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Homeland Security

The Testimony of
The Honorable Mark Spitzer
Chairman, , Arizona Corporation Commission

When I teach government classes I refer to the "healthy tension" created by our Founding Fathers between the branches of government as well as between the States and the National Government. When this tension becomes unhealthy, government becomes dysfunctional. As a four-term state legislator and now as a state regulator, I have occasionally chafed under unfunded federal mandates. However, as an elected official asserting state prerogatives my efforts must be productive rather than destructive. Mindless rants against Washington, whether from the left or the right, and feigned ignorance of Article VI of the Constitution serve no purpose.

One of our tasks today is to contribute in a meaningful way. The people whose homes were doused with gasoline do not care to hear us shout accusations. The mother who waited in a gas line does not want to hear us blaming each other like children. The public expects solutions from us. I will offer my suggestions to that end, in the hopes that they add to the discussion and perhaps help us all to find a resolution.

The transportation of hazardous liquids through interstate pipelines is unquestionably interstate commerce, and the United States has asserted jurisdiction within United States Code Title 49. That does not mean that the exercise of federal authority over interstate gasoline pipeline has always been wise-it has not. I offer herein suggestions for the Federal Office of Pipeline Safety to work more openly and collaboratively with our Commission's pipeline safety inspectors and other state agencies. But we must recognize federal statutory authority and the chaos that would ensue if the states enacted fifty different interstate pipeline codes. For example, were California to mandate annual hydrostatic testing of all interstate pipelines, Arizona's perilous supply of vital commodities would be shut down. Such caprice is neither sound nor necessary for the protection of public safety. My proposals reflect the healthy tension between the Federal OPS and the State of Arizona to accommodate all interests, the most important being public safety and the free flow of goods in commerce.

INFTRASTRUCTURE CHALLENGES AND SYSTEMMIC IMPROVEMENT

Arizona has virtually no crude oil production and refines no gasoline. Similarly, Arizona has no known deposits of natural gas and, as of this date, no natural gas storage facilities. Arizona is dependent on two pipeline systems for natural gas and but one pipeline system for gasoline. These circumstances are unacceptable and all parties, state and federal, public and private, and the people of Arizona must collectively resolve this problem.

The Corporation Commission convened a series of workshops and public meetings to deal with our natural gas infrastructure, or more precisely our lack thereof. For several years now the Commission has spent time and resources seeking additional natural gas pipeline capacity. Arizona's Congressional delegation has been extremely helpful in dealing with the FERC, including the pending litigated case over Arizona's allocation from the El Paso pipeline system. However, the Commission has zero regulatory authority with regard to gasoline prices and supply. Much more must be done to ensure redundancy of energy capacity and proper repair and maintenance of existing pipelines. The Federal government through its agencies must recognize the need to enhance Arizona's energy infrastructure.

Arizona's utter dependence on gasoline and natural gas pipelines, and the imperative of public safety, require that the Commission's pipeline safety inspectors be allowed to participate more openly in the oversight and inspection of pipelines. The Integrity Management Program ("IMP") is an example where more could be done. Under IMP, states are permitted to observe the Federal OPS and the pipeline operator. Observation is not participation - as Teddy Roosevelt once famously pointed out. Each state has a cadre of trained experts at the ready, prepared to assist and support the federal OPS in its task of ensuring interstate pipeline safety - The Federal OPS should integrate the states into the IMP.

States submit detailed 'Work Plans' to the Federal OPS every year, in which they propose a plan of action for the review and inspection of interstate pipelines in the state. More often than not, what is received back from the Federal OPS is an entirely different plan. This is not consultation - it is not cooperative to ask for a plan and respond with an entirely different proposal. Each state has a unique understanding of its geography, climate, soil and development - The Federal OPS should base its work plans on the proposals submitted by the states, not adopting them blindly, but recognizing the merits therein and incorporating them into the federal vision.

Arizona's pipeline inspectors have acknowledged experience and expertise. Attached as Exhibit A is a summary of the intrastate and interstate pipeline inspections performed by Commission employees. Between December 27, 1999 and August 31, 2000 the Federal OPS "revoked" the Arizona Corporation Commission's "agent status" and undermined our inspection of interstate pipelines. I thank the Senator for his efforts reinstating our Commission's status. The Federal OPS should enhance rather than undermine the agent status of state pipeline inspectors.

INFORMATION SHARING

The keeping of confidences is appropriate for doctors, lawyers and priests, but there should be no secrets with pipeline safety. We cannot ensure the safety of the public and protect the integrity of our nation's pipelines if state and local officials are not provided timely information. Critical facts are too voluminous, risks too great and potential impacts of terror too substantial not to insist on cooperation and a sharing of information. The Federal OPS and pipeline operators must share operational data with State officials, and immediately notify those officials of any potential danger to public health and safety from pipeline operations.

In two recent cases, Southwest Gas Corporation and the City of Mesa requested opinions from the US Department of Transportation on intrastate operations occurring in Arizona. In neither case did the Federal agency notify or communicate with the Commission. The Federal OPS should timely notify the states when requests for opinions concerning pipelines within their boundaries are received - states must be allowed to submit their comments on those requests before the OPS renders its opinion.

In the case of Kinder Morgan, in 1996 the 8-inch and 12-inch pipelines were inspected with a 'smart pig' device that is run through the pipeline inspecting for cracks, obstructions and evidence of corrosion. The Arizona Corporation Commission was never informed of that inspection and never received a copy of the results - solely because the pipelines were interstate. A Kinder Morgan 6-inch intrastate pipeline was 'pigged' in 1999 - over 5,000 anomalies were found in a 139-mile section. There is no justifiable reason for failing to share the results of inspections within a state - The Federal OPS should provide timely copies of all inspection reports to the states.

ENCROACHMENT

Entitlements relative to real estate construction in the vicinity of intrastate and interstate pipelines are governed by county and local zoning authorities. However, public safety demands that we address this issue and not simply "pass the buck" to cities, towns and counties. No residences should be built within 200 feet of a high pressure 8-inch or 12-inch gasoline pipeline. In Tucson, the homes were 37 feet from the pipeline. Within minutes over 6,000 gallons of gasoline had soaked several residences. We can only thank God that the homes were unoccupied - but we must recognize the danger.

Real estate construction involves the use of heavy machinery and excavation. Backhoes have been known to rupture or demolish even the sturdiest pipe. Heavy construction produces intense vibration and impacts soil composition, both of which jeopardize underground pipe. I understand some real estate developers seek to squeeze every nickel out of entitled land, but residential development within 37 feet of a fifty-year old gasoline pipeline is intolerable. The federal and state governments must step forward with appropriate restrictions where counties and cities act irresponsibly. The Federal OPS should work with states to develop clear guidance for counties and cities on the dangers and locations of pipelines to preclude residential zoning within 200 feet thereof.

CONCLUSION

On behalf of the Commission and its pipeline safety inspectors I am grateful to the Senator for convening this hearing. The many public recriminations and press releases since August have done nothing to protect public safety nor improve Arizona's energy infrastructure. Beginning with this hearing, Senator, the stakeholder process for solving these problems commences. My recommendations today are designed to address those solutions in collaboration with federal, state and local governments and the private sector. The needs are great, and this moment is the time to act.



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