Interstate Pipeline Inspections: Additional Planning Could Help DOT Determine Appropriate Level of State Participation
Released: 2018-05-29T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: PHMSA oversees the safety of interstate and intrastate natural gas and hazardous liquid pipelines. PHMSA certifies states to oversee intrastate pipelines, and some states also act as PHMSA's “agents” to supplement the federal inspection workforce for interstate pipelines. In recent years PHMSA has signaled a move away from using interstate agent agreements. Recent funding increases have enabled PHMSA to hire additional federal inspectors. States may receive annual grants to reimburse up to 80 percent of the cost of their pipeline safety activities.

Congress included a provision in statute for GAO to review the federal and state responsibilities and resources used to inspect interstate pipelines. This report addresses (1) how state participation has affected interstate pipeline oversight and (2) PHMSA's assessment of the resources needed to conduct interstate pipeline inspections. GAO reviewed relevant laws and PHMSA guidance on state participation in these inspections; analyzed the most recent 6 years of PHMSA funding and inspector staffing data; and interviewed pipeline safety officials from PHMSA and 22 states selected based on level of participation in interstate inspections.

section_title: What GAO Found
paragraphs: State involvement in interstate pipeline inspections can enhance oversight, although the three types of agreements that the Pipeline and Hazardous Materials Safety Administration (PHMSA) uses to allow state participation are not used extensively. Annual interstate agent agreements —held by 9 states—allow states to participate in all inspection activities and can bolster interstate pipeline oversight. For instance, an inspection conducted in 2014 by New York state officials led to $61,900 in federal civil penalties. Temporary interstate agreements —used in 6 states to date—allow PHMSA to request states to participate in specific interstate pipeline inspections. PHMSA officials said these agreements provide the agency greater flexibility. Some current interstate agents GAO interviewed said that temporary interstate agreements are useful, but are not substitutes for interstate agent status because states do not participate in the full range of inspections. Finally, PHMSA as authorized by federal law recently established joint inspections allowing states to request to participate in interstate inspections. However, state officials were concerned that their role is limited and that they must bear the full cost to participate. PHMSA officials said they intend to clarify the state inspector role in joint inspections and acknowledged that federal grants cannot be used by states to support joint inspection activities.

PHMSA allocated recently hired inspectors based on regional workload, but has not assessed future resource needs. From fiscal years 2012 to 2017, PHMSA's appropriations increased over 40 percent, allowing the agency to expand its inspector workforce by about 25 percent. PHMSA allocated the additional inspectors across the agency's five regions based on workload. For example, PHMSA's central region received a greater percentage of inspectors than other regions to help oversee a number of new pipeline construction projects. However, PHMSA has not planned for future workforce needs for interstate pipeline inspections. In particular, it has not assessed the resources and benefits that states can provide through the three types of agreements. Leading practices for workforce planning indicate that such forward-looking analyses are essential for effective workforce planning. Without such analyses, PHMSA cannot proactively plan for future inspection needs to ensure that federal and state resources are in place to provide effective oversight of interstate pipelines.

section_title: What GAO Recommends
paragraphs: PHMSA should develop a workforce plan for interstate pipeline inspections, considering, among other things, the additional resources and safety oversight that state pipeline officials can provide. DOT concurred with our recommendation and provided technical comments, which we incorporated as appropriate.

section_title: Letter
paragraphs: The U.S. energy pipeline network is composed of over 2.7 million miles of  pipeline transporting gas, oil, and other hazardous liquids both within  states (intrastate) and from one state to another (interstate). Inspections  of pipeline operator programs and facilities are key oversight activities at  both the federal and state level. At the federal level, the Pipeline and  Hazardous Materials Safety Administration (PHMSA) is responsible for  developing safety-related regulations for these pipelines. In general,  PHMSA conducts inspections and enforces regulations for interstate  pipelines, while certified states generally oversee intrastate pipelines.  Historically, PHMSA has also entered into agreements with some state  pipeline safety offices to act as “agents” to supplement the federal  inspection workforce for interstate pipelines. Over the years, however, the  number of interstate agents has declined from 22 in 1973 to 9 today. In  recent years, PHMSA has not accepted additional applications for  interstate agent agreements and has signaled a move away from these  agreements. Instead, PHMSA has introduced other means of participation  for states interested in pursuing an interstate agreement.

