COMMENTS OF THE AMERICAN PUBLIC GAS ASSOCIATION Dear Congressman Sharp: On behalf of the American Public Gas Association (APGA) and municipal gas systems across the country, we would like to comment on the proposed Pipeline Safety Act of 1991. APGA is a national trade association comprised of over 380 municipally owned natural gas distributions systems across the country. All of our member companies will be affected by the proposed law. Therefore, APGA's interest in this matter is substantial. APGA has reviewed the written comments of the American Gas Association (AGA) and would like to go on record in support of their comments. In addition APGA and AGA will have a single representative from our associations at the May 22 hearing before your committee. In these written comments, APGA will specifically address the proposed law regarding excess flow valves (EFV). EFVs are a relatively new device used primarily on natural gas services to single dwelling homes to restrict the flow of gas following a catastrophic break. Most gas utilities in the country have not tested these devices and some that have tested them have experienced false closures and other related problems. At this time there are too many unanswered questions to justify their required installation. APGA suggests that Congress not require the installation of these valves. Since EFVs are still being tested by gas distribution systems, APGA recommends that Congress ask the Secretary of Transportation to conduct a field test with the natural gas industry over the next two years and report back to Congress whether EFVs would be a cost beneficial safety device for consumers and the industry. APGA and some of its member systems would be pleased to participate in such a field test study. A.G.A.'s Response to Written Questions dated May 24, 1991 House Subcommittee on Energy and Power Committee on Energy and Commerce Q. What actions need to be taken regarding abandoned pipelines? What is your view of the suggestion raised in testimony submitted to this subcommittee by the State of Louisiana, Office of Conservation, that DOT should develop and implement a comprehensive program which would require the owners and operators of underwater structures to either (1) remove those structures prior to abandonment, or (2) maintain responsibility for the continued safe positioning of those structures even after they are taken out of active service? A. Presently the safety of abandoned pipelines is regulated by DOT's Office of Pipeline Safety, under Section 192.727 of the Code of Federal Regulations. The State of Louisiana's Office of Conservation (LOC) justifies its proposed requirement that operators remove pipelines prior to abandonment or to maintain and inspect abandoned pipelines on the number of claims that are filed with the Louisiana Fisherman's Gear Compensation Fund (FGCF). LOC's claims that a federal mandate is necessary because in claims to FGCF, fishermen report numerous strikes on abandoned pipelines in the Gulf of Mexico. This assertion is contrary to testimony before the House Subcommittee on Coast Guard and Navigation during the 101st Congress in which representatives of the fishing industry stated that fishermen were unable to identify accurately the nature of objects struck or their location. Upon further questioning these same representatives stated that numerous objects, not just pipelines, constituted underwater obstructions in the Gulf waters. These included tree stumps, wrecks, cars, wellheads and other debris. Additionally, under the current operating procedures, claims made on LOC's Compensation Fund are not required to be thoroughly investigated or substantiated and should thus not be considered to be infallible proof of pipeline strikes. It should be noted that funding for the FGCF is wholly acquired through assessments on mineral leases and pipeline rights-of-way in state waters. The State's administration expenses are also covered by these assessments. The natural gas industry questions whether a significant problem exists regarding abandoned pipelines in the Gulf of Mexico. We respectfully request that prior to any legislative action the State of Louisiana be asked to substantiate its claims. Abandoned natural gas pipelines do not constitute an explosive danger and should not be treated in the same manner as active lines for safety purposes. The issue of regulation and abandonment requirements for pipelines located in state waters is a state jurisdictional matter. The U.S. Office of Pipeline Safety has stated before the Senate Subcommittee on Surface Transportation on May 15, 1991 that the Department of Transportation did not consider itself to have jurisdiction over abandoned pipelines in state waters. The State of Louisiana could address the perceived problem of future abandonment of pipelines in state waters by promulgating abandonment or removal requirements in its permitting and leasing procedures. This is the appropriate place and an available mechanism for the state to address this matter. Q. The City of Fredericksburg has submitted testimony suggesting that "DOT regulations do not provide sufficient incentives for citizens affected by hazardous pipelines to enforce the Act or give them adequate procedural rights in DOT administrative proceedings." In particular, the City says that "Section 215 of the Act allows citizens suits, but only if the Secretary of Transportation fails to diligently pursue administrative proceedings against a violator or if the Justice Department and the state fail to pursue judicial remedies. This has had a practical effect of foreclosing citizens from filing in all but the most egregious cases where clear-cut violations of the Act exist and DOT has failed to act for an extended period of time. Not surprisingly, there have been few citizens suits filed under Section 215. The City suggests that these limitations on the right to sue should be eliminated; i.e., that S. 215 be amended to more closely resemble the citizens suit provisions found in other environmental statutes. This would include the addition of a separate cause of action whereby citizens could file suit against any person who operates a hazardous facility posing an imminent and substantial endangerment to health, safety or the environment. They further suggest that citizens be allowed to file suit unless DOT is actually pursuing litigation. Under current law, a citizen cannot file if DOT is diligently pursuing "administrative proceedings." Finally they suggest that citizen plaintiffs be able to recover civil penalties from violators. Under current law, citizens are only entitled to injunctive relief. What is your view? A. First, we must preface our answer with the caveat that the incident that precipitated the City of Fredericksburg's concerns involved a hazardous liquids pipeline, and we are not familiar with the details of that matter. However, the question posed is of great significance to the natural gas industry. We do not believe that the Act should be amended on the basis of the City's alleged difficulties in dealing with DOT's administrative process implementing the Act. The Act requires the Secretary