A previously abandoned natural gas pipeline exploded in Seattle, Washington on March 9, 2016, injuring nine firefighters, destroyed two buildings, and damaged multiple nearby structures.  The entity responsible for regulating intrastate and interstate gas pipelines in the state, the Washington Utilities and Transportation Commission, recently released a report from its investigation of the incident, concluding that it was caused by (1) external damage to the above-ground portion of the service line; and (2) improper abandonment of the line, which had not been cut and capped when it was taken out of service in 2004.  The report highlights the importance of adhering to federal regulatory requirements concerning proper pipeline abandonment, which was also the subject of a recent PHMSA Advisory Bulletin issued in response to a Congressional directive in the 2016 PIPES Act.

The Commission report cited several violations of the federal pipeline safety regulations, including 49 C.F.R. Part 192.727, which prescribes certain requirements for the abandonment of gas pipelines, including disconnecting, purging and sealing the pipe from gas supply.  The operator faces a maximum penalty of $3.2 million for the alleged violations, and the report recommends that the operator be required to implement a compliance program under which it will “identify and mitigate any other improperly abandoned pipelines that may exist within the company’s system.”

Notably, among the violations cited was the operator’s alleged failure to adhere to ongoing regulatory requirements applicable to the “active” service lines, including atmospheric and external corrosion testing.  This underscores a point made in the recent PHMSA Advisory Bulletin, that the federal pipeline safety regulations consider pipelines to be either “active”—and therefore fully subject to all relevant regulatory requirements—or “abandoned.”  Notably, there is no recognized regulatory status for “idled” pipe, and although it is a commonly used term among industry, such pipe is typically considered “active” from a regulatory perspective unless it has been formally abandoned as set forth in the regulations.  Commission staff noted that the operator had last performed an atmospheric corrosion test for the line in 2004, despite the requirements to perform atmospheric corrosion tests every 3 years (49 C.F.R. Part 192.481) and external corrosion control monitoring (49 C.F.R. Part 192.465).  Because the operator (in this case the operator’s contractor) did not abandon the line in compliance with the regulations and the operator’s procedures, it remained operationally active and subject to these requirements.

The staff considered the alleged violations “very serious,” stating that the operator’s improper abandonment of the line and subsequent failure to maintain and monitor it were contributing causes of the incident.  As a result of this and other penalty considerations under the Commission’s enforcement policy, the staff recommended that the Commission impose the maximum penalty of $3.2 million, despite the facts that the improper abandonment was performed by a contractor and the operator’s procedures required disconnecting and sealing the pipeline from gas supply.  Operators should be prepared to demonstrate compliance with applicable pipeline abandonment regulations for their pipeline infrastructure.  This incident, as well as other recent incidents, have highlighted the various risks associated with abandoned pipelines.  As indicated in PHMSA’s advisory, the industry should anticipate future rulemakings that could require more affirmative notice obligations for all abandoned pipelines as well as purged but active or “idled” pipelines.