When federal regulators learned last year that a Houston company built pipelines using defective steel, they ordered hundreds of sections of the newly laid pipe dug up and replaced.

Since then, the government has relaxed that get-tough approach.

Some pipeline steel that once would have been ordered replaced, now, if discovered, will remain in service. That includes pipe on the new $5.2 billion Keystone oil pipeline that runs through the St. Louis area.

Some environmental groups and others are questioning the government's action, the result, some claim, of private consultations between regulators and industry representatives who have grown too close.

"It doesn't inspire public confidence when the government ... has a standard one year and changes it the next year without explanation for why they did it," said Paul Blackburn, a lawyer with Plains Justice, a public interest law center that has questioned Keystone's safety.

The Keystone pipeline stretches 2,151 miles from Alberta's Athabasca tar sands to the ConocoPhillips' Wood River refinery in Roxana, then on to Patoka, Ill. One of the longest and most expensive pipelines ever built in North America, Keystone can carry about a half-million barrels a day, enough to supply about 2 percent of the country's daily demand. Oil began reaching the refinery in late June.

Concern about the pipeline comes at a time when the nation is struggling with the environmental effects of its energy policy. Work continues on sealing the Deepwater Horizon spill deep beneath the Gulf of Mexico. And in Michigan, responders expect to spend months cleaning up after the June rupture of a 30-inch pipeline that leaked nearly a million gallons of oil into a tributary of the Kalamazoo River.

Focus on Keystone's safety intensified recently after reports surfaced of two spills on the line even before it became fully operational, and that a spill in St. Charles County could create a "worst-case scenario," according to the company.

"Unfortunately, spills are a part of pipelines," said Josh Mogerman of the Natural Resources Defense Council. "We don't hear about them. But they're occurring and they're occurring at alarming frequency."

AGENCY WON'T TALK

Pipeline safety officials first learned of problems with defective steel while conducting tests on several projects built during a pipeline construction boom from 2007 to 2009. An investigation revealed that several lines contained significant amounts of defective pipe that stretched under pressure. The problems were traced to defective steel produced by several mills, but mostly by Welspun Power and Steel, a manufacturer based in India.

Almost half of the steel in the 30-inch Keystone pipeline came from Welspun and was manufactured about the same time the company provided defective steel on several other pipeline projects.

In some cases, the Pipeline and Hazardous Material Safety Administration took remedial action.

In April 2009, for example, the agency ordered the Houston company, Boardwalk Pipeline Partners, to replace more than 300 sections of newly built 42-inch gas pipeline, about half of which had expanded by as little as 0.6 percent.

But then in October 2009, the pipeline agency issued new guidelines. From that point on, only pipe that expanded by at least 1.5 percent would need to be replaced. Companies were told they needed to notify the agency only of expansions of 1 percent or more.

Officials with the agency, charged with oversight of the nation's 2.1 million miles of pipeline, did not respond to numerous requests from the newspaper over several weeks to discuss the change. An agency spokesman asked for written questions and then did not answer them.

Richard Cooper, a Washington pipeline consultant, said he thinks the government was caught off guard by the appearance of defective steel and that regulators initially took a conservative approach in ordering defective pipeline replaced.

Pipeline steel can withstand some expansion. The question is how much, Cooper said.

"Because it's such a serious issue in terms of possible pipe failure and it's happening on more than one line, they need to be a little bit more public about how they arrived at this number," Cooper said "(1.5 percent) may be a very appropriate number. They ought to be able to get it out to where people can see how they got it and it's defendable."

At a minimum, the government should have consulted outside experts instead of relying on its own staff and industry engineers to arrive at the new standard, Blackburn said.

"The question is, 'What's safe enough or strong enough?'" Blackburn said. "There should be a conversation with other people besides industry about that. These pipes are under so much pressure and would cause so much damage if they rupture that there should be zero tolerance for weak steel.''

Mogerman of the Natural Resources Defense Council criticized what he called the pipeline agency's "incredible lack of transparency" in dealings with the industry.

"You begin to hear people talking about 'agency capture' and the idea that much as (Minerals Management Service) was too close to people drilling in the gulf that perhaps the same thing may be in place with pipeline regulators. There's a lot of movement of people between the pipeline companies and regulatory agencies and they've gotten very cozy."

TWO LEAKS

After problems arose elsewhere, regulators ordered more extensive tests on the Keystone line. They also ordered that the line operate at reduced pressure until the work could be completed.

Officials with TransCanada — Keystone's owner — continue to say that the line is safe.

In late July, a TransCanada official said 432 miles of the line had undergone the more extensive testing looking for any defects, and no problems had been discovered. The company this week declined to provide an update. Testing is expected to be completed by the fall.

But problems surfaced on the Keystone line even before it became fully operational.

On May 21, five gallons leaked from a valve at a pump station near Carpenter, S.D. Workers hauled away 185 cubic yards of dirt and 9,356 gallons of water.

On June 23, another spill occurred at a pump station near Roswell, S.D. In that incident, oil sprayed from a loose fitting for three seconds, coating a 60-by-100-foot area with 100 gallons of oil. A crew shut off the oil immediately. Workers recovered 80 gallons of oil and removed 2,500 gallons of oily water and 200 cubic yards of soil.

Miner County Commission Chairman Rollin D. Schulz said TransCanada responded quickly to the Roswell leak, had been good to work with and that the spill wasn't "anything significant."

Still, in a 2006 pipeline risk assessment, TransCanada predicted fewer than two spills would occur during a 10-year period.

TransCanada said the leaks effected only company property, were properly reported and cleaned up. They said Keystone "is prepared to handle the worst-case scenario."

Talk of weakened safety standards and oil leaks raise concern in St. Charles County, home to one of those "worst-case scenarios."

According to TransCanada's own emergency response plan, the potential for the worst possible spill between Steele City, Neb., and Patoka is in St. Charles County near the confluence of the Missouri and Mississippi rivers. TransCanada said more than 24,000 barrels could pour from the line before a leak could be stopped. Some fear a St. Charles County spill could contaminate one of Midwest's major sources of drinking water.

Don Boehmer, the county's director of intergovernmental affairs, said no one ever informed the county that it was among the pipeline's worst potential spill sites. Nor were county officials aware of the government decision to change the pipe replacement standard.

"Obviously it's not as strict a requirement," Boehmer said. "That makes you feel less comfortable."