On June 17 2016 President Obama signed into law important new legislation affecting the US pipeline transportation industry. The new law is entitled "Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2016" (PIPES Act). The PIPES Act reauthorises the Pipeline and Hazardous Materials Safety Administration (PHMSA) through 2019 and facilitates greater pipeline safety by providing the PHMSA with emergency order authority. The act requires a review of both natural gas and hazardous liquid integrity management programmes, and mandates the creation of a working group to consider the development of an information-sharing system related to integrity risk analyses.

The PHMSA already has certain tools at its disposal, including a corrective action order, to suspend or restrict use of a pipeline facility when a facility is "hazardous to life, property, or the environment". However, the new emergency order authority provides the PHMSA with a more far-reaching ability to impose emergency restrictions when "an unsafe condition or practice, or a combination of unsafe conditions and practices, constitutes or is causing an imminent hazard".

The major distinction between this expanded authority and a corrective action order is that while a corrective action order can be applied only to a particular pipeline facility, the new authority can affect multiple operators or the entire industry if the PHMSA discovers a widespread unsafe condition (ie, a type of seam weld or new technology being used that the PHMSA believes could create an imminent hazard. In order to temper this authority, lawmakers put a procedural safeguard in place in the event of an operator filing a petition for review of an emergency order. In those circumstances, "if an agency decision… is not issued on or before the last day of the 30-day period beginning on the date on which the petition is filed, the order shall cease to be effective on such day", unless the secretary of transportation makes a written determination before the end of such period that an imminent hazard still exists. Given the significant ramifications of this emergency order authority, industry stakeholders need to be alert to circumstances in which the PHMSA could call on this additional enforcement tool.

The act also requires the PHMSA to publish periodic updates on the status of outstanding mandates from the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011, of which approximately half remain to be completed. The mandates yet to be acted on include requiring certain shut-off valves on transmission lines, mapping all high-consequence areas and shortening the deadline for accident and incident notifications. Additionally, the act mandates that the PHMSA issue minimum safety standards for underground natural gas storage facilities within two years, and conduct post-inspection briefings with owners or operators of a gas or hazardous liquid facility within 30 days of an inspection and provide written preliminary findings within 90 days.

The act requires the secretary of transportation to review and update minimum safety standards for "small scale liquefied natural gas pipeline facilities". This creates a new and distinct category of facility in the PHMSA's liquefied natural gas (LNG) regulatory scheme. The act creates this distinction without identifying the features that would require a facility to be classified as 'small scale'. It will be important for industry stakeholders to weigh in on the proper definition of 'small scale liquefied natural gas pipeline facilities' and the safety standards that the PHMSA should impose on this emerging class of LNG facilities.

The legislation is an important move forward in pipeline safety that accomplishes several goals. The act will force the PHMSA to finalise the remainder of the 2011 act mandates, provide operators with faster feedback from inspections so that they can more readily address issues and create federal safety standards for underground storage facilities.

For further information on this topic please contact Lisa M Tonery at Norton Rose Fulbright LLP's New York office by telephone (+1 212 318 3000) or email (lisa.tonery@nortonrosefulbright.com). Alternatively, contact Erik Swenson at Norton Rose Fulbright's Minneapolis office by telephone (+1 612 321 2800) or email (erik.swenson@nortonrosefulbright.com). The Norton Rose Fulbright website can be accessed at www.nortonrosefulbright.com.

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