Michigan oil spill resurfaces concerns about oversight

This week, a fracture in an Enbridge Energy pipeline released nearly a million gallons of oil into a tributary of the Kalamazoo River in Battle Creek, Mich. The accident is drawing attention to the obscure Department of Transportation agency responsible for the regulation and oversight of the country’s 2.3 million miles of natural gas and hazardous liquid pipelines: the Pipeline and Hazardous Materials Safety Administration, or PHMSA.

Containing a million gallons of oil spilled into the Kalamazoo River. (Jim West/ZUMApress.com)

A review of PHMSA records shows familiar ties between industry and regulators. A former legal counsel for the company responsible for the spill currently heads the oversight agency. In the last year, PHMSA has granted more than a dozen safety waivers to the companies it regulates. These waivers, industry observers say, have saved companies millions of dollars, but might have put people and property at risk.

Already, activists are drawing parallels between PHMSA and the Minerals Management Service, which had regulatory oversight over the Deepwater Horizon rig that spilled millions of barrels into the Gulf of Mexico. Interior Secretary Ken Salazar has disbanded MMS, arguing the agency had too cozy a relationship with the industry it regulated. And Congress is debating broad oil spill response legislation that, in part, restructures MMS and puts restrictions on the agency’s so-called revolving door.

Questions About Quarterman’s Work History

Cynthia Quarterman, PHMSA administrator, worked as legal counsel for Enbridge Energy, the owner of the pipeline that burst in Michigan, during her time as a partner at the major law firm Steptoe and Johnson. Quarterman also headed MMS from 1995 to 1999. President Obama nominated Quarterman, who served on the president’s transition team at the Department of Energy, to serve as head of PHMSA last year. On his first day in the White House, Obama signed an executive order with a “revolving door ban,” barring appointees from regulating companies where they worked. The White House did not return calls for comment.

“We raised concerns about Quarterman when she was nominated. She was high up in MMS and we’ve heard a lot about them in the last few months,” says Carl Weimer, executive director of the Pipeline Safety Trust, a non-profit group that advocates for fuel transportation safety.

Despite the criticism from some activists, Quarterman has called for reform at PHMSA. In April testimony to the House Committee on Transportation and Infrastructure, Quarterman said, “We inherited a program that suffered from almost a decade of neglect and was seriously adrift. We have set a new course.” She said she was implementing new standards at the safety waiver program, following a March 2010 Department of Transportation inspector general report that raised questions about it.

Activists have also raised questions about Jeffrey Wiese, PHMSA’s associate administrator for pipeline safety. Before taking on his current role at PHMSA, Wiese worked at MMS, where, among a number of other positions, he directed the offshore safety management program. Years later, that program’s lax oversight failed to prevent the massive oil spill in the Gulf of Mexico. Calls to PHMSA for comment were not returned.

Reviewing PHMSA ‘Special Permits’

A review of the 16 “special permits,” or safety waivers, granted since Jan. 2009 finds 12 waivers issued for natural gas pipelines, three for liquefied natural gas pipelines and one for an oil pipeline. Only one safety waiver has been granted since Quarterman took over as head of PHMSA in Nov. 2009.

PHMSA documents show that it was common practice at the agency to waive a requirement for companies to reevaluate the pressure levels in a pipeline if building has occurred on the land around it. In nine instances in the past year, PHMSA has waived companies’ obligation to “confirm or revise” the pressure in pipes where new construction, such as home building, has occurred nearby. The requirement is meant to protect people from potential gas leaks.

Weimer explains: “The original pipe they put in was a type of pipe for rural areas. Now that there’s houses around there, they’re supposed to be either using stronger or thinner pipe, or put less pressure in the thinner walled pipe.”

The waivers for the three liquefied natural gas pipelines appear to be minor, allowing the use of new technologies to test welding strength and vaporize gas.

The only oil pipeline waiver issued in the last year frees ConocoPhillips Alaska from its requirement to “fully inspect” insulated pipes if the company determines that the pipelines are not “susceptible to the influx of moisture and; therefore, atmospheric corrosion,” a May 9, 2009, PHMSA document says. According to PHMSA, material and equipment failure and corrosion are the most common causes of pipeline accidents.

