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Reauthorization of the Natural Gas Pipeline Safety Act and the Hazardous Liquid Pipeline Safety Act
Subcommittee on Energy and Air Quality
Mr. Herman Morris Jr.
Good
morning, Mr. Chairman and members of the Committee. I am pleased to appear
before you today and wish to thank the Committee for calling this hearing on the
important matter of pipeline safety and the nation's natural gas distribution
system. My name is Herman Morris,
and I am President and CEO of Memphis Light, Gas & Water (MLGW). MLGW was
founded in 1939 and serves more than 400,000 households and customers in Memphis
and Shelby County, Tennessee. We are the largest three-service municipal utility
system in the nation. Additionally,
we recently instituted a telecom division. MLGW
currently transports natural gas to Memphis across two interstate pipeline
companies, Williams Texas Gas Transmission Corp. and CMS Trunkline Gas Co. MLGW
transports more than 60 billion cubic feet of gas per year by pipeline to our
300,000 gas customers. I
am testifying on behalf of the American Gas Association (AGA) and the American
Public Gas Association (APGA). We
look forward to working with Congress, the Administration, the states and other
stakeholders to reach consensus on a bipartisan pipeline safety reauthorization
bill this year. AGA
is a national trade association representing 187 natural gas utilities
collectively serving over 52 million consumers. The APGA represents 480 of the 1000 municipally owned gas
companies across the nation. They include municipal gas distribution systems,
public utility districts, county districts, and other public agencies that own
and operate natural gas distribution facilities. Together AGA and APGA represent the gas utilities or local
distribution companies (LDCs) that deliver virtually all of the natural gas to
consumers in the United States. MLGW
is a member of both organizations. Unlike
most gas utilities, the chairman of the board of the municipal utility often is
usually the mayor or some other locally elected public official. Local
governments operating utility systems view that Congress, the regulators and
utilities need to find safety solutions that are responsible, balanced, and cost
effective. Natural
Gas Use Benefits Americans Mr.
Chairman, many U.S. energy experts consider natural gas the ideal energy
solution for our country. It's a
homegrown fuel, it's efficient and it's the cleanest-burning fossil fuel.
Over the next two decades, growing the natural gas market will bring
tremendous benefits for all Americans. Increasing
the use of natural gas over the next 20 years could cut foreign oil imports by
more than 4.5 million barrels per day. And
since natural gas is the cleanest fossil fuel, using more of it could reduce
carbon dioxide in the air we breathe by 930 tons per year - about 10 percent
of total emissions. Fifty-five
percent of America's homes are heated with natural gas and nearly 70 percent
of all new single-family homes are equipped with natural gas.
Abundant at home, clean to use and highly efficient, its perfectly suited
to meet our nation's energy needs today, tomorrow and beyond. "Face
of the Industry" Local distribution companies
are the last, critical link in the natural gas delivery chain. To most
customers, utilities are the "face of the industry".
Our mission is to continue to deliver natural gas to our communities
safely, reliably and affordably. Our companies and facilities are a vital part
of the communities we serve. We
participate in many community programs and charitable activities. We fuel area
businesses and therefore, the local economy. The health of the community is the
health of our company. Regulatory Authorities
Natural gas pipelines are
thoroughly regulated. As part of an
agreement with the Federal government, State pipeline safety authorities have primary
responsibility to regulate natural gas utilities as well as intrastate
pipelines. However, state governments routinely adopt as minimum standards the
federal safety standards promulgated by the U.S. Department of Transportation
(DOT). Therefore, what Congress
does will affect state regulations and our companies. Safety
Is Our Top Priority Natural
gas utilities are committed to safety.
Year in and year out, safety is our top priority.
Indeed, delivering natural gas safely and reliably to our customers is
essential for us to continue conducting our business. That is why our industry is constantly working to develop
technologies that will enhance the safety, reliability and efficiency of the
nation's gas delivery system. Our
industry's commitment to safety is borne out each year through the National
Transportation Board's annual statistics.
Delivery of energy by pipeline is consistently the safest mode of energy
transportation. Natural gas
utilities are dedicated to seeing this continue. Safety Record and
Expenditures In
addition to our strong voluntary programs, LDCs comply with a regulatory program
that devotes stringent attention to design, construction, testing,
maintenance, operation, replacement, inspection and monitoring practices.
