Authorization of the federal pipeline safety programs will expire on September 30th of this year. With this looming deadline, the Pipeline and Hazardous Materials Safety Administration (PHMSA) is scrambling to finish the 42 mandated rulemakings and studies required by the 2011 Pipeline Safety, Regulatory Certainty, and Job Creation Act (Pipeline Act).
To-date, PHMSA has completed only 26 of the mandates, leaving some of the most controversial issues unfinished, including rules on the use of automatic and remote-controlled shutoff valves; expansion of the integrity management program (IMP) requirements; maximum allowable operating pressure (MAOP) verification; and additional regulation of hazardous liquids lines.
In the past month alone, PHMSA issued two Notices of Proposed Rulemakings, which began the rulemaking process for three of the 2011 mandates: (1) expanding the use of excess flow valves in gas distribution systems, 80 Fed. Reg. 41460 (Jul. 15, 2015); (2) incident notification, 80 Fed. Reg. 39916 (Jul. 10, 2015); and (3) cost recovery for design reviews, id. PHMSA also issued a final rule last month, which finalized an even earlier mandate – from the 2006 pipeline safety authorization act – to address pipeline damage prevention programs. 80 Fed. Reg. 43836 (Jul. 23, 2015).
Congress recently called upon PHMSA to explain its delays in implementing the 2011 Act. During a hearing on July 14th before the House Energy and Commerce Committee, Subcommittee on Energy and Power, Members from both parties expressed frustration with PHMSA's delays. Some stated there is no excuse for a four-year delay on some of the easy mandates set forth in the Pipeline Act, such as the requirement that PHMSA change the incident notification rule to no later than 1 hour within a confirmed discovery.
Members also were concerned that PHMSA's proposed rules languish at the White House Office of Management and Budget (OMB) during OMB's review of the rules for cost-benefit effectiveness. PHMSA's authorizing statute requires that benefits exceed costs in all of its rulemakings. The rules proposed earlier this month demonstrate the difficulty PHMSA and OMB face in satisfying this requirement: the benefits do not exceed costs, unless "unquantified" environmental and health benefits are factored in.
Congressional frustration with PHMSA may lead to a shorter-term reauthorization this year, rather than the typical several-year authorization bills for pipeline safety programs. Congress will want to keep PHMSA's "feet to the fire" with authorization deadlines and will want time to assess the new regulations before authorizing new programs.
Industry observers believe that PHMSA intends to release a "mega-rule" on pipeline safety – containing several major final rules in one – by fall of this year.
When asked what progress PHMSA is making on the outstanding mandates, Interim Executive Director Stacy Cummings offered the following insights: (1) a gas and hazardous liquids rule will be completed by the end of the year; (2) IMP requirements will be expanded into other types of operations and assessment of new technologies will be added to IMP over the next year; and (3) the leak detection and valves rules are being evaluated now. Cummings would not commit to a schedule beyond that, and she would not prioritize any particular rule over another, saying they are all important and PHMSA has "a plan" to finish all of the mandates.
In the meantime, while awaiting final rules, Cummings said PHMSA is using Advanced Notices of Proposed Rule Makings, safety advisories, and other means to get information out to stakeholders quickly, even when the rulemaking process is slow. As an example, she noted PHMSA is planning an IMP risk assessment workshop soon with other industries, such as aviation, to gather and push out best practices to the pipeline industry. Cummings also testified that industry standards – such as API 1173, a recommended practice regarding pipeline safety management systems published earlier this month – can fill regulatory gaps.
Regarding the upcoming reauthorization bill, Cummings said PHMSA would like to work with Congress to obtain more information for the National Pipeline Mapping System (NPMS) information, so that PHMSA can better understand how products are transported and apply various analytics to that data to evaluate risk.