San Francisco Chronicle
By Eric Nadler
WASHINGTON -- Pipeline operators nationwide, and their customers, will face major changes and a hefty price tag if the National Transportation Safety Board can persuade federal and state regulators to implement recommendations it issued Tuesday in response to the San Bruno disaster.
Top among the recommendations is the elimination of "grandfathering" loopholes in federal and state laws that have allowed companies to run thousands of miles of the nation's oldest and most vulnerable natural gas pipelines without subjecting them to the kinds of high-pressure water tests that are required on modern pipelines.
Such tests aren't cheap - Pacific Gas and Electric Co., which is being forced to pressure test hundreds of miles in the aftermath of the San Bruno blast, says the cost can hit $500,000 per mile, an amount some pipeline safety experts say is exaggerated. All agree, however, that pressure tests require that pipes be taken out of service for days at a time.
Another safety board recommendation would require pipeline companies to convert their lines to accommodate torpedo-shaped inspection tools known as smart pigs, which are run inside a line to detect flaws like bad welds and corrosion.
About half the nation's transmission lines - the oldest ones - would be affected, and they would require expensive reconstruction. The reason such lines don't accommodate smart pigs now is that they are too narrow or filled with kinks, and pipeline operator trade organizations say it would cost billions to fix that.
"It is going to be expensive," said Oliver Moghissi, president of a major pipeline engineering organization, the National Association of Corrosion Engineers. "Ultimately, the cost of these activities will be put into a rate case and will be passed down to the consumer."
Woven throughout the recommendations are broader criticisms of pipeline regulators - the federal Pipeline and Hazardous Materials Safety Administration and the California Public Utilities Commission - for a long list of failures preceding the San Bruno explosion on Sept. 9, including ineffective auditing and rule-making. According to the safety board, those failures allowed Pacific Gas and Electric Co. to mismanage its transmission line and paved the way for the disaster.
"In too many cases, the regulators did not know what was going on," said safety board Chairwoman Deborah Hersman.
Making the rules
Her agency can only recommend changes but, historically, regulators and lawmakers have adopted about 80 percent of its proposed reforms, Hersman said after the hearing. The job of changing the rules would fall to Congress, Transportation Secretary Ray LaHood and California lawmakers.
Pipeline legislation now before Congress includes only a handful of the reforms the board recommended Tuesday. The elimination of the grandfathering exemption is not one of them, something Rep. Jackie Speier, D-Hillsborough, hopes will change.
"The No. 1 recommendation that should be on everyone's top priority list is getting rid of the grandfathering language in the law," said Speier, whose district includes the San Bruno neighborhood where eight people died and 38 homes were lost. She said it is "incomprehensible" that lawmakers would "give industry a pass."
State already moving
California has already started to eliminate the grandfathering of old pipe, though it is unclear how long the process will take. Paul Clanon, executive director of the state Public Utilities Commission, noted that his agency ordered all pipeline companies in the state earlier this year to pressure-test their grandfathered lines.
Industry groups have lobbied against mandatory pressure tests of old lines and against requirements to convert pipelines to accommodate smart pigs. Hersman said that when the safety board issued a recommendation in January that would require more pressure tests, "you would have thought the sky was falling."
Cost estimates for major changes such as pipe retrofitting or expanded pressure testing are fuzzy because federal regulators have never kept track of where older pipelines are located and how many miles of them are in use, the board said.
"We do know that half the nation's (gas transmission) pipelines were constructed before 1970," said Robert Hall, an investigator for the agency.
Change in approach
The board unanimously approved the recommendations for eliminating the grandfathering clause and requiring the use of pigs, but there was dissent.
Board member Earl Weener, a Boeing Co. engineer, cautioned against taking too much of a prescriptive approach to pipeline regulation, saying that setting performance goals has worked well in aviation. Prescriptive rules tell a company exactly what to do, while a performance-based system allows a firm to decide how to meet a goal.
Robert Trainor, an investigator for the safety board, said federal oversight of pipeline safety has leaned toward performance-based enforcement in recent years. Pipeline regulators have found it difficult to measure whether companies are complying, said Trainor, who suggested a "paradigm shift" in the other direction.
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San Bruno reforms are likely to be costly
San Francisco Chronicle