PHMSA Issues Proposed Gas Pipeline Rule, Broadly Expanding Regulatory Scope

HIGHLIGHTS:

• The Pipeline and Hazardous Materials Safety Administration (PHMSA) has issued a Notice of Proposed Rulemaking that would significantly broaden the agency's regulatory scope with respect to gas pipelines.
• The proposed rule creates "Moderate Consequence Areas" as a new category for regulation and also requires that older pipelines that have not previously required testing be pressure tested.
• Automatic or remote-controlled shut-off valve requirements were omitted, leaving that for another rulemaking.

The Pipeline and Hazardous Materials Safety Administration (PHMSA) issued an extensive, 549-page Notice of Proposed Rulemaking on March 17, 2016, that would significantly broaden the agency's regulatory scope with respect to gas pipelines. The proposed rule follows on the heels of S. 2276, the Securing America's Future Energy: Protecting our Infrastructure of Pipelines and Enhancing Safety Act (the SAFE PIPES Act). Passed by the U.S. Senate this month, the SAFE PIPES Act puts pressure on PHMSA to complete delayed Congressional pipeline safety mandates.

The impetus for the rulemaking was the 2010 pipeline incident in San Bruno, Calif., which killed eight people and injured more than 50, while destroying 38 homes. An Advanced Notice of Proposed Rulemaking (ANPRM) followed in 2011, along with National Transportation Safety Board (NTSB) recommendations, statutory requirements via the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, and a Government Accountability Office (GAO) recommendation, all of which factored into the proposed rule. However, some of the issues raised by Congress and the administration – and emphasized in the SAFE PIPES Act – were left out of the proposed rule. Notably, automatic or remote-controlled shut-off valves were omitted, with PHMSA stating that it will address this and other issued in a separate rulemaking.

Substantial Changes and Congressional Action

One of the most substantial changes proposed by PHMSA is the creation of a new category: Moderate Consequence Areas (MCAs), which would require integrity assessments and safety protections in each "onshore area that is within a potential impact circle ... containing five (5) or more buildings intended for human occupancy, an occupied site, or a right-of-way for a designated interstate, freeway, expressway, and other principal 4-lane arterial roadway." The agency elected to create the MCA category rather than expand the definition of High Consequence Areas (HCAs). Another substantial proposed change is to require that pipelines that were constructed before 1970 be pressure tested. Those pipelines, which were already in place when the applicable regulation went into effect, have thus far been grandfathered and escaped PHMSA-mandated testing.

As reported, Congress has started to take action on many of the same issues. (See Holland & Knight Alert, "Senate Passes Reauthorization Bill for PHMSA," March 8, 2016.) The House Energy and Commerce Committee recently introduced similar legislation to reauthorize the PHMSA, and the House Transportation and Infrastructure Committee plans to introduce its reauthorization draft later this spring.

The House bills could address major problems that industry members might have with PHMSA's NPRM, which could lead industry members to advocate changes if they think PHMSA's rule is too burdensome. Interested stakeholders should provide key Congressional policymakers and staff with suggested changes without delay.

Additional Proposed Changes

Other notable regulatory changes proposed by PHMSA include:

• modifying repair criteria for pipelines in HCAs and requiring similar repair criteria in the newly created MCAs, but with more relaxed deadlines for non-immediate conditions
• adding regulations that require and establish standards for the inspection and repair of onshore transmission pipelines and rights-of-way for "other factors affecting safety and operation" following an extreme weather event, such as hurricanes, floods, earthquakes and other natural disasters, or other similar events that have the likelihood of damage to infrastructure
• requiring that maximum allowing operating pressure (MAOP) be verified, that the records used to establish MAOP are reliable, traceable, verifiable and complete, and that operators report when MAOP has been exceeded
• requiring that certain onshore, steel, gas transmission pipelines confirm and record the physical and operational characteristics of pipelines that lack adequate records
• establishing certain pipeline attributes that must be included in pipeline data analysis, and requiring that such information be verified, validated and integrated
• allowing "spike" hydrostatic pressure testing, guided wave ultrasonic testing, and excavation and direct examination, but allowing direct assessment only when internal inspection is impossible
• adding specificity to models used to assess pipeline risks
• requiring that knowledge gained from integrity management be applied to the analysis of interacting threats, potential failures and worst-case incident scenarios
• providing more detailed guidance for the selection of assessment methods, and requiring that an operator using an internal inspection tool consider uncertainties in reported results when identifying anomalies
• requiring each operator of an onshore gas transmission pipeline to develop and follow a management of change process in accordance with existing national standards
• allowing a six-month extension of the seven-year reassessment of operators if the operator submits written notice to the Secretary of Transportation, with sufficient justification of the need for the extension, so long as that justification does not pose a safety risk
• codifying by regulation the portion of the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 that requires an operator of a pipeline facility to consider the seismicity of the area when identifying and evaluating all potential threats to each pipeline segment
• Incorporating industry standards for assessing the physical condition of in-service pipelines using in-line inspection, internal corrosion direct assessment and stress corrosion cracking direct assessment
• adding explicit requirements for safety features on launchers and receivers associated with in-line inspection, scraper and sphere facilities

Comments will be due within 60 days of publication in the Federal Register, which has not yet occurred. 
   

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.