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NYS Comptroller

THOMAS P. DiNAPOLI

Taxpayers' Guide to State and Local Audits

Public Service Commission
Pipeline Safety Oversight


Issued: March 8, 2016
Link to full audit report 2015-S-31
Link to 90-day response

Purpose
To determine whether the Public Service Commission (PSC) is providing oversight of pipeline safety in accordance with State regulations and federal performance standards. Our audit scope covered the period April 1, 2013 through October 21, 2015.

Background
The Pipelines and Hazardous Materials Safety Administration (PHMSA) within the federal Department of Transportation administers pipeline safety nationwide. To do this, it delegates some of its authority to states and provides partial reimbursement for the costs they incur. In New York, the PSC operates a federally certified safety program for intrastate and interstate pipelines. Inspections are performed by the Department of Public Service (DPS), which reports to the PSC. The PSC manages enforcement actions for intrastate pipelines, while PHMSA handles enforcement actions for interstate pipelines. New York’s pipelines transmit, gather, and distribute natural gas and hazardous liquids including crude oil, refined petroleum products, and other highly volatile, flammable, or toxic liquids. As of 2014, New York had 91,181 miles of natural gas pipelines and 1,153 miles of hazardous materials pipelines. Between 1995 and 2014, New York had 194 pipeline incidents with 23 fatalities, 123 injuries, and $77 million in property damage. PHMSA relies on state inspectors as the “first line of defense” to enforce pipeline safety, implement underground utility damage prevention programs, and promote public education and public awareness campaigns. PHMSA annually evaluates New York’s pipeline safety program using six performance metrics: Damage Prevention Program, Inspection Activity, Inspector Qualification, Leak Management, Enforcement, and Incident Investigation.

Key Findings

  • DPS staff do not verify the accuracy of the information on employee/contractor qualifications maintained by individual Operators which DPS staff rely on during field audits.
  • DPS has not set up a process to identify instances where Operators failed to notify them as required. We determined that Operators did not notify DPS of six gas-related incidents in 2015 that should otherwise have been reported. These incidents involved evacuations, road closures, a business closure, and other situations that left businesses and residents without gas.
  • DPS does not perform analyses of all available data to better identify potential high-risk areas.

Key Recommendations

  • Ensure the qualifications for Operators’ employees and contractors are accurately documented and supported in the Operators’ or independent third parties’ files.
  • Develop procedures to identify instances when Operators fail to report incidents as required and update the Manual to reflect those procedures.
  • Work with the Operators to identify all available sources of pipeline safety data, and then determine which analyses can best provide both DPS and the Operators with the most valuable information to help identify risks and improve pipeline safety.

Other Related Audits/Reports of Interest

Department of Environmental Conservation: Collection and Use of Oil Spill Funds (2014-S-59)
Department of Environmental Conservation: Selected Aspects of Inactive Hazardous Waste Site Remediation Cost Recovery (2014-S-14)

State Government Accountability Contact Information:


Audit Director: John Buyce
Phone: (518) 474-3271; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236