Pipeline Safety: Request for System Integrity Inspection Pilot Program Applications

DEPARTMENT OF TRANSPORTATION

Research and Special Programs Administration

[Docket No. RSPA-98-4523; Notice 1]

Pipeline Safety: Request for System Integrity Inspection Pilot

Program Applications

AGENCY: Office of Pipeline Safety, DOT.

ACTION: Notice of Request for Letters of Application.

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SUMMARY: The Office of Pipeline Safety (OPS) is initiating a new

program with interstate pipeline operators to evaluate an approach to

improve the effectiveness of the inspection process. The System

Integrity Inspection Pilot Program is designed to enhance the

inspection practices currently in use by focusing on a broad set of

pipeline integrity issues instead of conducting inspections only from a

regulatory compliance perspective. OPS invites eligible pipeline

operators to submit Letters of Application expressing interest in

participating in the Pilot Program. This notice begins the solicitation

process by specifying a deadline and address for Letters of Application

and by providing guidance for operators interested in participating.

DATES: Letters of application will be accepted until February 12, 1999.

ADDRESSES: Interstate pipeline operators interested in participating in

the System Integrity Inspection Pilot Program should send their letters

of application to Richard B. Felder, Associate Administrator for

Pipeline Safety, Research and Special Programs Administration,

Department of Transportation, Room 7128, 400 7th Street, SW,

Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT: Donald Moore (816) 426-2654 or any of

the five OPS Regional Directors: William Gute (202) 366-4580, Frederick

Joyner (405) 562-3530, Ivan Huntoon (816) 426-2654, Rodrick Seeley

(713) 718-3746, or Christopher Hoidal (303) 231-5701.

SUPPLEMENTARY INFORMATION:

I. Introduction

The Office of Pipeline Safety (OPS) is in the process of improving

its regulatory programs to assure greater levels of safety,

environmental protection, and service reliability. An important part of

this effort is re-examining the approach OPS uses to conduct

inspections of interstate pipeline operators and searching for more

effective processes. Traditionally, OPS inspections have focused

strongly

[[Page 68820]]

on ensuring compliance with applicable pipeline safety regulations

using a checklist approach. While this resource-intensive effort

provides assurance that operators are complying with all regulatory

requirements, it may not be the most effective approach to improving

safety.

The System Integrity Inspection (SII) Pilot Program is designed to

test whether a more broad-based examination of an operator's safety and

pipeline integrity programs, including many areas not currently

considered during a typical inspection, will result in improved

performance. Instead of OPS or state inspectors conducting

comprehensive compliance-based inspections, the SII Team, composed of

OPS and active interstate agents, will work cooperatively with the

operator to address the most significant pipeline system integrity

issues, addressing areas that may not be explicitly or completely

addressed by the regulations. To ensure continued regulatory compliance

with parts 191, and 192 or 195, the SII Team will require participating

operators to conduct comprehensive self-audits for compliance. To

accept a company into the program, the SII Team must see evidence that

the company has a formal self-audit process in place; that audits are

being conducted, audit findings are being documented and communicated,

corrective actions are being defined and implemented, and status is

being tracked and communicated. During subsequent meetings with the

company, the SII Team will conduct spot checks of self-audit records

and perform field verifications to ensure that the company's Self-Audit

Plan is being effectively implemented. This enhancement of current

inspection practices is intended to result in improved communication

and information sharing between operators and government, and focus

resources on the most important risks to pipeline safety.

OPS believes this approach will improve the utilization of company,

OPS, and state pipeline safety agency resources in addressing the most

significant and potentially high impact safety, environmental, and

regulatory issues. After three years, OPS will determine whether and in

what form the SII approach should be incorporated into the Federal

pipeline safety program on a permanent basis.

A. Goals

The SII Pilot Program has the following goals:

1. Enhance public safety and environmental protection by

concentrating the deployment of operator and OPS inspection resources

to areas of greatest safety and environmental risk, and by addressing

issues of mutual concern and resolving problems under a consultative

resolution process.

2. Provide OPS and active interstate agents with an enhanced

understanding of the operator's entire system, including pipeline

operation, maintenance, and emergency response programs. A more broad-

based understanding of the operator's integrity issues enables OPS to

better consider and review with the operator the range of available

integrity enhancements.

