Line of Sight: Pipeline Law Alerts and Analysis

On June 26, 2015 PHMSA issued a Notice of Proposed Rulemaking, which includes increased regulation in several key pipeline safety areas. The notice includes significant changes to the Operator Qualification rule, new required Control Room training, faster accident reporting, new renewal requirements for Special Permit holders, and new reporting on flow reversal and product changes. The NPRM includes new over-pressure protection inspection requirements for Transmission pipelines delivering to farm taps. In addition, the notice proposes PHMSA’s cost recovery fee structure for major project design review.

Key changes advanced include:

Proposed Changes Impacting Special Permits

PHMSA is proposing to add a renewal procedure to the pipeline safety regulations for those Special Permits that have been issued with expiration dates. This procedure will offer PHMSA another bite at the apple to potentially pull a special permit or require additional safety measures deemed to maintain safety and the environment. This proposed change would add an element of uncertainty to special permits and potentially additional significant costs to operators.

Proposed Requirements to inspect Farm Taps

PHMSA is proposing to amend Part 192, Subpart M – Maintenance by adding a new section that prescribes inspection activities under the existing States and Federal pipeline safety inspection programs for pressure regulators and overpressurization protection equipment on service lines that originate from transmission, gathering, or production pipelines. Currently, Federal pipeline safety requirements do not include overpressurization protection for farm taps. This new requirement would include inspection of farm-tap pressure regulating/limiting device, relief device, and automatic shutoff device every 3-years to make sure these safety equipment are in good working conditions.

While adding new requirements for transmission pipelines, PHMSA proposes to exclude farm taps from the requirements of the Distribution Integrity Management Program (DIMP).

Proposed Changes to Significantly Expand Operator Qualification (OQ)

PHMSA is proposing to expand the existing OQ rule scope to cover new construction and other currently uncovered tasks by redefining a “covered task.”  PHMSA is proposing to eliminate the 4 part test for determining a covered task and proposed to define a covered task as any maintenance, construction or emergency response task the operator identifies as affecting the safety or integrity of the pipeline facility. Other proposed changes to OQ include:

• a new requirement for evaluators of individuals performing covered tasks, including training requirements for new construction tasks as the current OQ requirements do not include new construction tasks;
• a “Program Effectiveness” requirement at §§ 192.807 and 195.507 to ensure that operators complete a review of the effectiveness of their OQ program;
• additional record requirements in §§ 192.809 and 195.509 that are normally reviewed during the inspection of OQ programs and are necessary to provide a thorough overview of an OQ program. The additional records would include records that document evaluators’ performance and program effectiveness;
• a new paragraph (b)(5) to §§ 192.631 and 195.446 to require each operator to define the roles and responsibilities and qualifications of others who have the authority to direct or supersede the specific technical actions of controllers;
• clarification of requirements addressing management of change and the communication of those changes; and
• adding gathering lines to the OQ rule through modification of §§ 192.9 and 195.11 to require operators to establish and administer an OQ program covering personnel who perform work on Type A gas gathering lines in Class 2 locations, regulated Type B onshore gas gathering lines and regulated hazardous liquids gathering lines in rural locations.

Proposed Additional Notification Requirements

The NPRM proposes a 60 day advance notice to PHMSA of the reversal of flow of product or change in product in a mainline pipeline. This notification is not required for pipeline systems already designed for bi-directional flow. The proposed rule would require operators to notify PHMSA electronically no later than 60 days before there is a reversal of the flow of product through a pipeline and also when there is a change in the product flowing through a pipeline.  In addition, a modification is proposed to  reflect the 60-day notification to PHMSA when over 10 miles of pipeline is replaced.

 Proposed Changes to Integrity Management: Pipeline Assessment Tools

PHMSA proposes to incorporate by reference the following consensus standards into 49 CFR Part 195: API STD 1163, “In-Line Inspection Systems Qualification Standard” (August 2005); NACE Standard Practice SP0102-2010 “Inline Inspection of Pipelines” NACE SP0204-2008 “Stress Corrosion Cracking Direct Assessment;” and ANSI/ASNT ILI-PQ-2010, “In-line Inspection Personnel Qualification and Certification” (2010). Also, PHMSA proposes to allow pipeline operators to conduct assessments using tethered or remote control tools not explicitly discussed in NACE SP0102-2010, provided the operators comply with applicable sections of NACE SP0102-2010.

While this proposed rulemaking action addresses only Part 195, PHMSA is considering a similar proposed requirement in 49 CFR Part 192 for gas pipelines.

 Control Room Team Training Requirement

PHMSA is proposing explicit control room team training requirement for all individuals who would be reasonably expected to interface with controllers during normal, abnormal or emergency situations in §§ 192.631(h) and 195.446(h) to include supervisors or others intervening in control room operations.

 Accident and Incident Notification

PHMSA proposes to faster reporting; requiring operators to provide telephonic or electronic notification of an accident or incident at the “earliest practicable moment,” including the amount of product loss, following the confirmed discovery of an accident or incident, but not later than one hour following the time of such confirmed discovery. Further, PHMSA is proposing to require operators to revise or confirm that initial notification within 48 hours of confirmed discovery of the accident or incident.

 PHMSA Cost Recovery

PHMSA proses a prescribed fee structure and assessment methodology for recovering costs associated with design reviews of new gas and hazardous liquid pipelines with either overall design and construction costs totaling at least $2,500,000,000 or that contain new and novel technologies.

PHMSA has developed a sample master cost recovery agreement that would be used between PHMSA and the applicant for a project proposal meeting the criteria of proposed 49 CFR Part 190, Subpart D requirements. The sample master cost recovery agreement will be posted on PHMSA’s website and in Docket No. PHMSA- 2013-0163. A master cost recovery agreement would include at a minimum:

(1) Itemized list of direct costs to be recovered by PHMSA;

(2) Scope of work for conducting the facility design safety review and an estimated total cost;

(3) Description of the method of periodic billing, payment, and auditing of cost recovery fees;

(4) Minimum account balance which the applicant must maintain with PHMSA at all times;

(5) Provisions for reconciling differences between total amount billed and the final cost of the design review, including provisions for returning any excess payments to the applicant at the conclusion of the project;

(6) A principal point of contact for both PHMSA and the applicant;

(7) Provisions for terminating the agreement; and

(8) A project reimbursement cost schedule based upon the project timing and scope.

Taking Discretion out of Drug and Alcohol Testing 

PHMSA proposes to require drug testing of employees after an accident and allowing exemption from drug testing only when there is sufficient information that establishes the employee(s) had no role in the accident. The change would require operators to document specific reasons justifying when testing was not administered and to keep such documentation for at least three years.

 In-Service Welding

Currently, PHMSA does not allow in service welding, but this proposal would allow the operators to follow Appendix B of API 1104 for in service welding. Therefore, PHMSA proposes to revise 49 CFR 192.225, 192.227, 195.214, and 195.222 to add reference to API 1104, Appendix B.

The full 110 page text outlining the proposed changes to 49 CFR Parts 190, 191, 192, 195, and 199 can be found here on PHMSA’s website.  Comments are due 60 days from the date of publication in the Federal Register.