Pipelines update: PHMSA regulations and the PIPES Act of 2020

With the reauthorization of the PIPES Act (i.e., Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020), the oil and gas industry is in line for changes that will have an effect on nearly every pipeline operator. In addition to an increase in funding for the Pipeline and Hazardous Materials Safety Administration (PHMSA), the agency was given several mandates to issue final rules throughout the industry.

Many of the final rules have been a long time in coming and are the result of PHMSA’s slow pace in responding to industry incidents and concerns. Now that the agency has deadlines, however, operators will be seeing changes in several sections of the 49 Code of Federal Regulations (CFR) Part 192 (“Transportation of natural and other gas by pipeline: Minimum federal safety standards”) and 49 CFR Part 195 (“Transportation of hazardous liquids by pipeline”) (FIG. 1).

FIG. 1. The PIPES Act of 2020 will bring changes to several sections of 49 CFR 192 and 49 CFR 195 that will impact pipeline operators.

In addition to a new disclosure consideration for pipelines facing violation penalties, the affected areas of operation are the new classification of idled pipelines, large-scale LNG facilities, onshore gas gathering lines and updated leak detection standards for gas pipelines, each of which are discussed with relation to events bringing about the mandate and how operators likely will be affected by the final rules.

PHMSA has some work to do, and operators will be feeling the effects in the coming years. In late 2020, former President Trump signed into law the reauthorization of the PIPES Act.¹ The original legislation, the PIPES Act of 2016, recently expired,² but the new version sets goals and objectives to further the government’s efforts to build a safer industry through increased administration and rulemaking.

One of the most impactful benefits of the act is the increase in general funding for PHMSA safety programs through 2023, including an increase in personnel and federal grant programs.³ However, many of the mandates will have a direct impact on operator compliance, and most regulation updates are slated to take place within the next 3 yr. With so much change on the horizon, operators will benefit from looking ahead to know what regulations might impact their operations.

Disclosure consideration. Among the changes brought about by the PIPES Act of 2020 is the addition of an operator’s self-disclosure of an issue as part of violation considerations.⁴ This amendment to considerations for civil penalties⁵ is a benefit for operators. Moving forward, any civil penalties for violations relating to pipeline facility compliance regulations⁶ and certain one-call notification regulations⁷ will be calculated with the consideration of an operator’s proactive attempts to correct known violations or self-disclosure of such violations before PHMSA discovers the violation on its own.

This amendment appears to be a form of reward to operators that not only take measures to correct compliance issues on their own but also to those that are honest about such issues with PHMSA via reporting. Moreover, the implication is that a lack of such behavior on the part of an operator facing civil penalties for violations is likely to be considered as well, meaning operators that wait until audits come around and cannot prove unawareness of violations are more likely to receive harsher penalties.

Final rule issuances. The PIPES Act of 2020 also requires PHMSA to issue several final rules within certain timeframes to increase safety standards across the oil and gas industry. While the list is extensive, many operators are likely to feel the effects of specific changes. In most cases, the mandates are a response to ongoing industry concern.

Idle pipelines. In 2019, the American Petroleum Institute (API), in conjunction with the Association of Oil Pipe Lines (AOPL), submitted a request for clarification of how certain amendments applied to idle pipelines, referring specifically to 49 CFR Part 195 in the final rule. However, PHMSA replied that such clarification was unnecessary because Pipeline Safety Regulations (PSR) did not consider “idle” an acceptable status for a pipeline, only “in-service/active” or “abandoned.”

PHMSA went on to exemplify how “idle” pipelines could continue to pose safety risks and must be addressed as “active” pipelines.⁸ The PIPES Act of 2020, however, not only defines “idle” pipelines but also addresses rulemaking regarding such assets. Specifically, pipelines now qualify as “idle” if they have ceased normal operations and will not resume service for at least 180 d, have been isolated from all product sources, and have either been purged or hold such a small volume of gas that no potential hazard exists.⁹

With the recognition of this classification, PHMSA is now required to provide regulation for such assets. The act states that PHMSA’s final rule for how PSR apply to idled pipelines must be issued within 2 yr.¹⁰ For many operators, this will be a welcome addition to regulations, as they will not only be able to classify qualifying assets as “idle” instead of maintaining active pipeline compliance on such lines, but also will have more guidance on safety practices for idle pipelines.