3. Harmonize interpretation of regulations and safety concerns

among OPS regions by utilizing an OPS team approach comprised of one

inspector from each of the five OPS regions and one state

representative from each involved state with an active interstate agent

agreement.

4. Provide opportunity for pipeline operators to achieve a high

level of recognition as industry leaders in pipeline safety.

5. Provide an opportunity for more efficient inspection planning

and staff allocation for both operators and OPS, and provide operators

with designated contact people for inspection coordination within OPS.

6. Assure operator compliance with parts 191, and 192 or 195 using

an operator's Self-Audit Plan and OPS spot checks instead of standard

OPS inspections. Early in the program, the SII Team and the company

will address comprehensiveness and completeness of the company's Self-

Audit Plan, and various means of monitoring and improving the Plan's

effectiveness. The SII Team will periodically spot check to ensure that

field data supports company records and that the Plan's implementation

results in regulatory compliance.

B. Program Key Features

In order to achieve these goals, OPS has developed the SII Pilot

Program described in this Notice. This new approach is based on a

philosophy of open communication and mutual trust which compels OPS and

the operator to move beyond the basic requirements of the regulations

in a total effort to prevent pipeline accidents. Some of the key SII

Pilot Program features are summarized below:

1. Participation in the SII Pilot Program is strictly voluntary.

SII Pilot Program companies voluntarily enter the program to improve

pipeline safety and integrity, and to share with OPS their analysis and

plans for addressing the highest priority safety issues.

2. OPS will use a SII Team to manage and conduct the SII Pilot

Program. The SII Team will usually be comprised of one inspector from

each of the five OPS regions and one state representative from each

involved state with an active interstate agent agreement. The SII Team

and participating operators will work together to resolve any problems

or regulatory issues that may arise during the Pilot Program.

3. OPS will provide the public the opportunity to comment on the

appropriateness of companies OPS is considering for candidates for the

SII program. OPS will publish a Federal Register notice of its intent

to select an operator at least 60 days prior to issuing the operator a

Letter of Acceptance. These notices will be posted on the SII Web Site

to enable all interested parties to comment. OPS will also notify

national organizations representing public, safety, and environmental

interests of candidate companies under consideration. These national

organizations would include, but not be limited to, the Environmental

Defense Fund, the International Association of Fire Chiefs, the

National League of Cities, the National Governors Association, and the

National Association of Towns and Townships.

4. Participation in the SII Pilot Program does not diminish the

operator's rights or responsibilities under the Federal Pipeline Safety

Regulations. Pipeline operators participating in the SII program are

still required to comply fully with all applicable regulatory

requirements. Only the approach used to inspect operators will be

modified.

5. The SII approach is structured around two basic operator plans.

The operator's Self-Audit Plan (described in Exhibit A) focuses on

assuring operator compliance with the applicable requirements in parts

191, and 192 or 195 of the Federal Pipeline Safety Regulations. The

operator's System Integrity Plan (see Exhibit B) addresses the

activities and programs the operator implements to monitor, maintain,

and improve the integrity of the pipeline system, over and above those

actions specified in the regulations. OPS recognizes that these two

aspects of maintaining system integrity may be managed within a single

program by some operators. They are described separately in this Notice

to differentiate the OPS approach to addressing regulatory compliance

versus exceeding compliance requirements through integrity-focused

discussions with SII Pilot Program participants.

6. Companies participating in the SII Pilot Program must have clear

and

[[Page 68821]]

established records of compliance with applicable pipeline safety

regulations. In making this determination, the SII Team will review its

records to determine if candidate companies have historically met

requirements of applicable pipeline safety regulations and have

demonstrated a willing attitude to respond to any OPS concerns.

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 also consult with other agencies about their knowledge of the

company's safety and environmental compliance record. The determination

will be a joint OPS Regional, OPS Headquarters, and SII Team decision.

7. If, during the course of the SII Pilot Program, any compliance

concerns are identified, SII Pilot Program participants must take

actions necessary to remedy the concern as soon as possible. This would

include addressing any management system issues that might be the root

cause of safety problems or contributor to repetitive concerns.

