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Similar Pipes, Different Rules

When the owners of the Tennessee natural gas pipeline decided to expand the pipe in the Marcellus Shale region of Pennsylvania's northern tier, the federal safety rules they had to follow filled a book.

Second in a four-part series.

When the owners of the Tennessee natural gas pipeline decided to expand the pipe in the Marcellus Shale region of Pennsylvania's northern tier, the federal safety rules they had to follow filled a book.

For this interstate transmission line running north from the Gulf Coast, the regulations covered everything from the strength of the steel to the welding methods to how deep the pipeline must be buried.

Also in Bradford County, another company - Chesapeake Energy - is building a pipeline the same size as the Tennessee line, 24 inches in diameter. And it's designed to operate at even higher pressure - up to 1,440 pounds per square inch.

But for this line, in this rural section of shale country, there are no safety rules at all.

Because the second line is classified as a "gathering" pipeline, carrying gas from well fields to transmission lines, safety rules are less stringent. And because that line is in a rural area, it's totally unregulated.

Bill Wilson lives in neighboring Wyoming County, another crossroads for the new generation of powerful Marcellus gathering lines. He made a study of pipeline rules in his role as president of a group of landowners who negotiated gas and pipeline leases.

He says the calculation that balances safety regulations against population numbers treats rural residents as "collateral damage."

"It's all about money. You know that as well as I do," he said.

This loophole in the law, a legacy of the industry's influence in Washington, has been evident for decades, but the mighty Marcellus gas strike in Pennsylvania has changed the rules.

The new wells, using the technique of hydraulic fracturing, generate tremendous torrents of gas that need big pipes, running at pressures far greater than traditional gathering lines.

That has federal regulators and some members of Congress once again pushing to extend safety rules to the 200,000 miles of gathering lines in rural America - with gas and pipeline companies pitted against them.

"I believe when a pipeline is put in the ground, there has to be some regulation," said Transportation Secretary Ray LaHood, whose agency oversees pipelines through the Pipeline and Hazardous Materials Safety Administration, PHMSA.

"Someone has to have some enforcement over them, some oversight on construction and safety - but also transparency, so people in these communities know when a pipeline is going through their front yard," he said.

This high-stakes battle - now playing out in Harrisburg, as well - has engaged politicians, environmentalists, and legions of lobbyists, arguing over arcane details in law offices, committee rooms, and before the state Public Utility Commission.

As Pennsylvania takes its place among the major gas-producing states, it is perhaps appropriate that a key figure in these regulatory debates is a congressman from Pennsylvania - Bill Shuster.

When Republicans gained control of the House in the 2010 elections, Shuster became chairman of a subcommittee with oversight of pipelines. He's hesitant to add rules that might slow natural gas development - including ones on gathering pipelines.

"If there's a glaring problem out there, we ought to take a look at it, but I haven't heard there's a problem," he said. "If it's not broke, why fix it?"

Gas and pipeline companies say that the oversight gap has no effect on public safety, and that their new gathering lines in the Marcellus are "state of the art."

Chesapeake Energy says the 24-inch line it is building in Bradford County, like its other pipelines, meets or exceeds all safety regulations.

"I would be surprised to find anybody building gathering lines out there that are not up to the highest integrity standards," said David J. Spigelmyer, vice president of Chesapeake and chairman of the Marcellus Shale Coalition, the leading industry trade group.

Though the industry insists accidents on gathering lines are rare, the stakes are high when the pipes do rupture. In recent years, they have blown up in Texas and Oklahoma, killing workers and burning one woman in her home.

"It doesn't matter what you call this thing," said Richard Kuprewicz, an engineer and consultant for the Pipeline Safety Trust. "You've got high diameter and high pressure - guess what? There needs to be more regulation."

But industry representatives, here and in Washington, are once again pushing back. Bills pending in Harrisburg say the state rules can't be tougher than the federal ones.

"It simply increases the cost of doing business in the area without really accomplishing much," said W. Jonathan Airey, a lawyer for the industry. He and others say the money could be better spent on protecting the public in more populated areas.

He was doubtful the move would gather much steam, especially given the long history of wrangling over the issue. "I don't know how enthusiastic DOT [the Department of Transportation] is to reopen something that took 30 or 35 years" to settle, he said.

Fewer people, less protection

As pipeline rules have become stricter, they have required companies to focus their greatest attention on what regulators officially term "high-consequence areas" - places where the injury or death toll would be massive.

That's of little comfort to Emily Krafjack, who lives in Mehoopany, in rural Wyoming County.

"We're of no consequence, that's what I always say," said Krafjack, who has become one of Pennsylvania's most persistent advocates for stronger pipeline regulations.

