Over the past several years PHMSA has issued numerous Advisories and Guidance notices. In fact, the Agency has issued nine times more informal guidance documents than formal rulemakings on pipeline safety issues since January 2012 (6 Notices or Advanced Notices of Proposed Rulemakings, compared to 54 interpretative letters, advisories or guidance). The Pipeline Safety Act comes up for reauthorization next year, and as of this post the Agency has still not proposed rules on four issues that Congress expressly directed PHMSA to address in 2012 (excluding an additional six issues that Congress gave PHMSA the discretion to issue regulations “if appropriate” or “as necessary”). To date, PHMSA has only issued one final rule as a result of the 2011 Pipeline Safety Act Reauthorization (which became effective January 2012).
In response to a request from Congress to study the impact of shale oil and gas development on transportation infrastructure and safety, the Government Accounting Office (GAO) recently published a report commenting on these developments and focusing on DOT’s response to address safety risks posed by rail and pipeline transportation. The report concludes that while DOT is addressing increased risks posed by rail, the Agency should proceed with a rulemaking to address the risks posed by new gathering pipelines in shale development areas.
PHMSA has issued an Advisory Bulletin to alert hazardous liquid and gas transmission pipeline operators of the impacts associated with flow reversals, product changes, and conversions to service. The Advisory, issued in conjunction with newly-published Agency Guidance on these issues, recommends that operators consult existing conversion of service requirements for flow reversals and product changes and undertake additional actions in order to ensure integrity and safety.
While acknowledging in the associated Guidance that the Agency’s recommended practices are not required, PHMSA nevertheless makes a number of suggestions, including that operators consider pressure testing the entire pipeline prior to flow reversals on gas and liquid pipelines and prior to significant product changes on liquid lines. PHMSA also recommends that operators consider taking the following steps prior to reversing flow, product changes, and conversion of service:
- Performance of ILI and hydrostatic pressure with a spike test, “especially if historical records have indications of previous in-service or hydrostatic pressure test failures, selective seam corrosion, stress corrosion cracking, other cracking threats, or other systemic concerns;”
- Validation of material and strength test records, and preparation of plan to obtain any missing material documentation (and if mechanical and/or chemical properties are missing, require destructive tests to confirm material properties of the pipeline);
- Review of the adequacy of sectionalizing valves and leak detection capability;
- Enhancement of communications with stakeholders concerning changes; and
- Submittal of a comprehensive written plan (in reliance on the Guidance) to the appropriate PHMSA regional office for review.
PHMSA identifies certain circumstances in which the Agency believes that it may not be advisable to perform flow reversals, product changes or conversions to service, however, including: grandfathered pipelines; low-frequency ERW pipe, lap welded, unknown seam types and pipe with seam factors less than 1.0; pipelines with a history of failure and leaks related to stress corrosion cracking, corrosion, or manufacturing defects; pipelines operating above Part 192 design factors; or, where the change involves a product change from unrefined products to highly volatile liquids.
The actions noted above are indeed advisory, but the Agency also notes several existing regulatory requirements that may be triggered by flow reversals, product changes and conversion to service projects, including: (1) pre-construction notification provisions of 49 C.F.R. Parts 192 and 195; (2) integrity management notifications for changes on gas systems that “substantially affect” IMP implementation, among other things; and (3) other associated O&M or IMP regulations. As a result of these requirements, the Advisory cautions that operators should be prepared to demonstrate how they have addressed impacts to “O&M, emergency plans, control room management, operator qualification training, emergency responder training, public awareness, spill response, maps and records, and IMP programs and plans.”
Despite the fact that the recommendations are not required by law, as acknowledged by the Agency, the Advisory suggests that operators should develop and document technical justifications for their chosen course of action, particularly if they depart from the Guidance. As operators consider making system changes to accommodate shifts in the market and demand for transportation services, the Agency will likely expect to see that they have addressed these recommendations.
In 2012, following a 2010 oil pipeline accident in Marshall, Michigan, NTSB recommended that API develop a pipeline Safety Management Standard (SMS). SMSs are used in various sectors (aviation, maritime, labor, food management, etc.), and typically follow ISO frameworks. The general intent behind a SMS is to ‘provide a systematic way to identify hazards and control risks while maintaining assurance that these risk controls are effective,’ and they are meant to reflect a ‘businesslike approach to safety.’
As further indication of the Agency’s increased focus on pipeline construction activity, PHMSA will publish an Advisory Bulletin on September 12, 2014 intending to clarify pre-construction notification requirements. Under PHMSA regulations, operators are required to notify PHMSA through the National Registry of Pipeline and LNG Operators not later than 60 days before certain events, including construction of (1) a facility other than a section of line pipe (including replacement, modification, upgrades, etc.) that costs $10 million or more; (2) 10 or more miles of a new pipeline; or (3) any new LNG plant, LNG facility or hazardous liquid pipeline facility. 49 C.F.R. Parts 191.22(c)(1); 195.64(c)(1).
