Feds Want Tougher Rules for Pipelines after Series of Spills

November 2015, Vol. 242, No. 11

Associated Press

Federal officials want tighter safety rules for pipelines carrying crude oil, gasoline and other hazardous liquids after a series of ruptures that included the costliest onshore oil spill in the nation’s history in Michigan.

The Department of Transportation (DOT) proposed expanding pipeline inspection requirements to include rural areas that are currently exempt and for companies to more closely analyze the results of their inspections. The agency also would make companies recheck lines following floods and hurricanes, and submit information about leaks and other problems on thousands of miles of smaller lines that fall outside of existing regulations.

The proposal covers over 200,000 miles of hazardous liquids pipelines that criss-cross the nation – a network that expanded rapidly over the past decade as domestic oil production increased. Pipeline ruptures in recent years have fouled waterways in Michigan, Montana, California, Virginia and elsewhere with crude oil and other petroleum products.
“This is a big step forward in terms of strengthening our regulations,” said Marie Therese Dominguez, chief of the Transportation Department’s Pipeline and Hazardous Materials Safety Administration (PHMSA). “It’s timely, and it’s raising the bar on safety.”

The new rules have been in the works since 2010, when 840,000 gallons of crude oil spilled into the Kalamazoo River in Michigan and other waterways from a ruptured line operated by Enbridge of Calgary, Canada.

Investigators with the National Transportation Safety Board cited corrosion and a crack in the line as the probable cause, and blamed the accident in part on ineffective oversight and weak regulation from the pipeline safety administration. The leak went undetected for 17 hours, and cleanup costs for the spill exceeded $1 billion, making it the costliest onshore oil spill ever in the U.S., NTSB Chairman Christopher Hart said recently in testimony before Congress.

If the proposed changes had been in place, the requirements could have prevented the Michigan spill and 238 other accidents between 2010 and 2014, transportation officials said. The other accidents released over 10 million gallons of oil, gasoline and related products and resulted in $118 million in costs and damages.

The proposed rules also expand requirements for leak-detection systems to include new, regulated pipelines. Current rules cover only lines in areas with a large population or environmentally sensitive features such as drinking water supplies.

John Stoody, vice president of the Association of Oil Pipe Lines, an industry group, said much of the proposal involves work that companies already do voluntarily, such as periodic inspections of lines in rural areas. By imposing requirements on the timing of maintenance, federal officials run the risk of diverting attention from high-consequence areas with large populations or environmental features, he said.

“That’s maintenance dollars that would not be spent on higher-priority areas,” Stoody said.

Despite its broad sweep, the federal proposal was characterized as an incremental step forward by the head of the Pipeline Safety Trust, a Bellingham, WA-based advocacy group.

“There’s some good stuff in there,” trust Executive Director Carl Weimer said. “But we’re disappointed that it took five years and we don’t’ think it’s as significant as (federal officials) tried to portray it.”

Weimer pointed to the requirement to check lines after natural disasters, such as the flooding blamed in a 2011 ExxonMobil pipeline rupture that spilled 63,000 gallons of crude oil into Montana’s Yellowstone River. Companies also should take steps ahead of time to guard against such occurrences, he said.

The changes could cost pipeline companies a combined $22.5 million annually, according to the agency. Dominguez said she hopes to finalize the rules sometime next year.

A 2011 pipeline law passed by Congress included requirements for remote-controlled and automatic emergency valves that can quickly shut down the flow of oil. Advocates say such valves are a simple way to limit damage from accidents. The American Petroleum Institute has said retrofitting lines with remote-controlled valves could cost up to $1.5 million per device. Transportation officials plan to address the issue in a separate proposal.

The delay was criticized by Rep. Lois Capps, D-CA, whose district includes the Santa Barbara County coastline where a May 19 rupture of a corroded pipe owned by Plains All-American Pipeline of Houston spilled over 100,000 gallons of crude, some of which flowed into the ocean, formed a large slick and stained beaches.

“Federally regulated oil and gas pipelines currently are not required to use the best automatic shut-off technologies available and that needs to change,” Capps said in a statement.

Also on Oct. 1, federal regulators announced they are assessing a $2.6 million civil penalty against ExxonMobil Pipeline Co. for a 2013 oil spill in Arkansas. PHMSA released its final report on the Pegasus pipeline leak that spilled roughly 3,190 barrels of oil near Mayflower and Lake Conway about 20 miles north of Little Rock in March 2013. The agency said in its order that the company violated regulations involving the line’s integrity, operation and maintenance.

The U.S. Department of Transportation agency’s spokeswoman Artealia Gilliard wrote in an email that “time-intensified defects of originally manufactured pipe” led to the rupture in the pipeline. She said an investigation found the violations.
The northern portion of the pipeline, which runs through Mayflower, remains closed. The agency granted a request to return the southern segment of the line to partial service with reduced pressure in July 2014.

The report examined nine violations and outlines the responsibility the company had for those items. It said the company had switched to assessing larger portions of the pipeline instead of smaller segments, which delayed the results of the integrity assessments and took longer than the agency allows.

In addition to the $2,630,400 penalty, the order requires the company to update the methods it uses to assess the pipeline to better identify those lines that are more susceptible to seam failures. A 22-foot seam in the Pegasus pipeline ruptured to cause the 2013 spill.

“ExxonMobil Pipeline Company has received and is evaluating its options with respect to PHMSA’s final order for the 2013 Mayflower incident,” ExxonMobil spokesman Christian Flathman wrote in an emailed response to The Associated Press.
The report said the company argued that the agency couldn’t issue a civil penalty and that if it did, the amount should be capped at a much lower amount because some of the nine violations fell under the same regulation.

In August, a federal judge approved a $5 million settlement agreement among the pipeline operator, the state of Arkansas and the federal government. ExxonMobil agreed to pay $3.19 million to the federal government and nearly $1.9 million in fines, fees and other payments to Arkansas.

The order said the company must also work out procedures to better train those involved in risk assessments of pipelines to err on more conservative estimates. The company must also maintain the required schedule of inspections, use qualified personnel to conduct the assessments and identify methods to make sure identified threats are not discounted.

Most of the requirements have a timeline of between 30 and 150 days to be completed under the order. The agency noted that if the company is not granted an extension, additional civil fines up to $200,000 per each unmet requirement per day can be issued. The company has 20 days to remit the $2.6 million civil penalty under the order.

The report says the agency considered the history of ExxonMobil Pipeline Company’s prior offenses, noting there were 12 offenses in the last five years.

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