Updates

On June 22, 2016, President Obama signed into law the Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2016, or PIPES Act of 2016 (“Act”). The Act reauthorizes the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) of the U.S. Department of Transportation through 2019, imposes additional requirements on certain pipeline operators, and requires PHMSA to issue new safety standards, revise its regulations, and develop reports and recommendations for Congress. Taken together, the Act’s reforms have the potential to increase the regulatory burden faced by hazardous liquid pipeline operators.

Changes to Inspection Procedures

The Act mandates that within 30 days of any pipeline safety inspection, PHMSA or the certified state authority must conduct a post-inspection briefing with the owner or operator of the gas or hazardous liquid pipeline facility outlining any concerns. To the extent practicable, PHMSA or the certified state authority must provide the owner or operator with written preliminary findings of the inspection within 90 days. Additionally, at the request of a state authority, the Secretary now must allow for a certified state authority to participate in the inspection of an interstate pipeline facility.

The Act requires each operator of an onshore hazardous liquid pipeline located more than 150 feet underwater in a high consequence area (“HCA”) to ensure that pipeline integrity assessments are completed at least once every twelve months. The operator also must ensure that pipeline integrity assessments using pipeline route surveys, depth of cover surveys, pressure tests, external corrosion direct assessments, or other technologies that the operator demonstrates can further the understanding of the condition of the pipeline facility are completed on a schedule based on the risk that the pipeline facility poses to the relevant HCA.

New Safety Standards

Within two years, PHMSA must issue minimum safety standards for underground natural gas storage facilities. Under the Act, an underground natural gas storage facility is defined as a “gas pipeline facility that stores natural gas in an underground facility,” including a depleted hydrocarbon reservoir, an aquifer reservoir, or a solution-mined salt cavern reservoir.

In developing these new standards, PHMSA must, among other things, consider the economic impacts of the regulations on individual gas customers and ensure that the regulations do not have a significant economic impact on end users. The Act also requires PHMSA to impose a fee on any entity operating an underground natural gas storage facility and to use such fees for activities related to underground natural gas storage facility safety.

Updates to Regulations and Minimum Safety Standards

The Act requires the Secretary of Transportation to revise PHMSA’s regulations to explicitly state that the Great Lakes, coastal beaches, and marine coastal waters are USA ecological resources for purposes of determining whether a pipeline is in a HCA. The Act also requires the Secretary of Transportation to review and update minimum safety standards for permanent, small scale liquefied natural gas pipeline facilities.

Reports and Studies

The Act directs the Secretary of Transportation and Comptroller General to prepare numerous reports and studies, which may foreshadow areas of future regulation. Specifically, PHMSA must provide reports to Congress regarding the natural gas and hazardous liquid pipeline integrity management programs. PHMSA must conduct a state-by-state review of state-level policies relating to natural gas leaks and provide a report to Congress that summarizes its findings and recommends policies that would improve safety by accelerating the repair and replacement of natural gas pipelines or systems. Additionally, PHMSA must provide a report to Congress regarding the establishment of a national integrated pipeline safety regulatory inspection database to improve collaboration and communication between PHMSA and state pipeline regulators. PHMSA also must convene a working group to consider the development of a voluntary information-sharing system to encourage collaborative efforts to improve inspection information feedback and information sharing. In addition, the Act requires PHMSA to provide updates on completing the mandates set forth under the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, many of which the agency has not yet completed.

Under the Act, the Secretary of Transportation must conduct a study on improving existing damage prevention programs and a study examining the safety, regulatory requirements, techniques, and best practices applicable to pipeline facilities that transport or store only petroleum gas or mixtures of petroleum gas and air (e.g., propane, propylene, and butane) to 100 or fewer customers. The results of these studies must be reported to Congress within one and two years, respectively. The Comptroller General of the United States also must complete studies within two years on state pipeline safety agreements, the feasibility and costs associated with odorizing all combustible gas in pipeline transportation, and materials, training, and corrosion prevention technologies for gas and hazardous liquid pipeline facilities.

The potential regulations that may result from these studies could have substantial financial and operational implications for hazardous liquid pipeline operators. At the same time, the Act requires the Secretary of Transportation to consult with stakeholders and include their perspectives in its reports to Congress, providing industry stakeholders an opportunity to actively shape future regulations. Industry stakeholders should be prepared to participate in order to ensure that these studies, reports, and any resulting regulations reflect industry concerns and expertise.

The full text of the PIPES Act of 2016 can be found here.