OPS expects that the operator will identify such noncompliance

issues and conditions in its Self-Audit report, and identify the

corrective actions taken to restore compliance, or the corrective

action plan to address concerns that are still open. During the spot

check and validation reviews, these findings will be reviewed and

discussed with the SII Team. Such issues will be dealt with in a

consultative interaction with both the company and the SII Team

exchanging their perspectives to understand the true safety

significance of the occurrence, the extent of the problem, and the

effectiveness of the corrective action plan. This interaction will

provide assurance that the corrective actions are appropriate, and

effectively address any significant safety concerns that might have

been present.

It is expected that operators in the SII Program can resolve safety

and compliance issues without civil penalties, as long as the following

conditions occur:

The Self-Audit identifies noncompliance situations and the

operator corrects the problem to the SII Team's satisfaction.

System or organizational problems that lead to

noncompliances are corrected.

The operator's program prevents repetitive violations.

Only operators with good compliance histories and a willingness to

partner with OPS will be considered for the SII Program. Should

uncorrected compliance issues persist, the operator would be terminated

from the program.

8. OPS expects SII Program participants to be on the leading edge

of risk reduction and show continuous improvement in managing overall

pipeline system integrity.

9. The SII Team may need to review on-site an operator's documents

that may contain business sensitive or confidential information while

it conducts inspections and reviews company compliance and integrity

programs. OPS will explore access to this information through other

means such as the operator's Intranet.

C. Operator Benefits

OPS expects the SII approach will offer substantial benefits to the

operator as well as to OPS. Some of the important operator benefits

include:

1. Improved Coordination of Inspection Activities. Reducing the

number of inspections on an operator's system to spot checks of their

self-audit process and integrity program validation inspections will

simplify the coordination of inspection support from the company side.

Furthermore, because there will be an identified point-of-contact with

OPS, the logistics of inspection planning and support should also be

simplified.

2. Focus on Important Integrity Issues. In addition to refocusing

resources, the scope of inspections will shift from a comprehensive

checklist of each regulatory requirement to an emphasis on the most

important integrity issues. Both OPS, interstate agents, and the

operator will be investing more efforts in addressing the most

important safety issues, and less time looking at low safety impact

and/or administrative compliance items, while still ensuring the

operator is fully compliant with parts 191, and 192 or 195.

3. Consultative Interaction with OPS. OPS and participating

interstate agents intend to work with the company to address and

resolve important integrity issues on the operator's system. OPS

believes the exchange of ideas and information on the most important

integrity issues, and what can be done to address them will benefit

both the operator and government. OPS will gain an improved

understanding about key system integrity issues, including condition,

leak history, and remedial activities. The participating companies will

benefit from the broad national regulatory perspective that OPS will

bring to discussions at the early stages of considering potential

safety alternatives.

In the event that a noncompliance is discovered during the pilot

program, OPS intends to work in a consultative fashion with the company

to remedy the problem in the most effective and meaningful manner. It

is expected that operators in the SII Program can resolve safety and

compliance issues without civil penalties, as long as the conditions

listed previously are satisfied.

4. Consistent System-wide Feedback. By using the multi-Region SII

Team in conducting inspections, the SII approach will result in more

consistent interpretation of compliance requirements and feedback to

the operator. It will minimize opportunities for varying

interpretations of regulatory requirements among OPS Regions.

5. Support Improvements to Inspection Process. By participating in

the SII Pilot Program, companies will be afforded the opportunity to

provide input to OPS in developing and refining an improved SII

process. Participating operators will be directly involved in

developing integrity-based inspection approaches that cost-effectively

reduce risk.

II. SII Pilot Program Process

Through interactions with industry, its state pipeline safety

representative partners, and its technical advisory committees, OPS has

established a process to implement the SII Pilot Program. Through the

steps shown in the accompanying figure, OPS seeks to produce the

results that will demonstrate achievement of the program goals. Each of

these steps is discussed in detail in subsequent sections of this

Notice.

BILLING CODE 4910-60-P

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[GRAPHIC] [TIFF OMITTED] TN14DE98.035

BILLING CODE 4910-60-C

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III. Application Process

A. Criteria for Participation

OPS has established the several criteria that will be used to

govern operator eligibility to participate in the SII Pilot Program.

