Natural gas distribution pipelines continue to transport natural gas from  transmission lines to consumers (about 1.9 million miles, primarily  intrastate).
Hazardous liquid pipelines transport products, such as crude oil, to  refineries and the refined product on to product terminals (about  161,000 miles, primarily interstate).
Pipelines have an inherent safety advantage over other modes of freight  transportation because they are primarily located underground, away from  public contact. By one measure, the reduction in accidents overall, the  hazardous liquid pipeline industry has greatly improved its safety record  over the past 10 years. (See fig. 2.)  From 1994 through 2003, accidents on  interstate hazardous liquid pipelines decreased from 245 in 1994 to 126 in  2003, or almost 49 percent. These accidents resulted in an average of 2  fatalities and 8 injuries per year. However, the industry’s safety record has  not improved for accidents with the greatest consequence—those resulting  in a fatality, an injury, or in property damage of $50,000 or more—called  serious accidents in this report. The number of serious accidents stayed  about the same over the 10-year period. The lack of significant change over  time in the number of serious accidents on interstate hazardous liquid  pipelines may be due in part to the relatively small number of these  accidents—about 88 every year. The accident rate—which considers the  amount of product and the distance it is shipped—followed a similar  pattern. The accident rate for hazardous liquid pipelines overall decreased  from about 0.41 accidents per billion ton-miles shipped in 1994 to about  0.25 accidents per billion ton-miles shipped in 2002. The accident rate for  serious interstate hazardous liquid pipeline accidents stayed the same,  averaging about 0.15 accidents per billion ton-miles shipped from 1994  through 2002.
In contrast to hazardous liquid pipelines, accidents on interstate natural  gas pipelines increased from 81 in 1994 to 97 in 2003, or almost 20 percent.  (See fig. 3.)  These accidents resulted in an average of 3 fatalities and 10  injuries per year. The number of serious accidents on interstate natural gas  pipelines also increased, from 64 in 1994 to 84 in 2003, though they have  fluctuated considerably over this period. Information on accident rates for  natural gas pipelines is not available because of the lack of data on natural  gas shipped through pipelines. As with hazardous liquid pipelines, the lack  of significant change over time in the number of total accidents and serious  accidents on interstate natural gas pipelines may be due in part to the  relatively small number of these accidents—about 65 every year.
OPS, within RSPA, administers the national regulatory program to ensure  the safe operation of the nation’s natural gas and hazardous liquid  pipelines. OPS has carried out its oversight responsibility by developing  and issuing prescriptive minimum safety standards and enforcing these  standards. Recently, the agency has developed additional standards that  are risk based and focus on improving pipeline operators’ management of  their operations rather than on meeting prescriptive requirements. In 1999,  to reduce the risk of accidents attributable to human error, OPS issued a  new operator qualification regulation requiring pipeline operators to  develop programs for ensuring that individuals working on their pipeline  systems are qualified to do so. In 2000, to better focus on safety risks that  are unique to individual pipelines, OPS issued the first in a series of  integrity management regulations requiring operators to better protect  pipeline segments where a leak or rupture could have a significant effect on  densely populated or environmentally sensitive areas (called high- consequence areas).  Under this new risk-based regulatory approach,  operators must, in addition to meeting minimum safety requirements,  develop comprehensive plans for identifying the range of risks facing these  segments and taking actions to mitigate these risks. According to OPS, it is  devoting a large portion of its resources to implementing the integrity  management program. OPS issued integrity management requirements for  large hazardous liquid pipeline operators (those with 500 or more miles of  pipeline) in December 2000, for small hazardous liquid pipeline operators  in January 2002, and for natural gas transmission pipeline operators in  December 2003. The agency is carrying out inspections of operators’  compliance with these requirements in separate phases, starting with  inspections of large hazardous liquid operators from September 2002  through April 2004. In all, the agency will need to inspect the integrity  management programs of more than 1,000 individual operators of  hazardous liquid and natural gas transmission pipelines.
To improve pipeline safety, OPS carries out several types of activities. First,  it develops and issues pipeline safety regulations and supports national  consensus standards, which provide additional guidance to pipeline  operators in managing their pipeline systems safely. In addition, OPS  undertakes oversight activities, which include inspections to determine  compliance with its regulations, accident investigations, and enforcement.  Finally, OPS administers other programs—including, for example, research  and development to enhance pipeline safety technologies, data collection  to better define pipeline-related problems and concerns, and education to  prevent excavation-related damage.
When OPS finds a violation—such as the failure of an operator to inspect  various aspects of its pipeline—during an inspection or an investigation  after an accident, it may take one of several types of enforcement or  administrative actions depending on the nature and severity of the  violation. (See table 1.)  An enforcement action may require the operator to  correct an unsafe condition or practice, or the enforcement action may be a  civil penalty (monetary fine). An administrative action notifies a pipeline  operator of a safety concern that is not serious enough to require an  enforcement action.
When imposing civil penalties, OPS must by law consider seven factors:  (1)  the nature, circumstances, and gravity of the violation; (2) the degree of the  operator’s culpability; (3) the operator’s history of prior offenses; (4) the  operator’s ability to pay; (5) any good faith shown by the operator in  attempting to achieve compliance; (6) the effect on the operator’s ability to  continue doing business; and (7) other matters as justice may require.  Before OPS imposes a civil penalty, it issues the pipeline operator a notice  of probable violation that documents the alleged violation and identifies  the proposed civil penalty amount. OPS then allows the operator to present  additional evidence either in writing or in an informal hearing. Attorneys  from RSPA’s Office of Chief Counsel preside over these hearings. Evidence  presented by the operator may result in the civil penalty being affirmed,  reduced, or withdrawn. If, after this step, the hearing officer determines  that a violation occurred, OPS’s associate administrator issues a final order  that requires the operator to correct the safety violation (if needed) and pay  the penalty (termed “assessed penalties” in this report). The operator has  20 days after the final order is received to pay the penalty. FAA collects civil  penalties for OPS.
From 1992 through 2002, federal law allowed OPS to assess up to $25,000  for each day that a violation continued, not to exceed $500,000 for any  related series of violations. In December 2002, the Pipeline Safety  Improvement Act increased these amounts to $100,000 and $1 million,  respectively.
OPS is a small federal agency. In fiscal year 2003, OPS employed about 150  people—about half of whom were pipeline inspectors. In contrast, the  Federal Railroad Administration, another agency within the Department of  Transportation, employs 855 people, including more than 400 inspectors to  enforce rail safety regulations. In addition, FAA, the agency within the  Department of Transportation responsible for the safety of civil aviation,  employed about 48,500 people in fiscal year 2003. About 4,000 of these  employees were safety inspectors. For fiscal year 2003, OPS received about  $66.8 million in appropriations and about $17.5 million from the Pipeline  Safety Fund.
OPS retains full responsibility for enforcing regulations on interstate  pipelines, and it certifies states to perform these functions for intrastate  pipelines. Currently, OPS has agreements with 11 states, known as  interstate agents, to help it inspect segments of interstate pipeline within  these states’ boundaries. However, OPS undertakes any enforcement  actions identified through inspections conducted by interstate agents. In  2002, about 400 state pipeline safety inspectors assisted OPS in overseeing  pipeline safety within their states, according to the latest available data.
section_title: Key Management Elements Are Needed to Determine the Effectiveness of OPS’s Enforcement Strategy
paragraphs: Although in recent years OPS has made a number of changes in its  enforcement strategy that have the potential to improve pipeline safety, the  effectiveness of this strategy cannot currently be determined because the  agency has not incorporated three key elements of effective program  management—clear program goals, a well-defined strategy for achieving  those goals, and performance measures linked to the program goals.
subsections: section_title: OPS’s Enforcement Strategy, as Well as a Broader Oversight Approach, Has Been Evolving
paragraphs: OPS’s enforcement strategy, as well as its overall approach for overseeing  pipeline safety, has undergone significant changes in the last 5 years.  Before 2000, the agency had emphasized partnering with the pipeline  industry to improve pipeline safety rather than punishing noncompliance.  In 2000, in response to concerns that its enforcement was weak and  ineffective, the agency decided to institute a “tough but fair” enforcement  approach and committed to making greater use of all its enforcement tools,  including larger civil penalties. In 2001, to further strengthen its  enforcement, the agency began issuing more corrective action orders  requiring operators to address safety problems that led to pipeline  accidents. In 2002, OPS created an Enforcement Office to put more focus  on enforcement and help ensure consistency in enforcement decisions.  However, the agency has not yet filled key positions in this office.
OPS was making these changes in its enforcement strategy at the same  time that it was significantly changing its overall approach for overseeing  pipeline safety. In particular, in 2000 the agency began implementing its  new integrity management program, which requires operators to  systematically manage risks to their pipelines in areas where an accident  could have the highest consequences. The agency believes that pipeline  accidents in these high-consequence areas will decrease because operators  are required, under this risk-based approach, to identify and repair  significant defects in pipelines located in these areas. Officials have  emphasized that they believe this program is improving the safety culture  of the pipeline industry and has a greater potential to improve safety than  enforcing OPS’s traditional minimum safety standards. According to these  officials, in the last several years, they have placed a priority on developing  and implementing this risk-based regulatory approach and on developing a  sound approach for overseeing pipeline operators’ fulfillment of the  agency’s new requirements. For example, OPS has developed detailed  protocols and guidance for inspecting operators’ identification of risks and  resulting repairs and has developed new information systems for tracking  the status of issues identified in these inspections. OPS has developed a  similar approach for overseeing these companies’ fulfillment of its new  requirements for ensuring that their employees are qualified to operate  pipeline systems. According to OPS officials, the agency plans to use these  new oversight approaches as a model for improving its oversight of  operators’ compliance with its minimum safety requirements. Officials  have emphasized that their efforts to raise safety standards, inspect  pipeline operators against these standards, investigate accidents, and take  enforcement actions collectively represent an overall systematic approach  to improving pipeline safety.