We continually refine our safety practices.
Natural gas utilities spend an estimated $6.4 billion each year in
safety-related activities. Approximately
half of this money is spent in compliance with federal and state regulations.
The other half is spent, as part of our companies' voluntary commitment
to ensure that our systems are safe and that the communities we serve are
protected. Safety is a top priority, a
source of pride and a matter of corporate policy for every company. These
policies are carried out in specific and unique ways. Each company employs
safety professionals, provides on-going employee evaluation and safety training,
conducts rigorous system inspections, testing, maintenance, repair and
replacement programs, distributes public safety information, and complies with a
wide range of federal and state safety regulations and requirements.
Individual company efforts are supplemented by collaborative activities
in the safety committees of regional and national trade organizations. Examples
of these groups include the American Gas Association, the American Public Gas
Association and the Interstate Natural Gas Association of America. Clarification
of GAO Reports Some pipeline safety critics
have seized on a statement in the May 2000 U. S. General Accounting Office (GAO)
Report entitled "The Office of Pipeline Safety is Changing How It Oversees the
Pipeline Industry", that indicated that "major" pipeline safety incidents
(those causing a fatality, injury, or more than $50,000 in property damage) have
increased by 4% per year over the 10-year period 1989-1998.
This implies that accidents are increasing and that pipelines are
becoming increasingly unsafe. This information needs to be put into context.
What the GAO report does not
recognize is the fact that the increase in "major", or reportable incidents,
is due to the ever-increasing cost of "property damage" associated with
accidents that include loss of product and remediation costs. These have increased drastically over the time period
examined. Further, the
$50,000 threshold is not adjusted overtime for inflation and therefore the trend
lines are skewed. The GAO report does recognize
(see footnote on page 10 of this report) that the total number of
accidents has decreased by 1.5 percent annually over this same timeframe.
This trend continues. According
to AGA's study of the data, incidents involving natural gas distribution
systems decreased by over 10 percent while the volume of natural gas used
nationwide has increased by 25 percent over the period of 1987-1999.
Thus, while more citizens are now enjoying the benefits of using natural
gas, the safety of the delivery system continues to improve. While, our industry is rightly
proud of our excellent safety record, we are constantly striving to improve it.
The
Leading Cause of Accidents- Excavation Damage
The
leading cause of accidents on distribution pipelines comes from excavators
unintentionally striking our lines. It
is known as excavation damage, also commonly called third-party damage.
Year after year, these strikes cause over 60% of the total ruptures on
utilities and the vast majority of
injuries and fatalities. This problem has been highlighted again in two recent
accidents -- one in Perry, Okalahoma and another in Marble Heights, Ohio. While
we work very hard to provide for safety, we cannot do it alone. Excavators and
other underground utility operators need to work with us to provide for safe and
reliable natural gas service. Congress should urge states to require government
agencies and their contractors to participate in One-Call programs.
This would help eliminate some exemptions some state agencies currently
have in several states from participation in One-Call. The
105th Congress recognized this problem and created a federal program
to reward States with strong One-Call laws. These laws require excavators to call before they dig, and
utilities to mark their underground facilities accurately. The Committee also
directed DOT to gather all stakeholders together to produce a "best
practices" study. This effort was
completed last year, and we are working to help implement the best practices to
improve field operations of One-Call systems. DOT has also supported the
creation of a broad-based public/private organization - the Common Ground
Alliance - to promote the adoption of the best practices across the nation.
This group includes underground pipelines, utility owners, constructors,
excavators, and One-Call organizations, with over 400 current members. We support efforts to provide
for additional funding for both state grants and promotion of best-practices
adoption. This additional
funding is provided through general revenue funding as the efforts provide for
clear public benefit and include other utilities beyond just gas and oil
pipelines. Reduction of third
party damage incidents provides for the safety of the public and also helps
ensure the unimpeded flow of natural gas to consumers. Other
Distribution Safety Initiatives
Natural gas utilities are
working with federal and state governments on a variety of new safety
initiatives. These include the creation of a voluntary data gathering
effort on performance of older plastic pipe materials; pipeline system integrity
standards; operator fatigue surveys; improved data gathering on transmission and
distribution systems, and many other efforts. We view these as investments in
our customers and the communities we serve.