Large-scale LNG facilities. In late 2020, the Government Accountability Office (GAO), which audits agencies on behalf of the U.S. Congress, released a report that examined federal regulations applicable to LNG facilities.¹¹ The report’s chief finding was that LNG export facility regulations belonging to multiple agencies, including PHMSA, were out of date and lacking “current technical standards.”¹²

In the case of PHMSA, relevant regulations were found to cite fire safety standards dating to 2001, despite the government recommendation that regulations that include technical standards be reviewed and updated accordingly every 3 yr–5 yr.¹³ Specifically, the report identified that eight of nine standards relating to Part 193 and 45 of 55 regulations applying to natural gas facilities were outdated.¹⁴

Many critics say relevant PHMSA regulation updates are long overdue given a shift in the industry toward large-scale export LNG facilities.¹⁵ On the heels of these findings—and in addition to an executive order that required PHMSA to update 49 CFR Part 193, which had received little attention since the 1980s¹⁶—it is no surprise that the PIPES Act now calls for PHMSA to update federal safety standards via a final rule for operating and maintaining large-scale LNG facilities, except for peakshaving facilities. This rule must be issued within 3 yr.

Operators can likely expect more specific regulations with stricter guidelines, as well as updated information pertaining to specific processes and procedures.

Onshore gas gathering lines. As recently as October 2019, PHMSA updated pipeline safety regulations for gas transmission pipelines, citing incidents that occurred over the past decade that resulted in several fatalities.¹⁷ Meanwhile, API issued two standards in 2020 pertaining to the definition of gas gathering lines for regulation application and the operational practices for gas gathering pipelines after recognizing the need for more robust practices for gas gathering lines.¹⁸

Not as much movement as expected has been seen on PHMSA’s part to update regulations pertaining to gas gathering pipelines, leading the PIPES Act to direct PHMSA to update minimum safety standards for onshore gas gathering pipelines as a final rule within 90 d. Operators should expect a revised set of minimum standards;¹⁹ however, given the deadline, it is unlikely that PHMSA will be requiring radical changes, translating to a smoother updating process for operators.

Leak detection standards. Since 2003, PHMSA has spent an estimated $15.6 MM on leak detection research, with 87% applying to gas pipelines. Of this $13.57-MM portion, 75% applied to transmission lines, 68% applied to distribution lines, 59% applied to gathering lines and 3% applied to underground storage. Of that research, more than 80% focused on specific technologies.²⁰

Moreover, as part of the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011, PHMSA was required to provide a report of leak detection systems (LDS) utilized by hazardous liquid pipeline facilities and transportation-related flowlines, along with their limitations and practicability.²¹ In the same year, in response to a fatal gas transmission pipeline rupture and subsequent explosion, the National Transportation Safety Board (NTSB) issued a safety recommendation to PHMSA that operators of natural gas transmission and distribution lines be required to utilize LDS to assist in recognizing and locating leaks;²² however, as of March 2020, PHMSA had not yet accomplished the provision of “a more comprehensive and effective leak detection system for the pipeline industry as a whole.”²³

Despite research and encouragement by other agencies, 49 CFR Part 192, which addresses gas transmission, distribution and regulated onshore gathering pipelines, makes mention of LDS only twice. In §192.935, which addresses operators’ preventative and mitigative measures, the regulation mentions LDS as an additional measure,²⁴ while §192.620 states that LDS are an acceptable method of control for high-consequence areas for which response time to mainline valves exceeds 1 hour after an event is identified in a control room.²⁵

Compared to the LDS sections specifically outlined in Part 195 for hazardous liquid pipelines, the regulations for gas pipelines are minimal. In an effort to make such regulations more robust and to reduce methane emissions, the PIPES Act of 2020 requires PHMSA to release a final rule within 1 yr that outlines more comprehensive LDS and repair programs for gas operators. To meet this goal, PHMSA must provide minimum performance standards with consideration for available technologies.²⁶ Operators should be prepared for updated regulation that is more specific as to acceptable leak detection methods, with considerations of the type and location of pipelines.