In 2002, OPS began to enforce its new integrity management and operator  qualification standards, in addition to its minimum safety standards. For  integrity management, the agency has primarily used notices of  amendment, which require improvements in procedures rather than  stronger enforcement actions to give pipeline operators time to learn how  to build programs that meet OPS’s complex standards. OPS has recently  started to make greater use of civil penalties in enforcing these standards.  The agency has also used a mix of enforcement actions in enforcing its  operator qualification standards. OPS’s use of civil penalties, corrective  action orders, and notices of amendment was significantly greater in 2003  than it was in 1999, the year before OPS started changing its enforcement  strategy. (See fig. 4.)
According to OPS’s associate administrator, the agency has made  significant progress in implementing its integrity management program and  now needs to devote more attention to strengthening the management of  its enforcement program. Consequently, OPS has recently begun to  “reengineer” this program. Efforts under way include developing a new  enforcement policy and guidelines, developing a streamlined process for  handling enforcement cases, modernizing and integrating the agency’s  inspection and enforcement databases, meeting with stakeholders to  obtain their views on how to make the enforcement action fit the violation,  and hiring additional staff devoted to enforcement. Some aspects of these  plans are discussed in more detail in the following sections.
section_title: OPS Needs Goals for Its Enforcement Program
paragraphs: Although OPS has overall performance goals, the agency has not  established specific goals for its enforcement program. According to OPS  officials, the agency’s enforcement program is designed to achieve OPS’s  overall performance goals of (1) reducing the number of pipeline accidents  by 5 percent annually and (2) reducing the number of spills of oil and other  hazardous liquids from pipelines by 6 percent annually. A number of other  agency efforts—including the development of new safety standards,  inspections, and initiatives to help communities prevent damage to  pipelines—are also designed to achieve these goals.
The above performance goals are useful agencywide safety goals because  they identify the end outcomes, or ultimate results, that OPS seeks to  achieve through its various efforts. However, OPS has not established goals  for its enforcement program that identify the intermediate outcomes, or  direct results, the enforcement program seeks to achieve. Intermediate  outcomes show progress toward achieving end outcomes. For example,  enforcement actions can result in improvements in pipeline operators’  safety performance that can subsequently result in reduced pipeline  accidents and spills. OPS managers have told us that the desired direct  results of enforcement actions are deterring noncompliance with safety  standards, reducing repeat violations of specific standards, and influencing  pipeline operators’ safety performance by requiring safety improvements to  correct identified problems. Program outputs, such as enforcement  actions, can lead to such intermediate outcomes, which in turn can result in  the desired end outcomes of reduced accidents and spills. (See fig. 5.)
We have reported that it is a useful practice for federal programs to  complement end outcome goals with intermediate outcome goals in order  to help show a program’s contribution to desired end outcomes. OPS is  considering establishing a goal to reduce the amount of time it takes to  issue final enforcement actions. While such a goal could be useful for  improving the management of the enforcement program, it does not reflect  the direct results the agency hopes to achieve through enforcement. Clear  goals for the enforcement program that specify intended intermediate  outcomes (such as a reduced number of repeat offenders) would be useful  to OPS and to external stakeholders to show how enforcement efforts  contribute to pipeline safety.
section_title: OPS Needs to Fully Define Its Enforcement Strategy
paragraphs: OPS has not fully defined its strategy for using enforcement to achieve its  goals. According to OPS officials, the agency’s increased use of civil  penalties and corrective action orders reflects a major change in its  enforcement strategy. However, although OPS began to implement these  changes in 2000, it has not yet developed a policy that describes this new,  more aggressive, enforcement strategy or how the strategy will contribute  to the achievement of OPS’s performance goals. In addition, although OPS’s  authorizing statutes and regulations provide general guidance on the use of  various types of enforcement actions, the agency does not have up-to-date  detailed internal guidelines on the use of its enforcement actions that  reflect its current strategy. For example, OPS has an enforcement manual  that provides general guidance on the various types of enforcement actions  and how each should be used, but this guidance reflects the agency’s  earlier, more lenient, approach to enforcement and does not specify the  types of situations that may warrant certain types of actions. In addition,  although OPS began enforcing its integrity management standards and  received greater enforcement authority under the Pipeline Safety  Improvement Act in 2002, it does not yet have guidelines in place for  enforcing these standards or implementing the new authority provided by  the act.
An important internal control practice is to have policies and procedures  for each agency activity. According to agency officials, OPS management  has communicated enforcement priorities and ensured consistency in  enforcement decisions through frequent internal meetings and detailed  inspection protocols and guidance. However, without enforcement policies  and guidelines in place that reflect its current strategy, the agency lacks  reasonable assurance that this strategy is being carried out effectively. For  example, OPS regional and state inspector staff may not be fully aware of  the agency’s current strategy, and regional directors may be less likely to  make complex judgments about enforcement in a uniform manner.
Agency officials recognize the need to develop an enforcement policy and  up-to-date detailed enforcement guidelines and have been working on  various aspects of this task. According to OPS officials, the agency has  been in a period of “recreating” its enforcement policy. To date, the agency  has completed an initial set of enforcement guidelines for its operator  qualification standards and has developed various other draft guidelines.  According to OPS officials, the policy and remaining guidelines, when  completed, will   reflect the agency’s increased emphasis on civil penalties and corrective  action orders and provide detailed guidance on the use of these and  other enforcement tools;  cover the enforcement of OPS’s traditional safety standards, as well as  its new integrity management standards; and  discuss how OPS will implement the greater enforcement authority  provided to it by the Pipeline Safety Improvement Act of 2002.
Agency officials anticipate that the new enforcement policy and remaining  guidelines will not be finalized until sometime in 2005 because of the  complexity of these tasks.
While the development of an enforcement policy and guidelines should  help to define OPS’s enforcement strategy, it is not clear whether this effort  will link this strategy with results, since agency officials have not  established goals specifically for their enforcement efforts. We have  reported on the importance for effective program management of  connecting strategies to desired results by clearly defining program  strategies and developing and presenting a rationale for how these  strategies contribute to the achievement of goals.
section_title: OPS Needs Adequate Measures of the Effectiveness of Its Enforcement Strategy
paragraphs: According to OPS officials, the agency uses three types of performance  measures to determine the effectiveness of both its enforcement activities  and other oversight efforts:  (1) the achievement of agency performance  goals, (2) agency inspection and enforcement activity, and (3) the integrity  management performance of pipeline operators, such as pipeline repairs  made in response to the agency’s new requirements. (See table 2.)  These  measures provide useful information about the agency’s efforts to improve  pipeline safety. For example, measures of pipeline repairs made in  response to the agency’s integrity management requirements provide  information on the intermediate outcomes, or the direct results, of this new  regulatory approach and help demonstrate how this approach leads to  reductions in pipeline accidents and spills. However, OPS’s current  measures do not clearly indicate the effectiveness of its enforcement  strategy because they do not measure the intermediate outcomes of  enforcement actions that can contribute to pipeline safety, such as  improved compliance, fewer repeat violations of specific standards, or the  implementation of safety improvements required to correct identified  problems.
As part of efforts to improve its information systems, OPS is considering  developing the following additional types of measures of the effectiveness  of its enforcement and other oversight activities (see table 2):  Measures related to the management of enforcement actions. OPS is  developing these new measures as part of efforts to integrate and  modernize its inspection and enforcement databases and improve its  handling of enforcement cases.
Measures of safety improvements that were ordered by OPS. The  agency has recently started to collect new data on actions by pipeline  operators in response to corrective action orders and may also collect  such data for safety orders in 2005, when it plans to start using these  types of orders.
The results of OPS’s inspections of operator integrity management  and operator qualification programs. OPS has developed new  databases that track the safety issues identified in integrity management  and operator qualification inspections, as well as enforcement actions.  In subsequent inspections, inspectors will follow up on these issues and  record their status.
Some of the measures under consideration could provide more information  on the intermediate outcomes of the agency’s enforcement strategy, such as  the extent of repeat violations and repairs made in response to corrective  action orders, as well as other aspects of program performance, such as the  timeliness of enforcement actions. In addition, measures of the results of  integrity management and operator qualification inspections could provide  further information on the intermediate outcomes of these new regulatory  approaches.
We have found that agencies that are successful in measuring performance  strive to establish measures that demonstrate results, address important  aspects of program performance, and provide useful information for  decision making. While OPS’s efforts to develop new measures have the  potential to eventually produce better information on the performance of  its enforcement program than is currently available, the agency has not  fully adopted key practices for achieving these characteristics of successful  performance measurement systems. The following sections discuss these  characteristics and the extent to which OPS has fulfilled them in  developing measures of enforcement performance.
subsections: section_title: Measures Should Demonstrate Results
paragraphs: Measures should be tied to program goals and demonstrate the degree to  which the desired program results are achieved. These program goals  should in turn be linked to overall agency goals. The new measures that  OPS is considering are not based on such linkages, because the agency has  not established goals for its enforcement program. Leading organizations  seek to establish clear hierarchies of performance goals and measures that  link the goals and measures for each organizational level to each  successive level. Without such clear hierarchies, an agency will lack a  straightforward road map showing how daily activities contribute to  attaining agencywide goals.  Although OPS is considering some new  measures that could provide more information on the intermediate  outcomes of its enforcement strategy, without first setting clear goals that  identify the various direct results the agency seeks to achieve through  enforcement, it may not choose the most appropriate measures of results  and may not follow through in developing such measures. For example,  although OPS adopted a more aggressive enforcement strategy starting in  2000, without appropriate goals and measures the agency cannot determine  the effects of this new strategy on operators’ compliance with its safety  standards. OPS officials acknowledge that it is important to develop such  intermediate goals and related measures but emphasize that it is  challenging to do so because of the diversity of pipeline operations and the  complexity of OPS’s regulations.
