Fuel Accident Prevention & Response Team

Meeting Summaries

 

• Team Meetings
  
• Public Comments
  
• Subcommittees

 

Team Meetings

July 28, 1999
SeaTac, WA

The meeting was convened by Acting Chair Mark Asmundson, Mayor of Bellingham, at a meeting room in Sea-Tac Airport at 8:30 a.m.

After a brief discussion regarding the focus of the Task Force�s initial efforts, Mayor Asmundson expressed the group�s consensus thatthe primary focus should initially be on pipelines; alternative transportation modes could be considered for additional focus later in the Task Force�s proceedings. The focus on pipelines appears to be necessitated because of the relatively short time in which the Task Force is to develop recommendations.

Mayor Asmundson read a letter from Laura Hartman (Pilchuck Audubon Society) concerning environmental organization membership in the Task Force and requesting clear opportunities for public participation during meetings. The Team reaffirmed its previous determination that membership at this time should be limited to those appointed by the Governor but that clear and continuing opportunities for public participation would be provided.

The draft agenda for today�s meeting was amended to allow time for public comment.

A web site for the Task Force has been established at: http://www.governor.wa.gov/taskcomm/faprt/faprt.htm.

Representatives of the natural gas industry made a 90-minute presentation on their distribution system from high-pressure transmission lines to the very low-pressure delivery lines that are buried in our neighborhoods. Additional points that may not be evident from the handouts include:

• Land movement is the most common cause of large releases from Williams� natural gas pipelines.
• In some areas, Williams is buying trees in the vicinity of its pipeline to maintain slope stability.
• While federal regulations provide that operators cannot exceed 40 percent of the rated pressure in urban areas, many companies restrict their pressure to approximately 20 percent.
• The distribution system�s SCADA system is only able to detect major leaks. Valves are both automatic and manual.
• The main transmission lines are initially buried approximately 3 to 4 feet deep.
• Hydrostatic tests are typically done only when a line is put into service or when there is a change in service; hydrostatic test results are not filed with public agencies but are available for inspection by public agencies.
• Smart pigs have only recently begun to be used; smart pig inspection records are not filed with public agencies but are available for their review.

ARCO representatives gave a presentation about petroleum fuel pipelines, entitled Transportation System Overview. In addition to items covered in their handouts, they explained the process of exchanging or trading product with other shippers to avoid transportation costs. For example, a shipper in Washington trades with a competitor in California for product (instead of the product being physically transported to that market).

Normally ARCO accounts for 1/3 of the shipments on the Olympic Pipeline (OPL), but with the Ferndale to Allen segment ruptured, their shipments are down. Crude runs have diminished from about 8.5 million gallons a day to around 6 million gallons. They are now shipping 15% via pipeline and 70% via ship & barge. They are 15% over capacity so are running additional ships and barges to satisfy demand. They also are running about 90 trucks per day. Typically that number is 40. Before the incident they only occasionally barged to Seattle, but that has increased now.

The EPA is currently doing a multimedia review of the ARCO facilities.

ARCO offered the task force a tour of their facilities.

Zack Barrett with the federal Office of Pipeline Safety offered to provide the Team with copies of relevant OPS reports at their next meeting.

Richard Kuperwicz of Accufacts, Inc. provided a presentation on the manner in which petroleum product pipelines operate. Among points that he made that may not be evident from his handout materials are the following:

• There is no federal requirement for leak detection, but some states do mandate it.
• There is no federal requirement for "fail safe" design (i.e., a design that assures that pressure in the pipe system cannot exceed maximum operating pressures by ten percent).
• There is no federal requirement for computer monitoring of the pipeline (the Office of Pipeline Safety apparently has a concern about too many false alarms).

Steve Hunter (Washington Department of Ecology) provided a summary of spill statistics.

Dennis Lloyd, WUTC, provided a summary of natural gas line leak statistics, including the following information involving four interstate gas transmission incidents in Washington caused by "outside forces (landslides)" due to the increase in rain and ground water on Northwest Pipeline Corporation facilities:

• On March 6, 1995, near Castle Rock, the 26 inch pipeline failed.
• On February 8, 1997, near Everson, the 26 inch pipeline failed.
• On February 9, 1997, near Kalama, the 26 inch pipeline failed.
• On February 26, 1999, near Stevenson, the 22 inch pipeline failed.

Other incidents occurring at Northwest Pipeline Corporation facilities:

• On June 28, 1997, human error caused a valve to leak near Woodinville;
• On January 3, 1998, a weld defect located on a fitting caused the 22 inch pipeline to rupture at a location east of Pendleton, Oregon, resulting in the loss of gas service to 10,000 customers in the Walla Walla area:

 

After the presentations, there was some discussion by Team members. Mary Corso stated that she perceived that there were two types of gaps that merited the group�s focus: gaps in available data and gaps in the regulatory framework. Regarding data gaps, she noted that there is not good Washington State data on the spill histories of interstate pipelines operating in the State and that the Washington State Patrol cannot document the number of hazardous materials movements per day on state highways. Mary stated that we need to have a data collection system that considers not just the frequency of spills but the volume and consequence. Plus, we should have both national and regional data and better records of the causes of various spills.

On logistical matters, the group agreed that it needed a larger space than the present meeting room, preferably at the airport but, if that is not possible, then near the airport.

The group decided that the August 11, 1999 agenda item concerning state regulations should include an analysis of the EFSEC statute (which regulates the siting of new pipelines). Kittitas County Commissioner Bill Hinkle stated that he would invite the Deputy Kittitas County Prosecutor who was involved in the Cross Cascade EFSEC proceedings to share his perspective on how the current process works from a local government point of view.

Mary Corso suggested that the four state agencies on the Task Force should ask their Assistant Attorney Generals to examine the legal issues that are arising regarding who has jurisdiction over what.

In response to an inquiry from Susan Harper (Cascade Columbia Alliance Executive Director) that group was requested to submit a proposal by August 11, 1999 regarding non-industry, non-governmental organizations presentations to be made on August 25, 1999.

The meeting was adjourned at approximately 3:30 p.m.

August 11, 1999
Seattle, WA

Members reviewed the key decisions made at their July 28 meeting:

• The Team will address only pipelines, not other modes of fuel transportation;
• The Team will retain its current membership;
• Public comments and questions will be taken during meetings as time allows.

Tom Morrill, Assistant Attorney General, presented a summary of the legal framework regarding federal preemption of state authority for pipeline regulation. Among his key points:

• For intrastate lines, if the state has been certified by the Office of Pipeline Safety (OPS), it can serve as the enforcing agency and can adopt standards more stringent than federal ones; the Utilities and Transportation Commission performs this role in Washington. Washington and California are the only certified Western states.
• For interstate lines, the federal statute explicitly preempts state authority to adopt "safety" standards. OPS exercise this role.
• If a main pipeline carries products across state borders, but trunk lines carry it to destinations within the state, the state can regulate the trunk lines.
• There is much ambiguity about the distinction between environmental and safety standards. While the federal OPS have not challenged states on environmental standards if they do not jeopardize OPS standards, pipeline companies frequently have.
• Some states have successfully imposed financial assurance or other funding obligations on interstate lines.
• Federal law does not preempt a state role in siting pipelines. In Washington, the Energy Facility Site Evaluation Council (EFSEC) exercises this authority.

Joe Stohr, Manager of the Spills Program, Department of Ecology, gave a presentation on the current regulatory system for liquid petroleum pipelines. He used a handout.

