Integrated inspections the latest variation

An Inspection Type Glossary on the website of the Department of Transportation’s (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA) lists no less than 12 types of inspections an operator of an interstate natural gas or hazardous liquids pipeline may need to endure.  Also, one of those types is “other inspections,” which includes a whole subset of inspections in addition to the other  11 inspection types. 

And that’s just the federal inspection list.  States have the authority to regulate intrastate pipelines and devise their own inspection programs.  A survey conducted by the National Association of Pipeline Safety Representatives and the National Association of Regulatory Utility Commissioners (NAPSR/NARUC) revealed that there are 1,361 state pipeline regulations, orders, or legislative provisions exceeding federal requirements.  How exactly can a pipeline operator ensure that his or her facilities can survive any one or any number of perhaps 2 dozen types of inspections?

The obvious answer is to be in perfect compliance with all federal and state regulations at all times; consistently impress your regulators with your development and implementation of nonregulatory programs that reward extra effort in your company; be cognizant of and in control of every potential risk your entire system poses to people and the environment; ensure that every employee is properly trained, up-to-date in training, and unaffected by prohibited substances; avoid complaints against you by having excellent relationships with all the communities through which the pipeline runs; and maintain some sort of cooperative communication with public advocacy and environmental/conservation groups seeking to expose every real and imagined weakness in your company.  

Of course, few companies are capable of accomplishing all this on a regular basis.  Even those that see all these measures as desirable rarely have the resources and personnel to fulfill them on a consistent basis.  A major part of the problem is the scale of pipelines.

Overall, more than 3,100 operators run 2.6 million miles of interstate and intrastate pipelines nationwide; there are also 126 liquefied natural gas facilities and 6,448 hazardous liquid breakout tanks.   Even average size pipelines are equipped with thousands of valves as well as compressor stations, metering stations, control stations, and computerized supervisory control and data acquisition (SCADA) systems—each of which must meet regulatory requirements even though some of these components may be unmanned, many miles from operator locations, and infrequently visited by maintenance staff. 

Given these conditions, it is inappropriate to compare the challenges faced by compliance managers at a single facility, even a large industrial plant, with those of pipeline operators overseeing buried lines and associated equipment that can be spaced out over hundreds of miles. 

510 inspectors

But the ability of operators to keep their pipeline systems compliant and safe probably far exceeds the ability of regulatory agencies to inspect them.  Nationwide, there are about 510 government pipeline inspectors—375 state inspectors and 135 federal inspectors.  PHMSA reports that in 2012, federal staff conducted 1,163 inspections.  What did those inspections cover?  Not enough, according to a July 2013 report from Public Employees for Environmental Responsibility (PEER). 

PEER says that since 2006, PHMSA and its state partners had inspected about 583,692 miles of interstate and intrastate pipelines, less than one-fifth of the national total.  Also, since 2006, there have been more than 300 incidents, such as a spill, explosion, or breakdown, which triggered no follow-in inspection, stated PEER.  “At the current rate, most of our oil and gas pipeline network will not be inspected in this generation,” said Kathryn Douglass, an attorney for PEER.

The reality is that even with most states heavily involved in pipeline inspections, government has the capacity to inspect only those pipelines that it believes pose the greatest risks.  For the remainder, the expectation, as phrased by PHMSA, is that operators will “know, understand, and manage the risks associated with their own pipeline facilities.”

Inspection types

The PHMSA glossary lists the following types of inspections:

• General operations inspections cover an operator's operations and maintenance (O&M) procedures.  These inspections are typically conducted by a team of PHMSA inspectors and are performed for the larger pipeline operators who have a variety of geographically diverse pipeline facilities.
• Integrity management (IM) inspections address an operator’s compliance with PHMSA regulations requiring operators of gas transmission and distribution pipelines and hazardous liquid pipelines to develop and implement comprehensive integrity and risk management programs, including requirements to periodically inspect and test pipelines to identify and repair potentially injurious defects.
• IM field verifications review an operator's implementation of IM field activities.
• Operator qualification inspections check an operator’s compliance withrequirements to have formal programs to qualify personnel for certain safety-sensitive tasks associated with O&M of their pipelines.
• Operator qualification field verifications check that qualified individuals are performing operations and that records demonstrating the qualifications of individuals are current and accurate.
• Unit inspections or standard inspections focus on predefined portions of pipeline systems and often include inspections of pump or compressor stations, storage tanks, and other equipment in addition to the pipeline itself.  Multiple unit inspections are typically necessary to examine all the facilities of larger operators.
• Failure investigations are performed following a pipeline failure to determine the cause of the release and any violations of the pipeline safety regulations that may have contributed to the failure.
• Specialized inspections focus in detail on a particular area of concern and are often initiated following unit inspections, failure investigations, or other inspection activities where it is determined that a more-intensive, in-depth inspection of a particular geographical area, pipeline system, or compliance area is warranted.
• Construction inspections target new construction to ensure the pipeline or facility is constructed, installed, and tested in accordance with applicable pipeline safety regulations and standards before its being placed in operation.
• Drug and alcohol inspections are designed to ensure compliance with DOT and PHMSA's drug and alcohol testing regulations.
• Other inspections focus on areas such as damage prevention, site security, emergency response capability, follow-up on corrective action orders and other PHMSA enforcement actions, and concerns raised by members of the public.

