Reps Overseeing Pipeline Safety are Profiting From Pipeline Companies

American oil and gas pipelines continue to expand while the agency that’s supposed to oversee them sits idly by.

Reps Overseeing Pipeline Safety are Profiting From Pipeline Companies
Firefighters work to extinguish a fire caused by over-pressurized gas lines on September 13, 2018 in Lawrence, Massachusetts. Dozens of fires broke out in Lawrence, North Andover and Andover because of the gas lines.

As the network of pipelines transporting oil and gas continues to grow, the agency in charge of pipeline safety has been unable to finalize rules to protect the public from poorly designed and operated systems that can leak and put lives at risk. As a result, hundreds of thousands of miles of natural gas pipelines have been built without so much as minimum safety standards for their owners to follow.

Fossil fuel pipeline safety standards are set by the Pipeline and Hazardous Materials Safety Administration (PHMSA), which states that its mission is to “protect people and the environment by advancing the safe transportation of energy.” Since 2011, PHSMA has left open several rulemaking procedures to establish safety standards for natural gas pipelines, but it has so far failed to conclude any of them. While these rules sit in limbo, there have been several fatal gas pipeline incidents, including at least three in 2018—the Columbia Gas explosion in Massachusetts, an explosion in Texas that was caused by a leaking gas gathering pipeline, and an explosion of an Atmos pipeline, also in Texas.   

As natural gas production has increased since the mid-2000s, gas gathering pipelines, systems that transport gas from production sites to collection points, have been built at a rapid pace, and many of the new pipes flow through densely populated, “high consequence” areas. It is estimated that there are now at least 439,000 miles of unregulated natural gas pipeline in the U.S. The lack of regulation means that pipeline companies are rarely penalized when their lines explode and cause property damage, injuries, or deaths.

Some experts point to a burdensome cost-benefit analysis process that PHMSA must complete as an explanation for why it has been unable to complete new regulations for these pipelines. Under a law passed by Congress in 1996, the PHMSA can only issue a regulation after making a reasoned determination that the quantifiable benefits of the proposal exceed the expected costs.

PHSMA’s cost-benefit analysis requirement is unique among laws passed by Congress to protect public safety. The 1996 law is “the only health and safety or environmental protection statute where such an explicit directive to an administrative agency to base regulation of risk on a cost-benefit test was actually inserted into statute,” according to a recent congressional testimony submitted by Carl Weimer, executive director of the nonprofit Pipeline Safety Trust.

Weimer explained at a recent hearing that in order to enact a regulation, PHMSA must show that the cost of implementing that regulation would not outweigh the benefit of protecting human lives.

“[PHMSA uses] a figure of about $9-10 million as the benefit of a human life,” Weimer said. “So if you have a tragedy like San Bruno that kills 8 people and you go through a cost-benefit to look at installing new valves on pipelines, and you say that over the course of 10 years you’re going to prevent 10 lives from being lost, that would be worth about $100 million. At the same time if you look at what the cost would be for the industry to put a valve on every mile of pipeline that might be required…the cost of implementing automated valves way outweighs the benefit of the human lives you’re going to save.”

The laws regulating the pipeline industry, including the cost-benefit analysis requirement, fall under the jurisdiction of the U.S. House Railroads, Pipelines, and Hazardous Materials Subcommittee. The subcommittee, part of the Transportation & Infrastructure Committee, is responsible for legislation reauthorizing the PHMSA every few years and establishing laws governing its operation and rulemaking process. So far the subcommittee has not passed legislation to address the agency’s stalled rulemaking process.

According to a Sludge analysis of financial disclosures, the members of the Railroads, Pipelines, and Hazardous Materials Subcommittee have as much as $2.8 million invested in fossil fuel companies that own and operate oil and gas pipelines, presenting significant conflicts of interest.

Many of the companies in which the representatives, both Democrats and Republicans, are personally invested are members of trade groups that oppose the PHSMA’s proposals to regulate natural gas gathering pipelines. The American Petroleum Institute and the GPA Midstream Association filed a joint position paper with the Department of Transportation in December 2018 opposing much of the PHSMA’s proposal for regulating gas gathering pipelines, stating that the new regulations would cost the industry $28 billion over a 15-year period.

None of the subcommittee members responded to requests for comment about their investments.

Of the eight subcommittee members invested in companies that operate fossil fuel pipelines, Rep. Paul Mitchell (R-Mich.) has the most money in play, owning as much as $1.25 million worth of stock in Berkshire Hathaway—which owns the BHE Pipeline Group and operates 16,400 miles of natural gas pipeline in the U.S., including one that operates in his home state—and as much as $250,000 worth of stock in Suncor Energy, whose pipeline group manages over 1,700 km of pipeline across the U.S. and Canada. Suncor refineries receive Canadian crude oil via Enbridge’s Line 5 Pipeline Project, which runs through Michigan, where the state’s Democratic Attorney General is attempting to shut it down.

On his website, subcommittee member Rep. Brian Babin (R-Texas) praises the LNG export facility in Sabine Pass, Texas, stating that it “will make America stronger and more secure.” The facility is currently expanding to accommodate a deal between Qatar and ExxonMobil, which is headquartered in Babin’s oil-rich state, to export liquified natural gas. Babin owns as much as $15,000 in Exxon Mobil stock. The Sabine Pass facility receives gas shipped through pipelines operated by two companies in which Babin owns as much as $15,000 worth of stock—Kinder Morgan and Energy Transfer Partners. Babin’s congressional district, TX-36, lies just outside of downtown Houston, where Kinder Morgan has its corporate headquarters, and Energy Transfer is based in Dallas.

In total, Babin owns as much as $155,000 worth of stock in companies that operate oil and gas pipelines.

Tennessee Democrat Steve Cohen has as much as $515,000 invested in companies that own and operate pipelines. His largest investment in the industry is in stock of Berkshire Hathaway worth between $115,000 and $300,000. Cohen also owns up to $100,00 worth of stock in ExxonMobil, which operates a crude oil pipeline and several other pipelines in his state.

Rep. Greg Pence (R-Ind.), brother of Vice President Mike Pence, owns up to $250,000 worth of stock in Marathon Petroleum. Marathon Pipe Line operates several pipelines that cross the state of Indiana, including the Martinsville pipeline, which transports crude oil, and the Lima pipeline, which transports gasolines, distillates, and liquified petroleum gases.

It is not illegal for representatives to buy and sell stocks in companies they impact through their committee work, but some members of Congress have proposed legislation requiring members to cease all stock trading while serving in Congress.

The Railroads, Pipelines, and Hazardous Materials Subcommittee is currently working on legislation to reauthorize the Pipeline Safety Act, which governs PHMSA. The committee held its first hearing on the issue on April 2, and some lawmakers said that they would like to address issues that are causing delays in the regulatory rulemaking process, including the cost-benefit analysis requirement.

However, others on the committee, including Babin and Rep. Scott Perry (R-Pa.), appeared to favor an approach that relies on industry self-regulation to do the job that PHMSA has shirked.

“Is there any reason to believe that the company itself—with the significant investment and the significant liability—doesn’t have a great stake in making sure that they play safely, that they maintain correctly, and that their whereabouts are known and documented?” Rep. Perry asked Andrew Black, CEO of the Association of Oil Pipe Lines, a trade group representing the owners and operators of liquid pipelines.

“I understand what you say to be the case,” Black responded. “I think you’re right.”


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