Some of the key points covered:

• The program has 55 FTE�s and regulates 39 facilities. 18 work on transmission prevention and 22 on transmission preparedness and response; 2 focus on facility prevention and 6 on facility response. One-fourth of an FTE is devoted to pipeline prevention and three-fourths of an FTE is dedicated to pipeline preparedness and response.
• Most of their effort is focused on large facilities (e.g., refineries) and on vessels.
• The program is funded by a 5 cents per barrel tax on imported oil, with 4 cents going to program operations and 1 cent going into a response account for significant spills. If the finished product is exported, the tax payment is refunded; this applies to about half the revenue received.
• Spills to water are subject to penalties of up to $10,000 per day.

 Dennis Lloyd's, Pipeline Safety Manager, Utilities and Transportation Commission, presentation on the current regulatory system for intrastate pipelines included the following points:

• The UTC is certified to regulate intrastate natural gas and hazardous liquid pipelines. Its standards for natural gas lines are more stringent than federal with respect to incident reports and the frequency of leak surveys. The standards for liquid fuel lines equal the federal rules.
• If a state has an agreement with OPS, it can serve as the federal agency�s agent in inspecting, auditing, and reporting violations to the OPS for enforcement. CA, AZ, MN and NY operate under such agreements.
• The federal Pipeline Safety Law authorizes OPS to collect safety user fees from pipeline companies. While the fees should enable OPS to cover 50 percent of certified states� costs, for 1999 Congress has only appropriated funds to cover 44 percent of such costs.
• The UTC receives the remainder of its funding from fees charged to regulated businesses.
• Dennis cited a 1999 report from OPS (Special Report 219) offering land use recommendations to local and state governments. While these jurisdictions are preempted from adopting safety regulations, they can control where pipelines are located.
• The agency has 4 FTE�s for inspections, response and enforcement; it will be adding 2 more.
• The state does not maintain current maps showing the location of all existing pipelines. Such mapping systems are difficult and costly to create and maintain.

Jim Hurson, Kittitas County Deputy Prosecutor, spoke on the flaws in the current system for pipeline siting, based on the County�s experiences in the recent Cross-Cascades Pipeline case before EFSEC. The major problems he cited are:

• EFSEC does not require the applicant to submit a complete and detailed application.
• The sequencing and links between the EFSEC process and the State Environmental Policy Act (regarding Environmental Impact Statements) are confusing and ineffectual.
• Local governments are not given adequate authority.

Tom Morrill also noted several issues surrounding the EFSEC process, including:

• The absence of clear connections with the Growth Management Act and local ordinances.
• The appropriate extent of EFSEC�s right of eminent domain on private land and the unanswered questions about whether they also have this authority for public lands.

Discussion: The Team agreed that a series of questions arose from the presentations and that they should work on developing answers to these:

Ecology�s Program for Liquid Petroleum Pipeline Regulation

• Should prevention plans be required for interstate pipelines?
• Should companies be required to include local governments in response plan development and should local governments include pipeline companies in their plan development?
• What is needed to improve local emergency response capability?
• How can the agency�s data systems be improved?
• Should the planning standards controlling industry plans be more prescriptive?
• How can local response capability be funded?
• Is the local role in the Unified Command System adequately clear? Should it be reinforced?

 UTC Program for Intrastate Pipeline Regulation:

Legal Issues:

Siting Process:

How can the current siting process be improved with respect to,

• eminent domain;
• consistency with the Growth Management Act;
• linkage to the State Environmental Policy Act;
• linkage to the Shoreline Management Act;
• respective roles of state and local governments?
• How can better decisions be made about land use around existing pipelines?

The Team discussed and agreed on a purpose statement to define our task: "To improve prevention, preparedness, and response to fuel pipeline incidents in Washington State."

We agreed to establish three subcommittees to better focus our work and to open participation on those subcommittees beyond the Team�s members. The subcommittees will be Prevention and Siting; Preparedness and Response; and Funding.

The August 25 meeting will be at the Seatac Doubletree Hotel and focus on Preparedness and Response, First Responders, and Follow-Up and Restoration after incidents occur. Mary Corso, Glen Woodbury and Joe Stohr volunteered to organize the agenda and arrange for speakers.

The September 8 meeting will include presentations on lessons learned and current regulatory systems in California, Virginia and Minnesota. It will also include presentations by industry and the public interest sector on their views of the shortcomings of the current regulatory system.

Public meetings will be held in Moses Lake, Bellevue and Vancouver where citizens will have an opportunity to present their views on the Team�s work. These will be held in conjunction with Team meetings. Locations will be announced.

 

August 25, 1999
SeaTac, WA

State Fire Marshal Mary Corso facilitated two panel presentations on disaster preparedness and response. The morning panel featured local government officials.

Robert Johnson, Auburn Fire Chief and Chair of the State Emergency Response Committee, described the work of that Committee, which is now a subcommittee of the State Emergency Management Council. It includes state agencies, a local fire chief, 2 local emergency response representatives and a representative of the transportation industry. The Committee will soon have its first 2 full-time staff members.

Chief Johnson explained the multiple roles of local fire departments in fire suppression, provision of emergency medical response, urban search and rescue, investigations, and education and training. He noted that the structure and funding sources for such agencies varies widely among communities. Ms. Corso noted that 18,000 of the 22,000 fire fighters in WA are volunteers and that 580 of the 650 departments serve populations of 20,000 or less.

While the number of fire response calls are decreasing, the number of hazardous materials calls are increasing. According to a State Patrol survey, 63% of calls relate to transportation, 27% to fixed facilities, 5% to marine incidents and 5% to pipelines. There are 24 publicly funded hazardous material teams around the state and 12 specialized teams. All face serious problems in keeping their staff trained and prepared. Much of the training must be done on overtime.

The major difficulties facing local responders are:

• Fire departments are underfunded to deal with hazardous materials; they have particular problems covering the costs of their equipment.
• The state and federal government do not provide enough assistance to locals.
• The state needs greater regional response capacity � with dedicated funding � to coordinate equipment, training and supplies.

Trudy Winterfeld, Director, Cowlitz County Emergency Management, described the role of emergency management staffs who handle mitigation (efforts to avoid hazards), preparedness, response and recovery. Local capacity varies, but is rarely sufficient to meet the need, particularly since most areas face a large number and variety of hazards. Federal funding assistance is diminishing and it is often difficult to get state and local policy makers to recognize potential dangers and fund preparedness.

Ms. Winterfeld suggested that it would be desirable to:

• establish a disaster trust fund to avoid problems that arise when funding is provided on a reimbursement basis; and
• mandate joint planning between local responders and pipeline operators.

Dean Mitchell, the Assistant Police Chief of Moses Lake, reiterated the problem local governments face in getting their staff trained to address hazardous materials; funding for such training is particularly difficult to obtain. He noted that state funding assistance is resulting in improved inter-jurisdictional communications and coordination.

State and federal agency representatives spoke during the afternoon session:

Lt. Steve Kalmbach and Glenn Brautaset of the Washington State Patrol�s Fire Protection Bureau described that agency�s work. Their hand-outs display the agency�s structure and mission and describe the mobilization process used for response to major events (such as wildfires). The Fire Marshal has 5 teams around the state, whose members are trained and qualified to respond to national or even international incidents.

