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Federal Pipeline and Oil-by-Rail Regulator Making 9% Staff Cut, Confounding Experts

Job cuts come at a time when PHMSA is struggling to regulate the nation’s aging pipeline network and new pipelines tied to the oil and gas boom.

Apr 24, 2014

The federal regulator for petroleum pipelines and oil-toting railcars is offering employee buyouts that could shrink the agency's staff by 9 percent by mid-June—a step that has confounded observers because the agency is widely regarded as being chronically understaffed.

Pipeline and Hazardous Materials Safety Administration (PHMSA) spokesman Damon Hill said the buyout offers are meant to "help the agency manage attrition in areas where a large and growing number of employees are eligible for retirement by offering an inducement for a limited number of employees to voluntarily retire or resign."

Hill said PHMSA is continuing to hire in key areas at the same time. "I understand how some folks may be looking at [the buyout effort], but it's part of an overall plan to retain expertise and plan for retention and things like that," he said. "There is some good that comes out of this."

Still, the job cuts come at a time when PHMSA is already under considerable duress. Politicians and the public have been pushing the agency to more rigorously regulate the nation's aging pipeline network as well as the many new pipelines tied to surging domestic oil and natural gas production. A spate of damaging pipeline spills and oil-by-rail accidents is adding to the workload, exposing PHMSA's shortcomings and intensifying scrutiny of the agency. 

PHMSA, which is part of the Department of Transportation, regulates the 2.6 million miles of U.S. pipelines that carry hazardous liquids such as crude oil and fuels. It's also responsible for making sure that more than 6 million tons of other hazardous material travels safely across the country each day via air, rail, ship and vehicle. 

Carl Weimer, executive director of the Pipeline Safety Trust and a member of PHMSA's technical committee for pipeline safety standards, was puzzled by news of the agency's move to trim its staff.

"It seems like a lot of people … [and] an inopportune time," he said. "They have all these Congressional mandates, they have all these requests from [the National Transportation Safety Board] to fix things, there's been a series of incidents that they're trying to investigate, and they're even saying out loud how they don't have enough inspectors and how they would like to do more."

Weimer's concern was echoed by Barbara Lawrence, who lives on a lake in Texas that has pipelines running through it carrying thick, diluted bitumen from Canada's oil sands.

"I'm actually shocked because there's a proliferation of [oil and natural gas] drilling in this country with the shale revolution, they're bringing in tar sands, and they're building pipelines like crazy," she said. "Some of this stuff is hazardous, and [PHMSA] should be expanding at an incredible rate to make sure that all this stuff is safe."

Hill, the PHMSA spokesman, said the agency is offering financial incentives for early retirement or resignation until mid-May, and those who volunteer must leave their jobs a month later. The buyouts were offered to investigators and engineers, as well as to transportation specialists, public affairs specialists and administrative, human resources and legal personnel.

"Industry offers buyouts periodically to entice older people to retire, and I think that's all it was about," said John Pepper, an engineer and inspector who left PHMSA for a natural gas storage company in February, between the buyout offers. Still, he said, "It was bizarre to me. We needed people and they offered that [buyout plan]. It didn't really make sense."

If all of the authorized slots are filled, the agency will lose 33 employees. Spokesman Hill said 13 employees left PHMSA through a similar offer that closed at the end of 2013.

Together, the buyout programs could result in the loss of up to 46 employees. But because PHMSA recently hired six new people, the net loss to the agency would be 40 people, or 9 percent of the full-time workforce since the end of last year.

The size of PHMSA's payroll cut seems small compared to private sector layoffs and the big reductions that have hit elsewhere in the federal government. But the losses are likely to have an outsized effect on PHMSA, which is already hampered by substantial vacancies, a plodding hiring process and the lengthy training that’s required for many of its new hires.

If employees accept all of the available buyouts, PHMSA will shrink to a full-time staff of 386, putting it 112 jobs short of its approved payroll for the current fiscal year. Despite having fallen further behind in its hiring because of the buyouts, PHMSA's budget proposal for 2015 seeks a major expansion to 602 full time positions.

Previous efforts to substantially boost PHMSA's budget and staffing have been thwarted by political wrangling over the federal budget and the regulator's inability to hire and retain enough inspectors and other key employees.

The administration had hoped to beef up PHMSA in 2013, but Hill said it got a $10.5 million funding cut instead because of the federal government's across-the-board budget cuts called for under the sequester agreement between Congress and the White House. The agency saw a modest rise in funding for the current fiscal year, but PHMSA is hoping for a more significant increase in the next budget.

In making the case for more money, the regulator's 2015 budget proposal said, "The pressing dangers of aging pipelines, the introduction of increasingly vulnerable pipeline materials, and the significant growth in new pipeline infrastructure demand PHMSA not only sustain, but increase current [inspection and enforcement] staffing levels to prevent incidents involving major injury to humans and damage to property and the environment."

Hiring has been a problem, according to Pepper, the former PHMSA inspector.

"It'd be nice if they had a lot more inspectors, but it's just almost impossible to hire them," said Pepper. "I don't know why they were letting inspectors go [in the buyouts]."

The rapid expansion of oil and natural gas drilling—and the pipelines that go with it—has led to a worsening shortage of inspectors and engineers throughout the industry. Multinational corporations with plenty of money to lure new talent are scrambling to land enough skilled personnel, so the task is doubly hard for governments that offer workers much lower salaries. 

That has undermined PHMSA's staffing ambitions, but they're not alone. The National Transportation Safety Board, which conducts investigations following major pipeline or other accidents, recently noted that it has just 10 rail inspectors to handle 20 ongoing investigations involving railroad oil tankers.

PHMSA's buyout offers could exacerbate the problem by letting experienced engineers go before replacements are ready to take over. It's already happened elsewhere within the pipeline agency.

Weimer from the Pipeline Safety Trust cited the loss of two PHMSA employees who volunteered for the PHMSA buyouts and were gone shortly thereafter.

The employees handled requests for agency information submitted by the public—including groups like Weimer's—under the federal Freedom of Information Act (FOIA). Their departure has crippled the pipeline agency's FOIA office, undermining efforts to be more transparent and responsive to the growing demand for pipeline information to be made public.

"It was a blow for getting stuff out of the FOIA office," Weimer said. "But we have also had conversations with multiple PHMSA people in [Washington, D.C.] who mentioned how much institutional memory and staff abilities were lost because of the last minute early retirement of many people within PHMSA."

PHMSA's spokesman said the buyout process was meant to avoid that problem.

"We have quite a few retirement-eligible employees," said Hill, PHMSA's spokesman. The agency's buyout program, he added, "gives us time to work with those folks who decided to accept the offer and garner their expertise, and help us get other people ready to assume those responsibilities."

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