PHMSA recently indicated it is contemplating rescinding interstate agency agreements which would reduce state participation in oversight of interstate natural gas and hazardous liquid pipelines.  Under the Pipeline Safety Act, states may enter agreements with PHMSA allowing them to take on certain aspects of interstate pipeline transportation oversight, including incident investigations, new construction, and other inspection duties.  49 U.S.C. § 60106.  There are currently 8 states with such authority over interstate natural gas pipelines and 5 states with interstate authority over hazardous liquid lines pursuant to interstate agent agreements.

A report recently published by the Citizens Advisory Committee of the Washington State Utilities and Transportation Commission (WUTC), explains that PHMSA indicated in recent appropriations discussions that it may rescind these agreements and reassume inspection authority over interstate pipelines.  According to the WUTC report, elimination of the agreements would negatively impact the overall effectiveness and efficiency of the pipeline inspection program in Washington (which has interstate agent agreements in place for both interstate gas and liquid lines) and the other authorized states, pointing out that the benefits of state oversight include shorter incident response time; greater knowledge of facilities and their operational history; more thorough inspections; and better oversight of pipeline construction projects, among other things.  The report recommends that Washington oppose any effort by PHMSA to reduce the State’s role in interstate pipeline safety.

While PHMSA has not yet made any official announcements on the issue, nor formally rescinded any of the state agreements that are in place, the Agency indicated that it is contemplating increasing its authority over the interstate lines currently regulated by states under interstate agent agreements, as reflected in its revisions of the 2015 version of its Guidelines for State Programs.  Among the Agency’s revisions to the Guidelines are its statements that “if federal inspection resources increase, PHMSA may transition existing interstate agents to time-defined agreements allowing a transition period to plan for program changes” and that for new applications for interstate agent agreements, “it is current policy to enter into temporary interstate agreements for time defined projects as agreed upon by the State and OPS as opposed to long term formal agreements for new applicants.”  These revisions certainly contemplate a more limited role for states in future interstate agent arrangements.

Reducing state authority over interstate lines may signal an attempt by PHMSA to encourage states to direct their resources to regulation of intrastate pipelines, which all but two states (Alaska and Hawaii) regulate under annual certifications and agreements with the Agency.  According to the WUTC report, state pipeline inspectors make up around 75 percent of all pipeline inspectors nationally.  State pipeline safety inspectors are responsible for inspecting and enforcing pipeline safety regulations over 80 percent of intrastate transmission and distribution pipelines.  Operators should continue to monitor these and other potential changes in the federal-state oversight of pipeline safety, and encourage consistency in the interpretation and application of safety rules.