to deal with such situations "diligently". If the Secretary is not doing so, citizens can commence civil actions under the Act after giving the Secretary 60 days notice. The notice provision should give citizens' additional leverage with the Secretary, one last opportunity for the Secretary to exercise diligence in resolving the types of concerns that have been raised by the City of Fredericksburg. The statute is designed to give the Secretary every opportunity to comply with the requirements of the law. We do not regard this as a flaw. Rather, it recognizes that, in matters involving pipeline safety, the responsibility for ensuring compliance with pipeline safety regulations should reside initially and primarily with the Department of Transportation, the entity charged by law with that vital function. The City states that the practical effect of the "diligence" criterion is such that citizens suits are difficult to bring "in all but the most egregious cases where clear-cut violations of the Act exist and DOT has failed to act for an extended period of time." A.G.A. submits that this is exactly how the law should work. Citizens suits should not be permitted except in cases wherein the Department has failed to act diligently to enforce the mandates of the law, such as the City itself has described. Federal pipeline safety regulations are complex and require significant expertise to implement. Thus, determinations as to whether an operator has complied with the regulations or whether a dangerous situation exists because of a failure of regulatory compliance are matters specifically within the Department's jurisdiction and substantive expertise. Rather than conclude, as the City does, that the dearth of citizens suits under Section 215 is a failure of regulatory diligence, A.G.A. believes that this fact attests to the generally exemplary manner in which the Department has performed its statutory mandate. Therefore, A.G.A. believes that Section 215 should not be amended as the City has suggested. In particular, we strongly object to broadening Section 215 to allow citizens suits "unless DOT is actually pursuing litigation." Such language would substitute the judgment of the courts and the general public for the substantial expertise that exists at the Department. We cannot see any safety benefits that would result from this type of amendment. Moreover, the suggestion that citizens should be able to go to court "against any person who operates a hazardous facility posing an imminent and substantial endangerment to health, safety, or the environment" could seriously endanger public safety. This is because the language is so broad and ill-defined that the Department would be required to divert staff from its statutory mission of enforcing pipeline safety regulations and spend substantial resources defending against ill-conceived, unnecessary or even frivolous litigation. Q. New York State Assemblyman Paul D. Tonko, who is chairman of the Assembly's Subcommittee on Fire Protection Services, has submitted testimony for the record, including a resolution passed by the New York State Assembly requesting that the U.S. Congress provide oversight powers over interstate pipelines during, and immediately following, a disaster. What is your view of that resolution? A. The natural gas industry is required by federal law to devise, maintain, and comply with a written emergency plan that sets forth procedures to minimize dangerous situations that might result from a natural gas pipeline emergency. Section 192.615 of DOT's regulations requires that these plans provide for: effective communication with police, fire and public officials; prompt response to emergency conditions, including natural disasters; emergency shutdown procedures; appropriate training of emergency crews and operating personnel; and, prompt service restoration. Thus, we believe that the New York Assembly Resolution is not only of questionable legality, given the preemptive effect of the Act, it is also unnecessary given the regulatory requirements that envision and encourage such cooperation with local public safety officials. Mr. SHARP. Ms. Cates, we'll be happy to hear from you now. STATEMENT OF JENNIFER A. CATES Ms. CATES. Thank you. Mr. Chairman, my name is Jennifer Cates. I am vice president of law and regulatory affairs for Tex/ Con Oil & Gas Co., a primarily onshore lower 48 operator with gas purchase processing, gathering, and marketing operations. We operate approximately 2,000 miles of the natural gas gathering line mostly in the States of Louisiana and Oklahoma. I'm pleased to say we've never had a reportable incident. One of the things I would like to put on the record is that natural gas companies are not dependent upon Federal mandate as far as what actions we take to promote public safety. We're very concerned with safety of not only our own employees but the communities in which we operate. As an example, we have put in a SCADA system on our gathering systems. I am here representing the IPAA today, as you've noted, and a number of our member companies share the following concerns. However, before I get into that, I would like to commend you and your staff for the very interactive approach you've taken with this legislation. We believe that it has already shown a great deal of sensitivity to the needs of the industry and we're here today to continue that dialogue. My major concern is that we may see increased regulation which will disproportionately impact producers and gatherers without increasing safety benefits. My secondary concern is that some of the provisions as written will have the result of reducing or stopping forever, in some cases, production of natural gas, which we have now recognized is the clean environmentally preferable fuel, and which everyone, I think, can agree is a very cheap fuel. Turning specifically to smart pigs, there's no question, smart pigs are expensive. We are giving you in our written testimony two comparisons which I think are instructive. The first is the startup cost for one pipeline in Louisiana which currently has a transportation margin of 2.2 cents. First, your startup costs are going to be such that 1.6 of the 2.2 cents will go to the smart pig installation, leaving that operator with a margin of six-tenths of a cent. That is a 75 percent reduction in his earnings. Turning to the cost that will be required in order to reconstruct lines which cannot currently accommodate smart pigs within the next 5 years, we've given you a chart at the end of the testimony which demonstrates that the rebuild costs can range from $40,000 to $140,000 per mile of pipeline, depending on the size and location of the pipeline. These are significant costs to an industry that measures its profits in cents. Our request in this regard is that there be no mandate for the use of smart pigs on rural gathering lines which are currently exempt from regulation and that, further, where an operator of the transmission line or a currently regulated nonrural gathering lines can demonstrate that he has used cathodic protection, internal coding, or other methods which can replicate appropriate safety |