Glenn displayed a WA state map showing locations of major pipelines in relation to the location of trained hazmat teams; he expressed concern about the gaps in coverage for response to pipeline incidents. The Fire Protection Bureau operates the Fire Training Academy in North Bend that offers training to local responders on a fee-funded basis; some 5,000 people are being trained annually. Glenn explained that once a mobilization occurs, the Mobilization Incident Commander establishes an Overhead Team to handle operations, logistics, planning and finance. Dave Wakefield of the East Pierce County Fire and Rescue Squad joined in the discussion.

The speakers offered 2 recommendations. One would be to establish a cadre of trained Incident Commanders who can respond to and assist local responders in the first critical hours. This would require identification of funding for training and response capacity. The second is to strengthen first responder training for fire service, law enforcement, emergency management and hazardous materials personnel; this too would necessitate identification of funding sources.

Dave Hodeboom of the Emergency Management Division provided hand-outs giving an overview of the Division and the state�s Fire Services Resource Mobilization Plan. He explained the notification/response procedures, the operation of the Emergency Operations Center and its activation phases, the Division�s liaison with local jurisdictions and the Hazmat training and assistance EMD provides to local jurisdictions.

Steve Hunter of the Department of Ecology�s Spill Preparedness, Prevention and Response Program discussed the penalties Ecology can impose for spills that pollute water. There is a basic penalty up to $10,000 regardless of fault; additional amounts can be charged if the violation is willful, negligent or if the operator fails to clean up promptly. Steve pointed out what his staff sees as the biggest gaps in their program: they are preempted from requiring prevention plans for interstate pipelines, they are seriously underfunded because of the refunds to exporters authorized in the law establishing the barrel tax on imported oil, and their resources are increasingly being diverted to deal with methamphetamine laboratories.

Anthony Barber of the U.S. Environmental Protection Agency explained that his agency deals with prevention of spills of oil or hazardous materials from fixed facilities while the U.S. Department of Transportation deals with transportation facilities such as pipelines. EPA gives grants to state and local agencies to help them enhance spill preparedness; they also provide technical experts to assist state and local agencies. He noted that EPA provides training to local government staffs, but recognizes that cost may constrain attendance at such training. In a post-spill situation, the Coast Guard-administered Oil Spill Liability Trust Fund can partially reimburse local expenses; Superfund, administered by EPA, sometimes covers the costs of hazardous material cleanups.

The Team discussed its 3 upcoming meetings to hear public comment on fuel pipeline incident prevention and response. The meetings will be in Bellevue, September 8; Moses Lake, September 16; and Vancouver, September 22. The September 8 and 22 meetings will follow daytime work sessions.

The public comment meetings will run from 5:30 to 8:30 p.m. Each will follow the same structure:

• introductions by team members;
• brief explanation of Team assignment and progress to date;
• opportunity for public comment with the time divided equally among the number wishing to speak.

We reviewed the three subcommittees that will be established; Prevention and Siting, Preparedness and Response, and Funding. Members and alternates were asked to contact Carol Jolly about which subcommittee they wished to serve on and/or chair.

 

September 8, 1999
Bellevue, WA

Two presentations were given on requirements for operator qualification and training:

Zach Barrett of the federal Office of Pipeline Safety explained the agency's recently (August 1999) adopted regulation and the process used in its development. He noted that under the 1996 Accountable Pipeline Safety and Partnership Act, system operators must be qualified "to safely perform O & M tasks and to recognize and react to abnormal operating conditions." OPS placed its emphasis on having systems establish qualifications rather than on specifying training or testing requirements. Each operator has the flexibility to establish a qualification program and include an evaluation mechanism that ensures ongoing qualification. The regulation is effective in November 1999; by October 2002, all operators must be qualified.

In response to questions, Zach explained that compliance with the regulation will be determined by OPS and state inspectors when they are conducting their regular inspections; these generally occur on a 2 to 3 year cycle. They expect to begin "enforcement" in an education mode and gradually phase in the use of more stringent tools. The adequacy of an operator�s plan or its implementation will be judged by regulatory agency inspectors.

Dennis Lloyd, with the Utilities and Transportation Commission, described Washington�s requirements for operator qualification. State regulations require training for operators and contractors. Such training can occur on-the-job, in classrooms, or in classes offered by equipment manufacturers. These rules apply to 4 gas utilities, 7 industrial gas operators, 3 municipal gas systems, 240 master meter operators, and 7 hazardous liquid pipelines.

Compliance is evaluated by inspectors; large systems are inspected 4 to 5 times per year; for smaller systems, the frequency of inspection is determined by their past performance record. The UTC will soon have 6 engineers working on pipeline safety, including conducting inspections.

A series of speakers then presented different perspectives on the adequacy of the current regulatory system and recommendations for potential improvements. Each provided handouts.

Ben Cooper, Association of Oil Pipelines, and Marty Matheson, American Petroleum Institute, presented the views of liquid fuel pipeline operators. They noted that the 200,000 miles of interstate pipeline carry about 64% of the ton-miles of petroleum transported across the U.S., and that pipelines are the safest and most economical transport mode. Ben reviewed a number of initiatives underway by the industry to improve safety.

Marty provided a handout offering recommendations to the Team. She first emphasized the importance of avoiding pipeline damage by third party excavations and urged the adoption of a single one-call system. She urged support for the voluntary system the Office of Pipeline Safety is instituting with operators to establish uniform mapping coordinates. She recommended that WA better incorporate information about pipeline locations into local land use planning, work with OPS on defining and protecting Unusually Sensitive Areas, and promote cooperative efforts among system operators, federal and state regulators, and an informed public.

During the Q & A period, Ben explained that while OPS only requires reporting of spills of 50 barrels or more, the API and AOP are seeking voluntary reporting of spills of 5 barrels or more in the hope that increased information exchange about causes of such incidents will help improve performance. The industry sees these small spills as potential precursors to larger problems.

Terry Boss, Interstate Natural Gas Association, reviewed the uses and advantages of natural gas over other fuels. His handout explained the current regulatory system for siting and operating natural gas lines and the applicable regulations. Terry emphasized that risk management was a central tool in promoting safety and distributed a report on this topic prepared by the oil and natural gas industries and the OPS. He stressed the large proportion of incidents related to outside force (third-party damage) and emphasized the importance of avoiding this.

Mike Faulkenberry, Avista Corp., explained the views of local gas distribution companies. Residents have more exposure to these lines because they provide individual service, but the lines operate under lower pressure than large lines. Mike described the various regulatory systems covering their operations, stated that they are adequately regulated and concluded that further regulations are not warranted.

Susan Harper, Cascade Columbia Alliance, presented a panel of environmental organization representatives. They began with a video called "Out of Sight, Out of Mind" created in Fredericksburg, Virginia after they experienced 2 pipeline accidents that threatened their drinking water.

Susan urged the Team to pursue regional, liquid fuels, transportation policy and to promote conservation and the use of renewables as a means of reducing the use of liquid fuels. She criticized the exclusion of citizens from government regulatory processes, with particular focus on the process used by the Energy Facility Site Evaluation Council (EFSEC) in considering an application for a Cross-Cascade Pipeline between 1996 and 1999.

Claudia Newman, a Board Member of the King County Conservation Voters, also said that citizens have too limited a voice, and industry too great a voice in the regulatory process. She cited difficulties she had faced in trying to urge the state UTC to adopt more stringent pipeline safety regulations. Claudia emphasized the value of more stringent regulations, including double-walled pipes and more leak detection equipment. She urged substantial revision of the EFSEC statute to remedy its many procedural flaws. She also urged the Team to press Congress to adopt a stronger pipeline regulation law.

