Chapter 4 Domestic Petroleum

The production and price of oil not only greatly affects the American economy, but it also affects the everyday life of American consumers, who rely on oil to heat their homes, drive their cars, and light their light-bulbs. In fact, 62% of the energy used in the United States today is generated from oil and gas. Oil is derived from both domestic and imported sources; thus, in order to understand the law that governs the production and usage of domestic petroleum, one must be familiar with the (i) basic terms related to the oil business, (ii) the 5 stages of oil production, (iii) the early history of petroleum in the United States, (iv) the convoluted federal and state regulatory system that governs oil, (v) the use of offshore oil and gas rigs in the United States, (vi) the transportation of oil, (vii) and the environmental impact of oil.

Petroleum, also known as crude oil, is produced in a five stage process that includes exploration, production, refining, transportation, and distribution. Based on a common law history and in contrast with other Western nations, oil and mineral rights are owned by private land-owners rather than the government.

Given the importance of oil in the modern economy and the private ownership of mineral and oil rights in the United States, a complex regulatory system must exist to prevent the physical waste of oil, the economic waste of oil, and further Tragedies of the Commons. Furthermore, given the importance of oil, businesses have developed methods to extract natural gas via hydraulic fracturing and extract oil and gas from offshore rigs. While both of these methods of extraction create a domestic source of petroleum, they also introduce environmental and social externalities. Thus, the study of the domestic oil must be understood by juxtaposing the necessity of oil in our modern economy with the incentive that the producers of oil have to pass on environmental externalities to society as whole.

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  What are the key terms necessary to understand the production of crude oil and natural gas in the United States?
  

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  What are the five stages of the production of oil and gas in the United States?
  

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  What types of oil were used before the development of petroleum?
  

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  What is the Rule of Capture? How does the Rule of Capture affect the regulation of oil and gas in the United States?
  

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  What are the goals of state conservation regulation?
  

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  What is meant by the Tragedy of the Commons? What is the difference between the Tragedy of the Commons I and the Tragedy of the Commons II?
  

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  What is hydraulic fracturing? What benefits does it offer? What negative externalities may hydraulic fracturing produce?
  

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  What is the statutory framework that governs the production of offshore oil and gas?
  

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  What impact does the production and transportation of oil have on the environment?
  

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  How is oil transported and how does the government regulate the transportation of oil?
  

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  What are oil spills and what happens to companies who are responsible for an oil spill?
  

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  How are pipelines regulated?
  

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  Who should own natural resources including mineral and oil rights - the government or the individual landowner?
  

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  Is it good policy to provide government subsidies to produce more domestic petroleum or to help private investors finance a pipeline from Alaska to Chicago? Should domestic producers of oil be given economic incentives to reduce the United States’ dependence on foreign oil?
  

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  Given the potential for environmental catastrophe, should the United States develop a regulatory system that discourages off-shore drilling for oil? Does your answer stay the same after the considering the BP oil spill?
  

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  In what ways can a tragedy of the commons be prevented?
  

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  Given the high price of oil, should the United States drill in Alaska? Consider both the environmental and economic ramifications.
  

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  Is hydraulic fracturing worth the negative externalities that it creates?
  

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  Would investment dollars be better spent developing alternative energy sources or continuing to harvest the limited domestic petroleum that is available?
  

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  Should liability be capped at only $75mm for oil spills? Should the Department of Transportation seek to better regulate its pipelines?
  

The price of oil has greatly fluctuated in the last 60 years. These fluctuations have precipitated much of the legislation and regulations passed by both the states and the Federal government in the United States. The below graph illustrates these fluctuations.

The following are key terms that help aid the study of both domestic and international petroleum (petroleum is also known as crude oil). In considering the below definitions, it is important to remember that 62% of the energy used in the United States today is generated from oil and gas.

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  Petroleum / Crude oil – crude oil is a naturally occurring, inflammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds that are found in geologic formations beneath the Earth's surface. Crude oil is the term for "unprocessed" oil. It is also known as petroleum. Crude oil is a fossil fuel, meaning that it was made naturally from decaying plants and animals living in ancient seas millions of years ago -- most places you can find crude oil were once sea beds. Crude oils vary in color, from clear to tar-black, and in viscosity, from water to almost solid.
  