Measures of program results can help hold agencies accountable for the  performance of their programs. Congress needs information on program  results to support its oversight of agencies and their budgets. Stakeholders  can use this information to accurately judge program effectiveness. We  asked a variety of pipeline safety stakeholders—including representatives  of industry; federal, state, and local agencies; and advocacy groups—for  their views on the effectiveness of OPS’s enforcement efforts. While many  of them stated that they believe OPS’s enforcement program has improved  in recent years, many also stated that they could not comment on the  impact of the agency’s enforcement actions on pipeline safety. Some noted  that this effectiveness is difficult to judge because of a lack of data.
section_title: Measures Should Address Important Aspects of Program Performance
paragraphs: For each goal, programs should select a few measures that cover key  performance dimensions and take different priorities into account. While  the new measures that OPS is considering cover a wider range of  performance aspects than do its current measures, the agency may not be  able to make sound decisions about which measures are the most  important without first setting goals for its enforcement program. An  agency official told us that a key factor in choosing final measures would  be the availability of supporting data. However, the most essential  measures, such as measures showing the enforcement program’s progress  in achieving compliance, may require the development of new data.
Developing appropriate performance measures requires carefully  coordinated planning, including a systematic approach for identifying and  refining potential measures that address various important aspects of  program performance. OPS has not comprehensively examined its needs  for measuring enforcement results as well as the results of other oversight  efforts to ensure that its choice of measures will take into account and  balance its various priorities. For example, OPS has developed databases  that will track the status of safety issues identified in integrity management  and operator qualification inspections, but has not yet developed the  capability to centrally track the status of safety issues identified in  determining compliance with its minimum safety standards. The results of  follow-up by inspectors on the status of these issues are maintained at the  regional office level but are not recorded in the agency’s inspection or  enforcement databases. Agency officials have told us that they are  considering how to add this capability as part of an effort to modernize and  integrate these databases and that the integrity management and operator  qualification databases will serve as a model for this effort. However, the  agency has not yet put in place a systematic integrated approach for  designing measures of oversight performance, including enforcement  performance.
subsections: section_title: Measures Should Provide Useful Information for Decision Making
paragraphs: Performance measures should provide agency managers with timely,  action-oriented information in a format that helps them make decisions  that improve program performance, including decisions to adjust policies  and priorities. OPS uses its current measures of enforcement  performance in a number of ways to oversee pipeline safety, including  monitoring pipeline operators’ safety performance and planning  inspections. While these uses are important, they are only indirectly related  to the management of enforcement results. Agency officials have made  progress in this area by identifying possible new measures of enforcement  results and other aspects of program performance, such as measures of the  timeliness of enforcement actions that may prove more useful for  managing the enforcement program.
Not having adequate measures limits OPS’s ability to make informed  decisions about its enforcement strategy. Although OPS has made major  changes in its enforcement strategy in the last several years, it has decided  on these changes with little information on the effectiveness of its prior  strategy. Agency officials explained that they decided to increase the use of  civil penalties and corrective action orders to improve public confidence in  the agency’s ability to enforce its standards, following the major pipeline  incidents in Bellingham, Washington, and Carlsbad, New Mexico, in 1999  and 2000, respectively. They also noted that their decisions about  enforcement policy are part of their overall approach for overseeing and  improving pipeline safety and are not based on trends in performance  measures.
section_title: OPS Has Increased Its Use of Civil Penalties; OPS and FAA Need Stronger Management Controls Over Collections
paragraphs: In response to criticism that its enforcement activities were weak and  ineffective, OPS increased both the number and the size of the civil  monetary penalties it assessed beginning in 2000. Pipeline safety  stakeholders we spoke with expressed differing views on whether OPS’s  civil penalties are effective in deterring noncompliance with pipeline safety  regulations. Most of the penalties that OPS assessed have been paid;  however, OPS and FAA lack important management controls to ensure that  penalties are collected.
The civil penalty results we present are mostly for OPS’s enforcement of its  minimum safety standards because OPS did not begin to enforce its  integrity management standards until 2002.
subsections: section_title: OPS Has Recently Proposed and Assessed More and Larger Civil Penalties
paragraphs: OPS proposed and assessed more civil penalties during the past 4 years— under its current “tough but fair” enforcement approach—than it did in the  previous 5 years, when it took a more lenient “partnering” enforcement  approach. (See table 3. Also, see the previous section and app. II for a  discussion of changes in OPS’s enforcement approaches.)   From 2000  through 2003, OPS proposed 127 civil penalties (about 32 per year on  average) compared with 94 civil penalties (about 19 per year on average)  from 1995 through 1999. Furthermore, of these proposed civil penalties, 88  were assessed from 2000 through 2003 (22 per year on average), whereas  70 were assessed from 1995 through 1999 (about 14 per year on average).  During the first 5 months of 2004, OPS proposed 38 civil penalties. While  the recent increase in the number and the size of OPS’s civil penalties  occurred under the agency’s new “tough but fair” enforcement approach,  other factors, such as more severe violations, may be contributing factors  as well.
Overall, OPS does not use civil penalties extensively. Civil penalties  represent about 14 percent (216 out of 1,530) of all enforcement actions  taken over the past 10 years. OPS makes more extensive use of other types  of enforcement actions that require that operators act to correct safety  violations. In contrast, civil penalties do not require a safety improvement,  but represent a monetary sanction for violating safety regulations. Finally,  OPS expects to make greater use of civil penalties for violations identified  during integrity management inspections as it gains more experience with  implementing this safety approach.
The sizes of the civil penalties have increased. From 1995 through 1999, the  average proposed civil penalty was about $19,000. From 2000 through 2003,  the average proposed civil penalty increased by over 132 percent to about  $45,000. Similarly, although to a lesser degree, assessed penalties  increased. From 1995 through 1999, the average assessed civil penalty was  about $18,000. From 2000 through 2003, the average assessed civil penalty  increased by 62 percent to about $29,000. (All amounts are in current year  dollars. Inflation was low during this period. If the effects of inflation are  considered, the average assessed penalty for 1995 through 1999 would be  $21,000, and the average assessed penalty for 2000 through 2003 would be  $30,000, in 2003 dollars.)
We excluded two proposed penalties totaling over $5 million resulting from  the Bellingham and Carlsbad incidents from our analysis because both  were extraordinarily large (no other proposed penalty exceeded $674,000),  and OPS, as of mid-July, had not assessed a penalty for the Carlsbad  incident. (RSPA referred the penalty to the Department of Justice for  judicial action.)  Including these proposed penalties would have skewed  our results by making the average penalty appear larger than it actually is.
For the 216 penalties that were assessed from 1994 through 2003, OPS  assessed the penalty that it proposed 69 percent of the time (150 civil  penalties). (See table 4.)  For the remaining 66 penalties, OPS reduced the  assessments by about 37 percent—from a total of about $2.8 million to  about $1.7 million. However, the dollar difference between the proposed  and the assessed penalties would be over three times as large had our  analysis included the extraordinarily large penalty for the Bellingham,  Washington, incident. For this case, OPS proposed a $3.05 million penalty and had assessed $250,000 as of July 2004. If we include this penalty in our  analysis, then over this period OPS reduced total proposed penalties by  about two-thirds, from a total of about $5.8 million to about $2 million.
According to an OPS official, the agency reduces penalties, among other  things, when the operator presents evidence that the inspector’s finding is  weak or wrong or when the pipeline’s ownership changes during the period  between the proposed and the assessed penalty. OPS’s database does not  provide summary information on why penalties are reduced. It was not  practical for us to gather information on a large number of penalties that  were reduced because to do so would have required reviewing each penalty  record and discussing each penalty with headquarters and regional  officials. As a result, we are not able to provide information on the most  common reasons why penalties were reduced. To provide examples of  reasons why penalties were reduced, we reviewed several of these  penalties. OPS reduced one of the penalties we reviewed because the  operator provided evidence that OPS inspectors had miscounted the  number of pipeline valves that OPS said the operator had not inspected.  Thus, the violation was not as severe as OPS had stated, and OPS reduced  the proposed penalty from $177,000 to $67,000. OPS reduced another  proposed penalty from $45,000 to $27,000 because the operator took  immediate action to correct the violation. As indicated earlier in this report,  good faith efforts to achieve compliance by operators are one factor that  OPS must, by law, consider in imposing civil penalties. Because we  reviewed only a few instances in which penalties were reduced, we cannot  say whether these examples are typical.
