PIPES Act of 2016 Enacted, New Regulation Coming for Natural Gas Storage

June 24, 2016 § Leave a comment

The Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016, or PIPES Act, reauthorizes the Pipeline and Hazardous Materials Safety Administration’s (PHMSA) oil and gas pipeline programs through 2019.  Like every version, every four years, the reauthorization includes new mandates for the agency.

 

The 2016 reauthorization requires that PHMSA develop national regulations for the construction and operation of underground natural gas storage facilities. That provision is in response to the Aliso Canyon gas leak in southern California.  For those interested in a preview of what is to come for storage, PHMSA has an upcoming workshop on July 14, 2016 that is certain to give us a roadmap.  See: PHMSA WORKSHOP DETAILS

 

Major Changes Proposed for Hazardous Liquids Pipelines Integrity Management

October 14, 2015 § Leave a comment

The Pipeline and Hazardous Materials Safety Administration (PHMSA) has proposed expansion of the current Integrity Management rules to include previously unregulated pipelines.  As forecasted here, gathering lines are among the expanded reach.

PHMSA’s Notice of Proposed Rulemaking (NPRM) is one of PHMSA’s most significant rulemakings to date, and if finalized, will result in a huge resource burden to the industry; unwelcome news during this challenging economic environment for the industry.

Some of the more significant new proposed requirements would change 49 CFR 195 to include the following:

  • Extending certain Integrity Management assessment and repair requirements to all pipelines, rather than those in high consequence areas (HCAs). PHMSA proposes to require pipeline segments not currently subject to the Integrity Management  regulations to be assessed by in-line inspections (ILI) at least once every 10 years, regardless of the proximity to high consequence areas (HCAs).
  • Limiting assessment methods other than ILI on non-HCA pipelines with notice including a technical demonstration that the pipeline is not capable of accommodating an ILI tool.
  • Changing the applicability of pipeline repair criteria to expand the list of conditions that require immediate remediation and to consolidate the timeframes for remediating all other conditions, and to apply these repair criteria to pipelines that are not subject to Integrity Management requirements, with an adjusted schedule for performing non-immediate repairs.
  • Modifying current Integrity Management repair criteria to encompass new conditions to be treated as “immediate repair conditions,” including bottom-side dents with stress risers; a calculation of remaining strength that shows a predicted burst pressure less than 1.1 times maximum operating pressure; any indication of significant stress corrosion cracking; and any indication of selective seam weld corrosion.
  • Eliminating current 60-day and 180-day repair categories, and would establish a new, consolidated 270-day repair category for ‘non-immediate’ repairs.
  • PHMSA proposes to specify that the immediate repair criteria in Part 195.452(h) are applicable to non-Integrity Management repairs and to establish an 18-month repair category.
  • Amending Part 195 to include a general requirement for performing all other repairs within a reasonable time.
  • Requiring any pipeline that could affect a HCA to be upgraded in order to accommodate ILI tools within 20 years, unless the basic construction of the pipeline would not accommodate the passage of such devices. Under current regulations, new pipelines and each line section of a pipeline where the line pipe, valve, fitting, or other line component is replaced must be designed and constructed to accommodate the passage of ILI devices, with certain exceptions.
  • Expanding the use of leak detection systems. PHMSA proposes to require all new hazardous liquid pipelines (not just those that could impact a HCA) to be designed to include leak detection systems and to evaluate the kind of system required to adequately protect the public, property and the environment.
  • Requiring Operators of all new liquid pipelines to evaluate and modify, as necessary, the capability of their leak detection systems to protect the public, property, and the environment.
  • Extending reporting requirements to certain unregulated lines, including all liquid gathering lines to require operators of all liquid gravity and gathering lines to submit annual, safety-related condition, and incident reports.
  • Requiring operators to inspect pipeline facilities potentially affected by an extreme weather event such as a hurricane or flood, an earthquake, a natural disaster, or other similar event within 72 hours after the cessation of the event, to ensure that no conditions exist that could adversely affect the pipeline and take appropriate remedial actions, which may include pressure reductions or shutdown in certain cases;
  • Requiring that operators of a new pipeline to develop a written Integrity Management program before the pipeline begins operation rather than one year after commissioning as current regulations require;
  • Specifying certain pipeline attributes that must be included in the information analysis required under the Integrity Management rule and requiring that operators identify any spatial relationship among anomalous information;
  • Requiring that operators verify the identification of segments subject to Integrity Management requirements annually; and
  • Clarifying that IM requirements apply to components of pipeline systems beyond line pipe, such as pump stations and breakout tanks.

Comments are due by January 8, 2016, and industry push-back is expected.

PHMSA Notice of Proposed Rulemaking: Expanding Use of Excess Flow Valves

July 11, 2015 § Leave a comment

PHMSA issued a Notice of Proposed Rulemaking (NPRM) to expand the use of Excess Flow Valves (EFVs), which are safety devices installed on natural gas pipelines to reduce the risk of accidents.  EFVs are currently required for new or replaced gas service lines servicing single-family residences (SFR) as defined in §192.383(a). PHMSA is proposing to make changes to Part 192 to expand this requirement to include new or replaced branched service lines servicing SFRs, multi-family residences, and small commercial entities consuming gas volumes not exceeding 1,000 Standard Cubic Feet per Hour (SCFH). PHMSA is also proposing to require the use of manual service line shut-off valve (e.g., curb valves) for new or replaced service lines with meter capacities exceeding 1,000 SCFH. Finally, PHMSA is proposing that operators notify customers of their right to request installation of an EFV on service lines that are not being newly installed or replaced. PHMSA is proposing to delegate the question of who bears the cost of installing EFVs to service lines that are not being newly installed or replaced to the operator, customer, and the appropriate State regulatory agency. The notice was transmitted to the Federal Register, which publishes the official NPRM.  Comments to the proposed rules are due 60 days after the NPRM is published in the federal register.

