Probe reveals cozy relationship of oil, gas industry with regulators

The Pipeline and Hazardous Materials Safety Administration, the federal agency that oversees the country’s 2.3 million miles of oil and natural gas pipelines, has adopted as part of its regulations all or parts of at least 29 standards written by the oil and natural gas industry.

Natural gas pipelines criss-cross Colorado and the United States. A recent Michigan spill has raised major safety questions. (Creative Commons)
The revelation, which comes to light as part of an investigation into pipeline safety by The Colorado Independent’s sister site, The Washington Independent, raises significant questions about the relationship between PHMSA and the industry that it regulates. It also feeds into comparisons between the agency and the now-defunct Minerals Management Service, which was in charge of permitting and licensing offshore drilling projects in the run-up to the April 20 Deepwater Horizon explosion and resulting oil spill.

Pipeline capacity has been a major issue for the natural gas industry in Colorado, where a lack of pipelines to carry gas to markets on both coasts has been cited in the recent drilling downturn. Industry and state officials have been pushing hard to increase capacity.

But pipeline safety and the PHMSA have come under increased scrutiny in the aftermath of a July 26 pipeline break near Battle Creek, Mich., that bled nearly 1 million gallons of oil into a tributary of the Kalamazoo River. While an investigation into the cause of the spill is ongoing, environmentalists and advocacy groups have been quick to criticize PHMSA, arguing that the agency doesn’t require adequate inspections of the nation’s pipeline system and it has a too-cozy relationship with industry.

For her part, PHMSA Administrator Cynthia Quarterman, who took over the agency in Nov. 2009, has promised to reform the agency. But Quarterman herself has close ties to the oil industry, working as legal counsel for Enbridge Energy, the very company that owns the pipeline that burst in Michigan.

Now, TWI has learned, PHMSA has adopted a series of industry standards by reference in its Pipeline Safety Regulations. At least 29 standards were written by two powerful industry trade groups: the American Petroleum Institute (API) and the American Gas Association (AGA). API, which represents both the oil and natural gas industries and is a powerful lobbying force in Washington, authored 27 of the standards. AGA, which represents 195 natural gas companies around the country, has authored two standards, according to a list (pdf) provided by PHMSA.

“There’s kind of a basic conflict of interest there if you’re letting industry develop part of things and then you adopt them as regulations,” said Carl Weimer, executive director of the Pipeline Safety Trust, a non-profit group that advocates for fuel transportation safety.

The industry standards touch on a number of issues key to ensuring pipeline safety, including pipeline welding, monitoring for liquid pipelines, evaluating the strength of corroded pipelines and testing pipeline pressure.

But even though these standards have been adopted as federal regulations, they continue to be the property of the oil and gas industry. As a result, public access to these standards is severely restricted. If a member of the public wants to see one of the standards, they must travel to the PHMSA headquarters in Washington or purchase the standard from API or AGA. Industry groups see the standards as proprietary information and therefore will not allow PHMSA to publish them on its web site.

“What makes this worse is that those standards are still the property of industry,” Weimer said.

Weimer has focused much of his scrutiny on a 2003 API standard that has been adopted by PHMSA. The standard outlines a process for oil and natural gas companies to alert nearby residents to the presence of a pipeline in their area. Weimer argues that API has no business writing such a standard. The standard should be written by an outside group with experience communicating important information to people, he said.

“The American Petroleum Institute is clearly a group that lobbies on behalf of industry, and sometimes they are developing standards that they really don’t have expertise in. API doesn’t have some deep understanding of how you communicate with the public about a pipeline,” Weimer said.

API’s public awareness standard, a read-only version of which has been published online by API after prodding from Weimer and others, says, “A more informed public along pipeline routes should supplement an operator’s pipeline safety measures and should contribute to reduce the likelihood and potential impact of pipeline emergencies and releases.” But the standard also stresses that “pipelines are a relatively safe mode of transportation, that pipeline operators undertake a variety of measures to prevent pipeline accidents, and that pipeline operators anticipate and plan for management of accidents if they occur.”

While pipeline accidents are rare, they can be deadly. 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.

Incidents involving natural gas resulted in 10 deaths and 59 injuries — most commonly caused by equipment failure and corrosion. But, a previous TWI story found, PHMSA does not have the mandate, or the staff, to oversee the millions of miles of pipelines crossing the country. Federal law mandates that PHMSA require only seven percent of the country’s natural gas pipelines and just 44 percent of the country’s liquid pipelines to be inspected.

PHMSA, responding to questions about the standards in a written statement, said it is bound by law to incorporate by reference acceptable standards into its regulations. The agency cited the National Technology Transfer and Advancement Act of 1995, which directs federal agencies to adopt standards set by “voluntary consensus standard bodies” when possible, rather than writing their own standards.

The Office of Management and Budget defines voluntary consensus standards as “technical standards developed or adopted by voluntary consensus standards bodies, both domestic and international,” PHMSA said, noting that “every U.S. government technical regulatory agency uses consensus standards.”

The public has access to the standards at the Department of Transportation’s headquarters in Washington or at the Government Printing Office, PHMSA noted. “PHMSA is actively working with standards organizations to urge them to provide better access to standards they have authored,” the statement said.

While federal law requires federal agencies to consider adopting standards, Weimer said PHMSA should take more precautions with the standards it adopts. PHMSA had adopted a total of 69 standards. Beyond the 29 written by the oil and natural gas industry, the others were written by more technical groups like the American Society of Mechanical Engineers or the National Fire Protection Association.

“Some of these standards are developed by groups like National Association of Corrosion Engineers. So, some of these groups really do have lots of expertise in the area and it makes sense,” Weimer said. But groups like API, Weimer argued, should not be developing standards because they have too much of an interest in the outcome of regulations.

Peter Lidiak, pipeline director at API, said PHMSA is not doing anything wrong in adotping industry standards as regulations. “They’re doing what they are supposed to be doing. We wouldn’t put out a standard if we didn’t think it was an appropriate set of guidelines for the industry to follow,” he said, adding, “We do often suggest to them that they might look at a standard that we have put in place rather than writing all new regulations if they address the same thing.”

On the issue of public access to the standards, Lidiak stresses that the standards are proprietary information, but notes that industry groups provide copies to PHMSA for public inspection. “If somebody wanted a bound copy, they’d have to pay to see them. But we provide a copy of all of our pipeline related standards to PHMSA,” Lidiak said. “And I will grant you, it’s not convenient for somebody living in Kansas City to come to PHMSA’s office.”

Lidiak also stressed that PHMSA reviews all industry standards before adopting them and can choose to adopt them in part if necessary. PHMSA also allows public comment on the standards, he said. A spokesperson for AGA did not return a request for comment.

Ultimately though, Weimer isn’t satisfied with the the standards and the lack of public access to them. “We believe in transparency. The more information that’s available to the public, the better,” he said.

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