Operators interested in participating should have a:

Clear and established compliance record as evidenced by a

history of meeting regulatory requirements and responding to safety

concerns raised by OPS;

Existing, continuing, system-wide evaluation process

directed towards safety and operational reliability;

Commitment to information sharing to support decisions

concerning system integrity;

Defined organizational structure to resolve safety,

environmental, and compliance issues;

Management that emphasizes comprehensive two-way internal

communications;

History of cooperation and open communication with OPS;

and

Centralized record keeping location (preferred).

The pipeline system proposed for the SII Pilot Program must be an

Interstate pipeline which falls under the requirements of 49 CFR part

191, and 49 CFR part 192 or 195. The operator must also propose a

comprehensive well-defined pipeline system and provide a description of

the system's elements and characteristics, including products shipped,

size, and geographic location.

B. The Application

An operator will submit an Application Letter indicating its intent

to participate in the SII Pilot Program. The Application Letter must

include a statement signed by the president or senior company official

attesting to their willingness to enter into a partnership with OPS and

active interstate agents to meet the terms of the program.

The following information, at a minimum, shall be included in the

application in order for the SII Team and OPS management staff to begin

the screening process:

1. General Information:

Operator Name, Address, Contact Person (including title),

Phone Number.

Pipeline System Description: Brief overall description;

Total number of pipeline miles; States traversed; Commodity transported

(Natural Gas, Refined Products, etc.).

2. Brief explanation of management commitment to pipeline system

integrity.

3. Operator's commitment and willingness to share integrity program

information such as described in Exhibit B and cooperate with OPS.

4. Brief Explanation of the operator's Self-Audit and System

Integrity Programs (see Exhibits A and B).

The Application Letter shall be mailed to: Richard B. Felder,

Associate Administrator for Pipeline Safety, Research and Special

Programs Administration, Department of Transportation, Room 7128, 400

7th Street, SW., Washington, DC 20590.

C. Screening Process

After receiving the Application Letters from interested companies,

OPS will screen the companies to identify potential candidates for the

SII Pilot Program. As part of the screening process, OPS will look for

companies with a demonstrated commitment to system integrity. A company

must present documentation of an existing system integrity process and

evidence that it is willing to work with OPS in defining a program that

achieves superior performance. Company openness and a willingness to

work in partnership with OPS are important qualities in this regard.

OPS will favor operators that have or intend to have a strong integrity

management program as indicated by:

A method of thorough assessment of system integrity so

that improved safety is being achieved;

A good opportunity to evaluate the SII approach as an

inspection program alternative; and

Distinguishing features, such as risk-based engineering

evaluations, innovative and unique maintenance or replacement projects,

or the use of new technologies for integrity monitoring that benefit

the operator, OPS, industry and enhance public safety.

OPS will screen Application Letters to identify no more than five

operators for selection into the SII Pilot Program. Five is the maximum

number OPS can reasonably expect to evaluate and, if selected, to

monitor.

The candidates who offer the best opportunity to test the SII Pilot

Program under a broad range of conditions will be selected. A notice of

the selection will be published in the Federal Register and on the web.

OPS will receive comments on the selection for consideration during the

presentation review process. In addition to the factors listed

previously, several other considerations will go into evaluating the

relative merit of operator proposals. OPS desires to include both gas

and liquid pipeline systems in different geographical regions. In

addition, OPS is looking for diversity in the system integrity program

scope, tools, and processes from the operators selected to participate.

OPS is also looking for operators that want to expand the scope of

their integrity efforts over the three-year period. Expanding projects

will add to the information base necessary to evaluate the SII Pilot

Program. The need for diversity in the Pilot Program and the limit of

five operators may result in some operators with good system integrity

programs not being accepted into the SII Pilot Program.

D. Operator's Presentation

Operators that pass through the screening step will be invited to

give more detailed presentations of their approach to the SII Team and

OPS Regional Directors. This presentation will give the operator a

chance to describe in more detail various aspects of its program, and

allow OPS to better understand features that may be important to SII

Program success. The presentation should:

Discuss the historical performance of the company from a

safety, environment, and regulatory perspective.

Identify how maintenance and replacement projects are

prioritized and factored into annual and long term plans;

Describe the engineering evaluations conducted as part of

the company's integrity program, including input sources used,

documentation, and the relationship of any research activities to the

company's program;

Provide examples demonstrating the company's historical

pro-active approach to safety (public and environmental), operational

reliability and training; and

Describe the company's current self-auditing program to

ensure compliance with the pipeline safety regulations.

