On October 1, 2015, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) announced proposed regulations to revise and update its pipeline safety standards and reporting requirements. The deadline to submit comments on the Notice of Proposed Rulemaking, Pipeline Safety: Safety of Hazardous Liquid Pipelines (Proposed Rule) is set for January 8, 2016.¹

The Proposed Rule would:

(i)    Extend certain reporting requirements to all hazardous liquid lines;
(ii)   Require inspections of pipelines in areas affected by extreme weather, natural disasters and other similar events;
(iii)  Expand the use of leak detection systems on hazardous liquid pipelines;
(iv)  Require pipeline integrity management (IM) to mitigate the effects of failures that occur outside of a high concentration area (HCA);
(v)   Amend and add new requirements for IM pipeline criteria for repairs; and
(vi)  Increase the use of inline inspection tools by requiring that any pipeline that could affect an HCA be capable of accommodating these devices within 20 years, unless its basic construction will not permit that accommodation.

PHMSA has been considering changes to its pipeline safety regulations since it published an Advanced Notice of Proposed Rulemaking (ANOPR) on October 18, 2010. When it first announced the ANOPR, PHMSA cited recent significant hazardous liquid pipeline accidents as a driving force behind amending its pipeline safety regulations. Five years later, PHMSA has now formally proposed amendments to its safety regulations to address the safety concerns raised by these prior pipeline incidents.

The Proposed Rule’s potential impact is extensive. PHMSA estimates that 421 hazardous liquid operators may incur costs to comply with the Proposed Rule. In addition, PHMSA estimates the industry wide annual costs for complying with the different proposed requirements will range widely, from approximately $1,000 to $16.7 million, depending on the applicable requirement, with aggregate costs approximately $22.4 million.

Below is a summary of the Proposed Rule’s main proposals.

I.  New Definitions and Extension of Certain Reporting Requirements to All Hazardous Liquid Lines.

The Proposed Rule would conform pipeline safety regulations promulgated under Part 195 with 49 U.S.C. § 60101(a)(4) by amending the definition of “Hazardous Liquid” to include the transportation by pipeline of any biofuel that is flammable, toxic, corrosive or would be harmful to the environment if released in significant quantities. The definition clarifies that biofuels are included within the meaning of “Hazardous Liquid.”

To facilitate its new requirements for pipeline repairs, PHMSA is also adding a new definition for “Significant Stress Corrosion Cracking.” As defined, an operator must repair a “Significant Stress Corrosion Cracking” immediately upon discovery.

In addition, PHMSA would extend current reporting requirements to mandate that all gathering line operators (whether onshore, offshore, regulated or unregulated) submit annual, safety-related condition and incident reports.

II.  Inspections of Pipelines in Areas Affected by Extreme Weather, Natural Disasters and Other Similar Events.

Under the Proposed Rule, pipeline operators must perform an inspection within seventy-two (72) hours after an extreme weather event such as a hurricane or flood, an earthquake, a natural disaster or other similar event. Operators do not have to conduct the inspection within seventy-two (72) hours if the affected area cannot be safely accessed by personnel and equipment required to perform the inspection, but they must conduct the inspection as soon as the affected area can be safely accessed.

When pipelines are affected by such extreme weather events or natural disasters, operators must inspect all potentially affected pipeline facilities to ensure that no conditions exist that could adversely affect the safe operation of that pipeline. The operator would be required to consider the nature of the event and the physical characteristics, operating conditions, location and prior history of the affected pipeline in determining the appropriate method for performing the inspection required. Based on the information obtained during the inspection, the operator must take appropriate remedial action to ensure the pipeline will continue to operate safely.

PHMSA has expressed particular interest in public comments on the proposed inspection requirements. Specifically, PHMSA has requested comments concerning (i) how operators currently respond to these events, (ii) what type of events are encountered, and (iii) whether a seventy-two (72) hour response time is reasonable.

