Energy Update - Williams & Jensen

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Jul 14, 2015 - Cost Recovery, Accident and Incident Notification, and Other Pipeline Safety Proposed Changes”. The ...
July 14, 2015

Energy Update Administration Proposes New Pipeline Safety Rules

Overview: On July 10, PHMSA published a Notice of Proposed Rulemaking (NPRM) titled “Operator Qualification, Cost Recovery, Accident and Incident Notification, and Other Pipeline Safety Proposed Changes”. The NPRM would: establish new requirements for certain pipeline employee qualifications; require that pipelines notify the National Response Center “as soon as practicable” following “confirmed discovery” of a covered incident; establish a process for recovering costs for safety review of new projects that cost more than $2.5 billion or employ new technologies; require notification to PHMSA of pipeline flow reversals and changes to the type of product transported; incorporate by reference industry standards on inline inspections and stress corrosion cracking direct assessment (SSCDA); and implement other changes to pipeline safety regulations. Comments are due on August 8, 2015. PHMSA is also developing additional pipeline safety rules. The agency is working on a liquid pipeline safety rule, based on the Advanced Notice of Proposed Rulemaking (ANPRM) on “Pipeline Safety: Safety of OnShore Hazardous Liquid Pipelines”. The issues addressed in this NPRM could include: the definition of high consequence areas; leak detection; repair criteria for pipelines in high-consequence and non-highconsequence areas; stress corrosion cracking; the ability of pipelines to accommodate inline inspection tools; and gathering lines. A parallel rule would address natural gas pipeline safety issues. On August 25, 2011, PHMSA issued an ANPRM on “Pipeline Safety: Safety of Gas Transmission Pipelines”. This rulemaking effort parallels the “Safety on On-Shore Liquid Hazardous Pipelines” pending NPRM, and is expected to cover a range of issues, including: integrity management requirements; expansion of high consequence areas; modification of repair criteria; new requirements for valve spacing and remote/automatic shut-off valves; underground gas storage; and regulation of gas gathering lines. Incident Notification: The incident notification requirements of the NPRM would implement Section 9 of the “Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011” (“2011 Act”, P.L. 112-90). The NPRM would require an operator to notify, by phone or electronically, the National Response Center “as soon as practicable following confirmed discovery” of an incident1 and no later than one hour following “confirmed discovery.” 1

49 CFR 191.3 defines “incident” as: “…any of the following events: (1) An event that involves a release of gas from a pipeline, or of liquefied natural gas, liquefied petroleum gas, refrigerant gas, or gas from an LNG facility, and that results in one or more of the following consequences: (i) A death, or personal injury necessitating in-patient hospitalization; (ii) Estimated property damage ____________________________________________ ©2015 Williams & Jensen, PLLC 701 8th Street, N.W. Suite 500 Washington, D.C. 20001 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com

“Confirmed discovery” would be defined as when “there is sufficient information to determine that a reportable event may have occurred even if an evaluation has not been completed.” PHMSA also proposes “to require operators to revise or confirm the initial notification within 48 hours of confirmed discovery of the accident or incident.” PHMSA published an advisory bulletin on January 30, 2013 to “encourage owners and operators of the gas and hazardous liquids pipeline systems and LNG facilities, as a practice, to report such accidents and incidents within one hour of confirmed discovery.” 2 Cost Recovery of Design Reviews: Section 13 of the 2011 Act authorizes PHMSA to recover costs incurred in regulatory review of new pipeline projects that would cost $2.5 billion or more. The NPRM would:  Require the project proponent to “notify PHMSA and provide the design specifications, construction plans and procedures, project schedule and related materials at least 120 days prior to the commencement of any of the following activities: construction route surveys, permitting activities, material purchasing and manufacturing, right of way acquisition, offsite facility fabrications, construction equipment move-in activities, onsite or offsite fabrications, personnel support facility construction, and any offsite or onsite facility construction.”  Provide that PHMSA will enter into a “Master Agreement” with the project proponent. The Master Agreement will provide for PHMSA’s recovery of costs associated with the project, and would include: an “[i]temized list of direct costs to be recovered by PHMSA”; the “[s]cope of work for conducting the facility design safety review and an estimated total cost;” a required “[m]inimum account balance which the applicant must maintain with PHMSA…”; and “[a] project reimbursement cost schedule based upon the project timing and scope.” Operator Qualifications: The NPRM would expand existing pipeline operator qualification requirements to include:  “[N]ew construction and previously excluded operations and maintenance tasks”;  “[O]perators of Type A gas gathering lines in Class 2 locations, Type B onshore gas gathering lines, and regulated rural hazardous liquid gathering lines…”;  Control room team training and exercises that include both controllers and other individuals who would reasonably be expected to interact with controllers (control room personnel) during normal, abnormal, or emergency situations”.