The presentation should adequately reflect and build upon the

operator's Application Letter. The presentation should reflect the

spirit of openness and mutual trust that is essential for success of

the SII approach, and reinforce the operator's intent to become a full

partner with the SII Team for the duration of the pilot program.

The operator can address these salient features by making an all-

inclusive presentation that is attended by key company personnel from

the engineering, operations, and maintenance departments. This will

best exhibit the company's commitment to system integrity and to

working with SII Team in the Pilot Program.

E. OPS Letter of Acceptance

OPS will consider information in the operator's presentation, as

well as any public comment received, before

[[Page 68824]]

approving the operator for participation in the SII Pilot Program. The

Associate Administrator of OPS will issue a Letter of Acceptance to the

official whose signature appears on the Application Letter. It is

possible that OPS will employ a phased approach to the evaluation and

acceptance of SII Pilot Program participants, resulting in operators

entering into the Pilot Program at different times.

IV. Program Formalization and Execution

For the three-year duration of the pilot program, ``standard OPS

inspections'' will be replaced with spot-checks and validation

inspections. The duration, extent and comprehensiveness of these

inspections will depend on the operator's performance in the past year.

It is expected that OPS and the operator will work collaboratively to

establish an inspection process that is appropriate and tailored for

the operator's specific pipeline system and integrity program. The

basic steps leading to this point are summarized below.

A. Program Formalization

Prior to beginning the SII Pilot Program with an operator, the SII

Team will check to see if a Joint Inter-Regional Operations and

Maintenance (O&M) Manual review has been recently performed. If an O&M

Manual review has not been completed, then one will be scheduled, or

performed as part of the SII Pilot Program Process.

As currently required, the operator must document all O&M Manual

revisions and additions whenever they occur. These revisions and

additions may be reviewed during the spot checks and validation

reviews. A primary purpose of these annual validation reviews is to

address and share information on new and significant safety and

compliance issues. Hence, it is expected that how the operator complies

with important, new regulatory requirements, particularly those where

interpretations might vary, will be addressed during these sessions.

Upon conclusion of the O&M Manual inspection (if needed), the first

SII Team/operator meeting will be conducted. During this session the

SII Team and the operator will:

Establish points of contact and protocols for

communication and information sharing during the pilot project.

Note: Any construction inspections, response to local government

or public complaints, and accident investigations would continue to

be conducted in the routine manner with results shared with the SII

Team.

Discuss safety and integrity issues of concern to both the

operator and OPS. These might include:

--Current areas of emphasis in operator's integrity program;

--OPS concerns from prior inspections;

--Operator accident and leak history;

--Appropriate data from the Federal Emergency Management Agency on

natural disaster history that may affect the pipeline;

--Oil Pollution Act Spill Response Plans and related issues for

hazardous liquid operators;

--Current industry-wide integrity issues and initiatives.

Review company operations, system and local maps, and

procedures, policies, or guidelines currently used to assure compliance

with Federal Pipeline Safety Regulations.

Discuss the company's record keeping system and interest

in exploring other avenues for sharing information and records without

compromising the confidentiality of sensitive, proprietary information.

Establish protocols for information exchange.

Review of Self-Audit Plan (see Exhibit A) and System

Integrity Program (see Exhibit B).

Establish how the self-audit spot checks and integrity

program validation reviews will be conducted, including how any

deficiencies or issues will be resolved.

Identify all new construction or major rehabilitation

projects planned for the upcoming year. While the SII Pilot Program

scope includes construction activities, new construction inspections

will be performed by the OPS Region. They will determine the

appropriate level of inspection for the new construction projects. The

OPS Regions will keep the SII Team and the company apprised of any

issues they identify when inspecting new construction.

Agree on a plan of action and time line for initiating the

SII Pilot Program.

Either at this initial session or shortly thereafter, the SII Team

will conduct the initial field spot check to validate and enhance the

operator's System Integrity and Self-Audit Plans. In this review,

emphasis will be placed on the operator's engineering evaluations and

correlation with operating data and field observations. As part of this

review process, the SII Team will review and discuss the effectiveness

of the operator's assessment of integrity issues identified on the

pipeline system.