Lacking Inspectors, Little Industry Accountability

Weimer says PHMSA generally holds companies to a high standard in granting special permit waivers. Companies have to provide the agency with detailed engineering analyses that show that granting a waiver would not lead to safety violations. But Weiner also says that PHMSA does not have enough inspectors to ensure that companies are actually implementing the safety requirements that go along with the waiver.

“If all is done as stated in a company’s plans, engineering-wise it makes sense. The problem is I don’t think PHMSA has the inspectors to keep track of whether those companies are really doing exactly as they say,” Weimer says. PHMSA requires that inspectors do site visits “every few years,” according to Weimer, but the purpose of those visits is to review the paper records the company keeps, rather than to inspect the work the company is doing in the field.

Quarterman has called for more staff, including inspectors, at the agency. As of June, PHMSA had 88 full-time inspectors to oversee the 2.3 million miles of pipelines in the United States. PHMSA’s web site says that state agencies perform “the majority” of inspections. While states inspect pipelines that begin and end within its borders, PHMSA inspectors review interstate pipelines, unless there is a special agreement in place.

Alex Moore, who focuses on oil pipeline issues for the environmental group Friends of the Earth, said he believes the Michigan spill will cause lawmakers to reexamine oil pipeline safety. “Just like the Deepwater Horizon spill, this will make everybody reevaluate the dirty ways we get energy. There have been a lot of spills from pipelines recently. I think that should be showing us that pipelines are not safe either,” he said.

The Obama administration should take a close look at PHMSA, Moore said. “I think the Obama administration and all federal agencies need to be putting more focus on the dangers of oil pipelines,” he said. “It’s another reason why we need to be transitioning to truly clean forms of energy, clean cars that are much more efficient and that are running on renewable power sources like wind and solar and not used with dirty forms of energy like oil.”

Lawmakers are taking notice as well. Rep. Mark Schauer (D-Mich.) is drafting legislation that would shorten the amount of time a company has to report a pipeline spill. The legislation would also increase the penalty for a failure to report a spill in a timely fashion.

According to PHMSA records, there were 265 “significant incidents” in the U.S. pipeline system last year, resulting in 14 deaths, 63 injuries and more than $152 million in property damage. A total of 53,000 barrels of liquid were spilled during these incidents. About 100 of those significant incidents involved “hazardous liquids” like oil. PHMSA defines significant incident as any accident involving a fatality, more than $5,000 of damage or a spill of liquid.

Implications for Other Oil Pipeline Projects

Moore has spent much of his time campaigning against a proposed oil pipeline that will stretch from Alberta, Canada, to Texas: the Keystone XL project. TransCanada has filed a request to PHMSA to receive a special permit that would allow the company to use thinner steel to build the Keystone XL pipeline. TransCanada was granted a similar special permit in 1997 that allowed the company to build a prior Keystone pipeline, which stretches from Canada to Ill., using steel with a stress level below the minimum safety requirement, according to a PHMSA document.

“Everybody expects the Keystone XL pipeline to get a waiver, but it hasn’t got it yet,” Moore said.

The Keystone XL project has come under criticism from many in the environmental community, who note that extracting Canadian oil sands, which the pipeline would transport across the United States, emits high levels of greenhouse gases.

The Environmental Protection Agency, in a July 16 letter to the State Department, raised a wide variety of concerns about the impact of Keystone XL. Chief among those concerns is that TransCanada does not have an adequate plan in the event of an oil spill. “We believe that additional efforts to evaluate potential adverse impacts to surface and ground waters from pipeline leaks or spills, including adverse impacts to public water supplies and source water protection/wellhead protection areas, are necessary,” EPA said in the letter.

In light of these concerns, the State Department this week delayed its decision on the Keystone XL permit to allow federal agencies 90 days to comment on TransCanada’s final environmental impact statement. A State Department spokesperson said the decision had nothing to do with the Michigan oil spill.

Terry Cunha, a TransCanada spokesperson, said “it would be hard to speculate right now” whether the Michigan spill will have an effect on its pending permit for the Keystone XL pipeline. Cunha said the company is working with the State Department to finish its environmental impact statement and will work with federal agencies going forward. Cunha confirmed that the company had submitted a special permit request to use thinner steel in its proposed pipeline. Enbridge Energy did not return calls for comment.

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Andrew Restuccia

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