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  Natural Gas – natural gas is a gas consisting primarily of methane, typically with 0–20% higher hydrocarbons (primarily ethane). It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.
  

The surge in oil and gas prices in 2001 and the inauguration of George Bush led to the passage of the Alaska Natural Gas Pipeline Act. The bill authorized a federal loan guarantee to private investors to construct the pipeline from Alaska to Chicago, which would take about ten years to permit and build. Since 2004, the price of the pipeline route from the North Slope to Chicago has ballooned to about $40bn. Is a federal guarantee of a private project like this a good use of federal funds?

Unlike in other countries, private landowners in the United States own the oil and gas and other minerals in the ground as real property. In all other countries in the world, the state owns these mineral resources found underground. In these countries, oil and gas are typically developed by national oil companies, such as Pemex in Mexico. Do you think that the state or private landowners should own gas and oil rights? Is the United States or the rest of the world doing it better?

Because of the private ownership of oil and gas in the United States, oil and gas law is governed by a complex legal framework composed of property, contract, and tort law. This common law operates within a complex framework of state conservation legislation and federal statutes. Furthermore, the Federal government owns substantial mineral resources in the West as the Federal government owns 30% of the total land area in the United States.

The exploration and production of oil and gas are typically done pursuant to an “oil and gas lease” between the landowner as lessor and an oil company (the operator) as a lessee. The lessee wants the rights but not the duty to develop a leasehold for a certain time. If promising deposits are found, the lessee wants the right to hold the lease for as long as profitable production occurs. The typical lesssor does not have the expertise to develop the oil and gas.

There are five stages in the value chain of oil production: (i) exploration, (ii) production, (iii) refining, (iv), distribution, (v) and marketing. The largest companies in the oil industry are vertically integrated and operate in all five stages of the value chain.

Most petroleum is transferred via pipelines. In the Piperline cases, the Supreme Court held that federal law could regulate pipelines, even if they were only intrastate pipelines. Gas Pipelines were regulated in 1938 when the Natural Gas Act was passed in recognition of the monopoly power of interstate gas pipelines.

Before petroleum was discovered, people used water to power their everyday needs. Since waterpower could not produce light; however, people needed an alternate energy source to create light. Thus, wealthy people often used animal and vegetable fats to burn in their oil lamps. The premium fuel was whale oil, although that became increasingly more expensive as whalers destroyed the whale populations in the Atlantic and had to move to the Antarctic to find more. As coal power and kerosene became available, whaling began to die out as the preferred source of energy for creating light.

In the 1850s, a Canadian inventor discovered kerosene. He extracted the liquid from natural deposits of tar and asphalts, and used it to burn in the already existing oil lamps. The new kerosene lamp took the place of the oil lamps in the homes and offices of the wealthy Americans. It wasn’t until 1859 that Americans learned how to drill for oil, rather than taking it from natural springs or skimming it from the tops of ponds.

The Pennsylvania Rock Oil Company hired Edwin Drake to drill a well near an old oil spring. He used an old steam engine and an iron bit to drill for the oil; the drill bit hit oil at only 69 feet below the surface. People rushed to Pennsylvania to drill for oil, and in 1861, the first refinery went into the region, producing mostly kerosene. For a more detailed history of oil, click here.

American courts first implemented The Rule of Capture with respect to oil and gas in 1907 in the decision of Barnard v. Monangahela Natural Gas Co. The question at issue in Barnard was whether a landowner could drill a well on his farm, though close to the land of another, and extract the gas or oil from the adjoining landowner. Oil and gas are attracted to the pressure created by the drilling, and easily move underneath the ground’s surface. The Court answered that it was the right of every landowner to drill wherever he saw fit; thus, it was not his fault if his drilling adversely affected the adjoining landowner. The Pennsylvania Court recognized this may not be the best rule, but decided it could do no better.

Although it is permissible for a landowner to take the gas or oil of adjoining landowners when he drills on his own property, courts have drawn the line when a landowner wastes or destroys the gas or oil of another. In Elliff v. Texon Drilling Co., the Elliff’s owned land adjoining to where Texon Drilling Co. had an oil drilling rig. During drilling, the rig blew out, causing the wells on the Elliff’s land to also blow out. The first blow out caused a large quantity of the Elliff’s gas and oil to drain from under their land and escape into the air. The Court recognized that under the Rule of Capture, there is no liability for any reasonable and legitimate drainage of oil and gas. But, because the court found Texon Drilling Co.’s actions to be those of “negligent waste and destruction”, the Elliff’s did not lose their right to their oil and gas under the Rule of Capture. Texon Drilling Co. was responsible for the loss of the oil and gas, and could not escape liability.