The Protecting our Infrastructure of Pipelines and Enhancing Safety Act  of 2016 included a provision that GAO assess and report on the  resources used in carrying out interstate pipeline safety agreements.  This report examines (1) how state participation has affected interstate  pipeline oversight and (2) PHMSA’s assessment of the resources it needs  to conduct future interstate pipeline inspections.

To address both objectives, we reviewed relevant statutes, literature  related to pipeline safety agreements and PHMSA guidance on state  participation. To determine the effects of state participation in interstate  pipeline oversight, we interviewed officials from PHMSA headquarters  and 5 regional offices and 22 state pipeline safety offices. (See table 1).  For our sample, we selected the following:  Our interviews provide a range of views, but are not generalizable across  all state pipeline safety offices.

To analyze PHMSA’s assessments of interstate pipeline inspection  resources needed, we obtained information on PHMSA’s appropriations  and inspector staffing levels for fiscal years 2012 through 2017. We  interviewed PHMSA officials on their data collection and verification  procedures and based on these steps determined the data was reliable  for our purposes. We also interviewed PHMSA officials about the  agency’s staffing allocation analyses on inspection staff required to  conduct interstate pipeline inspections. We assessed the extent to which  PHMSA’s inspector staffing activities and processes met leading  practices for workforce planning that we have identified in our prior work.

We conducted this performance audit from June 2017 to May 2018 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The U.S. pipeline network includes both interstate and intrastate  pipelines, the vast majority of which fall into the latter category:  Interstate pipelines: Interstate pipelines are primarily large-volume  transmission pipelines that carry gas or hazardous liquid–sometimes  over hundreds of miles—to communities and large-volume users  (e.g., factories). At the start of 2017, there were about 340,000 miles  of interstate transmission pipelines nationwide. Newly tapped  domestic gas and oil deposits have resulted in an increase in the  existing pipeline infrastructure to transport natural gas and oil.

Intrastate pipelines: Intrastate pipelines are primarily composed of gas  distribution and some transmission pipelines that transport natural gas  pipelines to residential, commercial, and industrial customers. As of  2015, there were about 2.2 million miles of distribution pipelines  nationwide. In addition, an estimated 18,000 miles of federally  regulated gathering pipelines carry natural gas or hazardous liquids  from production areas to processing facilities where the product is  refined before continuing in transmission pipelines.

At the federal level, PHMSA is responsible for developing regulations for  domestic interstate and intrastate natural gas and hazardous liquid  pipelines. Its regulatory programs are focused on ensuring safety in the  design, construction, operation, and maintenance of pipelines. Inspectors  from PHMSA’s five regional offices and states are responsible for  inspecting nearly 3,000 companies that operate 2.7 million miles of  pipelines.

Each year, PHMSA uses its Risk Ranking Index Model (RRIM) as one  input to determine its annual inspection priorities. RRIM categorizes each  of the nation’s pipeline systems regulated by PHMSA into high, medium,  and low-risk tiers. Pipeline risk are proposedbased on a combination of  categories, such as the type of pipeline material and time since last  inspection. PHMSA’s guidance specifies that high-risk pipelines should be  inspected at least once every 3 years, medium-risk pipelines every 5  years, and low-risk pipelines every 7 years. PHMSA’s goal each year is to  inspect, at a minimum, pipeline systems where the time since last  inspection meets or exceeds the PHMSA guidance for the tier.

Under federal pipeline safety laws, states may assume inspection and  enforcement responsibilities for intrastate gas and hazardous liquid  pipelines, which are primarily natural gas distribution pipelines. States  assume that responsibility by annually certifying their state pipeline safety  program to PHMSA, which PHMSA must validate. As part of a state’s  certification, states must establish pipeline laws similar to federal pipeline  safety regulations for intrastate pipelines, but may also impose more  stringent pipeline safety regulations. PHMSA reimburses certified state  agencies up to 80 percent of the total cost of operating their pipeline  safety program through an annual grant.