Greg Winter, Safe Bellingham, explained the Regional Citizen Advisory Council established in Prince William Sound Alaska and urged WA to adopt a similar model. He explained that the RCAC was created by federal law following the Exxon Valdez spill and receives over $2 million in funding from the oil industry. Its recommendations go to the Alyeska Company and affect the company�s operations.

Fred Felleman, representing Ocean Advocates, also recommended a regional fuel transportation policy and a reduction in petroleum demand. He criticized the inadequate funding available for the Department of Ecology�s Spill Preparedness and Response Program and urged a change in the statutory provision requiring a refund of the barrel tax for fuel exported from WA. He urged greater citizen oversight to ensure political integrity.

John Philben of the Somerset Neighborhood Association in Bellevue criticized the performance of the Olympic Pipeline Company after its recent spill in Renton. He urged that the state and federal government require more automatic shut-off valves and stressed the value of having OPS adopt the recommendations made by the National Transportation Safety Board.

Bob Chipkevish of the Safety Board was the next speaker. He reviewed testimony delivered by Board Chairman Jim Hall at a recent congressional hearing and cited the many recommendations the NTSB has made over the years to the OPS, which the latter agency has not adopted. He noted that the NTSB�s top priorities for OPS improvement related to pipeline integrity, training, corrosion protection, valve automation, and excavation damage prevention. He distributed a copy of comments the NTSB had submitted on OPS�s proposed Operator Qualification regulation and stated that the Board did not consider the adopted regulation satisfactory because it does not have sufficient testing requirements to ensure performance.

Zach Barrett, Office of Pipeline Safety, was the final speaker. He cited the history of fatalities, injuries and damages from pipeline incidents in the past 10 years. He noted that the agency�s responses to the NTSB�s recommendations could be viewed on their web site at ops.dot.gov. He stressed the importance of damage prevention in reducing pipeline incidents, since this is the main cause of failures.

September 22, 1999
Vancouver, WA
Clark College

Three speakers devoted the morning to presentations from other jurisdictions:

Jim Pates, City Attorney of Fredericksburg, Virginia Tom Brace, State Fire Marshal and Director, Office of Pipeline Safety, Minnesota Nancy Wolfe, Chief, Hazardous Materials Safety Division, California

Jim Pates described his city�s efforts to enhance the safety of the Colonial Pipeline Company�s line that runs nearby, after 2 line failures contaminated their drinking water supply and the federal Office of Pipeline Safety (OPS) provided inadequate response and enforcement. Mr. Pates stressed that OPS�s performance has been inadequate regardless of the political party running the federal executive branch, contending that this is due to industry influence success- fully keeping the agency underfunded and understaffed.
He cited as examples of Office of Pipeline Safetys' failures:

• The agency�s agreement with Colonial in response to their 1989 accident was developed with no local or state government involvement.
• To his knowledge OPS has never required a defective pipeline to be replaced; it has instead directed the operator to reduce pressure in the line.
• The agency has failed to establish criteria for Unusually Sensitive Areas despite Congressional direction to do so by 1994.

Mr. Pates explained how Virginia decided, with OPS support, to pursue designation as an "agent" for oversight of interstate pipelines. But after the state had invested substantial time and effort in this attempt, OPS advised them it had changed its policy and was no longer accepting additional states as agents. He distributed a handout recounting this history.

Mr. Pates urged the FAPRT to: focus on both liquid fuel and natural gas pipelines, insist on wide rights-of-way when transmission pipelines are sited, take advantage of court decisions supporting state and local rights to impose fees on interstate lines, and press our Congressional delegation and the Administration to reverse the OPS policy precluding designation of additional states as interstate agents.

Tom Brace explained how a commission formed in response to a fatal 1986 accident led to Minnesota�s establishment of a state pipeline safety office, first within the Department of Public Safety and then under the State Fire Marshal. Mr. Brace said that he is less critical of OPS than Mr. Pates, but still believes strongly that states should operate their own safety programs. He also recommends establishing a citizen advisory committee to a state OPS.

 

Minnesota has, after much effort, mapped all the major interstate pipelines in the state and he strongly urged WA to do this. Mr. Brace emphasized the value of establishing a One-Call Notification system and investing heavily in advertising it; he stressed the importance of large penalties for violations of such a system. He also spoke about the need to establish reasonably large rights-of-way around pipelines and the need to track abandoned as well as active lines.

Minnesota has 19 people in their state OPS, overseeing 50,000 miles of pipeline; 9,000 of those are interstate lines. They are one of 4 states in the country designated as agents for oversight of all hazardous liquid interstate lines. Their budget is funded 56 percent by fees on operators and 44 percent by the federal OPS, although funds from the latter are provided retroactively and are often as much as 9 months late.

Nancy Wolfe explained how California has a different approach to pipeline regulation, with the fire marshal�s office responsible for hazardous liquid pipelines and the Public Utilities Commission responsible for natural gas lines. The California liquid fuel regulatory program covers 8,000 miles of intra- and interstate lines. They use an 8-member advisory committee and find it very valuable. For intrastate lines, California has more stringent standards than the U.S. OPS for hydrostatic testing and risk evaluation. They also require more data for mapping, emergency contacts, and coordination with local emergency responders.

 

Ms. Wolfe stressed the need to automate data collection as much as possible and to correlate pipeline locations with public facilities (such as schools) and environmental features (such as drinking water sources). She noted that all her agency�s staff are peace officers with enforcement authority, but that they emphasize technical assistance to achieve compliance.

The base funding for their program (about $1.2 million per year) is generated by operator fees; California charges its 80 operators $3,000 each plus $150 mile of pipeline. Because funding from U.S. OPS is so variable and often so late, they do not rely on it for basic operations. Ms. Wolfe emphasized that a state does not receive any additional funds for becoming an interstate pipeline agent, though OPS audits state performance on such lines and can reduce their annual grant if they do not consider the performance satisfactory.

Ms. Wolfe spoke of the benefits of an inter-agency oil spill committee that ensures coordination among the 30 agencies with any related responsibilities. She noted that it is generally desirable to involve local planning and utility officials in the state program. She explained that her state trains pipeline operators and local emergency response staffs, often with assistance from pipeline companies. She urged Washington State to minimize local regulations that would impede a company�s proactively replacing old or inadequate lines.

During the Question and Answer period, the speakers said that laws and regulations should allow for "equivalent" techniques (e.g., smart pig inspections in lieu of hydrostatic testing) approved by the regulatory agency. All the speakers recommended the use of strong penalties for violations of "One-Call Systems," including against the entities responsible for accurately flagging utility locations for excavators. The speakers noted that old pipelines are not necessarily the biggest problem, and that the site a pipeline traverses or the product it carries can greatly influence its condition.

There was agreement that the data available to conduct thorough risk assessments is generally lacking, but that companies usually have better data than the federal OPS. In response to a question about local capacity to meet their needs for dealing with hazardous materials, the speakers said companies should be required to support and assist local first responders and should be required to meet with these agencies annually.

The entire Team expressed its appreciation to the speakers for their helpful presentations.