III.  Periodic Assessments of Pipelines That Are Located Outside an HCA.

Among its new proposed requirements, the Proposed Rule would request operators to perform assessments of pipelines that are not subject to integrity management requirements, i.e., non-HCA (non-IM) pipeline segments. The contemplated pipeline assessments for non-HCA pipelines must be conducted with an inline inspection (ILI) tool at least once every ten (10) years, or as otherwise necessary to ensure public safety. Under the Proposed Rule, operators may use other assessment methods by providing the Office of Pipeline Safety (OPS) prior written notice that a pipeline is not capable of accommodating an ILI tool.

After conducting an assessment, the Proposed Rule would require the immediate repair of certain identified conditions: (i) metal loss greater than eighty percent (80%) of nominal wall regardless of dimensions, (ii) a calculation of the remaining strength if the pipe shows a burst pressure less than 1.1 times the maximum operating pressure (MOP) at the location of the anomaly, and (iii) any indication of either a “Significant Stress Corrosion Cracking” or selective seam weld corrosion.

Although operators would have a new requirement to assess non-HCA pipelines, the Proposed Rule confirms that operators still would be obligated to complete assessments in HCAs first, followed by assessments in non-HCAs.

IV.  Application of Modified IM Repair Criteria to any Pipeline Where the Operator Has Identified Repair Conditions.

PHMSA’s current regulations for pipeline IM in an HCA require operators to develop an IM program that identifies the risks on each segment of a pipeline in certain categories and adopts remedial preventive and mitigative actions for these risks. The Proposed Rule would modify the IM repair criteria by (i) expanding the list of conditions that require immediate remediation, (ii) consolidating the time frames for remediating all other conditions, and (iii) specifying explicit deadlines for repairs on non-IM pipelines.

Specifically, PHMSA is proposing to modify the IM repair criteria to:

• Categorize bottom-side dents with stress risers as immediate repair conditions;
• Require immediate repairs whenever the calculated burst pressure is less than 1.1 times the MOP;
• Eliminate the 60-day and 180-day repair categories; and
• Establish a new, consolidated 270-day repair category for those conditions that are not required to be immediately repaired.

The Proposed Rule’s requirement to make a repair immediately if the burst pressure calculation is less than 1.1 times the MOP is a more conservative requirement than is currently in place. Consequently, many anomalies that would not qualify as immediate repairs under the current criteria would meet that requirement under the Proposed Rule.

V.  Expanded Use of Leak Detection Systems for All Hazardous Liquid Pipelines.

Current pipeline safety regulations mandate leak detection requirements for hazardous liquid pipelines that could affect an HCA. Under the Proposed Rule, PHMSA would require all new hazardous liquid pipelines, including non-HCAs, to include leak detection systems.

In addition, PHMSA would require operators to evaluate the kinds of systems that must be installed to adequately detect leaks. The operator must evaluate and modify, as necessary, the capability of its leak detection system to “protect the public, property and the environment.” Moreover, the Proposed Rule sets forth certain factors that must be considered in performing that evaluation, such as (i) the length and size of the pipeline, (ii) the type of product carried, (iii) the swiftness of leak detection, (iv) the location of the nearest response personnel, and (v) the leak’s history.

Finally, the new leak detection requirements would also apply to regulated onshore gathering lines.

VI.  Increased Use of Inline Inspection Tools.

PHMSA’s Proposed Rule would require that all hazardous liquid pipelines in an HCA and areas that could affect an HCA be made capable of accommodating the passage of an instrumental inspection device (referred to as a “smart pig”) within twenty (20) years. Due to the value of using inline inspection tools to identify problems, PHMSA’s proposal provides for the “gradual elimination” of pipelines that are not capable of accommodating smart pigs. An operator may petition to request a determination that it is impractical for its system to accommodate inline inspection devices.

Further, the Proposed Rule would limit the circumstances under which a pipeline could be constructed without smart pig capabilities. Unlike current regulations, the Proposed Rule would not provide an operator the ability to request a petition to waive the inspection tool requirement for reasons related to construction time constraints, and other unforeseen construction problems. The Proposed Rule would maintain the exception for emergencies.