Ken Silverstein | Sep 24, 2010

When a gas pipeline in Northern California exploded last month and killed 7 people, it triggered an outcry for reform.

Before the accident in San Bruno, Calif., there were others and ones that had similar catastrophic results. That prompted the Bush administration to clamp down on pipeline companies, which had previously taken the position that increased oversight was intrusive. While Congress last dealt with the issue in 2006, the thinking now is that those rules have to once again be strengthened, largely because the rate at which inspections occur is too slow.

"The nation's pipelines, our energy highways, are by far the safest way to quickly transport large volumes of fuels and other hazardous liquids over long distances," says Transportation Secretary Ray LaHood. "However, as the recent oil pipeline failures near Marshall, Mich., and Romeoville, Ill., have shown, as well as the tragic gas pipeline explosion in Northern California, the Department needs stronger authority to ensure the continued safety and reliability of our nation's pipeline network."

The proposed "Strengthening Pipeline Safety and Enforcement Act of 2010" would increase from $1 million to $2.5 million the maximum fine for the most serious violations involving deaths, injuries, or major environmental harm. It also would provide additional resources for the enforcement program by authorizing 40 additional inspectors and enforcement personnel over four years.

State regulators, meantime, have ordered Pacific Gas & Electric, which owns the pipe that burst on September 9, to ease the pressure by 20 percent. The company had earlier detailed for public review - as required by law - areas within its network that were considered higher risks. The utility has said in public statements that parts of the San Bruno pipe that were first installed more than 50 years ago were set to be replaced.

As for the explosion, PG&E has said that the rough terrain along with the number of twists and turns that the line takes had caused it sway from the normal procedures used to evaluate lines. Because of such special circumstances, workers had to inspect those "currents" within the pipe to determine if corrosion was occurring.

The utility has said that it takes full responsibility for the explosion. It has created a fund with $100 million that will compensate the San Bruno community as well as the victims. "We can give you our promise that PG&E will live up to its commitment to help rebuild this community - and help people rebuild their lives," says Peter Darbee, chief executive of PG&E.

Track Record

A safety law that passed in 2002 - and updated in 2006 -- set out to minimize the chances of disastrous oil and gas pipeline ruptures. It worked to speed up the frequency with which such lines were inspected as well as to impose tougher financial penalties. But critics had complained that the networks were too vast for them to be properly inspected.

Altogether, there are 2.4 million miles of interstate oil and gas pipelines in the United States as well as 1.8 million miles of distribution lines. According to the Pipeline and Hazardous Materials Safety Administration, about 7 percent of the nation's pipelines are classified as "high consequence areas."

The American Gas Foundation defends the industry. It says that between 1990 and 2002 the number of serious injuries or fatalities occurring on the nation's distribution lines accounted for 40 percent of the 1,570 incidences.

The foundation says that 47 percent of those "serious" accidents were caused by factors outside the operator's purview such as excavation. It also maintains that most of the accidents only involve property damage while 10 percent or less are tied to corrosion, construction or operation of the lines.

"The utilities that deliver the natural gas are subject not only to their own stringent internal controls, but also must meet rigorous federal and state oversight -- and the safety of the public is, and always will remain, our industry's paramount priority," says Lori Traweek, senior vice president of the American Gas Association, in testimony. She adds that the industry spends about $7 billion a year in safety-related activities.

Critics of PG&E and its handling of pipeline inspections have said that it has the expertise and resources to stay atop the matter. The Utility Reform Network goes on to say that the company had no difficulty finding huge bonus checks for its top executives but has not had the same sense of urgency when it comes to common pipeline upgrades.

TURN, to which the organization is referred, emphasizes that many of PG&E's claims will be handled by its insurance carrier and that any excess should - not -- be borne by the utility's customers through rate hikes. The same money that it has used to compensate its executive team should now be allocated to pipeline safety, it says.

 "Our lives are literally in PG&E's hands, and that's scary," says TURN executive director Mark Toney. "PG&E had no trouble finding $214 million extra for their highest paid executives in 2007-2010. It is time for the California Public Utility Commission to hold PG&E accountable."

Pipeline companies have taken a more conciliatory and proactive approach toward government regulation. But accidents such as the one in San Bruno undermine those efforts and instill fear in many communities. The industry must now devote more of its resources to operations and maintenance while federal regulators work to assure more frequent and more thorough inspections.

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