Legal Updates

Department of Transportation Proposes Rules Expanding Safety Regulations for Gas Gathering and Transmission Lines

The recent shale boom has greatly increased the amount of natural gas produced and transported across the country’s network of pipelines in recent years. Unfortunately, the increase in production has resulted in several significant environmental and safety incidents, including a widely reported 2010 gas pipeline explosion in San Bruno, California, that killed 8 people and destroyed more than 100 homes. As a result, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”), an agency of the Department of Transportation (“DOT”) established in 2004 tasked with regulating gas gathering and transmission lines, issued a major and controversial Notice of Proposed Rulemaking (hereinafter, the “Proposal”) on March 17, 2016, which would revise the safety and monitoring standards pertaining to the regulation of onshore natural gas pipelines.

The stated intent of the Proposal is to clarify and broaden the scope of safety regulations, including the implementation of a standardized Integrity Management (“IM”) regulatory structure that governs risk-based integrity assessment, repair, testing, and validation of gas gathering and transmission lines. The 549-page Proposal addresses congressional mandates set forth in the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 and six National Transportation Safety Board recommendations, and contains major and minor changes that are intended to assert the PHMSA’s control over the design, implementation, operation, maintenance, and repair of the pipelines. The PHMSA believes that, in addition to improved public safety, the Proposal will significantly reduce methane and carbon dioxide gas emissions by lowering the number of environmental incidents that have occurred with the increases in production.

However, these benefits will come at a high cost to the industry. Experts expect compliance with these changes to cost the industry more than $40 million dollars a year due to high costs stemming from the age and lack of existing information on many miles of pipelines constructed prior to 1970 and the increased regulation of previously exempt pipelines, additional natural gas gathering pipelines, and pipelines located in moderately populated areas. Further, the Proposal expands the PHMSA definition of a “gathering line”, which will subject many previously unregulated lines to increased testing and monitoring. Industry analysts are also concerned with potential service disruptions related to the implementation of these new regulations.

Comments may be submitted within 60 days after the Proposal is published in the Federal Register as a Notice of Proposed Rulemaking. Due to the number of extensive changes to the current regulatory structure, the Proposal is likely to generate many comments from the industry, environmental interest groups, state regulatory authorities, and safety advocates. As a result, the Proposal could change greatly before it is finalized.

Some of the key components of the Proposal are:

• Increased IM requirements will be required for more categories of pipelines, including many that were previously exempt

• Additional reporting of incidents and unsafe conditions, pressure testing, and new design requirements for previously exempt facilities, including those built prior to 1970

• Removal of reporting exemptions for gas gathering lines

• Increased IM testing, inspection, monitoring and repair criteria for pipelines in densely-populated areas, defined as High Consequence Areas (“HCA”)

• Creation of Moderate Consequence Areas (“MCA”), which will be subsets of non-HCA pipeline locations, defined as an area containing five or more buildings “intended for human occupancy” and certain highway and street rights-of-way, and the required assessment, periodic assessment, and remediation of discovered defects of the same (Note that MCAs will be less heavily regulated than HCAs)

• Increased requirements for collecting, validating, and integrating pipeline data, including the monitoring and recording of the physical and operational characteristics of pipelines where records are currently not available

• Disaster inspections that will require the operator to inspect all pipelines that may have been adversely affected to detect any damages in the event of a natural disaster, such as a hurricane, flood, earthquake, landslide, or other adverse natural occurrence

The Proposal is available as written on the PMHSA website here, and has been provided to the Federal Register for publication. Please contact any of our attorneys at Welborn Sullivan Meck and Tooley, P.C. if you have questions or if you need assistance filing a comment on the Proposal upon its publication in the Federal Register.