The Pipeline and Hazardous Materials Safety Administration (PHMSA or the Agency) will publish a new Notice of Proposed Rulemaking (NPRM or Notice) in tomorrow’s Federal Register. A pre-publication version of the NPRM is available here. Comments on this proposed rulemaking will be due 60 days Federal Register publication, i.e. by September 8, 2015. This Notice responds to directives from Congress in Sections 9 and 13 of the most recent (2011) amendments to the Pipeline Safety Act (PSA), which became effective January 3, 2012. The PSA amendments gave the Agency one year to propose new rules (or by January of 2013). This NPRM is thus more than two years overdue, although both Congress and other entities have been pressing the Agency to address these and other issues more promptly and comprehensively.
The Notice covers a wide range of issues that will affect most oil and gas pipelines. Unfortunately, many of the proposals are not fully described, refer to future guidance or, in one instance, claim to be dependent on future actions by Congress. A summary of the more notable proposed changes or additions to the PHMSA rules are set forth below.
Accident Notification Time Limit
The proposed change to 49 C.F.R. Parts 191.5 and 195.52 would expressly require telephonic notice of incidents within 1 hour of “confirmed discovery.” The current rules state that telephonic or electronic notice should be made “at the earliest practicable moment following discovery.” The Agency issued guidance in 2002 stating that the “earliest practicable moment” means “usually one to two hours after discovering the incident” (Advisory Bulletin ADB-02-04) and that guidance has been applied in enforcement matters. The new term of “confirmed discovery” is proposed to be defined at Parts 191.3 and 195.2 as when “there is sufficient information to determine that a reportable release may have occurred” (emphasis added). The Agency makes this proposal in response to several incidents where notification was unduly withheld, but the proposed change in law retains the awkward position PHMSA has taken that a release should be reported even before it is known whether it meets reporting criteria [a prior post on this issue is available here]. The new rule would also require an updated notification within 48 hours of the event.
Cost Recovery for PHMSA Review of New Construction Project
The 2011 PSA amendments added a new provision requiring new pipeline projects costing $2.5 billion or more, or those employing new or novel technology, to provide notice to PHMSA for the purpose of allowing the Agency the opportunity to elect to conduct a “design review” and related inspections. The amendments also allowed PHMSA to recover its costs of doing design review from the pipeline operator, and Congress directed PHMSA to promulgate guidance governing cost recovery. The Agency did provide some preliminary guidance in January 2013 on the meaning of “new and novel technology,” and indicated it would provide more specifics in a proposed rulemaking. This NPRM unfortunately offers little specifics on how the Agency will conduct cost recovery, stating instead that it is simply a “first step.” Surprisingly, the Notice makes any more specific proposal contingent on Congress enacting legislation that would allow the Agency to use a fee structure that would make design review cost recovery an offset to discretionary spending. The Notice does state that it will (at some unspecified time) make a “sample cost recovery agreement” available on the Agency’s website. It also states that an operator would be billed quarterly for the Agency’s design review costs (which may include personnel costs, travel, lodging, subsistence, materials, etc.), but the operator must maintain a “minimum account balance at all times with PHMSA.”
Expansion of Operator Qualification (OQ) Requirements
The proposed rulemaking would expand existing OQ requirements in several areas, in response to criticism from NTSB and others. The new rule would require OQ procedures for new construction, additional operation and maintenance (O&M) tasks, certain control room operations and certain types of regulated gathering lines. In addition, the proposed rule would alter the method for determining what constitutes a “covered task” under the rule (at Parts 192.801 and 195.501). [Prior posts concerning other regulatory activity affecting OQ requirements are available here and here.]
Renewal of Special Permits
The NPRM addresses renewal of Special Permits, proposing to amend Part 190.341 to add procedures for renewing special permits issued with expiration dates. The Agency currently places expiration dates on some, but not all, Special Permits (“depending on the [unspecified] nature of the permit”). The Notice says only that the Agency proposes to include renewal dates for some such permits on a discretionary basis, “… to ensure the permit conditions are still valid for the pipeline and if changes and updates are required to maintain safety and the environment.” The Notice further states that an operator with an expiration date on its Special Permit must apply for renewal no later than 180 days prior to expiration, and that such application must include significant information about the pipeline operating history and status since the Permit was first issued. The rule would also provide that “[t]he existing special permit will remain in effect until PHMSA acts on the application for renewal by granting or denying the request.”
New Requirement for Written Notice in Advance of Reversal of Flow or Conversion of Service
The NPRM would also amend Parts 191 and 195 to require notice be made to PHMSA 60 days prior to any reversal of flow on a pipeline that will last longer than 30 days (unless the pipeline was designed for bi-directional flow). That provision would create new Parts 191.22(c)(iv) and 195.64(c)(1)( iii), under the OPID requirements. OPID rules would be further revised to require 60 day prior notice for any construction “or replacement” of 10 or more miles of pipeline (new Parts 191.22(c)(1)(ii) and 195.64(c)(1)(ii)). Finally, notice would have to be provided to PHMSA of a pipeline being converted for service or a change in commodity 60 days before such projects commenced, with modifications proposed to the regulations at Parts 192.14 and 195.5. [A prior post concerning flow reversals, product changes, and conversion to service is available here.]
New Guidance for Liquid IMP Assessment Tools (ILI and SCADA)
As proposed, the new rules would expressly acknowledge that Supervisory Control and Data Acquisition (SCADA) information can be an acceptable method to obtain information about ‘covered segments’ of liquid pipelines under the Integrity Management Program (IMP) rules (Part 195.452). In addition, the rule change specifies several technical standards regarding in line inspection (ILI) – a more common integrity inspection method – that are now acceptable to PHMSA. Those standards, including API, ANSI and NACE, have become more specific and formalized in recent years, and provide technical guidance on ILI tool selection and use.
There are other proposed additions or revisions to PHMSA regulations in this notice, including use of farm taps (individual service lines), additional obligations for and more specificity about drug and alcohol testing, treatment of confidential business information, in service welding standards, editorial amendments and other corrections, and the availability of technical standards incorporated into the rules by reference. Operators are encouraged to review the proposed rules closely and submit comments as appropriate, and/or coordinate concerns through trade groups.