Collaboration
and Professional Organizations
Company safety professionals
also participate in a variety of professional and national standard-setting
organizations dedicated to advancing the practice of work place and public
safety. A partial list of the leading groups include the following: National
Association of Corrosion Engineers (NACE), National Fire Protection Association
(NFPA), National Safety Council (NSC), American Petroleum Institute (API),
American Welding Society (AWS), American Society of Testing Materials (ASTM),
American Society of Non-Destructive Testing (ASNT), American Society of
Mechanical Engineers (ASME), American Society of Civil Engineers (ASCE), and the
American Society of Safety Engineers (ASSE). Natural
Gas Systems are Different From Liquid Systems
There are important differences
between the natural gas and liquid pipeline systems that Congress should
recognize and understand when crafting new requirements. While many may
unintentionally link all "pipelines" together, there are indeed significant
differences between the liquid transmission systems, natural gas transmission
systems and natural gas distribution systems. Each industry faces different
challenges, operating conditions and consequences of ruptures. Interstate transmission systems
are generally made up of long runs of generally straight pipelines, having large
diameter, and operated at high volumes and high pressures. Distribution systems,
in contrast, are constructed in configurations that look like a network or web,
use smaller diameter pipe, and operate at lower volumes and pressures. Federal regulations recognize
the differences between these three types of systems, and different sets of
rules have been created for each. 49
CFR Part 192 sets out the regulations for natural gas transmission and
distribution and the rules discriminate between the two.
49 CFR Part 195 sets out the regulations for liquid transmission lines. Natural gas pipelines move a
single product, which is mainly methane, by periodic compression along the
length of the pipelines. Natural
gas transmission lines take our product from the producing areas to our towns
where the utility receives it and delivers our gas to homes and businesses.
Liquid transmission pipelines, in contrast, move several different commodities
such as crude oil, gasoline, heating oil, jet fuel, diesel, propane and other
liquids. These products are
physically pumped, sometimes in different batches, through the pipeline to
distribution terminals, refineries, and end-users. Legislation
Congress
must periodically reauthorize the natural gas pipeline safety act. The current
authorization has expired. Last
year, Congress began the reauthorization process but was unable to pass a bill.
Today, we are once again fully engaged in this process. In addition, the
Department of Transportation is in the process of issuing significant new
integrity management rules for natural gas and is expected to complete the
effort this year. And all of our
natural gas utilities are on schedule to comply with DOT's new Operator
Qualification rule by completing the qualification of natural gas utility and
contractor workers performing safety-related jobs by the rule's October 2002
deadline. The industry also is
engaged actively in finding new mechanisms to fund research, development and
demonstration projects for pipeline safety technologies. Mr.
Chairman and members of the Committee, we urge you to frame the current debate
by recognizing that the world has changed since this committee held its last
congressional hearing on this topic in 1999.
Much progress has been made on several important new regulations.
Further, the September 11 terrorist attacks have brought about a new
focus on security for preventing, deterring, detecting and responding to
potential attacks. Companies now
must focus significant attention on security issues, in addition to safety
matters. "One
Size Fits All" Does Not Fit Our Pipelines Natural
gas utilities do not support prescriptive legislative approaches. In fact, we
believe that "one-size-fits- all solutions" divert limited resources from
the areas that could most benefit and ultimately, could affect the reliability
of gas deliveries to consumers. All
pipelines are not the same. They
vary physically and operationally and face unique challenges related to their
locations, trajectories, construction and operating characteristics.
Given this context, I would
like to comment on several issues and suggest reasonable approaches for
addressing them for municipally and investor owned natural gas distribution
utilities. The issues that I will cover
are:
Security
from Terrorists Attacks
The
industry has been actively involved in addressing the security of the natural
gas transmission and distribution system since the events of September 11.
