Federal Agency Captured By Gas and Pipeline Industry

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The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) is responsible for overseeing, monitoring and maintaining 2.3 million miles of pipeline. A recent investigation conducted by Hearst Newspapers discovered that the federal agency is heavily influenced by the gas and pipeline industry which exercises a significant amount of control over the regulatory body’s decisions.

U.S. Transportation Secretary Ray LaHood is working to limit industry influence in federal safety studies of the country’s onshore pipeline network. LaHood’s decision is directed against a 2002 Bush-era rule requiring the federal agency to receive at least half of its funding for safety research from outside sources. The Hearst investigation found that, since the ruling, the PHMSA’s research is largely managed according to industry interests.

The investigation revealed that out of 174 safety studies conducted in the last decade by the federal PHMSA, two-thirds were funded by pipeline operators or other industry-controlled groups. Of the total studies, 89 were funded by a combination of 5 industry organizations that provide research and 3 that provide lobbying expertise.

The studies conducted by the PHMSA are crucial to the development of federal safety standards and inspection protocol used to manage the gas pipelines snaking across the states, including the proposed Keystone XL pipeline. But these studies, according to the investigation, are in part determined by industry direction. 

This overlap of federal regulation and facilitation calls the integrity of the federal agency’s research into serious question.

Credible, independent research is a crucial component of the Department of Transportation’s safety agenda,” said spokeswoman Olivia Alair. “This decision is the latest in a series of actions Secretary LaHood has taken to strengthen pipeline safety oversight and hold the industry accountable for managing safe pipelines.”

While half of the investigated studies conducted by the agency focused on pipeline corrosion and damage due to construction and digging, it remains unclear why little attention was paid to the overall problem of the aging pipeline infrastructure, a problem linked to several high-profile pipeline disasters in recent years.

Two major explosions, one in San Bruno, California that destroyed 38 homes last September, killing 8 people, and the other in Carmichael, Mississippi, that killed two people, were related to a defective seam welds.  A more recent explosion in Allentown, Pennsylvania, that killed 5 people, was due to an old form of brittle cast iron pipe. 

While these incidents were the focus of some of the studies conducted by the PHMSA in the last ten years, attention was diverted from the aging infrastructure problem. One of the studies conducted in 2004 even criticized the strict industry practices that led to ‘unnecessary repairs’ of defect welds.

Because the federal agency is reliant upon outside financial sources, they cannot propose study initiatives unless there are industry groups willing to help cover the costs. It would not be a stretch in this instance to introduce the concept of “regulatory capture.” And, as Andrew Nikiforuk recently put it, “the guy who pays the piper calls the tune.”

Secretary LaHood’s decision will repeal the 2002 policy that requires the safety agency’s funding to come from outside sources.

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