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U.S. Auditors See Lax Pipeline Oversight

Thursday, June 21, 2012

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Inspection backlogs, a preference for paper over field visits, regulatory loopholes, data management problems and other “key deficiencies” are weakening federal oversight of pipeline safety, auditors are warning.

The Department of Transportation’s Office of Inspector General has found multiple shortcomings in the Pipeline and Hazardous Materials Administration’s (PHMSA’s) oversight of the nation’s pipeline integrity management programs.



Cleanup crews worked an oil spill from July 2010 that fouled the Kalamazoo River and Morrow Lake. The spill, and hundreds of prior incidents in 2009, triggered the federal review of pipeline integrity management compliance.

Hazardous Liquid Pipeline Operators’ Integrity Management Programs Need More Rigorous PHMSA Oversight is both the title and bottom line of the highly critical federal report, released Monday (June 18).

1 year, 340 Incidents

The audit, which began in December 2010, followed a devastating pipeline spill in July 2010 in Enbridge, MI, and 340 hazardous liquid pipeline incidents reported in 2009.

More than 80 percent of those incidents stemmed from corrosion, cracks or other factors that an effective IMP could have identified, federal investigators said.

The rash of incidents raised concerns in Congress over how effectively PHMSA oversees hazardous liquid pipeline transmissions.

IMP requirements are spelled out in the 2001 Hazardous Liquid Integrity Management (IM) rule, which requires operators to develop and maintain IM programs that detail plans, processes and procedures to reduce the likelihood and severity of accidents in High Consequence Areas (HCAs).

In addition, PHMSA began an inspection program in 2002 to oversee pipeline operators’ IM programs.

35,000 Defects

The new audit looks at both the rule’s requirements and its enforcement. In the end, auditors found that although PHMSA has “accomplished much,” weaknesses persist, including some noted in 2002 by the Government Accountability Office and in 2006 by OIG.

The audit says IM inspections since 2002 have turned up more than 35,000 defects that had the potential to become leaks in HCAs. (About 77,000 miles of U.S. pipelines are in HCAs.) Those problems were repaired.

On the other hand, the auditors also cited hundreds of accidents stemming from problems that IM  assessments could have detected.

“Between 2005 and 2010, 356 significant accidents that were IM-detectable occurred, resulting in six deaths, 11 injuries, and $852 million in clean-up costs,” the audit reports. (That figure does not include $215 million that was added in May to the estimated cost of the Michigan spill.)

Auditors noted several areas of concern.

Inspection Deficiencies

“PHMSA has not met its IM inspection goals and has accumulated a backlog of IM inspections,” auditors report.

Stretched thin by its many inspection obligations, PHMSA has amassed such a backlog of IM inspections that it now plans to eliminate its five-year IM inspection goal and “transition to an integrated risk-based inspection process by 2013,” OIG noted.



PHMSA has developed such a backlog of IM inspections that it is getting ready to abandon its five-year inspection goal.

That plan would integrate various types of inspections, and its success depends in large part on PHMSA’s ability to improve its substandard data management and risk analysis systems, auditors note.

At present, PHMSA cannot even keep up with operators’ changing assets and relies on operators to report changes in their operations and holdings.

Auditors also say that “the declining number of IM inspections may impact PHMSA’s ability to enforce program requirements.”

Lack of Field Testing Cited

The auditors also criticized the PHMSA’s current reliance on “documentation-based inspections” (which review documents provided by operators) over site visits for many field inspections and accident investigations.

“PHMSA does not perform sufficient onsite visits … thereby missing important opportunities to identify and correct weaknesses in operator IM programs,” the report said.

Field tests regularly turn up issues not reflected in paperwork, auditors noted. For example:

• An April 2006 field test found that an operator had failed to properly classify part of its 26-inch crude oil pipeline as residing in an HCA, even though it went over a lake that supplied drinking water.

In a 2003 document-based inspection, PHMSA noted “numerous deficiencies” with that operator’s process for identifying HCAs, but cited no misclassifications.

• A February 2009 field test found that an operator could not document the qualifications of a contract employee to analyze and recommend repairs to pipeline defects during a dig inspection. A document-based inspection the year before had not found a problem.

• An April 2009 on-site spill investigation in Toledo, OH, found that the pipeline section had been improperly designed when installed and was susceptible to cracking. Although an adjacent line had had the same failure a year earlier, PHMSA did not make a site visit until after the second spill.

Non-Pipe Loophole

IM rules require operators to inspect their line pipe every five years, but no regular assessments are required for valves, pump and meter stations, storage tanks and other non-line-pipe facilities, even though these components account for more than half of all hazardous liquid accidents.

Auditors see that omission as a serious shortcoming. They note that technology and assessment tools are now available to inspect non-line pipe components and urge PHMSA to update these requirements.

Data Management

The audit also reiterates long-standing criticism of PHMSA’s data management and analysis capabilities—problems that were noted in two other federal audits over the last decade.

“While PHMSA has established a corrective action plan, the plan does not go far enough,” auditors reported.

The agency’s woeful data management and quality “limit the usefulness of operator accident and annual reports in identifying pipeline safety risks.”

“For example,” the auditors say, “PHMSA’s plan does not include a data quality check to prevent operators from erroneously submitting the same annual report data from one year to the next.”

Nor does PHMSA have a program for systematically analyzing data to identify safety and accident trends. Finally, the agency lacks the capability to identify high-risk pipelines by linking accidents, oversight actions, and pipeline characteristics to their location.

“While PHMSA has begun developing such a system, it will take years and additional resources to implement,” auditors note.

Performance Measures

PHSMA has not even developed performance measures to assess its own program’s effectiveness, auditors note.

“Instead, the agency focuses on overall pipeline safety measures (e.g., number of fatalities and injuries) that provide no feedback on the IM program’s impact,” the audit says.

“As a result, PHMSA is unable to fully gauge whether IM is having a positive effect on safety.”


Auditors made nine recommendations to improve PHMSA’s oversight. In its response, included in the audit, PHMSA concurred with seven and partially concurred with two.

However, PHMSA’s responses “did not fully meet the intent of” six of the auditors’ recommendations, and OIG is requesting additional information on those.


Tagged categories: Corrosion; hazardous materials; Health and safety; Inspection; Maintenance programs; Pipeline; Pipelines

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