Pipeline operators and their trade organizations shaped, managed and provided sizable funding for numerous safety studies conducted by the federal agency that regulates the industry, an investigation by Hearst Newspapers and the San Francisco Chronicle has found.
Industry’s access guaranteed influence. The studies launched by the federal Pipeline and Hazardous Materials Safety Administration helped mold national and state safety rules and inspection procedures for 2.3 million miles of pipelines that carry natural gas and hazardous liquids, some underneath neighborhoods.
Three deadly accidents in the past three years involved decades-old pipelines that might have been replaced – saving lives – had the outcomes of the federal agency’s research, and the policies they influenced, been different.
The Chronicle investigation revealed that two-thirds of the 174 safety studies of land-based pipelines that the federal agency has started in the past decade were largely funded by pipeline operators or organizations they control. That’s because the agency has required that, in most cases, at least half the funding for its pipeline safety research come from outside sources – a policy the Obama administration is now promising to change.
More than half the studies – 89 total – received funding from five industry trade organizations that conduct research, including three with lobbying arms.
Defenders of outside funding say the practice supplies the government with expertise it would otherwise lack. Critics say it skews the federal focus on safety away from reforms that the industry opposes.
Aging lines overlooked
Over the past decade, the federal agency focused half its studies on two industry priorities – preventing pipeline corrosion and damage caused by third parties such as contractors who dig near pipes – and very few on the growing problems associated with an aging pipeline system.
Hazards associated with aging pipe – such as defective seam welds that ruptured in the September natural-gas explosion in San Bruno, in which eight people died, and a 2007 propane blast in Carmichael, Miss., that killed two people – were the subject of just five of the 174 studies that the federal agency started in the past decade.
None of those five studies challenged a federal rule that allows pipeline owners to leave such welds in place. A 2004 report said that even current industry practice was too stringent and “likely resulted in the unnecessary repair of numerous seam weld defects.”
Only one study looked at the brittle cast-iron pipe lacing through many urban neighborhoods, such as a line that exploded in February in Allentown, Pa., killing five people. That study looked at how to make a better tool for locating such pipe, but did not touch on government policies that will allow companies to continue using obsolete iron pipe for decades.
U.S. Transportation Secretary Ray LaHood, whose department oversees the pipeline agency, promised to repeal the outside funding requirement after a reporter briefed his spokeswoman on the findings of The Chronicle’s investigation.
“Secretary LaHood believes that credible, independent research is a crucial component of the Department of Transportation’s safety agenda, and he has directed the Pipeline and Hazardous Materials Safety Administration to end the practice of using industry resources to help finance research,” spokeswoman Olivia Alair said.
Officials in the pipeline agency declined interview requests.
Editing safety studies
The pipeline industry’s influence on federal research goes beyond funding. Of the federal agency’s 174 studies since 2001, 37 were directly managed by industry organizations.
Industry groups also had a hand in shaping the final products. The Interstate Natural Gas Association of America, which represents most of the nation’s gas transmission line operators, edited a 2007 agency study on a topic on which the group lobbied the federal pipeline agency – the handling of defects in old pipes.
The gas association, which opposed tougher rules for such defects, changed the report “to assure consistency with industry codes and standards,” the study said. The federal agency cited the study’s findings in its pipeline inspection manual and in safety waivers it granted to pipeline companies.
Some projects had a preordained look: A 2008 study managed by an industry organization declared at the start that its objective was to show that federal criteria for dealing with flaws in lower-pressure pipelines were “overly conservative and may be relaxed.” By the study’s definition, such lower-pressure pipelines included the one that exploded Sept. 9 in San Bruno.
The pipeline agency’s peer review process is conducted during an Internet conference by a panel half made up of current and retired industry officials. In five years, it has never given a study a low grade, records show.
John Ahearne, former commissioner of the Nuclear Regulatory Commission and a leading national expert on research ethics, said it appears from the information The Chronicle gathered that the Pipeline and Hazardous Materials Safety Administration has been “providing some sort of cover” for the pipeline industry’s agendas through its research program.
“Just the fact that they are going through the motions of doing studies is not adequate, unless the studies have been developed by a critical process. And that doesn’t sound like that exists in that tiny agency,” said Ahearne, a member of the National Academy of Engineering and director of an ethics program for researchers.
Power to veto research
The agency’s requirement that outside sources pay at least half the cost of research was imposed in 2002 under the Bush administration and is unlike any other federal regulatory body.
As a result of that practice, the industry and its allies enjoy virtual veto power over the direction of the agency’s research program, said pipeline safety consultant Richard Kuprewicz of Redmond, Wash.
Kuprewicz, who has been involved with pipeline issues for more than 30 years, said the agency “is notorious” for being influenced by the industry. “Lobbying gets in and deflects them,” he said.
Terry Boss, senior vice president of the Interstate Natural Gas Association, said the government’s outside-funding requirement serves as a legitimate “test” for a study proposal, whether “the industry feels it is needed.”
Critical weld study
Last year, the pipeline safety agency shelved a study when no suitable co-financier or manager stepped forward. The subject was a type of seam weld present in pre-1970 pipelines – a majority of the current inventory – that is vulnerable to rupture.