The group discussed the need for intensive efforts during October if a report is to be prepared in early November for public review; three subcommittees will do this work. The Prevention and Siting, Preparedness and Response, and Funding committees � met during the afternoon to establish organizational ground rules and schedule future meetings. They then reported back to the full Team:

Prevention and Siting, Mayor Mark Asmundson, Chair:

 

This group plans meetings on September 28 and October 6, 13 and 20, between approximately 10 a.m. and 2 p.m. They prefer to hold their meetings at the World Trade Center Offices at SeaTac Airport if that facility is available. [NOTE: it has since been determined that this facility is not available.] They will allow any interested party to participate in their discussions, and have deferred a decision on how they will arrive at conclusions.

Their first meeting will focus on one-call systems, the second on internal pipeline inspections, preemption and franchise authority, the third on siting, and the fourth on reaching conclusions.

Prepardeness and Response, Joe Stohr, Department of Ecology, Chair:

This group will hold its first meeting September 30 or October 1 via a conference call. Any party wishing to participate should contact Joe (at 360-407-7450) for information on how to get access to the conference call. This discussion will focus on identifying an issues list and giving assignments to members to develop recommendations on specific issues. The committee will meet during the week of October 11 in Bellevue and the week of October 25 (specific dates have not yet been set) to finalize and prioritize its recommendations. They will allow any interested party to participate.

Funding, Bill Hinkle, Chair and Rick Mattoon, Co-Chair:

This committee will meet on September 30, and October 7, 14, 21, and 28 from approximately 8 to 10:30 a.m. Its first meeting will be held at the Utilities and Transportation Commission, 1300 S. Evergreen Park Drive, SW, Olympia. Subsequent meetings will be held in Room 440 of the Insurance Building on the Capitol Campus (14^th and Water Streets). The group will allow participation by any interested party, but Team members and alternates will make consensus decisions. If those parties cannot reach consensus, the committee will provide the Team majority and minority reports.

The committee�s first meeting will focus on payments currently made by oil and gas companies to state and local governments. It will include presentations by pipeline operators and the Department of Revenue. The group will also hear data gathered by the National Association of Utility Regulators about other states� programs for funding pipeline safety (if it is available).

At subsequent meetings, the group will consider funding options, including changes to the current barrel tax on imported oil, operator fees, local franchise agreements, changes to funding one-call systems, and penalty levels.

All committees were asked to ensure that minutes are taken of each session. These are to be submitted to Carol Jolly, who will ensure they are posted on the FAPRT web site and made available to the public.

Public Meeting Summaries

September 8, 1999
Bellevue, WA

Fortyone people spoke during the 3-hour meeting; each speaker was limited to 4 minutes.

Three key themes emerged from multiple speakers:

• Twenty individuals emphasized the necessity of focusing on improved accident prevention by better technology (e.g., monitoring systems, shut-off valves, leak detection, etc.); strengthened regulation and standards; stronger operator training requirements; or tougher enforcement to create incentives for better performance.
• Nine speakers cited specific flaws in their criticisms of the process used by the Energy Facility Site Evaluation Council (EFSEC) in evaluating the Olympic Pipe Line Company�s proposed Cross-Cascade Pipeline between 1996 and 1999.
• Five people cited concerns about land uses near pipelines, the need to acknowledge land stability in siting new lines, and the absence of public awareness of pipelines present in their neighborhoods.

Two people generously offered assistance to share information or experiences:

• Frank Planton of Portland, OR, offered to share information about Oregon�s One-Call Notice Center and the Oregon statute addressing one-call pre-dig notification.
• Brad Rosewood, with the Chevron Pipeline Corporation in Pasco, discussed his firm�s positive experiences with state and local regulators and emergency responders and offered various suggestions about techniques that work effectively for the 300-mile pipeline he oversees.

Other comments offered by speakers (not in any particular order):

• It is essential that we protect surface and ground water in making siting decisions; this is especially true with respect to drinking water sources.
• Allowing too large a volume to be spilled without an obligation to report the incident flaws the current spill notification system.
• While standards may need to be tightened, the Team should use reason in establishing new requirements.
• The cost of spill clean up should not be a tax-deductible expense.
• The federal Office of Pipeline Safety is ineffectual in regulating pipelines.
• In comparing fuel transport by pipelines vs. other modes (e.g., barges, trucks), pipeline transport is the safest.
• The authority of pipeline operators to exercise eminent domain should be reexamined, since they are profit making businesses.
• Public access to decision-making about pipeline safety issues should be increased.
• The state should work to decrease fuel consumption, which would diminish the need for transportation.
• The state should develop a comprehensive, fuel transportation, safety policy.

September 16, 1999
Moses Lake, WA

Nine people spoke during the meeting, with each speaker having an open-ended opportunity to present his or her views. The predominant topic for the session was the One-Call Notification system, and there was an extended discussion among audience members and the Team about the pros and cons of having a single One-Call Number for the state of WA.

Several speakers contended that it would be inappropriate to alter the current "Call before You Dig" program, which relies on 6 centers across the state. They asserted that there is no data showing that any benefits would be gained by a change and that the current system is working effectively for contractors and utilities. These speakers agreed that the biggest problems related to third-party damages arise from parties failing to call in at all or failing to wait the required 48 hours to have underground facility locations identified by the responsible operator.

There was related discussion of the statute dealing with excavation damage prevention (RCW 19.122) and the absence of meaningful enforcement or penalties for violation of that law. The statute is unclear about the regulatory agency responsible for its implementation.

Speakers emphasized the need for clearly visible markers displaying pipeline locations (in both urban and rural settings), the need for markers to state clearly that a pipeline [rather than "underground cable" is present, and the advantages of having markers show a One-Call number.

Other comments included:

• An objection that no local emergency management agency representative is on the Team.
• The public needs more education about the benefits of pipelines.
• An effective pipeline operation and maintenance program necessitates stringent examinations � internal, surface and by air � by the operator, careful scrutiny of any excavation in the vicinity of the pipeline, and close working relationships with the Department of Ecology and local emergency management agencies.
• Based on observations with the Alaska oil pipeline, WA should require 100% X-ray inspection of pipeline welds before pipe is laid, hydrostatic and soil testing of lines, and strong regulations and standards.

September 22, 1999
Vancouver, WA

Twenty-two people spoke during the 95-minute meeting. Each speaker was limited to five minutes to ensure that everyone who wished to do so was given an opportunity to speak.

Multiple speakers expressed three major themes:

• Eight speakers emphasized the need for better accident prevention through requirements imposed on pipeline operators. These could include double-wall pipelines, increased pipe thickness, automatic shut-off valves, better operator certification requirements, more frequent inspection and maintenance, ground-motion sensors and requirements to replace all pipe over 20 years old. One speaker suggested banning any development within 60 feet on each side of pipeline.
• Five speakers expressed serious concerns about the safety of a Williams Natural Gas Pipeline and compressor station in their neighborhood. They cited the absence of a neighborhood evacuation plan, slow response by the company to a previous accident, local government�s lack of essential information including maps of pipeline location, insufficient shut-off valves, and the seismic condition of the underlying land. Several of these people spoke of concerns about air pollution from the compressor station and their dissatisfaction with controls imposed by the regional air pollution agency and the Department of Ecology.
• Four speakers stressed that more forceful enforcement � including higher penalties � is essential when accidents damage human safety or the environment. Some of these speakers also urged repeal of the tax-deductibility of clean up costs.

