Federal regulators are seeking to toughen regulations for interstate natural gas pipelines following two deadly explosions that rocked the West and East Coasts within the past year.

The Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) last Wednesday issued an advanced notice of proposed rulemaking (ANPRM), which seeks public comment on whether certain regulatory exemptions for pipelines constructed before 1970 should be eliminated and whether integrity management (IM) requirements for pipelines, which primarily apply to pipe segments in highly populated areas, should be strengthened and expanded. The public has 60 days to comment.

“PHMSA believes that IM requirements[for] gas transmission pipelines …have increased the level of safety associated with the transportation of gas in HCAs [high-consequence areas, densely populated]. Still incidents with significant consequences continue to occur on gas transmission pipelines,” according to the ANPRM, which cited the California pipeline explosion in September 2010, where eight people were killed, and the pipeline explosion in Allentown, PA, in February that killed five people (see related stories and NGI, Feb. 14; Sept. 13, 2010).

“As a result of this [San Bruno] event, public concern has been raised regarding whether safety requirements applicable to pipe in populated areas can be improved. PHMSA is thus considering expanding the definition of an HCA so that more miles of pipeline are subject to [stricter] IM requirements,” the ANPRM said.

HCAs currently are defined as areas along pipelines’ systems where releases could have greater consequence to health and safety or the environment.

Moreover, PHMSA is considering whether revised requirements are needed on new construction or existing pipelines concerning mainline valves, including valve spacing and installation of remotely operated or automatically operated values; whether requirements for corrosion control of steel pipelines should be strengthened; and whether new regulations are needed to govern the safety of gathering lines and underground gas storage facilities.

The action is the first step in a lengthy rulemaking process. The ANPRM can be found on PHMSA’s web site at www.phmsa.dot.gov.

In related news gas municipal entities and industrial gas consumers have called on Congress to reject efforts to allow the interstate pipelines to collect a tracker fee — or tax — on top of the existing user fees from customers as part of pipeline safety reauthorization legislation.

Local distribution companies and other customers pay user fees in their base rates to interstate pipelines, which go toward funding PHMSA pipeline safety inspections and other programs, such as one-call notification. A tracker mechanism would allow an interstate pipeline to recover increased user fees without undergoing the scrutiny of the Federal Energy Regulatory Commission, said a spokesman for the American Public Gas Association (APGA).

“We express our strong opposition to any provision as part of pipeline safety legislation that would permit pipelines to bypass the Natural Gas Act just and reasonable standard through a tracker mechanism,” wrote the APGA and the Industrial Energy Consumers of America in a letter Tuesday to Rep. John Mica (R-FL), chairman of the House Transportation and Infrastructure Committee.

“The ‘tracker’ approach is unsound both because it virtually guarantees double recovery of user fees by pipelines and double payment of such fees by customers and because it permits pipelines that are already overrecovering their cost-of-service to nevertheless pass on such user fees without having their rates scrutinized by the agency charged with ensuring that pipeline rates are just and reasonable, the Federal Energy Regulatory Commission,” the two gas groups said.

In the current fiscal year, interstate gas pipeline have been assessed a user fee of $234.62 per mile based on 299,894 miles of pipeline. The fees are collected from their downstream customers and paid directly to PHMSA.

As far as the two groups are aware, a tracker mechanism has not yet been included in the pipeline safety legislation that is either pending or has emerged from the House Energy and Commerce Committee or the Senate Commerce Committee, the APGA spokesman said (see NGI, Aug. 1; May 9). However, the group noted that efforts are under way to include such a mechanism in the House Transportation measure.

“While no legislation has been proposed to authorize the recovery of PHMSA user fees via a FERC pipeline tracker, it is important to note that PHMSA user fees have risen significantly in recent years and that the lion’s share of this increase is attributable to distribution pipeline regulation and grants to the states that largely are intended to fund the regulation of distribution pipeline safety,” said the Interstate Natural Gas Association of America (INGAA), which represents interstate gas pipelines.

“Given the impetus for expanded pipeline safety regulation that will come with reauthorization of the Pipeline Safety Act, PHMSA user fees are likely to increase even more. Consequently, it makes sense to consider and be open to discussing ways to recover these costs that would be administratively efficient and equitable,” INGAA said.

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