Our results may be different from the results that OPS reports because of  the way the data are organized. OPS reports an action in the year in which  it occurred. For example, OPS may propose a penalty in one year and  assess it in another year (and possibly collect it in still another year). The  data for this action would show up in multiple years. Thus, OPS’s data  represent the activity that took place in any one year, but this presentation  does not allow users to determine the extent to which the proposed  penalties resulted in assessed penalties or whether the proposed penalty  amounts were reduced, since these actions may be contained in OPS  reports for different years. To better track the disposition of civil penalties,  we associated assessed penalties and penalty amounts with the year in  which they were proposed—even if the assessment occurred in a later year.
section_title: Stakeholders Expressed Differing Views on Whether OPS’s Civil Penalties Deter Noncompliance
paragraphs: Although OPS has increased both the number and the size of the civil  penalties it has imposed, the effect of this change, if any, on deterring  noncompliance with safety regulations is not clear. The stakeholders we  spoke with expressed differing views on whether OPS’s civil penalties deter  noncompliance. The pipeline industry officials we contacted said that to a  certain extent OPS’s civil penalties encourage pipeline operators to comply  with pipeline safety regulations. One group of pipeline industry officials  said that pipeline companies want to be on the record as being in  compliance with pipeline safety regulations and therefore try to avoid any  situation that would require OPS to issue an enforcement action. However,  some industry officials said that OPS’s enforcement actions are not the  operators’ primary motivation for safety. Instead, they said that the pipeline  operators are motivated to operate safely because they need to avoid any  type of accident, incident, or OPS enforcement action that impedes the  flow of products through pipelines, hindering operators’ abilities to provide  good service to their customers. Pipeline industry officials also said that  they want to operate safely and avoid pipeline accidents because such  accidents negatively affect the public’s perception of the company. In  addition, other industry officials noted that OPS has other enforcement  actions, such as corrective action orders, that give operators more  incentive to operate safely because corrective action orders can cost  companies much more money than civil penalties. For example, according  to an OPS official, the corrective action order OPS imposed after the 1999  pipeline accident in Bellingham, Washington, cost Olympic Pipeline more  than $100 million. This sum includes about $53 million to repair and replace  needed infrastructure and an estimated $50 million in lost revenue. Finally,  the three pipeline operators with whom we spoke indicated that any  enforcement action would deter noncompliance with pipeline safety  regulations because of the resulting negative publicity and the potential for  costly private litigation against the operator.
Most of the interstate agents and representatives of their associations,  insurance company officials, and the local representative from one state  expressed views similar to those of the pipeline industry officials. They  said that, to a certain extent, they believe civil penalties deter operators’  noncompliance with regulations. For example, some of the interstate  agents said that civil penalties—no matter what the amount—are a  deterrent because the penalty puts the pipeline operator in the public eye.  However, a few disagreed with this point of view. For example,  representatives of the state associations and the local representative from  one state said that OPS’s civil penalties are too small to be a deterrent and  that other OPS actions and the costs resulting from accidents, including  private litigation, are better deterrents. As discussed earlier, the average  civil penalty that OPS assessed from 2000 through 2003 was about $29,000.
Pipeline safety advocacy groups that we talked to also believed that the  civil penalty amounts OPS imposes are too small to have any deterrent  effect on pipeline operators. However, a representative from one of the  groups thought that the threat of additional civil penalties from OPS should  influence a pipeline operator to comply with pipeline safety regulations in  the future.
According to economic literature on deterrence, pipeline operators may be  deterred if they expect a sanction, such as a civil penalty, to exceed any  benefits of noncompliance. Such benefits could, in some cases, be lower  operating costs. The literature also recognizes that the negative  consequences of noncompliance—such as those stemming from lawsuits,  bad publicity, and the value of the products lost from accidents—can deter  noncompliance along with regulatory agency oversight. Thus, for example,  the expected costs of a legal settlement could overshadow the lower  operating costs expected from noncompliance, and noncompliance might  be deterred.
According to OPS, its policy since 1999 has been to make civil penalty  information available to the public by publishing the final orders for all  enforcement actions and to also publish all administrative actions on its  Web site. We found that from 2000 through 2003 (the period OPS describes  as its “tough but fair” enforcement era), OPS had posted 58 percent of final  orders involving assessed civil penalties on its Web site. An agency official  explained that OPS has not posted the remaining penalties because of high  staff turnover. To the extent that publicizing noncompliance information on  the Web site does deter noncompliance, OPS’s incomplete posting of  assessed civil penalty information is not facilitating the achievement of this  goal.
section_title: Operators Paid Full Amounts of Most Civil Penalties
paragraphs: For the 216 penalties that OPS assessed from 1994 through 2003, pipeline  operators paid the full amounts 93 percent of the time (200 instances) and  reduced the amounts 1 percent of the time (2 instances). (See fig. 6.)   Fourteen penalties (6 percent) remain unpaid, totaling about $837,000  (about 18 percent of the penalty amounts). In some instances, pipeline  operators pay their penalties based on the proposed—rather than  assessed—amount. Our results do not include an analysis of the number of  penalties paid prior to assessment because FAA’s and OPS’s data lacked  information necessary to complete the analysis.
We followed up in one of the two instances in which the operator paid less  than the assessed amount. In this instance, the operator requested that OPS  reconsider the civil penalty, and OPS reduced the assessed penalty from  $5,000 to $3,000 because the operator had a history of cooperation and OPS  wanted to encourage future cooperation.
Neither FAA’s nor OPS’s data show why the 14 unpaid penalties have not  been collected. To learn why, we spoke with both agencies about the status  of these penalties and, based on the information provided, we determined  that OPS closed 2 of the penalty cases without collecting the penalties,  operators are appealing 5 penalties, OPS recently assessed 3 penalties, and  OPS acknowledged that 4 penalties (totaling $45,200) should have been  collected. For some penalties, the information that FAA and OPS provided  about the collection status conflicted. For example, FAA reported to us that  2 penalties had been paid recently, which was not reflected in the  information reported to us by OPS. Regarding the 4 penalties that should  have been collected, OPS files indicated that final assessments had been  made, but because FAA records did not include final orders, FAA lacked  the information it needed to take collection action. After we brought these  penalties to OPS’s attention, OPS sent FAA the information it needed to  pursue collection. As of June 2004, FAA had created accounts for these  penalties and will begin sending balance due notices after the proper  waiting period has expired.
We were not able to determine the extent to which operators’ payments  were timely (operators have 20 days to pay penalties) because we judged  that the data elements in OPS’s and FAA’s databases were not reliable  enough to do so. (See app. I.)
section_title: OPS and FAA Need Better Management Controls to Ensure That Penalties Are Collected
paragraphs: Even though most civil penalties are paid, their payment is more likely due  to operators’ willingness to pay than to FAA’s or OPS’s actions. FAA is not  aware of the full range of civil penalties that it may ultimately be  responsible for collecting because OPS does not routinely notify FAA of  proposed or assessed civil penalties. We found that for the period from  1994 through 2003, FAA had no record of 44 of the 290 civil penalties  (totaling about $500,000 in assessments) that OPS had proposed. It is  important for FAA to be aware of all proposed civil penalties because  operators may choose to pay the proposed penalty rather than waiting for  the final assessment. When FAA does not have a record of a civil penalty  for which it receives a payment, it has to contact OPS for information about  the penalty. In addition, if FAA does not know that OPS has assessed a civil  penalty, it cannot act to collect the penalty if the operator does not pay on  time.
Staff from OPS and RSPA’s Office of Chief Counsel told us that they had not  provided FAA with documentation of proposed or assessed penalties  because each thought the other office was doing so. When we brought this  apparent communication gap to OPS’s attention, OPS agreed that it should  provide FAA with civil penalty documentation so that FAA would be aware  of the penalties that may be and are assessed. As of mid-July 2004, OPS had  not begun to provide the documentation.
Although OPS is responsible for enforcing pipeline safety, it does not  monitor the extent to which FAA collects civil penalties for pipeline safety  violations. OPS does not request or receive regular updates from FAA  about the status of penalties or overall collections, although such reports  are available. In addition, FAA does not routinely make available to OPS its  reports on the status of civil penalties, although it does send them to RSPA’s  Office of Chief Counsel. We found that OPS was unaware that FAA  prepares regular reports about penalties that are overdue or have been paid  but not closed out. OPS does not evaluate the civil penalty data that it  maintains in its enforcement database or review the data to ensure that its  information about civil penalties is complete and up to date. OPS also does  not compare its civil penalty data with FAA’s data to identify missing or  incomplete data. Finally, OPS does not evaluate its own enforcement  database to identify overdue penalties and check with FAA on their status.  After we brought these issues to OPS’s attention, OPS officials told us that  OPS is looking into setting up a system to monitor case activities and notify  OPS and the deputy chief counsel when it is time to move a case to the next  step.
section_title: Conclusions
paragraphs: OPS has been focusing much of its effort on safety initiatives in areas other  than the enforcement of minimum standards, such as its integrity  management program and operator qualification standards, because the  agency believes that these initiatives will result in major improvements in  the overall safety of the pipeline industry. In light of the progress OPS has  made in these other areas and the issues we raised with OPS in preparing  this report, OPS has indicated that it will devote more attention to  managing its enforcement program than it has previously. However,  because OPS cannot measure the effects of changes in its enforcement  strategy on operators’ performance, it will not know whether any  management changes it makes lead to improvements in the industry’s  compliance. Without goals for its enforcement program, a well-defined  strategy for achieving these goals, and performance measures linked to  program goals, OPS cannot demonstrate how its enforcement efforts  contribute to pipeline safety or learn from changes in its enforcement  policy.