In addition to taking immediate steps to secure critical facilities, the
industry has been meeting - through the trade associations - to determine
appropriate threat levels and responsible actions that reflect the current
heightened state of security. Additionally, utilities are
coordinating and cooperating fully with federal and state law enforcement and
regulatory authorities to find ways to protect our natural gas pipeline system.
The effectiveness of security-response measures is dependent on the
threat levels that trigger their execution. The first and foremost step in this
process is to establish a single point of contact in the government from which
consistently-defined threat levels are disseminated to the industry. It is
critical that there is coordination throughout the agencies that have
jurisdiction over the natural gas transmission and distribution sector,
including DOT, DOE, FEMA and FERC. This
will result in commonly understood and effective operator response actions. We
are committed to identifying further additional practices for the current state
of condition and higher threat levels, as well as refining vulnerability
assessments to assist in the identification of critical facilities. At this
time, our companies have in place, or are developing, plans to respond to higher
alert levels, including activating corporate security plan(s), emergency
response plan(s) and business recovery plan(s); engaging emergency personnel;
and securing facilities as appropriate. Ensuring
security of the nation's natural gas infrastructure is a fundamental part of
the industry's ordinary course of business. We are constantly refining
methods, performing risk assessment and reviewing our practices. We
encourage Congress to focus on a coordinated approach to the protection of
energy infrastructure - recognizing the growing interdependencies between
different industry and government sectors. To
achieve this, we recommend that industry and government work together to:
System
Integrity Rule
DOT has responded to
congressional and public concerns and has moved forward aggressively in this
area. Having issued a new set
of integrity management rules for liquid pipelines, DOT is moving expeditiously
on new rules for natural gas transmission lines. As outlined above, the liquid
and natural gas transmission systems are very different from one another.
The system integrity rule for natural gas transmission is going to be
issued soon, but it is important to understand that it will be different from
the one for liquid transmission. We urge Congress to allow DOT
to finish its work on developing a new rule for increased inspection
requirements for natural gas transmission pipelines in high-consequence areas. DOT is well on its way to completing its work on this matter
and issued a proposed rule for the definition of high-consequence areas for
natural gas in January 2002. DOT
is expected to issue a Notice of Proposed Rulemaking for the integrity
management plan for natural gas transmission lines in these areas in mid-2002.
Legislating in advance of DOT's rule seems hasty and unnecessary.
DOT understands the
distinguishing characteristics between liquids and gas systems and is taking
these into consideration in the rulemaking process.
Natural gas utilities own and
operate 40,000 of the 300,000 miles of transmission pipeline in the United
States. Most of these transmission lines are smaller in diameter than
the typical interstate transmission line and operate at lower pressures.
However, almost 40 %of these 40,000 miles of transmission lines are
likely to fall within "high consequence areas," and therefore utilities will
be greatly affected by the new rules. Unlike
most liquid transmission lines, the physical characteristics of natural gas
transmission and distribution lines preclude the use of internal inspection
devices in many cases. Thus,
natural gas distribution companies must use a variety of inspection tools and
methodologies to ensure the integrity of their lines. Some would like to require that
natural gas transmission lines be inspected with specific tools and within a
mandatory inspection period. We
strongly oppose this type of approach, as it does not provide necessary
flexibility needed to the operator in order to maintain the integrity of the
system. Further, requiring utility-owned transmission lines to be
tested with smart pigs or hydrostatically would result in these lines being out
of service for extended periods of time. This poses a separate problem, as many
of these lines are the sole source for natural gas delivery to systems serving
large numbers of consumers. This
would not increase safety; in many ways it could, in fact, undermine many of the
safety-related measures that are in place for distribution systems. For
residential customers, interruption of service can cause additional problems and
risks as each individual service must be isolated, re-lit inside the house and
then inspected again. This is a time consuming and laborious process, and
expensive. Utilities know that their lines
must be inspected regularly but inspection decisions, including the types or
tools used and inspection frequencies, should be based on objective risk
analysis and resources directed accordingly.
It is important to note that the regulatory requirements for natural gas
transmission lines already incorporate additional operational safety and
increased inspection requirements based on the population levels around the
pipeline. Pipelines are required to have
personnel patrol and inspect their lines each year and account for the houses
and buildings along the right-of-way. The
segment of pipeline in question is "classed" 1, 2, 3 or 4, with Class 1
being rural and Class 4 being the most urban.