Additional comments offered included:

• Better communication is needed between utilities and local planners under the Growth Management Act.
• Better coordination is needed between pipeline operators and local police and fire departments.
• Pipeline operator companies are doing the best they can and do try to keep in touch with local response agencies.
• While improved pipeline standards may be warranted, pipelines are still far safer than truck or barge transport of liquid products.
• It is essential that contractors call a one-call system before digging to avoid third-party damage.
• More stringent and costly regulations are unnecessary for companies to operate safely.
• The Labor and Industries legislation concerning workers harmed by serious accidents is flawed with respect to families� rights to compensation.

Subcommittees Summaries

 

Prevention and Siting
September 28, 1999

Present were: Tony Perez, Jerry Smedes, Linda Dennis, Don Evans, Katy Boylin, Chuck Boykin, Ken Meyer, Mike Gardner, Frank Planton, Duane Henderson, Chuck Blemenfeld, Dennis Lloyd, Zella West, Mary Rowe, Susan Harper, Barbara Greene, Steve Rieger, William Mulkey, Tracy Cereghino, Mark Asmundson.

The first part of the meeting focused on looking at the existing one call system in Washington. Among the findings:

• Washington has multiple One Call centers; a map was provided. This multiple one call center system evolved over the last 25-30 years in response to local needs. It has since expanded into larger units and some consolidation continues.
• None of the centers are funded by tax dollars; one-call centers utilize different funding mechanisms.
• The system receives about 280,000 calls per year mostly from professional contractors and excavators.
• Cascade reports that 40% of damage is caused by people who don�t utilize the one call system; PSE reported that a third of the damage is attributable to those who don�t call; damage from homeowners is about 10% of total.
• Not everyone has joined the one call system. Currently there is no penalty for not joining. Penalties are assessed only after damage has been committed. There may be more leverage with natural gas lines.
• Current State law does not define one-call boundaries; the UTC cannot always say to which one call center a facility owner should subscribe.
• Even with knowledge and use of the one call system, utilities and contractors are still experiencing problems.
• There may be an opportunity to improve the system by providing one statewide number for everyone to call. People can call one number but the calls would then be routed to the existing one-call providers. There may be statistical data supporting the contention that having only one phone number for the one call system will work better. This option would require additional research and funding would be required to implement and maintain.
• One phone number for utility locates can lead to more quality control and standardization.
• California utilizes one telephone number system.
• Contractors may need additional training

Potential Recommendations: A consensus emerged that the current one call system works reasonably well. It was recommended that a team be formed to work between legislative sessions and bring forward any proposed legislation for improving the system.

• Some members recommended the creation of one state-wide number. This would make it easier for everyone to remember which number to call. Another advantage noted was that it would be easier to advertise one number for the entire state
• Allocate some fees to advertising and promoting one-call.
• Look at State law to grant local governments ability to cite violators for not having a valid dig ticket.

The next discussion focused on Data Systems. Among the findings:

• Pipeline companies must maintain a good mapping system. Companies do have their own maps that are generally accurate but not perfect.
• There is no centralized mapping system. WA is trying to develop a centralized mapping system; funding is an issue WUTC has copies of all intrastate maps.
• Mapping is tricky, complicated and very expensive.
• No annual reporting required for liquid pipelines.
• OPS has begun a mapping initiative although participation by the liquid pipelines is optional. It was suggested that perhaps the state coordinate its efforts with OPS.

The question was raised as to whether problems had arisen from lack of signage in cities; How to map lines that carry more than one type of product.

Potential Recommendations:

Disclose pipeline locations to property owners within a specified distance.

Annual Reporting:

• Natural gas companies provide reporting on items such as inventory, pipe size, cause of leaks and other categories. There is no annual reporting requirement for liquid pipelines.
• OPS requires reporting of leaks in excess of 50 barrels or any amount if the event surface water is contaminated. They report on number of leaks but not on specific locations.
• Operators must monitor situation when land movements occur. They must look at movement of soil and any stress on the pipeline. If the pressure on the pipeline increases they have options; repairing, reducing pressure or shutting it down. If risks continue for more than five days they must reduce pressure.

Prevention and Siting
October 6, 1999

Present at the meeting were: Steve Reiger, Brian Wired, Pat Dolan, Tony Perez, Nora Johnson, Richard Kuprewicz, Will Odell, Duane Henderson, Grant A. Jensen, Christopher A. Bias, J. Sean Black, Traci Grundon, Deanne Kopkas, Stuart Jon Ell, Linda Dennis, Wayne A.Wienholz, Kevin Cowan, Dan L. Choate, Karen McCaffey, Ken Meyer, Tray Careghino, Joe Stohr, Kent Craford, Shari Jensen, Mary Rowe, Dennis E. Lloyd, Allen Fiksdal, Deb Ross, Tristan Wise, Susan Harper, Marc Asmundson.

Federal Preemption: The team summarized the preemption issue stating that currently only OPS can enact regulations regarding safety and operational guidelines. This preemption does not prohibit states from imposing environmental safeguards, provided that they do not directly impact pipeline operations.

Several question were posed to the team:

Should Washington ask the Federal Government to change the law to allow states to implement regulations dealing with safety and operations of pipelines?

Responses:

• We should work with the Feds to get OPS to be more responsive. We need to avoid a patchwork regulatory system.
• There are many examples where the Feds have allowed the States to go above and beyond the federal rules; Underground Storage tanks.
• There should be a way to address the unique safety concerns of local governments.

What objections would the industry have to more restrictive State safety standards assuming they were consistent with Federal regulations?

Responses:

• Different State standards could create a problem. Companies already take State features such as topography and weather into account.
  
  
• There is currently no system in place for gathering input from State/local officials for the placement of valves and leak detection devices.
  
  
• States do have input in siting decisions.

Who approves technical designs of pipelines?

• EFSEC can recommend to the governor that he not approve a siting of a pipeline. The governor cannot overrule EFSEC�s denial but he may overrule EFSEC�s approval of a pipeline siting recommendation.
  
  
• Intrastate pipelines are required to submit to a design review by WUTC.

It was noted that States generally have more stringent conditions for safety, i.e. leak detection standards.

It was also noted that interstate liquid pipelines are exempt from a federal law requiring operators to submit to a technical review when new components, other than replacements in kind, are added to their system. So, no one reviews new designs of liquid pipelines when new components are added.

Some members believe that there is a role for a State and federal partnership to review pipeline designs.

Pigging:

• There are no requirements for internal pig inspections. If you do use the pig; OPS can scrutinize the results.
• There are different types of pigs: high resolution, ultrasonic. Different pigs are used based on the information one is looking for.
• Pig tests can provide data about: dents, cracks, corrosion
• There are limits to the type of data you can gather using smart pigs. Current state of the art cannot define the rate of corrosion or identify small longitudinal cracks.
• The company who operates the smart pig interprets the results for Olympic Pipeline.
• Olympic Pipeline will spend more than $1 million to pig its line.
• It was unclear what if any standards existed for determining when defects found by pigs warranted further investigation

Valves:

• Remote valves can inadvertently close. It�s important where valves are placed because they can create surge problems.
• Valve placement is a problem in retrofitting existing pipelines. You need to strike the correct balance.
• Safety critical valves should have redundant operations.
• Check valves, which reduce the flow of liquid, can be prone to malfunction.

Generally it was believed that valves are an important safety device but it�s important to do careful study to determine the optimal location for valve placement.

Leak detection:

• It has been difficult historically to provide information regarding minor leaks.
• Technology now exists to monitor leaks.
• There are no federal requirements for leak detection devices on liquid pipelines, unlike gas pipelines.
• Need to be careful regarding requirements for leak detection because it could lead to many false alarms. Don�t hold companies to unreasonable standards.
  