PHMSA may permit certified states to participate in interstate inspections  through three types of agreements. (See fig.1):  Interstate agent agreement: At PHMSA’s discretion, certified states  may enter into an interstate agent agreement for either their natural  gas program, hazardous liquid program, or both on an annual basis.  As of April, 2018, nine state pipeline agencies hold these agreements.  On PHMSA’s behalf, these agencies assume inspection  responsibilities for the range of interstate inspection activities, as  agreed upon by PHMSA and prioritized by PHMSA during the  agency’s annual inspection planning process. States may also  propose and conduct additional inspections as they believe  necessary.  While state inspectors can identify violations, PHMSA is  ultimately responsible for enforcement of interstate pipeline  regulations and uses a range of enforcement tools from Warning  Letters to more stringent Notices of Probable Violation with either  proposed compliance orders or proposed civil penalties.

Temporary interstate agreement: These agreements allow PHMSA to  request a state that has had its certification validated by PHMSA to  perform interstate pipeline inspections on a temporary basis.  According to PHMSA guidelines, these agreements are used typically  for new construction inspections, but may include assistance such as  inspection of specific operators, witness to repairs or testing, or  investigation of incidents. Since 2010, PHMSA has entered into  temporary interstate agreements with six states.

Joint inspection: The Pipes Act of 2016 included a requirement for  PHMSA to allow certified states to participate in the inspection of an  interstate pipeline safety facility, if requested by the state pipeline  safety agency. As of April, 2018, no states have requested to  participate in joint inspections.

section_title: State Involvement in Interstate Pipeline Inspections, While Not Extensive, Can Enhance Oversight Activities
subsections: section_title: Interstate Agent Agreements Can Bolster Oversight in Participating States
paragraphs: According to PHMSA regional officials we met with, interstate agents  conduct high-quality inspections of interstate pipelines and provide an  important supplement to the federal inspection workforce. PHMSA  regional officials generally agreed that interstate agents have well-trained  staff and leverage their local knowledge to enhance interstate pipeline  inspections within their state. Additionally, interstate agents, if authorized  by PHMSA, may conduct inspections of interstate pipelines within their  state more frequently than PHMSA. For instance, officials in one PHMSA  region noted that an interstate agent in their jurisdiction ensured each  interstate operator was inspected once every 2 years, regardless of  PHMSA’s risk ranking. Similarly, in two of 5 regions that have interstate  agents, PHMSA regional officials stated that they needed interstate  agents to supplement their current allocation of federal inspectors. For  instance, in one region, PHMSA officials said that if interstate agent  agreements were discontinued, the region would need to hire 3 to 4  additional inspectors. In another region, officials said that interstate  agents provided the equivalent of 5 to 10 additional inspectors. Officials in  one PHMSA region said that, although the region could absorb the  interstate agent workload if needed, doing so would lead to less extensive  inspections because there would more pipelines to inspect with fewer  federal inspectors.

Interstate agents may also enhance pipeline safety oversight within their  state by going above and beyond the annual interstate inspection  activities required under their agreement with PHMSA. Specifically, as  part of the annual inspection planning process, PHMSA’s regional offices  work with interstate agents to develop an annual inspection plan. While  interstate agents must prioritize PHMSA’s inspection priorities, such as  participation in new construction inspections and PHMSA-led systems  inspections, they can also propose additional inspections of interstate  pipelines within their state. Officials in half of the nine states with  interstate agent agreements stated that they proposed and obtained  PHMSA’s approval for additional interstate pipeline inspections that would  not otherwise have been included in PHMSA’s annual inspection plan.  For instance, PHMSA’s Western Region reported that between January  1, 2015 and December 31, 2016 Washington State’s pipeline safety  agency—which holds an interstate agent agreement—proposed and  conducted 13 inspections beyond those identified in PHMSA’s inspection  plans.