Additionally, while the PIPES Act refers to “advanced leak detection technologies,” this includes commercially available technologies for continuous monitoring, as well as approved periodic survey methods. Therefore, while it is likely that CFR Part 192 will be brought closer to the level of specificity provided in CFR Part 195 for hazardous liquid pipelines, with potential regulations for computational pipeline monitoring, operators are more likely to find that their existing methods must be sharpened rather than replaced altogether.

While the reauthorization of the PIPES Act will certainly bring about change in the industry, it is important for operators to focus on how they can prepare for the new requirements, as well as the reasoning behind the updates. PHMSA regulations are not written and released overnight, and operators can be attentive to the development of new regulations and anticipate what resources will be needed to stay in compliance. However the regulations of the future affect them, operators must recognize that, as technology and operations evolve, so will the regulations that aim to keep our industry safe. GP

LITERATURE CITED

1. DiChristopher, T., “Trump signs long-delayed pipeline safety legislation into law,” S&P Global, December 28, 2020, Online: https://www.spglobal.com/platts/en/market-insights/latest-news/oil/122820-trump-signs-long-delayed-pipeline-safety-legislation-into-law
2. Baker, A., “Fossil, renewable energy advocates alike applaud passing of $2.3T spending bill,” Natural Gas Intelligence, December 22, 2020, Online: https://www.naturalgasintel.com/fossil-renewable-energy-advocates-alike-applaud-passing-of-2-3t-spending-bill/
3. Babst & Calland, “President Trump signs law reauthorizing federal pipeline safety program,” Pipeline Safety Alert, Vol. 6, Iss. 1, January 4, 2021, Online: http://www.babstcalland.com/wp-content/uploads/President-Trump-Signs-Law-Reauthorizing-Federal-Pipeline-Safety-Program.pdf
4. U.S. Congress, “Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020,” 49 U.S.C. Subtitle VIII, Chapter 601, 2021, Online: https://www.govinfo.gov/bulkdata/BILLS/116/2/s/BILLS-116s2299es.xml#toc-idf7378589-a33f-4ca9-8e0b-28cef66a8ebd
5. U.S. Department of Transportation, “Civil penalties,” 49 U.S. Code §60122, 1995, Online: https://www.govinfo.gov/app/details/USCODE-1994-title49/USCODE-1994-title49-subtitleVIII-chap601-sec60122
6. U.S. Department of Transportation, “Compliance and waivers,” 49 U.S. Code §60118, 2012, Online: https://www.govinfo.gov/app/details/USCODE-2011-title49/USCODE-2011-title49-subtitleVIII-chap601-sec60118
7. U.S. Department of Transportation, “One-call notification systems,” 49 U.S. Code §60114, 2012, Online: https://www.govinfo.gov/app/details/USCODE-2011-title49/USCODE-2011-title49-subtitleVIII-chap601-sec60114
8. U.S. Federal Register, “Pipeline safety: Safety of hazardous liquid pipelines,” 84 Fed. Reg. 52260, October 1, 2019, To be codified at 49 CFR Part 195.
9. U.S. Congress, “Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020,” 49 U.S.C. Subtitle VIII, Chapter 601, 2021, Online: https://www.govinfo.gov/bulkdata/BILLS/116/2/s/BILLS-116s2299es.xml#toc-idf7378589-a33f-4ca9-8e0b-28cef66a8ebd
10. U.S. Congress, “Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020,” 49 U.S.C. Subtitle VIII, Chapter 601, 2021, Online: https://www.govinfo.gov/bulkdata/BILLS/116/2/s/BILLS-116s2299es.xml#tocidf7378589-a33f-4ca9-8e0b-28cef66a8ebd
