The Pipeline and Hazardous Materials Safety Administration (“PHMSA”) has issued a final rule that, for the first time ever, expands certain federal pipeline safety requirements to all onshore gas gathering pipelines, regardless of size or location (“the Final Rule”). The final rule represents the culmination of over a decade of regulatory evolution with respect to rural gas gathering lines and the final part of the “Gas Mega Rule”, which, by PHMSA’s estimates, will make over 400,000 miles of onshore gas gathering pipelines subject to PHMSA’s pipeline safety regulations. The Final Rule establishes two new types of onshore gas gathering pipelines subject to varying degrees of regulation: (1) all onshore gathering line operators are now subject to PHMSA’s annual reporting and incident reporting requirements as “Type R” onshore gas gathering lines; and 2) certain previously unregulated rural gas gathering lines must now comply with PHMSA damage prevention and, depending on the size of the pipeline, construction and operational requirements as “Type C” onshore gas gathering lines. PHMSA published the Final Rule in the Federal Register on November 15, 2021, with an effective date of six months following the date of publication, meaning that operators will generally have to comply with all provisions of the final rule by May 15, 2022. Subject to certain provisions in the Final Rule, operators of all onshore gathering lines must begin submitting 2022 annual reports to PHMSA no later than March 15, 2023. However, designation of gathering line endpoints and data collection efforts related to Type C and Type R lines should begin far in advance of the first annual report deadline imposed under the final rule.
Why Is PHMSA Extending Regulation Over Rural Gas Gathering Lines
Gas gathering lines transport natural gas from production facilities to a transmission line or distribution main lines. Only certain onshore gathering lines known as Type A and Type B gathering lines have been subject to federal pipeline safety regulations. Type A gathering lines are pipelines that operate at relatively higher stress levels and are located in locations that have more than 10 buildings intended for human occupancy or locations where buildings with four or more stories above ground are prevalent. Type B gathering lines are lower-stress pipelines in locations that have more than 10 buildings intended for human occupancy or locations where buildings with four or more stories above ground are prevalent. Until the publication of the Final Rule, the majority of gathering lines (most of which are located in Class 1 rural areas — areas with 10 or fewer buildings fit for human occupancy) were exempt from the requirements of Part 191 and 192. PHMSA originally adopted this approach excluding many rural gathering lines from regulation because gathering lines have historically been low-pressure and shorter in distance, reducing the potential for catastrophic incidents.
Hydraulic fracturing and increased shale production of natural gas over the past fourteen years has changed the infrastructure landscape for transporting natural gas. The increase in production led to the construction of gas gathering lines with larger diameters operating at higher-pressure over longer distances. PHMSA views these long-haul, higher-pressure, larger-diameter gathering lines as sharing the same physical, functional, and operational characteristics and potential adverse consequences from an incident as transmission lines.
The Long Road to the Final Rule
In a 2006 rule, PHMSA established a risk-based approach to regulation based on size and location and defined “gathering line” by incorporating the American Petroleum Institute’s Recommended Practice 80 (“API RP 80”). API RP 80 defines a gathering line as “a pipeline, or a connected series of pipelines, used to transport gas from the furthermost downstream point in a production operation to the furthermost downstream of one of the defined endpoints of gathering.”
Subsequently, a series of pipeline safety incidents resulted in PHMSA reconsidering the scope of its regulation of rural gathering lines. Additionally, PHMSA has questioned some of the concepts used in API RP 80, such as “incidental gathering” when it comes to determining the starting points and endpoints of a gas gathering line. Pursuant to API RP 80, incidental gathering allows an operator to designate pipeline segments that are past the furthermost downstream of the endpoint of gathering up to the connection to “another pipeline” as a gathering line, regardless of the actual function or operational characteristics of that pipeline segment. In PHMSA’s view, applying this concept can result in gas pipeline segments that are downstream of a natural gas processing plant with the same diameter, operating pressure, and other characteristics as a transmission line that the segment connects to being classified as “gathering” and therefore not subject to PHMSA regulation. All of these factors and more played into PHMSA’s considerations when promulgating the Final Rule.
PHMSA first published an advanced notice of proposed rulemaking (“ANPRM”) to revise the pipeline safety regulations for gas gathering and gas transmission pipelines in August 2011. As part of the 2011 ANPRM, PHMSA requested public comment on expanding the definition of the term “regulated onshore gas gathering pipelines” to include a new category of high-pressure, large-diameter gathering lines in Class 1 locations. Separately, pursuant to the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, PHMSA was required to report to Congress on the adequacy of federal pipeline safety regulation of rural gathering lines. PHMSA issued the report to Congress in 2015, noting difficulties with properly designating the starting and endpoints of gathering lines and that states typically had not extended gas gathering regulation beyond Type A and Type B lines. All of these pressures culminated in PHMSA proposing its rural gas gathering line rule in April 2016, which, amongst other requirements, sought to extend Part 191 reporting requirements to all pipelines regardless of location and size, repeal the incorporation of API RP 80 into federal pipeline safety regulations, and create a new Class of Type A rural gas gathering lines, Type A Area 2, that would be subject to additional federal regulation.
The Final Rule and the Changed Landscape of Federal Gas Gathering Line Regulation
When PHMSA did not finalize the 2016 rule, Congress, in the Protecting our Infrastructure of Pipelines and Enhancing Safety Act of 2020 (“Pipes Act of 2020”), mandated that PHMSA promulgate a final version no later than March 27, 2021. Unlike the Proposed Rule, the Final Rule does not repeal the incorporation of API RP 80, but it does not adopt the recently updated second edition of API RP 80. PHMSA notes that it may consider updating certain terms related to defining gathering and production lines in a future rulemaking.
