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L.A. Spill Case Has Exposed Flaw in Pipeline Safety Oversight

Company responsible for the spill didn't know its dormant pipeline was full of oil before it leaked across a Los Angeles neighborhood.

Jun 3, 2014

On March 17, a Los Angeles-area oil pipeline spilled between 1,500 and 3,000 gallons of crude onto a neighborhood street, surprising residents and creating a noxious mess that took weeks to fully rectify.

The pipeline's owner, Phillips 66, must have been plenty shocked, too. It thought the pipe was empty.

Phillips 66 told state officials that it took ownership of the pipe through a 2001 acquisition, that it never used the line, and that it didn't know it still contained oil, according to Rep. Janice Hahn, whose Congressional district includes the spill site. The company and state oil pipeline regulators declined to confirm those statements or discuss other aspects of the case, citing an ongoing investigation into the spill.

In a statement, the Houston-based refiner and pipeline owner said the pipe involved was "out of service" and that it was being maintained "in compliance with [federal] requirements for this type of pipeline."

After purchasing the pipeline, Phillips 66 simply "assumed it was idle," said Hahn, who met with the company to discuss the spill in Wilmington, Calif., a city south of Los Angeles. The company never verified that the three-mile connector pipeline was emptied of oil or sealed off properly, she said.

Those admissions and other facets of the Wilmington case have exposed a few seldom-discussed weaknesses in how regulators monitor the safety of crude oil and other hazardous liquids pipelines nationwide—especially those that are abandoned or inactive. For example, the March spill illustrates how:

+ Regulatory semantics and the widespread use of terms such as "idle" can create confusion about the condition of pipelines, which regulations apply, and how to ensure the public's safety.

+ Critical pipeline records and information can go unexamined, be lost or misinterpreted amid ownership changes or the reshuffling of pipeline networks.

+ Significant oil spill threats can lurk in small, dormant pipelines, not just in major lines that are actively carrying crude.

Those realities are particularly troubling for communities that, like Wilmington, sprung up around refineries or over land that was once peppered with oil rigs. Such places have nearly a century's worth of active and inactive petroleum pipelines underground.

Similar hazards exist in nearly any neighborhood where hazardous liquid pipelines lay dormant, but the risk depends on several factors, including the attentiveness of the pipeline owners and regulators involved. Natural gas pipelines are governed by a separate set of regulations.

In Wilmington, it's still unclear how Phillips 66 came to believe that the pipeline had been cleaned out, why it was initially being described as "idle," and why the company owned the pipeline for 13 years and never discovered that it still contained oil. What caused the spill is still under investigation as well.

Phillips 66 inherited the pipeline in question through its $7 billion purchase of refiner Tosco Corp. in 2001. As part of the deal, Phillips took over Tosco's Wilmington oil refinery and its associated pipelines. On March 17, one of those pipelines—a 10-inch line roughly three miles long—leaked at least 39 barrels of crude oil (and possibly as much as 70 barrels) onto a residential street, forcing residents to endure the sickening smell of oil and the sound of jack-hammers tearing up their road.

In California, oil and liquid fuel pipelines that don't cross state lines—such as the pipe that leaked—are regulated by the California Fire Marshal's pipeline safety division. It is charged with monitoring in-state pipelines and making sure the companies that own them abide by the minimum federal requirements as well as any additional state regulations.

In discussions after the spill, Phillips 66 said the pipeline had been classified as "idle," according to Hahn, who spoke about the case during a May 20 Congressional hearing on pipeline regulation. But that term doesn't jibe with California pipeline law or with federal regulations from the Pipeline and Hazardous Materials Safety Administration (PHMSA)

"There are active pipelines and there are abandoned pipelines," PHMSA chief Cynthia Quarterman told lawmakers at the pipeline hearing. "The term 'idle pipeline' does not exist in pipeline law."

Hahn responded: "The fact that they even classified this as idle and the California Fire Marshal’s [office] allowed them to classify this as idle, brings up a huge issue to me that there’s some misinterpretation of our federal regulations,” Hahn said. To that, Quarterman said, "I agree with you on that. I don't know if the California Fire Marshal interpreted it wrong. I understand the operator interpreted it wrong."

In the statement Phillips 66 provided a week later, the company steered clear of the word idle, and instead described the damaged pipeline as being "out of service." That's a term that has meaning for both state and federal regulators—but the spill in March made it clear that the pipeline never qualified for that designation.

California pipeline regulations require out-of-service pipelines to be cleaned out and refilled with water or inert gas. The transition to that status is supposed to be "verified and accepted in writing" by state regulators, according to a summary provided by the fire marshal's pipeline office. Federal regulators consider an out-of-service pipeline as being an active line that can be (and often is) granted deferrals from having to comply with the normal safety requirements. But PHMSA also requires pipelines with that designation to be free of hazardous liquids.

It can be challenging to keep the categories and the corresponding rules straight. In 2009, the California fire marshal's office issued a three-page memo on state and federal pipeline status terminology, noting that "the issue of pipeline terminology for the various levels of pipeline status has become increasingly frustrating for operator staff."

Hahn had a complaint of her own. When a company buys a pipeline that's already shut down, "there is no [federal] requirement that a third party verify whether that pipeline has been purged or properly cleaned out," Hahn said in a statement. "This is simply unacceptable and reveals a glaring gap in our pipeline oversight and safety laws."

Last month, Hahn proposed legislation that would require future purchasers of hazardous liquids pipelines to inspect them within 180 days to determine if they are active or abandoned, as defined by PHMSA. The act would require the appropriate regulatory agency to verify the completion of the inspections.

"I just want some third party verification for our communities," said Hahn. "The honor system is great, but it failed."

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