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Feds Criticized For Loose Petroleum Pipeline Regulation

Reportedly, in the summer of 2011, an Exxon Mobil pipeline transporting oil across Montana burst open and flooded Yellowstone River with around 42,000 gallons of crude oil. Sources say that just weeks previous to the incident, a federal and company inspection found nothing seriously wrong with the pipeline. Further, sources say that a 35 mile stretch of Kalamazoo River in Michigan remains closed 14 months after an Enbridge Energy pipeline leaked 843,000 into an area once full of wild life, swimmers and boats. Industry sources estimate that the accident will cost more than $500 million dollars to clean.

Although sources say investigators have yet to determine the cause of either accident, the spills have drawn attention to the regulation of the 167,000-mile system of hazardous liquid pipelines crisscrossing the nation. The Pipeline and Hazardous Materials Safety Administration (PHMSA) is the federal agency responsible for governing the management of the pipelines. Reportedly, the agency is consistently short of inspectors and lacks the resources needed to hire more. Critics say this leaves too much of the regulatory control in the hands of pipeline operators themselves. Critics also say the agency rarely levies fines and is not active enough in policing the aging labyrinth of pipelines, which has suffered thousands of significant hazardous liquid spills over the past twenty years.

According to federal records, although the pipeline industry reported 25% fewer significant incidents from 2001-2010 than in the 90's, the amount of hazardous liquids being spilled from the pipelines is still considerable. Reportedly, there are still more than 100 significant pipeline spills each year. Further, sources say the percentage of dangerous liquids recovered by pipeline operators after a spill has dropped considerably in recent years. However, industry representatives have said that the current system works and point to the record as showing improvement.

Regardless, sources say concerns about the PHMSA's ability to regulate pipelines come at a critical time for the agency. Reportedly, the State Department has given a provisional green light to a controversial 1,661-mile pipeline from Canada to Texas that will carry a trickier form of crude oil and fall under the agency's jurisdiction. Further, according to a recent National Transportation Safety Board report, petroleum industries pipeline practices cost 8 people their lives last year alone. The report describes the agency's regulatory practices as lax and inadequate. In the report, the safety board urged the Transportation Department to go back and audit many of the pipeline agency's safety and enforcement policies.

Critics say that the PHMSA requires companies to focus their inspections on only the 44 percent of the nation's land-based liquid pipelines that could affect high consequence areas, which leaves thousands of miles of lines operating on the honor system. However, critics of the agency also point to congressional budget limits and attrition as leaving the agency with 118 inspectors, which is 17 shy of what federal law authorizes.

According to reports, the new pipeline which will run from Canada to Texas is known as the Keystone XL project. Reportedly, the project is different from most other pipelines in that it will carry a gritty mixture that includes bitumen. Industry sources say bitumen is a crude oil drawn from Canadian oil sands. Environmentalists contend that bitumen is more corrosive and difficult to clean when spilled. According to a State Department report, there are 57 special conditions designed to keep the Keystone pipeline safe and the pipeline should have little environmental impact if operated properly. However, the National Wildlife Federation has attacked the report's conclusion saying it has not taken into account the impacts of a major spill.

According to one representative of the PHMSA, the agency is not fully ready to regulate the operation of the Keystone XL project. Reportedly, since 1990, more than 5,600 incidents were reported involving land-based hazardous liquid pipelines. According to reports, these accidents released a total of more than 110 million gallons of mostly crude and petroleum products into the environment. According to the PHMSA, more than 100 of those oil spills each year were considered to be significant, meaning they caused a fire, serious injury, fatality or released at least 2,100 gallons.

Further, according to PHMSA records, pipeline operators reported recovering less than half of all hazardous liquids spilled over the last two decades. Critics point out that the ratio is not improving: after recovering more than 60 percent of liquids spilled in 2005 and 2006, operators recovered less than a third between 2007 and 2010. According to reports, nearly half of all incidents since 2002 arose from malfunctioning equipment, construction flaws and other technical problems with pipelines. Industry sources say that corrosion is also a substantial concern.

A recent investigation by the New York Times found that for every five significant incidents reported at a hazardous liquid pipeline between 2002 and 2010, the PHMSA issued one fine. Further the Times found the fines for that period, about $14 million, ranged from $1,000 for an inspection violation to a high of $2.4 million for the oil fire which resulted in death. The Times reports that in May, BP was fined $25 million after two spills of more than 213,000 gallons of crude oil in Alaska in 2006. Further, sources say federal regulators found that in the aftermath of the spills, the company failed to make prescribed corrections to the pipelines in question. However, records show that most of the pipeline agency's fines do not exceed $25,000.