These states are currently authorized to receive reimbursement  of up to 50 percent of the costs of their pipeline safety programs from  PHMSA. The Pipeline Safety Improvement Act of  2002 modified PHMSA’s traditional oversight approach by supplementing  the minimum standards with a risk-based program for gas transmission  pipelines. This program—termed “integrity management”—requires gas  transmission pipeline operators to assess and mitigate safety threats, such  as leaks or ruptures due to incorrect operation or corrosion, to pipeline  segments that are located in highly populated or frequently used areas,  such as parks. The 2002 act also requires that operators reassess these pipeline segments  for safety threats at least every 7 years. 1.) If conditions warrant, reassessments must occur more  frequently. Gas Integrity Management Program Benefits Pipeline Safety

Operators are making good progress in assessing and repairing their  pipelines, thereby improving the safety of their pipeline systems. In addition to  assessing their pipelines, operators are also making progress in fulfilling  the requirement to repair problems found on their pipelines in highly  populated or frequently used areas. We estimate that the integrity management program should offer  additional safety benefits over the minimum safety standards for up to 68  percent of the population living close to gas transmission pipelines. A number of representatives from pipeline industry organizations, state  pipeline agencies, safety advocate groups, and operators that we  contacted agree that integrity management benefits public safety because  it requires all operators to systematically assess their pipelines to gain a  comprehensive knowledge about the risks to their pipeline systems. Another concern raised by 33 (65 percent) of the operators is the  requirement to reassess their pipelines for corrosion problems at least  every 7 years. The 7-year Reassessment Requirement Appears to be Conservative

Periodic reassessments of pipeline threats are beneficial because threats— such as the corrosive nature of the gas being transported—can change  over time. Through December 2005 (latest data available), 76 percent of the  operators (182 of 241) reporting baseline assessment activity to PHMSA  told the agency that their pipelines were in good condition, free of major  defects, and requiring only minor repairs. 2.) In  addition, since operators are required to identify and repair significant  problems, the overall safety and condition of the pipeline system should  be enhanced before reassessments begin toward the end of the decade. Over the past 10- 1/2 years, 12 people have died and 3 have been injured in two corrosion- related incidents. Industry consensus standards allow for maximum reassessment intervals  for time-dependent threats of 10, 15, or 20 years only if the operator can  adequately demonstrate that corrosion will not become a threat within the  chosen time interval. The remaining three operators told us that  they would reassess their pipelines at intervals shorter than the industry  consensus standards but longer than 7 years because of the condition of  their pipelines. Safeguards Exist if an Alternative Standard for Corrosion Reassessments is Allowed

PHMSA and the state pipeline agencies plan to inspect all operators’  compliance with integrity management reassessment requirements, among  other things, to ensure that operators continually and appropriately assess  the conditions of their pipeline segments in highly populated or frequently  used areas. These inspections should serve as a check as to whether  operators have identified threats facing these pipeline segments and  determined appropriate reassessment intervals. PHMSA and states have  begun inspections and expect to complete most of the first round of  inspections no later than 2009. Increasing State Funding Appears Reasonable, but Funding Sources and Oversight Plans Would Need To Be Addressed

The Subcommittee’s draft bill proposes to increase the matching funds  that PHMSA provides to states for pipeline safety program activities from  a maximum of 50 percent to a maximum of 80 percent of a state’s pipeline  safety program costs. Furthermore, state pipeline safety  activities would increase if PHMSA implements its planned integrity  management program for distribution pipelines. According to PHMSA, the agency plans to monitor increased state pipeline  safety activities through its current oversight approach, which consists of  reviewing annual reports from states and field evaluations of state  activities. Finally, regarding the 7-year reassessment requirement, our preliminary  view is that these reassessment intervals should be based on technical  data, risk factors, and engineering analyses rather than a prescribed term.
Why GAO Did This Study

The Pipeline Safety Improvement Act of 2002 established a risk-based program for gas transmission pipelines--termed integrity management--which requires pipeline operators to identify areas where the consequences of a pipeline incident would be the greatest, such as highly populated areas. Operators must assess pipelines in these areas for safety threats (such as corrosion), repair or replace defective segments, and reassess their pipelines at least every 7 years. Under the Pipeline and Hazardous Materials Safety Administration's (PHMSA) regulations, operators must reassess their pipelines for corrosion at least every 7 years and for all safety threats at least every 10, 15, or 20 years. State pipeline safety agencies that assist PHMSA are eligible to receive matching funds up to 50 percent of the cost of their pipeline safety programs. This statement is based on ongoing work for Congress and for others. It focuses on three areas germane to current legislative reauthorization proposals: (1) an overall assessment of the integrity management program, (2) the 7-year reassessment requirement, and (3) provisions to increase state pipeline safety grants. GAO contacted more than 50 pipeline operators and a broad range of stakeholders and surveyed state pipeline agencies. GAO also reviewed PHMSA and industry guidance and reviewed PHMSA pipeline performance data.

What GAO Found

While the gas integrity management program is still being implemented, early indications show that the program benefits pipeline safety. For example, the condition of transmission pipelines is improving as operators assess and repair their pipelines. As of December 31, 2005 (latest data available), 33 percent of the pipelines in highly populated or frequently used areas had been assessed and over 2,300 repairs had been completed. In addition, we estimate that up to 68 percent of the population that lives close to natural gas transmission pipelines is located in highly populated areas and is expected to receive additional protection as a result of improved pipeline safety. Furthermore, despite some uncertainty on the part of operators over the program's documentation requirements, operators, gas pipeline industry representatives, state pipeline officials, and safety advocate representatives all agree that the program enhances public safety, citing operators' improved knowledge of the threats to their pipelines as the primary benefit. Although periodic reassessments of pipeline threats are beneficial, the 7-year reassessment requirement appears to be conservative. Through December 2005, 76 percent of the operators (182 of 241) reporting baseline assessment activity to PHMSA reported that their pipelines were in good condition, requiring only minor repairs. Most of the problems found were concentrated in just 7 pipelines. These results are encouraging, since operators are required to assess their riskiest segments first and operators are required to repair defects, making them safer before reassessments begin toward the end of the decade. There have been no deaths or injuries from corrosion related pipeline incidents over the past 5-1/2 years. An alternative approach is to permit pipeline operators to reassess their pipeline segments at intervals based on technical data, risk factors, and engineering analyses. Such an approach is consistent with the overall philosophy of the 2002 act and would meet its safety objectives. Under this approach, operators could reassess their pipelines at intervals longer than 7 years only if operators can adequately demonstrate that corrosion will not become a threat within the chosen time intervals. Otherwise, the reassessment must occur more frequently. As a safeguard to ensure that operators have identified threats facing these pipeline segments and have determined appropriate reassessment intervals, PHMSA and state regulatory agencies are already conducting integrity management inspections of operators. They plan to inspect most operators' integrity management activities by 2009. The provision to increase the cap on pipeline safety grants to states appears reasonable given that states' workloads are expanding, but funding sources and oversight of states' expanded activities would need to be addressed in order to ensure that the increased grants are appropriately carried out. PHMSA has identified several potential funding sources, such as reprioritizing the agency's budget and increasing pipeline user fees. For oversight, PHMSA anticipates integrating states' expanded activities into the agency's current oversight approach that relies on annual reports from states and field evaluations.