  
• Currently small leaks can carry criminal sanctions if groundwater is contaminated.

Operator Training; Among the issues raised:

• New OPS rules regarding operator certification are being implemented
• How can you certify that an operator can identify and respond too abnormal circumstances other than "in the cockpit" assessment.
• Each company does things differently so uniform certification requirements would be difficult.
• Operators are not the first lines of defense; they should rely on the equipment.

Franchising Issues; We wanted to learn what local government could do with their franchising authority. Local governments can:

• Assess franchise fees based on linear foot or other method.
• Require safety related testing and processes if utilizing City land.
• Impose insurance requirements.
• Gain access to maintenance records.

A representative from EFSEC suggested that local governments pass ordinances stipulating terms and conditions under which an operator can use Right of way and City property.

Potential Recommendation: Although the team has agreed that the core subcommittee members will most likely develop final recommendations, the following were offered as possible areas where recommendations may be made:

• Federal preemption can still exist but should yield better safety. States should be able to provide criteria under which stricter state regulations can be imposed to protect public safety. It should be seen as providing a way to augment the ability of OPS to do its job.
• Possible pilot program to test leak detection.
• Create a system where OPS must collaborate with States to specifically review proposed pipelines. At the conclusion of such a process, there would be a mechanism for resolving disputes. Reviews would be based on technical aspects, taking into account local conditions. For existing pipelines, every 10 years, agree look at any improvements that pipeline company should make in order to receive continuing authorization to operate within a City�s boundaries.
• Eliminate the exemption liquid pipeline operators enjoy regarding technical review when new components are added to the system. Currently no one reviews the design when new components are introduced.

Preparedness and Response
September 30, 1999

Present were:Joe Stohr, Ecology, Dave Hanson, Whatcom County Fire District, Lt. Steve Kalmbach, WSP, Glen Woodbury, Emergency Management Div., David Williams, WA Fire Commissioners, Bill Mulkey, Olympic Pipeline Co., Dave Wakefield, E. Pierce Fire & Rescue, Ed Reed, Pierce County DEM, Neil Clement, Whatcom County, Sam Lorenz, Grant County DEM, Steve Lamerall, WSP, Sgt. Roy Glass, WSP.

Introductions: Most individuals who signed up to participate were a part of the phone conference. Joe will make available these notes to all potential participants.

Administrative details: The group discussed the scope of the subcommittee. Efforts will be made to draft recommendations focused on preparedness and response but there will probably be overlap with the work of the other two subcommittees.

Participation:

Subcommittee members suggested that the Coast Guard and EPA be invited to participate, especially in discussions related to their respective jurisdictions. Joe will contact them.

 

Draft recommendation building: The subcommittee reviewed an initial list of recommendations gathered from public comment, agency staff and documents presented to the Task Force. Suggestions for further analysis were made and assigned to subcommittee members. Some modification of draft language took place and several additional recommendations were brought forth. Joe will compile all amended and new recommendations and send to members asap. Joe encouraged members to forward analysis, new recommendations, etc. so they can be added to the draft list.

"To Do" List: The following assignments were made:

• Compile second list of draft recommendations (Joe Stohr)
• Contact Coast Guard and EPA for participation (Joe Stohr)
• Send Dave Williams state definition of "worst case" accidents (Joe Stohr)
• Check how Prevention subcommittee is dealing with the following: 1)monitoring of pipeline for leaks, 2) positive incentives for pipeline operators. (Joe Stohr)
• Review potential expansion of GRP approach to include economic and human health impacts.(Joe Stohr)
• Send e-mail addresses of subcommittee to Glen Woodbury so he can mail fact sheets regarding Disaster Trust Fund. (Joe Stohr)
• Suggest that Task Force use Minnesota Report Format thatincludes a problem statement before each recommendation. (Joe Stohr)
• Suggest new approach to identifying "worst case" accidents. (DaveWilliams & Neil Clement)
• Develop a set of recommendations that capture needs of local first responders. Ed Reed, Glen Woodbury, Sam Lorenz, Bill Mulkey,(Dave Williams)
• Check if LEPCs are part of the GMA process to support protective land use decisions.

Next Meeting: The next subcommittee meeting will be Oct. 14, in Ecology's Northwest Regional Office, Room 2A, 3190 160th Ave. S.E., Bellevue, WA. (425) 649-7000. The meeting will run from 10am to 2 pm. The subcommittee will try to complete our draft list of recommendations and prioritize/organize them.

October 13, 1999

Opening remarks and introductions: Present at the meeting were: Tony Perez, Deb Ross, Allen Fiksall, Tristan Wise, Susan Harper, Don Evans, Joe Jainga, Dennis E. Lloyd, Kenneth W. Meyer, Wyne A. Wienholz, Karen McGaffey, Chuck Blumenfeld, Steve Hunter, Duane Henderson, Richard Kuprewicz, Grant Jensen, Lori Komayar, Carol Jolly, Chuck Mosher, Julie Rodwell.

EFSEC

The authorizing Statute, which was passed 30 years ago, was distributed to the members for their information. EFSEC originated as a one-stop forum for discussion of issues relative to the siting of large power plants. Among the roles EFSEC currently plays are coordinating with other state agencies, monitoring, regulating, and permitting. In some cases it can override local jurisdiction. EFSEC coordinates the work of various state agencies involved in the review of siting. Its review process encompasses several components:

 

• Environmental review
• Consistency with local land use policies
• Adjudication (provides broad perspective, opportunities for expert witnesses)
• Recommendation to the Governor.( Governor can return recommendation to EFSEC w/ request for additional conditions)
• Detail of Design and Construction

EFSEC reviews voluminous amounts of information in making their determinations. They believe that they have sufficient facts with which to make their decisions. EFSEC can deny a siting application on the basis of design and construction. Generally, if EFSEC determines that a siting application is inconsistent with local zoning and Land Use ordinances it terminates the process. The applicant�s only recourse is to prove that zoning determinations were faulty; this would be very difficult for an applicant to prove.

It was suggested that perhaps EFSEC coordinate w/ OPS on pipeline safety issues much like it does with the NRC, in cases where contamination spreads beyond the grounds of a nuclear facility.

Funding

EFSEC gathers fees from applicants. Applicants pay for all reasonable costs for siting facilities, including the costs of consultants. A review of EFSEC recommended that it might be a good idea to get state funding.

Large projects challenge the ability of other State agencies to intervene in the review process. These projects place a financial strain on their budgets and their effectiveness in the process is compromised because the applicant pays nothing. Discussion ensued as to whether the processing costs incurred by State agencies can be passed onto the applicant. It was suggested that perhaps state agencies could participate at the front end of the process - the EIS - stage, changing their role from intervention to review. Another factor cited as a barrier to effective state agency participation is the ex-parte limitations.

Some additional comments regarding EFSEC

Chuck Mosher asked that members providethe committee, in writing, their thoughts and recommendations on how the EFSEC process can be improved.

Easements

Discussion ensued as to how to strengthen easements. Federal regulations on easements are vague; they don�t prevent structures from being built on easements.