B. Program Execution

This phase of the program will be conducted one year after the

formalization and implementation of the Self-Audit and System Integrity

Plans. The SII Team will conduct annual on-site sessions with each

company to discuss program progress and integrity issues. During this

visit, it is expected that information shared will be integrity-based

and will go beyond the scope of the ``minimum'' Pipeline Safety

Regulations. This session will include a review of the company's

implementation and results of their Self-Audit and System Integrity

Plans. Any mutually agreed adjustments to the Plans will also be

reviewed.

SII team members will also perform spot checks in the field to

verify compliance with the regulations and validate implementation of

the operator's integrity program. A field validation plan will be

jointly developed with the operator. The areas selected for the spot

checks will be based on a number of factors including the operator's

self-audit results, prior OPS inspection results, incident and leak

information, and other system performance information. Other areas to

be reviewed include locations on the system where integrity is

especially crucial to the protection of the public and the environment,

and to service reliability. The field inspections will also include

examining any areas of concern identified by the SII Team, following up

on any corrective actions that may have been defined to address

compliance or integrity problems, and examining any new technological

applications.

The SII Team will produce an annual Summary Report that summarizes

the on-site information exchange meetings and field validation reviews.

This report will include a synopsis of the key integrity issues and

improvements discussed, performance measures, new or proposed program

enhancements, lessons learned, and the status of compliance with the

Self-Audit Plan. Any noncompliance conditions that have a significant

safety impact or require long term corrective actions will be discussed

in the Summary Report. OPS will make a general summary report, as well

as periodic updates on each pilot, available to the public via the

System Integrity web page at http: //ops.dot.gov.

All compliance concerns will be discussed directly with the

operator during the annual visit. As noted earlier, it is expected that

the operator will have identified and corrected these items as a result

of implementing its Self-Audit Plan. In the event new compliance issues

are discovered by the SII Team during its spot check, or the SII Team

has concerns with how the operator has addressed any compliance

problem, every attempt will be made to resolve

[[Page 68825]]

any outstanding issues in a consultative fashion.

Following resolution, compliance actions will be documented as

follows:

1. All issues found as a result of the Operator's Self-Audit Plan

will be reviewed with the operator. Significant safety implications and

their corrective actions will be incorporated into the SII Team Summary

Report.

2. Issues found as a result of the SII Team spot check inspections

will also be reviewed with the operator and will be included in the

Summary Report.

3. Concerns that have no safety implications will be monitored by

OPS to assure issues are resolved and that information is distributed

to appropriate personnel throughout the company to prevent recurrence.

As noted previously, it is expected that participants in the SII

Pilot Program will be in a civil penalty-free environment as long as

the following conditions are met:

Operator's Self-Audit identifies noncompliance situations

and the operator corrects the problem to the SII Team's satisfaction;

System or organizational problems that lead to

noncompliances are corrected; and

Operator's program prevents repetitive noncompliance

situations.

If these conditions are not satisfied, OPS will attempt to resolve

the outstanding issues through a consultative interaction with the

operator. If an issue that has significant safety implications cannot

be resolved to the SII Team's and operator's satisfaction, the operator

may appeal to the Associate Administrator for OPS. If the issue can not

be mutually resolved at that point, the operator and/or OPS can

terminate participation in the SII Pilot Program.

OPS reserves the right to issue a Corrective Action Order if the

Associate Administrator for Pipeline Safety determines that a

particular pipeline facility is hazardous to life, property, or the

environment. (For example, after an accident, where a Corrective Action

Order is issued requiring an inspection and/or testing program to

assure pipeline integrity and to restore public confidence.)

