Remarks of Jim Hall, Chairman
National Transportation Safety Board
before the American Petroleum Institute
Annual Pipeline Conference
Dallas, Texas, March 14, 1997
When George Persyn of Exxon invited me to address
this Conference, I was pleased to accept because this is a good
opportunity for me to speak to both liquid and natural gas pipeline
operators on improving pipeline safety. Also, I was relieved about
the timing of my presentation because my brother, who recently
retired his position with a major pipeline; won't be here to heckle
me.
Seriously, the timing for this presentation
is good because major changes are occurring in the pipeline industry
and the manner in which the industry addresses these changes will
greatly affect both your and the Safety Board's actions in the
future.
As you know, the National Transportation Safety
Board is an independent federal agency that I have been privileged
to lead for almost 3 years. We investigate all aviation accidents
and all major accidents in the surface modes of transportation,
as well as conducting safety studies on issues of national significance.
From these, it makes recommendations to prevent recurrence of
accidents. We are the eyes and ears of the American people at
accident sites.
You are undoubtedly familiar with our ongoing
investigations of ValuJet and TWA flight 800. Last November, we
launched a team to investigate what has turned out to be the deadliest
pipeline accident in the Safety Board's history, the natural gas
explosion that killed 33 people in San Juan, Puerto Rico. Such
catastrophes are doubly tragic if we do not learn from them and
do all we can to make sure they don't happen again. That is the
fruit of our recommendation process, and it is in that spirit
that I come before you today to discuss pipeline safety.
To return to my opening thought about change,
your industry has reacted well to change in the recent past. Once
pipeline operators merely transported liquids and gases in the
continental United States. Now you are a major factor in producing,
as well as transporting, product that meets not only the nation's
needs, but the needs of the world, as well. With recent mergers
between pipeline operators and competitors like electric power
companies, you are diversifying by providing multiple forms of
energy.
Improvements in technology are also changing
the way pipelines operate. Remote monitoring and control systems
and more effective testing equipment have made your operations
less dependent on labor and this has resulted in large restructuring
of companies and a reduction in personnel. It is difficult to
imagine what the next change might be, but you can be assured
that this industry will continue to be transformed.
As an essential provider of fuels, chemical
feed stocks, and now various energy resources, your industry has
been highly regulated both for economic and safety reasons. You
have argued for the need for greater flexibility to meet changing
circumstances so you can make cost-effective economic and safety
decisions that will allow you to use your operating and maintenance
monies more wisely.
Last year your industry testified about this
need and the Congress responded by enacting in both the liquid
and natural gas pipeline safety acts provisions for you to incorporate
risk management demonstration programs. Those who enter these
programs would not have to comply with the Federal minimum pipeline
safety standards, at least for those operations covered by the
demonstration program. The ultimate goal of these demonstration
programs would mean the end of Federal pipeline safety standards
as we know them today. And that prospect has the pipeline industry
excited.
First, let me note that I am puzzled about
this so-called "new" opportunity. Risk management is
not at all new. It has been practiced for many years by the military,
the nuclear power industry, and even by some of the pipeline operators
represented in this room. Its roots go back more than 30 years
- back to the 1960s. The use of a risk based program for managing
pipeline systems was first proposed by the Safety Board in 1972.
The Board advocated that RSPA and the FRA, the two U.S. Department
of Transportation agencies that then regulated pipeline safety,
along with private industry develop and incorporate proven risk
management principles into their operations. Specifically, the
Safety Board asked the API to develop guidance for its members
to establish such a program for controlling day-to-day hazards
in both their operations and maintenance activities.
Unfortunately, at that time, not many in the
industry seemed excited about the prospect of using risk management,
not the federal pipeline regulatory agencies, not the pipeline
associations, and not many of the pipeline operators. The Safety
Board, however, continued to support the program. We believe that
once the industry has become proficient in the use of risk management,
its leaders will learn from their failures and our investigation
of pipeline accidents.
While I am pleased that the industry is now
excited about the government allowing you to incorporate risk
management principles, understand that you have never been prohibited
from using those principles. That is why Shell, Tenneco, and others
have for years incorporated risk management into their operations.
