The Department of Transportation's (DOT) Pipeline and Hazardous Materials Safety Administration (PHMSA) job of policing how individual states oversee natural gas and other pipelines within their borders has been lacking in a number of categories, according to a report Friday by the DOT's Office of Inspector General.

The study was ordered as a direct result of findings that came out of the September 2010 natural gas transmission pipeline rupture and explosion in San Bruno, CA, which killed eight people and injured dozens more (see Daily GPI, Sept. 13, 2010).

The U.S. network of approximately 2.5 million miles of pipelines moves millions of gallons of hazardous liquids and 55 Bcf of natural gas every day, and PHMSA authorizes states to oversee and enforce operators’ compliance with federal pipeline safety regulations through its State Pipeline Safety Program. PHMSA also allocates grants to state programs.

In its investigation of the San Bruno explosion, the National Transportation Safety Board found weaknesses in PHMSA’s oversight of state programs, and recommended that DOT assess the effectiveness of the oversight of intra?state pipeline safety and whether state programs use federal grants effectively.

According to Assistant Inspector General Jeffrey Guzzetti, a number of deficiencies were found in PHMSA's operation. "PHMSA’s guidelines, policies, and procedures for state pipeline safety programs -- such as inspector staffing, training, scheduling, and inspection forms -- lack elements to ensure state inspections cover all federal requirements and pipeline operators maintain safety standards," Guzzetti wrote in the report.

"For example, PHMSA’s guidelines include an outdated staffing formula that does not account for the effects of new inspection types on state inspector needs and lack minimum qualifications for state inspectors to lead standard pipeline operator inspections. The guidelines also do not sufficiently detail how states should use risk factors for scheduling inspections or specify appropriate time intervals between inspections to ensure states' inspections detect and mitigate safety risks in a timely manner."

Guzzetti added that PHMSA’s policies and procedures for conducting state inspections do not require its evaluators to review the adequacy of states’ inspection procedures, and the agency does not have procedures to inform states of updated inspection forms.

"As a result, states may not properly execute and cover all inspection requirements. Finally, while PHMSA’s triennial financial reviews of state program expenditures are effective, the agency lacks formal written procedures to guide the conduct of these reviews. This lack of procedures could undermine the reliability of future reviews. PHMSA’s oversight of state pipeline safety programs is not sufficient to ensure states comply with program evaluation requirements and properly use suspension grant funds."

The report said "lapses in oversight" have resulted in undisclosed safety weaknesses in state programs. In a review of 400 program evaluation requirements for randomly selected states, the inspector general's office detected 135 noncompliances with program requirements, while PHMSA originally only identified 12. In addition, PHMSA has neither "provided states sufficient guidance on suspension funds nor completed financial audits of their use."

The inspector general's office recommended that PHMSA:

  1. Revise the staffing formula so that it accounts for risk and nonstandard inspections, and periodically analyze state-provided inspection unit data to validate staffing formula results.
  2. Develop and include in state program guidelines the minimum training requirements for state inspectors’ qualification to lead standard inspections (i.e. classroom and/or on-the-job training); a system that tracks revisions to federal inspection forms and actively notifies states when these new forms are available; and standards for time allowed between inspections for all inspection types.
  3. Develop and implement procedures to review the adequacy of inspection procedures as part of the annual program evaluation.
  4. Provide states with comprehensive guidance to ensure they effectively implement risk analysis methods for scheduling inspections.
  5. Document the procedures for conducting triennial grant reviews to ensure consistency of oversight.
  6. Develop a training program that ensures evaluators can successfully determine and verify whether states have complied with all program evaluation requirements according to its procedures, and accurately notify states in writing of noncompliance with program evaluation requirements to ensure states take correct action to achieve compliance.
  7. Develop and implement a plan for auditing states’ use of suspension funds, and work with state program managers to identify current suspension fund administration challenges requiring additional guidance.

According to Guzzetti, the pipeline administration’s officials concurred or partially concurred "with our seven recommendations to improve PHMSA’s oversight of state pipeline safety programs and grants. We have requested that the agency reconsider its response to one recommendation and provide further information in support of its actions taken or planned for the six other recommendations."