V. Performance Measurement of the SII Program

The SII Team will evaluate the individual pilot projects annually,

and will document the results in its post-inspection Summary Report to

ascertain the effectiveness of the SII approach. In measuring

performance of the Pilot Program, the following factors will be

examined:

Understanding of pipeline system-wide condition, including

identifying potential risks and risk reduction opportunities to address

the most significant risks;

Familiarity with approaches, technologies, research

activities, and processes available to identify and remedy potential

safety problems;

Use of safety approaches (e.g., risk assessment

processes), and risk control and reduction activities commensurate with

the level of risk;

Integration and communication of system integrity-related

information and improved practices throughout the company (e.g.,

systematically institutionalizing good ideas);

Effectiveness of the Self-Audit Plan and its

implementation in assuring compliance with the Federal Pipeline Safety

Regulations (i.e., regulatory compliance is achieved and maintained;

and newly identified noncompliance conditions are corrected and not

repeated);

Performance assessment, feedback, and results orientation

of operators and OPS; and

Visibility of company management commitment to safety.

At the conclusion of the three-year SII Pilot Program, OPS and

participating operators hope to be able to answer the following

questions through the performance measurement process:

1. What measures best capture the expected outcomes?

How has the organization demonstrated increased safety and

environmental protection?

2. Are the selected system integrity activities having the intended

effects?

Does actual experience confirm predictions?

3. How can the overall system integrity process be improved?

Given actual experience, does the organization need to

change its decisions?

How should the risk assessment and risk control processes

be updated to reflect new experience?

What modifications need to be done to improve the

effectiveness and efficiency of the SII Pilot Program?

4. Do OPS and affected state agencies know more about the integrity

of the pipeline system than it did when the operator entered the SII

Pilot Program?

Has mutual confidence between OPS, the interstate agents,

and the operators increased on system integrity issues?

5. Is the usage of Self-Audit Plans effective in assuring

compliance with the Pipeline Safety Regulations?

Is regulatory compliance being achieved and maintained?

6. Has the SII approach enhanced the inspection process?

7. Have state and Federal resources been optimized to improve

efficiency and consistency, and enhance protection of the public and

the environment?

Exhibit A--Operator's Self-Audit Plan

Purpose

An operator participating in the SII Pilot Program must have a

Self-Audit Plan. A participant's self-audit should establish the

following:

Baseline measurement to demonstrate compliance with CFR

Parts 191 and 192 or 195.

Target areas for corrective action.

Corrective action follow-up.

The operator must implement the plan to assure the success of

the SII Pilot Program. As described previously, the operator will

perform and report the results of its self-audit annually. These

results will be reviewed by the SII Team. This process will enable

both the operator and the SII Team, to identify strengths and

weaknesses of the company's Self-Audit Plan. It will also ensure

that all operational, maintenance, inspection, etc., programs

required to maintain compliance with the regulations are in

compliance and operating satisfactorily. This review will also

ensure that the program elements of the Self-Audit Plan are

operating as initially agreed upon, and procedures are in place for

a thorough follow-up of any accidents/incidents.

Features

The key parts of an effective Self-Audit Plan are Implementation

and Operation, Checking and Corrective Action, and Management

Review. The operator will use its existing Self-Audit Plan, or

develop a plan that satisfactorily addresses the intent of the

features identified below. The SII Team will accept the Self-Audit

Plan at the Pilot Program inception, and whenever new regulations or

other factors require modification of the Plan.

Implementation and Operation

Structure and Responsibility:

Roles, responsibilities and authorities must be

defined, documented and communicated.

Resources essential to its implementation must be

provided. Specific resources are human and technology.

A company officer must appoint a management

representative to: Ensure the Self-Audit Plan requirements

previously established are implemented and maintained; and report on

the performance of the Self-Audit Plan to management.

Training, Awareness and Competence:

The organization must:

Identify training needs for personnel executing the

self-audit to ensure delivery of uniform results; and

Establish procedures to ensure employees are aware of:

The importance of conformance with the SII Program; the significant

actual or potential impacts of their activities; and the potential

consequences of departures from the procedures.

[[Page 68826]]

Checking and Corrective Action

The organization must:

Establish documented procedures to monitor and measure

characteristics of its facilities that can have an impact on its

operations and compliance;

Prepare a procedure to periodically evaluate compliance

with the regulations;

Establish procedures for defining responsibility and

authority for handling, investigating and taking actions on

nonconformance which must be reported to the SII Team as agreed

upon;

Record and implement changes resulting from corrective

and preventive actions; and

Schedule audits based on the importance of the activity

and the result of previous audits.

