	Background

OPS, within the Department of Transportation’s Research and Special  Programs Administration (RSPA), administers the national regulatory  program to ensure the safe transportation of natural gas and hazardous  liquids by pipeline. In December 2002, the Pipeline Safety Improvement  Act increased these amounts to $100,000 and $1 million, respectively. Key Management Elements Are Needed to Determine the Effectiveness of OPS’s Enforcement Strategy

The effectiveness of OPS’s enforcement strategy cannot be determined  because OPS has not incorporated three key elements of effective program  management—clear performance goals for the enforcement program, a  fully defined strategy for achieving these goals, and performance measures  linked to the goals that would allow an assessment of the enforcement  strategy’s impact on pipeline safety. However, although OPS began  to implement these changes in 2000, it has not yet developed a policy that  defines this new, more aggressive enforcement strategy or describes how  the strategy will contribute to the achievement of the agency’s  performance goals. To date, the agency has completed an initial set of  enforcement guidelines for its operator qualification standards and has  developed other draft guidelines. The three  measures that OPS is considering could provide more information on the  intermediate outcomes of the agency’s enforcement strategy, such as the  frequency of repeat violations and the number of repairs made in response  to corrective action orders, as well as other aspects of program  performance, such as the timeliness of enforcement actions. While OPS’s new measures may produce better  information on the performance of its enforcement program than is  currently available, OPS has not adopted key practices for achieving these  characteristics of successful performance measurement systems:    Measures should demonstrate results (outcomes) that are directly linked  to program goals. OPS Has Increased Its Use of Civil Penalties; the Effect on Deterrence Is Unclear

In 2000, in response to criticism that its enforcement activities were weak  and ineffective, OPS increased both the number and the size of the civil  monetary penalties it assessed. OPS Now Assesses More and Larger Civil Penalties

OPS assessed more civil penalties during the past 4 years under its current  “tough but fair” enforcement approach than it did in the previous 5 years,  when it took a more lenient enforcement approach. From 2000  through 2003, OPS assessed 88 civil penalties (22 per year on average)  compared with 70 civil penalties from 1995 through 1999 (about 14 per  year on average). Civil penalties  represent about 14 percent (216 out of 1,530) of all enforcement actions  taken over the past 10 years. The Effect of OPS’s Larger Civil Penalties on Deterring Noncompliance Is Unclear

Although OPS has increased both the number and the size of the civil  penalties it has imposed, the effect of this change on deterring  noncompliance with safety regulations, if any, is not clear. The  stakeholders we spoke with expressed differing views on whether the civil  penalties deter noncompliance. Pipeline safety advocacy groups  that we talked to also said that the civil penalty amounts OPS imposes are  too small to have any deterrent effect on pipeline operators. As discussed  earlier, for 2000 through 2003, the average assessed penalty was about  $29,000.
Why GAO Did This Study

Interstate pipelines carrying natural gas and hazardous liquids (such as petroleum products) are safer to the public than other modes of freight transportation. The Office of Pipeline Safety (OPS), the federal agency that administers the national regulatory program to ensure safe pipeline transportation, has been undertaking a broad range of activities to make pipeline transportation safer. However, the number of serious accidents--those involving deaths, injuries, and property damage of $50,000 or more--has not fallen. Among other things, OPS takes enforcement action against pipeline operators when safety problems are found. OPS has several enforcement tools to require the correction of safety violations. It can also assess monetary sanctions (civil penalties). This testimony is based on ongoing work for the House Committee on Transportation and Infrastructure and for other committees, as required by the Pipeline Safety Improvement Act of 2002. The testimony provides preliminary results on (1) the effectiveness of OPS's enforcement strategy and (2) OPS's assessment of civil penalties.

What GAO Found

The effectiveness of OPS's enforcement strategy cannot be determined because the agency has not incorporated three key elements of effective program management--clear program goals, a well-defined strategy for achieving goals, and performance measures that are linked to program goals. Without these key elements, the agency cannot determine whether recent and planned changes in its strategy will have the desired effects on pipeline safety. Over the past several years, OPS has focused primarily on other efforts--such as developing a new risk-based regulatory approach--that it believes will change the safety culture of the industry. But, OPS also became more aggressive in enforcing its regulations, and now plans to further strengthen the management of its enforcement program. In particular, OPS is developing an enforcement policy that will help define its enforcement strategy and has taken initial steps toward identifying new performance measures. However, OPS does not plan to finalize the policy until 2005 and has not adopted key practices for achieving successful performance measurement systems, such as linking measures to goals. Incorporation of Key Program Management Elements into OPS's Enforcement Strategy OPS increased both the number and the size of the civil penalties it assessed against pipeline operators over the last 4 years (2000-2003) following a decision to be "tough but fair" in assessing penalties. OPS assessed an average of 22 penalties per year during this period, compared with an average of 14 per year for the previous 5 years (1995-1999), a period of more lenient "partnering" with industry. In addition, the average penalty increased from $18,000 to $29,000 over the two periods. About 94 percent of the 216 penalties levied from 1994 through 2003 have been paid. The civil penalty is one of several actions OPS can take when it finds a violation, and these penalties represent about 14 percent of all enforcement actions over the past 10 years. While OPS has increased the number and the size of its civil penalties, stakeholders--including industry, state, and insurance company officials and public advocacy groups--expressed differing views on whether these penalties deter noncompliance with safety regulations. Some, such as pipeline operators, thought that any penalty was a deterrent if it kept the pipeline operator in the public eye, while others, such as safety advocates, told us that the penalties were too small to be effective sanctions.