11. U.S. Government Accountability Office, “Natural gas exports: Updated guidance and regulations could improve facility permitting processes,” No. GAO-20-619, 2020, Online: https://www.gao.gov/assets/710/708647.pdf
12. U.S. Government Accountability Office, “Natural gas exports: Updated guidance and regulations could improve facility permitting processes,” No. GAO-20-619, 2020, Online: https://www.gao.gov/assets/710/708647.pdf
13. U.S. Government Accountability Office, “Natural gas exports: Updated guidance and regulations could improve facility permitting processes,” No. GAO-20-619, 2020, Online: https://www.gao.gov/assets/710/708647.pdf
14. Little, C. D., A. M. Cook and V. De Las Casas, “GAO calls on PHMSA to update LNG regulations,” PipeLaws, August 18, 2020, Online: https://www.pipelaws.com/2020/08/gao-calls-on-phmsa-to-update-lng-regulations
15. Little, C. D., A. M. Cook and V. De Las Casas, “GAO calls on PHMSA to update LNG regulations,”PipeLaws, August 18, 2020, Online: https://www.pipelaws.com/2020/08/gao-calls-on-phmsa-toupdate-lng-regulations
16. U.S. Federal Register, Exec. Order No. 13868, 84 Fed. Reg. 3, April 15, 2019, Online: https://www.govinfo.gov/content/pkg/FR-2019-04-15/pdf/2019-07656.pdf
17. U.S. Federal Register, “Pipeline safety: Safety of gas transmission pipelines: MAOP reconfirmation, expansion or assessment requirements, and other related amendments,” 84 Fed. Reg. 52180, October 1, 2019, To be codified as 49 CFR Parts 191 and 192.
18. American Petroleum Institute, “API issues standards to improve safety of natural gas gathering pipelines,” March 26, 2020, Online: https://www.api.org/news-policy-and-issues/news/2020/03/26/api-issues-standards-to-improve-safety-of-natural-gas-gathering-pipelines
19. U.S. Congress, “Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020,” 49 U.S.C. Subtitle VIII, Chapter 601, 2021, Online: https://www.govinfo.gov/bulkdata/BILLS/116/2/s/BILLS-116s2299es.xml#tocidf7378589-a33f-4ca9-8e0b-28cef66a8ebd
20. U.S. Pipeline and Hazardous Materials Safety Administration, “Research & development: Strategic plan,” Accessed January 12, 2021, Online: https://primis.phmsa.dot.gov/rd/splan.htm
21. U.S. Congress, “Pipelines Safety, Regulatory Certainty, and Job Creation Act of 2011,” 125 U.S.C. §60108, 2012, Online: https://www.govinfo.gov/content/pkg/PLAW-112publ90/pdf/PLAW-112publ90.pdf
22. Hersman, D. A. P., “Safety recommendation,” U.S. National Transportation Safety Board, September 26, 2011, Online: https://www.ntsb.gov/safety/safety-recs/recletters/P-11-008-020.pdf
23. National Transportation Safety Board, “Safety recommendation P-11-010,” Accessed January 12, 2021, Online” https://www.ntsb.gov/_layouts/ntsb.recsearch/Recommendation.aspx?Rec=P-11-010
24. U.S. Congress, “What additional preventative and mitigative measures must an operator take?” 49 CFR §192.935, 2011, Online: https://www.govinfo.gov/content/pkg/CFR-2011-title49-vol3/pdf/CFR-2011-title49-vol3-part192.pdf
25. U.S. Congress, “Alternative maximum allowable operating pressure for certain steel pipelines,” 49 CFR §192.620, 2011 Online: https://www.govinfo.gov/content/pkg/CFR-2011-title49-vol3/pdf/CFR-2011-title49-vol3-part192.pdf
26.  U.S. Congress, “Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020,” 49 U.S.C. Subtitle VIII, Chapter 601, 2021, Online: https://www.govinfo.gov/bulkdata/BILLS/116/2/s/BILLS-116s2299es.xml#tocidf7378589-a33f-4ca9-8e0b-28cef66a8ebd