During these additional inspections conducted by interstate agents, state  officials have identified violations of pipeline safety regulations. Some  violations, including the four illustrative examples below, were deemed  serious enough that PHMSA imposed civil penalties.

In 2015, the Connecticut Department of Energy and Environmental  Protection inspected an interstate pipeline that traverses the state.  During the inspection, Connecticut inspectors found the pipeline  operator had failed to employ properly qualified welders in  constructing a section of the pipeline. As a result, PHMSA issued a  civil penalty of $26,200 to the pipeline operator. In response to the  findings, the operator ensured its welders were properly qualified and  replaced the 14 welds completed by improperly qualified welders.

In 2014, the New York Department of Public Service’s Pipeline  Division inspected an interstate pipeline that traverses the state.  During that inspection, New York inspectors identified violations  related to the operator’s corrosion-control practices. Inspectors also  found that the operator failed to prepare, and follow, a manual for  conducting operations and maintenance activities, as well as for  emergency response. As a result, PHMSA issued a civil penalty of  $61,900. In response to the findings, the operator took action to  address the corrosion control-related violations and revised its  operations and maintenance manual.

In 2011, the New York Department of Public Service’s Pipeline  Division inspected an interstate pipeline that traverses the state.  During that inspection, a New York inspector identified violations  related to corrosion-control practices. As a result, PHMSA issued a  civil penalty of $78,900. PHMSA also issued a Compliance Order,  requiring the operator to remediate the identified violations, or face an  additional civil penalty.

In 2014, Arizona’s Corporation Commission’s Pipeline Safety Section  inspected two interstate gas transmission lines that traverse the state.  During the inspection, PHMSA and Arizona inspectors found that the  operator had committed probable violations by not properly odorizing  its pipeline, and providing insufficient information to the public about  its pipeline odorization methods. As a result, PHMSA issued a  Notice of Probable Violation, proposed civil penalties totaling  $162,700, and issued a Proposed Compliance Order.

Although state involvement in interstate inspections can enhance  oversight, officials from almost all of our selected states that do not  currently have an interstate agent agreement expressed little interest in  pursuing such an agreement. Specifically, some officials in we spoke with  plan to focus their limited resources on intrastate pipeline safety oversight  activities. For example, although Texas has over 50,000 miles of  interstate pipeline, officials in that state have focused exclusively on  intrastate inspection activity, citing the heavy workload of their inspection  staff, as well as challenges in recruiting and retaining additional  inspectors. In another instance, California’s state pipeline safety agency  responsible for hazardous liquid oversight voluntarily withdrew from the  interstate agent program in 2013, citing staffing shortages stemming from  a difficult economic climate.

Although PHMSA’s current policy stance does not prohibit the agency  from entering into a formal interstate agent agreement if the  circumstances warrant, the agency prefers that state agencies enter into  temporary interstate agreements. PHMSA officials explained that,  historically, PHMSA has used interstate agents to supplement federal  inspection resources and that the current nine interstate agents  supplement the federal workforce by approximately 10–15 inspectors.  PHMSA officials stated that they do not intend to discontinue current  interstate agent agreements, but due in part to a recent staff increase the  agency has sufficient staff to meet its inspection needs without adding  additional interstate agents. PHMSA officials also told us that intrastate  pipelines pose the highest safety risk to states and, consequently, state  pipeline safety agencies should focus their efforts on intrastate pipeline  oversight rather than participating in interstate pipeline inspections.  During the last 7 years, four states that applied for an agent agreement— New Hampshire, Virginia, Maryland, and Nevada—were not accepted  by PHMSA for these reasons. (See app. I.) In 2013, PHMSA decided not  to renew another state pipeline safety agency’s interstate agent  agreement, citing the state agency’s inability to staff its program properly,  among other things.

