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GAO Recommends that PHMSA Evaluate its Model for Pipeline Safety Inspections

Authors: Laura L. LaValle, Hana V. Vizcarra
August 17, 2017

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Pipeline safety and infrastructure issues have gained attention in recent years due to tight oil resources production, changes in regulations, and several high-profile incidents. On Thursday, August 3, the U.S. Government Accountability Office (GAO) issued a new report recommending that the Pipeline and Hazardous Materials Safety Administration (PHMSA) document the assumptions and decisions it made in developing its Risk Ranking Index Model (RRIM), which PHMSA uses to determine the frequency of its pipeline inspections.  The report also recommends that PHMSA conduct a data-driven evaluation of the RRIM to assess its effectiveness in prioritizing segments for inspection.

What is the Risk Ranking Index Model?

Among other responsibilities, PHMSA oversees the safety of more than 2.7 million miles of energy pipelines in the U.S. The agency’s regulations specify requirements for pipeline materials and corrosion prevention technologies, and establish design standards for pipelines specific to their operating conditions and pressures. PHMSA developed the RRIM as a system for assessing the proper frequency with which to inspect particular pipeline segments.  The system is intended to ensure pipeline operators’ compliance with regulations and assess pipeline safety while balancing PHMSA’s limited inspection resources. PHMSA’s RRIM uses data on pipeline characteristics and corrosion collected from operators (PHMSA refers to this data as threat factors) to generate an annual risk score for each pipeline segment that determines its priority for inspection. Threat factors include, for example, the use of ineffective external protective coating, the type of welding used in construction, commodity type, recent significant incidents, and recent enforcement actions.

GAO’s Recommendations for PHMSA’s Risk Ranking

The GAO Report includes two primary recommendations for action. First, GAO recommends that PHMSA document the decisions and underlying assumptions for RRIM’s design, including what data and information were analyzed in determining threat factors, weights, risk tiers, and inspection frequency.  This recommendation is based on GAO’s finding that PHMSA did not properly document the rationale for its design of the RRIM or the justification for key decisions made in the model’s development. Specifically, the GAO found that the reasoning behind PHMSA’s selection of threat factors and the relative weight of each threat factor were not well-documented.   Second, the GAO recommends that PHMSA establish and implement a process to periodically use data to review and assess the effectiveness of its model in prioritizing pipelines for inspection based on threats.  This recommendation is based on the finding that PHMSA lacks a process for regular review of RRIM to assess the model’s ongoing effectiveness as risks and their impacts may change over time.

Other Topics Covered in the GAO Report

The Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016 (The PIPES Act) required the GAO to report on PHMSA’s use of data on pipelines and corrosion prevention to inform its inspection priorities. This review resulted in the above two recommendations as well as the GAO’s acknowledgment of recent steps taken to improve data quality used in the RRIM. However, the GAO also noted certain limitations of the data, such as not having collected certain types of data PHMSA officials would like to use in their evaluations or the data collected not identifying the precise locations of threats. The PIPES Act also required the GAO to report on the pipeline materials and corrosion prevention technologies used in the pipeline network, including their benefits and limitations, as well as how operators train and ensure the qualification of personnel. The August GAO Report includes sections discussing these issues as well.

What’s Next?

Changes to the RRIM could result in changes to the frequency of inspections for pipeline segments.  The GAO does not have the power to directly require PHMSA to take action. Rather, GAO requests that the Secretary of Transportation order PHMSA to take its recommended actions. However, in a letter dated July 12, 2017 PHMSA acknowledged the usefulness of the GAO’s recommendations and stated its intention to implement them (see Appendix III of the GAO Report). PHMSA is expected to respond with plans to carry out the GAO’s recommendations by October 2, 2017 (60 days from the issuance of the final report).

Beveridge & Diamond’s Pipeline Practice Group provides strategic, business-focused legal services to pipeline companies, helping them proactively navigate a changing regulatory environment, update and upgrade compliance programs, and avoid and respond to federal and state enforcement actions. For more information on the GAO Report or PHMSA’s RRIM, please contact the authors or any member of Beveridge & Diamond’s Pipelines practice.  We invite you also to visit B&D’s Pipeline Safety Resource Center.

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