See more on PHMSA website here.

New Pipeline Safety Act Passed in Canada, Expect New Broad Regulations from the NEB

June 30, 2015 § Leave a comment

On June 18, 2015, the new Federal Pipeline Safety Act (Bill C-46) received Royal Assent. The Pipeline Safety Act includes amendments to the National Energy Board Act and the Canada Oil and Gas Operations Act.The amendments are effective June 18, 2016.

Key amendments include codification of the “polluter pays” principle, which will make any party whose fault or negligence causes an unintended or uncontrolled release of oil or gas responsible for the resulting costs, with no limit or ceiling on liability. The costs that can be recovered include actual damages from the release, as well as the costs of a Government, Aboriginal governing body or other party that takes action in response to the release.

The amendments to the NEB Act will also impose liability on a pipeline operators and constructors for a release, even where no fault or negligence is shown. In the case of a pipeline with the capacity to transport at least 250,000 barrels of oil per day, the limit of this strict liability is $1 billion. For other pipelines, the limit  will be set through new regulations. The statute of limitations to initiate these claims is three years after damages occur but no later than  six years after the date of the release.  Liability for these claims is joint and several.  Accordingly, a plaintiff may recover all the damages from any of the defendants regardless of their individual share of the liability. Companies that construct and operate pipelines will be required to maintain financial resources necessary to pay the amount of their strict liability exposure. The NEB may consider the company’s financial statements, letters of credit and insurance in determining whether this requirement is met. Pipeline companies may be allowed to participate in a “pooled fund” to cover their exposure. Stay tuned for the details to come through new NEB regulations.

The Pipeline Safety Act also clears the way for new rigorous regulation of pipeline abandonment.  Extensive new powers are established that allow NEB to oversee pipeline abandonment, including requiring financial assurance from owner/operators to cover the costs related to abandoned pipelines.  The Pipeline Safety Act establishes a new as-required tribunal to adjudicate claims for damages from pipeline releases and authorizes NEB to designate a third-party to oversee repairs and remediation if the operator fails to comply with NEB direction.

White House Unveils Regulatory Agenda Including Hot Items for Pipelines, Oil and Gas

May 27, 2014 § Leave a comment

On Friday, May 23, 2014, leading into the Memorial Holiday weekend, the White House published its semiannual regulatory agenda (Unified Agenda) describing its plans for approximately 60 departments, agencies, and commissions across the federal government. Marking the fourth consecutive time the Obama administration has decided to slide its regulatory agenda under the door on the eve of a major federal holiday, the approach is becoming predictable.

According to the published agenda the following items impacting natural gas and oil transportation by pipelines and oil by rail are slated for this summer:

  • A proposed rule by PHMSA to require excess flow valves on natural gas pipelines running through buildings beside single-family homes is slated for August 2014. The excess flow valve issue has been a focus of NTSB and Congress since the 2010 San Bruno explosion.
  • PHMSA is scheduled to release a broad reassessment of hazardous liquid pipeline safety regulation, including rules regarding leak detection in July 2014. This was called for in the Pipeline Safety Act reauthorization in 2011.
  • PHMSA plans to formally propose new crude-by-rail safety standards in July 2014. It is no surprise that new rules for tank cars are coming; how strict the standards advanced by the administration is yet to be revealed. Look for more information here when the rulemaking process begins.

A complete list from the Unified Agenda for the Department of Transportation can be found here:

Hearing on the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011

May 25, 2014 § Leave a comment

 

The Subcommittee on Railroads, Pipelines, and Hazardous Materials held a hearing on May 20, 2014 to review the 2011 Act.  The hearing was opened with remarks by Chairman Jeff Denham (R-CA), who stressed the importance of a risk-based approach to pipeline safety driven by private investment.  We believe in a risk-based, data-driven approach to pipeline safety that focuses private investment in pipeline safety on those areas of higher risk.  As PHMSA develops rules to implement the mandates contained in the 2011 act, it is critically important that we must provide regulatory certainly necessary for pipeline owners and operators to plan infrastructure investments, and do so with input from the safety community and industry.” 

OIG Report Critical of PHMSA Oversight Signals Change

May 7, 2014 § Leave a comment

The Office of Inspector General (OIG) recently issued an Audit Report criticizing PHMSA’s oversight of state pipeline safety programs and calling for change.

In the aftermath of the 2010 San Bruno incident, the National Transportation Safety Board called for an audit of PHMSA’s policies, procedures and oversight activities applicable to states certified under PHMSA’s Natural Gas Program.

The Report found documentation of inspection intervals lacking, an absence of trending analyses of operator’s annual reports and no defensible formula for state inspector staffing or training.

OIG made recommendations in 7 areas including:

  1. Revision and periodic validation inspector staffing formulas.
  2. Improvement of State Program Guidelines minimum training requirements, tracking of distribution of revised inspection forms, and standards for inspection intervals.
  3. Review of the adequacy of inspection procedures as part of the annual program evaluation.
  4. New PHMSA guidance drafted to ensure states employ risk analysis methods for scheduling inspections.
  5. Procedures documented for conducting triennial grant reviews.
  6. Improvements in training of PHMSA evaluators to effectively determine whether states have complied with all program evaluation requirements, issue notices of non-compliance, and ensure corrective action is taken.
  7. Audit states’ use of suspension funds.

Intrastate pipeline operators should expect heightened scrutiny, increased inspections and stricter interpretation of regulations in light of this report.

Where Am I?

You are currently browsing the PHMSA category at Line of Sight: Pipeline Law Alerts and Analysis.

%d bloggers like this: