[Federal Register Volume 62, Number 59 (Thursday, March 27, 1997)]
[Notices]
[Pages 14719-14731]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7827]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Research and Special Programs Administration
[Docket No. PS-142; Notice 5]
Requests for Applications for the Pipeline Risk Management
Demonstration Program
AGENCY: Office of Pipeline Safety, DOT.
ACTION: Notice of request for letters of intent.
-----------------------------------------------------------------------
SUMMARY: The Research and Special Programs Administration's (RSPA)
Office of Pipeline Safety (OPS) invites eligible pipeline operators to
submit Letters of Intent expressing interest in participating in its
Pipeline Risk Management Demonstration Program. This notice begins the
solicitation process by specifying a deadline and address for Letters
of Intent, by directing interested operators to supplementary guidance
documents, and by providing updated guidance for operators interested
in participating.
DATES: Letters of Intent will be accepted no later than July 25, 1997.
ADDRESSES: Letters of Intent should be sent to Richard B. Felder,
Associate Administrator for Pipeline Safety, Research and Special
Programs Administration, Department of Transportation, Room 2335, 400
7th St., SW, Washington, DC, 20590.
SUPPLEMENTAL DOCUMENTS:
(1) Program Framework for Risk Management Demonstrations (61 FR
58605): Describes the processes by which OPS will receive, review,
approve, monitor, modify, and terminate company risk management
demonstration projects, and provides a description of the information a
company should include in its Letter of Intent. The guidance in the
Program Framework is current except where noted in Section II of this
notice. The significant information in the Program Framework is
contained in Appendix A of this document or available on the Internet
at OPS address http://ops.dot.gov.
(2) Interim Risk Management Program Standard: Describes the
essential elements and characteristics of a company's risk management
program. A Letter of Intent should include evidence that the company
will address all considerations raised in the Program Standard. It is
available by contacting Eben Wyman at (202)366-0918 or on Internet at
OPS address http://ops.dot.gov.
(3) Guidance on Performance Measures: Provides the basis for
participating companies and OPS to assess, through the demonstration
projects, whether risk management is an effective alternative to the
current regulatory environment; and to determine whether superior
public safety and environmental protection is being achieved. OPS
considers the performance measures proposed in the consultation process
to be critical to approving a demonstration project. Companies may
include proposed performance measures, if available, in their Letters
of Intent. The March 1997 guidance is available by contacting Eben
Wyman at (202)366-0918 or on Internet at http://opspm.volpe60.dot.gov.
(4) Risk Management Communications Plan: Outlines the processes to
enable all stakeholders (including OPS, companies, States, and local
officials) to exchange information about the goals, objectives, and
status of the Demonstration Program and individual projects. The
Communications Plan describes the information OPS intends to share with
stakeholders via local prospectuses once candidate companies are
selected for consultations. Companies may consult the Plan to ensure
their Letters of Intent contain sufficient information for the
prospectuses, and for guidance on local level communications the
company should conduct. OPS will continue to develop communications
with the public during the Demonstration Program. The Plan is available
by contacting Eben Wyman at (202)366-0918 or on Internet at OPS address
http://ops.dot.gov.
(5) Risk Management Training Curricula: Describes the content of
the risk management training that will be provided to industry and
regulator participants in the Demonstration Program. Companies who
submit Letters of Intent and who OPS identifies as candidates for
selection will be invited to participate in the training. The company
may request an orientation with the OPS personnel who will be assigned
to evaluate and monitor its demonstration project. An outline of the
curricula is available by contacting Eben Wyman at (202)366-0918 or on
Internet at OPS address http://ops.dot.gov.
(6) Proceedings from January 28, 1997 Public Meeting held at the
Hilton Riverside Hotel, New Orleans, LA: Record of OPS response to
public comment on elements of the Demonstration Program. Available by
contacting Eben Wyman at (202)366-0918, or on Internet at OPS address
http://ops.dot.gov. A summary of OPS comments at the public meeting is
contained in Appendix B of this notice.
FOR FURTHER INFORMATION CONTACT: Eben M. Wyman, (202) 366-0918, or by
E-mail (eben.wyman@rspa.dot.gov), regarding the subject matter of this
document. Persons wishing to review previously submitted comments may
contact the RSPA Dockets Clerk, (202) 366-5046, U.S. Department of
Transportation, room 8421, 400 Seventh Street, SW, Washington, DC
20590. Inquiries should identify the docket number (PS-142). The
Dockets Facility is open from 10:00 a.m. to 5:00 p.m., Monday through
Friday, except on Federal holidays when the facility is closed.
SUPPLEMENTARY INFORMATION:
I. Overview
The Program Framework for Risk Management Demonstrations (Program
Framework)(61 FR 58605), published on November 15, 1996, describes the
Pipeline Risk Management Demonstration Program and its objectives and
statutory basis, and provides guidance for pipeline operators who may
wish to participate. The Demonstration Program will enable
participating pipeline operators to substitute compliance with the
provisions of an OPS-approved demonstration project for compliance with
existing pipeline safety standards. The objective of the Demonstration
Program is to test whether allowing operators the flexibility to
allocate safety resources through risk management is an effective way
to improve public safety, environmental protection, and reliability of
service. It will also provide data on how to administer risk management
as a permanent feature of the Federal pipeline safety program, should
risk management prove to be a viable regulatory alternative.
[[Page 14720]]
Guidance for participation by companies, regulators, and the public
in the Demonstration Program is contained in the documents referenced
at the front of this notice. OPS expects documents (1) through (5) will
be refined and improved as more is learned during the course of the
Program. OPS will report at least annually on the Program's progress,
via Federal Register notices, nationally broadcast two-way video
teleconferences, mailed updates on the individual project prospectuses,
and other means. By March 31, 2000, OPS will submit a Report to
Congress on the Demonstration Program status. A final report will be
issued in four years evaluating how effectively safety, environmental
protection, and reliability of service have been improved by
participating operators, the feasibility of risk management in general,
and recommending whether and in what form risk management should be
incorporated into the Federal pipeline safety program on a permanent
basis.
II. Modifications and Clarifications to Program Framework
The following modifications and clarifications to the Program
Framework for Risk Management Demonstrations are in response to public
comment to the docket, meetings with individual operators, national
public, environmental and other interested organizations, and continued
interaction with industry and the States through ``joint risk
management quality teams'' (JRAQT).
1. Window for submission of Letters of Intent
Companies considering participating in a demonstration project must
submit a Letter of Intent to OPS no later than July 25, 1997. This
provides operators a 120-day window, rather than the previously
published 60-day window.
2. Phased Selection of Demonstration Projects
OPS will likely select a few candidates for consultations before
the 120-day window for submission of Letters of Intent has closed. This
phased approach would allow OPS to better manage workload. OPS would
base these selections on evidence in the Letter of Intent that the
proposed demonstration project has a high likelihood of being approved
per the criteria described in the Program Framework.
3. Screening Criteria
As part of the screening criteria, previously described in the
Program Framework, OPS will favor companies with a demonstrated
commitment to risk management and a demonstrated ability to communicate
with OPS by, for example, being forthcoming with relevant data. OPS
will favor proposed projects that:
Are comprehensive, indicating a more systematic and
thorough assessment of risk and risk control options so that superior
protection can be achieved;
Provide a good opportunity to evaluate risk management as
a regulatory alternative; and
Contain distinguishing features, such as support from or a
pre-established relationship with local or stakeholders.
4. Informational Meetings with OPS
OPS is continuing its informational meetings at company sites to
discuss demonstration project concepts, to explore the potential for
more comprehensive project proposals, and to provide companies a better
understanding of Program objectives, opportunities, and the
administrative process and approach to application evaluation. In
addition to assisting companies with questions about risk management,
these meetings could position OPS to better plan the evaluation phase
of the Demonstration Program.
5. Local Distribution Companies (LDC) are Not Eligible to Participate
in the Current Demonstration Program
As stated in the Program Framework, eligibility for the current
Demonstration Program is limited to interstate natural gas transmission
and hazardous liquid pipeline companies. However, on February 26, 1997,
the National Association of Regulatory Utility Commissioners (NARUC)
Committee on Gas passed a Resolution supporting an LDC Risk Assessment
Quality Action Team to conduct a feasibility study of risk management
as a regulatory alternative.
6. Role of States in the Demonstration Program
In keeping with the statutory provision (49 US USC 60126(d)) that
allows the Department to provide for State consultation in the
Demonstration Program, OPS will contact State pipeline safety agencies
that may be affected by a proposed demonstration project to discuss the
extent of the State's involvement in the project. This could entail the
State providing input on geographic, socioeconomic, and other local
factors that the Project Review Team (PRT) should consider during its
consultation with an operator. It could also entail the State pipeline
safety agency acting as a conduit for other State agencies wishing to
provide input to the PRT. The State could serve, along with OPS and the
company, as a point-of-contact for members of the public providing
comments and raising questions. Should the State pipeline safety agency
choose not to participate in the Demonstration Program, OPS will find
alternative means of ensuring that the PRT considers input from other
State agencies and the public.
7. Meaning of ``Clear & Established Safety Record'' in Presidential
Directive
A Presidential directive to the Secretary of Transportation directs
the Secretary to limit risk management demonstration projects to those
pipeline operators that have clear and established records of
compliance with respect to safety and environmental protection. OPS
will review its records to determine if candidate companies have
historically met requirements of applicable State pipeline safety
regulations. Operators should have addressed all safety and
environmental protection actions prescribed by existing regulations and
orders, including consent orders and commitments for corrective action
made to OPS. OPS will consult with other agencies about their knowledge
of the company's safety and environmental compliance record. A company
may include in its Letter of Intent a statement identifying the
relationship of any ongoing prescribed actions to the proposed
demonstration project.
8. Role of Other Agencies
At the annual National Response Team (NRT) Regional Response Team
(RRT) Co-chairs' meeting in February, 1997, OPS invited the 15 State
NRT agencies to participate in the Demonstration Program. Once OPS
announces the candidate demonstration sites, OPS will contact NRT
officials whose regions may be affected by a proposed demonstration
project to identify an appropriate role for the officials'
participation in the Demonstration Program. This could entail the NRT
official identifying any issues and concerns he or she may have with a
candidate demonstration project, including the company's safety and
environmental compliance record. OPS will keep these officials abreast
of the Demonstration Program and individual projects in their regions
via periodic program briefings, project prospectuses, and updates. At
the State level, State pipeline safety agencies participating in the
Demonstration Program may act as
[[Page 14721]]
points-of-contact for other State agencies (including State
environmental agencies).
10. Clarification of Term ``Stakeholder''
OPS uses the term stakeholder in reference to parties at the
National, State, and local levels that have interest in the Pipeline
Risk Management Demonstration Program.
11. Error in Citing Part 192 as Source of Reporting Requirements for
Gas Operators
OPS could issue orders exempting participating operators from any
but the reporting requirements in 49 CFR Parts 191 or 195, but expects
that the projects approved in 1997 will require exemptions from only
one or a portion of the regulations. The Program Framework erroneously
cited Part 192 as the source for reporting requirements for gas
operators.
12. Clarify Role of Local Public Officials
The Program Framework was unclear about why OPS asks that
participating companies establish a dialogue with local officials in
proximity to their demonstration projects. The expected benefits of
local public involvement include:
Providing information about specific local conditions that
may not be known at the Federal or State level;
Ensuring that government agencies have considered all
relevant factors in making decisions to approve projects; and
Providing local feedback as to whether the Program is
accomplishing the goals for which it was designed.
To broaden opportunities for public involvement, other planned
outreach opportunities include an Internet homepage with each project's
status and national two-way video teleconferences available via
Internet.
OPS is seeking a diverse set of demonstration projects, and
encourages all interested interstate natural gas transmission and
hazardous liquid pipeline operators to submit Letters of Intent for
consideration.
Issued in Washington, DC on March 24, 1997.
Richard B. Felder,
Associate Administrator for Pipeline Safety.
Appendix A--Excerpt from the Program Framework for Risk Management
Demonstrations (61 FR 58606)
SUPPLEMENTAL INFORMATION:
I. Overview
Section 5 of the Accountable Pipeline Safety and Partnership Act of
1996 (Pub.L.No.104-304, Oct. 12, 1996) requires OPS to establish the
Pipeline Risk Management Demonstration Program and sets forth
requirements for carrying out risk management projects. In a memorandum
issued when the statute was enacted, the President directed the
Secretary of Transportation to use his discretion to administer the
Demonstration Program with certain safeguards in place. The safeguards
identified in the President's memorandum to the Secretary include
making provisions for:
Accepting projects that can achieve superior public safety
and environmental protection.
Enabling full and meaningful participation by affected
communities and constituencies in risk management project approval.
Using orders ensuring that the requirements of risk
management projects are subject to full enforcement authority.
Limiting the number of demonstration projects to ten (10).
Limiting participation to operators with clear and
established records of compliance with respect to safety and
environmental protection.
The statutory requirements, the President's memorandum to the
Secretary, comments on previous framework concepts (published in 60 FR
49040, September 21, 1995, and 60 FR 65725, December 20, 1995), and
other stakeholder input were used to develop the present framework,
which provides guidance to operators who may decide to participate in
the demonstration projects that are expected to begin in 1997.
Risk management can provide pipeline owners and operators greater
flexibility in their choice of safety-related activities than is
possible within OPS's present universally applicable regulatory
program. Risk management enables a company to customize its safety
program to address its pipeline's particular risks. Furthermore, risk
management is a dynamic process, with built-in features for evaluating
and improving safety activities as experience is gained.
The demonstration projects will test whether allowing operators the
flexibility to allocate safety resources through risk management is an
effective way to improve safety, environmental protection, and
reliability. They will also provide data on how to administer risk
management as a permanent feature of the Federal pipeline safety
program, should risk management prove to be a viable regulatory
alternative. The new standards, technologies, and communication
processes developed by operators and OPS for the risk management
demonstration projects will be adapted to support the range of risk-
based regulatory, compliance, and research and development activities
OPS presently has under development.
OPS expects that risk management methods and the formalized process
of interactions and negotiation between regulators and company
personnel will result in superior public safety and environmental
protection than could otherwise be attained through existing regulatory
requirements. Risk management is, by OPS definition, a more systematic
and thorough assessment of risk and risk control options, with the
intended result of superior decision making. As a result of improved
assessment, OPS believes there is a potential to identify more risk
than may have been found using existing practices.
OPS plans to select companies for demonstration projects with a
demonstrated commitment (1) to work in partnership to evaluate merits
of risk management processes and technologies and (2) to develop risk
management as an integral part of company day-to-day business
practices, at least related to the demonstration project. The selection
criteria favors projects showing potential for more comprehensive risk
management applications. All participants will be focused on improving
safety and environmental results, prioritizing resources more
effectively, and enhancing the ability of government and industry to
effect positive outcomes. OPS will have clear profiles of its
assessment of pipeline integrity before and after the demonstration
program. At the program conclusion, OPS fully expects to have a better
understanding of individual pipeline risks and to be in a better
position to evaluate risk control options.
Finally, OPS expects risk management to be able to provide better
accountability for safety and environmental protection, and a better
basis to communicate with the public. To assure that safety and
environmental protection improve, OPS will measure local, project-
specific data such as current physical data, new test data, comparison
with similar segments, outcomes from risk control actions, precursor or
``anticipative'' event measures, level of risk awareness, history of
service interruptions and incident data. OPS also expects to measure
improvements in communications, understanding, and resulting increased
ability of government and industry to effect desired safety and
environmental project outcomes. OPS and operators
[[Page 14722]]
participating in the Demonstration Program will report to the public
periodically during the four year period.
OPS will be accepting into the Demonstration Program those
projects, as proposed or ultimately negotiated, that are expected to
achieve superior public safety and environmental protection than is
currently being achieved through regulatory compliance. Because of the
nature of the risk management process, OPS believes that operators
choosing to participate will be able to propose projects demonstrating
such protection.
Each demonstration project is expected to have a four-year
duration. Participation in risk management demonstrations will be
voluntary and subject to OPS approval based on criteria set forth later
in this notice. Eligibility for the demonstration projects beginning in
1997 is limited to interstate natural gas transmission and hazardous
liquid pipeline companies. RSPA may later broaden eligibility to
include distribution and other intrastate operators.
II. Activities Presently Underway and Next Steps
The December 20, 1995, Federal Register notice gave the background
for OPS's consideration of company-specific risk management projects as
an alternative to the existing regulations. The notice described many
of the safety, environmental, legislative, technical, public
perception, and economic factors driving government, corporate, and
public interest in risk management.
Since December 1995, OPS has been working with ``joint risk
management quality teams'' (JRAQT) composed of representatives of State
pipeline regulatory agencies, the oil and gas industries, and local
public safety and environmental representatives to develop the five
primary components of the Pipeline Risk Management Demonstration
Program. These components include the Interim Risk Management Program
Standard, the guidance for assessing risk management as a regulatory
alternative using general industry data, the training protocols for
instructing government and corporate participants about their new roles
under risk management, a plan for productive communication between all
participants and the public, and the regulatory framework presented in
this notice. The standard and the regulatory framework are now ready
for public comment. The guidance for assessing risk management as a
regulatory alternative will be ready for public comment in November.
The Interim Risk Management Program Standard will serve as a common
ground upon which the pipeline industry can develop and refine
effective risk management demonstration projects that regulators can
approve and monitor. It defines certain elements that all programs
should contain, but allows flexibility to each company to customize its
project to fit its particular needs and corporate practices, and allows
projects to evolve as experience is gained. The standard will also
provide companies guidance for selecting performance measures to ensure
that safety and environmental protection are safeguarded in
demonstration projects. Directions for obtaining and commenting on the
standard are at the front of this notice.
The regulatory framework component presented in this notice guides
pipeline companies in how they can gain OPS approval of their risk
management projects and describes how OPS would monitor the plans. The
framework presented here will guide the demonstration projects that
begin in 1997. The experience gained from the demonstration projects
will help OPS to later develop a permanent procedure for approving risk
management projects, if risk management proves to be a viable
regulatory alternative. Directions for public comment on the regulatory
framework are also at the front of this notice.
To help ensure that the Demonstration Program components provide
the flexibility to fairly and consistently evaluate and support actual
risk management projects, OPS has been conducting a series of meetings
with individual operators since August 1996. The topics of discussion
include risk management projects the operator has in place or under
consideration and criteria OPS might use to evaluate them. During the
meetings, operators also learn about and comment on the Demonstration
Program components under development.
OPS has held two public meetings on risk management demonstration
projects and will hold a third on Tuesday, January 28, 1997, in New
Orleans, Louisiana. At that meeting, OPS and the JRAQT will present the
Interim Risk Management Program Standard that operators will use during
the demonstration projects. OPS will also present prototype risk
management projects to illustrate the documentation needed and the
types of issues to be addressed during project review, approval and
monitoring. After the meeting, OPS will publish a Federal Register
notice to begin the project approval process described in Section IV of
this notice. Between now and the January meeting, OPS will continue to
refine the Demonstration Program components based on public comment on
this notice, meetings with individual operators, national public,
environmental and other interested organizations, and continued
interaction with industry and the States through the JRAQT teams.
III. Risk Management Demonstration Project Objectives and Policies
The objectives of the Pipeline Risk Management Demonstration
Program, which stem from the statutory requirements and the
Presidential directive, are to accomplish the following:
To show that more effective allocation of resources can
result in improved safety and environmental protection over what is
presently achieved through regulatory compliance.
To address risks not addressed by regulations by
capitalizing on features inherent to the risk management process, such
as improved quality and integration of safety data and, as a result,
more comprehensive assessment of threats.
To systematically test risk management as a regulatory
alternative through objective evaluation under a broad range of
conditions.
To establish a common framework for productive
communication with public safety officials and the public, and for
getting meaningful public input into the risk management process.
To develop and apply new risk assessment models, processes
and technologies.
OPS believes that the following elements need to be structured into
the Demonstration Program:
(1) Operators participating in the Pipeline Risk Management
Demonstration Program will need to provide sufficient data and
background information to enable OPS to determine whether risk
management is an effective regulatory alternative that provides
superior safety and environmental protection.
Implicit in a company's participation in the Demonstration Program
should be the commitment to work in partnership with OPS to determine
whether and how risk management might become a permanent feature of the
Federal pipeline safety program. OPS will ask for evidence that risk
management, as it relates to the proposed demonstration project, is or
will be developed and implemented as an integral part of the day-to-day
business practices of the company. OPS will also periodically ask
[[Page 14723]]
companies for suggested refinements to the primary program components.
In keeping with the Interim Risk Management Program Standard, the
operator must identify project-specific performance measures that
demonstrate the effectiveness of the risk-control decisions being made.
During the project approval process, OPS will determine whether these
local project-specific performance measures appear appropriate and
adequate. Throughout a demonstration project, the operator will
evaluate local and broader program measures and ensure that the
performance measures are appropriate and adequate. The operator would
periodically report on these project-specific performance measurements
to OPS.
OPS is developing guidance for additional more general measures
operators would report during the four-year demonstration period to
enable OPS to determine the effectiveness of risk management as a
regulatory alternative. These measures will help OPS answer the
following questions:
Does risk management result in a greater safety,
environmental protection, and service reliability than would otherwise
be achieved through compliance with the safety regulations?
Are resources being better prioritized and more
effectively applied under risk management?
Has agency and industry involvement in the discussion of
risks and risk control options, and the agency and industry's ability
to impact desired outcomes, increased under risk management?
(2) Operators will be allowed to reallocate resources geographically,
as long as safety is adequately safeguarded at each location along a
demonstration site
OPS will allow operators the flexibility in a risk management
demonstration project to reallocate safety resources across several
pipeline segments. An operator may substitute one or more activities
for others, or do away with redundant activities altogether, as long as
the basic safety and environmental protection along the pipeline is
safeguarded at each point. However, it is still expected that the
overall demonstration project performance will result in superior
safety and environmental protection.
(3) OPS will consider approving demonstration projects of various
scopes and complexities
The scope of a risk management demonstration project may be an
entire pipeline system and all safety activities, or may be focused on
parts of a system and specific activities.
Since operators have different levels of experience with, and
confidence in, risk management, OPS expects some proposals to begin
with approaches that are limited in scope. Therefore, an operator may
propose a phased entry into a demonstration project, broadening the
scope of the project as experience is gained. During the project
approval process, OPS will favor projects showing a potential for
expansion and more comprehensive application of risk management. OPS
expects to work with companies to develop a profile which compares the
demonstration site to the rest of the pipeline.
OPS recognizes that significant benefits can accrue from even the
less sophisticated applications of risk management. Because no single
risk management approach will be universally appropriate for every
situation, OPS is looking for those that match the level of risk
management with the complexity of the risks being managed. However, any
operator who participates in the Demonstration Program must have in
place the program elements defined in the Interim Risk Management
Program Standard. The program elements provide the structure for the
limited scope proposal.
When an operator proposes risk control alternatives to implement
during a demonstration project, the operator should demonstrate a
knowledge and understanding of the range of risks along the
demonstration site and show that it has considered significant failure
modes. An operator may draw on corporate experience, skills, and
available documentation to support the proposed alternatives.
(4) OPS considers an operator's compliance with the provisions of an
OPS-approved risk management project to be an equivalent and acceptable
alternative to compliance with the regulations
OPS considers the provisions of an approved risk management project
to be a regulatory commitment. The terms and conditions of the project
will be incorporated into an order that is subject to enforcement
authority. By this order, an operator conducting risk management
activities in an approved project will be exempt from regulations
corresponding to the stated scope of the project, but will be required
to comply with the provisions of the project. An operator not complying
with the provisions of its OPS-approved project will be subject to the
same civil penalties administered under existing regulations.
OPS has the authority to exempt, by order, an owner or operator
participating in a risk management demonstration project from all or a
portion of the regulatory requirements, and from any new regulations,
applying to the covered pipeline facility. OPS could issue orders
exempting participating operators from any but the reporting
requirements in 49 CFR Parts 192 or 195, but expects that the projects
approved in 1997 will require exemptions from only one or a portion of
the regulations.
When the project concludes at the end of four years, or if it is
terminated earlier, consideration will be given to installations or
facility modifications made during the demonstration project that
conflict with existing or future regulatory actions. Actions taken by
the operator in good faith in an approved risk management project could
be ``grandfathered'' and exempt from future regulatory compliance,
provided safety and environmental protection are not compromised.
(5) The operator is responsible for active communication with State and
local officials regarding risk management. OPS will ensure that such
communication is part of the operator's demonstration project plan and
that the communication is carried out.
OPS sees potential for risk management to provide better
accountability to the public for safety and environmental programs. OPS
is beginning to explore appropriate strategies for productive
communication with public safety officials and the public, and for
getting meaningful public input into the risk management process.
Similarly, OPS realizes the importance of training and other
information exchange in supporting the institutional change that would
occur under risk management.
Companies must establish appropriate dialogue with State and local
public safety and environment officials. At a minimum, these public
officials should be aware that a risk management demonstration project
is underway on the pipeline, that OPS is monitoring the project, and
who functions as a point-of-contact. Such a dialogue would enable local
officials to reassure the public that an appropriate regulatory
presence is in place and how the overall safety and environmental
protection are enhanced by risk management. OPS will discuss external
communications with the operator during a consultation prior to formal
application.
[[Page 14724]]
IV. Process for Selecting Projects
OPS is providing the following as guidance for operators to seek
approval of their risk management demonstration projects. OPS plans to
formally solicit operators to voluntarily participate in the risk
management demonstration projects via a Federal Register Notice in
first quarter 1997. That notice will give target dates for the various
steps described below.
(1) Letter of Intent
Operators would notify OPS of interest in participating in a
demonstration project, and OPS would screen operators to ensure that
only companies whose demonstration project concepts have a reasonable
likelihood of being approved expend the resources to develop formal
applications. OPS will screen Letters of Intent to identify no more
than ten projects as candidates for selection in the Demonstration
Program. Ten is the maximum number OPS can reasonably expect to
evaluate and, if selected, to monitor. OPS would accept Letters of
Intent during a 60-day window in early 1997. A Letter of Intent is an
expression of a company's interest, but does not obligate a company to
participate in a demonstration.
OPS would require that a demonstration project cover any part or
all of a pipeline system that is covered by either 49 CFR Part 192 or
195, is under State oversight or oversight by a participating
interstate agent, and is currently in operation or under conversion to
service. Operators should commit to a project duration of at least four
years, and provide evidence that they will address all considerations
raised in the Interim Risk Management Program Standard. This includes
providing a description of the means by which the company would
communicate with local officials regarding its demonstration project.
OPS would like to choose operators who provide evidence of
consistent corporate commitment to risk management. This could be
demonstrated by a corporate officer, who controls the resource
allocation for the demonstration project and competing operations,
signing the Letter of Intent.
The Letter of Intent would include a general discussion of risk
management principles as part of a company's operating philosophy. To
provide OPS adequate data to choose a diverse set of demonstration
projects, the Letter would provide a brief system profile of the
pipeline, including product(s) transported, pipeline age and operating
history, types of population distributions and geographic conditions in
proximity of the pipeline, and any other features the operator thinks
are notable. The Letter would also describe the scope of the project as
defined per the Interim Risk Management Program Standard and any new
technologies and processes to be developed or deployed during the
demonstration phase.
In making its choice, OPS would consider those operators who have
clear records of safety and environmental compliance, based on OPS
records and consultation with other interested agencies. OPS will also
limit selection to projects which would achieve superior safety and
environmental protection. Operators should have completed any OPS-
initiated corrective actions.
OPS will publish for public comment a Federal Register notice
describing proposals of selected companies and the demonstration sites
under consideration. OPS will also follow through with national public,
environmental and other interested organizations about the sites under
consideration so that local officials can be notified and informed.
(2) Consultation
OPS would invite each operator submitting a promising Letter of
Intent to a consultation within 60 days of receipt of the Letter of
Intent. The purpose of the consultation would be to familiarize OPS and
affected States with specific aspects of an operator's risk management
project concept, to provide guidance to the operator on what
refinements (if any) are needed for OPS to approve the concept as a
demonstration project, to enable regulators to plan the expected level
of monitoring based on the company's own audit process, and to enable
regulators and the operator to agree on the roles and responsibilities
of each throughout the project duration. OPS intends that the
consultation begin a negotiation process that results in a
demonstration project that OPS could approve.
OPS will provide notification that encourages local officials and
the public with questions about demonstration projects to raise them
with State pipeline safety officials who can raise them in the
consultation process.
OPS would constitute a Project Review Team (PRT) to consult with
the operator, keep abreast of any subsequent discussions, and provide
technical input on whether a demonstration project could be approved.
OPS would customize the make-up of each PRT to the company and project.
The PRT members'' roles would be defined in OPS-developed protocols,
designed to ensure rigorous yet fair and consistent treatment of all
operators throughout plan negotiation, approval, and monitoring. The
mix of States and OPS regional personnel on the PRTs, as well as any
outside technical expertise consulted, would vary from project to
project depending on the demonstration's technical focus and geographic
location.
Some of the same OPS headquarters staff would be on all PRTs to
ensure consistent application of policy throughout the project and to
follow all issues raised during the consultations to their resolution.
The consultation would focus on the design, operations, and
maintenance practices that would replace practices required by 49 CFR
Part 192 or 195, and that would achieve superior overall safety and
environmental protection. The operator would provide the rationale for
these risk control alternatives by generally describing the specific
risk management models, processes, and sources of data supporting their
selection.
Other consultation discussion topics would include the program
goals, the project scope defined per the Interim Risk Management
Program Standard, the project-specific performance measures, the
operator's auditing plan, a plan for OPS audits, proprietary issues,
provisions for public communication, and the outline for a work plan
including benchmarks, risk assessment processes, new technologies
applied, points-of-disclosure, and mechanisms for monitoring and
refinement.
(3) Formal Application and Approval
An operator would submit an application formally indicating its
intent to enter into a risk management demonstration project.
Consistent with the program standard's intent for an efficient
information flow among appropriate stakeholders, a summary of this
formal application would be published in the Federal Register, and the
application itself would be made available for review and comment in
the docket. OPS will again communicate with national public,
environmental and other interested organizations about the sites in
which we intend to approve demonstration projects so that local
officials can be notified and informed.
The formal application, including a detailed work plan, would
document operator/PRT resolution of issues raised during the
consultation and any subsequent discussions. It would also provide
assurance of a corporate commitment to implement the project in
accordance with the operator's risk management application. Other
issues may be included at the operator's
[[Page 14725]]
discretion, such as how to return to compliance with the regulations
should a demonstration be terminated.
OPS would review the application and comments, and decide whether
to approve the project. If OPS decides to approve the project, OPS
would issue the operator a written order. The order, in addition to
exempting an operator from the applicability of specified pipeline
safety regulatory requirements for the period of the demonstration,
would set forth the terms and conditions for the operator's
participation in the demonstration project. The order would be
enforceable.
(4) Implementation
A risk management project would start as soon as OPS approves the
formal application and work plan, issues the order, and notifies the
public through the Federal Register that the order is in effect.
Regulators and operators would monitor risk management demonstration
projects for compliance with the order. OPS would provide each
participating operator with a plan describing the regulators' expected
level of effort in monitoring the demonstration, including the type of
audits, their frequency, the participants, the audit scope, and the
operator's means of addressing those aspects of the demonstration site
remaining in compliance with the regulations, but this plan would not
limit OPS's statutory authority to inspect a pipeline facility during
the period of the demonstration. Planned OPS audits would coincide with
the operator's data taking at key decision points, such as when the
operator evaluates the effectiveness of safety activities or considers
modifying safety activities.
An operator would notify OPS of any intent to make substantive
modifications to the risk management project once a demonstration is
underway. The PRT may reconvene to renegotiate project approval or to
resolve other significant issues. Provisions will be made for public
review and comment on renegotiated projects.
OPS could, through appropriate administrative action, address any
unsafe conditions that arise during the demonstration period to ensure
that such conditions are quickly addressed. OPS would also administer
civil penalties within the provisions of the existing regulations for
operators not complying with the order.
(5) Termination
OPS intends that, where a risk management demonstration project is
determined to have been successful, the operator could, in lieu of
switching to compliance with the regulations, continue to exercise risk
management on that part of the system that was covered by the
demonstration. However, this determination could not be made until the
end of the demonstration period. Upon conclusion of the project, or if
it is terminated earlier, consideration would be given to installations
or facility modifications made during the demonstration project that
conflict with future regulatory actions.
OPS may consider terminating a demonstration project if:
(i) The operator requests termination due to changed circumstances;
(ii) The operator does not comply with the terms and conditions of
the approved risk management project;
(iii) Safety has been compromised; or
(iv) OPS and the operator fail to agree on a substantive
modification to a risk management project.
V. Summary of Means of Achieving Meaningful Public and Community
Involvement
OPS is providing numerous opportunities for public participation in
the design and implementation of the Pipeline Risk Management
Demonstration Program. One of OPS's objectives for the demonstrations
is to establish a common framework for productive communication with
public safety officials and the public, and for getting meaningful
public input into the risk management process. OPS believes meaningful
public input is essential if the demonstrations are to be successful.
The public was invited to comment on early regulatory framework
concepts via Federal Register notices published in 60 FR 49040,
September 21, 1995, and 60 FR 65725, December 20, 1995. OPS is
soliciting public comment on the latest framework concepts via this
notice. In addition to the notices, OPS has held two public meetings in
preparation for the demonstrations and has scheduled a third for
January 28, 1997, in New Orleans, LA. The previous public meetings were
held on November 7, 1995, in McLean, Virginia, and on April 14-15,
1996, in Houston, TX. At the third meeting, OPS plans to present the
final framework and supporting documents, and to demonstrate the review
and approval process using prototype risk management projects.
This notice directs interested members of the public to the docket,
to the American Petroleum Institute (API), or to a website to obtain
and comment on the latest draft of the Interim Risk Management Program
Standard. The standard describes the elements that OPS, its State
partners, and industry agree must be common to all demonstration
projects. One requirement is an external communications element, in
which regulator and other stakeholder interests and concerns are
understood, and program goals and results are communicated to and
discussed with the public, as well as Federal, State, and local
regulators, and other stakeholders as appropriate. The docket
associated with this notice will have available for review any comments
received on the standard and on the regulatory framework.
This notice also describes the numerous opportunities OPS is
offering the public for comment during the demonstration review and
approval process. Before formal applications are due, OPS will publish
for public comment a Federal Register notice describing the
demonstration projects under consideration and each company's concept
for communicating with local safety officials should OPS approve its
demonstration project. The public will be noticed again once the formal
application is received and approval is imminent. At this time, a
summary of the formal application will be published in the Federal
Register, and the application itself will be made available for review
and comment through the docket. At each opportunity for notice in the
Federal Register, OPS will communicate with national public,
environmental and other interested organizations about the sites under
consideration so that local officials can be notified and informed
about planned program activities.
Affected States will be a part of the Project Review Team (PRT)
recommending whether or not OPS should approve a demonstration project.
OPS will provide notification that encourages local officials and the
public with questions about demonstration projects to raise them with
State pipeline safety officials who can raise them with the PRT.
OPS and industry's communications effort focusing on public and
environmental officials and other interested organization
representatives is intended to provide these officials with adequate
information to reassure the public that an appropriate regulatory
presence is in place during the demonstrations, and to describe how
safety and environmental protection will be enhanced by risk
management. OPS would appreciate comments on whether these mechanisms
are adequate to ensure public and community involvement, and if not,
what OPS and operators choosing to participate in the
[[Page 14726]]
demonstration projects can do to achieve such involvement.
VI. Report to Congress
By March 31, 2000, OPS will submit a Report to Congress on the
results of the demonstration projects, evaluating how effectively
safety, environmental protection, and reliability have been improved by
participating operators, the feasibility of risk management in general,
and recommending whether and in what form risk management should be
incorporated into the Federal pipeline safety program on a permanent
basis.
Appendix B--The Pipeline Risk Management Demonstration Program Public
Meeting, January 28, 1997, New Orleans, Louisiana
Note: The complete transcript of this Public Meeting is
available on the Internet at: http://ops.dot.gov
1. Background and Objectives
Moving into Implementation
Over the last few years, the Office of Pipeline Safety (OPS) has
been investigating the use of risk management as a regulatory
alternative that would produce superior performance in more cost-
effective ways. Over this time, OPS has worked in partnership with the
pipeline industry and State regulators through a series of Risk
Assessment Quality Teams (RAQTs) and has discussed progress and
concerns at a series of meetings and conferences, including a Pipeline
Safety Summit in 1994, and Risk Management Conferences in 1995 and
1996.
The initial RAQTs, which investigated the feasibility of using risk
management within the pipeline industry, concluded that risk management
had the potential to provide significant benefits by improving safety,
environmental protection, reliability, and cost-effective operation.
However, these Teams noted a variety of technical and regulatory issues
that still needed to be resolved, and recommended that a demonstration
program be planned and implemented to test the viability of risk
management as a regulatory alternative.
The first Risk Management Conference, held in McLean, Virginia, in
November 1995, identified the most important of these issues. A major
conclusion from this first Risk Management Conference was that a set of
``building blocks'' needed to be developed to provide an adequate
foundation upon which a viable and responsible Risk Management
Demonstration Program could be constructed. After this conference,
partnerships representing OPS, States, localities, industry and the
public were formed to design and construct the following building
blocks:
The Risk Management Program Framework that defines how OPS
receives, reviews, approves, and monitors operators risk management
demonstration projects;
The Risk Management Program Standard that defines the
essential elements and characteristics of an operator's risk management
program;
Guidance on Performance Measures that supports the ability
of operators and OPS to monitor performance, ensure that superior
performance is being achieved, and evaluate the results of the Risk
Management Demonstration Program;
A Communications Plan that describes how information about
the demonstration projects will be provided to local safety officials
and other interested parties, and how information from these parties
will be input to the demonstration process;
A Training Plan that defines how OPS, States, and industry
will be trained in the risk management building blocks.
Work commenced on these building blocks in early 1996. A second
Risk Management Conference was held in Houston, Texas in April, 1996 to
review progress and to hear input, concerns, and suggestions about the
building blocks.
A draft version of the Program Framework was developed by OPS and
published in the Federal Register on November 15, 1996, followed by a
60-day public comment period.
A draft Program Standard was developed by the Program Standard
Quality Team and referenced in the Federal Register notice. Comments
were received, and incorporated into an Interim Program Standard in
early January, 1997.
A draft Performance Measures Guidance was produced by the
Performance Measures Working Group, and distributed for comment in
December, 1996.
A draft Communications Plan was produced by OPS and the JRAQT
Coordination Team and distributed for comment in early January, 1997.
A draft Training Plan was produced by OPS and distributed for
comment in early January, 1997.
The Accountable Pipeline Safety and Partnership Act of 1996 was
passed by Congress and signed into law by President Clinton on October
12, 1996. This Act required the Secretary of Transportation to
``establish risk management demonstration projects--A) to demonstrate,
through the voluntary participation by owners and operators of gas
pipeline facilities and hazardous liquid pipeline facilities, the
application of risk management, and B) to evaluate the safety and cost-
effectiveness of the program.'' President Clinton provided additional
direction to the Secretary through a Memorandum that directed the
Secretary to implement administrative safeguards for carrying out the
law that will enhance accountability and protection of public safety
and the environment.
Meeting Purpose
This Public Meeting was designed to allow OPS to: 1) Present to the
public the basic risk management demonstration program building blocks,
2) Describe and illustrate, with simple examples, how the review and
approval process is envisioned to work, and 3) Obtain input from all
interested parties concerning the building blocks or any other aspect
of the Risk Management Demonstration Program.
Each of the draft building block documents, the Act of 1996, the
President's Directive, and other relevant documents were provided as
handout to each person attending the meeting and distributed to all
State pipeline safety agencies.
[OPS received input from this Meeting, revised the draft building
blocks as necessary, and published a final Program Framework in the
Federal Register in March 1997, inviting companies to submit Letters of
Intent for risk management demonstration projects.]
2. Conference Synopsis
This section provides a brief summary of each of the major sessions
on the Meeting agenda.
Welcome and Introduction
Richard Felder--Associate Administrator for Pipeline Safety
Mr. Felder opened the conference by welcoming everyone. He noted
that OPS and its State and industry partners started out over two years
ago with the realization that there may be a better way of approaching
pipeline safety regulation, an approach that is not event-driven and
that does not result in specification-based regulation. OPS is looking
for a better approach that will give superior safety through
customization, flexibility, collaboration, and innovation.
Mr. Felder read a letter from Mr. Bruce Ellsworth, a Public Service
Commissioner in New Hampshire and
[[Page 14727]]
Chairman of the National Association of Regulatory Utility
Commissioners, to illustrate changes in perception from the first risk
management meetings until now. Mr. Ellsworth noted that he was
originally skeptical about replacing the existing safety regulations
with risk management. He believes that the Natural Gas Pipeline Safety
Act of 1968 has led to an outstanding safety record, and was reluctant
to fix something that was not broken. However, as a result of his
participation on the Joint Risk Assessment Policy Steering Team, he has
seen that there may be an opportunity to make the system work better,
cheaper, and more effectively. Mr Ellsworth's letter stated that he
believed OPS has been right in exploring the viability of risk
management as a regulatory alternative, and communicated his support
for the pilot demonstration program.
Mr. Felder then delineated the basic building blocks of the
Demonstration Program and emphasized the new awareness and resolve on
the part of OPS to address the issues of public involvement.
RSPA Perspectives
Kelley Coyner, Research and Special Programs Administration
Ms. Coyner's discussion focused on the two twins of ``opportunity''
and ``responsibility'' that risk management presents. Risk management
provides a tremendous opportunity, but only if we take the
responsibility to do it right very seriously. She said that the
pipeline risk management initiative was consistent and supportive of
President Clinton's vision of a government that is humble enough not to
solve all of our problems, but strong enough to give us the tools to
solve our problems ourselves.
Ms. Coyner described the opportunities that risk management
provides to comprehensively analyze risks, prioritize resources, and
track performance; to be smarter and more accountable. She spoke of the
responsibilities of continuing the partnerships that got us to this
point, to continuously improve as we move forward, and to set clear and
ambitious performance goals.
A major theme of Ms. Coyner's talk was the need for communication
and public involvement. Improving public involvement has been a program
goal from the beginning. She asked members of the audience to take
seriously the challenge to make sure that OPS and its partners are off
to a good start and going in the right direction by providing their
comments in this public meeting.
Risk Management Building Blocks Panel
Program Framework
Stacey Gerard, Office of Pipeline Safety
Program Standard
Denise Hamsher, Lakehead Pipe Line
Performance Measures Guidance
Ivan Huntoon, Office of Pipeline Safety, Don Stursma, Iowa Commerce
Department
Communications Plan
Stacey Gerard, Office of Pipeline Safety
Training Outline
Richard Sanders, Transportation Safety Institute
Program Framework
Ms. Gerard discussed the Program Framework, which describes the
processes by which OPS will receive, review, approve, audit, and
communicate information about operator risk management demonstration
projects. She described the contents of the draft Program Framework
(published in the Federal Register) and the comments received on this
draft. Ms. Gerard also discussed the Accountable Pipeline Safety and
Partnership Act of 1996 and the President's Directive that accompanied
the law. She noted that the President's Directive requires that risk
management demonstration projects produce superior safety and
environmental protection, and directed OPS to place more emphasis on
meaningful public and community involvement.
Ms. Gerard outlined the basic steps in the regulatory process,
including:
The Letter of Intent (LOI), in which the company
communicates its intention to develop and propose a risk management
demonstration project;
The Screening Process, in which OPS screens the LOI to
select a set of potential projects that have the best chance of
supporting the Demonstration Program goals;
Pre-consultations, in which OPS staff meets with the
selected operators to discuss their proposed project, clarify
information in the LOI, and prepare the Project Review Team (PRT) for
an efficient consultation with the operator;
The Consultation Process, in which an PRT meets with the
company, and through a series of discussions, information exchange, and
interactions come to agreement on the scope and characteristics of an
acceptable risk management demonstration project, leading to the
submittal of an application by the operator;
The Review and Approval Process, in which OPS reviews the
operator's application, approves it if appropriate, and reflects the
commitments and terms and conditions of the program in a DOT Order;
The Audit Plan, developed by OPS, which will coincide with
the company's Work Plan milestones and decision points, and which
describes the specific processes and areas of OPS audits of the risk
management demonstration project;
The Implementation Phase, in which OPS and the operator
monitor progress, and modify or terminate the project as necessary.
She noted that, based on comments to the FR Notice, the window of
time for submitting LOIs will be extended to 90 or 120 days. She
strongly encouraged capable companies to submit LOIs.
Ms. Gerard discussed the issue of the ``clear and established''
safety record required by the President in his Directive of all
demonstration program participants. She noted that OPS wanted companies
with a clear record of compliance to start the project, and OPS will
work with companies to be sure there is a clear record.
Ms. Gerard also discussed the issue of ``superior performance''.
The President's Directive states that: ``The Secretary [of
Transportation] shall require each project to achieve superior levels
of public safety and environmental protection when compared with
regulatory requirements that otherwise would apply.'' Ms. Gerard noted
that, consistent with other aspects of the President's Directive,
superior performance would be achieved through a combination of:
(a) Improved analytical and decision-making processes. Risk
management programs consistent with the Program Standard would be
expected to include a comprehensive examination of risks, improved
allocation of resources, enhanced communications within the company,
better interactions with the regulators, meaningful public involvement,
and other features that would lead to superior performance.
(b) Selection of an integrated set of risk control activities that
is expected to reduce risks to the public, workers, and the
environment.
(c) Full accountability. Operators will be expected to identify
project-specific performance measures and submit project work plans
that explicitly define operator commitments. These commitments are
reflected in Orders that delineate the terms and conditions under which
the operator's risk management program is authorized, and which are
subject to the full
[[Page 14728]]
enforcement authority of the United States.
She clarified the role of the States, stating that OPS is inviting
the States to participate in the PRT process, but not mandating
participation of the States.
Program Standard
Ms. Hamsher, Co-Chair of the Joint Risk Assessment Program Standard
Team, described the basic objectives of the Program Standard, how it
was developed, and its basic elements. She stated that the Program
Standard describes the basic elements and characteristics of an
operator's risk management program. The Program Standard describes the
basic program and process elements, and the functional requirements of
a risk management program, but does not specify exactly how these
elements or functions should be performed, allowing operators to
customize their specific programs and technical tools to their
situation and needs. It is not an instruction manual, a substitute for
training, or a tool box. The Program Standard can provide the starting
point for the OPS review of proposed demonstration projects, but it is
not intended as a checklist for review and approval of demonstration
projects.
Ms. Hamsher discussed some of the risk management guiding
principles that were developed by the JRAQT. One of the key guiding
principles is that risk management is a management decision support
process. It is not just a set of technical models, but a comprehensive
program that is integrated with the overall operation of the company to
produce better decisions leading to superior performance. Risk
management supports responsible, prudent, and experienced managers, it
does not replace them. She also noted a guiding principle that risk can
be controlled and often reduced, but it cannot be totally eliminated.
We all need to reinforce, and communicate this realization so that
expectations for zero risk are not established. Another guiding
principle that went into the development of the Standard was that risk
management produces integrated information about safety and
environmental protection. Risk management increases information and
information flow, between the company, its regulators, and the public.
She noted that the JRAQT recognized that the technical models,
tools, and processes associated with a risk management program
necessarily include some subjective judgements, uncertain assumptions,
and limited data. Accordingly, the Program Standard includes a
Performance Monitoring element that includes the definition and
monitoring of performance measures that are directly tied to validating
the specific assumptions and input data of the operator's risk
assessment model and process.
Ms. Hamsher concluded by discussing the future of the Program
Standard. Progress on the demonstration projects will be monitored, and
the Program Standard will be refined and improved over the next four
years. However, because of the way the Program Standard was developed,
laying out the basic elements without prescribing details, it is not
expected that major modifications will be necessary over the
demonstration period. It is expected that this Program Standard will
eventually be transformed into an industry consensus standard.
Performance Measures Guidance
Mr. Huntoon, Regional Director for the OPS Central Region, and Don
Stursma, from the Iowa Commerce Department, discussed the work of the
Performance Measures Workgroup and the issues the group addressed in
producing the draft Guidance on Performance Measures. The Performance
Measures Workgroup was formed after a number of issues related to
performance measures were identified by the JRAQT Program Standard
Team.
The Workgroup concluded that there were two key areas where
performance measures were important:
(1) In monitoring the specific results produced by individual
company demonstration projects to ensure that the underlying
assumptions and input data of the risk assessment and risk control
models are valid, and that the approved projects are indeed resulting
in superior performance as predicted.
(2) In assessing the overall success of the Risk Management
Demonstration Program, providing input to the required OPS report to
Congress, and other progress reports.
Key issues that the Workgroup addressed were the availability of
data to support meaningful performance monitoring and the cost and
sensitivity of data reporting.
The report produced by the Workgroup is intended to provide
guidance for operators who are planning to participate in the risk
management demonstration program. The guidance should assist operators
in developing a performance monitoring process as described in the
Program Standard, and provide OPS the information it needs to assess
the overall effectiveness of risk management as a regulatory
alternative.
The project-specific performance measures will be included as part
of the operator's demonstration project application, and will depend
upon the expected outcomes of the demonstration project, and the
selected risk control activities. Mr. Huntoon delineated some of the
criteria developed by the Workgroup for these project-specific
performance measures.
In order to assess the overall benefit of risk management as a
regulatory alternative, the Workgroup felt that program-wide
performance measures were needed to allow individual companies and OPS
to address the following questions:
(1) Safety and Reliability. Does risk management result in greater
safety, environmental protection, and service reliability than would
otherwise be achieved through compliance with the safety regulations?
(2) Resource Effectiveness. Are resources being better prioritized
and more effectively applied under risk management?
(3) Communication and Partnership. Have agency and industry
involvement in the discussion of risks and risk control options, and
the agency's and industry's ability to impact desired outcomes
increased under risk management?
Mr. Stursma discussed each of these major areas in turn, describing
the issues that the Workgroup discussed in the process of producing the
Guidance on Performance Measures. He also gave a variety of practical,
everyday examples of the different types of performance measures to
illustrate the concepts.
He noted that the information gained from these program-wide
performance measures will be used by OPS to prepare a report to
Congress on the results of the Risk Management Demonstration Program.
The report will address each individual project and provide an overall
recommendation on the application of risk management as a regulatory
alternative. It was recommended that a successor group to the
Performance Measures Workgroup be formed, which would prepare annual,
interim progress reports. It is expected that OPS, the successor group
to the Performance Measures Workgroup, and operators participating in
the demonstration program will jointly prepare the interim annual
progress reports.
Communication Plan
Ms. Gerard described the evolution of the Communications Plan and
its basic elements. She reiterated the importance of meaningful public
involvement to the
[[Page 14729]]
success of the risk management program, and summarized the numerous
mechanisms planned for communication and involvement. In response to
concerns expressed by some that the public would only be informed too
late in the game to have any meaningful impact, Ms. Gerard pointed out
that OPS will, right at the beginning of the review and approval
process, summarize the Letters of Intent from companies selected to
provide risk management project applications. In addition to
publication in the Federal Register, project summaries will be
distributed to local safety officials, and feedback loops will be
established to obtain input from interested parties, at the very
beginning of the consultation process. Information that comes in will
feed into the pre-consultation and consultation process.
Each project summary, referred to as a prospectus, will describe to
local officials the objectives of each project, the safety alternatives
being discussed, and the company's approach to communications with the
public. The prospectus will define at least three points of contact for
anyone wishing to provide information or comment. One point of contact
will be from OPS Headquarters, one will be at the State level (if the
State agrees), and one from the operating company. As new or additional
information is developed during the consultation process, the
prospectus will be updated to keep people posted on events throughout
the process.
At the time of the formal application from the company, the
company's application will be made available in the docket, and a
summary will be published in the Federal Register. When the application
is approved and an Order is issued, OPS will issue another Federal
Register Notice.
Ms. Gerard stated that the aggressive OPS communications effort
under risk management is a much larger commitment that they have ever
made before because they understand how important meaningful public
involvement is to the success of the program.
Training Outline
Mr. Sanders, from the Transportation Safety Institute, summarized
the training program that OPS is developing to support the risk
management demonstration program. OPS is committed to joint government/
industry training to ensure that all parties have a mutual
understanding of the program, and speak the same language (or can at
least accurately interpret each other's language) to facilitate the
consultation process, and ensure high quality, comprehensive risk
management programs result that produce superior performance.
Mr. Sanders outlined the currently envisioned training program,
which is designed to support the Project Review Team, OPS, and the
company during the project review and approval process. The program
includes:
An Overview of the Risk Management Demonstration Program.
The Demonstration Process and Building Blocks.
The Risk Management Program and Process Elements.
OPS Auditing of an Approved Risk Management Demonstration
Project.
Prototypical Examples to Illustrate the Demonstration
Process.
The training program will be developed in a modular format, so that
orientations and training courses can be customized to the specific
audience, its level of experience, and its specific training needs. The
first two blocks of the training listed above, and selected portions of
the other blocks, can be provided as an orientation or ``headstart''
program to those that have not been actively involved in the program
development phase, or who wish to establish a common starting point.
The Risk Management Program and Process Elements portion of the
training is based on the Program Standard building block produced by
the JRAQT, and will provide overview descriptions of various types of
risk assessment and prioritization models and processes.
Mr. Sanders asked for review of the training material, and input
about training needs, including the usefulness of video, computer-based
training, or Internet interactive training.
Prototypes
Moderator: Mike Neuhard, Fairfax County Fire Department
Panelists: Bruce Hansen, Office of Pipeline Safety, Andy Drake,
PanEnergy Corporation, Beth Callsen, Office of Pipeline Safety, Gary
Zimmerman, Shell Pipeline
Two examples of possible regulatory alternatives, one from the
natural gas industry and one from the hazardous liquid industry were
discussed to illustrate the demonstration process described in the
Program Framework and discussed in the Building Blocks Panel. The
examples were simplified versions of what would be expected in a real
demonstration project, designed to illustrate the interactive process
between OPS and the company, and were not presented as practical
examples of comprehensive risk management programs or to illustrate the
critical public involvement aspects of the process.
