Pipelines have an inherent safety advantage over other modes of freight  transportation because they are primarily located underground, away from  public contact. These accidents resulted in an average of 2  fatalities and 8 injuries per year. OPS, within RSPA, administers the national regulatory program to ensure  the safe operation of the nation’s natural gas and hazardous liquid  pipelines. Key Management Elements Are Needed to Determine the Effectiveness of OPS’s Enforcement Strategy

Although in recent years OPS has made a number of changes in its  enforcement strategy that have the potential to improve pipeline safety, the  effectiveness of this strategy cannot currently be determined because the  agency has not incorporated three key elements of effective program  management—clear program goals, a well-defined strategy for achieving  those goals, and performance measures linked to the program goals. According to these  officials, in the last several years, they have placed a priority on developing  and implementing this risk-based regulatory approach and on developing a  sound approach for overseeing pipeline operators’ fulfillment of the  agency’s new requirements. 4.) 5.) OPS Needs Adequate Measures of the Effectiveness of Its Enforcement Strategy

According to OPS officials, the agency uses three types of performance  measures to determine the effectiveness of both its enforcement activities  and other oversight efforts:  (1) the achievement of agency performance  goals, (2) agency inspection and enforcement activity, and (3) the integrity  management performance of pipeline operators, such as pipeline repairs  made in response to the agency’s new requirements. Most of the penalties that OPS assessed have been paid;  however, OPS and FAA lack important management controls to ensure that  penalties are collected. Inflation was low during this period. If the effects of inflation are  considered, the average assessed penalty for 1995 through 1999 would be  $21,000, and the average assessed penalty for 2000 through 2003 would be  $30,000, in 2003 dollars.) For the 216 penalties that were assessed from 1994 through 2003, OPS  assessed the penalty that it proposed 69 percent of the time (150 civil  penalties). Stakeholders Expressed Differing Views on Whether OPS’s Civil Penalties Deter Noncompliance

Although OPS has increased both the number and the size of the civil  penalties it has imposed, the effect of this change, if any, on deterring  noncompliance with safety regulations is not clear. For example, some of the interstate  agents said that civil penalties—no matter what the amount—are a  deterrent because the penalty puts the pipeline operator in the public eye. In light of the progress OPS has  made in these other areas and the issues we raised with OPS in preparing  this report, OPS has indicated that it will devote more attention to  managing its enforcement program than it has previously. OPS should fully define its strategy for achieving these goals. OPS should establish a systematic approach for designing performance  measures that incorporates identified key practices. The two  reporting methods are not comparable. However, the agency did not  increase its use of enforcement actions until 2000 when it began its “tough  but fair” phase. 12.) 14.) 18.) Over the same period, the number of  OPS’s enforcement and administrative actions fluctuated widely.
Why GAO Did This Study

While pipelines are inherently safer to the public than other modes of freight transportation, pipeline accidents involving natural gas and hazardous liquids (such as gasoline) can have serious consequences. For example, a natural gas pipeline ruptured near Carlsbad, New Mexico, in 2000, killed 12 people, and resulted in $1 million in damages or losses. The Office of Pipeline Safety (OPS) administers the national regulatory program to ensure safe pipeline transportation. OPS uses its enforcement program, when safety problems are found, as one means to do so. This study reports on (1) the effectiveness of OPS's enforcement strategy and (2) OPS's actions for assessing monetary sanctions (civil penalties), among other things.

What GAO Found

The effectiveness of OPS's enforcement strategy cannot be determined because the agency has not set goals for its enforcement program, fully defined its strategy, or established performance measures linked to goals that would allow an assessment of results. These are key elements of effective management. Without these elements, the agency cannot determine whether recent changes in its strategy are having the desired effects on pipeline safety. Over the past several years, OPS has placed priority on other areas--developing a new risk-based regulatory approach--and it believes these efforts will change the safety culture of the industry. OPS now intends to devote more attention to strengthening the management of the agency's enforcement program. In particular, OPS is developing an enforcement policy that will help define its enforcement strategy and has made some initial steps toward identifying new performance measures. However, OPS does not anticipate finalizing such a policy until sometime during 2005 and lacks a systematic approach for incorporating some of the key practices identified for achieving successful performance measurement systems. OPS has increased both the number and the size of the penalties it has assessed against pipeline operators over the last 4 years (2000 through 2003) following its decision to be "tough but fair" in assessing penalties. During this period, OPS assessed an average of 22 penalties per year, compared with an average of 14 per year for the previous 5 years (1995 through 1999), a period of more lenient enforcement. In addition, the average penalty amount increased from $18,000 to $29,000 over the two periods. While civil penalty use and size has increased, it is not clear whether this action will help deter noncompliance with the agency's safety regulations. Stakeholders expressed differing views: some thought that any penalty had a deterrent effect if it kept the pipeline operator in the public eye, while others told us that the penalties were too small to be effective sanctions. About 94 percent of the 216 penalties levied from 1994 through 2003 have been paid. However, OPS lacks effective management controls to assure that penalties are collected. For example, OPS does not routinely inform its collection agent of penalties it has assessed.