Management Review

Management must:

Periodically review the self-audit procedures and

documentation to ensure continuing suitability, adequacy and

effectiveness;

Evaluate the need for changes to policy, objectives and

other elements as it relates to continuing progress to the plan; and

Appraise the need for additional training and

communications to remain in conformance and plan for personnel

changes.

Documentation

The Self-Audit Plan must be conducted by implementing a

structured process for documentation. The organization must

establish and maintain information, in paper or electronic form, the

description of core elements of the Self-Audit Plan.

Audit Cycle

In summary, the SII Pilot Program self-audit process is expected

to proceed as follows:

1. Operator conducts the self-audit, collecting evidence and

reporting findings;

2. Operator prepares the self-audit report;

3. Operator and SII Team discuss self-audit results during

annual site information exchange;

4. SII Team conducts spot-inspection to validate the report;

5. SII Team evaluates self-audit, discusses findings with

operator and makes recommendations for improvements. Operator fine

tunes Self-Audit Plan as necessary;

6. Operator addresses recommendations and corrects mutually

agreed on deficiencies; and

7. Operator begins next cycle.

Exhibit B--Operator's System Integrity Plan

The System Integrity Plan shall address key elements of pipeline

system integrity issues that are not explicitly or completely

addressed in the current pipeline safety regulations. This plan will

enable both the operator and SII Team to cooperate and share

information on strengths and weaknesses of the operator's pipeline

system in a partnering, problem-solving, and consultative

environment. Input to the System Integrity Plan typically includes

data and information about the design and age of the pipe, external

factors, operational and maintenance practices, operating history,

test history, inspection findings, and the proximity and

distribution of population, third party construction activities,

environmentally sensitive areas, and unusually sensitive areas. The

operator's System Integrity Plan should include the following:

An ongoing system-wide engineering analysis,

Feedback to management,

Implementation of activities to address the most

significant threats to integrity, and

Continuous improvement.

Diligently applied, this plan should result in:

A benchmark for evaluating the SII Program

effectiveness,

Evidence of a documented system integrity system,

Documented and implemented integrity improvement ideas,

Enhanced employee involvement, and

Targeted training resulting in a better informed

workforce.

Some examples of an operator's system integrity program key

elements that may be included in the Plan are listed below:

A. SCADA

Design parameters and limitations.

Operational logistics.

B. Corrosion Control

External.

Internal.

Atmospheric.

C. Operational Integrity

Hydrostatic testing, close interval surveys, internal

inspection, or other integrity assessments:

--How does the Operator determine where and when to apply these

tools which are above the minimum Federal regulations?

--What determines the choice of a method?

--What determines the interval or frequency?

--Who reviews the summary?

--Are the reports used for long-term planning? How?

D. Pipeline Incidents and Accidents

All leak/spill history (Reportable and Non-reportable).

Repair reports.

Operator errors.

Equipment failure/malfunction.

Natural causes (landslide, earthquake, flood, etc.).

Third party damage.

Near miss reporting.

Abnormal operations.

Exhibit C--Spot Checks for Validation of Operator Self-Audit Plans

Some key areas will be randomly selected for field inspection by

the SII Team at various points along the system considering operator

self-audit exception data, system performance data, and accident/

incident information. Other portions in the system that are crucial

for public and environmental safety and operational reliability may

also be reviewed. Some of the areas that could be covered in the

validation check include the following:

Pipe in, across, or over bridges, streams, national

parks, wild and scenic rivers, cultural areas, populated areas,

unusually sensitive areas (proposed USA's), large reservoirs and

aquifers with water for human consumption, high hazard and high

consequence areas (as identified in FEMA reports);

Pipe at supports;

Marginal cathodic potential readings;

Patrolling records/ROW issues;

SCADA system;

Ongoing operation/maintenance activities;

Pressure settings on regulator or relief valves;

Internal inspection device operations and results;

Close interval surveys;

Rehabilitation projects, condition of rehabilitated

pipe and coatings;

Class location changes;

Overpressure device settings;

Maintenance Repair practices (lowering in-service

lines, reduction in MAOP or MOP due to anomalies); and

Pipe replacement practices.

Issued in Washington, DC, on December 8, 1998.

Richard B. Felder,

Associate Administrator, Office of Pipeline Safety.

[FR Doc. 98-33099 Filed 12-11-98; 8:45 am]

BILLING CODE 4910-60-P