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AGA Identifies Areas of Concern With PHMSA's Proposed Pipeline Rules

As the clock runs out to respond to more than 700 pages of documents over proposed rules governing natural gas pipelines by the Transportation Department's Pipeline and Hazardous Materials Safety Administration (PHMSA), the American Gas Association (AGA) said it has identified several areas of concern.

The trade association added that the rules are "very prescriptive and convoluted" and said it is difficult to determine the regulatory agency's intent in several areas.

In a 549-page notice of proposed rulemaking (NPRM) issued last March, PHMSA proposed adding thousands of miles of gathering lines to its purview, requiring pipeline inspections after extreme weather events such as floods, earthquakes and hurricanes, and more frequent inspections of pipelines in rural areas (see Daily GPIMarch 21). Two months later, it granted the oil and gas industry an additional 30 days to submit comments on the NPRM, half of what was requested (see Daily GPIMay 10).

During a conference call Thursday, Erin Kurilla, AGA director for operations and engineering services, said her association and others also had to pore over more than 200 pages of an environmental assessment related to the proposed rules.

"The heart of this rulemaking was around addressing Congressional mandates and NTSB [National Transportation Safety Board] recommendations," Kurilla said. "We at AGA have not dismissed PHMSA's goals of achieving those mandates and recommendations but instead offered alternative code language."

Christine Wyman, AGA senior counsel, added that the association "came across several areas where there were inconsistent statements, or possibly unintended consequences, of very prescriptive and convoluted regulations."

Definition of a transmission line

An example is the definition of a transmission line, something Wyman said has not changed much since the beginning of pipeline safety regulations.

"PHMSA has proposed to revise it slightly, so that it would incorporate additional pipeline mileage," Wyman said. "This is an area where we've had extensive conversations with our members about how this would impact them, the possible safety benefits and the unintended consequences. We have really worked with our members to figure out what our position should be."

But Wyman said that task is made more difficult because PHMSA hasn't offered any justification or explanation for the change, nor has it provided an assessment of potential impact from changing it.

"Ironically, in their response to the comments on the advance NPRM, PHMSA responded that the definition is actually outside the scope of this rulemaking," Wyman said. "So with that context, we're left to have conversations with our members that are really speculating as to what PHMSA's concerns are. As we approach what our position is going to be and how we're trying to address those concerns, it's really all just based on speculation as to why PHMSA's doing this."

Maximum allowable operating pressure

Kurilla said a second area of concern to the AGA relates to maximum allowable operating pressure (MAOP), an important subject as regulators and the industry try to avoid another disaster such as the pipeline rupture and explosion in San Bruno, CA, in 2010 (see Daily GPISept. 15, 2010).

Under the proposed rules, grandfathered pipelines, or those constructed before 1970, face a Congressional mandate to perform some form of MAOP verification. PHMSA has provided six different methods to do so, but Kurilla said that creates a problem with the rules' applicability.

"A pipeline that is grandfathered -- and therefore has no record of a pressure test but is using historical pressures to verify their MAOP -- would be required to verify their MAOP through one of these six new methods offered PHMSA, five of which are not pressure tests," Kurilla said. "Therefore, if they choose any of those five, they would still be required to perform a pressure test in order to meet all of the requirements within that new section of code.

"If it sounds complicated, that's because it is. It took a lot people that are arguably very smart to realize that this is a circular reference that really forces operators' hands versus providing the flexibility that Congress asked PHMSA to provide."

Distribution lines also impacted

Although PHMSA has repeatedly stated the proposed rules are to cover transmission and gathering lines, Wyman said revisions to the agency's safety code would also impact distribution lines.

"We've found numerous places where PHMSA is proposing new requirements or revising requirements that aren't limited in applicability to just transmission lines," Wyman said. "There are significant distinctions between transmission and distribution lines that need to be taken into account. This changes the tone of our comments and how we need to respond to PHMSA because it seems in their documentation that they're focused solely on transmission.

"We're trying to identify all of these areas where distribution is included as well, provide comments as to the appropriateness of this, provide solutions for dealing with distinctions between transmission and distribution, and just remind PHMSA of the unintended consequences of generally revising some of these regulations that have pretty broad applicability."

Problems with material verification, hydrostatic testing

Kurilla said the material verification section of the proposed rule appears to be based on outdated technologies and standards.

"This is a new section of code that would force operators who do not have reliable, traceable, verifiable and complete material property records to then go and verify those material properties," Kurilla said. "PHMSA has introduced very prescriptive sampling frequencies and testing frequencies on pipelines and their components.

"[But] AGA believes those sampling and testing frequencies are based off very dated technologies. When you see our comments, you will see a drive to bring these prescriptive requirements up to modern understanding and the tools that are available to operators today."

Kurilla said there were also issues with hydrostatic testing, especially for AGA's members who operate intrastate pipelines embedded within distribution systems.

"Whenever you introduce water, you're introducing an unknown element into a pipeline system that's not intended to be there," Kurilla said. "When you perform hydrostatic testing in a new construction environment, you're able to dry that system out completely and thus not expose the pipeline to potential internal corrosion. But in doing it for in-service pipelines, not only do you have to bring that pipeline out of service -- which could thus impact the ability for that company to maintain service to their customers -- but also you're introducing an element that's not meant to be there: water.

Hydrostatic testing also costs a lot more. "It costs significantly more to hydrostatically test a pipeline than to in-line inspect that pipeline," Kurilla said. "In-line inspection is one of the methodologies that PHMSA cites as an option for MAOP verification, although that flexibility seems to be taken away due to the way in which the code requirements are written."

Loss of regulatory flexibility

Wyman added that AGA was concerned about the loss of such regulatory flexibility.

"PHMSA has gone to great lengths to tout the proposed regulations in offering operators flexibility in meeting these Congressional mandates," Wyman said. "We appreciate that because our pipelines are more unique and can be challenging to perform these methods on.

"But the way the regulatory text is drafted, it eliminates flexibility. That's inconsistent with what PHMSA is saying about the rule. It's not reflected in their impact assessment, which actually suggests that most pipelines, including intrastate transmission, are going to use a combination of in-line inspection technology as well as the engineering critical assessment. This is where we're struggling."

Expected tone of AGA's comments

Kurilla said the AGA "won't necessarily introduce alternate methodologies, but instead provide clarity and updates to the methodologies that PHMSA has introduced, and cleaning up the regulatory language such that these loops don't exist anymore. Again, we're basing a lot of this off speculation. Not a lot of it is discussed at length in the proposed rule, so we're speculating a bit on PHMSA's intent."

But Kurilla added that the AGA will suggest that issues related to distribution lines be addressed in a separate rulemaking. "Even PHMSA states that was the intent in the preamble language," she said. "PHMSA makes it pretty clear that was their intent, but in the actual code text they bring in distribution. We have to assume that was not their intent.

"We're going to ask them to make sure that that's clear in the final rule, and if they have any concerns about distribution this needs to be addressed in a separate rulemaking."

AGA spokesman Jake Rubin said the association expects to file its comments in a couple weeks. PHMSA has set a July 7 deadline for comments [PHMSA-2011-0023].

PHMSA said its proposed regulations would meet four congressional mandates from the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011, one recommendation by the Government Accountability Office, and six recommendations from the NTSB, including one requiring that more modern testing be performed on pipelines built before 1970. PHMSA officials told NGI that approximately 57% of all onshore gas transmission pipelines were constructed before 1970.

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