section_title: PHMSA’s Other Means of State Participation in Interstate Inspections Have Not Been Used Extensively
subsections: section_title: Temporary Interstate Agreements
paragraphs: While temporary interstate agreements provide an opportunity to  participate in interstate pipeline oversight, officials from some state  agencies told us that the agreement’s limited scope and ad hoc nature  can create obstacles to state participation. For instance, in states without  an interstate agent agreement, state inspectors’ day-to-day work focuses  exclusively on intrastate pipeline oversight activities. In the event PHMSA  requested assistance with certain interstate inspections, state inspectors  may be unfamiliar with the interstate pipeline systems and operators. As a  result, some state officials said that their inspectors may have a steep  learning curve when conducting inspections under a temporary interstate  agreement. However, PHMSA officials disagreed that most interstate  agent states would have such steep learning curve because they  currently inspect intrastate transmission pipelines; the regulations for  interstate and intrastate pipelines are for the most part identical. Another  obstacle some state officials identified relates to the fact that state  pipeline safety agencies may not have sufficient inspection staff available,  when needed, to participate in ad hoc interstate inspections.

Due to the limited state role and competing priorities, state pipeline safety  agencies rarely enter into temporary interstate agreements. According to officials in five of the 6 states that have that have entered into temporary  interstate agreements, the agreements were used for limited, ad hoc  inspections that were initiated by PHMSA. The sixth temporary interstate  agreement was initiated by PHMSA in lieu of the Virginia pipeline safety  agency’s 2017 application for an interstate agent agreement for natural  gas. PHMSA offered to enter into a longer-term, temporary interstate  agreement, which would permit the state agency to inspect the installation  of two large interstate pipeline systems. The state agency accepted the  temporary interstate agreement, which may be extended annually until  the completion of the pipeline construction. To meet its new interstate  inspection obligations, the state agency told us it hired two additional  inspectors. According to state officials, those two inspectors will be  dedicated to intrastate pipeline inspection, which will allow two of the  state agency’s more experienced inspectors to conduct interstate pipeline  inspections.

Current interstate agents do not consider temporary interstate  agreements to be an adequate substitute for an interstate agent  agreement. According to officials we spoke with that are currently  interstate agents, an interstate agent agreement allows state agencies  and their inspectors to develop a strong understanding of operators and  pipelines within their state. A few state officials stressed that the greatest  benefit of interstate agent status was the ability to leverage their local  knowledge—such as the proximity and familiarity with interstate pipelines  within their states—to allow for quick responses to public concerns and  pipeline incidents. PHMSA officials emphasized that temporary interstate  agreements are not intended to replicate an interstate agent agreement;  instead, these agreements are designed to provide PHMSA the flexibility  to request targeted, short-term assistance from state pipeline safety  agencies with interstate pipeline inspections.

section_title: Joint Inspections
paragraphs: Joint inspections offer states the most limited role in interstate pipeline  inspections and may be entered into only if the state meets certain  conditions. In response to the requirement in the PIPES Act, PHMSA  created joint inspections and established certain criteria for state  participation. For instance, to ensure that participation in joint inspections  does not compromise intrastate pipeline safety, PHMSA only allows state  inspectors to participate if the state agency has accomplished the  required minimum number of inspection days during the preceding  calendar year. PHMSA also requires state agencies to bear the cost of  participating in joint inspections—including travel and inspection time for  the state inspectors—rather than allowing states to include this activity in  their annual pipeline safety program grant reimbursement. According to  PHMSA officials, this requirement is designed to focus limited federal  funds intended to support states’ intrastate pipeline safety programs.

While it is too early to know whether states will participate in joint  inspections over the long term, no states have participated to date.  Despite general agreement among some state pipeline safety officials  that collaborating with PHMSA on interstate pipeline inspections could be  beneficial, they noted that PHMSA’s criteria reduces the incentive to  participate. For instance, a few of the state officials we spoke to generally  expressed concern over the requirement that states bear the entire cost  of their participation. Additionally, state officials perceive the current joint  inspection policy as restricting state inspectors to an observer role.  However, PHMSA officials we spoke with noted that the role of state  inspectors can vary based on the levels of training and knowledge among  state inspectors. PHMSA officials told us they intend to clarify this role for  states.