As population around the pipeline increases regulations require pipelines
to lower operating pressure, increase pipeline wall thickness, and inspect more
frequently. This class location
system for natural gas transmission lines recognizes that pipelines must provide
greater safety margins when operating in more populated areas. The new integrity management rules will add to these existing
requirements. Inspection methods and inspection intervals under the new
integrity management rule should be based on an assessment of risks balanced by
the need to maintain reliability of gas service at a reasonable cost to
consumers. Some
critics base their demand for a statutorily required inspection period or use of
specific inspection technology or methods on the fear that without them
pipelines will not be inspected. Nothing
could be further from the truth. Pipelines are continually inspected today. A
natural gas utility company's greatest asset is its reputation for the safe
and reliable service of natural gas.
We actively monitor our systems on a continuous basis. This is an
essential part of doing business.
Operator
Qualification
Concerns have been raised about
expertise and the abilities of the natural gas industry's workforce.
Even though our excellent safety record shows that our employees are
qualified to do their jobs, utilities are fully participating in the new
Operator Qualification (OQ) rule that was issued by DOT in August 1999.
For the first time operators will be required to verify and document this
qualification in writing. There are
two parts to this rule. Phase 1.
Written Plan. Phase 1 is complete. All
pipeline operators were required to have a written OQ Plan in place by April
2001. All OQ Plans are now subject
to audit by the state regulatory authorities.
In the event of an accident, the operator's OQ Plan is subject to
discovery in court. Phase 2.
Qualification of Individuals. Using
the written plan, all pipeline operators must qualify every individual who
performs a covered task on the pipeline, under the provisions set forth in the
operator's OQ Plan. This
requirement is effective October 27, 2002. Some have suggested that we
shift the focus from ensuring an individual is qualified to perform their
operations and maintenance tasks on the pipeline, to a requirement for training
and/or federal certification. The
current rule already encompasses evaluation, or testing, and qualification,
which may mean additional training if needed, and further testing.
Thus, employees are actually certified by the company under an
enforceable federal rule. This rule
is not yet fully implemented. We
strongly recommend that no further action be taken in the area of operator
qualification until DOT and Congress have had sufficient time to review the
rule's impact on pipeline safety. It is estimated that pipeline
operators will incur over $500 million in compliance costs associated with this
rule. This is both a significant
undertaking for pipeline operators and another cost for natural gas consumers. Some of the House bills that
have been introduced call for some form of federal certification of these
employees. We do not agree that
this approach is warranted or the best use of limited federal and company
resources. We urge Congress to
allow the Operator Qualification Rule to be implemented fully before deciding
whether it needs to be significantly changed or additional requirements layered
over it. The fact that there are still
very few accidents on our nation's 1.5 million miles of natural gas pipelines
is in itself a testament to the workers' skills and qualifications.
Issues such as training requirements, portability of qualifications,
qualification process modifications and the overall effectiveness of the rule
are most appropriately worked out among the stakeholders and federal and state
regulators. Utilities are
actively engaged in this process and do not believe that further legislative
action is justified at this time. Public
Education/Community Right-to--Know
Given the nation's heightened
security concerns, we urge Congress to consider carefully what information
should be released to the public at large and what information should be
restricted to those public officials and emergency and law enforcement agencies
that need it. Typically, in the
utility industry, those that need the information can readily obtain it from the
operator upon request. We also
support planning officials understanding how pipelines interact with their
communities to allow them to incorporate needed safeguards into their land use
decisions. We support advanced preparation
and training for fire, police and emergency service personnel who are often
first to arrive at a hazardous site. It is critical for them to know and
understand the nature of a natural gas incident and how best to manage it. AGA and APGA support the
public's right to know and understand how and where the natural gas system
operates. An informed public will be better able to contribute to accomplishing
the objectives of improved public safety.
However, detailed information such as very accurate locations, product
flow rates, valve placement, control center locations, accident scenarios and
other potentially sensitive information should be restricted.