4.C State Conservation Regulation

The rule of capture led to haphazard development which wasted large amounts of petroleum. This led states to attempt to prevent this waste through regulations. One example of such regulation is involved in Ohio Oil Co. v. Indiana. An Indiana statute passed in 1893 required the operator of any oil or gas well to confine the flow of oil or gas into a pipeline or other safe receptacle within two days of discovery. Ohio Oil Co. owned five wells that produced gas and oil, and the company used flaring to dispose of the casinghead gas produced by the wells because the gas had no value to Ohio Oil Co. However, nearby cities were using gas from the fields and Ohio Oil Company’s flaring was destroying the “back pressure” in the field that prevented salt water from encroaching the oil wells. Ohio Oil Company challenged the Indiana statute as a violation of due process because it was impossible to produce oil without producing gas, and the gas was valueless to the company. Reasoning that “a single owner could use the unrestrained license to waste the entire contents of [a] reservoir,” if it found that such regulation were beyond the power of the legislature, the Supreme Court found that it was within the legislative power to prevent waste. Ohio Oil Co. v. Indiana was one of the earliest cases to recognize the doctrine of correlative rights, which holds that each owner of a common source of supply has both legal rights and duties as to the other owners.

Regulations like the one involved in Ohio Oil Co. v. Indiana, as well as other types of regulations such as well spacing rules did not address the field’s production rate, which is the most important factor affecting the ultimate percentage of oil recovered from a field. Another issue was extreme fluctuations in the price of oil. Self-imposed controls agreed upon by operators were generally ineffective to address the problem. Responding to pressure from operators, state legislators enacted prorationing statutes, which established a maximum amount that each well could produce. This type of statute was challenged in Champlin Refining Co. v. Corporation Commission of Oklahoma. Champlin alleged that the state statute violated the due process and equal protection clauses of the Fourteenth Amendment and the commerce clause. After reviewing the reason the regulation was needed—to prevent large amounts of waste—the Supreme Court reasoned that since none of the proration orders were intended, or had the effect of, fixing prices, Champlin had not proved that the regulation was invalid.

Since 1973, almost all domestic oil wells are able to produce at capacity and have not been restricted by market-demand prorationing.

The Interstate Compact to Conserve Oil and Gas was formed in 1935 in order to prevent federal intervention in oil producing states. The compact relies on voluntary agreements to prevent waste of oil and gas and currently has thirty member states and six associate members.

Secondary recovery is the process of recovering oil that remains in the reservoirs after the natural reservoir drive is depleted. In 1979 Secondary recovery accounted for about sixty percent of Texas’s oil production and thirty-eight percent of Oklahoma’s. Secondary recovery is accomplished by injecting gas or water into the pore spaces of the reservoir rock, which drives oil toward producing wells. Chemical surfactants and polymers may be added to better flush the oil from the rock. In Railroad Commission of Texas v. Manziel, the Texas Supreme Court addressed the issue of efficiency during secondary recovery operations. An oil producer, Whelan applied to the Railroad Commission for permission to waterflood its part of the field, but Manziel, a neighboring producer in the same field, did not join in the operation. The commission approved and for years Manziel benefitted from Whelan’s efforts. To stop the flow of oil to Manziel from Whelan’s tract, Whelan sought permission to place an injection will near the lease line. The commission approved. On appeal, the Texas Supreme Court upheld the commission’s decision because the Manziel tract had been draining oil from the Whelan tract for years and the placement of the injection well would allow Whelan to get its “fair share” of the oil in the field. The court reasoned that secondary recovery was in the public interest and should be encouraged, and that the rules about surface invasions are not appropriately applied to subsurface invasions. The court concluded that if the commission authorizes a secondary recovery within its jurisdiction to prevent waste or protect correlative rights, then a trespass does not occur when the injected material moves across lease lines.

