Pipeline rules would have dramatic impact on the industry – pittsburgh business times

On March 17, 2016, the U. S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) released a long-awaited rulemaking proposal that could have a dramatic impact on the gas pipeline industry. More than four years in the making, the proposed rules would make significant changes to PHMSA’s pipeline safety standards by imposing new requirements for gas transmission and gathering lines. This ambitious proposal, issued in the waning days of the Obama Administration, seeks to address a number of issues raised by the Congress, other federal agencies, and the rapid development of energy infrastructure in the nation’s shale plays, particularly in the Marcellus and Utica regions.

What is PHMSA

PHMSA is the federal agency that administers the nation’s pipeline safety program. PHMSA’s primary responsibility is to establish minimum federal safety standards for gas and hazardous liquid pipelines. Most states, including Pennsylvania, participate in the federal pipeline safety program and receive grant funding from PHMSA to offset the cost of regulating intrastate gas pipelines. The Pennsylvania Public Utility Commission (PAPUC) has a certification to regulate the safety of intrastate gas pipelines in Pennsylvania, and has adopted PHMSA’s federal pipeline safety regulations.

What’s Being Proposed

PHMSA is proposing new requirements for verifying the materials used in constructing certain transmission lines. PHMSA is also proposing to require that the operators of these lines verify the maximum pressures of their systems through additional testing, pressure reductions, or pipeline replacements. Other key proposals would set more stringent standards for protecting pipelines from corrosion and managing the integrity of gas transmission lines located in high consequence areas, as well as new assessment and repair requirements for pipelines in moderate consequence areas that are not subject to PHMSA’s integrity management rules. PHMSA’s proposal would also significantly expand the regulations for gas gathering lines. PHMSA’s safety standards and reporting requirements do not currently apply to any gas gathering lines in rural locations.

The proposed rule would narrow those exemptions by applying some of PHMSA’s safety standards to larger diameter, higher pressure gathering lines in rural areas and extending the federal reporting requirements to all gas gathering lines. PHMSA estimates that approximately 61,000 miles of rural gas gathering lines across the U. S. would become regulated under its proposal, including many lines in Pennsylvania.

What’s Next?

PHMSA will publish its rulemaking proposal in the Federal Register in the next few weeks and provide an opportunity for public comment. After reviewing comments and consulting with its technical advisory committee, PHMSA will issue a final rule containing legally-binding requirements that will likely include phased-in compliance deadlines.

While the final outcome of the rulemaking process will not be known for at least several more months, PHMSA’s new regulations are likely to influence the natural gas pipeline industry for years to come. If the proposed rules are adopted, operators of many historically unregulated gathering line systems will be subject to PHMSA oversight for the first time. In addition, many gas transmission line operators would be required to comply with rigorous documentation and testing protocols, a task that may be difficult for operators of some pipeline systems.

The scope of PAPUC’s gas pipeline safety program would also expand, particularly if PHMSA follows through on its proposal to issue new regulations for gas gathering lines.

PAPUC would be directly responsible for regulating these lines, which have been the focus of increased scrutiny at the state and local level.

Now is the time for pipeline operators to review the implications of PHMSA’s proposal and consider whether to file comments.

Key questions or comments are likely to include whether the proposal is reasonable, based on actual risks, and supported by the facts in the record. Pipeline Safety and Hazardous Materials Attorneys James B. Curry and Keith J. Coyle are shareholders of the law firm Babst Calland and are based in the firm’s Washington, D. C. office.