section_title: PHMSA Used a Regional Workload Analysis to Allocate Inspection Resources, but Has Not Assessed Future Resource Needs
subsections: section_title: PHMSA Has Allocated Increased Inspection Resources Based on Regional Workload
paragraphs: From fiscal year 2012 to 2017, PHMSA’s funding increased by nearly 40  percent, allowing the agency to hire additional pipeline inspectors.  Specifically, PHMSA’s funding increased from $110 million in fiscal year  2012 to $154 million in fiscal year 2017. PHMSA’s inspection and  enforcement division received the majority of the increased funding,  allowing that division to hire additional staff. From fiscal year 2012  through 2017, the number of inspectors hired increased by over 25  percent, from 107 to 147 across the five PHMSA regions. (See fig. 2).

In recent years, PHMSA has improved its analysis of the number of  pipeline inspectors needed to address the inspection workload in each  region. Before 2014, PHMSA allocated inspectors evenly across the  agency’s five regions. Since 2014, PHMSA has used a regional workload  analysis to allocate its interstate inspectors. Unlike the previous analysis,  the regional workload analysis takes into account federal inspector  workload, pipeline construction, and the amount of pipeline mileage in  areas where the consequences of an accident are greater (such as  populated and environmentally sensitive areas) to help ensure that  PMHSA has appropriate resources in each region. For example,  PHMSA’s central region received a greater percentage of inspectors than  most other regions to help oversee a number of new pipeline construction  projects. (See table 2). According to PHMSA officials, the regional  workload analysis has resulted in a better match between workforce  staffing and needs.

section_title: PHMSA Lacks an Inspection Workforce Plan That Assesses Future Resource Needs for Interstate Pipeline Inspections
paragraphs: While PHMSA has improved how it allocates its current inspection staff  among the regions, the agency lacks a forward-looking workforce plan for  interstate pipeline inspections. Workforce planning helps agencies take a  strategic, forward-looking approach to put the right people with the right  skills in the right places at the right time. We have previously identified  leading practices for effective strategic workforce planning. These  approaches may vary with each agency’s particular needs and mission,  but share certain principles. These may include:  identifying skills and competencies to fill critical workforce gaps and  the strategies needed to recruit them; developing specific strategies that are tailored to address gaps in  number, deployment, and alignment of human capital; and monitoring and evaluating the agency’s progress toward its human  capital goals.

However, PHMSA has not developed a plan that systematically identifies  the anticipated interstate pipeline inspection workload or the number of  inspection staff needed to meet that workload. In light of the diminishing  role that interstate agents currently provide in bolstering PHMSA’s  inspection workforce, a plan for conducting future interstate pipeline  inspections should also account for the reduction in resources and  expertise state inspectors can potentially provide.

According to PHMSA officials, they have not developed a workforce plan  for interstate pipeline inspections because the agency’s focus has been  on allocating and training the recently hired inspectors and ensuring that  pipeline inspections are completed. Further, the lack of an inspector  workforce plan may be symptomatic of a wider-ranging workforce  planning issue. A November, 2017 DOT Inspector General (IG) report  found that PHMSA had not developed a comprehensive workforce plan  since 2005 and recommended that PHMSA develop such a plan.  PHMSA agreed with the recommendation and anticipates completing the  plan by the end of December 2018. Of note, PHMSA’s 2005 workforce  plan did not include an analysis of federal and state inspectors needed for  interstate pipeline inspections. In the absence of a workforce plan for  interstate inspections, PHMSA cannot proactively plan for future  inspection needs to ensure that federal and state resources are in place  to provide effective pipeline oversight.

section_title: Conclusions
paragraphs: PHMSA has an important role in overseeing interstate pipelines and  operators to ensure pipeline safety, and the agency’s partnership with  interstate agents has proven beneficial in fulfilling that role. Recent  increases in funding have allowed PHMSA to increase its own inspection  workforce and reduce its reliance on state agents. However, the agency  does not have an inspection workforce plan to ensure that it is making the  correct decisions regarding its mix of federal inspectors versus state  resources. Therefore, it does not have reasonable assurance that it will  be able to provide adequate oversight of interstate pipelines going  forward.

section_title: Recommendation
paragraphs: PHMSA should develop a workforce plan for interstate pipeline  inspections that is consistent with leading practices in workforce planning,  which should include a consideration of the additional resources and  safety oversight that state pipeline officials can provide.  (Recommendation 1)

section_title: Agency Comments
paragraphs: We provided DOT with a draft of this report for review and comment. In its  comments, reproduced in appendix II, the Department of Transportation concurred with our recommendation. The Department of Transportation  also provided technical comments, which we incorporated as appropriate.