A unitization agreement between all of the owners of a common field binds all the parties to develop the field cooperatively for the good of all. These agreements enable all owners to receive a “fair share” of the production of the entire field, and allows the field to be efficiently operated. The difficulty is finding a formula on which all of the owners of a field will agree. To address this difficulty, most oil and gas states have enacted unitization statutes that give a state conservation commission authority to force a minority of owners into a unit agreed to by a majority of owners. The necessity of this type of authority is illustrated by Gilmore v. Oil and Gas Conservation Commission. In that case the oil field in question had 177 producing wells and was owned by more than 80 individuals or entities. When the reservoir pressure fell below the bubble point, the commission recommended that the field be unitized to prevent waste. He owners met and considered 71 different formulae for allocating the production. By examining the voting records, they came to a compromise that received 75.89% approval. Gilmore, one of the owners, objected to this formula because it shorted his acreage and was based on production in the last 6 months, during which his wells had experienced downtime. The court acknowledged the inherent difficulties of finding a formula that would satisfy every owner and concluded that “substantial waste cannot be countenanced by a slavish devotion to correlative rights.” The court stated further that there was “no indication that a more equitable formula could be devised.”

In Texas, where a unitization statute has not been passed, the commission has used its broad authority to prevent waste as leverage to convince operators to voluntarily unitize by shutting in the fields or prorating them severely.

4.C.5 Hydraulic Fracturing: The Rule of Capture Reigns Again

Hydraulic fracturing, referred to as “fracking,” is a method of natural gas production in which operators drill down vertically, and then drill horizontally along a productive strata of oil or gas. Fracking is accomplished by pumping fluid down a well at high pressure in order to force natural gas out. Fracking was first used commercially in 1949. Since the horizontal portion may extend for more than a mile, the issue of trespass again arises. In Coastal Oil and Gas Corp. v. Garza Energy Trust, the Texas Supreme Court ruled that the rule of capture applied in this setting as well, when it reversed and remanded a jury award for $1 million to the Salinas family when Coastal extended its fracking operation into property owned by the Salinas, thus depriving them of their royalties. Rejecting the Salinas’ argument that the rule of capture does not apply to fracing because it is unnatural, the court reasoned that fracking is no more unnatural than drilling wells, and that the “law affords…ample relief” because Salinas could use hydraulic fracturing to stimulate production of his own wells and drain the gas to his own property. The court listed four reasons for not altering the rule of capture with respect to fracking: 1) the law affords the owner full recourse in the form of allowing an owner to drill a well to offset the drainage from his property, 2) allowing recovery in these situations would usurp the authority of the Railroad Commission to regulate oil and gas production, 3) the litigation process is not equipped to handle determining the value of oil and gas drained by fracking, and 4) no one in the oil and gas industry wants or needs the rule of capture to be changed.

In 2007, 27 percent of U.S. oil production and 14 percent of natural gas production came from wells located just off our nation’s coast. These wells lie in an area called the outer continental shelf (“OCS”). The OCS runs the length of the Atlantic Coast, around the Gulf of Mexico, and up the Pacific Coast to Alaska .The OCS is home to a considerable portion of our country’s undiscovered oil and gas reserves.

The question about whether to harvest these reserves has always been a political one. The Gulf states are divided on issue. States on the western coast of the gulf have been open to OCS leasing but states, like Florida, on the eastern coast have strongly opposed any drilling. Likewise, coastal states such as California and Massachusetts have not been welcoming to offshore drilling. In a similar vein, drilling off the coast of Alaska has provided its own unique set of problems.

The next few sections will seek to discuss the statutory framework that governs offshore drilling, the unique problems posed by harvesting Alaska’s oil reserves, and the Moratoria currently in place on offshore drilling.

Almost all of the legislation governing offshore drilling for oil and natural gas can be traced backed to a singular event: the Santa Barbara oil spill of January 1969. In that case, an oil rig being drilled by Union Oil Company blew out and leaked between 24,000 and 71,000 barrels of oil over the span of 11 days. After this incident Congress rapidly enacted a succession of environmental acts by first passing the national Environmental Policy Act of 1969 (“NEPA”), then the Marine Protection Research and Sanctuaries Act of 1972, then the Coastal Zone Management Act of 1972 (“CZMA”), the Endangered Species Act of 1973, and finally a revision of the Outer Continental Shelf Lands Act of 1953 (“OCSLA”) in 1978.