Much of the pipeline mileage in her county is designated "Class 1," the least-populated and least-regulated of four areas under PHMSA regulations. That means there are 10 or fewer homes along a one-mile section of pipeline within a quarter-mile right-of-way. No federal or state safety regulations apply to gathering lines in Class 1.

Pipeline companies building gathering lines in Wyoming County say they are following stricter standards anyway, using stronger steel and painstaking inspection procedures.

Krafjack said that's a welcome step - but she says it should not be voluntary. She says the Class 1 loophole must be closed - .

"While these run through the fields or the hills, eventually they go by people's homes," she said.

"All of these lines are being installed in a very short window of time. They can use shallower depth, they can use thinner pipe. They can do no inspections."

Though firms pledge to build to the best standards, she says, "We have no way of knowing."

For many other residents, though, these gathering lines represent more promise than peril. Many landowners now have wells drilled and "fracked" on their property - but won't start getting royalty checks until the pipes are hooked up and the gas starts flowing.

"We're pretty sure the black river runs right through here," said Phil Beardslee, 65, a truck driver from Springville, in Susquehanna County, saying the wells in his area had been big producers.

"And I hope so," he said. "We hope. It's my retirement."

He says he is unconcerned about pollution from the well pad near his home or safety problems from the pipelines. As he spoke, a crew from Williams was laying a pipe across the street from his house.

"They come in, do a good job, cover them up, and they're gone," Beardslee said. "By the time they get it all graded off, you don't know it's even here."

Fewer rules part of history

Lower safety standards for rural areas have been enshrined in federal rules since the dawn of federal pipeline regulation.

In 1965, a transmission pipeline fractured outside the small town of Natchitoches, La. The explosion killed 17 and prompted President Lyndon B. Johnson to call for the first time for federal pipeline regulation. The same pattern has been repeated ever since - explosion, deaths, reform.

With a push from Johnson, Congress enacted its first oversight laws in 1968.

But from the start, industry lobbyists made sure the rules explicitly exempted a huge segment of the pipeline infrastructure - the ones running from wells in more remote areas.

Soon, it became apparent that the exemption had created a massive regulatory gap.

"Although several serious accidents have occurred in recent years involving . . . gas gathering lines in rural areas, safety regulations governing these pipelines have not been issued," federal auditors warned in 1978.

Prodded by Congress, the Transportation Department tried to draft new rules in 1974 and 1986 and again in 1991. Each time, the industry fought back..

Companies questioned whether the lines were really that dangerous, and whether the extra expense of regulations would discourage natural gas exploration.

Each time, the agency ended up retreating.

One of the biggest obstacles has been an inability to solve the most basic question of all: When is a pipeline a gathering line?

For pipeline companies, names mean a lot: They pay user fees to the government, $70 million this year, based in part on how their pipes are defined. More important, tougher regulations mean more compliance costs.

Generally, gathering lines run from well fields and feed into bigger "transmission lines" that cross the country, and deliver gas to the utilities that pump it into homes and businesses through "distribution lines."

For years, the official definition was circular - a gathering line was one that, in the supply chain, came before a transmission line. A transmission line was one that came after a gathering line.

"We all used to make jokes that we'd all retire before we figure out what that is," said Johnny Dreyer, a spokesman for the Gas Producers Association, the major trade group for gathering pipeline firms.

In 2006, PHMSA essentially gave up: It simply instructed companies to use a guide produced by the American Petroleum Institute.

"It's a joke," said Bill Kiger, of Pennsylvania One Call, the 811 number that construction crews can call before they dig to avoid striking a buried gas line.

"The problem with all that kind of stuff is the definitions are produced by the user group," he said. "If you were a user, would you make the definition tough? It's like setting your own parking fee."

But that didn't settle anything. In August, federal regulators admitted the guide was full of "conflicting and ambiguous language," with 20 bewildering diagrams that can result in the same pipeline system being classified in different ways.

"The regulations, as I look at them, begin starting to look like the tax code," Jeffrey D. Wiese, associate PHMSA administrator for pipeline safety, said at an agency meeting.

Some companies have gamed the system, regulators say, exploiting the confusion so their lines escape regulation - even though they may run as far as 76 miles from the gas well.

In fighting new rules, the industry has leaned on numbers. There are fewer accidents on gathering lines, the argument goes, so new rules would be overkill.

But critics say that's something of a Catch-22. Since the lines aren't regulated, there's no requirement that companies report incidents or accidents. Reliable statistics are hard to come by.

"It's hard to move forward with a rulemaking based on data when there's no data and no requirement for anybody to give us data," one PHMSA official said in an interview, speaking on condition that he not be named.