The Final Rule creates two new categories of regulated gas gathering lines — Type R and Type C gathering lines. Type R gathering lines which have an outside diameter less than 8.625 inches or operate below the pressure or stress level criteria set forth below do not have to comply with any Part 192 requirements and are subject only to incident and annual reporting under Part 191.
Type C gathering lines are defined as gas gathering lines in Class 1 locations — any location that has 10 or fewer buildings intended for human occupancy — that are 8.65 inches in diameter or greater and that have a maximum allowable operating pressure (“MAOP”) that produces a hoop stress of 20 percent or more of specified minimum yield strength (“SMYS”) for metallic lines, or more than 125 psig for non-metallic lines or metallic lines if the stress level is unknown. These Type C gathering lines are now subject to certain Part 191 reporting and registration requirements, as described in further detail below, and Part 192 safety standards. The final rule follows a risk-based approach with varying degrees of regulation depending on the diameter of the pipeline and the number of residences near it, as set forth in the table below.
|Outside Diameter||Not located near a building intended for human occupancy or other impacted site (§ 192.9(f))||Located near a building intended for human occupancy or other impacted site (§ 192.9(f))|
|Greater than or equal to 8.625 inches up to and including 12.75 inches||-Design, Construction, Initial Inspection and Testing (new/replaced/relocated/changed lines)||-Design, Construction, Initial Inspection and Testing (new/replaced/relocated/changed lines)|
|Greater than 12.75 inches up to and including 16 inches||-Design, Construction, Initial Inspection and Testing (new/replaced/relocated/changed lines)||-Design, Construction, Initial Inspection and Testing (new/replaced/relocated/changed lines)|
|Greater than 16 inches||-Design, Construction, Initial Inspection and Testing (new/replaced/relocated/changed lines)
-Applicable requirements of part 192 for plastic pipe and components
|-Design, Construction, Initial Inspection and Testing (new/replaced/relocated/changed lines)|
Operators may have to engage in a potential impact radius calculation to determine the extent of the applicable requirements of Part 192 for their Type C lines. PHMSA regulations have specific criteria for calculating the radius, but generally the potential impact circle is the area around a pipeline where a pipeline rupture could cause severe consequences, such as harm to persons or property damage. Calculation of the potential impact circle generally requires an established MAOP for the pipeline segment at issue, but the Final Rule provides an alternative method based on class location unit if an MAOP has not been established.
The Final Rule also requires all operators of onshore gathering lines to report incidents and file annual reports under Part 191 through the creation of Type R lines. Responding to comments to the Proposed Rule, PHMSA rejected assertions that it lacked authority to extend reporting requirements to all onshore gas gathering pipelines regardless of location, pointing to existing statutory authority to gather information from gathering line operators. Type R lines include any onshore gas gathering lines in Class 1 or Class 21 locations that do not meet the definition of a Type A, Type B, or Type C line. The Final Rule makes Type R gathering lines subject to Part 191’s incident and annual reporting requirements, but operators of these lines need not comply with Part 192 requirements. However, PHMSA is not requiring operators who are not required to establish MAOP under Part 192 to comply with Part 191 requirements to report MAOP exceedances and other safety-related condition reports. In addition, no construction notification to PHMSA is required for Type R lines. PHMSA has developed a new annual report form and a new incident report form for operators of gas gathering lines that are not regulated under Part 192 to utilize for Type R lines.2
Along with creating two new categories of regulated gathering lines, the Final Rule also sets a 10-mile limitation on the use of “incidental” gathering on new, replaced, relocated, or otherwise changed gathering lines. This differs from the new definition of incidental gathering found in the second edition of API RP, which imposes a 20-mile distance limitation.
Impact of the Final Rule
PHMSA and the Federal Energy Regulatory Commission (“FERC”) have very different tests when it comes to defining a gathering line. Operators cannot rely on a determination that their gathering assets are not FERC-jurisdictional when assessing the impact of PHMSA’s Final Rule on rural gathering lines. Moreover, while the Final Rule does not repeal the incorporation of API RP 80 into PHMSA regulations, the discussions in the preamble to the Final Rule suggest PHMSA continues to scrutinize whether incorporation of the standard is appropriate and will deviate from the standard with respect to certain concepts, such as incidental gathering, if PHMSA finds sufficient basis to do so.
The Final Rule does not exist in a vacuum. Another stated purpose of the Final Rule is to reduce threats to the physical environment including, but not limited to, the reduction of greenhouse gas and methane emissions released during natural gas gathering line incidents. PHMSA released its Final Rule the same day that the Environmental Protection Agency proposed far-reaching methane rules under the Clean Air Act that would target new and existing air emission sources at natural gas gathering stations. All this comes on the heels of the June 2021 PHMSA-issued Advisory Bulletin directing operators to complete the mandate of the PIPES Act of 2020 for operators of jurisdictional pipelines to update their inspection and maintenance plans to address eliminating leaks and minimizing release of methane emissions (e.g., fugitives, venting, blowdown events) during operations. Plans must be revised by December 27, 2021 to address the replacement or remediation of pipelines that are known to leak, and also continually updated to meet the requirements of any existing or future regulations related to leak detection and repair pipeline safety .
Operators must designate the endpoints of new Type C lines within six months of publication of the Final Rule in the Federal Register, or by May 15, 2022. Both Type C and Type R operators must begin submitting 2022 annual reports no later than March 15, 2023. Additionally, Type C operators must comply with their additional requirements within one year of the Final Rule’s effective date. Should operators be unable to comply with these requirements within the applicable time frames, 90 days prior to the compliance deadline, operators may submit a notification to PHMSA requesting an alternative compliance deadline. However, no alternative deadlines are guaranteed.