The topics addressed by each of the prototypes included:
The information expected in the Letter of Intent.
The characteristics of the proposed demonstration project
that OPS would look for in screening Letters of Intent.
The topics that would be discussed at pre-consultation
sessions between OPS staff and the operator.
The discussions between the PRT and the company concerning
the risk-based justification for the proposed safety alternatives.
The performance measures necessary to validate assumptions
of the risk models and to confirm that superior performance was being
produced.
Audience Questions and Comments
Questions and comments from the audience were received by speakers
and panelists at a few different points in the meeting. Some of the
major areas of questions and comments are summarized below. A full,
verbatim set of all questions, comments, and OPS responses is available
in the meeting transcript.
The liability of companies under risk management
demonstration projects for compliance with the existing Federal or
State regulations.
Mr. Felder stated that a company that implements an OPS-approved
demonstration project is committed to abiding under the terms of their
approved application, as reflected in the associated OPS Order.
Participation in a demonstration project is not an exemption from the
minimum Federal pipeline safety standards as a whole. The underlying
regulations that would otherwise apply would not apply to the segment
of the pipeline within the demonstration project; the approved project
and corresponding Order would apply. There should be no problem from
the public's perspective if the company is in compliance with the
provisions of its demonstration project as opposed to being in
compliance with the underlying regulations; compliance with provisions
of the project is equivalent to compliance with the pipeline safety
regulations. The up-front review and approval process assures at the
outset that the demonstration project will result in a superior level
of safety compared to what you would have under the minimum State
standards.
The quality of the data to support risk management.
Mr. Felder noted that some of the audience comments reflected the
[[Page 14730]]
situation at OPS in years past, but did not reflect the many efforts
over the past few years that OPS has taken in increasing partnership
with industry, States, and the public to identify new regulatory
pathways, to get the type of information needed to regulate
effectively. He also noted that considerable work has gone into
ensuring that the risk management process will significantly improve
the amount and quality of data that will be available to OPS. The past
is not a good indicator of where OPS is going in the future as far as
risk information and data is concerned.
The level and type of communication with the public, and
OPS's role in this process.
Mr. Felder and Ms. Gerard reiterated the importance placed on
communication by OPS, and the need to engage in an unprecedented
outreach effort from OPS, but also noted the joint responsibility for
communication among OPS, industry, local safety officials, and the
public. Government cannot, and should not, do everything. Mr. Felder
said that it was important to understand that the people who run the
companies are also citizens of the country. They have a great stake in
the outcome of the work they do, and a great stake in the communities
that they affect. That is why OPS is enlisting their resources as part
of the public outreach process. He further noted that OPS is working
with national organizations because they have people and resources in
every community in America, and this can leverage OPS efforts in
getting down to the local community level. He stated that we need a
communication partnership among Federal regulators, the States,
national organizations, local officials, and the public.
Mr. Felder also pointed out that the situation with a risk
management demonstration project is not analogous to the siting of new
pipeline, where a company may be introducing a new risk into a
community that did not exist before. Risk management demonstration
projects will only be allowed by OPS where the company can demonstrate
that superior performance can be achieved. The communications and due-
process needs and mechanisms are accordingly different than that
associated with a new right-of-way or zoning change hearing where new
and additional risks are being introduced.
Ms. Hamsher pointed out that, in addition to the OPS Communication
Plan, the Program Standard contained explicit requirements for the
company to develop a two-way communications effort, ensuring that
public information will be input to the risk assessment and risk
control processes.
Public access to the Letters of Intent.
Mr. Felder stated that the Letters of Intent, as well as the formal
company application will be available in the docket for public
examination.
The interactive nature of the screening process.
Mr. Felder and Ms. Gerard stated that the screening process may
require information meetings and interactions with the companies to
clarify points in the Letters of Intent or to gather additional
information needed by OPS. However, any interactions, consultations, or
discussions with the company or States does not change the ultimate
responsibility for public safety, which sits in the hands of the OPS
regulators.
The relationship between the OPS program and other
regulators such as EPA.
Mr. Felder noted that OPS has had close collaboration with Mineral
Management Service and works closely with the Coast Guard, a part of
DOT. OPS is interested in putting together a larger network of agencies
to share experiences about risk management and other alternative
approaches to regulation. OPS has already performed a study that looked
at over a dozen other State agency programs in risk management,
defining and incorporating lessons learned from these programs into the
pipeline risk management program. OPS has began meeting with EPA and
will continue to consult with the EPA on issues of mutual interest.
[Subsequent to the public meeting, OPS briefed the 15 State
National Response Team (NRT) agencies and invited them to participate
in the Demonstration Program. As part of the screening and selection
process, OPS will contact NRT officials whose regions may be affected
by a proposed demonstration project to identify an appropriate role for
the officials' participation in the Demonstration Program. This could
entail the NRT official identifying any issues and concerns he or she
may have with a candidate demonstration project, including the
company's safety and environmental compliance record. OPS will keep
these officials abreast of the Demonstration Program and individual
projects in their regions via annual program briefings, project
prospectuses, and updates.]
Limitations on the number of demonstration projects.
Mr. Felder stated that OPS is restricted by Presidential directive
to ten demonstration projects, involving interstate pipelines. No
demonstration projects are planned for the local distribution companies
at this time. In addition, OPS will be undertaking a variety of other
initiatives related to regulatory reform and risk-based regulation
beyond the demonstration projects themselves. OPS is committed to
ensuring a high quality demonstration program that protects and
improves safety and the environment, understands the significant
resources required to support this program, and will not take on any
more projects than it can responsibly and prudently handle.
Summary and Closing
John Riordan, Interstate Natural Gas Association of America (INGAA)
Pipeline Safety Task Force, Joe Martinelli, API General Committee on
Pipelines, Rich Felder, Office of Pipeline Safety
Mr. Riordan, from MidCon and the spokesman for INGAA, discussed how
the Board of INGAA, which is represented by the Chief Executive
Officers of the major pipelines in the United States, Mexico, and
Canada became interested in risk management as a means to improve
safety. He noted that society and the marketplace are demanding
increased accountability from industry and the people that regulate the
industry, and INGAA believes that the risk management demonstration
program is very important in this regard. He emphasized the importance
of communications, and the need to continuously improve in a changing
world.
Mr. Martinelli, past President of Chevron Pipeline and Chairman of
the General Committee on Pipeline for API, recounted the history of how
industry, OPS, and other interested parties got to this point on risk
management. He applauded the tremendous amount of work done by a large
number of people in government and industry and the public. He noted
that a key recognition four years ago was ``one size fits all''
regulation was not in the best interests of anybody, and a fundamental
change was needed. Mr. Martinelli discussed the difficulty of change,
whether in a person, a company, or an entire industry, and challenged
all parties to not be fearful of change. He warned people not to get
caught up in the ``30-year'' syndrome or the ``not invented here''
syndrome that resists change. He also talked about the recognition that
government and industry had to be more collaborative than adversarial.
Mr. Martinelli also noted that we were not
[[Page 14731]]
at the end of a journey with the development of the risk management
building blocks, but just at the beginning of the journey, and the
journey will be a long and hard one that requires significant continued
effort from all parties. A key message was: ``Get comfortable with
change'' and he provided a rule of thumb called the Rule of Three
Positives. ``When somebody suggests a change to you, don't say: `No,
that won't work. That's not the way I do it.' When somebody suggests
something new, stop and think and make three positive comments about
the new idea before you make one negative comment.'' He challenged the
companies to be innovative, creative, and provide OPS with so many
quality demonstration proposals that their selection process will be
difficult.
Mr. Felder closed the conference by expressing appreciation to all
those that attended and to all of his staff that made the public
meeting possible. He and Stacey Gerard then handed out DOT certificates
of appreciation to individuals outside the government, in industry, the
public, and contractors, that have worked with the various Risk
Assessment Quality Teams.
[FR Doc. 97-7827 Filed 3-26-97; 8:45 am]
BILLING CODE 4910-60-P