We are sending copies of this report to relevant congressional  committees, the Secretary of Transportation, and other interested parties.  In addition, this report will also be available at no charge on GAO’s  website at http://www.gao.gov  If you or your staff have any questions about this report, please contact  me at (202) 512-2834 or flemings@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix II.

section_title: Appendix I: States That Have Applied and Have Not Been Accepted for Interstate Agent Status
paragraphs: In the past 7 years, four additional state pipeline safety agencies have  applied for interstate agent agreements:

New Hampshire: In 2014, the state legislature passed a law requiring  the state’s pipeline safety agency to apply for interstate agent status  on an annual basis. State pipeline safety officials cited New  Hampshire inspectors’ local knowledge of interstate pipelines, as well  as concerns over the frequency of PHMSA’s interstate pipeline  inspection activity, as reasons for seeking an agreement. To date,  PHMSA has not accepted the state agency’s annual applications for  interstate agent status citing an increase in the federal inspection  workforce, a preference for states to focus on intrastate pipeline  oversight, and the ability for state agencies to participate in interstate  inspections through other means, such as temporary interstate  agreements.

Virginia: In 2016, the Virginia General Assembly passed legislation  requiring the state pipeline safety agency to apply for interstate agent  status for natural gas. The state agency applied the following year,  citing the need to conduct construction inspections of the Virginia  section of two large interstate natural gas transmission pipelines.  PHMSA did not accept the state agency’s application, citing  increasing federal inspection resources as well the agency’s lack of  full authority over its intrastate gas operators. Instead, PHMSA  provided the state agency a temporary interstate agreement,  renewable on an annual basis, to conduct the desired inspections.

Maryland: Maryland’s pipeline safety agency applied for interstate  agent status in 2014 in response to public concern over proposed  construction of a new interstate pipeline. PHMSA did not accept the  agency’s application for interstate agent status, citing an increase in  federal resources and PHMSA’s preference that the state agency  focus its inspection efforts on intrastate pipelines. According to state  agency officials, public interest has waned and the state has no plans  to reapply.

Nevada: Nevada’s pipeline safety agency applied for interstate agent  status in 2011. According to state pipeline safety officials, they did so  to help retain staff, rather than as a result of pipeline safety concerns.  PHMSA did not accept the agency’s request, citing a preference only  to enter into new interstate agreements when additional state support  was needed, as well as the preference for states to focus on intrastate  pipeline facilities. According to state officials, they do not plan to  reapply.

section_title: Appendix II: Comments from the Department of Transportation

section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgements
paragraphs: In addition to the contact named above, Sara Vermillion (Assistant  Director), Nick Nadarski (Analyst-in-Charge), Mike Duane, David Hooper,  Delwen Jones, Malika Rice, and Kelly Rubin made key contributions to  this report.

Fast facts: The Pipeline and Hazardous Materials Safety Administration (PHMSA) oversees the safety of natural gas and hazardous liquid pipelines. States sometimes work with PHMSA to inspect and oversee these pipelines.

We looked into federal and state responsibilities for interstate pipeline inspections, and found that PHMSA expanded its inspector workforce by 25% between 2012 and 2017. However, the agency hasn't planned for future workforce needs—for example, it hasn't assessed how states can help with pipeline inspections and safety oversight. We recommended that they do so.