Integrated inspections

In 2008, in an attempt to eliminate inspection redundancies and consolidate efforts, the PHMSA launched its integrated inspection (II) pilot project for operators with the largest interstate systems.  The II approach combines discrete inspection types (e.g., unit inspections, O&M inspections, and IM inspections) into a single inspection that provides an integrated evaluation of an operator's safety management programs.

The II process is complex, extended, and resource intensive for both the PHMSA and the operator.  Before conducting an II, PHMSA audit teams screen multiple operator reports such as those covering safety and enforcement.  Based on this pre-inspection screening audit, the PHMSA develops a set of questions customized to the operator’s system.   The operator is provided with the time needed—usually several weeks—to distribute the questions to the appropriate departments and develop the data needed to answer the questions.  The IIs themselves are typically conducted by teams of PHMSA inspectors who will travel to the operator’s headquarters and to multiple field locations.  Following completion of the II, the PHMSA will inform the operator of the results and any need for follow-up action. 

Several operators who have been subject to PHMSA IIs have had positive responses, mainly because they committed all the personnel needed to answer PHMSA’s questions and meet other expectations, the kind of cooperation PHMSA was apparently looking for.  IIs are costly undertakings for operators, but the reward is that they will probably not be inspected again in the near term unless there is an accident or another unusual occurrence that attracts PHMSA’s attention. Through June 2012, the PHMSA reported that it had completed 12 IIs.  The pilot phase of the program ended in 2013.

State inspections

PHMSA delegates the majority of the responsibility for inspecting intrastate pipelines and enforcing regulations to the states.  The PHMSA also covers about 80 percent of the costs of state inspections, about $46 million, PHMSA announced in September 2013. 

Under the Pipeline Safety Act, a state must receive certification from PHMSA if it wants to assume pipeline safety responsibilities within its borders.  Certification is a mutual agreement between PHMSA and a state, wherein the state takes on the responsibility to ensure that its pipeline operators meet the federal agency’s minimum pipeline safety standards.  Once certified, the state is responsible for oversight of pipelines that do not cross state boundaries (intrastate pipelines).  Arizona, California, Connecticut, Iowa, Michigan, Minnesota, New York, Ohio, Virginia, Washington, and West Virginia also act as interstate agents on behalf of the federal government.  In this role, state personnel inspect interstate pipelines and submit reports to PHMSA, which carries out compliance and enforcement action as necessary.

Also, states are entitled to adopt pipeline safety regulations for intrastate pipelines, which are stricter than federal regulations, and the overwhelming majority of states have done so and, apparently, for good reasons.  For example, in their recently updated Compendium of State Pipeline Safety Requirements & Initiatives Providing Increased Public Safety Levels Compared to Code of Federal Regulations, NAPSR/NARUC emphasize that a uniform federal inspection policy for intrastate pipelines would actually decrease safety levels for the following reasons:

• Certain states may have a history of a specific problem or incident that prompted the initiation of rulemaking, statutory amendments, or issuance of commission orders, such as a pipeline explosion or the discovery of a material defect in a particular pipeline system.
• Pipeline operator practices differ with respect to materials selected, methods of installation, and O&M approaches.
• In some areas of the country, there has been no need for certain initiatives within a state.
• In other areas of the country, the landscape or geography has prompted specialized rules.
• The public’s demand and/or tolerance for more stringent rules is greater in certain areas of the country.

The Compendium, whichlists all state pipeline regulations that are more stringent than comparable federal rules

Information about PHMSA pipeline inspections

William C. Schillaci
BSchillaci@blr.com