These legislative enactments came at a time when the country was in the throes of an energy crisis brought on by the OAPEC oil embargo of 1973. Thus, the last part of the decade saw energy competing with the environment for national attention. The federal government sought to form a compromise with the environmental lobby. The revision of OSCLA attempted to achieve such a balance. Its 1978 amendments expanded the role of state and local government officials in the federal OCS leasing process in hopes that this would put an end to litigation between costal states and the federal government, so that oil could be expedited to markets in the wake of the price shocks caused by the embargo.

However, opposition to OCS leasing continued unabated. In 1977, the Department of Interior was prepared to issue another lease sale off the coast of Santa Barbara. However, the state government of California opposed and asked the U.S. Supreme Court to interpret the CZMA and the new OSCLA in light of this leasing decision.

The case before the Supreme Court hinged on language in the CZMA that stated activities that “directly affected” a coastal zone must comply with state standards. ¹ The states sought to use the “directly affected” language to prevent oil exploration from being conducted off their coasts. However, the Court held that the DOI’s leases were not an activity that “directly affected” coastal zones and the sales were allowed to continue. This issue would be revisited in the 1990s when Congress chose to remove “directly” from the language of the statute, thus lowering the burden for states wishing to prevent offshore drilling.

4.D.3 Alaska: Aboriginal Rights

As stated earlier offshore drilling of the coast of Alaska presents its own unique set of challenges. Prudhoe Bay in Alaska is the largest oil field in North America. It was discovered in 1967 on land that the state had selected under the Alaskan Statehood Act of 1958. This Act gave Alaska the right to select over 100 million acres from unreserved lands. Native Americans in Alaska objected to 80 percent of the state’s claims. Congress resolved these disputes with the Alaskan Native Claims Settlement Act (“ANCSA”). In the ANCSA Congress allowed native Alaskans to select 44 million acres of land for their use as long as they relinquished all “aboriginal rights” to the exclusive use of the lands and waters in Alaska.

“Aboriginal rights” was a theory long recognized by both Alaskans and the U.S. Courts alike. These rights included hunting and fishing, and were extremely important as most native Alaskans lived a subsistence life-style based on harvesting wild resources. The Settlement Act did not vest native Alaskans right to fish or hunt in the large part of Alaska that was now in federal hands. However, the federal government remedied this problem by passing of another act 9 years later: the Alaska National Interest Lands Conservation Act (“ANILCA”). ANILCA established a priority for non-wasteful subsistence fishing and hunting on federal lands.

OCS leasing began to come into conflict with the subsistence rights of native Alaskans living in coastal villages. These native Alaskans claimed that OCS leasings would adversely affect their aboriginal rights to hunt and fish on the OCS under ANILCA. However, the Supreme Court disagreed and held that ANILCA did not apply to OCS leasing activity. The Court held that ANILCA only applied to the right to hunt on lands “in Alaska” and the OCS, which began well past the territorial waters of Alaska, could not be considered to be “in Alaska.”

A moratorium movement, prohibiting OCS leasing, began gaining momentum under Ronald Regan’s administration in 1981. A moratorium is an injunction issued by either the Executive or Congressional branch. The movement began at the insistence of coastal states who were frustrated with the results of litigations aimed at prohibiting offshore drilling. In 1982 Congress wrote prohibition into DOI’s appropriation’s bill that banned offering certain OCS areas on the California coast up for lease. By 1989 succeeding appropriation bills had extended the moratoria to more than 181 million acres off the coasts of California, the North Atlantic, and the eastern Gulf of Mexico. This off limits acreage equaled more than twice the acreage that had ever been leased in the history of the OCS program.

Congress cited a planned sale of 1 billion acres by the DOI secretary as the reason for the moratoria. Congress explained that the rapid pace and magnitude of the leasing proposed under that sale would undermine the ability of state and local governments to adequately asses the environmental impact of leasing. Congress further stated that since the Regan administration refused to continue funding for state coastal management systems, include the states in OCS revenue sharing, or maintain consistent program requirements left the states and local citizens taking all the risks of OCS activity without receiving any of the benefits.

The moratoria was met with fierce opposition by the domestic oil industry. However, the 1980’s saw a sharp drop in the price of oil and succeeding presidents did not see the need to lift the moratoria. In 1990 President George H.W. Bush extended the moratoria to most of the U.S. coastline, and in 1998 President Clinton extended this moratoria through 2012. However, in 2008 the moratoria expired because Congress did not include a leasing prohibition in the appropriations bill. President George W. Bush lifted the executive order restricting certain OCS leasing. With the executive order lifted, a new OCS program is now being formulated.