Although operators pay the vast majority of the civil penalties that OPS  proposes or assesses, their compliance is more likely due to their  willingness to pay than to OPS’s or FAA’s efforts because neither agency  has been providing the other with the information needed to ensure  effective penalty collections. If FAA does not know that OPS has imposed  civil penalties, it cannot take actions to collect them, and if FAA does not  communicate the status of its collections to OPS, OPS misses opportunities  to understand the effects of its enforcement actions on operators’ behavior.
Finally, OPS’s incomplete implementation of its policy to post its civil  penalty actions on its Web site limits the public’s ability to understand the  enforcement actions that OPS has taken.
section_title: Recommendations for Executive Action
paragraphs: We are making a total of six recommendations; three to improve OPS’s  enforcement strategy and three to improve management controls over the  collection of civil penalties.
To improve OPS’s ability to determine the effectiveness of its enforcement  strategy and make adjustments to this strategy as needed, we are  recommending that the Secretary of Transportation direct the Associate  Administrator for Office of Pipeline Safety to take the following three  actions:    OPS should establish goals for its enforcement program.
OPS should fully define its strategy for achieving these goals.
OPS should establish a systematic approach for designing performance  measures that incorporates identified key practices.
We also recommend that the Secretary of Transportation direct the  Associate Administrator, OPS, and the Administrator, FAA, as appropriate,  to take the following three actions to improve management controls over  the collection of civil penalties and the public dissemination of information  on enforcement actions:  OPS should inform FAA of all proposed and assessed civil penalties so  that FAA can carry out its collection functions.
FAA should share its reports on collections with OPS so that OPS will  know the status of civil penalty enforcement actions.
OPS should post all enforcement actions on its Web site, consistent with  its policy.
section_title: Agency Comments and Our Evaluation
paragraphs: In commenting on a draft of this report, the Associate Administrator for  Pipeline Safety in RSPA and other officials told us that OPS welcomed the  insights provided by the report and generally concurred with the report and  its recommendations. The associate administrator emphasized that OPS  enforcement has improved since 1999 through use of its full range of  enforcement tools, including civil penalties to punish violators, corrective  action orders to address immediate and potential safety concerns, and  notices of amendment to require and monitor changes to safety programs.  OPS told us that it continues to seek constructive interactions with the  industry through the integrity management program; however, companies  breaking the law must expect to be punished, and OPS will use all of its  enforcement authority to achieve 100 percent safety compliance.
Regarding the effectiveness of OPS’s enforcement strategy, OPS told us  that, to help attain its primary performance goals (reducing the number of  accidents by 5 percent annually and reducing the number of pipeline spills  by 6 percent annually), it will establish intermediate outcomes as discussed  in the report to help improve its ability to evaluate the effectiveness of  specific enforcement tools. The officials also indicated that OPS expects to  learn more about enforcement effectiveness through its two statutorily  mandated technical advisory committees, which are reviewing, among  other things, proposed modifications and improvements to the  enforcement program. These committees were established pursuant to the  Natural Gas Pipeline Safety Act of 1968 and the Hazardous Liquid Pipeline  Safety Act of 1979, in part to serve as a sounding board for discussing  pipeline safety policy issues. We are pleased with OPS’s constructive  response to our draft report and that the department plans to implement  our recommendations on establishing goals for its enforcement program,  defining a strategy for achieving those goals, and establishing a systematic  approach to designing performance measures.
Regarding its use of civil penalties, OPS indicated that it plans to automate  enforcement tracking to better ensure consistent application of policy  across regional offices and improve management controls over the  collection of civil penalties. To improve management controls over civil  penalties collections, OPS explained that it envisions a solution using  information technology to provide a transparent and real time tracking of  civil penalty assessment activity between FAA, RSPA’s Office of Chief  Counsel, and OPS.  We are pleased that until these enhancements can be  deployed OPS has agreed to take the steps we recommended to improve  management controls over the collection of civil penalties.
We are sending copies of this report to congressional committees and  subcommittees with responsibility for transportation safety issues; the  Secretary of Transportation; the Administrator, RSPA; the Administrator,  FAA; the Associate Administrator, OPS; and the Director, Office of  Management and Budget. We will also make copies available to others  upon request. This report will be available at no charge on the GAO Web  site at http://www.gao.gov.
If you have any questions about this report, please contact me at  siggerudk@gao.gov or James Ratzenberger at ratzenbergerj@gao.gov.  Alternatively, we can be reached at (202) 512-2834. Staff who made key  contributions to this report are listed in appendix V.
section_title: Scope and Methodology
paragraphs: To evaluate the effectiveness of the Office of Pipeline Safety’s (OPS)  enforcement strategy, we identified key elements of effective program  management by reviewing our products on this subject, Office of  Management and Budget guidance, and studies by the National Academy of  Public Administration and the Urban Institute.  We then determined the  extent to which the office’s strategy incorporates these three elements  (clear program goals, a well-defined strategy for achieving goals, and  measures of performance that are linked to program goals). For each  element, we obtained information from OPS on its activities and plans and  compared this information to the published criteria. We also reviewed the  Web sites of selected regulatory agencies to determine how these other  agencies measure enforcement results. As part of this work, we monitored  OPS’s efforts to develop a strategy that applies to all its enforcement  activities and to improve its performance measurement capabilities. We  supplemented these activities by interviewing pipeline safety stakeholders  to obtain their views on the effectiveness of OPS’s enforcement efforts.  These stakeholders included industry trade associations, federal agencies,  state agencies and associations, a local representative from Virginia, and  pipeline safety advocacy groups. (Stakeholders that we contacted for this  and other aspects of our work are listed at the end of this appendix.)
To examine OPS’s civil penalty actions, we reviewed legislation; OPS  regulations; and OPS manuals, guidelines, and protocols setting forth OPS’s  legal authority and policies and procedures for implementing this authority.  We also obtained information from OPS, the Research and Special  Programs Administration (RSPA), and the Federal Aviation Administration  (FAA) about pipeline safety enforcement policies and procedures. (Since  1993, FAA’s general accounting division has managed the accounts  receivable for OPS’s pipeline safety and RSPA’s hazardous materials  programs.)  We discussed FAA’s collection activities with OPS, RSPA’s  Office of Chief Counsel, and FAA officials.
In developing information about OPS’s use of civil penalties, we analyzed  civil penalty data from OPS’s enforcement database and FAA’s civil penalty  receivables and collections database. Because neither OPS’s nor FAA’s civil  penalty data were complete, we combined them into a single database. The  data were incomplete in three ways. First, the OPS data set included  penalties that were not in the FAA data set. Second, each data set had fields  (variables) not contained in the other data set. Third, certain fields were  common to both data sets, but the data for a particular enforcement action  were present in one data set and missing in the other data set. For such  variables, we substituted the available data for the missing data when  possible. In addition, OPS and FAA sometimes used different methods for  numbering penalties. We converted all penalty numbers to a standard  format so we could combine the two data sets. When data were  inconsistent with other logically related data, we corrected the data using  our best judgment. For example, if OPS data showed that the assessed  amount was $75,000, but both OPS and FAA data showed that the proposed  amount was $10,500 and FAA data showed that both the final order and  collected amount was $7,500 without any notation for the difference  between $7,500 and $75,000, we assumed that the $75,000 amount was a  data entry error and corrected the assessed amount to be consistent with  the collected amount. When possible, we supplemented data in the two  data sets with data from other sources. For example, if OPS’s Web site  included a final notice with the assessed penalty amount, but this  information was not captured in the data sets, we added the information to  the combined data set. We also discussed our preliminary results with OPS  and FAA, and their comments led to further corrections. For example, the  combined OPS and FAA data suggested that 16 penalties had not been  collected. After we discussed this information with OPS and FAA, they  provided documentation showing that many fewer penalties were  uncollected. For example, as discussed in the body of the report, FAA  reported to us that 2 penalties had been paid recently, which was not  reflected in the information reported to us by OPS. In addition, we  determined that OPS closed 2 of the penalty cases without collecting the  penalties, operators are appealing 5 penalties, OPS recently assessed 3  penalties, and OPS acknowledged that 4 penalties (totaling $45,200) should  have been collected.
In determining how OPS used its enforcement options to address  noncompliance with pipeline safety regulations, we analyzed enforcement  data for enforcement actions opened between 1994 and 2003 from OPS’s  enforcement database and FAA’s civil penalty database. OPS’s enforcement  database contains information about instances when OPS has taken some  type of enforcement action. OPS officials acknowledged that OPS’s  enforcement database lacked complete information on penalty collections  and indicated that FAA tracks the collection of OPS’s civil penalties. To  assess the reliability of OPS’s and FAA’s data, we (1) performed electronic  testing for obvious errors in accuracy and completeness and (2)  interviewed officials from OPS’s enforcement office and FAA’s general  accounting division who are knowledgeable about the data and how the  data were entered. We consulted regularly with these officials to resolve  the handling of problematic data entries. After these actions, and after  making needed corrections, we determined that the data were sufficiently  reliable for the types of analyses we wanted to pursue for this report except  to determine whether operators paid penalties in a timely manner. In this  instance, the discrepancies between OPS’s and FAA’s data and between  FAA’s data and the case files we reviewed were too great for the data to be  judged reliable. For example, we found that the collection dates in FAA’s  database did not match the hard-copy documentation for about half of 20  cases that we reviewed by hand.
OPS identifies each enforcement action in its enforcement database with a  unique number. This number identifies the region, the year OPS initiated  the action, the type of operator, and some types of enforcement actions.  OPS’s numbering system had certain characteristics that limited our ability  to analyze the data as fully as we wanted. For example, the system does not  identify enforcement actions where OPS used more than one type of  enforcement, such as those that have both a compliance order and a notice  of amendment, and it does not identify actions that have a compliance  order. Therefore, we asked OPS to provide additional information detailing  the enforcement and administrative actions taken in each instance. We  used these data to divide the enforcement data into four sets of  enforcement actions:  civil penalties, other enforcement actions,  administrative actions, and complex actions.
