Kansas gas storage regulation might not improve safety

Due to a jurisdictional issue, underground natural gas storage facilities in Kansas have not been inspected for 19 months — at least not inspected by government regulators. Senators Pat Roberts and Jerry Moran have introduced legislation that would allow Kansas to resume inspections.

The safety of underground natural gas storage is important, especially in Kansas, where in 2001 gas leaked under Hutchinson and caused fires and explosions that killed two people and caused much property damage. So should Kansans be relieved that government regulation and inspection may be resumed soon?

Reading news stories from after the January 2001 Hutchinson disaster should teach us to be wary of relying on government regulation and inspection for ensuring safety. For example, a February 2001 in the Wichita Eagle contained this: “State officials in Kansas knew that the 20-year-old regulations governing underground gas storage were inadequate, years before a gas leak in Hutchinson claimed two lives. Officials with the Kansas Department of Health and Environment met with industry representatives in 1996 and told them new regulations were needed to ensure safe operation of 630 gas storage wells in the state. The new regulations were never written. The update was delayed because the KDHE was short staffed, said Don Carlson, chief of the industrial programs section. The department has two people assigned to permit, inspect, oversee and write regulations for the 6,000 underground injection wells in Kansas that are used to store natural gas and propane, dispose of hazardous waste or mine salt, he said.” (emphasis added)

So for 20 years Kansas operated with inadequate regulations. Was this know by the general public? It doesn’t appear that it was. Instead, people assumed that government was watching out for their safety.

The Hutchinson News concluded in 2004: “True, some of the company’s reports misled the regulator. But the state official also did little, if anything, to check the company’s information or to inspect the site. A local diner serving two dozen cheeseburgers a day received more attention than an underground facility storing billions of cubic feet of natural gas and other volatile hydrocarbons.”

So how well were Kansans served by its regulators? Not well at all, we must conclude.

Eventually the operators of the gas storage facility were held accountable for their errors. But it wasn’t direct government action that did that, although the operators were fined $180,000. But government operates courts where the victims received compensation for their losses — if it is possible to compensate for loss of life with mere money.

What about the other party to this disaster — the State of Kansas: Was it held accountable? Not at all. Examples of regulatory failure rarely result in punishment of government or those who work for it.

A recent example is the Washington Post story Eight SEC employees disciplined over failures in Madoff fraud case; none are fired. Bernie Madoff stole tens of billions from clients over a long period of time in a highly-regulated industry. The Securities and Exchange Commission chief was advised to fire one person, but declined to do even that. Instead, eight employees received punishments such as “suspensions, pay cuts and demotions.”

Not only did the state not perform adequate inspections, and not only did the SEC fail to detect Madoff’s ongoing theft, the presence of government regulation makes people think things are safe.

Sadly, it is only after disasters like Hutchinson or sensational cases like Madoff’s that we become aware of the weak protections that government regulation provides.


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