In a recent critique, Politico.com offered a harsh evaluation of PHMSA, pointing out (among other things) that the Agency has been lax in enforcing existing rules and slow to promulgate new ones. The article dubs PHMSA the “can’t-do agency,” claiming that it “lacks the manpower to enforce the rules and the willpower to write stronger ones.” One week before the Politico piece was published, the House Subcommittee on Railroads, Pipelines, and Hazardous Materials began hearings on reauthorization of the Pipeline Safety Act (PSA). Several politicians, including Rep. Jeff Denham (R-CA), pointedly questioned PHMSA Acting Administrator Tim Butters on why the Agency has been so slow to issue the crude-by-rail and pipeline safety rules that were pending when the Subcommittee convened hearings on these rulemakings last year. Butters responded by pointing out that PHMSA is in the final stages of developing its high hazard flammable train rule, and that the Agency has completed 22 of the 42 Congressional mandates in the 2012 PSA. He emphasized the demands on the Agency in the wake of the energy production boom, rapid expansion in pipeline construction, and numerous pipeline incidents in recent years (noting that in addition to the aforementioned Congressional mandates, PHMSA has received 49 new NTSB recommendations, 16 OIG recommendations, and 7 GAO recommendations).
Statutory and Budgetary Limitations on PHMSA
PHMSA’s Office of Pipeline Safety has indeed been given a huge charge by Congress, but Congress has not provided the Agency with the budget or staff sufficient to implement all of the directives that fall to it. There are more than 2.5 million miles of oil and gas pipelines in the U.S. Those pipelines include gathering lines, oil mainlines, gas transmission lines, distribution lines and delivery lines. PHMSA only regulates those pipelines and facilities as directed by Congress, and under Congress’ definitions, most gathering lines are not yet fully subject to the PSA (which may change soon, under the 2012 PSA directive requiring PHMSA to review the sufficiency of current gathering lines regulation). Also, under current regulation, distribution lines are not as fully regulated as oil mains or gas transmission. Yet gathering and distribution lines comprise more than half of all pipelines. PHMSA’s 139-person inspection and enforcement staff (assisted by over 300 state inspectors) are responsible for oversight of all regulated pipelines, and the Agency has only recently been authorized to add additional inspection and enforcement positions in 2015.
As noted in the Politico article, PHMSA has been directed by Congress to issue “performance based” regulations, as compared to “prescriptive” regulations used by almost all other federal agencies. Performance based regulations mean that the government establishes minimum safety standards, but expects pipeline operators to create stricter standards specific to their own system(s). An operator’s Operation & Maintenance (O&M) and Integrity Management Program (IMP) manuals, once approved, have the force of law, and become enforceable by the Agency. Performance based regulations may ultimately result in enforcement of standards that are more stringent than those under a prescriptive regime, given that an operator’s procedures frequently go beyond minimum standards. This purpose is plain in the legislative history of the PSA considering the use of performance standards. See Statement of Hon. Brock Adams, DOT Secretary, in Senate Hearings on S. 411 (1979) (“The DOT’s pipeline facility safety standards are written in performance language. As such, the safety goal is mandated but the means of reaching that goal are, to a large degree, left to the discretion of the facility owner or operator. This approach permits application of new technologies without awaiting specific authorization through the public rulemaking process.”). In addition, Politico takes on PHMSA’s advisory committee framework, claiming that it creates an advantage for industry, but neglecting to observe the various benefits of the advisory committee structure, such as increased coordination and collaboration between government and industry.
Pipelines are the safest mode of transportation for oil and gas. Numerous studies show pipelines have fewer incidents and cause less damage than rail, highway or marine transportation of oil and gas. And the rate of serious incidents for both oil and gas pipelines has continued to decline in recent years. Even during that decline, PHMSA has continued steady enforcement of its regulations, proposing record civil penalties in 2013. The decline in serious incidents likely reflects both increased efforts by PHMSA to hold operators accountable for pipeline safety, and voluntary industry efforts to improve safety within the Agency’s performance-based regulatory framework.
Outstanding PHMSA Mandates and Areas for Improvement
Of course, all agencies (and companies) could do better. All agencies also by necessity work with the companies they regulate (something Politico faults PHMSA for doing). By working cooperatively with the regulated community and states, federal law is given effect, and not always just through enforcement. In fact, both the Agency and the regulated community have worked together to develop a Safety Management Standard that is expected to be promulgated as a new API standard shortly, and the industry through its primary trade groups API and INGAA have undertaken additional voluntary initiatives as well (see, e.g., API/AOPL Annual Liquids Pipeline Safety Performance Report and Strategic Plan; INGAA Strategic Plan to Build Confidence in Pipeline Safety). The Agency has also issued numerous advisories over the past several years (the Agency’s increasing use of guidance instead of rulemaking is a concern we have noted in prior posts on this website). Still, as raised in the Congressional Subcommittee hearing earlier this month, PHMSA rulemakings seem to come at an increasingly slow pace, demonstrated by the Agency’s numerous outstanding mandates and rulemakings in the works.
The critiques recently leveled against PHMSA by Politico and some politicians do not fully consider the challenges, and the accomplishments, made by this Agency and its regulated community, even while operating under significant budget and staffing constraints. The Pipeline Safety Act is up for reauthorization this year, and while at this time the expectation is that it will be a ‘clean bill’ (with little substantive amendment), PHMSA does still have a number of studies and rulemakings to complete in which all parties have a keen interest. America’s energy future has changed dramatically in just a few years, creating new challenges for everyone involved, including Congress and the media. Critiques are more easy to issue than are substantive ideas or solutions to identified problems. The discussion will continue, but so should positive change. PHMSA, states, the regulated community and citizen groups are working quietly to show continued progress in reduction of incidents, even while pipelines already offer the safest mode of transportation of oil and gas.