You did not then nor do you now need federal approval. Considering
your present expectations of risk management for enhancing pipeline
safety, just imagine how much progress might have been made had
these principles been incorporated industry-wide since the 1970s.
Now that your industry has been successful
in drawing the support of Congress and the Office of Pipeline
Safety for replacing pipeline safety standards with risk management,
I believe that you need to be aware of several concerns I have
if you are to be successful in securing a place for risk management
in the future for the pipeline industry. First, effective risk
analysis standards must be developed. RSPA issued on December
9, 1996, its draft guidance document on performance measures for
use in the pipeline risk management demonstration program. That
document makes it clear that the performance measures included
are only a beginning and that adjustments will be made based on
program experience. It seems a little premature to be talking
about performance measures for programs when there has been no
guidance issued about the various types of safety, hazard assessment,
or risk analyses, and no analysis conducted on their performance
relative to their usefulness in evaluating pipeline systems.
Nor has guidance been developed on the manner
and types of documentation that must be kept for review to assess
the adequacy of the programs and their results. We need to develop
a method to gauge the success of the pilot programs.
Another concern you should have is the knowledge
of your regulators when it comes to risk management principles.
It is clear that the industry has the primary risk management
experience and knowledge, and that the guidance and requirements
now being developed are primarily the product of the pipeline
industry. You may view this as a benefit now, but for you to have
effective future interaction with your regulators it is to your
advantage that they understand risk management. Knowledgeable
regulators would prove an asset - providing independent and impartial
assessments of your risk management programs. Their broad view
of the program will most definitely be beneficial to you as an
individual operator. On the other hand, inexperienced regulatory
oversight of your risk management practices will be burdensome,
consuming unreasonable amounts of review time and raising unnecessary
criticism of the program. It is to your advantage to work closely
with them and make sure they understand the structure of your
program.
A third concern you should have, and one that
is already evident, is the lack of public acceptance of a federally-approved
risk management program option. People fear that such programs
will relieve industry of having to adhere to basic safety standards.
The demonstration program has not yet begun and already there
is some fear that the relationship between the Office of Pipeline
Safety and the industry is too close - that the program is a ruse
designed to relieve the industry of its public safety obligations.
No doubt an improperly run program could be just that, but with
constructive industry effort and an effective regulatory body,
the Safety Board sees this as an opportunity for enhancing public
safety.
A properly operated and documented risk management
program will make available for public scrutiny the hazard identification
analyses, the risk assessments, the economic assessments, and
the bases of decisions made by management to eliminate, reduce,
or accept risks identified through quality assessments. It is
essential that the analyses and decision processes employed be
documented concisely to provide for effective federal compliance
reviews.
The Safety Board is encouraged that finally
there is movement to incorporate risk management principles into
pipeline operations. When properly implemented, we believe it
will be much easier for us to gain your acceptance of our safety
improvement recommendations -- recommendations such as those dealing
with the need for effective employee training programs and with
the need to rapidly shut down failed pipelines, especially those
that occur in densely populated areas.
Since 1969 the Safety Board has identified
the need for improving employee training programs. Our first safety
recommendation concerning employee training was for the Indiana
Public Service Commission to determine the adequacy of training
procedures being used by a gas pipeline operator. In the period
from 1975 through 1986, the Safety Board addressed the need for
improving employee training in more than 100 additional recommendations
made to pipeline operators, industry associations, and to RSPA.
Then on February 18, 1987, the Safety Board urged RSPA to require
pipeline operators to develop effective training programs for
their employees. Specifically, that recommendation called for
training programs to provide the knowledge and skills needed for
employees to correctly carry out all assigned safety-related tasks
and that the effectiveness of the training be assessed through
testing and other evaluation means.
RSPA promptly issued on March 23, 1987, an
advance notice of proposed rulemaking proposing to establish minimum
training and testing standards for pipeline employees. It has
now been 10 years since that proposal was issued and we still
do not have minimum standards for training and testing pipeline
employees. Instead, on June 25, 1996 the proposed rulemaking was
withdrawn and the next day, RSPA announced that it would establish
a committee to negotiate a rule. Three weeks ago, RSPA issued
a notice of public meeting - it notes that an advisory committee
will hold its first meeting on the 23rd and 24th
of April, to address minimum training and testing standards. API
is a member of this committee, and I urge you to take positive
action and get the job done. It is well overdue.