A balance needs to be found and implemented. In many instances, improving
public information is a cooperative effort between the natural gas utility and
communities it serves. Whether new efforts extend or improve existing programs,
utilities will participate in their development and implementation. However, we
ask that our unique relationship with our state regulatory agencies and local
communities be recognized and any new requirements be crafted in a way that
takes this into consideration. Research,
Development and Demonstration
AGA and APGA support increased
funding for research and development.
However, the current funding for the Office of Pipeline Safety is
provided through user-fee assessments on pipeline operators.
We urge Congress to authorize and appropriate funds from general revenues
for additional pipeline research and development dollars. Where user fees are used to fund research and
development, the Office of Pipeline Safety should coordinate with the industry
to help make sure that efforts focus in areas where needs exist in the field and
are used as efficiently and effectively as possible. Several focus groups have been
held with government, industry and research organizations to identify the areas
of most interest for RD&D. These
groups have consistently suggested that RD&D funding address the development
of better technologies and improvements for excavation damage prevention and
detection, in-line inspection tools, small leak detection, monitoring and
technologies for meeting any new security requirements. Utilities contribute to
research and development through such organizations as the Gas Technology
Institute where advanced safety devices and technologies are designed and
tested. Interstate pipeline and local distribution companies invest millions in
non-construction safety-specific activities. We are always seeking better
technologies to use in our safety activities and will continue with these
initiatives. Last
month at NARUC's Winter Committee Meetings here in Washington D.C., NARUC
passed a resolution entitled "Resolution Supporting Congressional
Legislation for Operations and Safety Research and Development (R&D) Funding
for Gas Distribution Utilities". A copy of that resolution is attached to
my testimony. In
summary, NARUC's R&D Resolution 1) expresses NARUC support for
Congressional legislation establishing an R&D funding program for gas
distribution utilities to ensure essential research for distribution delivery
systems in the amount of approximately $65 million per year; 2) states that the
annual funding of $65 million would be collected through a legislatively
designed volumetric charge designed to collect an
average of less than $1 per year
for residential customers, and average
$5 per year for commercial customers,
with a cap of $250 per year
for very large volume customers; and 3) states that funds collected for R&D
would be focused on improving infrastructure security, safety,
reliability and efficiency.
This research will benefit all users of natural gas by improving the delivery
systems. The funds will not be used to conduct R&D for end use applications
and will not be used to promote natural gas usage by advertising. We believe
that this research program will enable utilities to directly address those
safety and security related concerns that Congress has raised over the course of
the pipeline safety debate. Clearly, this program is critical
to the utility industry meeting expectations of an enhanced safe, secure and
reliable system.
As several members of this and
other committees have proposed, there is going to have to be a significant and
dynamic change in the way we currently fund research. State
Jurisdiction for Interstate Pipelines
Utilities are concerned that
different requirements imposed by States on interstate transmission could lead
to supply disruption to our customers. One
state could make a requirement that could in fact cause customer shut-offs in
another state. Uninterrupted flow
is critical to natural gas systems. If
interstate gas flows are interrupted, the ability of a utility to maintain
adequate pipeline pressure to serve customers is immediately and often severely
impaired. In such situations, our
companies must manually turn off service to each individual customer in the area
affected by the gas outage. When
gas flows resume, we must then restore service and re-light each gas appliance
in every affected home and business. The
process is a long and tedious one, and is obviously not without its own risks.
Unnecessary disruptions should be avoided. Summary In summary, the natural gas
utility industry is proud of its safety record. Natural gas has become the
recognized fuel of choice by both citizens and the federal government. Customer
growth and confidence also carry with them an added responsibility. Public safety is the top
priority of natural gas utilities. We invite you to visit our facilities and
observe for yourselves our employees' dedication to safety. We will continue
our dedication and efforts to operate safe and reliable systems and to
strengthen One-Call laws and systems in every state.
Thank you for providing the
opportunity to present our views on the important matter of pipeline safety. We
look forward to working with federal, state and local authorities and
representatives, as well as within our industry, to achieve the highest possible
level of public and employee safety. ATTACHMENTS Safety
Graphics
CEO
Letter re: Integrity Management Operator
Qualification Paper NARUC
Resolution List
of Currently Mandated Inspections
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