In fact, the only real attempt to study accidents on gathering lines was done by an industry trade group in 2004. The Gas Processors Association surveyed 40 operators and found 58 incidents during the previous five years, including one death and three injuries. The group said this showed the lines posed less threat than transmission lines.

The study was cited by PHMSA when, in 2006, it decided against tougher rules.

At the request of Congress, the Government Accountability Office is now trying to collect statistics on gathering-line accidents; auditors recently toured Pennsylvania.

In the effort to extend regulation, safety advocates and regulators have had to contend with opposition not only in the industry, but from elsewhere in the government.

In 2004, Energy Department officials cited a policy of President George W. Bush to protect domestic energy production and echoed industry lobbyists in warning that regulation would harm "marginal" operators.

The move to increase safety could force companies to shut down wells or discourage the drilling, wrote James Slutz, who was then deputy assistant secretary for natural gas and petroleum technology.

Lobbyists joined in, saying new regulations would have a "devastating impact" on gas exploration, and "drag producers into a regulatory scheme . . . with little or no benefit."

These worries found a sympathetic audience among regulators.

"We are very concerned that we not bring additional costs," Stacey L. Gerard, the chief safety officer at the time, said during a 2006 meeting with a PHMSA technical advisory panel heavy with industry representatives. "We are very sensitive to the limited margins of profit."

In the end, the agency in 2006 dropped its bid to push regulation into Class 1 rural areas, saying its proposal "does not appear to be a reasonable use of available resources." The agency tightened some rules on gathering lines but relaxed others.

The net result: No change in miles regulated.

Big explosion, no investigation

Near the town of Alex, in the oil-field plains southwest of Oklahoma City, a noise that sounded like a bomb shook people awake in the middle of the night three years ago.

The explosion, from a 20-inch gas gathering line, rattled their walls and sent up a 50-foot ball of flame that turned 3 a.m. as bright as afternoon. Three homes were destroyed, and a woman, Mildred Hull, suffered second- and third-degree burns.

Grady County Fire Chief Perry Wenzel said the blaze was ferocious, so intense that it melted the back of one of his fire trucks.

"It totally destroyed three homes that were there," Wenzel said in a recent interview. "It burned them to the ground."

The line was 32 years old. The company that owned it, Enogex Inc., said at the time an inspection the year before had turned up no problems. No one hit the line during an excavation.

What caused the pipe to blow up remains a mystery. The area, a center of oil and gas production since the 1920s, was rural, meaning pipes there fall outside any regulations. Oklahoma did not investigate.

"Our pipeline safety division didn't have jurisdiction over it," said Matt Skinner, a spokesman for the Oklahoma Corporation Commission.

"In terms of this agency, there were no reports," Skinner said.

Enogex conducted its own review but won't discuss the results.

"They just don't want to reveal that information," said Enogex spokeswoman Sandra Longcrier. She did say that since the accident, the company has begun to use internal devices to inspect larger gathering lines for corrosion: "That was a good lesson learned."

Two years later, another Enogex gathering line exploded in another town in the same county, injuring three workers doing maintenance on the line. One suffered a broken leg, burst eardrums, and second-degree burns over half his body.

Like the first line, this one was unregulated, and state officials did not investigate the accident. Longcrier said the company would not reveal that cause, either.

"More and more, these lines are not in a rural area - they get built up around the line after it's in," she said, stressing that the company's workers have a personal stake in safety: "All our men live and work in those areas where they have lines."

After the Alex accident, the Oklahoma Legislature took up a bill that would have given the state authority to regulate these rural gathering lines. It would have removed a legal ban on the state imposing any pipeline rules more stringent than federal ones.

But it drew fire from pipeline firms and died.

"The industry felt like it was a little too burdensome," said Republican State Sen. Brian Bingman, the sponsor.

With its long history of oil and gas production, Grady County is now a "spiderweb of pipelines," Wenzel, the fire chief, said.

"They should be regulated," he said. "Mainly for the safety of the people. These things are running next to towns and everything. They're everywhere.

"I wish there was a lot more support on this," he said. "But when it comes to the pipeline companies, they take that over."

A changing landscape

In Pennsylvania, like other oil and gas states, shallow gas wells - and pipelines - have been around for decades, dating to the first pioneering wave of oil and gas development that began 150 years ago.

About 350,000 conventional gas wells have been drilled in Western Pennsylvania, and 70,000 are still producing. Those types of wells generally require much smaller pipelines, six or eight inches in diameter. Pressures are lower.

The new natural gas rush has changed everything.

In the Marcellus, drillers pump water at high pressure to blast the gas loose from shale, a process known as hydraulic fracturing, and send as many as 16 wells underground horizontally from the same well pad.

Gas bursts from these wells at pressures as high as or higher than is typical for even the big interstate lines. Within a year or two, the pressure drops significantly.