of $50,000 or more, including loss to the operator and others, or both, but excluding cost of gas lost; (iii) Unintentional estimated gas loss of three million cubic feet or more; (2) An event that results in an emergency shutdown of an LNG facility. Activation of an emergency shutdown system for reasons other than an actual emergency does not constitute an incident. (3) An event that is significant in the judgment of the operator, even though it did not meet the criteria of paragraphs (1) or (2) of this definition. 2 78 FR 6402. ____________________________________________ ©2014 Williams & Jensen, PLLC 701 8th Street, N.W. Suite 500 Washington, D.C. 20001 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com

The NPRM would also:  Redefine a “covered task” as “an activity identified by the operator that affects the safety or integrity of the pipeline facility.”  Specify that a “covered task includes, but is not limited to, the performance of any operations, maintenance, construction, or emergency response task.”  Require “each operator to define the roles and responsibilities and qualifications of others who have the authority to direct or supersede the technical actions of controllers.” Special Permit Renewal: The NPRM would establish a renewal procedure for special permits issued to pipeline operators. Farm Taps: PHMSA proposes to exempt “farm taps” from gas distribution integrity management requirements, but would establish a “new section that prescribes inspection programs under the existing State[] and Federal pipeline safety inspection programs for pressure regulators and overpressurization protection equipment on service lines that originate from transmission, gathering, or production pipelines.” Notification of Reversal of Flow or Change of Product: The NPRM would expand the requirements for pipeline operators to notify PHMSA regarding operational changes or other events. The new events that would trigger the notification requirement include:  Construction of 10 or more miles of new or replacement pipeline;  “Reversal of product flow direction when the reversal is expected to last more than 30 days” for pipelines not “already designed for bidirectional flow;” and  Change in product transported. PHMSA notes that “[e]xamples include, but may not be limited to, changing a transported product from liquid to gas, from crude oil to HVL [highly volatile liquids], and vice versa.” Pipeline Assessment Tools/Incorporation of Industry Standards: PHMSA is proposing to incorporate industry standards for in-line inspection (ILI) and Stress Corrosion Cracking Direct Assessment (SCCDA):  “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)”.

____________________________________________ ©2014 Williams & Jensen, PLLC 701 8th Street, N.W. Suite 500 Washington, D.C. 20001 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com

Post-Accident Drug and Alcohol Testing: PHMSA proposes to expand the existing coverage of testing requirements “by requiring drug testing of employees after an accident allowing exemption from drug testing only when there is sufficient information that establishes the employee(s) had no role in the accident.” Information Made Available to the Public and Request for Confidential Treatment: In the NPRM, PHMSA proposes to establish a process to allow information submitted to the agency to be designated as confidential. The confidential information would receive some protection from disclosure, but would still remain subject to FOIA requests. The party submitting the confidential information would have the opportunity to object to disclosure in response to a FOIA request. In Service Welding: The NPRM would update the regulations covering in service welding. Editorial Amendments: The NPRM also includes a series of minor editorial changes to correct errors in the existing pipeline safety regulations. By:

Frank Vlossak

____________________________________________ ©2014 Williams & Jensen, PLLC 701 8th Street, N.W. Suite 500 Washington, D.C. 20001 Telephone: (202) 659-8201 Fax: (202) 659-5249 www.williamsandjensen.com