The need for improved employee training continues
to be identified as a critical factor in our accident investigations.
The latest instance was the November 21, 1996, explosion at San
Juan, Puerto Rico that I mentioned earlier, in which 33 people
were killed and more than 80 were injured. Just two weeks ago,
we issued recommendations calling for the operator to improve
its employee training program. We believe that effective employee
training programs will become even more important to public safety
as newer technologies are introduced into your operations and
as you downsize your staffs.
It makes good business sense to make certain
that your employees know what is expected of them,
that they are provided training
adequate for them to fulfill their assignments, and that they
understand how to carry out those assignments safely. Many operators
understand that effective employee training is beneficial and
have implemented training and even certification programs. I believe
that through properly implemented risk management programs the
industry will see the wisdom of having effective employee training
programs even without government intervention.
We are disappointed in the lack of action on
another important safety issue. Twenty six years ago the Safety
Board recommended that RSPA conduct a study to develop standards
on rapidly shutting down failed pipelines. The study was completed
and the recommendation was closed, but no requirements were issued
to implement the study's findings on improving ability of operators
to rapidly shut down failed pipelines. We again addressed the
need for improvements on shutting down failed pipelines in a 1987
recommendation, calling on RSPA to require the installation of
remote-operated valves on liquid pipelines and to base their spacing
on the population at risk.
The Congress also addressed the need for rapid
shutdown for all pipelines that year, and on February 11, 1987,
RSPA issued an advance notice of proposed rulemaking for the installation
of remote and automatic valves. Two years later, it collected
information from the pipeline industry on this issue. Ironically,
while RSPA was reviewing the information it had collected, two
major Safety Board investigations were documenting the consequences
of not rapidly shutting down failed pipelines - the accidents
on May 25, 1989 at San Bernardino, California and on March 13,
1990, at North Blenheim, New York. Nevertheless, on June 8, 1990,
a rulemaking notice was issued stating that there did not appear
to be sufficient justification for requiring the installation
of remote- or automatic-operated valves.
The Congress disagreed. It required RSPA to
conduct a study to determine whether remote- and automatic-operated
valves were needed to enhance pipeline safety and to assess the
cost and effectiveness of initiating a demonstration project on
using emergency flow restricting devices. In March 1991, RSPA
issued its study on emergency flow restricting devices and concluded
that the only such devices that were technically feasible, effective
and cost beneficial were remote-operated valves and check valves
installed in offshore liquid pipelines and in onshore liquid pipelines
that were located in environmentally sensitive and populated areas.
However, the Safety Board identified serious
flaws in the study. The Board believed that the study incorrectly
limited the locations where such valves could be effective and
on January 18, 1995, we called on RSPA to expedite requirements
for installing automatic- or remote-operated valves on all high-pressure
pipelines - both liquid and natural gas -- in urban and environmentally
sensitive areas. No action has yet been taken.
We believe that effective risk management programs
will result in industry voluntarily taking action on the installation
of remote and automatic shutdown valves where pipelines traverse
densely populated areas without a Federal requirement to do so.
It will also promote other actions recommended by the Safety Board,
such as:
These things will occur if the industry develops
effective risk management programs. On the other hand, if the
industry elects to use this opportunity as a ruse for avoiding
compliance with present-day safety standards, then another scenario
will evolve.
In this scenario there will be a few years
in which the industry will save maintenance dollars by not performing
the system maintenance and replacements that must be performed
to maintain the system safely. The number of technicians and engineers
employed by the industry will continue to fall. Employee knowledge
will not be kept at the level necessary for safe operations. And
then there will be a time of reckoning when a series of pipeline
accidents with significant consequences will result in Congressional
demands for a return to the days of uniform specifications for
all pipeline operators. That's the regulatory posture from which
you worked hard to free yourselves.
So I say to you in closing that your future
is in your hands. Make it work for you and for improving pipeline
safety, and not just you alone, but all Americans will be the
beneficiaries.
If we believe you are acting in the best interests
of the American people, the National Transportation Safety Board
will support you every step of the way.
Thank you for inviting me.