As discussed earlier in this report, our reporting of enforcement actions  differs from OPS’s. Whereas we report these actions for the year when OPS  first responded to the related violation, OPS, in its annual enforcement  summary report, reports the enforcement actions it has taken during that  year, regardless of when it first responded to the related violations. The two  reporting methods are not comparable.
As a means of better understanding OPS’s civil penalty process, we  reviewed 20 civil penalty actions initiated between 1992 through 2003. We  chose penalties that, on their face, appeared large or small, seemed to have  gone unpaid for a long period, may have involved repeat offenders, or  appeared to have been reduced between the assessment and the collection.  We reviewed the case file documentation and discussed the penalty with  headquarters and regional enforcement officials. The number of penalties  we reviewed was not large enough (usually about two to three penalty  actions for each criterion we used) to draw any insights. Reviewing these  files was time consuming, and reviewing a larger number of files, as well as  obtaining any supporting documentation from the regional offices that  initiated them, was not practical.
In determining whether OPS’s civil penalties deter noncompliance, we  interviewed pipeline safety stakeholders to obtain their views on the  deterrent effect of OPS’s civil penalties. These stakeholders included  industry trade associations, pipeline companies, state agencies and  associations, insurance companies, a local representative from Virginia,  and pipeline safety advocacy groups. We supplemented the stakeholders’  comments with information from economic literature on deterrence. The  literature on deterrence that we reviewed included:  A. Mitchell Polinsky and Steven Shavell, The Economic Theory of Public  Enforcement of Law, Journal of Economic Literature, Vol. XXXVIII  (March 2000);  Oren Bar-Gill and Alon Harel, “Crime Rates and Expected Sanctions:   The Economics of Deterrence Revisited,” Journal of Legal Studies, Vol.  XXX (June 2001), pp. 485-501;  Isaac Ehrlich, “Crime, Punishment, and the Market for Offenses,”
Journal of Economic Perspectives, Vol. 10 (Winter 1996), pp. 43-67;  Richard A. Posner, “Economic Analysis of Law.” 3rd edition (1986), Little,  Brown and Company; and  Steven D. Levitt, “Why Do Increased Arrest Rates Appear to Reduce  Crime:  Deterrence, Incapacitation, or Measurement Error?” working  paper #5286, National Bureau of Economic Research (September 1995).
subsections: section_title: Other Aspects of Our Work
paragraphs: In determining how OPS’s policies and procedures have changed over time,  we conducted activities as described above to cover the period 1994  through 2003.
In determining whether OPS substitutes civil penalties for corrective action  orders, we reviewed the underlying purposes of each enforcement action  and discussed them with OPS headquarters and regional enforcement  officials. We reviewed a very limited number of enforcement cases  involving civil penalties, and none of these records indicated that one form  of penalty had been substituted for another. Because of the substantial  effort involved, it was not practical to review a large number of  enforcement cases.
In learning how OPS’s use of civil penalties compares to FAA’s for air  carriers, we used the information described above to summarize OPS’s civil  penalty information. We compared this information to similar information  gathered under a concurrent engagement on FAA’s enforcement activities.   We chose FAA as the comparison agency because it is another  transportation safety agency and because information was readily  available. Because considerable time and effort are needed to understand  agencies’ enforcement policies and practices, as well as to collect, ensure  the quality of, and analyze data, it was not practical to expand the  comparison to other agencies.
In determining the extent to which OPS had implemented the  recommendations involving state activities in our May 2000 report, we  asked OPS officials to describe the actions taken to implement the  recommendations. We then interviewed all of the interstate agents to  determine the extent to which they believed OPS had implemented our  recommendations. In some instances, following interviews with interstate  agents, we discussed with OPS the overall nature of the interstate agents’  views. In assessing the extent to which OPS had implemented our  recommendation on civil penalties, we discussed with OPS how it had  responded to our recommendation. To determine whether it had made  more use of the full range of its enforcement options, we examined data  from OPS’s pipeline incident processing enforcement system database and  FAA’s civil penalty receivables and collections database. We analyzed the  data to determine the degree to which OPS used enforcement and  administrative actions from 1995 through 2000 and compared these results  with the use of these actions from 2000 through 2003.
Finally, in comparing changes in OPS’s enforcement actions with industry  and economic trends, we interviewed OPS officials to determine factors  that they said influenced the trends in the number of enforcement actions  they took from 1994 through 2003. We also asked pipeline safety  stakeholders to identify factors that might have influenced OPS’s  enforcement and administrative actions during this period and used our  own knowledge of the area to select others. The factors identified are those  discussed in appendix IV. We then examined data from OPS’s pipeline  incident processing enforcement system database and FAA’s civil penalty  receivables and collections database by analyzing the trends in the number  of enforcement and administrative actions that OPS took from 1994  through 2003 and comparing these data visually with the selected factors.  We obtained data from OPS on pipeline accidents, pipeline mileage, and  OPS’s inspection activities. We obtained data on natural gas and petroleum  consumption from the Energy Information Administration. We obtained  data on new construction trends from the Census Bureau.
section_title: Organizations Contacted
section_title: Other Pipeline Safety Enforcement Issues
paragraphs: To address other issues required under the 2002 pipeline safety act and  additional issues of interest to you, we examined (1) how OPS’s  enforcement policies and procedures have changed since 1990, (2) whether  OPS substitutes corrective action orders for civil penalties, and (3) how  OPS’s policies and enforcement actions compare with those of FAA.
subsections: section_title: OPS’s Enforcement Policies and Procedures Have Changed Since 1990
paragraphs: OPS’s enforcement approach has evolved as its policies and procedures  have changed. OPS policies have gone through three phases since 1990:    (1) the standard inspection phase (1990 through 1994), (2) the risk  management demonstration phase (1995 through 1999), and (3) the  integrity management phase (2000 to the present).
Standard inspection phase—During this phase, OPS enforced its  minimum safety standards, conducting what it called standard  inspections, to ensure that each pipeline operator complied with each  pipeline safety regulation. OPS trained inspectors to complete  inspection forms that covered all operations, but did not differentiate  between high-risk and low-risk requirements. Individual OPS inspectors  primarily conducted inspections on a unit basis. OPS used all  enforcement options.
Risk management demonstration phase—During this phase, OPS  still focused most of its resources on enforcing minimum safety  standards, but it also began to encourage individual operators to focus  their resources on the greatest risks to their pipeline systems. OPS also  began to use teams of OPS inspectors to evaluate an operator’s entire  pipeline system. The inspection goal was to determine whether the  operator had any systemic safety issues that it needed to address. OPS  emphasized partnering with the pipeline operators to improve pipeline  safety rather than punishing noncompliance. As a result, OPS issued  fewer civil penalties and more administrative actions to address  noncompliance.
Integrity management phase—In this phase, OPS shifted its focus  from enforcing minimum safety standards to more comprehensive  inspections of pipeline operators, known as the integrity management  program. As a result, OPS conducted fewer inspections because each  inspection took more time and covered more miles of pipeline than a  standard inspection. However, the integrity management inspections  identified more violations than if OPS had continued inspections of the  more established minimum safety standards. OPS concentrated its  enforcement actions on ensuring that operators’ risk identification and  mitigation procedures were sufficient and primarily relied on its notices  of amendment to give operators experience in implementing the  complex regulations. More recently, OPS has begun to propose civil  penalties. OPS is also developing a new enforcement tool—the safety  order—that encourages operators to take action to remedy safety- related conditions. OPS plans to use the safety order to direct the  operator to remedy safety-related conditions that could significantly  change or restrict pipeline operations; however, unlike the conditions  identified in a corrective action order, these would be conditions that  did not pose an immediate threat to life or property. Tremendous  pipeline failures in Bellingham, Washington, in June 1999 and in  Carlsbad, New Mexico, in August 2000, and reports by the Department  of Transportation’s Inspector General and by us led OPS to abandon its  partnering approach in favor of what it termed a “tough but fair”  enforcement approach.
section_title: OPS Does Not Substitute Corrective Action Orders for Civil Penalties
paragraphs: According to OPS, the agency does not substitute corrective action orders  for civil penalties because OPS levies corrective action orders and civil  penalties for different reasons. OPS imposes a corrective action order on a  pipeline operator when it finds a situation that presents an imminent  hazard to life or property that needs to be addressed. OPS does not have to  find that the operator has violated its regulations before issuing a  corrective action order. For example, earlier this year, OPS issued a  corrective action order that directed an operator to reduce operating  pressure when OPS could not determine the cause of a pipeline failure. In  contrast, civil penalties are not used to correct the underlying safety  violations. Rather, OPS uses civil penalties as sanctions for violating federal  pipeline safety regulations and uses other enforcement tools, such as  corrective action orders, to correct safety violations. For example, in 2001,  OPS assessed a $37,500 civil penalty against an operator that did not follow  OPS’s procedures during an annual test of the company’s emergency  shutdown system. OPS used the penalty as a sanction and took no further  action. In this case, the operator already had a procedure in place but did  not follow it. If OPS had found that the operator’s procedures were  inadequate, it could have both issued a notice of amendment requiring the  operator to bring its procedures in line with OPS’s regulations and imposed  a civil penalty as a sanction for having inadequate procedures.
section_title: OPS and FAA Have Different Regulations and Processes for Using Civil Penalties
paragraphs: Both OPS and FAA, in its oversight of the aviation industry, use civil  penalties, among other enforcement actions, to deter noncompliance with  their safety regulations. While OPS regulates and may issue civil penalties  to operators of pipeline systems, FAA regulates and may issue civil  penalties to aircraft operators, airports, and individuals involved in air  transport, such as pilots and mechanics.
