With pipeline growth booming, the US agency in charge of safety struggles to keep up

The pipeline industry added thousands of miles of natural gas, crude oil and carbon dioxide pipelines to the national network in recent years. But the federal regulatory agency responsible for ensuring that vast system’s safety failed to grow at the same pace.

Pipeline miles expand every year, and are expected to see even faster growth in the near future thanks to major federal laws.

The 2021 infrastructure law provided $1 billion for grants for new natural gas distribution lines.

And the climate, taxes and policy law Democrats passed along party lines and President Joe Biden signed last year included billions in tax incentives for carbon capture systems, including pipelines to underground storage sites in North Dakota, spurring a slew of new pipeline proposals in the Midwest.

But neither bill added money for the pipeline safety program at the Pipelines and Hazardous Materials Safety Administration, or PHMSA, a 600-employee agency within the U.S. Department of Transportation that is responsible for guaranteeing the safety of pipelines that cross state lines.

Kenneth Clarkson, a spokesman for the Pipeline Safety Trust, an advocacy group, said the agency has long lacked the funding it needs.

“PHMSA has been historically underfunded, and unfortunately that is still the case,” Clarkson wrote in an email to States Newsroom. “The agency needs more resources to keep up with the safety of our nation’s millions of miles of pipelines, especially so as more pipelines are continually being added to that total.”

Pipeline Safety Trust was founded to be a watchdog on industry and regulators in 2003 with money from criminal penalties imposed following the Olympic Pipe Line Company explosion in Bellingham, Washington in 1999.

That disaster killed two children and an 18-year-old and caused at least $45 million in property damage after nearly 250,000 gallons of gasoline spilled from a ruptured pipeline and caught fire.

PHMSA Deputy Administrator Tristan Brown told the House Transportation and Infrastructure Committee’s Railroad, Pipelines and Hazardous Materials Subcommittee at a March hearing that the agency has had to work “leaner” as its responsibilities have grown without a subsequent rise in resources.

“PHMSA’s oversight responsibilities continue to grow, both in terms of the types of facilities we regulate, as well as the number of facilities we regulate,” Brown told the House panel. “We have had to continuously operate relatively leaner as compared to our expanded universe of regulated facilities.”

Brown is the top PHMSA official because the agency has not had a Senate-confirmed administrator since the end of the Trump administration. Biden has not nominated anyone for the role.

Spokespeople for PHMSA did not substantively respond last week to messages seeking comment.

Responsibilities grow but not the budget

PHMSA’s budget is the smallest of DOT’s eight agencies, not including the government-owned nonprofit Great Lakes St. Lawrence Seaway Development Corporation.

Its annual appropriations are less than half what the next smallest, the Federal Motor Carrier Safety Administration, is allocated. PHMSA received $319 million in regular appropriations last fiscal year, with just more than half, $161 million, allocated for pipeline safety.

As of March, the agency had 207 inspection and enforcement workers on staff. By comparison, the Federal Rail Administration employs nearly 400 safety inspectors. The Federal Aviation Administration employs more than 14,000 air traffic controllers.

Asked by New York Republican Marc Molinaro in March why rulemaking at the agency took so long, Brown said PHMSA was overwhelmed with new responsibilities in a fast-growing area.

“Natural gas, for example: triple what it was five years ago,” Brown said. “Carbon dioxide, hydrogen: $100 billion in incentives. We have zero people, zero full-time employees focused on that. Our ability to get things done is directly proportional to the resources that Congress gives us.”

Molinaro said he didn’t accept that more funding would mean a better job by the agency.

But Bill Caram, the executive director of the Pipeline Safety Trust, told the panel that Congress should provide “a substantial increase to PHMSA’s authorized funding to reflect the enormous increase in their charge.”

A bill the House transportation panel approved last week would boost annual funding authorization for the agency, putting the total at $201 million for pipeline safety.

But increasing funding authorization doesn’t necessarily translate to more federal inspectors. The most recent authorization bill, passed in 2020, required that the agency have 247 pipeline inspectors on the job in fiscal 2023, but PHMSA was 40 short of that number this year.

The need for pipeline inspectors will only become greater in coming years as the incentives for new carbon dioxide pipelines spur construction. At about 5,000 miles today, pipelines carrying carbon dioxide could grow to 100,000, Clarkson wrote.

Ethanol-producing states in the Midwest are seeing particular interest in carbon dioxide pipelines as the carbon byproduct of the region’s ethanol industry is more easily sequestered and transported to underground storage facilities primarily in North Dakota.

The proposed pipelines have caused controversy with local landowners. North Dakota’s Public Service Commission denied an initial permit for Summit Carbon Solutions, which has proposed a $5.5 billion pipeline network that would carry CO2 from ethanol plants in five states to North Dakota storage facilities. The company has appealed and state regulators are reevaluating the application.

PHMSA has not yet written regulations for hydrogen and carbon dioxide pipelines.

The House bill would require those rules to be written, but “only provides minimal direction” on how to draft them, Clarkson wrote.

The regulator also does “not really” shift inspectors geographically as more pipelines come online in certain places, said Robert Clarrios, an administrative manager at the National Association of Pipeline Safety Representatives, a coalition group of state officials.

“There’s no specific focus based on miles of pipeline,” he said. “I’ve never seen anything where PHMSA focuses on, you know, ‘Oh, you guys have had a lot of pipelines, so we’re gonna give you extra attention.’ They just don’t do that.”

States fill void

With PHMSA a relatively small agency, the responsibility of ensuring the safety of the growing network of pipelines throughout the country falls largely to state agencies.

States employ 435 pipeline inspectors, more than twice as many as PHMSA.

State inspectors fill a vital role in the national mission system of pipeline management, Christopher Mele, the legislative director for energy policy at the coalition group of state-level regulators the National Association of Regulatory Commissioners, said.

“Without the states, they couldn’t do it,” Mele said of PHMSA’s ability to inspect the nation’s pipelines. “It would take them a number of years to gear up. PHMSA’s constantly short of staff as it is, as far as inspectors.”

But state regulators often feel they are not properly funded by the federal government for their role in overseeing the nation’s pipeline network.

By law, state pipeline agencies can be reimbursed by PHMSA for up to 80% of their costs — though that cap is never reached, according to Mele. The highest reimbursement rate states have received since 2016 is 70.5%, he said.

The committee-approved bill would increase funding for state reimbursement, but would still only amount to about 72% or 73% of states’ costs, he said.

And while the reimbursement rate for states has not risen dramatically, federal requirements for inspections have expanded in recent authorization laws, Mele said.

“So we’re faced with a pretty large unfunded-mandate situation,” he said.