The production, transport, refining, and consumption of oil and petroleum products have a significant environmental impact. They can all affect air quality, water quality, and biological resources - either directly or indirectly - through air and water quality changes that they precipitate.

The takeaway from the BP Case Study is learning about the Clean Water Act (CWA) and it multi-stage effluent discharge guidelines. The Court first discussed the CWA and its general objective. The objective of the Clean Water Act (CWA), the Court said, “is to restore and maintain the chemical, physical, and biological integrity of the Nation’s waters.” 33 U.S.C. § 1251. Consequently, the discharge of any pollutant is illegal unless made in compliance with the provisions of the CWA.

The CWA formulates national effluent limitation guidelines for those entities that discharge pollutants into the navigable waters of the United States. These guidelines are structured in a multi-stage system, wherein each stage of effluent discharge (based on the type and amount of pollutant(s)) is progressively more stringent than the last.

In order for the emitting entity to obtain a permit to operate, it must meet the standards set forth by the EPA. At the first stage of pollutant reduction, the EPA determines the level of effluent reduction achievable within an industry with the implementation of the “best practicable control technology currently available,” or, “BPT.” At the second stage, the EPA sets more stringent standards for toxic and conventional pollutants. For toxic pollutants, the EPA is to set the standard for the “best available technology economically achievable,” or, “BAT.” For conventional pollutants, the standard is “best conventional pollutant control technology,” or, “BCT.” For new pollutants, the EPA the standard - “new source performance standards” (NSPS) - is tantamount to the application of BAT controls to remove all types of pollutants from new sources within each category.

In the case at hand, the EPA was essentially being attacked by two different petitioners: oil industry petitioners and the Natural Resources Defense Council (NRDC) petitioner. The former argued that the EPA’s standards were too stringent; the latter argued that the standards were too lenient. Ultimately, the Court affirmed the administrative-level decision, and therefore affirmed the multi-stage standards established by the EPA.

4.F Oil Transportation

4.F.1 Oil Spills

Oil spills often occur as a side effect of the transportation, refinement, and use of petroleum products. Broadly defined, oil spills include the release of crude oil from tankers, offshore platforms, drilling rigs, and wells. Spills further include the release of refined petroleum products (such as gasoline, diesel) and their by-products and heavier fuels used by large ships such as bunker fuel. Spills may take months or even years to clean up.

When many people hear the word oil spill, they often think of Exxon Valdez and the BP Deepwater Horizon incident. The BP accident is probably more memorable because it just recently occurred. However, oil spills, albeit on a lower scale, occur often as a part of delivering petroleum products to the market. Oil spills both affect market price and result in negative environmental externalities; therefore, it is in the best interest of consumer and capitalist alike to transport and refine petroleum as safely as possible.

4.F.2 Remedial Legislation: OPA 90

As a result of the Exxon Valdez spill in 1989, the OPA 90 Regulations, or the Oil Pollution Act of 1990, was passed to address future oil spills and the devastating effects that oil spills have on the economy. OPA 90 states that any oil company, meaning oil ship or oil rig, is liable for the costs and damages resulting from an accident where oil is spilled into the ocean, on a shoreline, or in an area that is popular for fisheries. This is the first act that was created for establishing liability on a corporation for damages to natural resources and injuries / loss of income for people who fish those areas.

When the bill was originally written, it capped liability at $75 million; However, due to the oil spill in 2010 in the Gulf of Mexico, some members of Congress attempted to be raise the liability cap to $10 billion. That attempt was blocked by both political parties because there are other wells in that area that need to be protected (at least protected economically).

4.F.3 Pipeline Safety

Pipeline safety is a broad yet crucial element in production of petroleum, which is often pushed aside in favor of economic concerns. For example, the Office of Pipeline Safety has jurisdiction over more than 2 million miles of pipelines but is one of the smallest units within the Department of Transportation. The agency has only 55 inspectors and is budgeted for only 107 full-time employees. It commonly relies on state and local authorities to perform inspections. For decades, the agency has not known the exact whereabouts of thousands of miles of pipelines under its jurisdiction.