Both OPS’s and FAA’s processes for issuing civil penalties allow for due  process, through opportunities afforded to regulated entities to present  evidence that may lead the regulator to reduce or withdraw the penalties.  (See table 5.)  The maximum penalties that each agency can impose differ  significantly. OPS may impose penalties for pipeline operators up to a  statutory maximum of $100,000 per day per violation up to a statutory  maximum of $1 million per case, whereas FAA may impose much smaller  penalties for aircraft operators—up to $11,000 per violation of federal  aviation regulations or up to $30,000 per violation of RSPA’s hazardous  materials regulations. However, FAA has no statutory maximum penalty  per case.
Another difference between the two agencies’ civil penalty processes is  that FAA has more detailed guidance on setting penalty amounts than OPS.  FAA’s guidance lists types of violations with a corresponding range of civil  penalty amounts for each and also lists factors that should be considered in  setting the penalty level. OPS considers broad statutory factors in  determining civil penalty amounts and is developing more detailed  guidance for making these determinations as part of its efforts to develop  an enforcement policy and detailed internal guidelines that reflect its  current enforcement strategy.
FAA issues many more civil penalties each year than OPS. (See table 6.)   From 1994 through 2002, FAA issued more than 10 times as many civil  penalties to aircraft operators as OPS issued to pipeline operators.  However, the average civil penalties that FAA assessed to the aircraft  operators and that we included in our analyses were lower than the average  civil penalties that OPS assessed to pipeline operators ($14,100 versus  $21,300). In addition, during this period, FAA reduced the civil penalties it  had proposed before assessing them to a much greater degree than did  OPS. Specifically, the total assessed penalties that FAA issued to aircraft  operators were 59 percent lower than the total proposed penalties ($34.7  million versus $84.0 million), whereas the total assessed penalties that  OPS issued to pipeline operators were 19 percent lower than the total  proposed penalties ($4.2 million versus $5.2 million). Our comparison of  OPS’s and FAA’s use of civil penalties was designed to provide some  descriptive information but not to evaluate the two agencies’ use of these  penalties or to investigate the reasons for any differences.
section_title: OPS’s Implementation of Recommendations Made in Our May 2000 Report
paragraphs: In May 2000, we made three recommendations to the Secretary of  Transportation to improve OPS’s pipeline safety program. Two of the  recommendations proposed wider use of interstate agents and the third  dealt with OPS’s use of civil penalties.  We found that OPS implemented  two of these recommendations and implemented the intent of the third.
subsections: section_title: OPS Has Involved Interstate Agents More in Federal Pipeline Safety Activities
paragraphs: In response to our recommendation that OPS work with state pipeline  safety officials to determine how best to involve them in federal pipeline  safety activities, OPS told us that it had modified its interstate pipeline  oversight program to allow more opportunities for state participation.  OPS  informed us that the 11 qualified states may inspect the construction of  new pipelines, oversee rehabilitation projects and integrity management  programs, investigate accidents, conduct inspections, and participate in  nonregulatory program initiatives. In addition, according to OPS, states  that do not qualify as interstate agents may apply to participate in specific,  short-term activities such as inspecting the construction of a new pipeline  or investigating a pipeline accident.
We contacted all 11 interstate agents to determine the extent to which they  participate with OPS in implementing federal pipeline safety efforts. Ten of  the 11 interstate agents told us that OPS was implementing our  recommendation as OPS said it was doing. These 10 states said they  assisted OPS by participating in at least one of the activities mentioned  above.  The eleventh state said that OPS had not changed its method of  involving the state; however, this state agreed that communication between  the two parties had improved.
Although nearly all of the 11 interstate agents said that OPS was  implementing this recommendation, 7 said OPS was too slow in letting  them know which actions it had taken or planned to take in response to the  potential noncompliance that the interstate agents had discovered during  inspections. For example, two interstate agents commented that once they  notified OPS of noncompliant activity, the case seemed to go into what they  described as a “black hole”—indicating that they never heard anything else  from OPS about the matter. One of these two interstate agents told us that  it was very difficult for it to conduct adequate follow-up inspections (i.e.,  those conducted at pipeline companies to determine whether previously  found problems have been corrected) without knowing what actions, if  any, OPS had taken or planned to take. This interstate agent also noted that  once, after it alerted OPS to noncompliant activity at one company, it found  the same violation 2 years later during the next scheduled inspection cycle.
We brought the interstate agents’ concerns to OPS’s attention and,  according to the agency, it is now providing interstate agents with  information on the actions it took or will take in response to the agents’  notices of noncompliant activity. OPS officials told us that effective  November 2003, OPS began disposing of noncompliance cases in writing  for interstate agents within 60 days after receiving notices of operator  noncompliance from interstate agents—as required by the Pipeline Safety  Improvement Act of 2002.
On the basis of our discussions with OPS and the interstate agents, we  believe that OPS has implemented this recommendation.
section_title: OPS Has Involved Interstate Agents in Its Integrity Management Program
paragraphs: In response to our recommendation that OPS allow interstate agents to  help review integrity management programs developed by the pipeline  companies that operate in their states to ensure that these companies have  identified and adequately addressed safety risks to their pipeline systems,  OPS told us that it had revised its interstate agent agreements with  qualified states to implement this recommendation.
In determining the extent to which interstate agents participate with OPS in  reviewing integrity management plans, we contacted the six interstate  agents that have agreements with OPS under the agency’s hazardous liquid  integrity management program. Five of them agreed that OPS was  implementing this recommendation as OPS told us it was doing. The one  interstate agent that did not believe OPS had implemented this  recommendation (the same interstate agent that did not believe OPS had  implemented our previously discussed recommendation) told us that while  it was allowed to attend and observe one integrity management inspection,  it was not allowed to participate—that is, it was not allowed to ask  questions during the inspection. According to OPS, this was before RSPA’s  Chief Counsel provided interstate agents with verbal guidance stating that  states could participate in integrity management inspections held outside  their boundaries if the hosting state granted permission.
On the basis of our discussions with OPS and the interstate agents, we  believe that OPS has implemented this recommendation.
In discussing both recommendations, we asked the interstate agents about  the degree of partnership between them and OPS. For the first  recommendation, 7 of the 11 interstate agents said there was or was close  to being a true partnership with OPS.  However, 3 others thought that better  communication could improve the partnership between the two entities.   The remaining interstate agent thought that by acknowledging the pipeline  safety expertise that interstate agents acquired under the states’ intrastate  pipeline programs, OPS could also improve the partnership between the  two parties.  For the second recommendation, 4 of the 6 interstate agents  said there was or was close to being a true partnership with OPS.  One of  the 4 interstate agents thought the partnership could improve if OPS gave  more advance notice so that interstate agents could make travel  arrangements to attend integrity management inspections. The fifth  interstate agent told us it did not want to offer an opinion on whether it  thought a partnership with OPS existed. It wanted an opportunity to work  with OPS on implementing integrity management requirements for natural  gas.  The remaining interstate agent (the same interstate agent that did not  believe OPS had implemented either of these recommendations) thought  there was no partnership with OPS because the agent had been allowed  only to observe the integrity management inspections.
section_title: OPS Implemented the Intent of Our Recommendation to Examine the Effect of Its Reduced Use of Civil Penalties
paragraphs: We recommended that the Secretary of Transportation require that OPS  determine whether its reduced use of civil penalties has maintained,  improved, or decreased compliance with pipeline safety regulations. OPS  said that it could not determine the impact of its reduced use of civil  penalties on compliance because it did not have sufficient data to do so.   The agency concluded that its decreased reliance on civil penalties did not  allow it to adequately address safety concerns and was perceived  negatively by the public and Congress. OPS subsequently changed its  enforcement policy to make fuller use of its range of enforcement tools,  including increasing the number and size of civil penalties.