A considerable amount of Marcellus gas arrives ready-made for the big interstate lines. Some companies operating in Pennsylvania, including Williams, typically use 24-inch for their gathering lines in the state. Some lines are even larger.

As a result, "the framework for regulating gas gathering lines may no longer be appropriate," PHMSA announced this year. In August, the agency once again opened a study on whether to close the rural regulation loophole.

"We're worried, too. We would like to have jurisdiction over those lines," said Cynthia L. Quarterman, PHMSA administrator.

For starters, officials proposed dumping the convoluted American Petroleum Institute guidebook and drafting a new definition.

More sweepingly, the agency asked for comment on whether it should impose "new, risk-based requirements for large-diameter, high-pressure gas gathering lines in rural locations."

"It's a little tough to defend to say that we don't regulate Class 1 locations," PHMSA official DeWitt Burdeaux told an industry conference in March. "That those folks that are in a little more rural areas are not as important as those in the higher-density population areas."

A pipeline-safety bill now close to passage in Washington once again brings up the issue of ending the exemption for rural gathering lines. Just as before, the bill calls only for yet another study - due in two years.

Industry representatives are still skeptical. Jeff Applekamp, director of government affairs for the Gas Producers Association, said he wasn't aware of the higher-pressure gathering lines in shale regions.

As for the possibility of new rules, he said: "All I can say is it would take more investigation" regarding the need to regulate in "these far-out remote areas."

A push for reform

In Pennsylvania, regulators were caught unprepared for the massive rollout of pipeline construction. Everywhere but Alaska and Pennsylvania, the perennially short-staffed PHMSA relies on state agencies to inspect gathering lines in gas-well fields.

Even before the Marcellus pipeline construction began in earnest, PHMSA had been imploring the Pennsylvania Public Utility Commission to take on that role, said Paul Metro, who oversees gas regulation for the PUC.

But the agency was slow to respond. Former commissioners said it just wasn't on their radar.

Starting in 2010, the PUC began holding hearings on what regulation should look like. The commission, industry, and legislators hashed out a rough consensus: Pennsylvania, like other states, would begin to enforce the federal rules.

As in Oklahoma and other states, legislators included a provision that would prohibit Pennsylvania regulators from adopting any rules more stringent than federal ones. The upshot: no rules for rural gathering lines.

"The industry wanted some assurances" that the PUC would not try to overstep federal law, said Fran Cleaver, staff director of the state Senate Consumer Protection Committee.

"I think this is what we could negotiate to get a consensus right now," she said. "This was as much as we could do."

The Pennsylvania House and Senate each passed versions of a pipeline regulation bill earlier this year. The two versions are similar, and a reconciled version is expected to become law soon.

The legislation will likely include a provision for a state registry for all gathering lines - but still no safety rules in rural areas.

That hasn't gone over well with landowners, activists, and some government officials in the shale fields.

"The safety of a selected class of citizens will be deemed expendable," Lynn Senick, a resident of Montrose in Susquehanna County, a center of shale drilling, testified before the PUC.

Those protests have apparently helped sway some players in Harrisburg.

Over the summer, Gov. Corbett's Marcellus Shale advisory commission voted, 27-0, to recommend extending rules to rural areas.

"Those citizens in those areas are saying, 'We want regulation,' " Robert Powelson, the PUC chairman and commission member, said in an interview.

"We heard them loud and clear."

State Sen. Lisa J. Baker, sponsor of the Senate version of the pipeline-regulation bill, said she was preparing another measure that would have the PUC oversee all lines, rural or not.

Her Luzerne County district is a hotbed of protest against pipelines.

"These are high-pressure lines carrying gas near their homes," Baker said of her constituents, "and they think they should have the same protections as people who live in more urban areas."

Even so, any move to extend regulation may face opposition from the industry and its supporters in Harrisburg.

State Rep. Matt Baker, a Republican from Tioga County who is a leader on pipeline issues in his chamber, said he remained opposed to having the state take the lead and regulate Class 1. Baker, no relation to Lisa Baker, represents a district that includes parts of Bradford and Tioga Counties, areas laced with well pads and pipelines.

"The reason the feds don't do it is that with the cost-benefit analysis, there just isn't a substantiated need to do so," he said.

The Marcellus Shale Coalition agrees. The influential trade group says the question of regulation in rural America should be settled at the federal level, not by every state passing its own rules.

The coalition chairman, Spigelmyer, says all Pennsylvania gas pipelines, rural or not, should be listed in a registry, but he stopped short of endorsing new regulation.

"We're trying to do what's right in the field," he said. "Let's face it - the Marcellus is being developed with the highest integrity standards."

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