(Editor's Note: The following article has been provided byBryan Campbell, a member of the subrogation and recovery departmentat Cozen O'Connor.)

Yearly, many oil pipelines fail, spill crude oil and causesignificant health and environmental damage all across thecontinental United States, leading to hefty financial implicationsfor the oil companies landowners, government and insurers.

One case in point: In September 2012, Enbridge Energy paid a$3.7 million penalty for a 2010 rupture of a pipeline that pollutedthe Kalamazoo River with thousands of gallons of crude oil. InOctober, Montana landowners filed suit claiming a major petroleumdistributor overlooked warnings before a pipeline break dumpedroughly 1,500 barrels of crude oil into the Yellowstone River.

Here, we will examine the risks of a pipeline spills andtheir origins, technology, and regulations to mitigate potentialfallout, and recovery from failure.

The Fallout of a Spill

When oil spills occur, there can be significant healthconsequences as exposure to oil has been linked to various forms ofcancer and genetic mutations in DNA that can lead to birthdefects. It also goes without mentioning that oil spills havesignificant adverse effects on the environment.

Due to these tremendous risks, it is imperative that oil spillsare controlled, contained and cleaned up quickly to mitigate thehealth/environmental risks and exorbitant financial implicationsfor landowners, government and insurers. Cleanup andcontainment of oil spills—which often happen in remote,hard-to-access locations—call for specialists, extensive testingand a process that often costs into the millions ofdollars. For these reasons, much research and development hasbeen dedicated to preventing oil spills from happening in the firstplace.

Curbing Pipeline Failures

Because of the far-reaching implications one small oil spill canhave, keeping these pipelines safe is critical. It is important tounderstand the origin of these pipeline failures which differwidely depending on several factors, including the environment thepipe was in, coatings used on the pipe, materials being transportedand, naturally, human error related to lack of maintenance.

In particular, corrosion plays a significant role. Mostpipelines are manufactured from steel, which is highly corrosivewhen exposed to the soils on the outside, and is also subject todegradation on the inside through years of crude oil flowingthrough.

Several new techniques and technological developments have madethe extraction of oil in hard to reach places easier, less costlyand more efficient, the result of which may be a contingency of newpipelines being built throughout the country, such as the highlycontroversial Keystone XL pipeline. While it is vital for usto employ practices and technologies that will minimize the risk ofpipeline failures, it is equally critical to understand potentialcracks in thesemethods.

Currently, in an effort to combat corrosion, most pipelines are“cathodically protected” (CP) on the outside of the pipe prior tobeing buried in the ground. CP is a technique that turns thesteel pipe into the cathode of an electrochemical cell. Onpipelines, CP is achieved by using a DC power source and pumpingelectricity into the system. The positive cable is attached to theanode that is backfilled into the surrounding sediment near thecathode. The pipe is connected to the negative cable, thus creatingthe cathode.

Although CP protection is designed to be impermeable, there aresome weaknesses. Specifically, if the CP is improperly administeredthe production of hydrogen ions may commence which results in theions being absorbed by the metal causing hydrogenembrittlement. Hydrogen embrittlement causes weakened weldsand significantly compromises the piping itself, leading to cracks,fissures and ultimately catastrophic oil leaks. Therefore what isat first supposed to be a protectant ends up being the crux of itsdeterioration.

Another advancement being applied to pipelines in an attempt toprevent ruptures is to apply a coat externally to the pipe by aprocess known as fusion bonded epoxy (FBE), which is used becauseit is extremely durable and can withstand the punishment ofinstallation, backfilling and ground movement. With both CP andFBE, blowouts should, theoretically, be a risk of the past. Unfortunately, however, they are not. When faced with a leak on anewer pipeline, it is imperative to engage an expert whounderstands CP and FBE, including how they are administeredand potential problems with their applicationto explore suchpossibilities.

In addition to new technologies making the pipelines physicallysafer, regulations are also becoming more prominent, althoughcompliance and regulatory enforcement is lacking. Laws such as 49CFR 192.112 have provided a framework for inducing safer modes ofoperation. This specific piece of regulation provides requirementsfor corrosion control and federal safety standards of natural andother gas pipelines. There are also regulations determining whatkind of loads the pipes can carry and the pressure at which certainmaterials are passed through the pipe, as well as mandatorymaintenance, service and inspection schedules.

The combination of technology and better regulation has resultedin the safer operation of pipelines. However, significant failurescontinue to occur, such as the Kalamazoo River spill. The problemmay not simply be the lack of regulation, but the partiesresponsible to enforce and/or comply with the regulations. ThePipelines and Hazardous Materials Safety Administration (PHMSA) isfrequently short of inspectors leaving the regulatory inspection upto the pipeline operators, which may pose a conflict of interest.Because of the inadequate inspection by the PHMSA, there is a lackof answers as to why recent blowouts have occurred. Consequently,the derisory inspection capabilities provided by the PHMSA instillsdoubt to pipeline safety. Without tougher inspections, penaltiesand, therefore, increased adherence to the regulations, pipelineblowouts may never be truly eradicated.

Recovering from a Spill

Despite new technologies and regulations making pipelineoperations safer, improper application of coatings, unplannedreaction of chemicals, as well as other factors can inducedisastrous blowouts leading to environmental damage and propertyloss. Chances of breakdown also increase with imperfect executionof perfected procedures by third parties i.e. workers,manufactures, installers and operators.

This is where there is potential for subrogation, but time is ofthe essence. Investigation into causation and proper cleanup movequickly and involve highly technical issues. Retaining propertyexperts and consultants early on can make a significant differencein recovering from pipeline failure.

Mathieu Dubeau also contributed to this article. Dubeauserved as a research assistant at Cozen O'Connor. Currently heis completing his last year of undergraduate course work at SeattleUniversity, studying political science with a focus on politicaltheory, globalization and environmentalstudies.

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