Question-summary annotations: questions: question: What are the potential effects of state involvement in interstate pipeline inspections?
answer: State involvement in interstate pipeline inspections can enhance oversight, although the three types of agreements that the Pipeline and Hazardous Materials Safety Administration (PHMSA) uses to allow state participation are not used extensively.

question: What are annual interstate agent agreements?
answer: Annual interstate agent agreements —held by 9 states—allow states to participate in all inspection activities and can bolster interstate pipeline oversight.
child_questions: question: How has one of these inspections proceeded previously?
answer: For instance, an inspection conducted in 2014 by New York state officials led to $61,900 in federal civil penalties.

question: What are temporary interstate agent agreements?
answer: Temporary interstate agreements —used in 6 states to date—allow PHMSA to request states to participate in specific interstate pipeline inspections.
child_questions: question: What is the benefit of these temporary agreements over the annual ones?
answer: PHMSA officials said these agreements provide the agency greater flexibility.

question: What is the downside of these temporary agreements over the annual ones?
answer: Some current interstate agents GAO interviewed said that temporary interstate agreements are useful, but are not substitutes for interstate agent status because states do not participate in the full range of inspections.

question: Why were joint inspections established?
answer: Finally, PHMSA as authorized by federal law recently established joint inspections allowing states to request to participate in interstate inspections.
child_questions: question: Why are states apprehensive about the joint inspections?
answer: However, state officials were concerned that their role is limited and that they must bear the full cost to participate.
child_questions: question: What was the PHMSA reaction to this concern?
answer: PHMSA officials said they intend to clarify the state inspector role in joint inspections and acknowledged that federal grants cannot be used by states to support joint inspection activities.

questions: question: How has PHMSA addressed their current and future needs?
answer: PHMSA allocated recently hired inspectors based on regional workload, but has not assessed future resource needs.

question: How did the PHMSA workforce expand from 2012 to 2017?
answer: From fiscal years 2012 to 2017, PHMSA's appropriations increased over 40 percent, allowing the agency to expand its inspector workforce by about 25 percent.
child_questions: question: How did PHMSA place this workforce?
answer: PHMSA allocated the additional inspectors across the agency's five regions based on workload. For example, PHMSA's central region received a greater percentage of inspectors than other regions to help oversee a number of new pipeline construction projects.

question: How has PHMSA failed to consider their future workforce?
answer: However, PHMSA has not planned for future workforce needs for interstate pipeline inspections. In particular, it has not assessed the resources and benefits that states can provide through the three types of agreements.
child_questions: question: Why is it likely future analysis could be beneficial?
answer: Leading practices for workforce planning indicate that such forward-looking analyses are essential for effective workforce planning.

question: Why is a lack of future analysis detrimental to PHMSA?
answer: Without such analyses, PHMSA cannot proactively plan for future inspection needs to ensure that federal and state resources are in place to provide effective oversight of interstate pipelines.

questions: question: What are the safety responsibilities of PHMSA?
answer: PHMSA oversees the safety of interstate and intrastate natural gas and hazardous liquid pipelines.

question: What are the oversight responsibilities of PHMSA?
answer: PHMSA certifies states to oversee intrastate pipelines, and some states also act as PHMSA's “agents” to supplement the federal inspection workforce for interstate pipelines.
child_questions: question: Has PHMSA changed their related workforce?
answer: In recent years PHMSA has signaled a move away from using interstate agent agreements. Recent funding increases have enabled PHMSA to hire additional federal inspectors.

question: How are states reimbursed for their work with pipelines?
answer: States may receive annual grants to reimburse up to 80 percent of the cost of their pipeline safety activities.

questions: question: How did the GAO come to create this review?
answer: Congress included a provision in statute for GAO to review the federal and state responsibilities and resources used to inspect interstate pipelines.

question: What does this report address?
answer: This report addresses (1) how state participation has affected interstate pipeline oversight and (2) PHMSA's assessment of the resources needed to conduct interstate pipeline inspections.
child_questions: question: What information did the GAO use to address these points?
answer: GAO reviewed relevant laws and PHMSA guidance on state participation in these inspections; analyzed the most recent 6 years of PHMSA funding and inspector staffing data; and interviewed pipeline safety officials from PHMSA and 22 states selected based on level of participation in interstate inspections.