While OPS did not strictly implement our recommendation, its actions to  make fuller use of all its enforcement tools adhere to the intent of the  recommendation.  In 1994, at the very end of OPS’s standard inspection  phase, OPS issued 42 administrative actions and 95 enforcement actions.   (See fig. 7.) From 1995 through 1998, during its partnering phase, OPS  increased its use of administrative actions, while issuing fewer civil  penalties and non-civil-penalty enforcement actions.  After 1998, OPS  decreased its use of administrative actions. However, the agency did not  increase its use of enforcement actions until 2000 when it began its “tough  but fair” phase. (See app. II for more information on OPS’s policy phases.)
section_title: OPS’s Enforcement Policies Influenced Trends in Enforcement and Administrative Actions
paragraphs: The primary influence on trends in OPS’s enforcement and administrative  actions has been changes in OPS’s enforcement policies. These policy  changes coincided with changes in OPS’s leadership. Other factors that  contributed to OPS’s policy changes and ultimately influenced trends in the  agency’s enforcement and administrative actions were two serious pipeline  accidents and reports on them from the Department of Transportation’s  Inspector General and from us on improvements needed in OPS’s pipeline  safety program.  To explore whether there were other possible  explanations for the trends in enforcement and administrative actions, we  analyzed trends in pipeline accidents, pipeline mileage, OPS’s inspection  activities, natural gas and petroleum consumption, and new construction  and compared them with the trends in OPS’s enforcement and  administrative actions. We found that none of these data series appear to  be strongly associated with the trends in OPS’s enforcement and  administrative actions.
subsections: section_title: OPS’s Use of Enforcement and Administrative Actions Has Varied with Policy Changes
paragraphs: OPS’s use of enforcement and administrative actions has evolved with  changes in the agency’s enforcement policies and leadership. As discussed  in appendix II, OPS’s enforcement policies have gone through three phases  since 1990:  (1) the standard inspection phase (1990 through 1994), which  emphasized across-the-board compliance; (2) the risk management  demonstration phase (1995 through 1999), which focused on partnering  with the industry to address the highest risks; and (3) the integrity  management phase (2000 to the present), which continued to focus on the  highest risks but also took a “tough but fair” approach to enforcement. OPS  officials told us that the enforcement policy changes reflected in these  three phases have been the primary influence on the trends in OPS’s  enforcement and administrative actions. In addition, we observed that  these policy phases appear to coincide with changes in OPS’s leadership;  new associate administrators came on board in 1995 and mid-2000. Finally,  according to OPS officials, the agency’s latest policy change was also  influenced by two major pipeline accidents in 1999 and 2000 that focused  public and congressional attention on pipeline safety and led to the  previously cited reports by the Department of Transportation’s Inspector  General and by us.
The changes in OPS’s enforcement policies and leadership roughly parallel  the trends in OPS’s enforcement actions. (See fig. 7 in app. III.)  As  previously discussed, in 1994, at the very end of OPS’s standard inspection  phase, OPS issued 42 administrative actions and 95 enforcement actions.  From 1995 through 1998, during its partnering phase, OPS increased its use  of administrative actions, while decreasing its use of civil penalties and  other enforcement actions. After 1998, OPS’s use of administrative actions  decreased. In 2000, when OPS initiated its “tough but fair” phase, its use of  enforcement actions started to rise.
section_title: Pipeline Accidents
paragraphs: Long-term trends in the numbers of serious pipeline accidents and in the  accident rate for interstate hazardous liquid pipelines do not appear to be  associated with trends in OPS’s enforcement and administrative actions. As  discussed earlier in this report, trends in the numbers of serious accidents  for interstate natural gas and hazardous liquid pipelines were mixed from  1994 through 2003. (See figs. 2 and 3.)  These trends do not parallel the  wide fluctuations in the numbers of enforcement and administrative  actions that OPS took during the same period. Over this same period, the  accident rate for interstate hazardous liquid pipelines—that is, the number  of serious accidents per billion ton-miles of hazardous liquids shipped— decreased, while the numbers of OPS enforcement and administrative  actions fluctuated.
For the number of all pipeline accidents per 10,000 miles of pipeline (where  volume of products supported is not included), there appears to be some  association between the number of accidents per 10,000 miles of pipeline  and OPS’s enforcement actions but no association between the number of  accidents per 10,000 miles of pipeline and OPS’s administrative actions.  (See fig. 8.)  This metric, like the standard inspections that OPS conducted  from 1990 through 1994, does not take risk into account; it considers only  the mileage of pipelines in place, not the amounts of products shipped—or,  by implication, the risks involved in shipping them. The number of  accidents per 10,000 miles of pipeline increased somewhat steadily during  the period of our review, growing by almost 50 percent, from about 2.2  accidents per 10,000 miles of interstate pipeline in 1994 to 3.3 such  accidents in 2002 (latest data available). At least through 2000, the number  of accidents per 10,000 miles of interstate pipeline and the number of OPS  enforcement actions moved together. This parallel movement might  suggest, if all else were equal, that OPS primarily took enforcement actions  when serious accidents occurred. However, most OPS enforcement actions  were the result of its routine inspections—not as a result of accident  investigations. The number of accidents per 10,000 miles of interstate  pipeline does not appear to coincide with the number of OPS  administrative actions during this period.
The trend in the number of serious interstate pipeline accidents (those  causing a fatality, an injury, or $50,000 or more in property damage) per  10,000 miles of pipeline, like the trend in the number of all pipeline  accidents, appears to parallel the trend in OPS’s enforcement actions, but  not the trend in OPS’s administrative actions. (See fig. 9.)  During the  period of our review, the number of serious interstate pipeline accidents  rose by more than 6 percent, from 156 in 1994 to 166 in 2003, and generally  followed the same pattern as the number of enforcement actions. However,  for serious accidents as for all accidents, there does not appear to be a  logical connection between these trends. Furthermore, for serious  accidents, as for all accidents, the trends in the number of accidents and in  OPS’s administrative actions do not appear to move together.
section_title: Pipeline Miles
paragraphs: The trend in the number of pipeline miles since 1994 does not appear to be  associated with the trends in OPS’s enforcement and administrative  actions. (See fig. 10.)  From 1994 through 2002 (latest data available), the  miles of pipeline in the United States increased by almost 11 percent, from  almost 2.2 million miles in 1994 to more than 2.4 million miles in 2002.  However, the numbers of enforcement and administrative actions that OPS  issued during this period varied.
section_title: Number of OPS Inspectors, Inspections, Inspection Days, and Types of Inspections
paragraphs: Our analysis shows no strong apparent association between the number of  OPS inspectors on line, the number of inspections conducted by OPS  inspectors, or the number of days OPS inspectors spent away from the  office conducting inspections and the number of OPS’s enforcement and  administrative actions. (See fig. 11.)  The number of OPS inspectors on line  more than doubled from 1994 through 2003, increasing from 28 in 1994 to  73 in 2003 at a fairly steady rate. Over the same period, the number of OPS’s  enforcement and administrative actions fluctuated widely.
The number of inspections conducted by OPS inspectors varied from 1994  through 2003. (See fig. 12.)  The fewest inspections occurred in 1994 and  1999 (about 730 each year), and the most took place in 1996 (almost 1,100)  and 2003 (about 1,120). These changes in the number of inspections do not  appear to be associated with the trends in OPS’s enforcement and  administrative actions, which also varied over the same period but often in  different directions and at different times.
The time OPS inspectors spent conducting inspections does not appear to  be associated with the numbers of enforcement and administrative actions  they took. (See fig. 13.)  The number of days they spent away from the  office conducting inspections more than doubled, increasing fairly steadily  from more than 1,700 in 1994 to almost 5,300 in 2003, while the numbers of  enforcement and administrative actions they took over the same period  fluctuated widely.
Our analysis points to a possible association between the types of  inspections conducted and OPS’s enforcement and administrative activity.  The number of standard inspections—those designed to assess compliance  with OPS’s minimum safety standards—appears to be loosely associated  with the numbers of enforcement actions and administrative actions taken  over the period. (See fig. 14.)  The number of standard inspections varied  from about 580 in 1994 to about 550 in 2003, peaking at 830 in 1996. The  number of other inspections that OPS conducts, including construction  inspections, accident investigations, and integrity management  inspections, increased from about 150 in 1994 to about 560 in 2003. For  many but not all of the years covered, the numbers of enforcement and  administrative actions paralleled the numbers of standard and other  inspections, albeit at a later date. One interpretation of this apparent  linkage is that changes in inspection activity led to similar but later changes  in enforcement activity. (The lag in enforcement activity reflects the time  taken for inspectors to interpret their inspection results and gain  management approval for any enforcement actions to be taken.)  However,  this interpretation is not consistent with the data for the entire 10-year  period.
section_title: Natural Gas and Petroleum Consumption
paragraphs: Trends in natural gas and petroleum consumption do not appear to be  associated with trends in OPS’s enforcement and administrative actions.  From 1994 through 2002 (latest data available), natural gas consumption  increased by 5.7 percent, rising from about 21.2 trillion cubic feet to almost  22.5 trillion cubic feet. (See fig. 15.)  This trend is not consistent with the  fluctuations in OPS’s enforcement and administrative actions.
Petroleum consumption also increased, rising by almost 11 percent at a  fairly steady rate, from almost 18 million barrels per day in 1994 to more  than 19 million barrels per day through 2002 (latest data available). Over  the same period, the number of enforcement and administrative actions  that OPS issued varied widely. (See fig. 16.)
section_title: Construction Spending
paragraphs: Historical trends in new construction do not appear to be associated with  trends in OPS’s enforcement and administrative actions. Pipeline accidents  often result from construction activities, such as excavation. From 1994  through 2003, new construction steadily increased, as measured by Census  Bureau indicators of privately owned housing units started and completed.  For example, the number of new, privately owned housing units started  increased by almost 27 percent at a fairly steady rate, from about 1.5  million in 1994 to about 1.8 million in 2003. However, trends in OPS’s  enforcement and administrative actions varied widely over the same  period. In particular, the trend in the number of OPS’s enforcement actions  does not appear to be associated with the trend in the number of new  homes started. (See fig. 17.)
Similarly, the value of new homes completed does not appear to be  associated with trends in OPS’s enforcement activity. (See fig. 18.)  From  1994 through 2003, in constant dollars, the annual value of construction put  in place increased steadily by almost 23 percent, from about $732 billion in  1994 to about $898 billion in 2003. Over the same period, the number of  OPS’s enforcement and administrative actions fluctuated widely.
section_title: Contacts and Staff Acknowledgments
subsections: section_title: Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the above, Jennifer Clayborne, Elizabeth Eisenstadt, Bert  Japikse, Judy Guilliams-Tapia, Bonnie Pignatiello Leer, Gail Marnik, and  Gregory Wilmoth made key contributions to this report.
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