The National Transportation Safety Board asked for the study after the Mississippi explosion in 2007, which was caused by a failure of one such weld. After the San Bruno pipe ruptured along a different kind of seam weld, the safety board asked again about the study’s status.
On May 26, the agency finally began the study. It will be managed by an independent research organization, Battelle Memorial Institute in Columbus, Ohio, but it will also be co-funded by four industry trade groups with a stake in the outcome.
The stakes are high because the study is likely to re-examine an approach to defective seam welds that has sheltered pipeline operators – and ultimately, gas customers – from expensive tests and even the replacement of billions of dollars worth of pipe.
Under the government and industry standard, a questionable seam weld is deemed to be stable, or safe, as long as it hasn’t leaked and the maximum allowable operating pressure of the pipeline hasn’t changed in the previous five years. The federal pipeline safety agency adopted that standard in 2003 based on industry practice and industry-financed studies, records show.
The trouble is, the San Bruno pipe ruptured at a defective longitudinal seam weld after 54 years in the ground, without a change in maximum operating pressure. The operator, Pacific Gas and Electric Co., was unaware that the pipe had such a weld.
Several pipeline safety engineers now say the stable-weld theory is questionable because normal long-term pressure fluctuations might be enough to cause a bad weld to rupture.
The Interstate Natural Gas Association is one of the organizations putting up money for the Battelle study. On Jan. 31, association President Don Santa expressed concern to the federal agency that it might “countermand” the stable-weld standard, which he called central to pipeline integrity management because it frees up resources to address other risks.
Asked to elaborate, Santa said in an e-mail he wants the agency to wait at least until the National Transportation Safety Board issues its report on the cause of the San Bruno explosion before making any changes.
The gas association did its own report on the San Bruno disaster in May, suggesting that the pipeline’s weld hadn’t ruptured because of long-term stress but because of forces caused by a sewer project two years before the blast.
Industry funds needed
The federal agency’s thin research budget, less than $7 million a year, can’t support a program devoid of industry money without cutting back on the number of studies it performs.
“It is fair to assume that less pipeline safety research would occur” if industry doesn’t help pay for it, Santa said.
The agency now gets most of its budget from industry fees, which could be increased to raise more research funding. Santa, however, said the federal government has already increased fees in recent years to pay for pipeline safety grants to states.
The agency’s pipeline safety research office has just nine employees. One was responsible for tracking 68 studies since October 2002, averaging two years in duration.
The overall agency, with 430 employees, must ensure the safety of 2.3 million miles of gas and liquid pipelines, plus the safe transport of hazardous materials on airplanes, trains, trucks and ships.
Its research agenda has traditionally been formed at conventions attended by pipeline operators, private researchers and government officials. The events are put on by the agency, with special forums sponsored by industry trade organizations, records show.
“Do we have power to set the agenda and maybe guide where it will go? Yes, but I think it is a good thing as well,” said Cliff Johnson, president of Pipeline Research Council International, an industry-supported research organization that has managed or partially financed more than 50 studies for the pipeline agency.
The federal agency’s approval is on each study, but the co-funding policy dictates industry is dominant because few other sources are available.
“It’s really quite simple,” said Maureen Droessler, administrator of Operations Technology Development, a research trade group sponsored by natural gas companies. The pipeline agency “requires the co-fund. The co-funding comes directly from industry.”
Not that she and her colleagues think that’s a bad thing.
“You have to have someone knowledgeable of pipeline operations to be involved somehow,” said Daphne D’Zurko, vice president for research for the Northeast Gas Association, which manages pipeline agency studies and represents natural gas companies in eight states.
Mechanical engineer Royce Don Deaver of Montgomery, Texas, said he believes industry’s influence on research represents a danger.
The former Exxon pipeline employee, now a consultant, worked on a 2006 pipeline agency study that he said was designed to justify an increase in operating pressure for newer pipelines carrying crude oil, gasoline and other dangerous liquids.
Increasing pressure means more volume and revenue for the operator. Deaver said it can also lead to spills and explosions. He said he had told his study colleagues that “there wasn’t any basis to support what they wanted to do.”
“They stopped talking to me and including me in meetings. And my assignments and involvement in the project started going downhill,” Deaver said.
The study wasn’t completed for unexplained reasons, said retired Oak Ridge National Laboratory project manager C. Barry Oland, who oversaw the project for the pipeline agency.
The federal agency hasn’t approved pressure increases for liquids, but did so for certain gas pipelines in 2008, citing an industry-sponsored study in 2000.
Seeing beyond industry
Brian Leis, senior research leader at Battelle in Ohio, said he has never been pressured to reach a preordained conclusion. But he said he wants the pipeline safety agency’s outside funding requirement to end for another reason – it discourages “creative” research to solve long-term problems.
At present, Leis said, the government’s focus is on “putting out fires” identified by the industry because it “is their money that’s being spent.”
The agency research program has had successes, including a promising new tool for finding corrosion inside old pipelines that are difficult to inspect.
LaHood, with his planned policy, can call on independent expertise at universities and an array of U.S. Energy Department labs. Many independent labs have extensive experience managing agency studies.
But mechanical engineer Deaver said much more will be needed to assure that the pipeline safety agency is regulating the industry, not the other way around, and that the research is balanced and independent.
At the moment, he said, the federal government “is not driving the issues. They are sitting in the backseat.”