Safety Agency Cracks Down on Crude, Petroleum Pipeline Spills

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By Sylvia Carignan

The Pipeline and Hazardous Materials Safety Administration is cracking down on smaller violations in the crude oil, petroleum, and hazardous liquid industries to combat a slow rise in the number of pipeline accidents.

High-profile incidents that have spilled about a million gallons of crude oil have led PHMSA to scrutinize hazardous liquid pipelines more closely, lawyers say. The agency is asking more companies that operate those types of pipelines—including Anadarko Petroleum, Sunoco, Frontier Energy and Dakota Midstream—to fill gaps in their safety procedures.

Companies that handle hazardous liquids, such as petroleum products, crude oil, anhydrous ammonia, biofuel, and carbon dioxide, are getting more letters and notices from the agency than gas and liquid natural gas companies are, data show.

“The focus on warning letters and notices of amendment is kind of like ‘an ounce of prevention is worth a pound of cure,’” Indianapolis-based Paul Drucker, leader of Barnes & Thornburg’s pipeline practice team, told Bloomberg BNA. “They’re trying to correct smaller problems before they turn into big problems.”

The American Petroleum Institute, Anadarko Petroleum, Sunoco, Frontier Energy and Dakota Midstream didn’t immediately respond to Bloomberg BNA’s requests for comment.

Putting Operators on Notice

In notices of amendment, PHMSA tells a pipeline operator that it lacks a particular safety procedure, or that an existing procedure lacks what the agency considers to be an important detail. The agency may then request that the operator revise, or amend, that procedure.

The notices don’t carry penalties or mandatory compliance steps.

“I think it also bodes well for a lot of pipeline operators that they are being cited for lesser violations,” Drucker said.

Drucker and one of his Chicago-based team members, Jill Fortney, analyzed PHMSA data in August and found that the agency has prioritized hazardous liquid pipelines in its notices. But that doesn’t mean PHMSA is paying less attention to gas pipelines.

“PHMSA is also looking at gas pipeline operators too, to make sure they comply,” Fortney told Bloomberg BNA.

From 2014 to 2016, the agency issued an average of 41 notices of amendment annually. It has issued 49 so far this year, and 30 of them focus on hazardous liquid pipelines. Fortney projected that PHMSA is on track to file 74 notices this year, more than the recent annual average, with 43 going to hazardous liquid pipeline operators.

Over the same three-year period, PHMSA issued an average of 65 warning letters annually. As of this month, the agency has sent 76 so far this year. In the letters, the agency warns an operator that PHMSA inspectors believe they observed a violation, and that it can lead to thousands of dollars in penalties.

PHMSA’s warning letters and notices of amendment for hazardous liquid pipeline operators “could signal a change in policy, or could be that they’re trying to highlight a particular issue,” said Bryn Karaus, an associate in the Washington offices of Van Ness Feldman who focuses on pipeline safety.

PHMSA didn’t immediately respond to Bloomberg BNA’s request for comment.

Battling Pipeline Failures

The number of “significant” pipeline incidents, as defined by PHMSA, has seen a slight uptick over the past decade. A “significant” incident results in any of the following:

  •  a fatality
  •  in-patient hospitalization
  •  $50,000 or more in total costs, measured in 1984 dollars
  •  release of five or more barrels of a highly volatile liquid
  •  release of 50 or more barrels of other liquids
  •  release of a liquid resulting in an unintentional fire or explosion
PHMSA recorded 107 significant hazardous liquid pipeline incidents in 2006 and 176 in 2016.Though the increase in enforcement actions started this year, Drucker said it isn’t related to the Trump administration’s goals.

“I don’t think it’s political. It’s a result of high-profile incidents related to hazardous liquid pipelines,” Drucker said.

In 2010, about a million gallons of crude oil spilled from a burst pipeline near the town of Marshall, Mich. The pipe belonged to Enbridge, and the company has since dredged oil and contaminated sediment from the affected water bodies, according to the U.S. Environmental Protection Agency.

In 2015, a pipeline carrying crude near Refugio State Beach in California spilled more than 100,000 gallons of oil, much of which ran into the ocean, according to the National Oceanic and Atmospheric Administration.

PHMSA is considering changes to hazardous liquid pipeline safety regulations that would address leak detection systems, pipeline integrity, and the possibility of leaks or spills near vulnerable areas, such as towns and cities, bodies of water, and protected habitats.

The agency expects to finalize the changes in a rule ( RIN:2137-AE66) by the end of this year.

To contact the reporter on this story: Sylvia Carignan in Washington at scarignan@bna.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bna.com

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