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.

By way of background, rapid oil and gas production has prompted increased pipeline infrastructure projects, particularly with respect to gathering pipelines that bring sources from the wellhead to refineries for processing, or to transmission lines for further transportation.  Recent expansion in pipeline infrastructure has not kept pace with increased domestic oil and gas production, however.  Limited pipeline capacity has resulted in increased use of other modes of transportation such as rail, truck and barge.  The GAO report cites to Energy Information Administration data which indicates that refinery receipts of domestic crude by rail increased by 750% from 2008 to 2012, due to increases in production in North Dakota, Texas and other states which have exceeded the capacity of existing pipelines to move oil from production areas to refineries (reliance on truck has increased by 90% and barge by 200%).

While noting that rail incidents have increased significantly since 2008, GAO did not make any rail-specific safety recommendations because it found that DOT is addressing those risks through recent emergency orders and proposed rulemakings (regarding tank cars and spill response).  In contrast, GAO found that DOT has not fully addressed the safety risks from expansion of federally unregulated gathering pipelines.  The report notes that while DOT has acknowledged the growing potential risk associated with these pipelines, it has not proposed regulatory changes.  Historically, gathering pipelines were characterized by small diameter pipelines, operated a lower pressures, through rural areas, but some newly constructed gathering pipelines closely resemble transmission pipelines in that they have larger diameters, operate at higher pressures, and may be located in or near populated areas.  With these changes, GAO cites an increased safety risk to the public as well as concerns about the preparedness of emergency responders to address a major incident on unregulated gathering pipelines.

The report concludes with GAO’s recommendation to DOT and PHMSA to proceed with a rulemaking to address the risks of large-diameter, higher pressure gathering pipelines, including subjecting them to emergency response planning requirements.  In response, DOT generally agreed with GAO and confirmed that it is developing rulemakings to revise pipeline safety regulations with respect to gathering lines.  Specifically, PHMSA indicated that it has drafted proposed regulations for both gas and hazardous liquid gathering pipelines, and that the gas rule is being reviewed internally and the oil rule is being reviewed by the Office of Management and Budget.  Further, the Agency indicated that it has studied existing regulations to identify where gathering pipelines are regulated and where gaps remain.  This report, required by Congress in the Pipeline Safety Act 2011 reauthorization to be submitted by January 2014, has not yet been published.

In light of the above, it remains to be seen how far PHMSA will extend its regulations to currently unregulated oil and gas gathering pipelines.  In the absence of regulation, some states have been active in this area, passing laws to regulate rural gathering lines.  At the very least, we expect that federal regulation of rural gathering lines will be a topic in next year’s Pipeline Safety Act reauthorization proceedings.