March 2018, Vol. 245, No. 3

Legal Perspectives

PHMSA Eyes Progress in Pipeline Safety Rulemaking Proceedings

Having recently filled the two most important political appointments at the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA), the Trump administration appears ready to take further action on two rulemaking proceedings that could reshape the nation’s federal safety standards for hazardous liquid and natural gas pipelines.

Howard R. Elliott was recently sworn in as PHMSA’s administrator. Elliott brings more than four decades of experience in the freight rail industry to his new leadership position, including expertise in the areas of hazardous material safety and security.

He previously received the Association of American Railroads (AAR) Holden-Proefrock Award for lifetime achievement for hazardous materials safety, served on AAR’s Risk Management Working Committee and Security Committee, and is a member of the American Society of Industrial Security and the FBI-DHS Domestic Security Alliance Council. Administrator Elliot’s background and experience suggests that he is well-positioned to lead PHMSA, the federal agency responsible for ensuring the safe transportation of energy products by truck, rail, vessel or pipeline.

The same can be said of Elliot’s new deputy, Drue Pearce, who became PHMSA’s newly appointed deputy administrator. Pearce previously served as the federal coordinator for Alaskan Natural Gas Transportation Projects and as an official in the Department of Interior during the George W. Bush administration.

She also served as a member of PHMSA’s Technical Pipeline Safety Standards Committee, the federal advisory committee that reviews PHMSA’s proposed pipeline safety regulations, and as a member of the Alaska House of Representatives and Alaska State Senate. Pearce’s prior public service and familiarity with the pipeline industry leaves her well-prepared to assume a significant role at PHMSA, particularly on pipeline safety matters.

As the core of the agency’s new leadership team, Elliot and Pearce will play an important part in deciding the fate of two important pipeline safety rulemaking proceedings. The Obama administration came close to finalizing the first proceeding for hazardous liquid pipelines in the days before President Trump’s inauguration.

The second proceeding for gas transmission and gathering lines is in an earlier stage of development, but could have a far more dramatic long-term effect on the industry. Several new executive orders issued by Trump relating to regulatory reform and domestic energy resources will affect the final outcome in both of these proceedings.

What Did PHMSA Propose? 

In October 2015, PHMSA issued a notice of proposed rulemaking (NPRM) that offered significant changes to its hazardous liquid pipeline safety regulations.

The proposed changes included new reporting requirements for operators of gravity and unregulated rural gathering lines, new inspection requirements for pipelines affected by extreme weather, natural disasters, and other similar events.

Also addressed, new periodic assessment requirements for pipelines not covered by PHMSA’s integrity management (IM) program regulations, new leak detection requirements for non-IM pipelines, new pipeline repair criteria and a new mandate requiring operators to make pipelines in high-consequence areas (HCAs) capable of accommodating inline inspection tools within 20 years, unless the pipeline’s construction would not permit that accommodation.

Industry commenters expressed significant concerns with many of the proposed changes, including the American Petroleum Institute (API), which submitted an economic analysis indicating that the total annualized cost of the proposals would exceed $600 million (or more than 25 times the $22.4 million estimate that PHMSA provided in its preliminary regulatory impact analysis).

Shortly after Trump’s inauguration, the White House issued a memo stating that any final rules awaiting OFR publication should be withdrawn and returned to the originating agency for further review.

According to the Department of Transportation’s (DOT’s) latest significant rulemaking report, PHMSA expects to issue the Trump administration’s new version of final rule late in April 2018.

In April 2016, PHMSA issued an NPRM proposing extensive changes to the safety standards and reporting requirements for gas transmission and gathering lines.

To address certain mandates in the 2011 reauthorization of the Pipeline Safety Act and related National Transportation Safety Board safety recommendations, PHMSA proposed new requirements for verifying the maximum allowable operating pressure and documenting the materials in onshore steel gas transmission lines.

PHMSA also proposed new requirements for conducting integrity assessments of certain transmission lines in moderate consequence areas; new corrosion control, pipeline repair, and recordkeeping requirements; and changes to the IM requirements for gas transmission lines. In addition to the proposals for gas transmission lines, PHMSA proposed significant changes to the regulations for onshore gas gathering lines, primarily to address the growth of new pipeline infrastructure in the nation’s shale plays.

The proposed changes included new definitions for determining what qualifies as an onshore gas gathering line, new safety standards for regulated onshore gas gathering lines.

Industry expressed significant concerns with the proposals in the NPRM, which would dramatically alter PHMSA’s regulations for gas transmission and gathering lines. API also submitted an economic analysis showing that PHMSA made numerous errors in developing the preliminary regulatory impact analysis for the NPRM.

In January 2017, PHMSA held an initial meeting of the Gas Pipeline Advisory Committee (GPAC), the federal advisory committee that reviews its gas pipeline rulemaking proposals, to begin considering the NPRM’s proposals. PHMSA has held two subsequent GPAC meetings, in June 2017 and December 2017, since that time.

PHMSA has indicated that additional GPAC meetings will be held in 2018 to continue reviewing the NPRM. According to the DOT’s latest significant rulemaking report, PHMSA expects to issue a final rule in August 2018. That schedule assumes that PHMSA will present the final rule to the Secretary’s office for consideration in March 2018, which seems unlikely given the current pace of the GPAC’s review of the NPRM. P&GJ

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