Increased natural gas production from shale formations in the U.S. has led to a notable increase in applications for regulatory approvals of liquefied natural gas (LNG) exports and construction of LNG export facilities. Three LNG export terminals have been approved since 2012, and another 14 terminals are currently proposed. This surge in interest in LNG exports may burden the resources and technical expertise of the two federal agencies that oversee LNG facility siting, design, construction, and operation, the Federal Energy Regulatory Commission (FERC) and the Pipeline and Hazardous Materials Safety Administration (PHMSA) within the Department of Transportation (DOT).
The authority of the U.S. Department of Transportation (DOT) to establish minimum safety standards for the design, installation, and construction of pipeline facilities is clearly set forth in the Pipeline Safety Act (49 U.S.C. § 601 et seq.) (PSA or the Act), as is its authority to conduct design review of certain new facilities and new and novel technology by virtue of the 2012 amendments. DOT’s authority to inspect and impose these standards during construction is not so clearly articulated, however. Although DOT has established and enforced standards for pipeline construction since it began regulating the safety of pipelines in the late 1960s, it has published only limited guidance for the regulated community clarifying how this authority will be exercised. It has also rarely asserted its authority to conduct construction inspections, until construction was complete.
PHMSA recently proposed to significantly expand the information collected from operators through the National Pipeline Mapping System (NPMS). In the Agency’s notice and request for comment, PHMSA proposes to collect extensive information regarding pipeline attributes and extends reporting requirements to newly abandoned pipelines, regulated breakout tanks, and offshore gas gathering lines. The deadline for commenting is September 29, 2014.
In a report issued on July 25, 2014, EPA’s Office of Inspector General (OIG) issued a series of recommendations for EPA to increase its efforts to reduce methane emissions from natural gas distribution pipelines, including partnering with PHMSA to develop a joint strategy. According to the report, pipeline leaks accounted for more than 10 percent of total methane emissions from natural gas systems, equating to a loss of more than $192 million of gas in 2011. EPA does not directly regulate methane, and the report was undertaken to review EPA’s progress in implementing the Obama administration’s 2013 Climate Action Plan, which calls for EPA to develop a comprehensive interagency methane strategy. (See prior pipelinelaw alert here).
The OIG recognized that EPA currently maintains a voluntary program (Natural Gas STAR) to address methane leaks across the gas industry, but concluded that its efforts have produced limited results from local distribution companies because of financial and policy disincentives. These include the fact that operators have little financial interest in repairing leaks that do not pose safety hazards, because costs of fugitive emissions are passed on to customers. As a result of these findings, the OIG report recommends that EPA: (1) partner with PHMSA to address methane leaks from a combined environmental and safety standpoint, (2) develop a strategy to address the financial and policy barriers that hinder reductions from the distribution sector, (3) establish performance goals, (4) track distribution sector emissions and use that data to help determine if future regulation is appropriate, and (5) assess whether data from ongoing studies should be used to update distribution sector emission factors.
With regard to PHMSA coordination, the report urges EPA to consult closely with PHMSA as it develops any future regulations, noting that “the lack of coordinated action between the EPA and PHMSA hinders an effective partnership where PHMSA’s technology and regulations could be used to produce additional environmental benefits.” The report also recommends that EPA work with state utility commissions to develop and expand policies that encourage mitigation of leaks, especially from aging cast-iron and unprotected pipes.
EPA was provided an advance draft of the OIG report and has confirmed its willingness to work more closely with PHMSA and to determine by the second quarter of FY 2016 whether potential new regulations beyond voluntary efforts are appropriate. The status of the implementation of several other recommendations of the OIG report remains unresolved, with resolution efforts in progress. Despite EPA’s commitment to work with PHMSA, the agencies have not yet conferred on this issue. Because both PHMSA and EPA have regulatory jurisdiction over different aspects of natural gas pipelines, it will likely take some time for the agencies to develop a proposed path forward and it is unclear at this time whether that will include additional regulation.
In response to recent crude oil train derailments in the U.S. and Canada, PHMSA has proposed two rulemakings intended to prevent and mitigate the consequences of crude by rail incidents. In consultation with the Federal Railroad Administration, on August 1, 2014, PHMSA issued a notice of proposed rulemaking that addresses three primary topics: (1) operational controls for certain “high hazard flammable trains,” (2) improved classification and testing program for mined gases and liquids, and (3) enhanced tank car standards. In conjunction with the rail safety proposed rule, PHMSA also issued an advanced notice of proposed rulemaking regarding oil spill response plans requirements for high hazard flammable trains.