Members provided some helpful comments:

• ROW should appear on Title documents; Title companies should be required to provide this information.
• How do you deal with parties who have violated existing laws?
• Look to CA model.
• Possible incentives to builders.
• Statewide clearinghouse for easement requirements.
• Provide for more education and communication between pipeline companies and developers. Local governments should require developers to consult with utilities before approving permits. There�s a need to get pipeline companies in the loop regarding developments near their ROW. Let communication start early in the process. Perhaps local governments can place a check box on permit applications where an applicant must indicate if a pipeline easement exists.
• Local governments and the legislature should come together and resolve the issue of building or digging around easements.
• Pass a state law to say you can�t build on an easement
• Utilities should provide more information to communities.
• Enforce rules about removal of signage; provide penalties.
• Place onus on rental companies to provide their customers information about One call system and requirements for using it.
• Place a fine of $25 thousand plus the cost of repair to those who cause damage to pipelines.
• Revoke the licenses of contractors who repeatedly cause damage.

GMA

It was recommended that local governments address pipeline siting through their Comprehensive Plan and development ordinances. They should specify the generic conditions governing where pipelines should go.

Locals should consider the types of facilities that would warrant setbacks. (By federal law, natural gas companies upgrade their facilities when schools, critical facilities or population encroaches on the pipeline.

Eminent Domain

The team had a short discussion on the issue of eminent domain. The issue was raised as to whether pipeline companies, who enjoy eminent domain powers, should exercise that right and obtain property outright as a way to reduce third party damage to their pipelines. After some discussion it was agreed that eminent domain was a lower priority and not a high payoff option.

Independent Office of Pipeline Safety

Discussion ensued about the where a state office of pipeline safety should reside (i.e., UTC, Fire Marshall, EFSEC) and a definition of what this office would do. It was agreed that these different agencies would have an opportunity to validate their positions at the next meeting or submit a position paper to the committee.

It was suggested that the 1991 Office of Marine Safety is a good model for a state office of pipeline safety. It had outside experts, was independent and had a citizen�s advisory board.

Among the scope of activities for the state Office of Pipeline Safety is:

• Provide technical experts
• Focus of public safety and prevention
• Provide inspections of the pipeline
• Audit
• Set and enforce standards

Funding
September 30, 1999

The Subcommittee met at the offices of the Utilities and Transportation Commission, 1300 S Evergreen Park Drive, SW; Olympia, WA. A list of the attendees is attached.

Ray Philen of the Department of Revenue discussed pipeline companies� obligations for Public Utility Taxes (PUT) and Business and Occupation Taxes and distributed a handout about 1998 revenues under these requirements. Because DOR legislation specifies that for any sector in which there are less than 3 payers, payment information is not discloseable, the hand-out provided information on Natural Gas Distribution Companies, but not on Natural Gas or Liquid Petroleum Transmission Companies. Ray agreed to report back to the subcommittee on the aggregate revenue from all pipeline companies, since this will meet the disclosure requirements.

The Public Utility Tax rate on product distribution is 3.85% of gross receipts. Business and Occupation taxes are due on other services a company might provide (e.g., maintenance or consulting) and the rate for this is 1.96%. Revenues from the PUT go to the State General Fund.

Ray explained that the state could collect no taxes if a pipeline transports product through the state but does not store or deliver any of it within state.

He further explained that gas distribution and liquid petroleum and gas transmission companies were assessed about $1.5 billion in property taxes in 1998. He agreed to report back to the subcommittee on the amount actually paid.

Bob Hansen of Avista described his company�s tax payments to the state as representative of other Local Distribution Companies. The biggest tax they pay is the PUT; they also pay real and personal property taxes to counties. In 1998, Avista had $84 million in assessed value and paid about $1.3 million in property taxes. The other large tax on Avista is city utility tax at 6% of gross receipts; in 1998, the company paid about $2.2 million in such taxes across Washington.

Of the states Avista serves, WA is the only one with a PUT; other states charge income taxes. The PUT is higher than the income taxes charged by these other states.

The company also pays fees to the Utilities and Transportation Commission for the latter�s regulatory program. In 1998 this amounted to about $145,000. Rick Mattoon noted that the agency�s total 1998 revenue for pipeline regulation was about $540,000 with just over half from operator fees and just under half from a U.S. Office of Pipeline Safety (OPS) grant.

Rick reported on discussions he had with the head of the pipeline safety program within the Arizona Corporation commission who is currently president of the National Association of Pipeline Safety Representatives. Terry Fronterhouse pointed out that there is no standard level of funding for state programs and the OPS has ever developed a mechanism for setting such a standard.



Funding
October 14, 1999

The Subcommittee met in Room 440 of the Insurance Building in Olympia. A list of the attendees is attached.

Rick Mattoon began by following up on a commitment made by Ray Philen of the Department of Revenue at the Subcommittee�s September 30 meeting. Ray promised to provide information about Public Utility and B & O taxes paid by all pipeline operators and about their actual 1999 property tax payments. Rick handed out documents with this information (attached).

Rick then discussed trends in the Utilities and Transportation Commission�s (UTC�s) revenues and expenditures for pipeline safety over the past several years. He noted that the pipeline industry pays fees to cover the UTC�s costs for consumer protection, economic regulation and safety; the total of these fees is capped in statute. The safety program has been operating at a deficit since 1996 and the UTC has made up the shortfall by taking funds from the industry�s economic regulation payments.

Gerry O�Keefe and Janis Kingery of the Department of Ecology then gave a presentation on the barrel tax and its use by Ecology�s Spills Prevention, Preparedness and Response Program. This tax was instituted in 1991 as the state was reacting to the Exxon Valdez spill. Gerry provided several handouts (attached).

The state collects 5 cents per barrel on crude oil or petroleum products imported to Washington by vessel. Only the first possession is taxable; subsequent recipients of the same product are exempt from payment.

One cent goes to a Spill Response Account. This is available for immediate use in the event of a major spill; a major spill is defined as one where expenses exceed $50,000. It is capped at $10 million; when that level is reached, the state will stop collecting this penny until the fund diminishes to $9 million, when collection will begin again. This account is increasing by about $2 million per biennium and the $10 million level is expected to be reached in 2000.

Four cents goes to Ecology�s Spill Administration Account to cover the program�s operating costs. This account has taken in less money than needed 5 of the past 8 years. The shortfall expected for 1999 led the legislature to transfer $1 million from the Spill Response Account to the Administration Account; nevertheless, the department had to reduce its staff by over 2 full-time employees.

Under the law, the state must give a credit to the payer for oil or petroleum products exported from Washington. The net result is that of the total revenue collected, almost one-third is returned. The unpredictability of the timing and size of the refunds worsen the effects of this on the department's operations.

Because the volume of the crude oil entering the state is largely fixed by the capacity of the state�s refineries, the volume being taxed has remained relatively stable while the state�s needs to operate the program have continued to grow (because of inflation among other reasons).

The Subcommittee discussed some of the options that might be applied to fund a pipeline safety program:

• a tax on crude oil entering the state by pipeline and used in the state;
• a tax on refined products entering the state by any transport mode other than vessels;
• a fee on pipeline operators based on miles of pipe and volume transported (which reflects the variation in pipeline size).

Team members agreed to contact pipeline safety officials in other states to determine how their programs are funded. The states to be contacted are:

Arizona, California, Michigan, Minnesota, Nevada, and Rhode Island.

This information is to be brought to the Subcommittee�s next meeting, which is scheduled for October 28 at 8:00 a.m. in Room 440 of the Insurance Building. Carol Jolly agreed to contact the chairs of the other subcommittees to emphasize the necessity of their providing their recommendations to the Funding Subcommittee before the October 28 meeting.

For information on any of the meetings, please contact Carol Jolly at (360) 902-0639 or [email protected]