DOT OIG Issues Recommendations to PHMSA on Siting Evaluations for LNG Facilities and Monitoring State Pipeline Safety Programs

On April 28, the DOT’s Office of Inspector General (OIG) published the results of its audit which assessed various PHMSA activities related to liquefied natural gas (LNG) facilities.  Specifically, the audit examined PHMSA’s (1) inspection of existing interstate LNG facilities, (2) review of applications for proposed new interstate LNG facilities, and (3) evaluation of state gas programs’ oversight of LNG facilities.

 

The OIG report found that PHMSA’s inspections of existing interstate LNG facilities met all applicable standards.  However, it identified shortcomings in PHMSA’s procedures for evaluating proposed new interstate LNG facilities.  The OIG noted that when reviewing an application for a new LNG facility, PHMSA or subcontractor engineers use a checklist to conduct an initial review of whether the siting of the proposed facility complies with 49 C.F.R. Part 193.  The OIG analyzed PHMSA’s checklists associated with two applications and found several administrative errors and minor pressure miscalculations.  The OIG report recommended that PHMSA adopt additional written procedures that include second-level verification steps to reduce the risk of incomplete or inconsistent analyses of LNG facility applications.

The OIG report also found that PHMSA’s evaluations of state gas programs missed deficiencies in the state LNG facilities inspection intervals and LNG inspector training.  PHMSA guidelines require states to conduct standard inspections of LNG facilities at least every 5 years, but PHMSA evaluates state performance using the timeframe established in the state’s written procedures, which may be more restrictive.  The OIG reviewed the frequency of standard inspections for 36 LNG facilities and found 18 facilities with inspection intervals exceeding the states’ timeframes.  However, the corresponding PHMSA evaluations did not identify these deficiencies.  PHMSA guidelines also require state personnel to complete several pipeline safety training courses before leading LNG inspections.  The OIG reviewed 42 inspections from calendar year 2014 to 2019 and identified 4 where none of the inspectors had the requisite training. The corresponding PHMSA evaluations also did not identify these deficiencies. The OIG report recommended that PHMSA adopt new procedures for conducting evaluations of state gas programs to better identify deficiencies.  The report further recommended that PHMSA update its guidelines to states to ensure that at least one member of each inspection team has completed all required training.

The OIG report stated that, as of the publication date, PHMSA had updated its policies, and provided documentation supporting its conclusion that all recommendations had been resolved and should be closed.

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