As Spokane eyes new Yellowstone Pipeline agreement, council members cite safety concerns

Spokane City Councilwoman Lori Kinnear knows $100 million is a hefty sum .

What she doubts, however, is whether it would be enough to cover the damage caused by a catastrophic spill from the petroleum pipeline that snakes through Spokane under the Spokane River and near a city drinking water well.

It’s one of a few sticking points that has held up approval of a new 25-year franchise agreement with the owners of the Yellowstone Pipeline, which transports petroleum products across multiple states in the Northwest.

The pipeline only briefly passes through Spokane, running south through Hillyard, crossing beneath the Spokane River near Felts Field, then circling around the city’s southern border before running back into the city through the West Plains.

The city has been without a new agreement in place with the pipeline’s owner since the last one expired in 2004. The council – which has authority to approve or reject the new agreement – was updated on the negotiations between the city and Yellowstone Pipeline Co. last October and quickly raised concerns.

Council members have two central issues with the proposal, both of which contemplate an emergency. First, they want to ensure that there is an adequate response plan in place if the pipeline ruptures. They also question whether the $100 million liability insurance policy the pipeline owner agrees to carry would actually cover the cost of such a failure.

Members also have sought assurances that the pipeline does not pose a great environmental risk. The pipeline runs within 50 feet of the city’s Parkwater well site near the Spokane River’s Upriver Dam, which supplies drinking water to city residents.

According to City spokeswoman Marlene Feist, the pipeline’s owners and the city informed Council President Breean Beggs of local emergency response plans in the event of a spill. Beggs, in an interview on Tuesday, said he still is not satisfied.

“I don’t know that I could ever be convinced,” Beggs acknowledged.

The pipeline’s operator, Phillips 66, touted its 24/7 monitoring of the pipeline and myriad additional safety measures already in place in a statement to The Spokesman-Review.

“Phillips 66 places the highest priority on safety and operational excellence,” said Phillips 66 spokesman Rich Johnson. “We have multiple safety and integrity management programs in place to ensure the safety and reliability of the pipeline and to protect the community and the environment.”

Separately, a $75,000 vulnerability assessment paid for by the pipeline company will be overseen by the water department as a condition of the proposed agreement.

The city already hired a third party, Southwest Research Institute, to conduct a safety audit that found the pipeline is in compliance with federal regulations, Assistant City Attorney Timothy Szambelan told the council on Monday.

The new franchise agreement was sponsored by Councilman Michael Cathcart, who noted the completion of the safety analysis and said it’s “a win-win.”

“Plus, if they’re not going to transport through the pipeline, they’re going to transport other ways that folks may think is even worse,” Cathcart said.

Some members question whether the $100 million liability insurance policy the pipeline owner agrees to carry would actually cover the cost of an extreme pipeline failure.

Beggs has firsthand experience with a pipeline catastrophe. He was working as an attorney in Bellingham when the Olympic Pipeline exploded, and he represented the family of one of the three people who died.

In Bellingham, the cost of the explosion far exceeded $100 million, Beggs said.

On Monday, Szambelan told the council that the pipeline owner “couldn’t give us a 100% guarantee, but (its attorney) did say that they would take responsibility if it goes over $100 million.”

But without that commitment in writing, Beggs wonders if it’s enforceable, particularly given the way he said pipeline companies are designed to insulate their parent corporations from liability. The pipeline company is owned by parent companies Phillips 66 Co., Exxon Pipeline Holdings and Sunoco Pipeline.

“You can’t count on them paying anything more, because you’re taking money from their shareholders that they don’t legally owe,” Beggs said.

Meanwhile, Beggs has suggested the pipeline either be rerouted to protect the water supply or the city’s well to be relocated – at the pipeline owner’s expense. The owner has rejected that proposal, according to the city, noting the pipeline’s existing path already was approved by past city officials.

Beggs has toyed with the idea of moving the city’s well, then taking the pipeline company to court to recoup the costs, but doubts he’d have the support of enough council members or the city administration to enact such a strategy.

It’s unclear if the proposal will meet the demands of the City Council.

The council agreed to discuss the proposal at its Public Infrastructure and Environmental Sustainability Committee on Aug. 24.

Councilwoman Betsy Wilkerson was appointed to her seat earlier this year and was not present when the agreement was reintroduced last year.

“I would like a little more time because this is my first exposure to the ordinance, and I do not have all the background,” Wilkerson said.

Kinnear heaped praise on Szambelan, who is negotiating the agreement on the city’s behalf. Szambelan is “working like a beaver,” Kinnear said. ” I trust him, (but) the fact that there is a pipeline running under our river, adjacent to our river, over our aquifer…makes me extremely nervous.”

“There is nobody that can guarantee there won’t be an accident, you can’t do that,” Kinnear said.

The agreement does offer the city annual payments of $25,000, an increase from the old deal, under which the company paid $200 annually.

To Kinnear, that isn’t enough.

“That’s ridiculous for what you’re getting, for our right of way and the risk that we’re taking as a community,” Kinnear said.

The city’s authority to impose safety standards is limited. The pipeline falls under the jurisdiction of the federal Pipeline and Hazardous Materials Safety Administration, while the state Pipeline Safety Commission is tasked with inspecting the pipeline and enforcing safety standards.

Those skeptical of the deal can put their foot down. But if the council continues to reject a new agreement, the old one holds in place.

Beggs won’t vote in favor of the deal as it stands but said he isn’t running a campaign against it. Kinnear is also vocally opposed.

“We don’t have enough leverage to do what I feel we should be able to do, because they have legal standing with the federal government. But what I can do is take a stand for the community’s safety, and say this is not OK,” Kinnear said.